Hudson Highland Group, Inc. (Nasdaq:HHGP), a leading global
provider of professional recruitment and related talent solutions,
today announced financial results for the full year and fourth
quarter ended December 31, 2011.
"During 2011, we launched new strategic initiatives to maximize
the value of Hudson's global platform and achieve greater operating
efficiencies. In more than 20 countries, our teams placed over
16,000 professionals and managed on average 5,800 highly skilled
contract consultants per day to deliver solutions that helped our
clients grow and address these uncertain times," said Manuel
Marquez, chairman and chief executive officer of Hudson Highland
Group. "Despite headwinds in the fourth quarter, we achieved double
digit revenue growth, generated positive cash flow and realized
record net income from continuing operations in 2011. We believe we
are now better positioned to confront the market contraction in
Europe and its ripple effect in Asia Pacific."
2011 Full Year Summary
- Revenue of $933.7 million, an increase of 17.5 percent from
2010, or 10.9 percent in constant currency.
- Gross margin of $354.3 million, or 37.9 percent of revenue,
grew 18.7 percent in 2011, or 11.9 percent in constant
currency.
- EBITDA* of $23.6 million, or 2.5 percent of revenue in 2011,
compared with $6.5 million, or 0.8 percent of revenue, in
2010.
- Net income of $10.9 million, or $0.35 per basic share and $0.34
per diluted share, compared with net loss of $4.7 million, or $0.16
per basic and diluted share, in 2010.
"Improvements in our earnings and cash position in 2011 resulted
from our global commitment to move our company to solid
profitability and liquidity," said Mary Jane Raymond, the company's
chief financial officer. "In the fourth quarter, we took steps to
further optimize our operations by moving from four to three
regional units. This structure helped us weather the deteriorating
conditions at the end of the year. We expect to generate additional
synergies in 2012 to drive our earnings."
2011 Fourth Quarter Summary
- Revenue of $222.7 million, an increase of 1.7 percent over the
fourth quarter of 2010, or 1.0 percent in constant currency.
- Gross margin increased to $84.6 million in the fourth quarter,
or 38.0 percent of revenue, representing a 2.1 percent increase
from the same period last year, or 1.4 percent in constant
currency.
- EBITDA* of $6.0 million, or 2.7 percent of revenue in the
fourth quarter, improved from $3.6 million, or 1.6 percent of
revenue, for the fourth quarter of 2010.
- Net income of $3.3 million, or $0.10 per basic and diluted
share, compared with net income of $1.2 million, or $0.04 per basic
and diluted share, for the fourth quarter of 2010.
- Cash flow from operations was $20.4 million in the fourth
quarter. Liquidity increased to $89.1 million, composed of $37.3
million in cash and $51.8 million in available borrowings.
* EBITDA and adjusted EBITDA are defined in the segment tables
at the end of this release.
Key Strategic Initiatives
During 2011, the company launched a new global strategy focused
on four key initiatives which were instrumental in delivering the
full year results:
- Reap the value of Hudson's global business
To further align operations with the needs of its global
clients, Hudson established global practices for two of its fastest
growing businesses, Legal eDiscovery and RPO, which represented 70
percent of constant currency gross margin growth in 2011. In
addition, the company simplified its operating platform, organizing
operations into three regions, which it believes will facilitate
greater alignment with its global clients' needs, better
coordination of global activities and more efficient utilization of
resources.
- Attract, develop and retain the right people
Following the appointment of a new chief people officer, the
company started to deploy best-practice processes to help its teams
be more successful. These efforts contributed to Hudson's adjusted
EBITDA leverage on incremental gross margin of 49 percent in
constant currency in 2011.
- Focus on selected clients and services in the market
The company further developed its professional recruitment and
talent solutions services to bring more value to clients. Higher
value solutions helped improve the gross margin on contract talent
and interim management by 100 basis points in constant currency to
18.5 percent. In permanent recruitment, Hudson's RPO clients
increasingly use the company's talent management offerings to
further align recruitment processes with their business needs.
