Hudson Highland Group Reports 2011 First Quarter Financial Results
26 Avril 2011 - 10:00PM
Hudson Highland Group, Inc. (Nasdaq:HHGP), one of the world's
leading providers of permanent recruitment, contract professionals
and talent management solutions, today announced financial results
for the first quarter ended March 31, 2011.
2011 First Quarter Summary
- Revenue of $218.5 million, an increase of 21.3 percent over the
first quarter of 2010, and approximately flat to the fourth quarter
of 2010
- Permanent recruitment continued to deliver the strongest
service line revenue growth, up 31.8 percent from the prior year
quarter
- Temporary contracting revenue increased 20.8 percent in the
first quarter, representing the fifth consecutive quarter of
accelerating growth over the prior year period
- Gross margin of $81.2 million, or 37.2 percent of revenue, up
22.2 percent from the same period last year, and a decrease of 2.1
percent from the fourth quarter of 2010
- All regions contributed to strong top-line growth, reporting
double-digit revenue and gross margin increases in the first
quarter compared with the prior year period
- EBITDA* of $2.5 million, or 1.2 percent of revenue, improved
from an EBITDA loss of $1.4 million for the first quarter of
2010
- Net loss of $0.0 million, or $0.00 per basic and diluted share,
compared with net loss of $4.2 million, or $0.16 per basic and
diluted share, in the first quarter of 2010
* EBITDA is defined in the segment tables at the end of this
release and includes other non-operating income.
"We are encouraged that the demand for our services continues to
grow," said Mary Jane Raymond, Hudson Highland Group's interim
chief executive officer and chief financial officer. "This quarter
was Hudson's fifth consecutive quarter of increased revenue growth
over prior year. Even as some clients continue to face economic
uncertainty, they are increasingly relying on Hudson to select
their strategic hires."
Regional Results
Regional results for the first quarter in constant currency
were:
- Europe gross margin was up 18 percent, led by 21 percent growth
in the U.K. and 16 percent growth in continental Europe, compared
with first quarter 2010
- Australia/New Zealand gross margin was up 22 percent compared
with the prior year period, led by 44 percent growth in permanent
recruitment
- Asia gross margin was up 9 percent compared with first quarter
2010
- Americas gross margin was up 11 percent compared with the prior
year period, driven by 9 percent growth in temporary contracting
and 27 percent growth in permanent recruitment
Liquidity and Capital Resources
The company ended the first quarter of 2011 with $71.0 million
in liquidity, composed of $28.3 million in cash and $42.7 million
in availability under its credit facilities. The company used
$10.3 million in cash flow from operations during the quarter and
increased its outstanding borrowings from $1.3 million at the end
of the fourth quarter to $11.2 million at the end of the first
quarter. Cash usage in the first quarter was driven by revenue
more weighted to the end of the quarter and payment of annual
bonuses. Days Sales Outstanding (DSO) rose to 55 days from 49 at
the end of 2010 and 53 a year ago.
Guidance
The company currently expects second quarter 2011 revenue of
$230 - $240 million and EBITDA of $5 - $8 million at prevailing
exchange rates. This compares with revenue of $195.0 million
and EBITDA of $3.1 million in the second quarter of 2010.
Additional Information
Additional information about the company's quarterly results can
be found in the shareholder letter and the quarterly earnings
slides in the investor information section of the company's Web
site at www.hudson.com.
Conference Call/Webcast Hudson Highland Group
will conduct a conference call Wednesday, April 27, 2011 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 www.hudson.com.
The archived call will be available on the investor information
section of the company's Web site at www.hudson.com.
About Hudson Highland Group
Hudson Highland Group, Inc. is a leading provider of permanent
recruitment, contract professionals and talent management services
worldwide. From single placements to total outsourced
solutions, Hudson helps clients achieve greater organizational
performance by assessing, recruiting, developing and engaging the
best and brightest people for their businesses. The company
employs more than 2,000 professionals serving clients and
candidates in approximately 20 countries. More information is
available at www.hudson.com.
