NEW YORK, Feb. 6 /PRNewswire-FirstCall/ -- 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 fourth quarter
and full-year ended December 31, 2007. 2007 Fourth Quarter Summary
-- Revenue of $290.5 million, an increase of 1.4 percent from
$286.4 million for the fourth quarter of 2006 -- Gross margin of
$130.0 million, or 44.7 percent of revenue, up 10.1 percent from
$118.1 million, or 41.2 percent of revenue for the same period last
year -- Adjusted EBITDA of $13.5 million, or 4.6 percent of
revenue, up 14.4 percent from $11.8 million for the fourth quarter
of 2006 -- EBITDA of $12.9 million, or 4.4 percent of revenue, up
75.9 percent from $7.3 million for the same period last year -- Net
income from continuing operations of $4.6 million, or $0.18 per
basic and diluted share, compared with net income of $1.2 million,
or $0.05 per basic and diluted share, for the fourth quarter of
2006 -- Net income of $12.0 million, or $0.47 per basic and $0.46
per diluted share, compared with net income of $22.8 million, or
$0.93 per basic and $0.90 per diluted share, for the fourth quarter
of 2006 2007 Full-Year Summary -- Revenue of $1.18 billion, an
increase of 1.8 percent from $1.16 billion for 2006 -- Gross margin
of $507.9 million, or 43.1 percent of revenue, an increase of 10.6
percent from $459.3 million, or 39.7 percent of revenue for 2006 --
Adjusted EBITDA of $41.5 million, or 3.5 percent of revenue, an
increase of 76.6 percent from $23.5 million, or 2.0 percent of
revenue, for 2006 -- EBITDA of $32.6 million, or 2.8 percent of
revenue, an increase of 111.3 percent from $15.4 million, or 1.3
percent of revenue for 2006 -- Net income from continuing
operations of $4.9 million, or $0.19 per basic and diluted share,
compared with a net loss of ($8.2) million, or ($0.33) per basic
and diluted share, for 2006 -- Net income of $15.0 million, or
$0.59 per basic and $0.58 diluted share, compared with net income
of $20.4 million, or $0.83 per basic and diluted share, for 2006
"Our fourth quarter and full-year results demonstrate the value of
our geographic diversity and depth of specialization," said Jon
Chait, Hudson Highland Group chairman and chief executive officer.
"Our international operations delivered an adjusted EBITDA margin
greater than seven percent, which is in our long-term target range.
With this week's Energy and Engineering business sale, we have
completed our non-core divestitures and are focused globally on
specialized high-margin business segments with strong growth
potential. We believe Hudson is well positioned today regardless of
what the economy may bring." Mary Jane Raymond, executive vice
president and chief financial officer, added, "We expect earnings
improvement in 2008 as a result of our stronger core focus, process
re-engineering in North America and continued strength of our
international operations. Additionally, strong cash flow in the
fourth quarter and transaction proceeds provide financial
flexibility for investments." Sale of Energy and Engineering
Business On February 4, 2008, the company announced it had
completed the asset sale of its energy and engineering staffing
businesses to System One Holdings LLC. The company received
approximately $11 million in cash, subject to post- closing
adjustment; a five-year $5 million seller note; and a warrant
exercisable for 10 percent of the equity of System One. Hudson
Highland Group also has the right to receive an additional $600,000
in cash upon resolution of certain liabilities, and has retained
$3.6 million of receivables of the business. The company will treat
the business as a discontinued operation effective December 31,
2007. Sale of Netherlands Reintegration Business On December 20,
2007, the company announced it had completed the sale of its Dutch
Reintegration subsidiary, Hudson Human Capital Solutions B.V. to
Workx! Holding B.V. The company recorded a gain on the sale of
approximately $5.0 million, including $7.4 million in accumulated
foreign currency translation gains. As of December 1, 2007, the
business was considered a discontinued operation. Share Repurchase
Program On February 4, 2008, the company announced that its board
of directors authorized the repurchase of up to $15 million of the
company's common stock. The company intends to make purchases from
time to time as market conditions warrant. Guidance The company
currently expects first quarter 2008 revenue of $285 - $300 million
at prevailing exchange rates and adjusted EBITDA of $2 - $5
million, excluding the impact of any restructuring, acquisitions or
divestitures. This compares with revenue of $288.1 million and
adjusted EBITDA of $4.5 million in the first quarter of 2007.
