NEW YORK, May 4 /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, 2009. 2009 First Quarter Summary -- Revenue of
$165.0 million, a decrease of 43.9 percent from $294.0 million for
the first quarter of 2008 -- Gross margin of $62.3 million, or 37.8
percent of revenue, down 49.8 percent from $124.2 million, or 42.2
percent of revenue for the same period last year -- Adjusted
EBITDA* loss of $10.0 million, or 6.1 percent of revenue, down from
adjusted EBITDA of positive $6.8 million for the first quarter of
2008 -- EBITDA* loss of $15.9 million, down from EBITDA of positive
$5.4 million for the same period last year -- Net loss from
continuing operations of $15.2 million, or $0.60 per basic and
diluted share, compared with net income from continuing operations
of $0.4 million, or $0.02 per basic and $0.01 per diluted share,
for the first quarter of 2008 -- Net loss of $5.6 million, or $0.22
per basic and diluted share, compared with net income of $1.4
million, or $0.05 per basic and diluted share, for the first
quarter of 2008 *Adjusted EBITDA and EBITDA are defined in the
segment tables at the end of this release. "Our operating results
continued to be significantly impacted by the deep global recession
during the first quarter," said Jon Chait, Hudson Highland Group
chairman and chief executive officer. "While we expect the
environment to remain challenging, we believe that the first
quarter was a financial performance bottom for Hudson." "Our team
has done an admirable job of reducing costs and managing cash given
the extraordinary market circumstances," added Mary Jane Raymond,
chief financial officer. "Further, we have moved swiftly to
identify new pockets of opportunity and remain sharply focused on
viable markets in this environment." Restructuring Program During
the second quarter of 2009, the company expects to continue to
streamline its operations in response to current economic
conditions. The company recently increased the size of the 2009
restructuring plan to $11 - $16 million and expects to incur $3 -
$6 million of restructuring charges during the second quarter of
2009. First quarter expenses of $5.9 million were related to
severance and lease terminations in all three regional businesses
of the company. Liquidity and Capital Resources The company ended
the first quarter of 2009 with $35.0 million in net cash, a
decrease from $43.9 million at the end of 2008, and excess
availability under its amended credit facility of $5.3 million. The
company also received $11.6 million in April 2009 from Heidrick
& Struggles, the final earn-out from the sale of Highland
Partners in 2006. 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.
During the first quarter, the company repurchased 243,316 shares at
a total cost of approximately $0.7 million. Since the inception of
the program, the company has repurchased 1,491,772 shares at a
total cost of approximately $8.2 million. As of March 1, 2009,
additional stock repurchases are prohibited under the terms of the
company's amended credit agreement. Guidance Despite recent signs
of increasing stability, visibility remains low. As a result, the
company will not provide formal guidance for the second quarter of
2009. The company will comment on current trends and its outlook
for the second quarter on its earnings call. Additional Information
Additional information about the company's quarterly results can be
found in the shareholder letter and the fourth quarter and
full-year 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
Tuesday, May 5, 2009 at 9:00 AM ET to discuss this announcement.
Individuals wishing to participate can join the conference call by
dialing 1-800-374-1532 followed by the participant passcode
95760964 at 8:50 AM ET. For those outside the United States, please
call in on 1-706-634-5594 followed by the participant passcode
95760964. 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 95760964. For those outside the United States,
the call will be available on 1-706-645-9291 followed by the
participant passcode 95760964. 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 nearly
3,000 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
impact of global economic fluctuations including the current
economic downturn; the ability of clients to terminate their
relationship with the company at any time; risks in collecting our
accounts receivable; implementation of the company's cost reduction
initiatives effectively; the company's history of negative cash
flows and operating losses may continue; the company's limited
borrowing availability under our credit facility, which may
negatively impact our liquidity; restrictions on the company's
operating flexibility due to the terms of its credit facility;
fluctuations in the company's operating results from quarter to
quarter; risks relating to the company's international operations,
including foreign currency fluctuations; risks related to our
investment strategy; risks and financial impact associated with
dispositions of underperforming or non-core assets; the company's
heavy reliance on information systems and the impact of potentially
losing or failing to develop technology; competition in the
