Exhibit 99.1
| For Immediate Release | Contact: | David F. Kirby |
| Hudson Highland Group | ||
| 212-351-7216 | ||
| david.kirby@hudson.com |
Hudson Highland Group Reports 2009
Third Quarter Financial Results
NEW YORK, NY – November 3, 2009 – 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 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 www.yahoo.com and the investor information section of the company's Web site at 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 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 Ended September 30, | Nine Months Ended September 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 September 30, 2009 | Hudson Americas | Hudson Europe | Hudson Asia 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 September 30, 2008 | Hudson Americas | Hudson Europe | Hudson Asia 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 September 30, 2009 | Hudson Americas | Hudson Europe | Hudson Asia 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 September 30, 2008 | Hudson Americas | Hudson Europe | Hudson Asia 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. |