HSON - Earnings call transcript Q2 2018

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Operator

Good morning and welcome to the Hudson Global conference call for the second quarter of 2018.

Our call this morning will be led by Chief Executive Officer, Jeff Eberwein; and Chief Financial Officer, Patrick Lyons. Please be advised that except for historical information the statements made during the presentation constitute forward-looking statements under applicable security laws. Such forward-looking statements involve certain risk and uncertainties that may cause actual results to defer materially from those contained in the forward-looking statements. These risks are discussed in our Form 8-K filed today and in other filings made with Securities and Exchange Commission including our annual report on Form 10-K as amended. obligations any any statements. disclaims company to forward-looking update The

is over will this to EBITDA. During our earnings website reconciliation posted of encourage slides references and An in be quarterly release EBITDA helpful Sir, material will during hudson.com. adjusted guide our may the course on as call. I you earnings time they to at to call access Eberwein. made both our will reference as such turn non-GAAP adjusted to the begin. call now this you our I serve Jeff included as terms a conference

Jeffrey Eberwein

Candice and outlook the thank on you second XXXX. trends and forward. Patrick we you, business, CFO, perspective for review and welcome results review results our RPO I'll some see then details give going today. Thank additional everyone. our provide some quarter on our Lyons, and costs joining will quarter corporate We second for the us Hudson's

$XX $XXX,XXX We $X.X currency. expense divestitures. that client For up with above severance. decrease adjusted our $X.X X% the second costs of positive last were was million, global following businesses this growth of decreased currency $XX.X year $X.X million million margin recent Americas. $XX an in third loss XX% in includes Gross million in quarter, and severance of year-over-year to the constant about a quarter ago the loss the same of Europe EBITDA $XXX,XXX the million period with which a as in of or due the XX% million the second quarter adjusted offset And and the compared year of number U.K. we is of the strong much large EBITDA of year. reported reported revenue in Asia-Pacific last of by in constant impacted SG&A

from last in XX% large year. year-over-year that ended quarter; margin impacted the September Turning country Americas adjusted in contract ago. region reported EBITDA a the to second still gross the $XXX,XXX year by regional positive performance $XXX,XXX down Despite and that, was down of

had once clients growth in currency. from up an year-on-year got strong higher at client a existing XX% a revenue again XX% with gross new Asia-Pacific boost the fourth up quarter excellent margin margin in the down was up of same volumes constant revenue in XXXX. and We In was and quarter up saw This in and noted X% Americas. growth margin Europe, U.K., departure the in client impacted in currency which strong gross XX%. the gross by global offset was constant win XX%

mixed our for were compared this in believe dedicated the second the last up and to remains all their so thank show results strongly overall in in work future clients hard Hudson XXXX. focused employees to to We the far I year, work focus very globe quarter and While very will serving hard want team and around results.

serve more like to very name high-quality financial employees team RPO as clients, the outlook spending critical do months, around we life the people clients is management well and services, with particularly talent talent some where our Hudson and sciences, industry sectors mission after talented time So has an and few. such talent key success. prestigious, consumers world, is where and to acquisition in We of professionals to recent offer on business. a dedicated perspective and and RPO in I'd a

known offer a for are service solutions high-touch, hires. professional customized clients. and We white-color quality high-end, We for our

are delivery. long-term with service strong clients and and We our summary, clients. our on partner trusted we valued from a In have marks high customer receive service

talent indeed going in fits grow and RPO should over firm NelsonHall, faster the the business serving margin the XX% we EBITDA to leading see XX% This the revenue to Hudson In should If the needs. terms RPO rate sector this benefit even research of at view a to moving solution to will services XX% growth be that does for participate at We as forward, is is companies RPO forecast of to business industry and our their believe growth annually we an then to gross more also grow well-positioned RPO and participate a grow XX% industry these believe as our more same high-quality should, RPO the strongly forecast RPO with an grow our coming we in an in. adjusted years. rate. trends. industry, at fast-growing, and

envision third the of quarter Now of a severance our believe than we we of it cost turning businesses around grows, painting that We've positive we year a we divestitures been being exclude recruitment RPO's changes severance in believe at generate we legacy the this we're will, anticipate in further picture some sometime The We we rate reductions year for lower EBITDA on to positive the XXXX, as adjusted costs, as adjusted the costs EBITDA if costs. as solidly end cost this to made we metric on examining decline, XXXX. approximately and and or is the year. if structure and corporate of end should about next company costs first focusing year. And have include should that costs since our going the XX% be forward. reduce next corporate corporate lower recent run months