- Create a compelling digital presence
To deliver a more compelling digital presence for its clients
and candidates – critical to the company's future – Hudson began
integrating its existing technology, information, social media and
branding efforts. Under the direction of its chief knowledge
officer, in December 2011, Hudson launched a new search engine
optimized web site in more than 20 countries. The new web platform
is already generating an increasing flow of targeted candidates and
business leads.
Regional Highlights
Americas
In 2011, Hudson Americas delivered one of its best-performing
years. Gross margin increased 29 percent compared with 2010, while
adjusted EBITDA reached $6.4 million compared with $0.2 million in
2010. A 19 percent increase in contracting gross margin was driven
primarily by the company's Legal eDiscovery practice. This business
provides end-to-end eDiscovery solutions, process management and
managed review services tailored to meet client
needs. Temporary contracting gross margin increased 60 basis
points to 22.2 percent in 2011, driven primarily by higher margins
in eDiscovery. Permanent recruiting gross margin grew by 95
percent, attributable to the early success of RPO in the Americas,
a strategic service that allows clients to transfer all or part of
their recruitment process to Hudson.
For the fourth quarter, Hudson Americas' gross margin increased
27 percent compared with the prior year period, driven by 14
percent gross margin growth in temporary contracting, including
eDiscovery. Permanent recruitment more than doubled due to
growth in RPO. Adjusted EBITDA reached $2.4 million for the
fourth quarter, more than doubling from the prior year period.
Asia Pacific
Asia Pacific delivered strong adjusted EBITDA gains in 2011 on
10 percent gross margin growth in constant currency, driven by the
expansion of RPO and efficient leverage. Gross margin growth
was driven by 14 percent growth in permanent recruitment and 5
percent growth in temporary contracting. Permanent recruitment
growth was led by 35 percent growth in RPO across the region as
well as 23 percent growth in China.
Adjusted EBITDA was $21.3 million, or 5.9 percent of revenue, an
increase of 56 percent or $7.6 million from 2010. Asia Pacific
continued to be the most profitable region in the organization, and
benefitted from 51 percent constant currency leverage in 2011.
During the fourth quarter, European economic conditions created
a ripple effect in Asia Pacific as some multi-national clients
delayed hiring decisions. Gross margin was down 5 percent in
constant currency in the fourth quarter from prior year, but
despite this, adjusted EBITDA reached $5.0 million, or 6.0 percent
of revenue, an increase of 24 percent or $1.0 million from the
fourth quarter of 2010.
Europe
For the full year 2011, Hudson Europe's gross margin increased 9
percent in constant currency compared with the prior year. Adjusted
EBITDA of $16.5 million increased 79 percent from $9.2 million in
2010.
Temporary contracting gross margin increased 30 percent in
constant currency, driven by the expansion of Legal eDiscovery in
the U.K., as well as growth in the Netherlands professional
contracting business and Belgium's interim management
business. The temporary contracting gross margin increased to
18.9 percent, up from 16.9 percent in 2010, driven primarily by
higher margins in eDiscovery. Permanent recruitment delivered
modest growth in 2011, a combination of growth in retained search
in Belgium and France, and declines in the U.K.
The second half of 2011 was notable for volatile economic
conditions in Europe, marked by the sovereign debt crisis and the
contraction of the banking and finance industry. During the
fourth quarter, several clients delayed permanent hiring
decisions. Nonetheless, the balanced service portfolio helped
maintain gross margin flat compared with the fourth quarter of 2010
in constant currency. Adjusted EBITDA of $3.0 million increased 18
percent over the fourth quarter of 2010.
Business Outlook
The company remains optimistic about 2012, but the European debt
situation has persisted and the weaker economic conditions
witnessed in the fourth quarter have continued into the first
quarter. Given the current environment, the company expects first
quarter 2012 revenue to be down between 4 – 8 percent to prior year
at prevailing exchange rates, and EBITDA about breakeven from
operations. This compares with revenue of $218.5 million and EBITDA
of $2.5 million in the first quarter of 2011.
