Exhibit 99.1
For Immediate Release | Contacts: | Richard W. Pehlke | ||
Hudson Highland Group | ||||
212-351-7285 | ||||
rich.pehlke@hhgroup.com | ||||
Thomas Smith | ||||
Ogilvy Public Relations Worldwide | ||||
212-880-5269 | ||||
thomas.smith@ogilvypr.com |
Hudson Highland Group Reports
2005 First Quarter Financial Results
NEW YORK, NY – May 5, 2005 – Hudson Highland Group, Inc. (NASDAQ: HHGP), one of the world’s leading providers of specialized professional staffing, retained executive search and human capital solutions, today announced financial results for the first quarter ended March 31, 2005.
2005 First Quarter Highlights
• | Revenue of $352.9 million, an increase of 21.8 percent from $289.8 million for the first quarter of 2004 |
• | Gross margin of $128.2 million, or 36.3 percent of revenue, up 20.5 percent from $106.4 million, or 36.7 percent of revenue, for the same year ago period |
• | EBITDA of $2.8 million, compared to a loss of $11.2 million in the first quarter of 2004 |
• | Net loss of $4.1 million, or $0.20 per basic and diluted share, compared to a net loss of $18.7 million, or $1.09 per basic and diluted share for the first quarter of 2004 |
“The company performed admirably in the first quarter, recording strong year-over-year revenue growth – particularly Hudson North America where revenue increased 54 percent – and our sixth consecutive quarter of improved year-over-year operating profitability,” said Jon Chait, chairman and chief executive officer of Hudson Highland Group. “This progress can be attributed to continuing strength in the employment market and our focus on key, high-value offerings for segments with strong growth potential.”
Richard W. Pehlke, executive vice president and chief financial officer of Hudson Highland Group added, “All around, the first quarter was fundamentally sound, with strong top-line and gross margin growth, solid expense control, good operating leverage and EBITDA ahead of plan.”
Guidance
Given the current economic environment, the company expects EBITDA as a percent of revenue to be 1.5 to 2 percent in 2005 and 3.5 to 4 percent in 2006. The company now believes that an assumption of 12 to 15 percent revenue growth for 2005 is reasonable, resulting in a full-year EBITDA range of $22 to 29 million. This is based on expectations of constant currency revenue and gross margin growth of 30 to 35 percent in Hudson North America, 10 to 15 percent in Hudson Europe, and 0 to 5 percent in Hudson Asia Pacific and Highland Partners.
Conference Call / Webcast
Hudson Highland Group will conduct a conference call today Thursday, May 5, 2005 at 10:30 AM EDT to discuss this announcement. Investors wishing to participate can join the conference call by dialing 1-800-374-1532 followed by the participant passcode 5580704 at 10:20 AM EDT. For those outside the United States, please call in on 1-706-634-5594 followed by the participant passcode 5580704. Hudson Highland Group’s quarterly conference call can also be accessed online through Yahoo! Finance atwww.yahoo.com and the investor information section of the company’s website atwww.hhgroup.com.
Hudson Highland Group
Hudson Highland Group is one of the world’s leading professional staffing, retained executive search and human capital solution providers. We help our clients achieve greater organizational performance by attracting, selecting, engaging and developing the best and brightest people for their businesses. Our approximately 3,800 employees in more than 20 countries are dedicated to providing unparalleled service and value to our clients. More information about Hudson Highland Group is available atwww.hhgroup.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 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 on temporary contracting operations; the cyclical nature of the company’s executive search and mid-market professional staffing businesses; the company’s ability to manage its growth and fund working capital associated therewith; risks associated with expansion; 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; the impact of employees departing with existing executive search clients; risks maintaining professional reputation and brand name; restrictions imposed by blocking arrangements; exposure to employment-related claims, and limits on insurance coverage related thereto; government regulations; the company’s ability to successfully operate as an independent company and the level of costs associated therewith; and restrictions on the company’s operating flexibility due to the terms of its credit facility. 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.
