UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 27, 2014
HUDSON GLOBAL, INC.
(Exact name of registrant as specified in charter)
Delaware | 000-50129 | 59-3547281 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||
560 Lexington Avenue
New York, NY 10022
(Address of Principal Executive Offices)
Registrant's telephone number, including area code (212) 351-7300
N/A
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c) |
ITEM 2.02. | RESULTS OF OPERATIONS AND FINANCIAL CONDITION. |
On February 27, 2014, Hudson Global, Inc. issued a press release announcing its financial results for the full year and three months ended December 31, 2013. A copy of such press release is furnished as Exhibit 99.1 to this Current Report.
Included in Exhibit 99.1 are references to “liquidity.” The company believes that this non-GAAP measure provides investors useful information about its combined available cash and borrowing capacity.
ITEM 9.01. | FINANCIAL STATEMENTS AND EXHIBITS. |
(a) Financial Statements.
None.
(b) Pro Forma Financial Information.
None.
(c) Shell Company Transactions
None.
(d) Exhibits
99.1 Press Release of Hudson Global, Inc. issued on February 27, 2014.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.
HUDSON GLOBAL, INC. (Registrant) | ||
By: | /s/ STEPHEN A. NOLAN | |
Stephen A. Nolan | ||
Executive Vice President and Chief Financial Officer | ||
Date: | February 27, 2014 | |
Hudson Global, Inc.
Current Report on Form 8-K
Exhibit Index
Exhibit Number | Description | |
99.1 | Press Release of Hudson Global, Inc. issued on February 27, 2014. | |
Exhibit 99.1
For Immediate Release | Contact: | David F. Kirby | ||
Hudson | ||||
212-351-7216 | ||||
david.kirby@hudson.com | ||||
Hudson Global Reports 2013 Fourth Quarter and Full-Year Results
NEW YORK, NY - February 27, 2014 - Hudson Global, Inc. (Nasdaq: HSON), a leading global talent solutions company, today announced financial results for the fourth quarter and full-year ended December 31, 2013.
2013 Fourth Quarter Summary
• | Revenue of $159.5 million, a decrease of 13.4 percent from the fourth quarter of 2012, or 11.9 percent in constant currency. Sequentially, from the third quarter of 2013 to the fourth quarter of 2013, revenue was down 2.5 percent or 4.4 percent in constant currency, as compared with a decline of 1.9 percent for the same period in 2012. |
• | Gross margin of $56.9 million or 35.7 percent of revenue, a decrease of 15.0 percent from the same period in 2012, or 13.8 percent in constant currency. Sequentially, gross margin increased 2.0 percent or 0.1 percent in constant currency, as compared with a decrease of 1.1 percent for the same period in 2012. |
• | Adjusted EBITDA* loss of $2.0 million, compared with adjusted EBITDA of $3.2 million in the fourth quarter of 2012. Sequentially, adjusted EBITDA improved by 31.3 percent or 33.2 percent in constant currency. Fourth quarter adjusted EBITDA included $0.8 million of costs related to the leadership change in Hudson Europe. |
• | Restructuring charges of $2.8 million, asset impairments of $1.3 million and other income of $0.3 million in the fourth quarter of 2013. |
• | EBITDA* loss of $5.8 million, compared with EBITDA of $3.5 million in the fourth quarter of 2012. |
• | Net loss of $11.3 million, or $0.35 per basic and diluted share, compared with net loss of $0.3 million, or $0.01 per basic and diluted share, for the fourth quarter of 2012. |
2013 Full-Year Summary
• | Revenue of $660.1 million, a decrease of 15.1 percent from 2012, or 13.7 percent in constant currency. |
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• | Gross margin of $229.9 million, or 34.8 percent of revenue, a decrease of 19.3 percent from 2012, or 18.3 percent in constant currency. |
• | Adjusted EBITDA* loss of $12.3 million, compared with adjusted EBITDA of $7.5 million in 2012. |
• | Restructuring charges of $6.7 million, asset impairments of $1.3 million and other income of $0.7 million in 2013. |
• | EBITDA* loss of $19.6 million in 2013, compared with EBITDA of $0.1 million in 2012. |
• | Net loss of $30.4 million, or $0.94 per basic and diluted share, compared with net loss of $5.3 million, or $0.17 per basic and diluted share, in 2012. |
* EBITDA and adjusted EBITDA are defined in the segment tables at the end of this release.
