NEW YORK, May 5 /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 first quarter
ended March 31, 2008. 2008 First Quarter Summary -- Revenue of
$297.5 million, an increase of 3.2 percent from $288.2 million for
the first quarter of 2007 -- Gross margin of $126.2 million, or
42.4 percent of revenue, up 7.2 percent from $117.7 million, or
40.9 percent of revenue for the same period last year -- Adjusted
EBITDA* of $6.7 million, or 2.3 percent of revenue, up 40.4 percent
from $4.8 million for the first quarter of 2007 -- EBITDA of $5.3
million, or 1.8 percent of revenue, up 289.4 percent from $1.4
million for the same period last year -- Net income from continuing
operations of $0.3 million, or $0.01 per basic and diluted share,
compared with net loss of ($1.8) million, or ($0.07) per basic and
diluted share, for the first quarter of 2007 -- Net income of $1.4
million, or $0.05 per basic and diluted share, compared with net
income of $0.1 million, or $0.00 per basic and diluted share, for
the first quarter of 2007 * Adjusted EBITDA is defined in the
segment tables at the end of this release. "During the first
quarter, we benefited from our geographic diversification and
specialized, professional-level recruitment focus," said Jon Chait,
Hudson Highland Group chairman and chief executive officer. "While
strong performances continued in Asia Pacific and Europe, our North
America business performed admirably, including a particularly
strong period for Hudson Legal, one of our specialized markets less
impacted by economic cycles." "The energy and engineering business
divestiture helped us further our strategic focus and drive
additional operational cost reduction," added Mary Jane Raymond,
executive vice president and chief financial officer. "We believe
this will position Hudson for improved profitability when markets
recover and, in the meantime, cushion our exposure to the economic
cycle." 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. Through March 31, 2008, the company had repurchased
701,173 shares for a total cost of approximately $5.3 million.
Restructuring Program During 2008, the company will streamline its
support operations to match its focus on specialization. The
company expects to have $5 - $7 million of restructuring actions
throughout this year, including $1 - $2 million in the second
quarter. During the first quarter of 2008, the company incurred
$1.6 million of restructuring expenses, predominantly related to
lease terminations and severance in Hudson Americas following the
sale of its energy and engineering business. 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
business to System One Holdings LLC. The company received
approximately $11 million in cash, subject to post-closing
adjustment; a five-year, secured subordinated $5 million seller
note; and a warrant exercisable for 10 percent of the equity of
System One. Hudson Highland Group also retained $3.6 million of
receivables of the business, all of which has been collected, and
has the right to receive an additional $600,000 in cash upon
resolution of certain liabilities. The company has treated the
business as a discontinued operation effective December 31, 2007.
As a result of the sale, the company allocated $6.9 million of
goodwill and recorded a loss on sale of ($0.6) million. Guidance
The company currently expects second quarter 2008 revenue of $300 -
$315 million at prevailing exchange rates and adjusted EBITDA of
$10 - $13 million, excluding the impact of any restructuring,
acquisitions or divestitures. This compares with revenue of $298.5
million and adjusted EBITDA of $12.2 million in the second quarter
of 2007. 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 Tuesday, May 6, 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 43059918 at 8:50 AM ET. For
those outside the United States, please call in on 1-706-634-5594
followed by the participant passcode 43059918. 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
43059918. For those outside the United States, the call will be
available on 1-706-645-9291 followed by the participant passcode
