Hudson Global Reports 2020 Third Quarter Results
2020 Third Quarter Summary
- Revenue of
$25.4 million decreased 1.4% from the third quarter of 2019 and 4.7% in constant currency. - Adjusted net revenue of
$9.1 million decreased 20.4% from the third quarter of 2019 and 22.6% in constant currency. - Net loss was
$1.2 million , or$0.41 per basic and diluted share, compared to net income of$0.4 million , or$0.12 per basic and diluted share, for the third quarter of 2019. Adjusted net loss per diluted share (Non-GAAP measure)* was$0.38 compared to adjusted net income per diluted share of$0.13 in the third quarter of 2019. - Adjusted EBITDA (Non-GAAP measure)* loss was
$0.7 million compared to adjusted EBITDA of$0.8 million in the third quarter of 2019. - Total cash including restricted cash was
$29.7 million atSeptember 30, 2020 .
“Our business in the third quarter of 2020 continued to be impacted by the challenging macroeconomic environment caused by COVID-19,” said
* The Company provides Non-GAAP measures as a supplement to financial results based on accounting principles generally accepted in
Regional Highlights
All growth rate comparisons are in constant currency.
In the third quarter of 2020,
Corporate Costs
In the third quarter of 2020, the Company's corporate costs were
Liquidity and Capital Resources
The Company ended the third quarter of 2020 with
Share Repurchase Program
Through 2019 and 2020 year-to-date, the Company reduced its share count by 16% and continues to view share repurchases as an attractive use of capital. Under its
COVID-19 Update
As disclosed in previously issued Company press releases as well as in our 2019 Form 10-K and first and second quarter 2020 Form 10-Qs, our business has been adversely impacted by the COVID-19 outbreak and the accompanying economic downturn. This downturn, as well as the uncertainty regarding the duration, spread and intensity of the outbreak, led to an initial reduction in demand for our services in the first three quarters of 2020. Some of our customers have instituted hiring freezes, while other customers that are more capable of working remotely have been allowed to operate somewhat as usual. The expected timeline for this reduction in demand for our services remains uncertain and difficult to predict considering the rapidly evolving landscape but we are beginning to see signs of positive momentum at certain clients.
The Company is vigilantly monitoring the business environment surrounding COVID-19 and continues to proactively address this situation as it evolves. The Company is confident that it can continue to take appropriate actions to manage the business in this challenging environment due to the flexibility of its workforce and the strength of its balance sheet.
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 #: 9879465
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 September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||
| Revenue | $ | 25,413 | $ | 25,762 | $ | 74,117 | $ | 68,363 | ||||||||
| Operating expenses: | ||||||||||||||||
| Direct contracting costs and reimbursed expenses |
16,343 | 14,366 | 46,319 | 35,912 | ||||||||||||
| Salaries and related | 8,098 | 8,857 | 24,650 | 27,758 | ||||||||||||
| Other selling, general and administrative | 2,049 | 2,022 | 5,584 | 6,911 | ||||||||||||
| Depreciation and amortization | 25 | 23 | 73 | 62 | ||||||||||||
| Total operating expenses | 26,515 | 25,268 | 76,626 | 70,643 | ||||||||||||
| Operating (loss) income | (1,102 | ) | 494 | (2,509 | ) | (2,280 | ) | |||||||||
| Non-operating income (expense): | ||||||||||||||||
| Interest income, net | 14 | 88 | 133 | 526 | ||||||||||||
| Other income (expense), net | 96 | (87 | ) | 474 | (215 | ) | ||||||||||