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Financial Tables Follow
HUDSON HIGHLAND GROUP, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(in thousands, except share and per share amounts)
(unaudited)
Three Months Ended March 31, | ||||||||
2005 | 2004 | |||||||
Revenue | $ | 352,869 | $ | 289,804 | ||||
Direct costs | 224,662 | 183,413 | ||||||
Gross margin | 128,207 | 106,391 | ||||||
Selling, general and administrative expenses | 124,899 | 117,596 | ||||||
Depreciation and amortization | 4,857 | 5,079 | ||||||
Business reorganization expenses | 529 | 60 | ||||||
Merger and integration recoveries | (43 | ) | (37 | ) | ||||
Operating loss | (2,035 | ) | (16,307 | ) | ||||
Other expenses: | ||||||||
Other | 276 | 1,597 | ||||||
Interest, net | 426 | 401 | ||||||
Loss before provision for income taxes and accounting change | (2,737 | ) | (18,305 | ) | ||||
Provision for income taxes | 1,400 | 403 | ||||||
Net loss | $ | (4,137 | ) | $ | (18,708 | ) | ||
Basic and diluted loss per share: | ||||||||
Net loss | $ | (.20 | ) | $ | (1.09 | ) | ||
Weighted average shares outstanding | 20,504,000 | 17,231,000 | ||||||
HUDSON HIGHLAND GROUP, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands, except share and per share amounts)
March 31, 2005 | December 31, 2004 | |||||||
(unaudited) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 12,316 | $ | 21,064 | ||||
Accounts receivable, net | 222,804 | 197,582 | ||||||
Other current assets | 14,142 | 14,187 | ||||||
Total current assets | 249,262 | 232,833 | ||||||
Property and equipment, net | 34,492 | 36,360 | ||||||
Other assets | 6,335 | 6,081 | ||||||
Intangibles, net | 5,896 | 6,104 | ||||||
$ | 295,985 | $ | 281,378 | |||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 28,754 | $ | 27,023 | ||||
Accrued expenses and other current liabilities | 140,019 | 140,903 | ||||||
Short-term borrowings and current portion of long-term debt | 23,354 | 4,066 | ||||||
Accrued business reorganization expenses | 8,031 | 8,930 | ||||||
Accrued merger and integration expenses | 1,751 | 1,872 | ||||||
Total current liabilities | 201,909 | 182,794 | ||||||
Accrued business reorganization expenses, non-current | 5,674 | 6,832 | ||||||
Accrued merger and integration expenses, non-current | 2,843 | 3,329 | ||||||
Other non-current liabilities | 2,564 | 2,648 | ||||||
Long-term debt, less current portion | 2,367 | 2,041 | ||||||
Total liabilities | 215,357 | 197,644 | ||||||
Commitments and Contingencies | ||||||||
Stockholders’ equity: | ||||||||
Preferred stock, $0.001 par value, 10,000,000 shares authorized; none issued or outstanding | — | — | ||||||
Common stock, $0.001 par value, 100,000,000 shares authorized; issued 20,739,722 and 20,612,966 shares, respectively | 21 | 21 | ||||||
Additional paid-in capital | 355,707 | 353,825 | ||||||
Retained deficit | (315,713 | ) | (311,576 | ) | ||||
Accumulated other comprehensive income - translation adjustments | 40,843 | 41,694 | ||||||
Treasury stock, 15,798 shares | (230 | ) | (230 | ) | ||||
Total stockholders’ equity | 80,628 | 83,734 | ||||||
$ | 295,985 | $ | 281,378 | |||||
HUDSON HIGHLAND GROUP, INC.
SEGMENT ANALYSIS
(in thousands)
(unaudited)
For the Three Months Ended March 31, 2005 | Americas | Europe | Asia Pac | Corporate & Other | Total | |||||||||||||||
Revenue | ||||||||||||||||||||
Hudson | $ | 111,131 | $ | 122,399 | $ | 103,501 | $ | 974 | $ | 338,005 | ||||||||||
Highland | 11,785 | 1,921 | 1,158 | — | 14,864 | |||||||||||||||
$ | 122,916 | $ | 124,320 | $ | 104,659 | $ | 974 | $ | 352,869 | |||||||||||
Gross Margin | ||||||||||||||||||||
