Hudson Global Reports 2019 First Quarter Results
2019 First Quarter Summary
- Revenue of
$16.2 million decreased by 0.2 percent from the same period in 2018 and increased 9.2 percent in constant currency. - Gross profit of
$9.4 million decreased 7.5 percent from the first quarter of 2018 and decreased 2.5 percent in constant currency. - Net loss of
$1.9 million , or$0.06 per basic and diluted share, compared to net income of$10.7 million , or$0.33 per basic and diluted share, for the first quarter of 2018. The results in the first quarter of 2018 included net loss from continuing operations of$2.9 million and income from discontinued operations of$13.6 million related to the sale of the recruitment and talent management businesses. - Adjusted EBITDA (Non-GAAP measure)* loss of
$1.8 million compared to adjusted EBITDA loss of$2.2 million in the first quarter of 2018. - Reduced shares outstanding by approximately 8%.
“The Asia Pacific region once again led with the strongest performance while results in
* The Company provides Non-GAAP measures as a supplement to financial results based on accounting principles generally accepted in
Regional Highlights
The divested businesses are treated as discontinued operations, therefore the discussion below is focused on the continuing operations of the RPO business for all periods presented. Prior period EBITDA and Adjusted EBITDA may not be comparable due to regional support and infrastructure cost allocation treatment between continuing and discontinued operations following the divestitures.
In the first quarter of 2019,
Liquidity and Capital Resources
The Company ended the first quarter of 2019 with
Share Repurchase Program
The Company has a common stock share repurchase authorization in place of
In addition, as previously announced, the company completed a tender offer in March for 2.5 million shares of the Company's common stock for an aggregate cost of
Corporate Costs
Immediately following the closing of the divestitures at the end of the first quarter of 2018, management reviewed the company's corporate costs on a line-by-line basis. The company believes the run rate for corporate costs in 2019 should be approximately
Corporate costs in the first quarter of 2019 were higher than expected due to one-time expenses related to audit and legal matters.
Business Outlook
With respect to forward-looking non-GAAP measures, a reconciliation of the non-GAAP measures to the corresponding GAAP measures is not available without unreasonable efforts due to the variability, complexity and low visibility of the non-cash and other items described below that we exclude from the non-GAAP outlook measures. The variability of these items is likely to have a significant impact on our future GAAP financial results.
For 2019, the company continues to expect to grow revenue and gross profit more than 10 percent versus 2018, and adjusted EBITDA before corporate costs should grow faster than this rate. This combination of growth in its RPO business and reduction in corporate costs should enable the company to generate positive adjusted EBITDA in 2019.
Conference Call/Webcast
Hudson will conduct a conference call today at
If you wish to join the conference call, please use the dial-in information below:
- Toll-
Fee Dial -In Number: (877) 497-1434 - International Dial-In Number: (929) 387-3951
- Conference ID #: 7595319
The archived call will be available on the investor information section of the Company's web site at hudsonrpo.com.
About Hudson RPO
For more information, please visit us at hudsonrpo.com or contact us at ir@hudsonrpo.com.
Forward-Looking Statements
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 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 important factors, risks, uncertainties and assumptions, including industry and economic conditions that could cause actual results to differ materially from those described in the forward-looking statements. Such factors, risks, uncertainties and assumptions include, but are not limited to, Hudson Global’s ability to achieve anticipated benefits from the sales of its recruitment and talent management operations in
| HUDSON GLOBAL, INC. | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
| (in thousands, except per share amounts) | ||||||||
| (unaudited) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2019 | 2018 | |||||||
| Revenue | $ | 16,187 | $ | 16,215 | ||||
| Direct costs | 6,791 | 6,061 | ||||||
| Gross profit | 9,396 | 10,154 | ||||||
| Operating expenses: | ||||||||
| Salaries and related | 9,172 | 10,359 | ||||||
| Other selling, general and administrative | 2,188 | 2,453 | ||||||
| Depreciation and amortization | 18 | — | ||||||
| Total operating expenses | 11,378 | 12,812 | ||||||
| Operating loss | (1,982 | ) | (2,658 | ) | ||||
| Non-operating income (expense): | ||||||||
