Hudson Highland Group Updates Q4 2008 Guidance and Status of Impairment Testing
NEW YORK, Dec. 18 /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 revised guidance for the fourth quarter
and an update on its annual impairment testing, both of which reflect the
impact of the global economic slowdown.
Hudson's markets worldwide declined significantly during November.
Results for the month were below prior year in all regions: Asia Pacific,
Europe, and North America. The company experienced reduced demand in both
contract and permanent recruitment from October levels, with the largest
percentage drop coming from the permanent recruitment business.
Given these trends, the company now expects its fourth quarter 2008
revenue to be between $200-$210 million at prevailing exchange rates,
compared with previous guidance of $205-$220 million. The company also
believes adjusted EBITDA could be as low as a loss of $6 million, compared
with previous adjusted EBITDA guidance of $2-$5 million. Adjusted EBITDA
excludes the impact of any restructuring, acquisitions, divestitures and
impairments.
Economic conditions in North America began to deteriorate in late 2007.
Hudson took a number of actions at the end of 2007 and through 2008 in all of
its markets that reduced its pre-tax expense base by $40 million on an
annualized basis, about half of which was realized during 2008 to offset
gross margin declines, and continues to assess options to align its
operations with the market while serving client and candidate needs. A number
of additional actions to reduce expenses are already underway, but the rapid
drop in permanent recruitment during November limited the company's ability
to mitigate the adjusted EBITDA decline in a few weeks. Hudson currently
expects that the benefit of these additional actions will begin to be
realized in the early part of 2009, in addition to the full annualized impact
of the 2008 actions. More detailed information regarding cost reduction
actions and the timing of benefits will be provided when the company
announces fourth quarter and full-year earnings results.
These cost reduction actions are also important to the company's
liquidity position. As of yesterday, the company had net cash of
approximately $42 million. Every region is focused on cash management as part
of its response to the economic conditions.
Hudson expected slowing economic conditions when it announced its third
quarter 2008 results and set guidance for the fourth quarter. However,
economic conditions during the quarter have been worse than anticipated with
greater contraction in North America and the European Union, and slower
growth rates in the emerging markets. The company expects weak global
conditions to persist throughout 2009, resulting in a reduction in demand for
its services. In addition, revenue has been affected by the strengthening
U.S. dollar against most currencies in 2008, and this condition may continue
in 2009.
The company is also in the process of conducting its annual impairment
testing of goodwill, as well as other long-term assets. The process follows
the required accounting guidance and the analysis includes consideration of
factors such as deterioration in macro-economic conditions, their impact on
the company's markets and business performance and the decline in the market
price of the company's common stock. Based on this analysis, the company may
record in the fourth quarter of 2008 a non-cash impairment charge of between
$30-$75 million for goodwill and intangibles from its various acquisitions
since 2004, and possibly other long-term assets.
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 more than 3,300 professionals serving clients and
candidates in more than 20 countries. More information is available at
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 company's
history of negative cash flows and operating losses may continue; the ability
of clients to terminate their relationship with the company at any time; the
impact of global economic fluctuations on temporary contracting operations;
risks and financial impact associated with acquisitions and dispositions of
non-core businesses; 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; fluctuations in the company's operating results from
quarter to quarter; risks relating to the company's international operations,
including foreign currency fluctuations; dependence on key management
personnel; restrictions imposed by blocking arrangements; exposure to
employment-related claims from both clients and employers and limits on
insurance coverage related thereto; government regulations; any impairment to
the carrying value of goodwill; restrictions on the company's operating
flexibility due to the terms of its credit facility; and the company's
ability to maintain effective internal control over financial reporting.
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 press release.
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.
Contact: David F. Kirby
Hudson Highland Group
212-351-7216
david.kirby@hudson.com
SOURCE Hudson Highland Group, Inc.
CONTACT: David F. Kirby of the Hudson Highland Group, +1-212-351-7216,
david.kirby@hudson.com
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