During 2008, the company intends to streamline its support
operations to match its narrowed focus on specialization. Although
the company has not committed to take any such actions, the company
expects to have $5 - $7 million of restructuring actions through
this year, including $1 - $3 million in the first quarter.
Additional Information Please find additional information about the
company's quarterly results in the shareholder letter in the
investor information section of the company's website at
http://www.hudson.com/. Conference Call/Webcast Hudson Highland
Group will conduct a conference call Thursday, February 7, 2008 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 32241194 at 8:50 AM ET. For
those outside the United States, please call in on 1-706-634-5594
followed by the participant passcode 32241194. 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.hudson.com/. The archived call will be available for one
week by dialing 1-800-642-1687 followed by the participant passcode
32241194. For those outside the United States, the call will be
available on 1-706-645-9291 followed by the participant passcode
32241194. 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 3,600
professionals serving clients and candidates in more than 20
countries. More information is available at http://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 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
company's history of negative cash flows and operating losses may
continue; the ability of clients to terminate their relationship
with the company at any time; the impact of global economic
fluctuations on temporary contracting operations; risks and
financial impact associated with acquisitions and dispositions 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; restrictions imposed by blocking
arrangements; exposure to employment-related claims and limits on
insurance coverage related thereto; government regulations;
restrictions on the company's operating flexibility due to the
terms of its credit facility; and the company's ability to maintain
effective internal control over financial reporting. 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 Year Ended December 31,
December 31, 2007 2006 (1) 2007 (1) 2006 (1) Revenue $290,484
$286,421 $1,179,075 $1,157,874 Direct costs 160,500 168,355 671,162
698,619 Gross margin 129,984 118,066 507,913 459,255 Operating
expenses: Selling, general and administrative 116,511 106,289
466,413 435,754 Acquisition- related expenses 837 858 5,299 1,687
Depreciation and amortization 3,532 8,117 14,624 19,803 Business
reorganization expenses (recoveries) (276) 3,297 4,362 6,015 Merger
and integration expenses (recoveries) 8 287 (787) 362 Total
operating expenses 120,612 118,848 489,911 463,621 Operating income
(loss) 9,372 (782) 18,002 (4,366) Other income (expense): Interest,
net 195 173 700 (1,634) Other, net (242) (223) 3,445 1,584 Income
(loss) from continuing operations before income taxes 9,325 (832)
22,147 (4,416) Provision (benefit) for income taxes 4,762 (2,011)
17,240 3,771 Income (loss) from continuing operations 4,563 1,179
4,907 (8,187) Income from discontinued operations, net of income
taxes 7,402 21,666 10,074 28,615 Net income $11,965 $22,845 $14,981
$20,428 Basic income (loss) per share: Income (loss) from
continuing operations $0.18 $0.05 $0.19 $(0.33) Income from
discontinued operations 0.29 0.88 0.40 1.16 Net income $0.47 $0.93
$0.59 $0.83 Diluted income (loss) per share: Income (loss) from
continuing operations $0.18 $0.05 $0.19 $(0.33) Income from
discontinued operations 0.28 0.85 0.39 1.16 Net income $0.46 $0.90
$0.58 $0.83 Weighted average shares outstanding Basic 25,479,000
24,668,000 25,274,000 24,471,000 Diluted 25,781,000 25,346,000
25,914,000 24,471,000 (1) Note -- 2007 and 2006 financial
statements have been adjusted to reflect the sales of businesses as
discontinued operations and the restatement filed on Form 8-K on
February 4, 2008. HUDSON HIGHLAND GROUP, INC. CONSOLIDATED
CONDENSED BALANCE SHEETS (in thousands, except share and per share
amounts) December 31, December 31, 2007 (1) 2006 (1) (unaudited)
ASSETS Current assets: Cash and cash equivalents $39,245 $44,649
Accounts receivable, net 189,072 199,583 Prepaid and other 18,493
16,609 Current assets from discontinued operations 12,265 19,266
Total current assets 259,075 280,107 Intangibles, net 78,235 38,916
Property and equipment, net 29,470 27,276 Other assets 7,214 4,560
Non-current assets of discontinued operations 212 1,323 Total
