Hudson Global Reports 2020 First Quarter Results
2020 First Quarter Summary
- Revenue of
$24.1 million increased 49.1% from the first quarter of 2019 and 55.2% in constant currency. - Adjusted net revenue of
$9.8 million increased 4.3% from the first quarter of 2019 and 7.8% in constant currency. - Net loss improved to
$0.5 million , or$0.17 per basic and diluted share, from a net loss of$1.9 million , or$0.58 per basic and diluted share, for the first quarter of 2019. Adjusted net loss per diluted share (Non-GAAP measure)* of$(0.08) improved from$(0.50) in the first quarter of 2019. - Adjusted EBITDA (Non-GAAP measure)* loss improved to
$0.1 million from an adjusted EBITDA loss of$1.5 million in the first quarter of 2019. - Share count reduced by 16% since
December 31, 2018 . - Total cash including restricted cash was
$26.5 million atMarch 31, 2020 .
“In the first quarter, we reported solid year on year growth despite starting to experience the economic impact of the COVID-19 pandemic in March,” said
* The Company provides Non-GAAP measures as a supplement to financial results based on accounting principles generally accepted in
Regional Highlights
In the first quarter of 2020,
Corporate Costs
In the first quarter of 2020, the Company's corporate costs were
Liquidity and Capital Resources
The Company ended the first quarter of 2020 with
Share Repurchase Program
Under its
In addition, the Company completed a tender offer in
On
COVID-19 Update
As disclosed in the Company's press releases issued on
The Company is vigilantly monitoring the situation surrounding COVID-19 and will continue to proactively address this situation as it evolves. Due to the flexibility of its workforce and the actions it is taking, the Company is confident it can continue to efficiently manage its business and mitigate risks in this challenging environment, while retaining the ability to meet clients' needs when activity improves.
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: (866) 220-5784 - International Dial-In Number: (615) 622-8063
- Conference ID #: 4471797
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.
Investor Relations:
The Equity Group
212 836-9611 / lcati@equityny.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, global economic fluctuations; the adverse impacts of the recent coronavirus, or COVID-19 outbreak; the Company’s ability to successfully achieve its strategic initiatives; risks related to the Company’s large cash balance relative to its market capitalization as a small public company; risks related to potential acquisitions or dispositions of businesses by the Company; the Company’s ability to retain and recruit qualified management and/or advisors; the Company’s ability to operate successfully as a company focused on its RPO business; risks related to fluctuations in the Company's operating results from quarter to quarter; the ability of clients to terminate their relationship with the Company at any time; competition in the Company's markets; the negative cash flows and operating losses that may recur in the future; risks relating to how future credit facilities may affect or restrict our operating flexibility; risks associated with the Company's investment strategy; risks related to international operations, including foreign currency fluctuations, political events, natural disasters or health crises, including the ongoing COVID-19 outbreak; the Company's dependence on key management personnel; the Company's ability to attract and retain highly skilled professionals; the Company's ability to collect accounts receivable; the Company’s ability to maintain costs at an acceptable level; the Company's heavy reliance on information systems and the impact of potentially losing or failing to develop technology; risks related to providing uninterrupted service to clients; the Company's exposure to employment-related claims from clients, employers and regulatory authorities, current and former employees in connection with the Company’s business reorganization initiatives, and limits on related insurance coverage; the Company’s ability to utilize net operating loss carry-forwards; volatility of the Company's stock price; the impact of government regulations; and restrictions imposed by blocking arrangements. Additional information concerning these, and other factors is contained in the Company's filings with the