“We closed out 2013 with sequential gross margin growth in our business in the fourth quarter, a leadership team strengthened with experienced executives from the industry, and an emphasis on disciplined execution in both our front office and back office,” said Manolo Marquez, chairman and chief executive officer at Hudson. “Our focus in 2014 will be driving top-line growth through selective investments in key opportunity areas and recapturing positive trajectory in our earnings profile.”
Stephen Nolan, chief financial officer at Hudson said, “Given the progress we have made on the cost structure over the past two years and the positive momentum we are experiencing in some of our business units and markets, we expect to show further traction in 2014. We intend to keep a sharp eye on costs, continue to maintain a strong liquidity position and ensure that we strengthen the operating rigor we have established in recent months.”
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Regional Highlights
Americas
In the fourth quarter, Hudson Americas' gross margin decreased 14 percent sequentially as compared with the third quarter of 2013 and 17 percent as compared with the fourth quarter in 2012. This was primarily due to reduced project demand in Legal eDiscovery. Recruitment Process Outsourcing (RPO) gross margin in the fourth quarter recorded an increase of approximately 29 percent as compared with the fourth quarter in 2012, as business development efforts earlier in the year resulted in the initiation of several new client relationships in the quarter. Adjusted EBITDA declined to $1.1 million or 3.8 percent of revenue for the fourth quarter, compared with $1.4 million or 3.5 percent of revenue for the same period a year ago.
Hudson Americas' gross margin in 2013 decreased 21 percent from 2012. Contracting gross margin declined by 21 percent, primarily attributable to Legal eDiscovery, and permanent recruitment gross margin dropped by 20 percent. Despite growth in the fourth quarter, RPO gross margin declined by 13 percent in 2013 following 26 percent growth in 2012. The decline was primarily driven by the loss of a large client following its acquisition in 2012. Aggressive cost actions and reductions in support staff drove SG&A and headcount down in 2013 by 20 percent and 18 percent, respectively. The efforts to reduce SG&A offset approximately 86 percent of the gross margin decline. As a result, adjusted EBITDA was $3.6 million, or 2.6 percent of revenue, compared with $4.9 million, or 2.9 percent of revenue, in 2012.
Asia Pacific
Hudson Asia Pacific gross margin declined 19 percent in constant currency in the fourth quarter of 2013 from the same period in 2012. Sequentially, gross margin declined 7 percent in the seasonally slower fourth quarter as compared with the third quarter of 2013, against a 12 percent sequential decline in the fourth quarter of 2012. A 24 percent year-over-year decline in permanent recruitment gross margin accounted for over 80 percent of the overall gross margin drop, driven by softer demand in the IT and industrial sectors. Asia Pacific delivered an adjusted EBITDA loss of $1.3 million, or 2.3 percent of revenue, down from adjusted EBITDA of $2.3 million, or 3.7 percent of revenue in the fourth quarter of 2012.
Hudson Asia Pacific's gross margin in 2013 decreased 23 percent in constant currency compared with 2012, impacted by difficult economic conditions and increasingly subdued hiring activity, amidst concern over slowing economic growth in China. Mining and related industries, including manufacturing, were particularly affected, accounting for over 50 percent of the decline in gross margin. In response to these challenging conditions, the company took steps to rebalance its portfolio and streamline its operating structure. These actions to reduce costs resulted in an SG&A decline of 12 percent and headcount decline of 6 percent in 2013 from 2012. Our effort to reduce SG&A offset 48 percent of the decline in gross margin. Adjusted EBITDA loss was $1.4 million, or 0.6 percent of revenue, down from adjusted EBITDA of $12.9 million in 2012 or 4.5 percent of revenue.
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Europe
During the fourth quarter of 2013, Hudson Europe gross margin increased 11 percent in constant currency sequentially from the third quarter 2013, compared with an 8 percent sequential increase in fourth quarter 2012. The sequential growth was driven by 23 percent growth in Continental Europe on strength in Talent Management in Belgium and France. As compared with the fourth quarter of 2012, gross margin decreased 9 percent in constant currency. Temporary recruitment gross margin declined 15 percent, driven by reduced demand in the Legal sector in the U.K. Permanent recruitment gross margin declined 3 percent, driven by reduced demand in France and Belgium. Adjusted EBITDA of $1.1 million, or 1.5 percent of revenue, was down from $3.5 million, or 4.2 percent of revenue in the fourth quarter of 2012.
