NEW YORK, Nov. 3 /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 third quarter
ended September 30, 2009. 2009 Third Quarter Summary -- Revenue of
$169.6 million, a decrease of 37.0 percent from $269.2 million for
the third quarter of 2008, and a decrease of $4.2 million or 2.4
percent from the second quarter of 2009 -- Gross margin of $64.2
million, or 37.8 percent of revenue, down 43.0 percent from $112.7
million, or 41.9 percent of revenue for the same period last year,
and a decrease of $0.7 million or 1.1 percent from the second
quarter of 2009 -- Adjusted EBITDA* loss of $3.2 million, or 1.9
percent of revenue, down from adjusted EBITDA of positive $6.6
million for the third quarter of 2008, and an improvement from the
adjusted EBITDA loss of $4.4 million in the second quarter of 2009
-- EBITDA* loss of $6.1 million, down from EBITDA of positive $3.8
million for the same period in 2008 -- Net loss from continuing
operations of $7.6 million, or $0.29 per basic and diluted share,
compared with net income from continuing operations of $0.4
million, or $0.01 per basic and diluted share, for the third
quarter of 2008 -- Net loss of $6.9 million, or $0.26 per basic and
diluted share, compared with net loss of $0.3 million, or $0.01 per
basic and diluted share, for the third quarter of 2008 *Adjusted
EBITDA and EBITDA are defined in the segment tables at the end of
this release. "Sequential improvement of adjusted EBITDA during the
third quarter was encouraging," said Jon Chait, Hudson Highland
Group's chairman and chief executive officer. "This achievement was
counter to typical third quarter seasonal softness and resulted
from the company's earlier restructuring actions and increased
sequential demand in some markets. While we expect the environment
to remain challenging, I expect we will continue to deliver
improved sequential financial results for the fourth quarter of
2009 and into 2010." "We continued to manage our cash well, ending
the quarter with $44.5 million, as our Days Sales Outstanding
decreased to 48 days," said Mary Jane Raymond, the company's
executive vice president and chief financial officer. "We used $2.8
million of cash during the third quarter, of which $1.7 million was
used for an earn-out payment on our Tony Keith acquisition in China
and $0.9 million was a repayment on our credit facility. Cash flow
from operations showed significant improvement from the first half
of the year with a net use under $1 million." Restructuring Program
During the fourth 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 its 2009
restructuring plan to $19 million and expects to incur $2 - $5
million of restructuring charges during the fourth quarter of 2009.
Third quarter restructuring expenses of $2.9 million were related
to severance and lease terminations, primarily in Europe. Liquidity
and Capital Resources The company ended the third quarter of 2009
with $44.5 million in cash and $10.5 million currently borrowed
under its primary credit facility, down from $47.2 million in cash
at the end of the second quarter of 2009 with $11.3 million
borrowed. In addition, the company has availability under its
primary credit facility of $2.3 million, as well as an additional
$3.8 million of availability under local country credit facilities,
the majority of which became available subsequent to September 30,
2009. The company paid $1.7 million in July 2009 as part of its
earn-out for the Tony Keith acquisition in China. Guidance Despite
recent signs of increasing stability, visibility remains low. As a
result, the company will not provide formal guidance for the fourth
quarter of 2009. The company will comment on current trends and its
outlook for the fourth quarter on its third quarter earnings call.
Additional Information Additional information about the company's
quarterly results can be found in the shareholder letter and the
third 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
Wednesday, November 4, 2009 at 9:00 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 36219796 at 8:50 a.m. ET. For those outside
the United States, please call 1-706-634-5594 followed by the
participant passcode 36219796. 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 two weeks by dialing 1-800-642-1687 followed
by the participant passcode 36219796. For those outside the United
States, the call will be available on 1-706-645-9291 followed by
the participant passcode 36219796. 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 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;
financial impact of audits by various taxing authorities; 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
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 Nine Months Ended September Ended
September 30, 30, ---- ---- ---- ---- 2009 2008 2009 2008 ---- ----
---- ---- Revenue $169,647 $269,239 $508,186 $865,398 Direct costs
105,457 156,544 317,108 495,123 ------- ------- ------- -------
Gross margin 64,190 112,695 191,078 370,275 ------ ------- -------
------- Operating expenses: Selling, general and administrative
expenses 67,412 106,080 208,442 345,478 Depreciation and
amortization 2,741 3,913 9,369 11,274 Business reorganization and
integration expenses 2,878 2,817 12,279 5,033 Goodwill and other
impairment charges - - 1,549 - --- --- ----- --- Total operating
expenses 73,031 112,810 231,639 361,785 ------ ------- -------
------- Operating (loss) income (8,841) (115) (40,561) 8,490 Other
(expense) income : Interest, net (96) 337 (469) 895 Other, net 99
603 773 1,963 -- --- --- ----- (Loss) income from continuing
operations before provision for income taxes (8,838) 825 (40,257)
11,348 (Benefit) provision for income taxes (1,215) 464 (2,300)
