NEW YORK, July 30 NY-Hudson-Highland2Q
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
david.kirby@hudson.com
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 margin137,217 129,720 262,825 247,034
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 7,69470
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 24,98425,24725,13525,084
Diluted 25,51225,24725,61525,084
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 term481 -
Accounts receivable, net 196,949 187,980
Prepaid and other 20,14318,389
Current assets from discontinued
operations- 13,461
Total current assets269,002 259,075
Goodwill67,94773,444
Other intangibles, net 5,144 4,791
Property and equipment, net 30,02529,470
Other assets11,742 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
expenses3,356 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 19,46718,649
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 2626
Additional paid-in capital 448,549 444,075
Accumulated deficit (282,267) (288,587)
Accumulated other comprehensive
income-translation adjustments 50,28644,946
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 HudsonHudson 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
amortization1,170 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 HudsonHudson 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) $11,906
Acquisition-related
expenses3,551 302 -- 3,853
Business reorganization
expenses (recoveries) (7) (7) 171,575 1,578
Merger and integration
expenses (recoveries) (42) - -- (42)
EBITDA (1) (4,809) 10,334 9,115 (8,123)6,517
Depreciation and
amortization1,160 1,632 994 66 3,852
Operating income (loss)$(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 HudsonHudson Asia
Americas EuropePacific 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 60595 - 2,391
Merger and integration
expenses (recoveries)1514 - (1) 28
EBITDA (1) 1,25415,16413,847 (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 HudsonHudson Asia
Americas EuropePacific 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 2,44031 1,501 4,694
Merger and integration
expenses (recoveries) (42) - - - (42)
EBITDA (1)(6,907) 14,14714,671 (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.
SOURCE Hudson Highland Group, Inc.