Hudson Europe's gross margin decreased 13 percent in 2013 in constant currency compared with 2012. Temporary contracting gross margin decreased 11 percent in constant currency, driven by declines in the UK on weaker results from the higher margin Legal eDiscovery practice. Temporary contracting gross margin decreased to 16.8 percent of revenue from 17.5 percent in 2012. Permanent recruitment gross margin declined 13 percent in 2013 compared with 2012, as a result of reduced client demand in the U.K., particularly in the Legal and IT sectors, and in France in the Industrial sector. SG&A decreased by 9 percent and headcount by 11 percent in 2013 from 2012. Our effort to reduce SG&A offset 62 percent of the decline in gross margin. Adjusted EBITDA of $1.5 million, or 0.5 percent of revenue, was down from $8.0 million, or 2.5 percent of revenue in 2012.
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Liquidity and Capital Resources
The company ended the fourth quarter of 2013 with $67.2 million in liquidity, composed of $37.4 million in cash and $29.8 million in availability under its credit facilities. This compares with $38.7 million in cash and $41.7 million in availability under its credit facilities at the end of 2012. The company generated $4.1 million in cash flow from operations during the quarter and $2.5 million in cash flow from operations for the year of 2013. The company had $0.5 million in outstanding borrowings at the end of the fourth quarter of 2013.
Business Outlook
Given current economic conditions, business trends, a continuing focus on costs and focused investments in the consultant population in certain markets to drive future top-line growth, the company expects first quarter 2014 revenue of between $145 million and $155 million and adjusted EBITDA of between negative $2.5 million and negative $4.5 million. In the first quarter of 2013, revenue was $165.7 million and adjusted EBITDA was a loss of $4.9 million.
Conference Call/Webcast
Hudson will conduct a conference call today at 10:00 a.m. ET to discuss this announcement. Individuals wishing to listen can access the webcast on the investor information section of the company's web site at Hudson.com.
The archived call will be available on the investor information section of the company's web site at Hudson.com.
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About Hudson
Hudson is a global talent solutions company with expertise in leadership and specialized recruitment, contracting solutions, recruitment process outsourcing, talent management and eDiscovery. We help our clients and candidates succeed by leveraging our expertise, deep industry and market knowledge, and proprietary assessment tools and techniques. Operating in 20 countries through relationships with millions of specialized professionals, we bring an unparalleled ability to match talent with opportunities by assessing, recruiting, developing and engaging the best and brightest people for our clients. We combine broad geographic presence, world-class talent solutions and a tailored, consultative approach to help businesses and professionals achieve higher performance and outstanding results. More information is available at Hudson.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 company's ability to execute its strategic initiatives, 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 the company has experienced from time to time, restrictions on the company’s operating flexibility due to the terms of its credit facilities, risks associated with the company’s investment strategy, risks related to international operations, including foreign currency fluctuations, 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 its accounts receivable, the company’s ability to achieve anticipated cost savings through the company’s cost reduction initiatives, 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 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 Securities and Exchange Commission. These forward-looking statements speak only as of the date of this document. The company assumes no obligation, and expressly disclaims any obligation, to update any forward-looking statements, whether as a result of new information, future events or otherwise.