43059918. 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. Financial Tables Follow HUDSON HIGHLAND GROUP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (in thousands,
except share and per share amounts) (unaudited) Three Months Ended
March 31, 2008 2007 Revenue $297,507 $288,150 Direct costs 171,282
170,407 Gross margin 126,225 117,743 Operating expenses: Selling,
general and administrative 119,519 112,965 Acquisition-related
expenses - 298 Depreciation and amortization 3,863 3,695 Business
reorganization expenses 1,320 3,116 Merger and integration expenses
75 - Total operating expenses 124,777 120,074 Operating income
(loss) 1,448 (2,331) Other income (expense): Interest, net 360 212
Other, net 426 2,607 Income (loss) from continuing operations
before income taxes 2,234 488 Provision for income taxes 1,966
2,266 Income (loss) from continuing operations 268 (1,778) Income
from discontinued operations, net of income taxes 1,096 1,833 Net
income $1,364 $55 Basic and diluted income (loss) per share: Income
(loss) from continuing operations $0.01 $(0.07) Income from
discontinued operations 0.04 0.07 Net income $0.05 $- Weighted
average shares outstanding: Basic 25,500,000 24,919,000 Diluted
25,887,000 24,919,000 HUDSON HIGHLAND GROUP, INC. CONSOLIDATED
CONDENSED BALANCE SHEET (in thousands, except share and per share
amounts) (unaudited) ASSETS March 31, December 31, 2008 2007
Current assets: Cash and cash equivalents $25,290 $39,245
Restricted cash, short term 1,100 - Accounts receivable, net
219,284 189,072 Prepaid and other 23,522 18,493 Current assets from
discontinued operations - 12,265 Total current assets 269,196
259,075 Intangibles, net 74,836 78,235 Property and equipment, net
28,993 29,470 Other assets 11,318 7,214 Non-current assets from
discontinued operations - 212 Total assets $384,343 $374,206
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts
payable $27,291 $21,237 Accrued expenses and other current
liabilities 124,159 120,842 Credit facility and current portion of
long-term debt 1,834 243 Accrued business reorganization expenses
4,048 3,490 Accrued merger and integration expenses 294 314 Current
liabilities from discontinued operations - 6,300 Total current
liabilities 157,626 152,426 Accrued business reorganization
expenses, non-current 2,668 2,689 Accrued merger and integration
expenses, non-current 277 327 Other non-current liabilities 19,003
18,649 Total liabilities 179,574 174,091 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: 25,888,548 and 25,690,631 shares, respectively 26 26
Additional paid-in capital 445,013 444,075 Accumulated deficit
(287,223) (288,587) Accumulated other comprehensive
income-translation adjustments 51,399 44,946 Treasury stock,
585,802 and 24,680 shares, respectively (4,446) (345) Total
stockholders' equity 204,769 200,115 $384,343 $374,206 HUDSON
HIGHLAND GROUP, INC. SEGMENT ANALYSIS (in thousands) (unaudited)
Hudson For the Three Months Hudson Hudson Asia Ended March 31, 2008
Americas Europe Pacific Corporate Total Revenue $83,262 $113,352
$100,893 $- $297,507 Gross margin $22,755 $59,149 $44,321 $-
$126,225 Adjusted EBITDA (1) $1,227 $6,178 $5,229 $(5,928) $6,706
Business reorganization expenses (recoveries) 1,462 (237) 95 -
1,320 Merger and integration expenses (recoveries) (2) 77 - - 75
EBITDA (1) (233) 6,338 5,134 (5,928) 5,311 Depreciation and
amortization 1,173 1,647 990 53 3,863 Operating income (loss)
$(1,406) $4,691 $4,144 $(5,981) $1,448 Hudson For the Three Months
Hudson Hudson Asia Ended March 31, 2007 Americas Europe Pacific
Corporate Total Revenue $76,547 $118,343 $93,260 $- $288,150 Gross
margin $22,084 $57,048 $38,611 $- $117,743 Adjusted EBITDA (1)
$(1,369) $6,827 $5,570 $(6,250) $4,778 Acquisition-related expenses
- 298 - - 298 Business reorganization expenses (recoveries) 729
2,447 14 (74) 3,116 EBITDA (1) (2,098) 4,082 5,556 (6,176) 1,364
Depreciation and amortization 1,127 1,570 883 115 3,695 Operating
income (loss) $(3,225) $2,512 $4,673 $(6,291) $(2,331) (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. DATASOURCE: Hudson Highland
Group, Inc. CONTACT: David F. Kirby of Hudson Highland Group,
+1-212-351-7216, Web site: http://www.hhgroup.com/
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