Safe Harbor Statement
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; 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; 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; risks
in collecting the company's accounts receivable; the company's
history of negative cash flows and operating losses may
continue; restrictions on the company's operating flexibility
due to the terms of its credit facility; implementation of the
company's cost reduction initiatives effectively; the company's
heavy reliance on information systems and the impact of potentially
losing or failing to develop technology; risks related to our
dependence on uninterrupted service to clients; the company's
exposure to employment-related claims from both clients and
employers and limits on related insurance coverage; 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
HUDSON HIGHLAND GROUP,
INC. |
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS |
(in thousands, except
share and per share amounts) |
(unaudited) |
|
|
|
|
Three Months
Ended March 31, |
|
2011 |
2010 |
|
|
|
Revenue |
$ 218,539 |
$ 180,118 |
Direct costs |
137,341 |
113,697 |
Gross margin |
81,198 |
66,421 |
Operating expenses: |
|
|
Selling, general and administrative
expenses |
78,808 |
68,333 |
Depreciation and amortization |
1,576 |
2,287 |
Business reorganization and integration
expenses |
351 |
113 |
Total operating expenses |
80,735 |
70,733 |
Operating income (loss) |
463 |
(4,312) |
Other income (expense): |
|
|
Interest, net |
(206) |
(232) |
Other, net |
487 |
658 |
Income (loss) from continuing operations
before provision for income taxes |
744 |
(3,886) |
Provision for income taxes |
750 |
252 |
Loss from continuing operations |
(6) |
(4,138) |
Loss from discontinued operations, net of
income taxes |
-- |
(69) |
Net loss |
$ (6) |
$ (4,207) |
Basic earnings (loss) per
share: |
|
|
Loss from continuing operations |
$ (0.00) |
$ (0.16) |
Loss from discontinued operations |
-- |
(0.00) |
Net loss |
$ (0.00) |
$ (0.16) |
|
|
|
Diluted earnings (loss) per
share: |
|
|
Loss from continuing operations |
$ (0.00) |
$ (0.16) |
Loss from discontinued operations |
-- |
(0.00) |
Net loss |
$ (0.00) |
$ (0.16) |
|
|
|
Weighted average shares
outstanding: |
|
|
Basic |
31,325 |
26,257 |
Diluted |
31,325 |
26,257 |
|
|
HUDSON
HIGHLAND GROUP, INC. |
CONDENSED CONSOLIDATED
BALANCE SHEETS |
(in thousands, except
per share amounts) |
(unaudited) |
|
|
|
|
March 31,
2011 |
December 31,
2010 |
ASSETS |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ 28,311 |
$ 29,523 |
Accounts receivable, net |
145,505 |
128,576 |
Prepaid and other |
14,046 |
13,988 |
Total current assets |
187,862 |
172,087 |
Property and equipment, net |
16,114 |
16,593 |
Other assets |
18,422 |
17,154 |
Total assets |
$ 222,398 |
$ 205,834 |
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
Current liabilities: |
|
|
Accounts payable |
$ 11,732 |
$ 14,812 |
Accrued expenses and other current
liabilities |
82,434 |
74,990 |
Short-term borrowings |
11,156 |
1,339 |
Accrued business reorganization expenses |
2,176 |
2,619 |
Total current liabilities |
107,498 |
93,760 |
Other non-current liabilities |
10,491 |
10,493 |
Income tax payable, non-current |
8,158 |
8,303 |
Total liabilities |
126,147 |
112,556 |
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 32,838 and 32,181 shares,