###
Financial Tables Follow
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HUDSON GLOBAL, INC. | |||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||
(in thousands, except per share amounts) | |||||||||||||||
(unaudited) | |||||||||||||||
Three Months Ended | Year Ended | ||||||||||||||
December 31, | December 31, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Revenue | $ | 159,504 | $ | 184,276 | $ | 660,128 | $ | 777,577 | |||||||
Direct costs | 102,608 | 117,352 | 430,256 | 492,710 | |||||||||||
Gross margin | 56,896 | 66,924 | 229,872 | 284,867 | |||||||||||
Operating expenses: | |||||||||||||||
Selling, general and administrative expenses | 58,876 | 63,774 | 242,162 | 277,402 | |||||||||||
Depreciation and amortization | 1,573 | 1,650 | 6,406 | 6,438 | |||||||||||
Business reorganization expenses | 2,762 | 231 | 6,721 | 7,782 | |||||||||||
Office integration expense and (gains) on disposal of business | — | (558 | ) | 6 | (117 | ) | |||||||||
Impairment of long-lived assets | 1,336 | — | 1,336 | — | |||||||||||
Total operating expenses | 64,547 | 65,097 | 256,631 | 291,505 | |||||||||||
Operating income (loss) | (7,651 | ) | 1,827 | (26,759 | ) | (6,638 | ) | ||||||||
Non-operating income (expense): | |||||||||||||||
Interest income (expense), net | (138 | ) | (124 | ) | (596 | ) | (635 | ) | |||||||
Other income (expense), net | 281 | 40 | 753 | 254 | |||||||||||
Income (loss) before provision for income taxes | (7,508 | ) | 1,743 | (26,602 | ) | (7,019 | ) | ||||||||
Provision for (benefit from) income taxes | 3,788 | 2,086 | 3,793 | (1,684 | ) | ||||||||||
Net income (loss) | $ | (11,296 | ) | $ | (343 | ) | $ | (30,395 | ) | $ | (5,335 | ) | |||
Earnings (loss) per share: | |||||||||||||||
Basic | $ | (0.35 | ) | $ | (0.01 | ) | $ | (0.94 | ) | $ | (0.17 | ) | |||
Diluted | $ | (0.35 | ) | $ | (0.01 | ) | $ | (0.94 | ) | $ | (0.17 | ) | |||
Weighted-average shares outstanding: | |||||||||||||||
Basic | 32,600 | 32,169 | 32,493 | 32,060 | |||||||||||
Diluted | 32,600 | 32,169 | 32,493 | 32,060 | |||||||||||
Note: Certain prior year amounts have been reclassified to conform to the current period presentation.
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HUDSON GLOBAL, INC. | |||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | |||||||
(in thousands, except per share amounts) | |||||||
(unaudited) | |||||||
December 31, 2013 | December 31, 2012 | ||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 37,378 | $ | 38,653 | |||
Accounts receivable, less allowance for doubtful accounts of $1,108 and $1,167, respectively | 85,901 | 107,216 | |||||
Prepaid and other | 8,762 | 11,543 | |||||
Total current assets | 132,041 | 157,412 | |||||
Property and equipment, net | 13,822 | 20,050 | |||||
Deferred tax assets, non-current | 7,124 | 9,816 | |||||
Other assets | 5,842 | 6,190 | |||||
Total assets | $ | 158,829 | $ | 193,468 | |||
LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 9,747 | $ | 9,292 | |||
Accrued expenses and other current liabilities | 54,722 | 55,960 | |||||
Short-term borrowings | 476 | — | |||||
Accrued business reorganization expenses | 3,810 | 1,916 | |||||
Total current liabilities | 68,755 | 67,168 | |||||
Other non-current liabilities | 5,697 | 7,853 | |||||
Deferred rent and tenant improvement contributions | 6,120 | 8,061 | |||||
Income tax payable, non-current | 3,872 | 3,845 | |||||
Total liabilities | 84,444 | 86,927 | |||||
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; issued 33,543 and 33,100 shares, respectively | 34 | 33 | |||||
Additional paid-in capital | 475,461 | 473,372 | |||||
Accumulated deficit | (417,422 | ) | (387,027 | ) | |||
Accumulated other comprehensive income | 17,173 | 20,536 | |||||
Treasury stock, 211 and 79 shares, respectively, at cost | (861 | ) | (373 | ) | |||
Total stockholders’ equity | 74,385 | 106,541 | |||||
Total liabilities and stockholders' equity | $ | 158,829 | $ | 193,468 | |||
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HUDSON GLOBAL, INC. | ||||||||||||||||||||
SEGMENT ANALYSIS - QUARTER TO DATE | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