| (Loss) income from continuing operation before provision for income taxes | (992 | ) | 495 | (1,902 | ) | (1,969 | ) | |||||||||
| Provision for income taxes from continuing operations | 165 | 149 | 538 | 356 | ||||||||||||
| (Loss) income from continuing operations | (1,157 | ) | 346 | (2,440 | ) | (2,325 | ) | |||||||||
| (Loss) income from discontinued operations, net of income taxes | — | 18 | — | (113 | ) | |||||||||||
| Net (loss) income | $ | (1,157 | ) | $ | 364 | $ | (2,440 | ) | $ | (2,438 | ) | |||||
| Basic and diluted loss per share: | ||||||||||||||||
| (Loss) earnings per share from continuing operations | $ | (0.41 | ) | $ | 0.11 | $ | (0.84 | ) | $ | (0.74 | ) | |||||
| (Loss) earnings per share from discontinued operations | — | 0.01 | — | (0.04 | ) | |||||||||||
| (Loss) earnings per share | $ | (0.41 | ) | $ | 0.12 | $ | (0.84 | ) | $ | (0.77 | ) | |||||
| Weighted-average shares outstanding: | ||||||||||||||||
| Basic | 2,858 | 3,082 | 2,920 | 3,150 | ||||||||||||
| Diluted | 2,858 | 3,118 | 2,920 | 3,150 | ||||||||||||
| CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| (in thousands, except per share amounts) | ||||||||
| (unaudited) | ||||||||
2020 |
2019 |
|||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 29,345 | $ | 31,190 | ||||
| Accounts receivable, less allowance for doubtful accounts of |
11,916 | 12,795 | ||||||
| Restricted cash, current | 154 | 148 | ||||||
| Prepaid and other | 1,213 | 804 | ||||||
| Total current assets | 42,628 | 44,937 | ||||||
| Property and equipment, net | 132 | 186 | ||||||
| Operating lease right-of-use assets | 269 | 401 | ||||||
| Deferred tax assets | 725 | 793 | ||||||
| Restricted cash | 234 | 380 | ||||||
| Other assets | 7 | 7 | ||||||
| Total assets | $ | 43,995 | $ | 46,704 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 392 | $ | 1,064 | ||||
| Accrued expenses and other current liabilities | 8,920 | 8,178 | ||||||
| Short-term debt | 810 | — | ||||||
| Operating lease obligations, current | 230 | 246 | ||||||
| Total current liabilities | 10,352 | 9,488 | ||||||
| Income tax payable | 859 | 845 | ||||||
| Operating lease obligations | 43 | 160 | ||||||
| Long-term debt | 516 | — | ||||||
| Other liabilities | 167 | 177 | ||||||
| Total liabilities | 11,937 | 10,670 | ||||||
| Commitments and contingencies | ||||||||
| Stockholders’ equity: | ||||||||
| Preferred stock, |
— | — | ||||||
| Common stock, 3,663 shares issued; 2,685 and 2,936 shares outstanding, respectively |
4 | 4 | ||||||
| Additional paid-in capital | 486,659 | 486,088 | ||||||
| Accumulated deficit | (438,947 | ) | (436,507 | ) | ||||
| Accumulated other comprehensive loss, net of applicable tax | (333 | ) | (479 | ) | ||||
| (15,325 | ) | (13,072 | ) | |||||
| Total stockholders’ equity | 32,058 | 36,034 | ||||||
| Total liabilities and stockholders' equity | $ | 43,995 | $ | 46,704 | ||||
| SEGMENT ANALYSIS - QUARTER TO DATE (continued) | ||||||||||||||||||||
| RECONCILIATION OF ADJUSTED EBITDA | ||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||
| For The Three Months Ended |
Pacific |
Corporate | Total | |||||||||||||||||
| Revenue, from external customers | $ | 19,877 | $ | 1,934 | $ | 3,602 | $ | — | $ | 25,413 | ||||||||||
| Adjusted net revenue, from external customers (1) | $ | 5,002 | $ | 1,678 | $ | 2,390 | $ | — | $ | 9,070 | ||||||||||
| Net loss | $ | (1,157 | ) | |||||||||||||||||
| Provision from income taxes | 165 | |||||||||||||||||||
| Interest income, net | (14 | ) | ||||||||||||||||||
| Depreciation and amortization | 25 | |||||||||||||||||||
| EBITDA (loss) (2) | $ | 517 | $ | (789 | ) | $ | (40 | ) | $ | (669 | ) | (981 | ) | |||||||
| Non-operating expense (income), including corporate administration charges | 415 | 26 | 88 | (625 | ) | (96 | ) | |||||||||||||
| Stock-based compensation expense | 11 | — | 1 | 322 | 334 | |||||||||||||||