assets $374,206 $352,182 LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities: Accounts payable $21,237 $21,274 Accrued
expenses and other current liabilities 120,842 125,561 Credit
facility and current portion of long-term debt 243 238 Accrued
business reorganization expenses 3,490 5,077 Accrued merger and
integration expenses 314 837 Current liabilities from discontinued
operations 6,300 14,302 Total current liabilities 152,426 167,289
Other non-current liabilities 18,648 8,204 Accrued business
reorganization expenses, non-current 2,689 3,409 Accrued merger and
integration expenses, non-current 327 1,721 Long-term debt, less
current portion 1 235 Total liabilities 174,091 180,858 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: 25,690,631 and 24,957,732 shares, respectively 26 25
Additional paid-in capital 444,075 427,645 Accumulated deficit
(288,587) (300,031) Accumulated other comprehensive
income-translation adjustments 44,946 43,915 Treasury stock, 24,680
shares (345) (230) Total stockholders' equity 200,115 171,324
$374,206 $352,182 (1) Note -- 2007 and 2006 financial statements
have been adjusted to reflect the sale of businesses as
discontinued operations and the restatement filed on Form 8-K on
February 4, 2008. HUDSON HIGHLAND GROUP, INC. SEGMENT ANALYSIS (in
thousands) (unaudited) For the Three Months Ended Hudson Hudson
Hudson December 31, 2007 Americas Europe Asia Pacific Corporate
Total Revenue $68,482 $115,203 $106,799 $- $290,484 Gross margin
$21,041 $60,386 $48,557 $- $129,984 Adjusted EBITDA (2) $1,207
$10,512 $8,736 $(6,982) $13,473 Acquisition- related expenses - 837
- - 837 Business reorganization (recoveries) (118) - (34) (124)
(276) Merger and integration expenses 2 - - 6 8 EBITDA (2) 1,323
9,675 8,770 (6,864) 12,904 Depreciation and amortization 1,069
1,381 1,037 45 3,532 Operating income (loss) $254 $8,294 $7,733
$(6,909) $9,372 For the Three Months Ended Hudson Hudson Hudson
December 31, 2006(1) Americas Europe Asia Pacific Corporate Total
Revenue $74,295 $114,603 $97,523 $- $286,421 Gross margin $24,397
$54,325 $39,344 $- $118,066 Adjusted EBITDA (2) $2,338 $7,627
$7,358 $(5,546) $11,777 Acquisition- related expenses - 858 - - 858
Business reorganization expenses 323 2,162 666 146 3,297 Merger and
integration expenses (recoveries) 325 - (38) - 287 EBITDA (2) 1,690
4,607 6,730 (5,692) 7,335 Depreciation and amortization 2,480 1,832
879 2,926 8,117 Operating income (loss) $(790) $2,775 $5,851
$(8,618) $(782) (1) Note -- 2006 financial statements have been
adjusted to reflect the sale of businesses as discontinued
operations and the restatement filed on Form 8-K on February 4,
2008. (2) 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. Amortization for 2006 includes accelerated
amortization expense related to changes in estimates and
valuations. HUDSON HIGHLAND GROUP, INC. SEGMENT ANALYSIS (in
thousands) (unaudited) For the Year Ended December 31, 2007 (1)
Hudson Hudson Hudson Americas Europe Asia Pacific Corporate Total
Revenue $291,525 $472,407 $415,143 $- $1,179,075 Gross margin
$87,494 $239,559 $180,860 $- $507,913 Adjusted EBITDA (2) $(114)
$34,716 $33,428 $(26,530) $41,500 Acquisition-related expenses
3,551 1,748 - - 5,299 Business reorganization expenses (recoveries)
541 2,438 (15) 1,398 4,362 Merger and integration (recoveries) (50)
- - (737) (787) EBITDA (2) (4,156) 30,530 33,443 (27,191) 32,626
Depreciation and amortization 4,354 6,059 3,937 274 14,624
Operating income (loss) $(8,510) $24,471 $29,506 $(27,465) $18,002
For the Year Ended December 31, 2006 (1) Hudson Hudson Hudson
Americas Europe Asia Pacific Corporate Total Revenue $306,732
$458,815 $392,327 $- $1,157,874 Gross margin $91,461 $208,966
$158,828 $- $459,255 Adjusted EBITDA (2) $(5,396) $25,797 $30,801
$(27,701) $23,501 Acquisition-related expenses - 1,687 - - 1,687
Business reorganization expenses 1,764 2,684 874 693 6,015 Merger
and integration expenses (recoveries) 399 1 (38) - 362 EBITDA (2)
(7,559) 21,425 29,965 (28,394) 15,437 Depreciation and amortization
6,343 6,871 3,171 3,418 19,803 Operating income (loss) $(13,902)
$14,554 $26,794 $(31,812) $(4,366) (1) Note -- 2007 and 2006
financial statements have been adjusted to reflect the sale of
businesses as discontinued operations and the restatement filed on
Form 8-K on February 4, 2008. (2) 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. Amortization for 2006
includes accelerated amortization expense related to changes in
estimates and valuations. HUDSON HIGHLAND GROUP, INC.