For The Three Months Ended December 31, 2013 | Hudson Americas | Hudson Asia Pacific | Hudson Europe | Corporate | Total | |||||||||||||||
Revenue, from external customers | $ | 29,612 | $ | 55,404 | $ | 74,488 | $ | — | $ | 159,504 | ||||||||||
Gross margin, from external customers | $ | 7,781 | $ | 20,045 | $ | 29,070 | $ | — | $ | 56,896 | ||||||||||
Adjusted EBITDA (loss) (1) | $ | 1,133 | $ | (1,271 | ) | $ | 1,081 | $ | (2,924 | ) | $ | (1,981 | ) | |||||||
Business reorganization expenses (recovery) | 781 | 887 | 1,067 | 27 | 2,762 | |||||||||||||||
Impairment of long-lived assets | — | 257 | 1,079 | — | 1,336 | |||||||||||||||
Office integration expense and (gains) on disposal of business | — | — | — | — | — | |||||||||||||||
Non-operating expense (income), including corporate administration charges | 714 | 43 | 1,474 | (2,513 | ) | (281 | ) | |||||||||||||
EBITDA (loss) (1) | $ | (362 | ) | $ | (2,458 | ) | $ | (2,539 | ) | $ | (438 | ) | $ | (5,797 | ) | |||||
Depreciation and amortization expenses | 1,573 | |||||||||||||||||||
Interest expense (income), net | 138 | |||||||||||||||||||
Provision for (benefit from) income taxes | 3,788 | |||||||||||||||||||
Net income (loss) | $ | (11,296 | ) | |||||||||||||||||
For The Three Months Ended December 31, 2012 | Hudson Americas | Hudson Asia Pacific | Hudson Europe | Corporate | Total | |||||||||||||||
Revenue, from external customers | $ | 39,458 | $ | 63,517 | $ | 81,301 | $ | — | $ | 184,276 | ||||||||||
Gross margin, from external customers | $ | 9,388 | $ | 26,361 | $ | 31,175 | $ | — | $ | 66,924 | ||||||||||
Adjusted EBITDA (loss) (1) | $ | 1,379 | $ | 2,334 | $ | 3,455 | $ | (4,017 | ) | $ | 3,151 | |||||||||
Business reorganization expenses (recovery) | (44 | ) | 22 | 213 | 40 | 231 | ||||||||||||||
Impairment of long-lived assets | — | — | — | — | — | |||||||||||||||
Office integration expense and (gains) on disposal of business | (558 | ) | — | — | — | (558 | ) | |||||||||||||
Non-operating expense (income), including corporate administration charges | 593 | 975 | 641 | (2,249 | ) | (40 | ) | |||||||||||||
EBITDA (loss) (1) | $ | 1,388 | $ | 1,337 | $ | 2,601 | $ | (1,808 | ) | $ | 3,518 | |||||||||
Depreciation and amortization expenses | 1,650 | |||||||||||||||||||
Interest expense (income), net | 124 | |||||||||||||||||||
Provision for (benefit from) income taxes | 2,086 | |||||||||||||||||||
Net income (loss) | $ | (343 | ) | |||||||||||||||||
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 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. 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. |
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HUDSON GLOBAL, INC. | ||||||||||||||||||||
SEGMENT ANALYSIS - QUARTER TO DATE (continued) | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
For The Three Months Ended September 30, 2013 | Hudson Americas | Hudson Asia Pacific | Hudson Europe | Corporate | Total | |||||||||||||||
Revenue, from external customers | $ | 34,842 | $ | 58,274 | $ | 70,471 | $ | — | $ | 163,587 | ||||||||||
Gross margin, from external customers | $ | 9,073 | $ | 21,348 | $ | 25,375 | $ | — | $ | 55,796 | ||||||||||
Adjusted EBITDA (loss) (1) | $ | 1,295 | $ | (460 | ) | $ | 440 | $ | (4,158 | ) | $ | (2,883 | ) | |||||||
Business reorganization expenses (recovery) | 208 | — | 152 | 368 | 728 | |||||||||||||||
Impairment of long-lived assets | — | — | — | — | — | |||||||||||||||
Office integration expense and (gains) on disposal of business | — | — | — | — | — | |||||||||||||||
Non-operating expense (income), including corporate administration charges | 433 | (335 | ) | 913 | (1,307 | ) | (296 | ) | ||||||||||||
EBITDA (loss) (1) | $ | 654 | $ | (125 | ) | $ | (625 | ) | $ | (3,219 | ) | $ | (3,315 | ) | ||||||
Depreciation and amortization expenses | 1,529 | |||||||||||||||||||
Interest expense (income), net | 158 | |||||||||||||||||||
Provision for (benefit from) income taxes | 45 | |||||||||||||||||||
Net income (loss) | $ | (5,047 | ) | |||||||||||||||||
For The Three Months Ended March 31, 2013 | Hudson Americas | Hudson Asia Pacific | Hudson Europe | Corporate | Total | |||||||||||||||