Conference Call/Webcast Hudson Highland Group
will conduct a conference call today at 5:00 p.m. ET to discuss
this announcement. Individuals wishing to listen can access
the webcast on the investor information section of the company's
web site at www.hudson.com.
The archived call will be available on the investor information
section of the company's web site at www.hudson.com.
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 2,000 professionals serving clients and
candidates in approximately 20 countries. More information is
available at www.hudson.com.
Forward-Looking Statements
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 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 important factors, risks, uncertainties and assumptions,
including industry and economic conditions' that could cause actual
results to differ materially from those described in the
forward-looking statements. Such factors, risks, uncertainties and
assumptions include, but are not limited to, global economic
fluctuations; risks related to fluctuations in the company's
operating results from quarter to quarter; the ability of clients
to terminate their relationship with the company at any
time; competition in the company's markets; risks
associated with the company's investment strategy; risks related to
international operations, including foreign currency fluctuations;
the company's dependence on key management personnel; the company's
ability to attract and retain highly skilled professionals; risks
in collecting the company's accounts receivable; the company's
history of negative cash flows and operating losses may
continue; restrictions on the company's operating flexibility
due to the terms of its credit facilities; the company's ability to
implement cost reduction initiatives effectively; the company's
heavy reliance on information systems and the impact of potentially
losing or failing to develop technology; risks related to our
dependence on uninterrupted service to clients; the company's
exposure to employment-related claims from both clients and
employers and limits on related insurance coverage; volatility
of the company's stock price; the impact of government
regulations; and 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 document. The company assumes no
obligation, and expressly disclaims any obligation, 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
per share amounts) |
(unaudited) |
|
|
|
|
|
|
Three Months
Ended December 31, |
Year Ended
December 31, |
|
2011 |
2010 |
2011 |
2010 |
|
|
|
|
|
Revenue |
$ 222,738 |
$ 219,061 |
$ 933,736 |
$ 794,542 |
Direct costs |
138,090 |
136,137 |
579,431 |
495,969 |
Gross margin |
84,648 |
82,924 |
354,305 |
298,573 |
Operating expenses: |
|
|
|
|
Selling, general and administrative
expenses |
78,379 |
80,192 |
329,899 |
294,313 |
Depreciation and amortization |
1,501 |
1,730 |
6,251 |
8,184 |
Business reorganization and integration
expenses |
(27) |
988 |
720 |
1,694 |
Total operating expenses |
79,853 |
82,910 |
336,870 |
304,191 |
Operating income (loss) |
4,795 |
14 |
17,435 |
(5,618) |
Other income (expense): |
|
|
|
|
Interest income (expense), net |
(234) |
(306) |
(1,143) |
(1,278) |
Other income (expense), net |
(290) |
1,812 |
(44) |
4,500 |
Fee for early extinguishment of credit
facility |
-- |
-- |
-- |
(563) |
