NEW YORK, July 30 /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 second quarter
ended June 30, 2008. 2008 Second Quarter Summary -- Revenue of
$305.9 million, an increase of 3.0 percent from $297.0 million for
the second quarter of 2007 -- Gross margin of $137.2 million, or
44.9 percent of revenue, up 5.8 percent from $129.7 million, or
43.7 percent of revenue for the same period last year -- Adjusted
EBITDA* of $11.2 million, or 3.7 percent of revenue, down 5.6
percent from $11.9 million for the second quarter of 2007 -- EBITDA
of $10.2 million, or 3.3 percent of revenue, up 56.8 percent from
$6.5 million for the same period last year -- Net income from
continuing operations of $1.6 million, or $0.07 per basic and $0.06
per diluted share, compared with net loss of ($1.4) million, or
($0.05) per basic and diluted share, for the second quarter of 2007
-- Net income of $5.0 million, or $0.20 per basic and $0.19 per
diluted share, compared with net loss of ($0.6) million, or ($0.02)
per basic and diluted share, for the second quarter of 2007 *
Adjusted EBITDA is defined in the segment tables at the end of this
release. "Second quarter operating results were led by our
international operations and continuing improvement in North
America," said Jon Chait, Hudson Highland Group chairman and chief
executive officer. "Our management team did a commendable job in
navigating turbulent economies in many markets." "Our cash position
more than doubled from last quarter to over $50 million, driven by
better working capital management, particularly in North America,"
added Mary Jane Raymond, executive vice president and chief
financial officer. "Our restructuring program is providing the
desired financial flexibility for future investments."
Restructuring Program During the remainder of 2008, the company
will continue to 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
- $3 million in the third quarter. During the first half of 2008,
the company incurred $2.7 million of restructuring expenses in
conjunction with its 2008 program. Second quarter expenses were
predominantly related to severance and reorganization of certain
support functions in Hudson Europe. Sale of Balance Public
Management Division Effective May 1, 2008, the company completed
the sale of the assets of the public management division of
Balance, which supplies contractors with medical expertise. Revenue
for this division in 2007 was $6.0 million. The company has treated
the business as a discontinued operation effective June 30, 2008.
As a result of the sale, the company allocated $3.7 million of
goodwill and recorded a gain on sale of $2.8 million. 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. During
the first quarter of 2008, the company repurchased 701,173 shares
at a total cost of approximately $5.3 million. During the second
quarter, the company did not make any repurchases. Guidance The
company currently expects third quarter 2008 revenue of $290 - $305
million at prevailing exchange rates and adjusted EBITDA of $8 -
$11 million, excluding the impact of any restructuring,
acquisitions or divestitures. This compares with revenue of $300.4
million and adjusted EBITDA of $10.6 million in the third quarter
of 2007. Additional Information Additional information about the
company's quarterly results can be found in the shareholder letter
and the second quarter earnings slides 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, July 31, 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 53821851 at 8:50 AM ET. For those outside the
United States, please call in on 1-706-634-5594 followed by the
participant passcode 53821851. 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 53821851. For those outside the United
States, the call will be available on 1-706-645-9291 followed by
the participant passcode 53821851. 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. Contact:
David F. Kirby Hudson Highland Group 212-351-7216 Financial Tables
Follow HUDSON HIGHLAND GROUP, INC. CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (in thousands, except per share amounts)
(unaudited) Three Months Ended Six Months Ended June 30, June 30,
2008 2007 2008 2007 Revenue $305,940 $297,045 $601,428 $583,860
Direct costs 168,723 167,325 338,603 336,826 Gross margin 137,217
129,720 262,825 247,034 Operating expenses: Selling, general and
administrative 125,973 117,814 245,283 230,619 Acquisition-related
expenses - 3,853 - 4,151 Depreciation and amortization 3,570 3,852
7,429 7,542 Business reorganization expenses 1,071 1,578 2,391
4,694 Merger and integration (recoveries) expenses (47) (42) 28
(42) Total operating expenses 130,567 127,055 255,131 246,964
Operating income 6,650 2,665 7,694 70 Other income (expense):
Interest, net 183 435 543 647 Other, net 899 (19) 1,325 2,588
Income from continuing operations before income taxes 7,732 3,081
9,562 3,305 Provision for income taxes 6,106 4,431 7,966 6,636
Income (loss) from continuing operations 1,626 (1,350) 1,596
