Hudson Highland Group Reports 2009 First Quarter Financial Results
NEW YORK, May 5 /PRNewswire-AsiaNet/ --
Hudson Highland Group, Inc. (Nasdaq: HHGP), one of the world's leading
providers of permanent recruitment, contract professionals and talent management
solutions, today announced financial results for the first quarter ended March
31, 2009.
2009 First Quarter Summary
- Revenue of $165.0 million, a decrease of 43.9 percent from $294.0
million for the first quarter of 2008
- Gross margin of $62.3 million, or 37.8 percent of revenue, down 49.8
percent from $124.2 million, or 42.2 percent of revenue for the same
period last year
- Adjusted EBITDA* loss of $10.0 million, or 6.1 percent of revenue, down
from adjusted EBITDA of positive $6.8 million for the first quarter of
2008
- EBITDA* loss of $15.9 million, down from EBITDA of positive $5.4
million for the same period last year
- Net loss from continuing operations of $15.2 million, or $0.60 per
basic and diluted share, compared with net income from continuing
operations of $0.4 million, or $0.02 per basic and $0.01 per diluted
share, for the first quarter of 2008
- Net loss of $5.6 million, or $0.22 per basic and diluted share,
compared with net income of $1.4 million, or $0.05 per basic and diluted
share, for the first quarter of 2008
*Adjusted EBITDA and EBITDA are defined in the segment tables at the end
of this release.
"Our operating results continued to be significantly impacted by the deep
global recession during the first quarter," said Jon Chait, Hudson Highland
Group chairman and chief executive officer. "While we expect the environment
to remain challenging, we believe that the first quarter was a financial
performance bottom for Hudson."
"Our team has done an admirable job of reducing costs and managing cash
given the extraordinary market circumstances," added Mary Jane Raymond, chief
financial officer. "Further, we have moved swiftly to identify new pockets of
opportunity and remain sharply focused on viable markets in this
environment."
Restructuring Program
During the second quarter of 2009, the company expects to continue to
streamline its operations in response to current economic conditions. The
company recently increased the size of the 2009 restructuring plan to $11 -
$16 million and expects to incur $3 - $6 million of restructuring charges
during the second quarter of 2009. First quarter expenses of $5.9 million
were related to severance and lease terminations in all three regional
businesses of the company.
Liquidity and Capital Resources
The company ended the first quarter of 2009 with $35.0 million in net
cash, a decrease from $43.9 million at the end of 2008, and excess
availability under its amended credit facility of $5.3 million. The company
also received $11.6 million in April 2009 from Heidrick & Struggles, the
final earn-out from the sale of Highland Partners in 2006.
Share Repurchase Program
On February 4, 2008, the company announced that its board of directors
authorized the repurchase of up to $15 million of the company's common stock.
During the first quarter, the company repurchased 243,316 shares at a total
cost of approximately $0.7 million. Since the inception of the program, the
company has repurchased 1,491,772 shares at a total cost of approximately
$8.2 million. As of March 1, 2009, additional stock repurchases are
prohibited under the terms of the company's amended credit agreement.
Guidance
Despite recent signs of increasing stability, visibility remains low. As
a result, the company will not provide formal guidance for the second quarter
of 2009. The company will comment on current trends and its outlook for the
second quarter on its earnings call.
Additional Information
Additional information about the company's quarterly results can be found
in the shareholder letter and the fourth quarter and full-year earnings
slides in the investor information section of the company's website at
Conference Call/Webcast
Hudson Highland Group will conduct a conference call Tuesday, May 5, 2009
at 9:00 AM ET to discuss this announcement. Individuals wishing to
participate can join the conference call by dialing 1-800-374-1532 followed by
the participant passcode 95760964 at 8:50 AM ET. For those outside the United
States, please call in on 1-706-634-5594 followed by the participant
passcode 95760964. Hudson Highland Group's quarterly conference call can also
be accessed online through Yahoo! Finance at www.yahoo.com and the investor
The archived call will be available for one week by dialing
1-800-642-1687 followed by the participant passcode 95760964. For those
outside the United States, the call will be available on 1-706-645-9291
followed by the participant passcode 95760964.
About Hudson Highland Group
Hudson Highland Group, Inc. is a leading provider of permanent
recruitment, contract professionals and talent management services worldwide.