| Interest income, net | 313 | — | ||||||
| Other expense, net | (37 | ) | (67 | ) | ||||
| Loss from continuing operation before provision for income taxes | (1,706 | ) | (2,725 | ) | ||||
| Provision for income taxes from continuing operations | 65 | 172 | ||||||
| Loss from continuing operations | (1,771 | ) | (2,897 | ) | ||||
| (Loss) income from discontinued operations, net of income taxes | (131 | ) | 13,618 | |||||
| Net (loss) income | $ | (1,902 | ) | $ | 10,721 | |||
| Basic and diluted earnings (loss) per share: | ||||||||
| Basic and diluted loss per share from continuing operations | $ | (0.05 | ) | $ | (0.09 | ) | ||
| Basic and diluted earnings per share from discontinued operations | — | 0.42 | ||||||
| Basic and diluted (loss) earnings per share | $ | (0.06 | ) | $ | 0.33 | |||
| Weighted-average shares outstanding: | ||||||||
| Basic | 32,877 | 32,146 | ||||||
| Diluted | 32,877 | 32,146 | ||||||
-
| HUDSON GLOBAL, INC. | ||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| (in thousands) | ||||||||
| (unaudited) | ||||||||
| March 31, 2019 |
December 31, 2018 |
|||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 30,266 | $ | 40,562 | ||||
| Accounts receivable, less allowance for doubtful accounts of $93 and $41, respectively | 12,587 | 9,893 | ||||||
| Prepaid and other | 1,173 | 671 | ||||||
| Current assets of discontinued operations | — | 941 | ||||||
| Total current assets | 44,026 | 52,067 | ||||||
| Property and equipment, net | 184 | 170 | ||||||
| Operating lease right-of-use assets | 639 | — | ||||||
| Deferred tax assets, non-current | 620 | 583 | ||||||
| Restricted cash, non-current | 377 | 352 | ||||||
| Other assets, non-current | 7 | 7 | ||||||
| Total assets | $ | 45,853 | $ | 53,179 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 983 | $ | 1,461 | ||||
| Accrued expenses and other current liabilities | 7,205 | 8,984 | ||||||
| Operating lease obligations, current | 297 | — | ||||||
| Current liabilities of discontinued operations | 23 | 115 | ||||||
| Total current liabilities | 8,508 | 10,560 | ||||||
| Income tax payable, non-current | 2,036 | 1,982 | ||||||
| Operating lease obligations, non-current | 342 | — | ||||||
| Other non-current liabilities | 151 | 150 | ||||||
| Total liabilities | 11,037 | 12,692 | ||||||
| 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; 36,217 and 36,135 shares issued; 29,389 and 31,905 shares outstanding, respectively |
36 | 36 | ||||||
| Additional paid-in capital | 485,279 | 485,095 | ||||||
| Accumulated deficit | (437,454 | ) | (435,552 | ) | ||||
| Accumulated other comprehensive loss | (541 | ) | (606 | ) | ||||
| Treasury stock, 6,828 and 4,230 shares, respectively, at cost | (12,504 | ) | (8,486 | ) | ||||
| Total stockholders’ equity | 34,816 | 40,487 | ||||||
| Total liabilities and stockholders' equity | $ | 45,853 | $ | 53,179 | ||||
| HUDSON GLOBAL, INC. | ||||||||||||||||||||
| SEGMENT ANALYSIS - QUARTER TO DATE | ||||||||||||||||||||
| Reconciliation of Non-GAAP Financial Measures | ||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||
| For The Three Months Ended March 31, 2019 | Hudson Asia Pacific |
Hudson Americas |
Hudson Europe |
Corporate | Total | |||||||||||||||
| Revenue, from external customers | $ | 8,679 | $ | 3,140 | $ | 4,368 | $ | — | $ | 16,187 | ||||||||||
| Gross profit, from external customers | $ | 4,590 | $ | 2,762 | $ | 2,044 | $ | — | $ | 9,396 | ||||||||||
| Net loss | $ | (1,902 | ) | |||||||||||||||||
| Loss from discontinued operations, net of income taxes | (131 | ) | ||||||||||||||||||
| Loss from continuing operations | (1,771 | ) | ||||||||||||||||||
| Provision for income taxes | 65 | |||||||||||||||||||
| Interest income, net | (313 | ) | ||||||||||||||||||
| Depreciation and amortization | 18 | |||||||||||||||||||
| EBITDA (loss) (1) | $ | (48 | ) | $ | (414 | ) | $ | (348 | ) | $ | (1,191 | ) | (2,001 | ) | ||||||
| Non-operating expense (income), including corporate administration charges | 214 | 123 | 152 | (452 | ) | 37 | ||||||||||||||
| Stock-based compensation expense | 21 | 13 | 1 | 149 | 184 | |||||||||||||||
| Adjusted EBITDA (loss) (1) | $ | 187 | $ | (278 | ) | $ | (195 | ) | $ | (1,494 | ) | $ | (1,780 | ) | ||||||
| For The Three Months Ended March 31, 2018 | Hudson Asia Pacific |
Hudson Americas |
Hudson Europe |
Corporate | Total | |||||||||||||||
| Revenue, from external customers | $ | 8,825 | $ | 3,700 | $ | 3,690 | $ | — | $ | 16,215 | ||||||||||
| Gross profit, from external customers | $ | 4,923 | $ | 3,126 | $ | 2,105 | $ | — | $ | 10,154 | ||||||||||
| Net income | $ | 10,721 | ||||||||||||||||||
| Income from discontinued operations, net of income taxes | 13,618 | |||||||||||||||||||
| Loss from continuing operations | (2,897 | ) | ||||||||||||||||||
