NEW YORK, July 29 /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, 2009. 2009 Second Quarter Summary -- Revenue of
$173.8 million, a decrease of 42.6 percent from $303.1 million for
the second quarter of 2008, and an increase of $9.1 million or 5.6
percent from the first quarter of 2009 -- Gross margin of $64.9
million, or 37.3 percent of revenue, down 51.7 percent from $134.4
million, or 44.3 percent of revenue for the same period last year,
and an increase of $2.9 million or 4.6 percent from the first
quarter of 2009 -- Adjusted EBITDA* loss of $4.4 million, or 2.6
percent of revenue, down from adjusted EBITDA of positive $11.4
million for the second quarter of 2008, and an improvement from the
adjusted EBITDA loss of $9.7 million in the first quarter of 2009
-- EBITDA* loss of $9.6 million, down from EBITDA of positive $10.4
million for the same period in 2008 -- Net loss from continuing
operations of $15.5 million, or $0.59 per basic and diluted share,
compared with net income from continuing operations of $1.9
million, or $0.07 per basic and diluted share, for the second
quarter of 2008 -- Net loss of $17.8 million, or $0.68 per basic
and diluted share, compared with net income of $5.0 million, or
$0.20 per basic and $0.19 per diluted share, for the second quarter
of 2008 *Adjusted EBITDA and EBITDA are defined in the segment
tables at the end of this release. "Despite an adverse economic
environment in the second quarter, we were able to reduce our first
quarter adjusted EBITDA loss by 54 percent due to aggressive cost
management," said Jon Chait, Hudson Highland Group chairman and
chief executive officer. "While we expect the environment to remain
challenging, I believe that we have weathered the worst of the
declines and there is evidence that market demand levels are
beginning to stabilize." "Our recent office restructuring actions
and additional cost reductions are helping to position the company
for a profitable future when the recovery takes hold," said Mary
Jane Raymond, the company's executive vice president and chief
financial officer. "We expect our adjusted EBITDA in the second
half of 2009 to improve over the first half of the year,
notwithstanding a possible seasonal decline in the third quarter.
We expect cash trends to improve as well." Restructuring Program
During the third quarter of 2009, the company expects to continue
to streamline its operations in response to current economic
conditions. Last quarter, the company increased the size of the
2009 restructuring plan to $11 - $16 million and expects to incur
$1 - $4 million of restructuring charges during the third quarter
of 2009. Second quarter restructuring expenses of $3.6 million were
related to severance and lease terminations, primarily in Europe
and North America. Liquidity and Capital Resources The company
ended the second quarter of 2009 with $47.2 million in cash
including $11.3 million currently borrowed under its amended credit
facility, up from $46.3 million at the end of the first quarter of
2009. In addition, the company has excess availability under its
amended credit facility of $6.7 million. The company received $11.6
million in April 2009 from Heidrick & Struggles for the final
earn-out from the sale of Highland Partners in 2006. Guidance
Despite recent signs of increasing stability, visibility remains
low. As a result, the company will not provide formal guidance for
the third quarter of 2009. The company will comment on current
trends and its outlook for the third quarter on its second quarter
earnings call. 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 Web site at
http://www.hudson.com/. Conference Call/Webcast Hudson Highland
Group will conduct a conference call Thursday, July 30, 2009 at
10:00 a.m. 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 19999263 at 9:50 a.m. ET. For
those outside the United States, please call in on 1-706-634-5594
followed by the participant passcode 19999263. 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 Web site 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
19999263. For those outside the United States, the call will be
available on 1-706-645-9291 followed by the participant passcode
19999263. 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 2,500
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 HUDSON HIGHLAND GROUP, INC. CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (in thousands, except share and per share
amounts) (unaudited) Three Months Ended Six Months Ended June 30,
June 30, -------- -------- 2009 2008 2009 2008 ---- ---- ---- ----
Revenue $173,848 $303,128 $338,539 $596,159 Direct costs 108,964
168,725 211,651 338,579 ------- ------- ------- ------- Gross
margin 64,884 134,403 126,888 257,580 ------ ------- -------
------- Operating expenses: Selling, general and administrative
expenses 69,329 123,002 141,030 239,398 Depreciation and
amortization 2,840 3,537 6,628 7,362 Business reorganization and
integration expenses 3,562 1,024 9,401 2,216 Goodwill and other
impairment charges 1,549 - 1,549 - ----- --- ----- --- Total
operating expenses 77,280 127,563 158,608 248,976 ------ -------
------- ------- Operating (loss) income (12,396) 6,840 (31,720)
8,604 Other (expense) income: Interest, net (182) 204 (372) 558
Other, net 54 1,095 674 1,358 -- ----- --- ----- (Loss) income from
continuing operations before income taxes (12,524) 8,139 (31,418)
10,520 Provision (benefit) for income taxes 2,975 6,281 (1,085)
8,060 ----- ----- ------ ----- (Loss) income from continuing
operations (15,499) 1,858 (30,333) 2,460 (Loss) income from
discontinued operations, net of income taxes (2,272) 3,098 7,003