8,524 ----=-- --- -=----- ----- (Loss) income from continuing
operations (7,623) 361 (37,957) 2,824 Income (loss) from
discontinued operations, net of income taxes 770 (670) 7,773 3,187
--- --=-- ----- ----- Net (loss) income $(6,853) $(309) $(30,184)
$6,011 ======== ====== ========= ====== Basic earnings (loss) per
share: (Loss) income from continuing operations $(0.29) $0.01
$(1.46) $0.11 Income (loss) from discontinued operations 0.03
(0.02) 0.30 0.13 ---- ------ ---- ---- Net (loss) income $(0.26)
$(0.01) $(1.16) $0.24 ======= ======= ======= ===== Diluted
earnings (loss) per share: (Loss) income from continuing operations
$(0.29) $0.01 $(1.46) $0.11 Income (loss) from discontinued
operations 0.03 (0.02) 0.30 0.13 ---- ------ ---- ---- Net (loss)
income $(0.26) $(0.01) $(1.16) $0.24 ======= ======= ======= =====
Weighted average shares outstanding: Basic 26,320 25,245 25,938
25,180 Diluted 26,320 25,630 25,938 25,550 HUDSON HIGHLAND GROUP,
INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except
per share amount) (unaudited) September 30, December 31, 2009 2008
---- ---- ASSETS Current assets: Cash and cash equivalents $44,483
$49,209 Accounts receivable, net 96,994 127,169 Prepaid and other
13,169 15,411 Current assets from discontinued operations 314 2,360
--- ----- Total current assets 154,960 194,149 Intangibles, net
1,231 2,498 Property and equipment, net 19,306 24,379 Other assets
15,767 9,927 Total assets $191,264 $230,953 ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts
payable $10,009 $15,693 Accrued expenses and other current
liabilities 57,523 76,447 Short-term borrowings 10,456 5,307
Accrued business reorganization expenses 6,761 5,724 Current
liabilities from discontinued operations 72 1,410 -- ----- Total
current liabilities 84,821 104,581 Other non-current liabilities
19,734 16,904 Accrued business reorganization expenses, non-current
548 1,476 --- ----- Total liabilities 105,103 122,961 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 26,764 and 26,494 shares,
respectively 27 26 Additional paid-in capital 445,387 450,739
Accumulated deficit (393,089) (362,905) Accumulated other
comprehensive income- translation adjustments 34,128 27,054
Treasury stock, 111 and 1,140 shares, respectively, at cost (292)
(6,922) ----- ------- Total stockholders' equity 86,161 107,992
------ ------- Total liabilities and stockholders' equity $191,264
$230,953 ======== ======== HUDSON HIGHLAND GROUP, INC. SEGMENT
ANALYSIS (in thousands) (unaudited) For The Three Months Ended
Hudson September 30, Hudson Hudson Asia 2009 Americas Europe
Pacific Corporate Total --------- ------- -------- --------- -----
Revenue $35,705 $67,898 $66,044 $- $169,647 ======= ======= =======
== ======== Gross margin $9,258 $29,571 $25,361 $- $64,190 ------
------- ------- -- ------- Adjusted EBITDA (1) $(1,625) $30 $2,579
$(4,206) $(3,222) Business reorganization and integration expenses
592 1,881 405 - 2,878 Goodwill and other impairment charges - - - -
- --- --- --- --- --- EBITDA (1) (2,217) (1,851) 2,174 (4,206)
(6,100) Depreciation and amortization 1,047 911 739 44 2,741 -----
--- --- -- ----- Operating (loss) income $(3,264) $(2,762) $1,435
$(4,250) $(8,841) ======== ======== ====== ======== ======== For
The Three Months Ended Hudson September 30, Hudson Hudson Asia 2008
Americas Europe Pacific Corporate Total --------- ------- --------
--------- ----- Revenue $66,485 $98,301 $104,453 $- $269,239
======= ======= ======== === ======== Gross margin $17,967 $49,717
$45,011 $- $112,695 ------- ------- ------- --- -------- Adjusted
EBITDA (1) $1,586 $3,403 $7,631 $(6,005) $6,615 Business
reorganization and integration expenses 121 813 1,883 - 2,817
Goodwill and other impairment charges - - - - - --- --- --- --- ---
EBITDA (1) 1,465 2,590 5,748 (6,005) 3,798 Depreciation and
amortization 1,175 1,495 1,190 53 3,913 ----- ----- ----- -- -----
Operating income (loss) $290 $1,095 $4,558 $(6,058) $(115) ====
====== ====== ======== ====== (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 Nine Months
Ended Hudson September 30, Hudson Hudson Asia 2009 Americas Europe
Pacific Corporate Total --------- ------- -------- --------- -----
Revenue $122,861 $202,014 $183,311 $- $508,186 ======== ========
======== === ======== Gross margin $30,741 $91,155 $69,182 $-
$191,078 ------- ------- ------- --- -------- Adjusted EBITDA (1)
$(5,284) $(253) $2,318 $(14,145) $(17,364) Business reorganization
and integration expenses 3,339 6,547 2,379 14 12,279 Goodwill and
other impairment charges (120) - 1,669 - 1,549 ---- --- ----- ---
----- EBITDA (1) (8,503) (6,800) (1,730) (14,159) (31,192)
Depreciation and amortization 3,100 3,731 2,401 137 9,369 -----
----- ----- --- ----- Operating (loss) income $(11,603) $(10,531)
$(4,131) $(14,296) $(40,561) ========= ========= ======== =========
========= For The Nine Months Ended Hudson September 30, Hudson
Hudson Asia 2008 Americas Europe Pacific Corporate Total ---------
------- -------- --------- ----- Revenue $221,254 $324,329 $319,815
$- $865,398 ======== ======== ======== === ======== Gross margin
$60,901 $170,603 $138,771 $- $370,275 ------- -------- -------- ---
-------- Adjusted EBITDA (1) $4,544 $18,985 $22,413 $(21,145)
$24,797 Business reorganization and integration expenses 1,826
1,229 1,978 - 5,033 Goodwill and other impairment charges - - - - -
--- --- --- --- --- EBITDA (1) 2,718 17,756 20,435 (21,145) 19,764
Depreciation and amortization 3,518 4,467 3,130 159 11,274 -----
----- ----- --- ------ Operating (loss) income $(800) $13,289
$17,305 $(21,304) $8,490 ====== ======= ======= ========= ======
(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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