Revenue, from external customers | $ | 37,223 | $ | 56,201 | $ | 72,254 | $ | — | $ | 165,678 | ||||||||||
Gross margin, from external customers | $ | 8,144 | $ | 21,491 | $ | 27,042 | $ | — | $ | 56,677 | ||||||||||
Adjusted EBITDA (loss) (1) | $ | (357 | ) | $ | (426 | ) | $ | (112 | ) | $ | (4,017 | ) | $ | (4,912 | ) | |||||
Business reorganization expenses (recovery) | (17 | ) | 102 | 1,871 | 26 | 1,982 | ||||||||||||||
Impairment of long-lived assets | — | — | — | — | — | |||||||||||||||
Office integration expense and (gains) on disposal of business | — | — | — | — | — | |||||||||||||||
Non-operating expense (income), including corporate administration charges | 607 | 339 | 1,469 | (2,685 | ) | (270 | ) | |||||||||||||
EBITDA (loss) (1) | $ | (947 | ) | $ | (867 | ) | $ | (3,452 | ) | $ | (1,358 | ) | $ | (6,624 | ) | |||||
Depreciation and amortization expenses | 1,648 | |||||||||||||||||||
Interest expense (income), net | 146 | |||||||||||||||||||
Provision for (benefit from) income taxes | (177 | ) | ||||||||||||||||||
Net income (loss) | (8,241 | ) | ||||||||||||||||||
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 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. 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. |
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HUDSON GLOBAL, INC. | ||||||||||||||||||||
SEGMENT ANALYSIS - YEAR TO DATE | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
For The Year Ended December 31, 2013 | Hudson Americas | Hudson Asia Pacific | Hudson Europe | Corporate | Total | |||||||||||||||
Revenue, from external customers | $ | 139,003 | $ | 232,748 | $ | 288,377 | $ | — | $ | 660,128 | ||||||||||
Gross margin, from external customers | $ | 34,243 | $ | 87,161 | $ | 108,468 | $ | — | $ | 229,872 | ||||||||||
Adjusted EBITDA (loss) (1) | $ | 3,613 | $ | (1,446 | ) | $ | 1,496 | $ | (15,952 | ) | $ | (12,289 | ) | |||||||
Business reorganization expenses (recovery) | 1,297 | 989 | 3,646 | 789 | 6,721 | |||||||||||||||
Impairment of long-lived assets | — | 257 | 1,079 | — | 1,336 | |||||||||||||||
Office integration expense and (gains) on disposal of business | 6 | — | — | — | 6 | |||||||||||||||
Non-operating expense (income), including corporate administration charges | 2,578 | 535 | 5,543 | (9,408 | ) | (752 | ) | |||||||||||||
EBITDA (loss) (1) | $ | (268 | ) | $ | (3,227 | ) | $ | (8,772 | ) | $ | (7,333 | ) | $ | (19,600 | ) | |||||
Depreciation and amortization expenses | 6,406 | |||||||||||||||||||
Interest expense (income), net | 596 | |||||||||||||||||||
Provision for (benefit from) income taxes | 3,793 | |||||||||||||||||||
Net income (loss) | $ | (30,395 | ) | |||||||||||||||||
For The Year Ended December 31, 2012 | Hudson Americas | Hudson Asia Pacific | Hudson Europe | Corporate | Total | |||||||||||||||
Revenue, from external customers | $ | 169,216 | $ | 288,144 | $ | 320,217 | $ | — | $ | 777,577 | ||||||||||
Gross margin, from external customers | $ | 43,164 | $ | 117,430 | $ | 124,273 | $ | — | $ | 284,867 | ||||||||||
Adjusted EBITDA (loss) (1) | $ | 4,864 | $ | 12,911 | $ | 7,960 | $ | (18,271 | ) | $ | 7,464 | |||||||||
Business reorganization expenses (recovery) | 1,007 | 1,285 | 5,131 | 359 | 7,782 | |||||||||||||||
Impairment of long-lived assets | — | — | — | — | — | |||||||||||||||
Office integration expense and (gains) on disposal of business | (558 | ) | 441 | — | — | (117 | ) | |||||||||||||
Non-operating expense (income), including corporate administration charges | 3,147 | 5,830 | 5,784 | (15,016 | ) | (255 | ) | |||||||||||||
EBITDA (loss) (1) | $ | 1,268 | $ | 5,355 | $ | (2,955 | ) | $ | (3,614 | ) | $ | 54 | ||||||||
Depreciation and amortization expenses | 6,438 | |||||||||||||||||||
Interest expense (income), net | 635 | |||||||||||||||||||
Provision for (benefit from) income taxes | (1,684 | ) | ||||||||||||||||||
Net income (loss) | $ | (5,335 | ) | |||||||||||||||||
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 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. 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. |
11
HUDSON GLOBAL, INC.