respectively |
33 |
32 |
Additional paid-in capital |
467,782 |
466,582 |
Accumulated deficit |
(408,205) |
(408,199) |
Accumulated other comprehensive
income—translation adjustments |
36,947 |
34,902 |
Treasury stock, 53 and 9 shares,
respectively, at cost |
(306) |
(39) |
Total stockholders' equity |
96,251 |
93,278 |
Total liabilities and stockholders'
equity |
$ 222,398 |
$ 205,834 |
|
|
HUDSON
HIGHLAND GROUP, INC. |
SEGMENT ANALYSIS -
QUARTER TO DATE |
(in
thousands) |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For The Three Months Ended March
31, 2011 |
Hudson Europe |
Hudson ANZ |
Hudson Americas |
Hudson
Asia |
Corporate |
Total |
Revenue, from external customers |
$ 93,710 |
$ 70,804 |
$ 45,812 |
$ 8,213 |
$ -- |
$ 218,539 |
Gross margin, from external customers |
$ 38,937 |
$ 24,019 |
$ 10,356 |
$ 7,886 |
$ -- |
$ 81,198 |
Business reorganization and integration
expenses |
$ 351 |
$ -- |
$ -- |
$ -- |
$ -- |
$ 351 |
Non-operating expense (income), including
corporate administration charges |
1,610 |
1,045 |
583 |
91 |
(3,816) |
(487) |
EBITDA (Loss) (1) |
$ 2,175 |
$ 1,041 |
$ (379) |
$ 973 |
$ (1,284) |
$ 2,526 |
Depreciation and amortization expenses |
|
|
|
|
|
1,576 |
Interest expense (income), net |
|
|
|
|
|
206 |
Provision for (benefit from) income
taxes |
|
|
|
|
|
750 |
Loss (income) from discontinued operations,
net of taxes |
|
|
|
|
|
-- |
Net income (loss) |
|
|
|
|
|
$ (6) |
|
|
|
|
|
|
|
For The Three Months Ended March
31, 2010 |
Hudson Europe |
Hudson ANZ |
Hudson Americas |
Hudson
Asia |
Corporate |
Total |
Revenue, from external customers |
$ 76,654 |
$ 56,822 |
$ 39,507 |
$ 7,135 |
$ -- |
$ 180,118 |
Gross margin, from external customers |
$ 32,530 |
$ 17,776 |
$ 9,279 |
$ 6,836 |
$ -- |
$ 66,421 |
Business reorganization and integration
expenses |
$ 87 |
$ (116) |
$ 142 |
$ -- |
$ -- |
$ 113 |
Non-operating expense (income), including
corporate administration charges |
1,178 |
582 |
(509) |
188 |
(2,097) |
(658) |
EBITDA (Loss) (1) |
$ 436 |
$ 249 |
$ (241) |
$ 597 |
$ (2,408) |
$ (1,367) |
Depreciation and amortization expenses |
|
|
|
|
|
2,287 |
Interest expense (income), net |
|
|
|
|
|
232 |
Provision for (benefit from) income
taxes |
|
|
|
|
|
252 |
Loss (income) from discontinued operations,
net of taxes |
|
|
|
|
|
69 |
Net income (loss) |
|
|
|
|
|
$ (4,207) |
|
|
|
|
|
|
|
For the Three Months Ended December
31, 2010 |
Hudson Europe |
Hudson ANZ |
Hudson Americas |
Hudson
Asia |
Corporate |
Total |
Revenue, from external customers |
$ 90,616 |
$ 74,338 |
$ 44,268 |
$ 9,839 |
$ -- |
$ 219,061 |
Gross margin, from external customers |
$ 37,468 |
$ 25,231 |
$ 10,775 |
$ 9,450 |
$ -- |
$ 82,924 |
Business reorganization and integration
expenses |
$ 865 |
$ 102 |
$ 21 |
$ -- |
$ -- |
$ 988 |
Non-operating expense (income), including
corporate administration charges |
1,337 |
886 |
(1,298) |
243 |
(2,980) |
(1,812) |
EBITDA (Loss) (1) |
$ 314 |
$ 1,254 |
$ 2,386 |
$ 1,524 |
$ (1,922) |
$ 3,556 |
Depreciation and amortization expenses |
|
|
|
|
|
1,730 |
Interest expense (income), net |
|
|
|
|
|
306 |
Provision for (benefit from) income
taxes |
|
|
|
|
|
116 |
Loss (income) from discontinued operations,
net of taxes |
|
|
|
|
|
213 |
Net income (loss) |
|
|
|
|
|
$ 1,191 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Three Months Ended June 30,
2010 |