From single placements to total outsourced solutions, Hudson helps clients
achieve greater organizational performance by assessing, recruiting,
developing and engaging the best and brightest people for their businesses.
The company employs nearly 3,000 professionals serving clients and candidates
in more than 20 countries. More information is available at www.hudson.com.
Safe Harbor Statement
This press release contains statements that the company believes to be
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. All statements other than statements of
historical fact included in this press release, including those under the
caption "Guidance" and other statements regarding the company's future
financial condition, results of operations, business operations and business
prospects, are forward-looking statements. Words such as "anticipate,"
"estimate," "expect," "project," "intend," "plan," "predict," "believe" and
similar words, expressions and variations of these words and expressions are
intended to identify forward-looking statements. All forward-looking
statements are subject to risks and uncertainties that could cause actual
results to differ materially from those described in the forward-looking
statements. These factors include, but are not limited to, the impact of
global economic fluctuations including the current economic downturn; the
ability of clients to terminate their relationship with the company at any
time; risks in collecting our accounts receivable; implementation of the
company's cost reduction initiatives effectively; the company's history of
negative cash flows and operating losses may continue; the company's limited
borrowing availability under our credit facility, which may negatively impact
our liquidity; restrictions on the company's operating flexibility due to the
terms of its credit facility; fluctuations in the company's operating results
from quarter to quarter; risks relating to the company's international
operations, including foreign currency fluctuations; risks related to our
investment strategy; risks and financial impact associated with dispositions
of underperforming or non-core assets; the company's heavy reliance on
information systems and the impact of potentially losing or failing to
develop technology; competition in the company's markets and the company's
dependence on highly skilled professionals; the company's exposure to
employment-related claims from both clients and employers and limits on
related insurance coverage; the company's dependence on key management
personnel; volatility of stock price; the impact of government regulations;
restrictions imposed by blocking arrangements. Additional information
concerning these and other factors is contained in the company's filings with
the Securities and Exchange Commission. These forward-looking statements
speak only as of the date of this letter. The company assumes no obligation,
and expressly disclaims any obligation, to review or confirm analysts'
expectations or estimates or to update any forward-looking statements,
whether as a result of new information, future events or otherwise.
Financial Tables Follow
Contact: David F. Kirby
Hudson Highland Group
212-351-7216
david.kirby@hudson.com
HUDSON HIGHLAND GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
Three Months Ended
March 31,
--------- 2009
2008
---- ----
Revenue $164,990 $294,032
Direct costs 102,677 169,880
------- -------
Gross margin 62,313 124,152
------ -------
Operating expenses:
Selling, general and administrative expenses 72,302 117,313
Depreciation and amortization 3,790 3,825
Business reorganization and integration expenses 5,935 1,395
----- -----
Total operating expenses 82,027 122,533
------ -------
Operating (loss) income (19,714) 1,619
Other income (expense):
Interest, net (191) 351
Other, net 619 197
--- ---
(Loss) income from continuing operations before
provision for income taxes (19,286) 2,167
(Benefit) provision for income taxes (4,059) 1,784
------ -----
(Loss) income from continuing operations (15,227) 383
Income from discontinued operations, net of income
taxes 9,668 981
----- ---
Net (loss) income $(5,559) $1,364
======= ======
Basic (loss) income per share:
(Loss) income from continuing operations $(0.60) $0.02
Income from discontinued operations 0.38 0.03
---- ----
Net (loss) income $(0.22) $0.05
====== =====
Diluted (loss) income per share:
(Loss) income from continuing operations $(0.60) $0.01
Income from discontinued operations 0.38 0.04
---- ----
Net (loss) income $(0.22) $0.05