RECONCILIATION FOR CONSTANT CURRENCY
(in thousands)
(unaudited)
The company operates on a global basis, with the majority of its gross margin generated outside of the United States. Accordingly, fluctuations in foreign currency exchange rates can affect its results of operations. Constant currency information compares financial results between periods as if exchange rates had remained constant period-over-period. The company currently defines the term “constant currency” to mean that financial data for a previously reported period are translated into U.S. dollars using the same foreign currency exchange rates that were used to translate financial data for the current period. Changes in revenue, gross margin, selling, general and administrative expenses ("SG&A"), business reorganization expenses and other non-operating income (expense), operating income (loss) and EBITDA (loss) include the effect of changes in foreign currency exchange rates. Variance analysis usually describes period-to-period variances that are calculated using constant currency as a percentage. The company’s management reviews and analyzes business results in constant currency and believes these results better represent the company’s underlying business trends. The company believes that these calculations are a useful measure, indicating the actual change in operations. There are no significant gains or losses on foreign currency transactions between subsidiaries. Therefore, changes in foreign currency exchange rates generally impact only reported earnings.
For The Three Months Ended December 31, | |||||||||||||||
2013 | 2012 | ||||||||||||||
As | As | Currency | Constant | ||||||||||||
reported | reported | translation | currency | ||||||||||||
Revenue: | |||||||||||||||
Hudson Americas | $ | 29,612 | $ | 39,458 | $ | (16 | ) | $ | 39,442 | ||||||
Hudson Asia Pacific | 55,404 | 63,517 | (4,943 | ) | 58,574 | ||||||||||
Hudson Europe | 74,488 | 81,301 | 1,759 | 83,060 | |||||||||||
Total | $ | 159,504 | $ | 184,276 | $ | (3,200 | ) | $ | 181,076 | ||||||
Gross margin: | |||||||||||||||
Hudson Americas | $ | 7,781 | $ | 9,388 | $ | (15 | ) | $ | 9,373 | ||||||
Hudson Asia Pacific | 20,045 | 26,361 | (1,747 | ) | 24,614 | ||||||||||
Hudson Europe | 29,070 | 31,175 | 877 | 32,052 | |||||||||||
Total | $ | 56,896 | $ | 66,924 | $ | (885 | ) | $ | 66,039 | ||||||
SG&A (1): | |||||||||||||||
Hudson Americas | $ | 6,647 | $ | 8,005 | $ | (11 | ) | $ | 7,994 | ||||||
Hudson Asia Pacific | 21,318 | 24,054 | (1,562 | ) | 22,492 | ||||||||||
Hudson Europe | 27,989 | 27,697 | 795 | 28,492 | |||||||||||
Corporate | 2,922 | 4,018 | — | 4,018 | |||||||||||
Total | $ | 58,876 | $ | 63,774 | $ | (778 | ) | $ | 62,996 | ||||||
Business reorganization expenses: | |||||||||||||||
Hudson Americas | $ | 781 | $ | (44 | ) | $ | — | $ | (44 | ) | |||||
Hudson Asia Pacific | 887 | 22 | — | 22 | |||||||||||
Hudson Europe | 1,067 | 213 | — | 213 | |||||||||||
Corporate | 27 | 40 | — | 40 | |||||||||||
Total | $ | 2,762 | $ | 231 | $ | — | $ | 231 | |||||||
Operating income (loss): | |||||||||||||||
Hudson Americas | $ | 122 | $ | 1,735 | $ | (4 | ) | $ | 1,731 | ||||||
Hudson Asia Pacific | (3,192 | ) | 1,467 | (120 | ) | 1,347 | |||||||||
Hudson Europe | (1,468 | ) | 2,846 | 75 | 2,921 | ||||||||||
Corporate | (3,113 | ) | (4,220 | ) | — | (4,220 | ) | ||||||||
Total | $ | (7,651 | ) | $ | 1,828 | $ | (49 | ) | $ | 1,779 | |||||
EBITDA (loss): | |||||||||||||||
Hudson Americas | $ | (362 | ) | $ | 1,388 | $ | 5 | $ | 1,393 | ||||||
Hudson Asia Pacific | (2,458 | ) | 1,337 | (151 | ) | 1,186 | |||||||||
Hudson Europe | (2,539 | ) | 2,601 | 67 | 2,668 | ||||||||||
Corporate | (438 | ) | (1,808 | ) | — | (1,808 | ) | ||||||||
Total | $ | (5,797 | ) | $ | 3,518 | $ | (79 | ) | $ | 3,439 | |||||
Note: Certain prior year amounts have been reclassified to conform to the current period presentation.
