NEW YORK, May 3 /PRNewswire-FirstCall/ -- Hudson Highland Group,
Inc. (NASDAQ:HHGP), one of the world's leading providers of
specialized professional staffing, retained executive search and
talent management solutions, today announced financial results for
the first quarter ended March 31, 2006. 2006 First Quarter Summary
* Revenue of $344.7 million, a decrease of 2.3 percent from $352.9
million for the first quarter of 2005 * Gross margin of $128.1
million, or 37.2 percent of revenue, down 0.1 percent from $128.2
million, or 36.3 percent of revenue, for the same year-ago period *
EBITDA loss of $0.1 million, or 0.0 percent of revenue, down from
an EBITDA profit of $1.8 million, or 0.5 percent of revenue, for
the first quarter of 2005 * Net loss of $5.9 million, or $0.24 per
basic and diluted share, compared with a net loss of $5.2 million,
or $0.25 per basic and diluted share for the same period last year
"First quarter consolidated results were impacted by a
disappointing performance in Hudson Americas," said Jon Chait,
chairman and chief executive officer of Hudson Highland Group.
"However, Hudson Europe continued to make good progress, Hudson
Asia Pacific stabilized on the top line and Highland Partners
reported stronger profitability." "Several action steps are already
underway to address the issues in Hudson Americas," said Mary Jane
Raymond, executive vice president and chief financial officer. "We
have made key personnel changes as appropriate, and we are moving
to enhance our productivity in the region. As these moves take
effect, we expect to deliver good progress toward our full-year
targets." Guidance Given the current economic environment, the
company expects 2006 EBITDA as a percent of revenue to be 2.5 to
3.5 percent, constant currency revenue growth of 1 to 5 percent and
constant currency gross margin growth of 5 to 10 percent. This
guidance is based on expectations of constant currency revenue
growth of 5 to 10 percent for Hudson Americas, 0 to 5 percent for
Hudson Europe and Highland Partners, and -5 to 5 percent in Hudson
Asia Pacific. This guidance does not reflect the impact of any
acquisitions or divestitures that the company may consider in the
future. Beginning in the first quarter of 2006, the company
recorded compensation expense related to outstanding employee stock
options in accordance with FAS 123R. Based on current information,
the company anticipates this expense to be $5.3 million for 2006.
Corresponding costs in 2005 were $4.5 million. Note that the
company's 2005 financial statements have been adjusted for the
adoption of SFAS 123R using the modified retrospective method.
Conference Call / Webcast Hudson Highland Group will conduct a
conference call Thursday, May 4, 2006 at 9:00 AM ET to discuss this
announcement. Investors wishing to participate can join the
conference call by dialing 1-800-374-1532 followed by the
participant passcode 7841127 at 8:50 AM ET. For those outside the
United States, please call in on 1-706-634-5594 followed by the
participant passcode 7841127. Hudson Highland Group's quarterly
conference call can also be accessed online through Yahoo! Finance
at http://www.yahoo.com/ and the investor information section of
the company's website at http://www.hhgroup.com/. Additional
Information Please find additional information about the company's
quarterly results in our shareholder letter in the investor
information section of the company's website at
http://www.hhgroup.com/. Hudson Highland Group Hudson Highland
Group is one of the world's leading professional staffing, retained
executive search and talent management solution providers. We help
our clients achieve greater organizational performance by
attracting, selecting and developing the best and brightest people
for their businesses. Our approximately 3,800 employees in more
than 20 countries are dedicated to providing unparalleled service
and value to our clients. More information about Hudson Highland
Group is available at http://www.hhgroup.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 those under the caption "Guidance"
and other 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 risks and uncertainties that could cause actual results
to differ materially from those described in the forward-looking
statements. These factors include, but are not limited to, the
impact of global economic fluctuations on temporary contracting
operations; the cyclical nature of the company's executive search
and mid-market professional staffing businesses; the company's
ability to manage its growth; risks associated with expansion;
risks and financial impact associated with disposition of
non-strategic assets; the company's reliance on information systems
and technology; competition; fluctuations in operating results;
risks relating to foreign operations, including foreign currency
fluctuations; dependence on highly skilled professionals and key
management personnel; the impact of employees departing with
existing executive search clients; risks maintaining professional
reputation and brand name; restrictions imposed by blocking
arrangements; exposure to employment-related claims, and limits on
insurance coverage related thereto; government regulations; and
restrictions on the company's operating flexibility due to the