Income (loss) from continuing operations
before provision for income taxes |
4,271 |
1,520 |
16,248 |
(2,959) |
Provision for (benefit from) income
taxes |
962 |
116 |
5,339 |
1,482 |
Income (loss) from continuing operations |
3,309 |
1,404 |
10,909 |
(4,441) |
Income (loss) from discontinued operations,
net of income taxes |
-- |
(213) |
-- |
(244) |
Net income (loss) |
$ 3,309 |
$ 1,191 |
$ 10,909 |
$ (4,685) |
Basic earnings (loss) per
share: |
|
|
|
|
Income (loss) from continuing operations |
$ 0.10 |
$ 0.04 |
$ 0.35 |
$ (0.15) |
Income (loss) from discontinued
operations |
-- |
(0.01) |
-- |
(0.01) |
Net income (loss) |
$ 0.10 |
$ 0.04 |
$ 0.35 |
$ (0.16) |
|
|
|
|
|
Diluted earnings (loss) per
share: |
|
|
|
|
Income (loss) from continuing operations |
$ 0.10 |
$ 0.04 |
$ 0.34 |
$ (0.15) |
Income (loss) from discontinued
operations |
-- |
(0.01) |
-- |
(0.01) |
Net income (loss) |
$ 0.10 |
$ 0.04 |
$ 0.34 |
$ (0.16) |
|
|
|
|
|
Weighted average shares
outstanding: |
|
|
|
|
Basic |
31,639 |
31,234 |
31,566 |
29,931 |
Diluted |
32,118 |
31,754 |
31,989 |
29,931 |
|
|
|
|
|
HUDSON HIGHLAND GROUP,
INC. |
CONDENSED CONSOLIDATED
BALANCE SHEETS |
(in
thousands) |
(unaudited) |
|
|
|
|
December
31, |
|
2011 |
2010 |
ASSETS |
|
|
Current assets: |
|
|
Cash and cash equivalents |
$ 37,302 |
$ 29,523 |
Accounts receivable, less allowance for
doubtful accounts of $1,772 and $2,145, respectively |
131,489 |
128,576 |
Prepaid and other |
13,132 |
13,988 |
Total current assets |
181,923 |
172,087 |
Property and equipment, net |
17,838 |
16,593 |
Other assets |
16,785 |
17,154 |
Total assets |
$ 216,546 |
$ 205,834 |
|
|
|
LIABILITIES AND STOCKHOLDERS'
EQUITY |
|
|
Current liabilities: |
|
|
Accounts payable |
$ 12,025 |
$ 14,812 |
Accrued expenses and other current
liabilities |
74,248 |
74,990 |
Short-term borrowings |
3,384 |
1,339 |
Accrued business reorganization expenses |
858 |
2,619 |
Total current liabilities |
90,515 |
93,760 |
Other non-current liabilities |
10,867 |
10,493 |
Income tax payable, non-current |
7,807 |
8,303 |
Total liabilities |
109,189 |
112,556 |
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 32,776 and 32,181 shares,
respectively |
33 |
32 |
Additional paid-in capital |
470,786 |
466,582 |
Accumulated deficit |
(397,290) |
(408,199) |
Accumulated other comprehensive
income—translation adjustments |
34,255 |
34,902 |
Treasury stock, 79 and 9 shares,
respectively, at cost |
(427) |
(39) |
Total stockholders' equity |
107,357 |
93,278 |
Total liabilities and stockholders'
equity |
$ 216,546 |
$ 205,834 |
|
|
|
|
|
|
|
|
|
|
|
HUDSON HIGHLAND GROUP,
INC. |
SEGMENT ANALYSIS -
QUARTER TO DATE |
(in
thousands) |
(unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
For The Three Months Ended December
31, 2011 |
Hudson Americas |
Hudson Asia
Pacific |
Hudson Europe |
Corporate |
Total |
Revenue, from external customers |
$ 47,802 |
$ 83,185 |
$ 91,751 |
$ -- |
$ 222,738 |
Gross margin, from external customers |
$ 13,738 |
$ 33,598 |
$ 37,312 |
$ -- |
$ 84,648 |
Adjusted EBITDA (loss) (1) |
$ 2,445 |
$ 4,988 |
$ 2,967 |
$ (4,131) |
$ 6,269 |
Business reorganization and integration
expenses (recovery) |
$ -- |
$ -- |
$ (27) |
$ -- |
$ (27) |
Non-operating expense (income), including
corporate administration charges |
1,204 |
1,847 |
1,854 |
(4,615) |
