Hudson Global Reports 2019 Second Quarter Results
2019 Second Quarter Summary
- Revenue of
$26.4 million increased 55.2% from the second quarter of 2018 and increased 59.7% in constant currency. - Gross profit of
$11.7 million increased 7.9% from the second quarter of 2018 and increased 13.2% in constant currency. - Net loss of
$0.9 million , or$0.29 per basic and diluted share, compared to net loss of$1.4 million , or$0.42 per basic and diluted share, for the second quarter of 2018. - Adjusted EBITDA (Non-GAAP measure)* loss narrowed to
$0.3 million from an adjusted EBITDA loss of$1.1 million in the second quarter of 2018. Q2 2019 Adjusted EBITDA included$0.7 million of non-recurring expenses compared to$0.6 million in Q2 2018.
"In the second quarter, we reported double-digit revenue growth across all three regions and double-digit gross profit growth in our
Mr. Eberwein continued, "Earlier this year, market experts ranked Hudson RPO among the very top RPO providers in the
* The Company provides Non-GAAP measures as a supplement to financial results based on accounting principles generally accepted in
(1) https://www.hudsonrpo.com/newsroom/hro-today-bakers-dozen-apac/
Regional Highlights
In the second quarter of 2019,
Liquidity and Capital Resources
The Company ended the second quarter of 2019 with
In April, the Company finalized a new credit facility with
Share Repurchase Program
Under its
In addition, the Company completed a tender offer in
Corporate Costs
In early 2018, management reviewed the Company's corporate costs on a line-by-line basis and began to right-size these costs to the new business model. The Company believes the run rate for corporate costs in 2019 should be approximately
In the second quarter of 2019, the Company's corporate costs of
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 growth in revenues and gross profit of at least 10% versus 2018, and adjusted EBITDA before corporate costs should grow at a faster rate. As corporate costs continue to decline in the second half of 2019 and our business continues to grow, the Company expects to generate positive adjusted EBITDA in the second half of 2019 as well as full year 2019 excluding non-recurring items.
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 #: 3046646
The archived call will be available on the investor information section of the Company's web site at hudsonrpo.com.
About
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 June 30, | Six Months Ended June 30, | |||||||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||||||
| Revenue | $ | 26,414 | $ | 17,015 | $ | 42,601 | $ | 33,230 | ||||||||
| Direct costs | 14,755 | 6,214 | 21,546 | 12,275 | ||||||||||||
| Gross profit | 11,659 | 10,801 | 21,055 | 20,955 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Salaries and related | 9,729 | 9,303 | 18,901 | 19,662 | ||||||||||||
| Other selling, general and administrative | 2,701 | 2,755 | 4,889 | 5,208 | ||||||||||||
| Depreciation and amortization | 21 | 2 | 39 | 2 | ||||||||||||
| Total operating expenses | 12,451 | 12,060 | 23,829 | 24,872 | ||||||||||||
| Operating loss | (792 | ) | (1,259 | ) | (2,774 | ) | (3,917 | ) | ||||||||
| Non-operating income (expense): | ||||||||||||||||
| Interest income, net | 125 | 60 | 438 | 60 | ||||||||||||
| Other expense, net | (91 | ) | (45 | ) | (128 | ) | (112 | ) | ||||||||
| Loss from continuing operation before provision for income taxes | (758 | ) | (1,244 | ) | (2,464 | ) | (3,969 | ) | ||||||||