1. | SG&A is a measure that management uses to evaluate the segments’ expenses. |
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HUDSON GLOBAL, INC.
RECONCILIATION FOR CONSTANT CURRENCY (continued)
(in thousands)
(unaudited)
For The Year Ended December 31, | |||||||||||||||
2013 | 2012 | ||||||||||||||
As | As | Currency | Constant | ||||||||||||
reported | reported | translation | currency | ||||||||||||
Revenue: | |||||||||||||||
Hudson Americas | $ | 139,003 | $ | 169,216 | $ | (55 | ) | $ | 169,161 | ||||||
Hudson Asia Pacific | 232,748 | 288,144 | (13,188 | ) | 274,956 | ||||||||||
Hudson Europe | 288,377 | 320,217 | 416 | 320,633 | |||||||||||
Total | $ | 660,128 | $ | 777,577 | $ | (12,827 | ) | $ | 764,750 | ||||||
Gross margin: | |||||||||||||||
Hudson Americas | $ | 34,243 | $ | 43,164 | $ | (52 | ) | $ | 43,112 | ||||||
Hudson Asia Pacific | 87,161 | 117,430 | (4,455 | ) | 112,975 | ||||||||||
Hudson Europe | 108,468 | 124,273 | 1,093 | 125,366 | |||||||||||
Total | $ | 229,872 | $ | 284,867 | $ | (3,414 | ) | $ | 281,453 | ||||||
SG&A (1): | |||||||||||||||
Hudson Americas | $ | 30,627 | $ | 38,287 | $ | (25 | ) | $ | 38,262 | ||||||
Hudson Asia Pacific | 88,537 | 104,528 | (3,694 | ) | 100,834 | ||||||||||
Hudson Europe | 107,057 | 116,315 | 1,195 | 117,510 | |||||||||||
Corporate | 15,941 | 18,272 | — | 18,272 | |||||||||||
Total | $ | 242,162 | $ | 277,402 | $ | (2,524 | ) | $ | 274,878 | ||||||
Business reorganization expenses: | |||||||||||||||
Hudson Americas | $ | 1,297 | $ | 1,007 | $ | — | $ | 1,007 | |||||||
Hudson Asia Pacific | 989 | 1,285 | (60 | ) | 1,225 | ||||||||||
Hudson Europe | 3,646 | 5,131 | 29 | 5,160 | |||||||||||
Corporate | 789 | 359 | — | 359 | |||||||||||
Total | $ | 6,721 | $ | 7,782 | $ | (31 | ) | $ | 7,751 | ||||||
Operating income (loss): | |||||||||||||||
Hudson Americas | $ | 1,334 | $ | 3,318 | $ | (27 | ) | $ | 3,291 | ||||||
Hudson Asia Pacific | (5,883 | ) | 7,988 | (534 | ) | 7,454 | |||||||||
Hudson Europe | (4,823 | ) | 1,326 | (146 | ) | 1,180 | |||||||||
Corporate | (17,387 | ) | (19,270 | ) | — | (19,270 | ) | ||||||||
Total | $ | (26,759 | ) | $ | (6,638 | ) | $ | (707 | ) | $ | (7,345 | ) | |||
EBITDA (loss): | |||||||||||||||
Hudson Americas | $ | (268 | ) | $ | 1,268 | $ | (14 | ) | $ | 1,254 | |||||
Hudson Asia Pacific | (3,227 | ) | 5,355 | (496 | ) | 4,859 | |||||||||
Hudson Europe | (8,772 | ) | (2,955 | ) | (258 | ) | (3,213 | ) | |||||||
Corporate | (7,333 | ) | (3,614 | ) | — | (3,614 | ) | ||||||||
Total | $ | (19,600 | ) | $ | 54 | $ | (768 | ) | $ | (714 | ) | ||||
Note: Certain prior year amounts have been reclassified to conform to the current period presentation.
1. | SG&A is a measure that management uses to evaluate the segments’ expenses. |
13