Hudson Europe |
Hudson ANZ |
Hudson Americas |
Hudson
Asia |
Corporate |
Total |
Revenue, from external customers |
$ 80,717 |
$ 65,249 |
$ 40,819 |
$ 8,184 |
$ -- |
$ 194,969 |
Gross margin, from external customers |
$ 34,559 |
$ 21,723 |
$ 10,039 |
$ 7,916 |
$ -- |
$ 74,237 |
Business reorganization and integration
expenses |
$ 450 |
$ -- |
$ 101 |
$ -- |
$ -- |
$ 551 |
Non-operating expense (income), including
corporate administration charges |
1,148 |
1,015 |
393 |
38 |
(3,440) |
(846) |
EBITDA (Loss) (1) |
$ 2,466 |
$ 1,369 |
$ (991) |
$ 1,311 |
$ (1,034) |
$ 3,121 |
Depreciation and amortization expenses |
|
|
|
|
|
2,186 |
Interest expense (income), net |
|
|
|
|
|
243 |
Provision for (benefit from) income
taxes |
|
|
|
|
|
515 |
Loss (income) from discontinued operations,
net of taxes |
|
|
|
|
|
(52) |
Net income (loss) |
|
|
|
|
|
$ 229 |
|
|
|
|
|
|
|
(1) Non-GAAP earnings before
interest, income taxes, and depreciation and amortization
("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 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 as presented above
may not be comparable with similarly titled measures reported by
other companies. |
|
HUDSON
HIGHLAND GROUP, INC. |
Reconciliation For
Constant Currency |
(in
thousands) |
(unaudited) |
The Company operates on a global
basis, with the majority of our gross margin generated outside of
the United States. Accordingly, fluctuations in foreign currency
exchange rates can affect our 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, direct costs,
gross margin, and selling, general and administrative expenses
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. Earnings from subsidiaries are rarely repatriated to
the United States, and 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 and not the company's economic condition. |
|
|
|
|
|
|
For The Three
Months Ended March 31, |
|
2011 |
2010 |
|
As reported |
As reported |
Currency
translation |
Constant
currency |
Revenue: |
|
|
|
|
Hudson Europe |
$93,710 |
$76,654 |
$1,470 |
$78,124 |
Hudson ANZ |
70,804 |
56,822 |
6,113 |
62,935 |
Hudson Americas |
45,812 |
39,507 |
10 |
39,517 |
Hudson Asia |
8,213 |
7,135 |
389 |
7,524 |
Total |
218,539 |
180,118 |
7,982 |
188,100 |
|
|
|
|
|
Direct costs: |
|
|
|
|
Hudson Europe |
54,773 |
44,124 |
1,034 |
45,158 |
Hudson ANZ |
46,785 |
39,046 |
4,194 |
43,240 |
Hudson Americas |
35,456 |
30,228 |
(14) |
30,214 |
Hudson Asia |
327 |
299 |
19 |
318 |
Total |
137,341 |
113,697 |
5,233 |
118,930 |
|
|
|
|
|
Gross margin: |
|
|
|
|
Hudson Europe |
38,937 |
32,530 |
436 |
32,966 |
Hudson ANZ |
24,019 |
17,776 |
1,919 |
19,695 |
Hudson Americas |
10,356 |
9,279 |
24 |
9,303 |
Hudson Asia |
7,886 |
6,836 |
370 |
7,206 |
Total |
$81,198 |
$66,421 |
$2,749 |
$69,170 |
|
|
|
|
|
Selling, general and administrative
(a): |
|
|
|
|
Hudson Europe |
$35,271 |
$31,453 |
$353 |
$31,806 |
Hudson ANZ |
22,582 |
17,608 |
1,899 |
19,507 |
Hudson Americas |
10,472 |
10,785 |
17 |
10,802 |
Hudson Asia |
6,890 |
6,224 |
322 |
6,546 |
Corporate |
5,169 |
4,550 |
(2) |
4,548 |
Total |
$80,384 |
$70,620 |
$2,589 |
$73,209 |
|
|
|
|
|
|
|
|
|
|
(a) Selling, general and
administrative expenses include depreciation and amortization
expenses. |
CONTACT: David F. Kirby
Hudson Highland Group
212-351-7216
david.kirby@hudson.com
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