290 |
EBITDA (loss) (1) |
$ 1,241 |
$ 3,141 |
$ 1,140 |
$ 484 |
$ 6,006 |
Depreciation and amortization expenses |
|
|
|
|
1,501 |
Interest expense (income), net |
|
|
|
|
234 |
Provision for (benefit from) income
taxes |
|
|
|
|
962 |
Loss (income) from discontinued operations,
net of taxes |
|
|
|
|
-- |
Net income (loss) |
|
|
|
|
$ 3,309 |
|
|
|
|
|
|
For The Three Months Ended December
31, 2010 |
Hudson Americas |
Hudson Asia
Pacific |
Hudson Europe |
Corporate |
Total |
Revenue, from external customers |
$ 44,268 |
$ 84,177 |
$ 90,616 |
$ -- |
$ 219,061 |
Gross margin, from external customers |
$ 10,775 |
$ 34,681 |
$ 37,468 |
$ -- |
$ 82,924 |
Adjusted EBITDA (loss) (1) |
$ 1,109 |
$ 4,009 |
$ 2,516 |
$ (4,902) |
2,732 |
Business reorganization and integration
expenses (recovery) |
$ 21 |
$ 102 |
$ 865 |
$ -- |
$ 988 |
Non-operating expense (income), including
corporate administration charges |
(1,298) |
1,129 |
1,337 |
(2,980) |
(1,812) |
EBITDA (loss) (1) |
$ 2,386 |
$ 2,778 |
$ 314 |
$ (1,922) |
$ 3,556 |
Depreciation and amortization expenses |
|
|
|
|
1,730 |
Interest expense (income), net |
|
|
|
|
306 |
Provision for (benefit from) income
taxes |
|
|
|
|
116 |
Loss (income) from discontinued operations,
net of taxes |
|
|
|
|
213 |
Net income (loss) |
|
|
|
|
$ 1,191 |
|
|
|
|
|
|
For the Three Months Ended March 31,
2011 |
Hudson Americas |
Hudson Asia
Pacific |
Hudson Europe |
Corporate |
Total |
Revenue, from external customers |
$ 45,812 |
$ 79,017 |
$ 93,710 |
$ -- |
$ 218,539 |
Gross margin, from external customers |
$ 10,357 |
$ 31,903 |
$ 38,938 |
$ -- |
$ 81,198 |
Adjusted EBITDA (loss) (1) |
$ 204 |
$ 3,151 |
$ 4,136 |
$ (5,100) |
$ 2,391 |
Business reorganization and integration
expenses (recovery) |
$ -- |
$ -- |
$ 351 |
$ -- |
$ 351 |
Non-operating expense (income), including
corporate administration charges |
583 |
1,137 |
1,610 |
(3,816) |
(486) |
EBITDA (loss) (1) |
$ (379) |
$ 2,014 |
$ 2,175 |
$ (1,284) |
$ 2,526 |
Depreciation and amortization expenses |
|
|
|
|
1,576 |
Interest expense (income), net |
|
|
|
|
206 |
Provision for (benefit from) income
taxes |
|
|
|
|
750 |
Loss (income) from discontinued operations,
net of taxes |
|
|
|
|
-- |
Net income (loss) |
|
|
|
|
$ (6) |
|
|
|
|
|
|
For the Three Months Ended September
30, 2011 |
Hudson Americas |
Hudson Asia
Pacific |
Hudson Europe |
Corporate |
Total |
Revenue, from external customers |
$ 47,691 |
$ 100,637 |
$ 96,753 |
$ -- |
$ 245,081 |
Gross margin, from external customers |
$ 13,662 |
$ 41,201 |
$ 38,129 |
$ -- |
$ 92,992 |
Adjusted EBITDA (loss) (1) |
$ 1,956 |
$ 7,069 |
$ 3,893 |
$ (5,232) |
$ 7,686 |
Business reorganization and integration
expenses (recovery) |
$ -- |
$ -- |
$ -- |
$ -- |
$ -- |
Non-operating expense (income), including
corporate administration charges |
497 |
1,848 |
1,873 |
(3,982) |
236 |
EBITDA (loss) (1) |
$ 1,459 |
$ 5,221 |
$ 2,020 |
$ (1,252) |
$ 7,450 |
Depreciation and amortization expenses |
|
|
|
|
1,537 |
Interest expense (income), net |
|
|
|
|
328 |
Provision for (benefit from) income
taxes |
|
|
|
|
2,202 |
Loss (income) from discontinued operations,
net of taxes |
|
|
|
|
-- |
Net income (loss) |
|
|
|
|
$ 3,382 |
|
(1) Non-GAAP earnings before
interest, income taxes, and depreciation and amortization
("EBITDA") and non-GAAP earnings before interest, income taxes,