====== =====
Weighted average shares outstanding:
Basic 25,171 25,500
Diluted 25,171 25,877
HUDSON HIGHLAND GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands, except par value of stocks)
(unaudited)
March 31, December 31,
2009 2008
---- ----
ASSETS
Current assets:
Cash and cash equivalents $46,260 $49,209
Accounts receivable, net 103,968 127,828
Prepaid and other 25,511 15,552
Current assets of discontinued operations 751 881
--- ---
Total current assets 176,490 193,470
Intangibles, net 1,043 2,498
Property and equipment, net 21,693 24,446
Other assets 11,282 9,982
Non-current assets of discontinued operations 495 557
--- ---
Total assets $211,003 $230,953
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $14,263 $15,757
Accrued expenses and other current liabilities 55,844 76,791
Short-term borrowings 11,257 5,307
Accrued business reorganization expenses 7,680 5,724
Current liabilities of discontinued operations 1,553 1,002
----- -----
Total current liabilities 90,597 104,581
Accrued business reorganization expenses,
non-current 1,030 1,476
Other non-current liabilities 16,799 16,904
------ ------
Total liabilities 108,426 122,961
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.001 par value, 10,000 shares
authorized; none issued or outstanding - -
Common stock, $0.001 par value, 100,000 shares
authorized; issued 26,695 and 26,494 shares,
respectively 26 26
Additional paid-in capital 445,017 450,739
Accumulated deficit (368,464) (362,905)
Accumulated other comprehensive income-translation
adjustments 26,281 27,054
Treasury stock, 107 and 1,140 shares, respectively,
at cost (283) (6,922)
---- ------
Total stockholders' equity 102,577 107,992
------- -------
Total liabilities and stockholders' equity $211,003 $230,953
======== ========
HUDSON HIGHLAND GROUP, INC.
SEGMENT ANALYSIS
(in thousands)
(unaudited)
For
the Three Hudson
Months Ended Hudson Hudson Asia
March 31, 2009 Americas Europe Pacific Corporate Total
----------- --------- ---------- ----------- -------
Revenue $44,023 $66,227 $54,740 $- $164,990
======= ======= ======= === ========
Gross margin $10,962 $30,622 $20,729 $- $62,313
======= ======= ======= === =======
Adjusted EBITDA
(loss) (1) $(3,163) $(1,372) $(705) $(4,749) $(9,989)
Business
reorganization and
integration
expenses 1,623 2,434 1,878 - 5,935
----- ----- ----- - -----
EBITDA (loss) (1) (4,786) (3,806) (2,583) (4,749) (15,924)
Depreciation and
amortization 1,005 1,805 917 63 3,790
----- ----- --- --- -----
Operating income
(loss) $(5,791) $(5,611) $(3,500) $(4,812) $(19,714)
======= ======= ======= ======= ========
For the Three Hudson
Months Ended Hudson Hudson Asia
March 31, 2008 Americas Europe Pacific Corporate Total
----------- --------- ---------- ----------- -------
Revenue $83,262 $111,333 $99,437 $- $294,032
======= ======== ======= === ========
Gross margin $22,755 $58,532 $42,865 $- $124,152
======= ======= ======= === ========
Adjusted EBITDA
(loss) (1) $1,227 $5,769 $5,771 $(5,928) $6,839
Business
reorganization and
integration
expenses
(recovery) 1,460 (160) 95 - 1,395
----- ---- --- --- -----
EBITDA (loss) (1) (233) 5,929 5,676 (5,928) 5,444
Depreciation and
amortization 1,173 1,643 956 53 3,825
----- ----- --- --- -----
Operating income
(loss) $(1,406) $4,286 $4,720 $(5,981) $1,619
======= ====== ====== ======= ======
(1) Non-GAAP earnings before interest, income taxes, special charges,
other non-operating expense, and depreciation and amortization
("Adjusted EBITDA") and non-GAAP earnings before interest, income
taxes, other non-operating expense, and depreciation and amortization
("EBITDA") are presented to provide additional information about
the company's operations on a basis consistent with the measures which
the company uses to manage its operations and evaluate its performance.
Management also uses these measurements to evaluate capital needs and
working capital requirements. Adjusted EBITDA and
EBITDA should not be considered in isolation or as a substitute for
operating income, cash flows from operating activities, and other
income or cash flow statement data prepared in accordance with
generally accepted accounting principles or as a measure of the
company's profitability or liquidity. Furthermore, adjusted EBITDA
and EBITDA as presented above may not be comparable with similarly
titled measures reported by other companies.
SOURCE: Hudson Highland Group, Inc.
CONTACT: David F. Kirby of Hudson Highland Group,
+1-212-351-7216,
david.kirby@hudson.com
(HHGP)
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