| Provision for income taxes from continuing operations | 142 | 109 | 207 | 281 | ||||||||||||
| Loss from continuing operations | (900 | ) | (1,353 | ) | (2,671 | ) | (4,250 | ) | ||||||||
| (Loss) income from discontinued operations, net of income taxes | — | (11 | ) | (131 | ) | 13,607 | ||||||||||
| Net (loss) income | $ | (900 | ) | $ | (1,364 | ) | $ | (2,802 | ) | $ | 9,357 | |||||
| Basic and diluted (loss) earnings per share:(a) | ||||||||||||||||
| Basic and diluted loss per share from continuing operations | $ | (0.29 | ) | $ | (0.42 | ) | $ | (0.84 | ) | $ | (1.32 | ) | ||||
| Basic and diluted (loss) earnings per share from discontinued operations | — | — | (0.04 | ) | 4.22 | |||||||||||
| Basic and diluted (loss) earnings per share | $ | (0.29 | ) | $ | (0.42 | ) | $ | (0.88 | ) | $ | 2.90 | |||||
| Weighted-average shares outstanding:(a) | ||||||||||||||||
| Basic | 3,082 | 3,228 | 3,184 | 3,221 | ||||||||||||
| Diluted | 3,082 | 3,228 | 3,184 | 3,221 | ||||||||||||
| (a) Earnings per share and weighted average shares outstanding for all periods presented reflect the Company's 1-for-10 reverse stock split, which was effective June 10, 2019. | ||||||||||||||||
| HUDSON GLOBAL, INC. | ||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| (in thousands, except per share amounts) | ||||||||
| (unaudited) | ||||||||
| June 30, 2019 |
December 31, 2018 |
|||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 28,543 | $ | 40,562 | ||||
| Accounts receivable, less allowance for doubtful accounts of $84 and $41, respectively | 14,382 | 9,893 | ||||||
| Prepaid and other | 1,338 | 671 | ||||||
| Current assets of discontinued operations | — | 941 | ||||||
| Total current assets | 44,263 | 52,067 | ||||||
| Property and equipment, net | 217 | 170 | ||||||
| Operating lease right-of-use assets | 542 | — | ||||||
| Deferred tax assets, non-current | 725 | 583 | ||||||
| Restricted cash, non-current | 379 | 352 | ||||||
| Other assets, non-current | 7 | 7 | ||||||
| Total assets | $ | 46,133 | $ | 53,179 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 1,022 | $ | 1,461 | ||||
| Accrued expenses and other current liabilities | 8,298 | 8,984 | ||||||
| Operating lease obligations, current | 260 | — | ||||||
| Current liabilities of discontinued operations | 23 | 115 | ||||||
| Total current liabilities | 9,603 | 10,560 | ||||||
| Income tax payable, non-current | 2,084 | 1,982 | ||||||
| Operating lease obligations, non-current | 277 | — | ||||||
| Other non-current liabilities | 168 | 150 | ||||||
| Total liabilities | 12,132 | 12,692 | ||||||
| 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, 20,000 and 10,000 shares authorized; 3,658 and 3,613 shares issued; 2,960 and 3,190 shares outstanding, respectively (a) | 4 | 4 | ||||||
| Additional paid-in capital | 485,736 | 485,127 | ||||||
| Accumulated deficit | (438,354 | ) | (435,552 | ) | ||||
| Accumulated other comprehensive loss, net of applicable tax | (647 | ) | (606 | ) | ||||
| Treasury stock, 698 and 423 shares, respectively, at cost (a) | (12,738 | ) | (8,486 | ) | ||||
| Total stockholders’ equity | 34,001 | 40,487 | ||||||
| Total liabilities and stockholders' equity | $ | 46,133 | $ | 53,179 | ||||
| (a) Common stock and Treasury stock for all periods presented reflect the Company's 1-for-10 reverse stock split, which was effective June 10, 2019. | ||||||||
| HUDSON GLOBAL, INC. | ||||||||||||||||||||