company's markets and the company's dependence on highly skilled
professionals; the company's exposure to employment-related claims
from both clients and employers and limits on related insurance
coverage; the company's dependence on key management personnel;
volatility of stock price; the impact of government regulations;
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
letter. 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 Contact: David F. Kirby Hudson Highland Group
212-351-7216 HUDSON HIGHLAND GROUP, INC. CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (in thousands, except per share amounts)
(unaudited) Three Months Ended March 31, --------- 2009 2008 ----
---- Revenue $164,990 $294,032 Direct costs 102,677 169,880 -------
------- Gross margin 62,313 124,152 ------ ------- Operating
expenses: Selling, general and administrative expenses 72,302
117,313 Depreciation and amortization 3,790 3,825 Business
reorganization and integration expenses 5,935 1,395 ----- -----
Total operating expenses 82,027 122,533 ------ ------- Operating
(loss) income (19,714) 1,619 Other income (expense): Interest, net
(191) 351 Other, net 619 197 --- --- (Loss) income from continuing
operations before provision for income taxes (19,286) 2,167
(Benefit) provision for income taxes (4,059) 1,784 ------ -----
(Loss) income from continuing operations (15,227) 383 Income from
discontinued operations, net of income taxes 9,668 981 ----- ---
Net (loss) income $(5,559) $1,364 ======= ====== Basic (loss)
income per share: (Loss) income from continuing operations $(0.60)
$0.02 Income from discontinued operations 0.38 0.03 ---- ---- Net
(loss) income $(0.22) $0.05 ====== ===== Diluted (loss) income per
share: (Loss) income from continuing operations $(0.60) $0.01
Income from discontinued operations 0.38 0.04 ---- ---- Net (loss)
income $(0.22) $0.05 ====== ===== Weighted average shares
outstanding: Basic 25,171 25,500 Diluted 25,171 25,877 HUDSON
HIGHLAND GROUP, INC. CONDENSED CONSOLIDATED BALANCE SHEET (in
thousands, except par value of stocks) (unaudited) March 31,
December 31, 2009 2008 ---- ---- ASSETS Current assets: Cash and
cash equivalents $46,260 $49,209 Accounts receivable, net 103,968
127,828 Prepaid and other 25,511 15,552 Current assets of
discontinued operations 751 881 --- --- Total current assets
176,490 193,470 Intangibles, net 1,043 2,498 Property and
equipment, net 21,693 24,446 Other assets 11,282 9,982 Non-current
assets of discontinued operations 495 557 --- --- Total assets
$211,003 $230,953 ======== ======== LIABILITIES AND STOCKHOLDERS'
EQUITY Current liabilities: Accounts payable $14,263 $15,757
Accrued expenses and other current liabilities 55,844 76,791
Short-term borrowings 11,257 5,307 Accrued business reorganization
expenses 7,680 5,724 Current liabilities of discontinued operations
1,553 1,002 ----- ----- Total current liabilities 90,597 104,581
Accrued business reorganization expenses, non-current 1,030 1,476
Other non-current liabilities 16,799 16,904 ------ ------ Total
liabilities 108,426 122,961 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 26,695 and
26,494 shares, respectively 26 26 Additional paid-in capital
445,017 450,739 Accumulated deficit (368,464) (362,905) Accumulated
other comprehensive income-translation adjustments 26,281 27,054
Treasury stock, 107 and 1,140 shares, respectively, at cost (283)
(6,922) ---- ------ Total stockholders' equity 102,577 107,992
------- ------- Total liabilities and stockholders' equity $211,003
$230,953 ======== ======== HUDSON HIGHLAND GROUP, INC. SEGMENT
ANALYSIS (in thousands) (unaudited) For the Three Hudson Months
Ended Hudson Hudson Asia March 31, 2009 Americas Europe Pacific
Corporate Total ----------- --------- ---------- -----------
------- Revenue $44,023 $66,227 $54,740 $- $164,990 ======= =======
======= === ======== Gross margin $10,962 $30,622 $20,729 $-
$62,313 ======= ======= ======= === ======= Adjusted EBITDA (loss)
(1) $(3,163) $(1,372) $(705) $(4,749) $(9,989) Business
reorganization and integration expenses 1,623 2,434 1,878 - 5,935
----- ----- ----- - ----- EBITDA (loss) (1) (4,786) (3,806) (2,583)
(4,749) (15,924) Depreciation and amortization 1,005 1,805 917 63
3,790 ----- ----- --- --- ----- Operating income (loss) $(5,791)
$(5,611) $(3,500) $(4,812) $(19,714) ======= ======= =======
======= ======== For the Three Hudson Months Ended Hudson Hudson
Asia March 31, 2008 Americas Europe Pacific Corporate Total
----------- --------- ---------- ----------- ------- Revenue
$83,262 $111,333 $99,437 $- $294,032 ======= ======== ======= ===
======== Gross margin $22,755 $58,532 $42,865 $- $124,152 =======
======= ======= === ======== Adjusted EBITDA (loss) (1) $1,227
$5,769 $5,771 $(5,928) $6,839 Business reorganization and
integration expenses (recovery) 1,460 (160) 95 - 1,395 ----- ----
--- --- ----- EBITDA (loss) (1) (233) 5,929 5,676 (5,928) 5,444
Depreciation and amortization 1,173 1,643 956 53 3,825 ----- -----
--- --- ----- Operating income (loss) $(1,406) $4,286 $4,720
$(5,981) $1,619 ======= ====== ====== ======= ====== (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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