terms of its credit facility. 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 press release. The
company assumes no obligation, and expressly disclaims any
obligation, to review or confirm analysts' expectations or
estimates or to update any forward-looking statements, whether as a
result of new information, future events or otherwise. HUDSON
HIGHLAND GROUP, INC. CONSOLIDATED CONDENSED STATEMENTS OF
OPERATIONS (in thousands, except share and per share amounts)
(unaudited) Three Months Ended March 31, 2006 2005 (1) Revenue
$344,701 $352,869 Direct costs 216,611 224,662 Gross margin 128,090
128,207 Operating expenses: Selling, general and administrative
128,194 125,913 Depreciation and amortization 4,508 4,857 Business
reorganization expenses 3 529 Merger and integration (recoveries) -
(43) Total operating expenses 132,705 131,256 Operating loss
(4,615) (3,049) Other income (expense): Interest, net (414) (426)
Other, net 777 (276) Loss before provision for income taxes (4,252)
(3,751) Provision for income taxes 1,605 1,400 Net loss $(5,857)
$(5,151) Basic and diluted loss per share: Net loss $(0.24) $(0.25)
Weighted average shares outstanding 24,224,000 20,504,000 (1) Note
2005 financial statements have been adjusted for the Company's
adoption of SFAS 123R using the modified retrospective method. (The
comparable expenses for the three months ended March 31, 2006 and
2005 were $1,419 and $1,014, respectively.) HUDSON HIGHLAND GROUP,
INC. CONSOLIDATED CONDENSED BALANCE SHEETS (in thousands, except
share and per share amounts) March 31, December 31, 2006 2005 (1)
ASSETS (unaudited) Current assets: Cash and cash equivalents
$33,183 $34,108 Accounts receivable, net 238,057 232,081 Prepaid
and other 14,096 14,330 Total current assets 285,336 280,519
Intangibles, net 31,397 31,100 Property and equipment, net 29,715
31,438 Other assets 4,576 5,359 Total assets $351,024 $348,416
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts
payable $34,929 $24,718 Accrued expenses and other current
liabilities 135,552 140,036 Credit facility and current portion of
long-term debt 34,101 32,544 Accrued business reorganization
expenses 4,117 4,223 Accrued merger and integration expenses 985
1,239 Total current liabilities 209,684 202,760 Accrued business
reorganization expenses, non-current 3,376 4,095 Accrued merger and
integration expenses, non-current 1,789 2,038 Other non-current
liabilities 5,810 5,948 Long-term debt, less current portion 402
478 Total liabilities 221,061 215,319 Commitments and contingencies
Stockholders' equity: Preferred stock, $0.001 par value, 10,000,000
shares authorized; none issued or outstanding � � Common stock,
$0.001 par value, 100,000,000 shares authorized; issued: 24,539,889
and 24,340,462 shares, respectively 24 24 Additional paid-in
capital 420,687 416,448 Accumulated deficit (323,813) (317,956)
Accumulated other comprehensive income - translation adjustments
33,295 34,811 Treasury stock, 15,798 shares (230) (230) Total
stockholders' equity 129,963 133,097 $351,024 $348,416 (1) Note
2005 financial statements have been adjusted for the Company's
adoption of SFAS 123R using the modified retrospective method.
HUDSON HIGHLAND GROUP, INC. SEGMENT ANALYSIS (in thousands)
(unaudited) For the Three Months Hudson Ended Hudson Hudson Asia
Highland March 31, 2006 Americas Europe Pacific Partners Corporate
Total Revenue $112,248 $116,141 $100,538 $15,774 $ - $344,701 Gross
margin $25,322 $50,965 $36,861 $14,942 $ - $128,090 Adjusted EBITDA
(1) $(3,377) $5,550 $ 4,732 $1,288 $(8,297) $(104) Business
reorganization expenses - - - 3 - 3 Merger and integration expenses
- - - - - - EBITDA (1) (3,377) 5,550 4,732 1,285 (8,297) (107)
Depreciation and amortization 1,506 1,739 775 323 165 4,508
Operating income (loss) $(4,883) $3,811 $3,957 $962 $(8,462)
$(4,615) For the Three Months Hudson Ended Hudson Hudson Asia
Highland March 31, 2005 (2) Americas Europe Pacific Partners
Corporate Total Revenue $112,105 $122,399 $103,501 $14,864 $ -
$352,869 Gross margin $27,574 $50,451 $36,116 $14,066 $ - $128,207
Adjusted EBITDA (1) $2,271 $3,101 $6,696 $376 $(10,150) $2,294
Business reorganization expenses (recoveries) 608 (79) - - - 529
Merger and integration (recoveries) (43) - - - - (43) EBITDA (1)
1,706 3,180 6,696 376 (10,150) 1,808 Depreciation and amortization
976 978 2,417 354 132 4,857 Operating income (loss) $730 $2,202
$4,279 $22 $(10,282) $(3,049) (1) Non-GAAP earnings before
interest, income taxes, special charges, other non-operating
expense, and depreciation and amortization ("Adjusted EBITDA") and
non-GAAP earnings before interest, income taxes, other
non-operating expense, 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. Adjusted EBITDA and 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, adjusted EBITDA and EBITDA
as presented above may not be comparable with similarly titled
measures reported by other companies. (2) Note 2005 financial
statements have been adjusted for the Company's adoption of SFAS
123R using the modified retrospective method. DATASOURCE: Hudson
Highland Group, Inc. CONTACT: Investors - David F. Kirby,
+1-212-351-7216, , or Media - Emmanuel Serrano, +1-212-351-7203, ,
both of Hudson Highland Group Web site: http://www.hhgroup.com/
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