| SEGMENT ANALYSIS - QUARTER TO DATE (continued) | ||||||||||||||||||||
| Reconciliation of Non-GAAP Financial Measures | ||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||
| For The Three Months Ended June 30, 2019 | Asia Pacific | Americas | Europe | Corporate | Total | |||||||||||||||
| Revenue, from external customers | $ | 17,454 | $ | 3,982 | $ | 4,978 | $ | — | $ | 26,414 | ||||||||||
| Gross profit, from external customers | $ | 5,420 | $ | 3,591 | $ | 2,648 | $ | — | $ | 11,659 | ||||||||||
| Net loss | $ | (900 | ) | |||||||||||||||||
| Loss from discontinued operations, net of income taxes | — | |||||||||||||||||||
| Loss from continuing operations | (900 | ) | ||||||||||||||||||
| Provision from income taxes | 142 | |||||||||||||||||||
| Interest income, net | (125 | ) | ||||||||||||||||||
| Depreciation and amortization | 21 | |||||||||||||||||||
| EBITDA (loss) (1) | $ | 362 | $ | 428 | $ | 31 | $ | (1,683 | ) | (862 | ) | |||||||||
| Non-operating expense (income), including corporate administration charges | 329 | 165 | 111 | (514 | ) | 91 | ||||||||||||||
| Stock-based compensation expense | 37 | 10 | 13 | 365 | 425 | |||||||||||||||
| Adjusted EBITDA (loss) (1) | $ | 728 | $ | 603 | $ | 155 | $ | (1,832 | ) | $ | (346 | ) | ||||||||
| For The Three Months Ended June 30, 2018 | Asia Pacific | Americas | 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 | ) | ||||||||
| (1) 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 March 31, 2019 | Asia Pacific | Americas | 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 from 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 September 30, 2018 | Asia Pacific | Americas | Europe | Corporate | Total | |||||||||||||||
| Revenue, from external customers | $ | 9,306 | $ | 3,590 | $ | 4,231 | $ | — | $ | 17,127 | ||||||||||
| Gross profit, from external customers | $ | 5,741 | $ | 2,990 | $ | 2,150 | $ | — | $ | 10,881 | ||||||||||
| Net loss | $ | (870 | ) | |||||||||||||||||
| Loss from discontinued operations, net of income taxes | (47 | ) | ||||||||||||||||||
| Loss from continuing operations | (823 | ) | ||||||||||||||||||
| Provision for income taxes | 112 | |||||||||||||||||||
| Interest income, net | (102 | ) | ||||||||||||||||||
| Depreciation and amortization | 1 | |||||||||||||||||||
| EBITDA (loss) (1) | $ | 460 | $ | 87 | $ | (226 | ) | $ | (1,133 | ) | (812 | ) | ||||||||
| Non-operating expense (income), including corporate administration charges | 248 | 213 | 175 | (564 | ) | 72 | ||||||||||||||
| Stock-based compensation expense | 17 | 23 | 12 | 404 | 456 | |||||||||||||||
| Adjusted EBITDA (loss) (1) | $ | 725 | $ | 323 | $ | (39 | ) | $ | (1,293 | ) | $ | (284 | ) | |||||||
| (1) 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 Six Months Ended June 30, 2019 | Asia Pacific | Americas | Europe | Corporate | Total | |||||||||||||||
| Revenue, from external customers | $ | 26,133 | $ | 7,122 | $ | 9,346 | $ | — | $ | 42,601 | ||||||||||
| Gross profit, from external customers | $ | 10,010 | $ | 6,353 | $ | 4,692 | $ | — | $ | 21,055 | ||||||||||
| Net loss | $ | (2,802 | ) | |||||||||||||||||
| Loss from discontinued operations, net of income taxes | (131 | ) | ||||||||||||||||||
| Loss from continuing operations | (2,671 | ) | ||||||||||||||||||
| Provision from income taxes | 207 | |||||||||||||||||||
| Interest income, net | (438 | ) | ||||||||||||||||||
| Depreciation and amortization | 39 | |||||||||||||||||||