3,860 ------ ----- ----- ----- Net (loss) income $(17,771) $4,956
$(23,330) $6,320 ======== ====== ======== ====== Basic (loss)
income per share: (Loss) income from continuing operations $(0.59)
$0.07 $(1.18) $0.10 (Loss) income from discontinued operations
(0.09) 0.13 0.27 0.15 ----- ---- ---- ---- Net (loss) income
$(0.68) $0.20 $(0.91) $0.25 ====== ===== ====== ===== Diluted
(loss) income per share: (Loss) income from continuing operations
$(0.59) $0.07 $(1.18) $0.10 (Loss) income from discontinued
operations (0.09) 0.12 0.27 0.15 ----- ---- ---- ---- Net (loss)
income $(0.68) $0.19 $(0.91) $0.25 ====== ===== ====== =====
Weighted average shares outstanding: Basic 26,311 24,984 25,744
25,135 Diluted 26,311 25,512 25,744 25,616 HUDSON HIGHLAND GROUP,
INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except
per share amount) (unaudited) June 30, December 31, 2009 2008 ----
---- ASSETS Current assets: Cash and cash equivalents $47,238
$49,209 Accounts receivable, net 104,794 127,169 Prepaid and other
15,438 15,411 Current assets from discontinued operations 831 2,360
--- ----- Total current assets 168,301 194,149 Intangibles, net 971
2,498 Property and equipment, net 21,128 24,379 Other assets 13,152
9,927 Total assets $203,552 $230,953 ======== ======== LIABILITIES
AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable
$12,984 $15,693 Accrued expenses and other current liabilities
60,716 76,447 Short-term borrowings 11,348 5,307 Accrued business
reorganization expenses 6,955 5,724 Current liabilities from
discontinued operations 1,185 1,410 ----- ----- Total current
liabilities 93,188 104,581 Other non-current liabilities 19,157
16,904 Accrued business reorganization expenses, non- current 819
1,476 --- ----- Total liabilities 113,164 122,961 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 26,694 and 26,494 shares,
respectively 27 26 Additional paid-in capital 445,123 450,739
Accumulated deficit (386,235) (362,905) Accumulated other
comprehensive income- translation adjustments 31,756 27,054
Treasury stock, 107 and 1,140 shares, respectively, at cost (283)
(6,922) ---- ------ Total stockholders' equity 90,388 107,992
------ ------- Total liabilities and stockholders' equity $203,552
$230,953 ======== ======== HUDSON HIGHLAND GROUP, INC. SEGMENT
ANALYSIS (in thousands) (unaudited) For The Three Hudson Months
Ended Hudson Hudson Asia June 30, 2009 Americas Europe Pacific
Corporate Total --------- ------- -------- --------- ----- Revenue
$43,133 $68,187 $62,528 $- $173,848 ======= ======= ======= ==
======== Gross margin $10,512 $31,280 $23,092 $- $64,884 -------
------- ------- -- ------- Adjusted EBITDA (1) $(495) $798 $444
$(5,192) $(4,445) Business reorganization and integration expenses
1,124 2,328 96 14 3,562 Goodwill and other impairment charges (120)
- 1,669 - 1,549 ---- --- ----- --- ----- EBITDA (1) (1,499) (1,530)
(1,321) (5,206) (9,556) Depreciation and amortization 1,048 1,017
745 30 2,840 ----- ----- --- -- ----- Operating (loss) income
$(2,547) $(2,547) $(2,066) $(5,236) $(12,396) ======= =======
======= ======= ======== For The Three Hudson Months Ended Hudson
Hudson Asia June 30, 2008 Americas Europe Pacific Corporate Total
--------- ------- -------- --------- ----- Revenue $71,507 $115,696
$115,925 $- $303,128 ======= ======== ======== == ======== Gross
margin $20,186 $63,326 $50,891 $- $134,403 ------- ------- -------
-- -------- Adjusted EBITDA (1) $1,734 $9,870 $9,011 $(9,214)
$11,401 Business reorganization and integration expenses 245 779 -
- 1,024 Goodwill and other impairment charges - - - - - --- --- ---
--- --- EBITDA (1) 1,489 9,091 9,011 (9,214) 10,377 Depreciation
and amortization 1,171 1,329 984 53 3,537 ----- ----- --- -- -----
Operating income (loss) $318 $7,762 $8,027 $(9,267) $6,840 ====
====== ====== ======= ====== (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. HUDSON HIGHLAND GROUP, INC.
SEGMENT ANALYSIS (in thousands) (unaudited) For The Six Hudson
Months Ended Hudson Hudson Asia June 30, 2009 Americas Europe
Pacific Corporate Total --------- ------- -------- --------- -----
Revenue $87,155 $134,116 $117,268 $- $338,539 ======= ========
======== == ======== Gross margin $21,482 $61,584 $43,822 $-
$126,888 ------- ------- ------- -- -------- Adjusted EBITDA (1)
$(3,659) $(282) $(261) $(9,940) $(14,142) Business reorganization
and integration expenses 2,747 4,666 1,974 14 9,401 Goodwill and
other impairment charges (120) - 1,669 - 1,549 ---- --- ----- ---
----- EBITDA (1) (6,286) (4,948) (3,904) (9,954) (25,092)
Depreciation and amortization 2,053 2,820 1,662 93 6,628 -----
----- ----- -- ----- Operating (loss) income $(8,339) $(7,768)
$(5,566) $(10,047) $(31,720) ======= ======= ======= ========
======== For The Six Hudson Months Ended Hudson Hudson Asia June
30, 2008 Americas Europe Pacific Corporate Total --------- -------
-------- --------- ----- Revenue $154,769 $226,028 $215,362 $-
$596,159 ======== ======== ======== == ======== Gross margin
$42,940 $120,883 $93,757 $- $257,580 ------- -------- ------- --
-------- Adjusted EBITDA (1) $2,959 $15,583 $14,783 $(15,143)
$18,182 Business reorganization and integration expenses 1,705 416
95 - 2,216 Goodwill and other impairment charges - - - - - --- ---
--- --- --- EBITDA (1) 1,254 15,167 14,688 (15,143) 15,966
Depreciation and amortization 2,344 2,972 1,940 106 7,362 -----
----- ----- --- ----- Operating (loss) income $(1,090) $12,195
$12,748 $(15,249) $8,604 ======= ======= ======= ======== ======
(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. Contact: David F. Kirby Hudson Highland Group
212-351-7216 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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