Financial Tables Follow
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
| (in thousands, except per share amounts) | ||||||||
| (unaudited) | ||||||||
| Three Months Ended |
||||||||
| 2020 | 2019 | |||||||
| Revenue | $ | 24,131 | $ | 16,187 | ||||
| Operating expenses: | ||||||||
| Direct contracting costs and reimbursed expenses |
14,333 | 6,791 | ||||||
| Salaries and related | 8,217 | 9,172 | ||||||
| Other selling, general and administrative | 2,081 | 2,188 | ||||||
| Depreciation and amortization | 24 | 18 | ||||||
| Total operating expenses | 24,655 | 18,169 | ||||||
| Operating loss | (524 | ) | (1,982 | ) | ||||
| Non-operating income (expense): | ||||||||
| Interest income, net | 79 | 313 | ||||||
| Other income (expense), net | 41 | (37 | ) | |||||
| Loss from continuing operation before provision for income taxes | (404 | ) | (1,706 | ) | ||||
| Provision for income taxes from continuing operations | 107 | 65 | ||||||
| Loss from continuing operations | (511 | ) | (1,771 | ) | ||||
| Loss from discontinued operations, net of income taxes | — | (131 | ) | |||||
| Net loss | $ | (511 | ) | $ | (1,902 | ) | ||
| Basic and diluted loss per share:(a) | ||||||||
| Basic and diluted loss per share from continuing operations | $ | (0.17 | ) | $ | (0.54 | ) | ||
| Basic and diluted loss per share from discontinued operations | — | (0.04 | ) | |||||
| Basic and diluted loss per share | $ | (0.17 | ) | $ | (0.58 | ) | ||
| Weighted-average shares outstanding:(a) | ||||||||
| Basic | 3,065 | 3,288 | ||||||
| Diluted | 3,065 | 3,288 | ||||||
(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
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| (in thousands, except per share amounts) | ||||||||
| (unaudited) | ||||||||
2020 |
2019 |
|||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 26,127 | $ | 31,190 | ||||
| Accounts receivable, less allowance for doubtful accounts of |
12,778 | 12,795 | ||||||
| Restricted cash, current | 146 | 148 | ||||||
| Prepaid and other | 846 | 804 | ||||||
| Total current assets | 39,897 | 44,937 | ||||||
| Property and equipment, net | 164 | 186 | ||||||
| Operating lease right-of-use assets | 391 | 401 | ||||||
| Deferred tax assets | 626 | 793 | ||||||
| Restricted cash | 227 | 380 | ||||||
| Other assets | 7 | 7 | ||||||
| Total assets | $ | 41,312 | $ | 46,704 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 697 | $ | 1,064 | ||||
| Accrued expenses and other current liabilities | 6,607 | 8,178 | ||||||
| Operating lease obligations, current | 267 | 246 | ||||||
| Total current liabilities | 7,571 | 9,488 | ||||||
| Income tax payable | 819 | 845 | ||||||
| Operating lease obligations | 129 | 160 | ||||||
| Other liabilities | 163 | 177 | ||||||
| Total liabilities | 8,682 | 10,670 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, |
— | — | ||||||
| Common stock, 3,663 shares issued; 2,682 and 2,936 shares outstanding, respectively |
4 | 4 | ||||||
| Additional paid-in capital | 486,232 | 486,088 | ||||||
| Accumulated deficit | (437,018 | ) | (436,507 | ) | ||||
| Accumulated other comprehensive loss, net of applicable tax | (1,266 | ) | (479 | ) | ||||
| (15,322 | ) | (13,072 | ) | |||||
| Total stockholders’ equity | 32,630 | 36,034 | ||||||
| Total liabilities and stockholders' equity | $ | 41,312 | $ | 46,704 | ||||
| SEGMENT ANALYSIS - QUARTER TO DATE (continued) | ||||||||||||||||||||
| Reconciliation of Non-GAAP Financial Measures | ||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||
| For The Three Months Ended |
Corporate | Total | ||||||||||||||||||
| Revenue, from external customers | $ | 16,951 | $ | 3,188 | $ | 3,992 | $ | — | $ | 24,131 | ||||||||||
| Adjusted net revenue, from external customers (1) | $ | 4,511 | $ | 2,860 | $ | 2,427 | $ | — | $ | 9,798 | ||||||||||
| Net loss | $ | (511 | ) | |||||||||||||||||
| Loss from discontinued operations, net of income taxes | — | |||||||||||||||||||
| Loss from continuing operations | (511 | ) | ||||||||||||||||||
| Provision from income taxes | 107 | |||||||||||||||||||
| Interest income, net | (79 | ) | ||||||||||||||||||
| Depreciation and amortization | 24 | |||||||||||||||||||
| EBITDA (loss) (2) | $ | 337 | $ | (60 | ) | $ | 63 | $ | (799 | ) | (459 | ) | ||||||||