| EBITDA (loss) (1) | $ | 314 | $ | 14 | $ | (317 | ) | $ | (2,874 | ) | (2,863 | ) | ||||||||
| Non-operating expense (income), including corporate administration charges | 543 | 288 | 263 | (966 | ) | 128 | ||||||||||||||
| Stock-based compensation expense | 58 | 23 | 14 | 514 | 609 | |||||||||||||||
| Adjusted EBITDA (loss) (1) | $ | 915 | $ | 325 | $ | (40 | ) | $ | (3,326 | ) | $ | (2,126 | ) | |||||||
| For The Six Months Ended June 30, 2018 | Asia Pacific | Americas | Europe | Corporate | Total | |||||||||||||||
| Revenue, from external customers | $ | 18,425 | $ | 7,209 | $ | 7,596 | $ | — | $ | 33,230 | ||||||||||
| Gross profit, from external customers | $ | 10,682 | $ | 6,046 | $ | 4,227 | $ | — | $ | 20,955 | ||||||||||
| Net Income | $ | 9,357 | ||||||||||||||||||
| Income from discontinued operations, net of income taxes | 13,607 | |||||||||||||||||||
| Loss from continuing operations | (4,250 | ) | ||||||||||||||||||
| Provision for income taxes | 281 | |||||||||||||||||||
| Interest income, net | (60 | ) | ||||||||||||||||||
| Depreciation and amortization | 2 | |||||||||||||||||||
| EBITDA (loss) (1) | $ | 1,052 | $ | 215 | $ | 45 | $ | (5,339 | ) | (4,027 | ) | |||||||||
| Non-operating expense (income), including corporate administration charges | 422 | 260 | 189 | (759 | ) | 112 | ||||||||||||||
| Stock-based compensation expense | 12 | 43 | 6 | 580 | 641 | |||||||||||||||
| Adjusted EBITDA (loss) (1) | $ | 1,486 | $ | 518 | $ | 240 | $ | (5,518 | ) | $ | (3,274 | ) | ||||||||
| (1) 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 June 30, | |||||||||||||||
| 2019 | 2018 | ||||||||||||||
| As | As | Currency | Constant | ||||||||||||
| reported | reported | translation | currency | ||||||||||||
| Revenue: | |||||||||||||||
| Asia Pacific | $ | 17,454 | $ | 9,600 | $ | (270 | ) | $ | 9,330 | ||||||
| Americas | 3,982 | 3,509 | (8 | ) | 3,501 | ||||||||||
| Europe | 4,978 | 3,906 | (201 | ) | 3,705 | ||||||||||
| Total | $ | 26,414 | $ | 17,015 | $ | (479 | ) | $ | 16,536 | ||||||
| Gross profit: | |||||||||||||||
| Asia Pacific | $ | 5,420 | $ | 5,759 | $ | (310 | ) | $ | 5,449 | ||||||
| Americas | 3,591 | 2,923 | (7 | ) | 2,916 | ||||||||||
| Europe | 2,648 | 2,119 | (187 | ) | 1,932 | ||||||||||
| Total | $ | 11,659 | $ | 10,801 | $ | (504 | ) | $ | 10,297 | ||||||
| SG&A:(1) | |||||||||||||||
| Asia Pacific | $ | 4,695 | $ | 4,906 | $ | (229 | ) | $ | 4,677 | ||||||
| Americas | 3,022 | 2,791 | (7 | ) | 2,784 | ||||||||||
| Europe | 2,509 | 1,936 | (158 | ) | 1,778 | ||||||||||
| Corporate | 2,204 | 2,427 | (3 | ) | 2,424 | ||||||||||
| Total | $ | 12,430 | $ | 12,060 | $ | (397 | ) | $ | 11,663 | ||||||
| Operating income (loss): | |||||||||||||||
| Asia Pacific | $ | 683 | $ | 853 | $ | (85 | ) | $ | 768 | ||||||
| Americas | 590 | 132 | — | 132 | |||||||||||
| Europe | 136 | 180 | (30 | ) | 150 | ||||||||||
| Corporate | (2,201 | ) | (2,424 | ) | — | (2,424 | ) | ||||||||
| Total | $ | (792 | ) | $ | (1,259 | ) | $ | (115 | ) | $ | (1,374 | ) | |||
| EBITDA (loss): | |||||||||||||||
| Asia Pacific | $ | 362 | $ | 508 | $ | (62 | ) | $ | 446 | ||||||
| Americas | 428 | (76 | ) | 1 | (75 | ) | |||||||||
| Europe | 31 | 34 | (17 | ) | 17 | ||||||||||
| Corporate | (1,683 | ) | (1,768 | ) | (3 | ) | (1,771 | ) | |||||||
| Total | $ | (862 | ) | $ | (1,302 | ) | $ | (81 | ) | $ | (1,383 | ) | |||
| (1) 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. | |||||||||||||||
Source: Hudson Global, Inc.