| Non-recurring severance and professional fees | — | 1 | — | 81 | 82 | |||||||||||||||
| Adjusted EBITDA (loss) (2) | $ | 943 | $ | (762 | ) | $ | 49 | $ | (891 | ) | $ | (661 | ) | |||||||
| For The Three Months Ended |
Pacific |
Corporate | Total | |||||||||||||||||
| Revenue, from external customers | $ | 17,436 | $ | 3,510 | $ | 4,816 | $ | — | $ | 25,762 | ||||||||||
| Adjusted net revenue, from external customers (1) | $ | 5,574 | $ | 3,205 | $ | 2,617 | $ | — | $ | 11,396 | ||||||||||
| Net income | $ | 364 | ||||||||||||||||||
| Income from discontinued operations, net of income taxes | 18 | |||||||||||||||||||
| Income from continuing operations | 346 | |||||||||||||||||||
| Provision for income taxes | 149 | |||||||||||||||||||
| Interest income, net | (88 | ) | ||||||||||||||||||
| Depreciation and amortization | 23 | |||||||||||||||||||
| EBITDA (loss) (2) | $ | 821 | $ | 3 | $ | 178 | $ | (572 | ) | 430 | ||||||||||
| Non-operating expense (income), including corporate administration charges | 267 | 161 | 144 | (485 | ) | 87 | ||||||||||||||
| Stock-based compensation expense | 22 | (3 | ) | (9 | ) | 192 | 202 | |||||||||||||
| Non-recurring severance and professional fees | — | — | — | 37 | 37 | |||||||||||||||
| Adjusted EBITDA (loss) (2) | $ | 1,110 | $ | 161 | $ | 313 | $ | (828 | ) | $ | 756 | |||||||||
| (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, business reorganization expenses, stock-based compensation expense, and other non-recurring 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. 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. |
| SEGMENT ANALYSIS - YEAR TO DATE (continued) | ||||||||||||||||||||
| RECONCILIATION OF ADJUSTED EBITDA | ||||||||||||||||||||
| (in thousands) | ||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||
| For The Nine Months Ended |
Pacific |
Corporate | Total | |||||||||||||||||
| Revenue, from external customers | $ | 55,661 | $ | 7,328 | $ | 11,128 | $ | — | $ | 74,117 | ||||||||||
| Adjusted net revenue, from external customers (1) | $ | 14,331 | $ | 6,431 | $ | 7,036 | $ | — | $ | 27,798 | ||||||||||
| Net loss | $ | (2,440 | ) | |||||||||||||||||
| Provision from income taxes | 538 | |||||||||||||||||||
| Interest income, net | (133 | ) | ||||||||||||||||||
| Depreciation and amortization | 73 | |||||||||||||||||||
| EBITDA (loss) (2) | $ | 1,879 | $ | (1,767 | ) | $ | 323 | $ | (2,397 | ) | (1,962 | ) | ||||||||
| Non-operating expense (income), including corporate administration charges | 519 | 186 | (120 | ) | (1,059 | ) | (474 | ) | ||||||||||||
| Stock-based compensation expense | 49 | (4 | ) | 5 | 521 | 571 | ||||||||||||||
| Non-recurring severance and professional fees | — | 319 | — | 440 | 759 | |||||||||||||||
| Adjusted EBITDA (loss) (2) | $ | 2,447 | $ | (1,266 | ) | $ | 208 | $ | (2,495 | ) | $ | (1,106 | ) | |||||||
| For The Nine Months Ended |
Pacific |
Corporate | Total | |||||||||||||||||
| Revenue, from external customers | $ | 43,569 | $ | 10,632 | $ | 14,162 | $ | — | $ | 68,363 | ||||||||||
| Adjusted net revenue, from external customers (1) | $ | 15,584 | $ | 9,558 | $ | 7,309 | $ | — | $ | 32,451 | ||||||||||
| Net loss | $ | (2,438 | ) | |||||||||||||||||
| Loss from discontinued operations, net of income taxes | (113 | ) | ||||||||||||||||||
| Loss from continuing operations | (2,325 | ) | ||||||||||||||||||
| Provision for income taxes | 356 | |||||||||||||||||||
| Interest income, net | (526 | ) | ||||||||||||||||||
| Depreciation and amortization | 62 | |||||||||||||||||||
| EBITDA (loss) (2) | $ | 1,135 | $ | 17 | $ | (139 | ) | $ | (3,446 | ) | (2,433 | ) | ||||||||
| Non-operating expense (income), including corporate administration charges | 810 | 449 | 407 | (1,451 | ) | 215 | ||||||||||||||