Hudson | $ | 26,800 | $ | 50,451 | $ | 36,116 | $ | 774 | $ | 114,141 | ||||||||||
Highland | 11,093 | 1,862 | 1,111 | — | 14,066 | |||||||||||||||
$ | 37,893 | $ | 52,313 | $ | 37,227 | $ | 774 | $ | 128,207 | |||||||||||
Adjusted EBITDA (1) | ||||||||||||||||||||
Hudson | $ | 3,324 | $ | 3,234 | $ | 6,825 | $ | (858 | ) | $ | 12,525 | |||||||||
Highland | 654 | (86 | ) | (118 | ) | 450 | ||||||||||||||
Corporate | — | — | — | (9,667 | ) | (9,667 | ) | |||||||||||||
$ | 3,978 | $ | 3,148 | $ | 6,707 | $ | (10,525 | ) | $ | 3,308 | ||||||||||
EBITDA (1) | ||||||||||||||||||||
Hudson | $ | 2,758 | $ | 3,314 | $ | 6,825 | $ | (858 | ) | $ | 12,039 | |||||||||
Highland | 654 | (86 | ) | (118 | ) | 450 | ||||||||||||||
Corporate | — | — | — | (9,667 | ) | (9,667 | ) | |||||||||||||
$ | 3,412 | $ | 3,228 | $ | 6,707 | $ | (10,525 | ) | $ | 2,822 | ||||||||||
For the Three Months Ended March 31, 2004 | Americas | Europe | Asia Pac | Corporate & Other | Total | |||||||||||||||
Revenue | ||||||||||||||||||||
Hudson | $ | 72,234 | $ | 103,016 | $ | 99,877 | $ | 148 | $ | 275,275 | ||||||||||
Highland | 9,564 | 2,047 | 2,918 | — | 14,529 | |||||||||||||||
$ | 81,798 | $ | 105,063 | $ | 102,795 | $ | 148 | $ | 289,804 | |||||||||||
Gross Margin | ||||||||||||||||||||
Hudson | $ | 16,752 | $ | 43,372 | $ | 32,524 | $ | 117 | $ | 92,765 | ||||||||||
Highland | 8,906 | 1,965 | 2,755 | — | 13,626 | |||||||||||||||
$ | 25,658 | $ | 45,337 | $ | 35,279 | $ | 117 | $ | 106,391 | |||||||||||
Adjusted EBITDA (1) | ||||||||||||||||||||
Hudson | $ | (986 | ) | $ | (2,665 | ) | $ | 2,120 | $ | (1,596 | ) | $ | (3,127 | ) | ||||||
Highland | (404 | ) | (68 | ) | 528 | 56 | ||||||||||||||
Corporate | — | — | — | (8,134 | ) | (8,134 | ) | |||||||||||||
$ | (1,390 | ) | $ | (2,733 | ) | $ | 2,648 | $ | (9,730 | ) | $ | (11,205 | ) | |||||||
EBITDA (1) | ||||||||||||||||||||
Hudson | $ | (916 | ) | $ | (2,665 | ) | $ | 2,103 | $ | (1,596 | ) | $ | (3,074 | ) | ||||||
Highland | (314 | ) | (234 | ) | 528 | (20 | ) | |||||||||||||
Corporate | — | — | — | (8,134 | ) | (8,134 | ) | |||||||||||||
$ | (1,230 | ) | $ | (2,899 | ) | $ | 2,631 | $ | (9,730 | ) | $ | (11,228 | ) | |||||||
See following page for descriptions of note (1).
HUDSON HIGHLAND GROUP, INC.
RECONCILIATION OF ADJUSTED EBITDA TO OPERATING LOSS
(in thousands)
(unaudited)
Three Months Ended March 31, | ||||||||
2005 | 2004 | |||||||
Hudson | ||||||||
Adjusted EBITDA (1) | $ | 12,525 | $ | (3,127 | ) | |||
Business reorganization (expenses) recoveries | (529 | ) | 16 | |||||
Merger and integration recoveries | 43 | 37 | ||||||
EBITDA (1) | 12,039 | (3,074 | ) | |||||
Depreciation and amortization | (4,371 | ) | (3,733 | ) | ||||
Operating income (loss) | $ | 7,668 | $ | (6,807 | ) | |||
Highland | ||||||||
Adjusted EBITDA (1) | $ | 450 | $ | 56 | ||||
Business reorganization expenses | — | (76 | ) | |||||
EBITDA (1) | 450 | (20 | ) | |||||
Depreciation and amortization | (354 | ) | (423 | ) | ||||
Operating income (loss) | $ | 96 | $ | (443 | ) | |||
Corporate & Other | ||||||||
Adjusted EBITDA and EBITDA (1) | $ | (9,667 | ) | $ | (8,134 | ) | ||
Depreciation and amortization | (132 | ) | (923 | ) | ||||
Corporate expenses | $ | (9,799 | ) | $ | (9,057 | ) | ||
Hudson Highland Group consolidated | ||||||||
Adjusted EBITDA (1) | $ | 3,308 | $ | (11,205 | ) | |||
Business reorganization expenses | (529 | ) | (60 | ) | ||||
Merger and integration recoveries | 43 | 37 | ||||||
EBITDA (1) | 2,822 | (11,228 | ) | |||||
Depreciation and amortization | (4,857 | ) | (5,079 | ) | ||||
Operating loss | $ | (2,035 | ) | $ | (16,307 | ) | ||
(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. |