depreciation and amortization, non-operating income, goodwill and
other impairment charges, business reorganization expenses and
acquisition-related expenses ("Adjusted 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. EBITDA and adjusted 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, EBITDA and adjusted EBITDA as presented
above may not be comparable with similarly titled measures reported
by other companies. |
|
|
|
HUDSON HIGHLAND GROUP,
INC. |
SEGMENT ANALYSIS - YEAR
TO DATE |
(in
thousands) |
(unaudited) |
|
|
|
|
|
|
For The Year Ended December 31,
2011 |
Hudson Americas |
Hudson Asia
Pacific |
Hudson Europe |
Corporate |
Total |
Revenue, from external customers |
$ 192,217 |
$ 359,108 |
$ 382,411 |
$ -- |
$ 933,736 |
Gross margin, from external customers |
$ 50,778 |
$ 146,917 |
$ 156,610 |
$ -- |
$ 354,305 |
Adjusted EBITDA (loss) (1) |
$ 6,442 |
$ 21,306 |
$ 16,517 |
$ (19,860) |
$ 24,405 |
Business reorganization and integration
expenses (recovery) |
$ -- |
$ -- |
$ 720 |
$ -- |
$ 720 |
Non-operating expense (income), including
corporate administration charges |
2,962 |
7,126 |
7,727 |
(17,771) |
44 |
EBITDA (loss) (1) |
$ 3,482 |
$ 14,180 |
$ 8,071 |
$ (2,091) |
$ 23,642 |
Depreciation and amortization expenses |
|
|
|
|
6,251 |
Interest expense (income), net |
|
|
|
|
1,143 |
Provision for (benefit from) income
taxes |
|
|
|
|
5,339 |
Loss (income) from discontinued operations,
net of taxes |
|
|
|
|
-- |
Net income (loss) |
|
|
|
|
$ 10,909 |
|
|
|
|
|
|
For The Year Ended December 31,
2010 |
Hudson Americas |
Hudson Asia
Pacific |
Hudson Europe |
Corporate |
Total |
Revenue, from external customers |
$ 162,432 |
$ 303,619 |
$ 328,491 |
$ -- |
$ 794,542 |
Gross margin, from external customers |
$ 39,417 |
$ 121,965 |
$ 137,191 |
$ -- |
$ 298,573 |
Adjusted EBITDA (loss) (1) |
$ 172 |
$ 13,695 |
$ 9,239 |
$ (18,845) |
$ 4,261 |
Business reorganization and integration
expenses (recovery) |
307 |
(15) |
1,402 |
-- |
1,694 |
Non-operating expense (income), including
corporate administration charges (2) |
(1,822) |
4,863 |
6,751 |
(13,729) |
(3,937) |
EBITDA (loss) (1) |
$ 1,687 |
$ 8,847 |
$ 1,086 |
$ (5,117) |
$ 6,503 |
Depreciation and amortization expenses |
|
|
|
|
8,184 |
Interest expense (income), net |
|
|
|
|
1,278 |
Provision for (benefit from) income
taxes |
|
|
|
|
1,482 |
Loss (income) from discontinued operations,
net of taxes |
|
|
|
|
244 |
Net income (loss) |
|
|
|
|
$ (4,685) |
|
|
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|
|
|
|
|
|
|
|
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(1) Non-GAAP earnings before
interest, income taxes, and depreciation and amortization
("EBITDA") and non-GAAP earnings before interest, income taxes,
depreciation and amortization, non-operating income, goodwill and
other impairment charges, business reorganization expenses and
acquisition-related expenses ("Adjusted 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. EBITDA and adjusted 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, EBITDA and adjusted EBITDA as presented
above may not be comparable with similarly titled measures reported
by other companies. |
(2) Includes $563 credit facility
termination fee. |
|
|
HUDSON HIGHLAND GROUP,
INC. |
Reconciliation for
Constant Currency |
(in
thousands) |