(3,331) Income from discontinued operations, net of income taxes
3,330 732 4,724 2,768 Net income (loss) $4,956 $(618) $6,320 $(563)
Basic income (loss) per share: Income (loss) from continuing
operations $0.07 $(0.05) $0.06 $(0.13) Income from discontinued
operations 0.13 0.03 0.19 0.11 Net income (loss) $0.20 $(0.02)
$0.25 $(0.02) Diluted income (loss) per share: Income (loss) from
continuing operations $0.06 $(0.05) $0.06 $(0.13) Income from
discontinued operations 0.13 0.03 0.19 0.11 Net income (loss) $0.19
$(0.02) $0.25 $(0.02) Weighted average shares outstanding: Basic
24,984 25,247 25,135 25,084 Diluted 25,512 25,247 25,615 25,084
HUDSON HIGHLAND GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEET
(in thousands, except per share amounts) (unaudited) ASSETS June
30, December 31, 2008 2007 Current assets: Cash and cash
equivalents $51,429 $39,245 Restricted cash, short term 481 -
Accounts receivable, net 196,949 187,980 Prepaid and other 20,143
18,389 Current assets from discontinued operations - 13,461 Total
current assets 269,002 259,075 Goodwill 67,947 73,444 Other
intangibles, net 5,144 4,791 Property and equipment, net 30,025
29,470 Other assets 11,742 7,214 Non-current assets from
discontinued operations - 212 Total assets $383,860 $374,206
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts
payable $27,679 $20,988 Accrued expenses and other current
liabilities 117,353 120,009 Credit facility and current portion of
long-term debt 1,107 243 Accrued business reorganization expenses
3,356 3,490 Accrued merger and integration expenses 230 314 Current
liabilities from discontinued operations - 7,382 Total current
liabilities 149,725 152,426 Accrued business reorganization
expenses, non-current 2,305 2,689 Accrued merger and integration
expenses, non-current 244 327 Other non-current liabilities 19,467
18,649 Total liabilities 171,741 174,091 Commitments and
contingencies 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:
25,956 and 25,691 shares, respectively 26 26 Additional paid-in
capital 448,549 444,075 Accumulated deficit (282,267) (288,587)
Accumulated other comprehensive income-translation adjustments
50,286 44,946 Treasury stock, 589 and 25 shares, respectively
(4,475) (345) Total stockholders' equity 212,119 200,115 $383,860
$374,206 HUDSON HIGHLAND GROUP, INC. SEGMENT ANALYSIS (in
thousands) (unaudited) For the Three Months Ended Hudson June 30,
2008 Hudson Hudson Asia Americas Europe Pacific Corporate Total
Revenue $71,507 $116,838 $117,595 $- $305,940 Gross margin $20,179
$64,485 $52,553 $- $137,217 Adjusted EBITDA (1) $1,733 $10,013
$8,713 $(9,215) $11,244 Business reorganization expenses
(recoveries) 229 842 - - 1,071 Merger and integration expenses
(recoveries) 17 (63) - (1) (47) EBITDA (1) 1,487 9,234 8,713
(9,214) 10,220 Depreciation and amortization 1,170 1,329 1,018 53
3,570 Operating income (loss) $317 $7,905 $7,695 $(9,267) $6,650
For the Three Months Ended Hudson June 30, 2007 Hudson Hudson Asia
Americas Europe Pacific Corporate Total Revenue $70,830 $120,809
$105,406 $- $297,045 Gross margin $21,200 $62,685 $45,835 $-
$129,720 Adjusted EBITDA (1) $(1,307) $10,629 $9,132 $(6,548)
$11,906 Acquisition-related expenses 3,551 302 - - 3,853 Business
reorganization expenses (recoveries) (7) (7) 17 1,575 1,578 Merger
and integration expenses (recoveries) (42) - - - (42) EBITDA (1)
(4,809) 10,334 9,115 (8,123) 6,517 Depreciation and amortization
1,160 1,632 994 66 3,852 Operating income (loss) $(5,969) $8,702
$8,121 $(8,189) $2,665 (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-opera ting
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. HUDSON HIGHLAND GROUP, INC.
SEGMENT ANALYSIS (in thousands) (unaudited) For the Six Months
Ended Hudson June 30, 2008 Hudson Hudson Asia Americas Europe
Pacific Corporate Total Revenue $154,769 $228,171 $218,488 $-
$601,428 Gross margin $42,934 $123,017 $96,874 $- $262,825 Adjusted
EBITDA (1) $2,960 $15,783 $13,942 $(15,143) $17,542 Business
reorganization expenses (recoveries) 1,691 605 95 - 2,391 Merger
and integration expenses (recoveries) 15 14 - (1) 28 EBITDA (1)
1,254 15,164 13,847 (15,142) 15,123 Depreciation and amortization
2,343 2,972 2,008 106 7,429 Operating income (loss) $(1,089)
$12,192 $11,839 $(15,248) $7,694 For the Six Months Ended Hudson
June 30, 2007 Hudson Hudson Asia Americas Europe Pacific Corporate
Total Revenue $147,377 $237,817 $198,666 $- $583,860 Gross margin
$43,284 $119,304 $84,446 $- $247,034 Adjusted EBITDA (1) $(2,676)
$17,187 $14,702 $(12,798) $16,415 Acquisition-related expenses
3,551 600 - - 4,151 Business reorganization expenses (recoveries)
722 2,440 31 1,501 4,694 Merger and integration expenses
(recoveries) (42) - - - (42) EBITDA (1) (6,907) 14,147 14,671
(14,299) 7,612 Depreciation and amortization 2,287 3,197 1,877 181
7,542 Operating income (loss) $(9,194) $10,950 $12,794 $(14,480)
$70 (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.hudson.com/
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