RECONCILIATION FOR CONSTANT CURRENCY (in thousands) (unaudited) The
company defines the term "constant currency" to mean that financial
data for a period are translated into U.S. Dollars using the same
foreign currency exchange rates that were used to translate
financial data for the previously reported period. Changes in
revenues, 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. Quarter Ended December 31, 2007 2006
(1) As Currency Constant As Reported Translation Currency Reported
Revenue: Hudson Americas $68,482 $(165) $68,317 $74,295 Hudson
Europe 115,203 (9,171) 106,032 114,603 Hudson Asia Pacific 106,799
(12,760) 94,039 97,523 Total 290,484 (22,096) 268,388 286,421
Direct costs: Hudson Americas 47,441 (46) 47,395 49,898 Hudson
Europe 54,817 (4,000) 50,817 60,278 Hudson Asia Pacific 58,242
(7,557) 50,685 58,179 Total 160,500 (11,603) 148,897 168,355 Gross
margin: Hudson Americas 21,041 (119) 20,922 24,397 Hudson Europe
60,386 (5,171) 55,215 54,325 Hudson Asia Pacific 48,557 (5,203)
43,354 39,344 Total $129,984 $(10,493) $119,491 $118,066 Selling,
general and administrative (2) Hudson Americas $20,903 $(135)
$20,768 $24,539 Hudson Europe 52,092 (4,469) 47,623 49,388 Hudson
Asia Pacific 40,858 (4,493) 36,365 32,865 Corporate 7,027 - 7,027
8,472 Total $120,880 $(9,097) $111,783 $115,264 (1) Note -- 2006
financial statements have been adjusted to reflect the sale of
business segments as discontinued operations. (2) Selling, general
and administrative expenses include depreciation and amortization
and acquisition related expenses. Amortization for 2006 includes
accelerated amortization expense related to changes in estimates
and valuations. HUDSON HIGHLAND GROUP, INC. RECONCILIATION FOR
CONSTANT CURRENCY (in thousands) (unaudited) Year Ended December
31, 2007 (1) 2006 (1) As Currency Constant As Reported Translation
Currency Reported Revenue Hudson Americas $291,525 $(239) $291,286
$306,732 Hudson Europe 472,407 (38,382) 434,025 458,815 Hudson Asia
Pacific 415,143 (40,251) 374,892 392,327 Total 1,179,075 (78,872)
1,100,203 1,157,874 Direct costs: Hudson Americas 204,031 (61)
203,970 215,271 Hudson Europe 232,848 (18,871) 213,977 249,849
Hudson Asia Pacific 234,283 (24,405) 209,878 233,499 Total 671,162
(43,337) 627,825 698,619 Gross margin: Hudson Americas 87,494 (178)
87,316 91,461 Hudson Europe 239,559 (19,511) 220,048 208,966 Hudson
Asia Pacific 180,860 (15,846) 165,014 158,828 Total $507,913
$(35,535) $472,378 $459,255 Selling, general and administrative (2)
Hudson Americas $95,513 $(198) $95,315 $103,200 Hudson Europe
212,650 (17,3860) 195,264 191,727 Hudson Asia Pacific 151,369
(13,018) 138,351 131,198 Corporate 26,804 - 26,804 31,119 Total
$486,336 $(30,602) $455,734 $457,244 (1) Note -- 2007 and 2006
financial statements have been adjusted to reflect the sale of
business segments as discontinued operations. (2) Selling, general
and administrative expenses include depreciation and amortization
and acquisition related expenses. Amortization for 2006 includes
accelerated amortization expense related to changes in estimates
and valuations. DATASOURCE: Hudson Highland Group, Inc. CONTACT:
David F. Kirby, Hudson Highland Group, +1-212-351-7216, Web site:
http://www.hudson.com/
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