| Provision for income taxes | 172 | |||||||||||||||||||
| Interest expense (income), net | — | |||||||||||||||||||
| Depreciation and amortization | — | |||||||||||||||||||
| EBITDA (loss) (1) | $ | 544 | $ | 291 | $ | 11 | $ | (3,571 | ) | (2,725 | ) | |||||||||
| Non-operating expense (income), including corporate administration charges | 75 | 52 | 41 | (100 | ) | 68 | ||||||||||||||
| Stock-based compensation expense | 4 | 27 | — | 432 | 463 | |||||||||||||||
| Adjusted EBITDA (loss) (1) | $ | 623 | $ | 370 | $ | 52 | $ | (3,239 | ) | $ | (2,194 | ) | ||||||||
- Non-GAAP earnings before interest, income taxes, and depreciation and amortization (“EBITDA”) and non-GAAP earnings before interest, income taxes, depreciation and amortization, non-operating income, goodwill and other impairment charges, business reorganization expenses, stock-based compensation expense and other expenses (“Adjusted 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. However, EBITDA and adjusted EBITDA are not measures of financial performance under GAAP and should not be considered in isolation or as a substitute for net income, operating income, cash flows from operating activities, and other income or cash flow statement data prepared in accordance with GAAP or as a measure of the Company's profitability or liquidity. Furthermore, EBITDA and adjusted EBITDA as presented above may not be comparable with similarly titled measures reported by other companies.
| HUDSON GLOBAL, INC. | ||||||||||||||||||||
| SEGMENT ANALYSIS - QUARTER TO DATE (continued) | ||||||||||||||||||||
| Reconciliation of Non-GAAP Financial Measures | ||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||
| For The Three Months Ended December 31, 2018 | Hudson Asia Pacific |
Hudson Americas |
Hudson Europe |
Corporate | Total | |||||||||||||||
| Revenue, from external customers | $ | 9,215 | $ | 3,124 | $ | 4,236 | $ | — | $ | 16,575 | ||||||||||
| Gross profit, from external customers | $ | 5,513 | $ | 2,686 | $ | 2,069 | $ | — | $ | 10,268 | ||||||||||
| Net loss | $ | (620 | ) | |||||||||||||||||
| Loss from discontinued operations, net of income taxes | (427 | ) | ||||||||||||||||||
| Loss from continuing operations | (193 | ) | ||||||||||||||||||
| Benefit from income taxes | (294 | ) | ||||||||||||||||||
| Interest income, net | (136 | ) | ||||||||||||||||||
| Depreciation and amortization | 13 | |||||||||||||||||||
| EBITDA (loss) (1) | $ | 705 | $ | 137 | $ | (265 | ) | $ | (1,187 | ) | (610 | ) | ||||||||
| Non-operating expense (income), including corporate administration charges | 220 | 91 | (1 | ) | (246 | ) | 64 | |||||||||||||
| Stock-based compensation expense | 21 | 13 | (9 | ) | 184 | 209 | ||||||||||||||
| Adjusted EBITDA (loss) (1) | $ | 946 | $ | 241 | $ | (275 | ) | $ | (1,249 | ) | $ | (337 | ) | |||||||
| For The Three Months Ended June 30, 2018 | Hudson Asia Pacific |
Hudson Americas |
Hudson Europe |
Corporate | Total | |||||||||||||||
| Revenue, from external customers | $ | 9,600 | $ | 3,509 | $ | 3,906 | $ | — | $ | 17,015 | ||||||||||
| Gross profit, from external customers | $ | 5,759 | $ | 2,923 | $ | 2,119 | $ | — | $ | 10,801 | ||||||||||
| Net loss | $ | (1,364 | ) | |||||||||||||||||
| Loss from discontinued operations, net of income taxes | (11 | ) | ||||||||||||||||||
| Loss from continuing operations | (1,353 | ) | ||||||||||||||||||
| Provision for income taxes | 109 | |||||||||||||||||||
| Interest income, net | (60 | ) | ||||||||||||||||||
| Depreciation and amortization | 2 | |||||||||||||||||||
| EBITDA (loss) (1) | $ | 508 | $ | (76 | ) | $ | 34 | $ | (1,768 | ) | (1,302 | ) | ||||||||
| Non-operating expense (income), including corporate administration charges | 345 | 208 | 148 | (656 | ) | 45 | ||||||||||||||
| Stock-based compensation expense | 9 | 16 | 6 | 149 | 180 | |||||||||||||||
| Adjusted EBITDA (loss) (1) | $ | 862 | $ | 148 | $ | 188 | $ | (2,275 | ) | $ | (1,077 | ) | ||||||||
- Non-GAAP earnings before interest, income taxes, and depreciation and amortization (“EBITDA”) and non-GAAP earnings before interest, income taxes, depreciation and amortization, non-operating income, goodwill and other impairment charges, business reorganization expenses, stock-based compensation expense and other expenses (“Adjusted 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. However, EBITDA and adjusted EBITDA are not measures of financial performance under GAAP and should not be considered in isolation or as a substitute for net income, operating income, cash flows from operating activities, and other income or cash flow statement data prepared in accordance with GAAP or as a measure of the Company's profitability or liquidity. Furthermore, EBITDA and adjusted EBITDA as presented above may not be comparable with similarly titled measures reported by other companies.