| Non-operating expense (income), including corporate administration charges | 190 | 137 | 1 | (369 | ) | (41 | ) | |||||||||||||
| Stock-based compensation expense | 24 | 6 | 2 | 112 | 144 | |||||||||||||||
| Non-recurring items | — | — | — | 278 | 278 | |||||||||||||||
| Adjusted EBITDA (loss) (2) | $ | 551 | $ | 83 | $ | 66 | $ | (778 | ) | $ | (78 | ) | ||||||||
| For The Three Months Ended |
Corporate | Total | ||||||||||||||||||
| Revenue, from external customers | $ | 8,679 | $ | 3,140 | $ | 4,368 | $ | — | $ | 16,187 | ||||||||||
| Adjusted net revenue, from external customers (1) | $ | 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) (2) | $ | (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 | |||||||||||||||
| Non-recurring items | — | — | — | 266 | 266 | |||||||||||||||
| Adjusted EBITDA (loss) (2) | $ | 187 | $ | (278 | ) | $ | (195 | ) | $ | (1,228 | ) | $ | (1,514 | ) | ||||||
| (1) | Represents Revenue less the Direct contracting costs and reimbursed expenses caption on the Condensed Consolidated Statements of Operations. | |
| (2) | 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, stock-based compensation expense, and other items such as non-recurring severance and professional fees. (“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. EBITDA and adjusted 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, EBITDA and adjusted EBITDA as presented above may not be comparable with similarly titled measures reported by other companies. |
RECONCILIATION FOR CONSTANT CURRENCY AND ADJUSTED EPS
(in thousands) (unaudited)
The Company operates on a global basis, with the majority of its revenue generated outside of
| Three Months Ended |
|||||||||||||||
| 2020 | 2019 | ||||||||||||||
| As | As | Currency | Constant | ||||||||||||
| reported | reported | translation | currency | ||||||||||||
| Revenue: | |||||||||||||||
| $ | 16,951 | $ | 8,679 | $ | (560 | ) | $ | 8,119 | |||||||
| 3,188 | 3,140 | (3 | ) | 3,137 | |||||||||||
| 3,992 | 4,368 | (77 | ) | 4,291 | |||||||||||
| Total | $ | 24,131 | $ | 16,187 | $ | (640 | ) | $ | 15,547 | ||||||
| Adjusted net revenue(1) | |||||||||||||||
| $ | 4,511 | $ | 4,590 | $ | (274 | ) | $ | 4,316 | |||||||
| 2,860 | 2,762 | 1 | 2,763 | ||||||||||||
| 2,427 | 2,044 | (33 | ) | 2,011 | |||||||||||
| Total | $ | 9,798 | $ | 9,396 | $ | (306 | ) | $ | 9,090 | ||||||
| SG&A:(2) | |||||||||||||||
| $ | 3,991 | $ | 4,396 | $ | (265 | ) | $ | 4,131 | |||||||
| 2,783 | 3,089 | 2 | 3,091 | ||||||||||||
| 2,357 | 2,239 | (32 | ) | 2,207 | |||||||||||
| Corporate | 1,167 | 1,636 | — | 1,636 | |||||||||||
| Total | $ | 10,298 | $ | 11,360 | $ | (295 | ) | $ | 11,065 | ||||||
| Operating income (loss): | |||||||||||||||
| $ | 514 | $ | 160 | $ | (8 | ) | $ | 152 | |||||||
| 72 | (297 | ) | (1 | ) | (298 | ) | |||||||||
| 59 | (202 | ) | (4 | ) | (206 | ) | |||||||||
| Corporate | (1,169 | ) | (1,643 | ) | — | (1,643 | ) | ||||||||
| Total | $ | (524 | ) | $ | (1,982 | ) | $ | (13 | ) | $ | (1,995 | ) | |||
| EBITDA (loss): | |||||||||||||||
| $ | 337 | $ | (48 | ) | $ | 12 | $ | (36 | ) | ||||||
| (60 | ) | (414 | ) | — | (414 | ) | |||||||||
| 63 | (348 | ) | 2 | (346 | ) | ||||||||||
| Corporate | (799 | ) | (1,191 | ) | — | (1,191 | ) | ||||||||
| Total | $ | (459 | ) | $ | (2,001 | ) | $ | 14 | $ | (1,987 | ) | ||||
| (1) | Represents Revenue less the Direct contracting costs and reimbursed expenses caption on the Condensed Consolidated Statements of Operations. | |
| (2) | 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. |
| Three Months Ended | ||||||||
| Net loss per diluted share | $ | (0.17 | ) | $ | (0.58 | ) | ||
| Add: Non-recurring items per diluted share (after-tax) | 0.09 | 0.08 | ||||||
| Adjusted net loss per diluted share (1) | $ | (0.08 | ) | $ | (0.50 | ) | ||
| (1) | Adjusted net loss per diluted share is a non-GAAP measure defined as reported net loss per diluted share before items such as non-recurring severance and professional fees after tax that is 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 net loss per diluted share should not be considered in isolation or as a substitute for net loss per share 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. Further, Adjusted net loss per diluted share as presented above may not be comparable with similarly titled measures reported by other companies. |
Source: Hudson Global, Inc.