| Stock-based compensation expense | 80 | 20 | 5 | 706 | 811 | |||||||||||||||
| Non-recurring severance and professional fees | — | — | — | 975 | 975 | |||||||||||||||
| Adjusted EBITDA (loss) (2) | $ | 2,025 | $ | 486 | $ | 273 | $ | (3,216 | ) | $ | (432 | ) | ||||||||
| (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, business reorganization expenses, stock-based compensation expense, and other non-recurring 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. 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 OF
(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: | |||||||||||||||
| $ | 19,877 | $ | 17,436 | $ | 677 | $ | 18,113 | ||||||||
| 1,934 | 3,510 | (2 | ) | 3,508 | |||||||||||
| 3,602 | 4,816 | 238 | 5,054 | ||||||||||||
| Total | $ | 25,413 | $ | 25,762 | $ | 913 | $ | 26,675 | |||||||
| Adjusted net revenue (1) | |||||||||||||||
| $ | 5,002 | $ | 5,574 | $ | 196 | $ | 5,770 | ||||||||
| 1,678 | 3,205 | (6 | ) | 3,199 | |||||||||||
| 2,390 | 2,617 | 131 | 2,748 | ||||||||||||
| Total | $ | 9,070 | $ | 11,396 | $ | 321 | $ | 11,717 | |||||||
| SG&A:(2) | |||||||||||||||
| $ | 4,070 | $ | 4,477 | $ | 161 | $ | 4,638 | ||||||||
| 2,537 | 3,052 | (3 | ) | 3,049 | |||||||||||
| 2,245 | 2,295 | 115 | 2,410 | ||||||||||||
| Corporate | 1,295 | 1,055 | (2 | ) | 1,053 | ||||||||||
| Total | $ | 10,147 | $ | 10,879 | $ | 271 | $ | 11,150 | |||||||
| Operating income (loss): | |||||||||||||||
| $ | 919 | $ | 1,075 | $ | 33 | $ | 1,108 | ||||||||
| (767 | ) | 160 | — | 160 | |||||||||||
| 42 | 316 | 17 | 333 | ||||||||||||
| Corporate | (1,296 | ) | (1,057 | ) | 2 | (1,055 | ) | ||||||||
| Total | $ | (1,102 | ) | $ | 494 | $ | 52 | $ | 546 | ||||||
| EBITDA (loss): | |||||||||||||||
| $ | 517 | $ | 821 | $ | 21 | $ | 842 | ||||||||
| (789 | ) | 3 | — | 3 | |||||||||||
| (40 | ) | 178 | 9 | 187 | |||||||||||
| Corporate | (669 | ) | (572 | ) | (1 | ) | (573 | ) | |||||||
| Total | $ | (981 | ) | $ | 430 | $ | 29 | $ | 459 | ||||||
| (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. |
RECONCILIATION OF ADJUSTED NET LOSS PER DILUTED SHARE
(in thousands, except per share amounts)
(unaudited)
| Adjusted | Diluted Shares | Per Diluted | |||||||||
| For The Three Months Ended |
Net Loss | Outstanding | Share | ||||||||
| Net loss | $ | (1,157 | ) | 2,858 | $ | (0.41 | ) | ||||
| Add: Non-recurring items (after-tax) | 82 | 2,858 | 0.03 | ||||||||
| Adjusted net loss (1) | $ | (1,075 | ) | 2,858 | $ | (0.38 | ) | ||||
| Adjusted | Diluted Shares | Per Diluted | |||||||||
| For The Three Months Ended |
Net Income | Outstanding | Share | ||||||||
| Net income | $ | 364 | 3,118 | $ | 0.12 | ||||||
| Add: Non-recurring items (after-tax) | 37 | 3,118 | 0.01 | ||||||||
| Adjusted net income (1) | $ | 401 | 3,118 | $ | 0.13 | ||||||
| (1) | Adjusted net income or loss and adjusted net income or loss per diluted share are Non-GAAP measures defined as reported net income or loss and reported net income or loss per diluted share before items such as non-recurring severance and professional fees after tax that are presented to provide additional information about the company's operations on a basis consistent with the measures that 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 income or loss and adjusted net income or loss per diluted share should not be considered in isolation or as substitutes for net income or loss and net income or loss per share and other income or cash flow statement data prepared in accordance with generally accepted accounting principles or as measures of the company's profitability or liquidity. Further, Adjusted net income or loss and adjusted net income or loss per diluted share as presented above may not be comparable with similarly titled measures reported by other companies. |
Source: Hudson Global, Inc.