(unaudited) |
|
|
|
|
|
The company operates on a global
basis, with the majority of our gross margin generated outside of
the United States. Accordingly, fluctuations in foreign currency
exchange rates can affect our results of operations. Constant
currency information compares financial results between periods as
if exchange rates had remained constant period-over-period. The
company currently defines the term "constant currency" to mean that
financial data for a previously reported period are translated into
U.S. dollars using the same foreign currency exchange rates that
were used to translate financial data for the current
period. |
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|
Changes in revenue, gross
margin, selling, general and administrative expenses ("SG&A")
and other non-operating income (expense), operating income (loss)
and EBITDA (loss) 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. |
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The company believes that these
calculations are a useful measure, indicating the actual change in
operations. 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. |
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|
Three Months
Ended December 31, |
|
2011 |
2010 |
|
As reported |
As reported |
Currency
translation |
Constant
currency |
Revenue: |
|
|
|
|
Hudson Americas |
$ 47,802 |
$ 44,268 |
$ (5) |
$ 44,263 |
Hudson Asia Pacific |
83,185 |
84,177 |
2,019 |
86,196 |
Hudson Europe |
91,751 |
90,616 |
(583) |
90,033 |
Total |
$ 222,738 |
$ 219,061 |
$ 1,431 |
$ 220,492 |
|
|
|
|
|
Gross margin: |
|
|
|
|
Hudson Americas |
$ 13,738 |
$ 10,775 |
$ (5) |
$ 10,770 |
Hudson Asia Pacific |
33,598 |
34,681 |
807 |
35,488 |
Hudson Europe |
37,312 |
37,468 |
(279) |
37,189 |
Total |
$ 84,648 |
$ 82,924 |
$ 523 |
$ 83,447 |
|
|
|
|
|
SG&A and other non-operating income
(expense) (1): |
|
|
|
|
Hudson Americas |
$ 12,517 |
$ 8,254 |
$ 11 |
$ 8,265 |
Hudson Asia Pacific |
30,460 |
31,845 |
660 |
32,505 |
Hudson Europe |
36,205 |
36,359 |
(291) |
36,068 |
Corporate |
(513) |
1,922 |
(5) |
1,917 |
Total |
$ 78,669 |
$ 78,380 |
$ 375 |
$ 78,755 |
|
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|
|
|
Operating income (loss): |
|
|
|
|
Hudson Americas |
$ 2,122 |
$ 737 |
$ (10) |
$ 727 |
Hudson Asia Pacific |
4,354 |
3,176 |
21 |
3,197 |
Hudson Europe |
2,595 |
1,040 |
(4) |
1,036 |
Corporate |
(4,276) |
(4,939) |
3 |
(4,936) |
Total |
$ 4,795 |
$ 14 |
$ 10 |
$ 24 |
|
|
|
|
|
EBITDA (loss): |
|
|
|
|
Hudson Americas |
$ 1,241 |
$ 2,386 |
$ (15) |
$ 2,371 |
Hudson Asia Pacific |
3,141 |
2,778 |
144 |
2,922 |
Hudson Europe |
1,140 |
314 |
10 |
324 |
Corporate |
484 |
(1,922) |
-- |
(1,922) |
Total |
$ 6,006 |
$ 3,556 |
$ 139 |
$ 3,695 |
|
|
|
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|
(1) SG&A and other
non-operating income (expense) is a measure that management uses to
evaluate the segments' expenses, which include the following
captions on the Condensed Consolidated Statements of Operations:
Selling, general and administrative expenses and other income
(expense), net. Corporate management service allocations are
included in the segments' other income (expense). |
CONTACT: David F. Kirby
Hudson Highland Group
212-351-7216
david.kirby@hudson.com
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