RECONCILIATION FOR CONSTANT CURRENCY
(in thousands) (unaudited)
The Company operates on a global basis, with the majority of its gross profit generated outside of
| Three Months Ended March 31, | |||||||||||||||
| 2019 | 2018 | ||||||||||||||
| As | As | Currency | Constant | ||||||||||||
| reported | reported | translation | currency | ||||||||||||
| Revenue: | |||||||||||||||
| Hudson Asia Pacific | $ | 8,679 | $ | 8,825 | $ | (1,134 | ) | $ | 7,691 | ||||||
| Hudson Americas | 3,140 | 3,700 | (7 | ) | 3,693 | ||||||||||
| Hudson Europe | 4,368 | 3,690 | (247 | ) | 3,443 | ||||||||||
| Total | $ | 16,187 | $ | 16,215 | $ | (1,388 | ) | $ | 14,827 | ||||||
| Gross profit: | |||||||||||||||
| Hudson Asia Pacific | $ | 4,590 | $ | 4,923 | $ | (452 | ) | $ | 4,471 | ||||||
| Hudson Americas | 2,762 | 3,126 | (7 | ) | 3,119 | ||||||||||
| Hudson Europe | 2,044 | 2,105 | (62 | ) | 2,043 | ||||||||||
| Total | $ | 9,396 | $ | 10,154 | $ | (521 | ) | $ | 9,633 | ||||||
| SG&A (1): | |||||||||||||||
| Hudson Asia Pacific | $ | 4,396 | $ | 4,303 | $ | (449 | ) | $ | 3,854 | ||||||
| Hudson Americas | 3,089 | 2,781 | (8 | ) | 2,773 | ||||||||||
| Hudson Europe | 2,239 | 2,056 | (81 | ) | 1,975 | ||||||||||
| Corporate | 1,636 | 3,672 | — | 3,672 | |||||||||||
| Total | $ | 11,360 | $ | 12,812 | $ | (538 | ) | $ | 12,274 | ||||||
| Operating income (loss): | |||||||||||||||
| Hudson Asia Pacific | $ | 160 | $ | 620 | $ | — | $ | 620 | |||||||
| Hudson Americas | (297 | ) | 343 | — | 343 | ||||||||||
| Hudson Europe | (202 | ) | 52 | 20 | 72 | ||||||||||
| Corporate | (1,643 | ) | (3,673 | ) | (1 | ) | (3,674 | ) | |||||||
| Total | $ | (1,982 | ) | $ | (2,658 | ) | $ | 19 | $ | (2,639 | ) | ||||
| EBITDA (loss): | |||||||||||||||
| Hudson Asia Pacific | $ | (48 | ) | $ | 544 | $ | 8 | $ | 552 | ||||||
| Hudson Americas | (414 | ) | 291 | — | 291 | ||||||||||
| Hudson Europe | (348 | ) | 11 | 22 | 33 | ||||||||||
| Corporate | (1,191 | ) | (3,571 | ) | (2 | ) | (3,573 | ) | |||||||
| Total | $ | (2,001 | ) | $ | (2,725 | ) | $ | 28 | $ | (2,697 | ) | ||||
- SG&A is a measure that management uses to evaluate the segments’ expenses and includes salaries and related costs and other selling, general and administrative costs.
| Contact: | ir@hudsonrpo.com |