Turning focused the our our investing RPO long-term. believe to best you value stockholder value business the we three is sales, expect and that These management and stockholder company's the get are should right in business over board for somewhat but get XXXX. profitability business: turn to The Patrick to longer-term. bricks-and-mortar investments Unlike will now suppress over talk ours quick not investment from on and some businesses Officer, to Lyons, coming we're guidance will team making the one RPO growing our the medium-to in the And services strongly away. marketing. they creation, are the major technology, and paybacks. investments, to to Chief short-term that data capitalize their quarter we of they may believe review in second and about expensed additional ways growth know in like a results RPO areas investments people-oriented this Financial points achieve In minor, invest in have we the goal. our in believe quarters call drive in I'll we

Patrick Lyons

Jeff and you, Thank everyone. good morning

separate in for we U.S. transactions in pre-tax As a related XXXX, recorded numbers, year-over-year fully balance periods sheet and operations to rather discontinued and support thus operations Europe reflected sale businesses support under or asset infrastructure such comparison assets the XX, any GAAP regional by would support determined accounting million historical distorts presented. operations. reminder, also of the sale was costs most continuing statement or Hudson. not book are and for transferred and in of costs on talent of or But the discontinued highlight Under retained team between the a gain is whether EBITDA included at our previously transactions costs proportionally discontinuing operations GAAP March management criteria the of in in and the get the I reported as recruitment met all the level. costs and and of the by sales. and the the the and treatment of such allocated divestitures completed three Under which buyers Europe do Asia-Pacific Asia-Pacific the $XX those part as to corporate are in sale that shared now

executives three severance Our related corporate adjusted expense quarter to EBITDA second includes of basis in a year-to-date $X.X termination the divestitures. and following $XXX,XXX for million on the

August Our we remains inception million XXXX place in of shares have from program million. purchased X.X stock at cost buyback $X.X a stock in buyback of and the

We tax $X.X in the cash the a that revenue XXXX used of days no from but capital by days of quarter. increase usage higher $X.X was the second but operations to of reflecting XX the year continuing for March was flow million business XX second still also in XX operations a expenses Our receivables second tax during quarter. The quarter expenditure which usage The compared included March fees related were June, divestitures, number up at charge second -- paid million ago. March, quarter. sales and impacted in standing Day provisions at improves The million an cash to the $X was days accrued the from had in $XXX,XXX. from usage quarter. accounts as XX company in

to are quarter with payment million borrowings. and prior to we seeing legal return delays relating levels year related the ended in XXXX. the $XX.X We in some to cash transition We divestitures and no as new through the the progress our to we DSO expect of following entities sale

the discussions in new standalone We of business. lenders for RPO with are credit about various the currently establishment facilities

to want XXXX providing provide on with not outlook. guidance quarterly are time, we this an at did we update our you While

gross we revenue to positive see to prior September in large level, constant in during global over on calls. year XXXX At margin XXXX. in continue in We loss the gross client mentioned This during we currency constant growth factors margin year in against prior expect the in currency of expect a growth double-digit XXXX. previous of that

between expect EBITDA adjusted operations on deliver and expenses. EBITDA adjusted $X unchanged to is million $X as outlook we continue follows: pre-corporate to Our of continuing million RPO to from operations is

lower partially that ongoing approximately We which full-year million I the offset $X.X expect corporate. The to $X of estimate includes costs expected and compensation in earlier, severance professional savings in XXXX. of by million is from $X.X corporate million fees mentioned

result, a the $X $X.X from adjusted As loss be EBITDA million of a between million full-year expected XXXX. operations to is to for continuing

we could profitable lower in open RPO we EBITDA please? in to become Candice, for mentioned, expect position XXXX new you operating transition simplified a Jeff adjusted costs platform. with that play and pure RPO a now growth line year will questions, the this provider As us for the corporate as

Operator

I'm Group. with our from question Rubicon seeing Instructions] first Capital Lee [ph] [Operator

Unidentified Analyst

Thanks my for taking call.

give doing of of now update a just, and to have your I within guess incremental guess, two? know for I to been businesses, that us just seeing, over after, you talking on a quarter I Just next you're opportunity what you wanted you I you're other hearing, sense pipeline, different kind get year the the what Can of, what business the some organization. an on, work think people or you've is, minus guess thoughts full the kind

Jeffrey Eberwein

it's pretty pipeline. a better team their and than have went their through, ever believe. exciting. did also as And pipeline working and before, I robust and we each global just have a with we're region we Sure, I together outlook Patrick We

clients in consumer, financial business a where and we're start other I new we And to we're client then technology a potential like and those with we clients. over relationship And particularly lot in convert a have hiring pipeline that, mentioned before, and existing very of win industrial and our region the and business to sales life sciences, strong that to of is bright. some manufacturing on lot the services, lot to we'll at do time we're but in regions. in seeing We instances a of have also working a growth hard there's outlook expand exciting

Unidentified Analyst

group company, you're I the said, conflicts revenue So you the -- about what think to to I guess annually? the and should reiterate you XX% of and you when grow gross talk just industry margin XX% the think

Jeffrey Eberwein

RPO experts, an That's years. XX% to grow year coming forecast consultants, right. I mean, per XX% to the over industry the industry as

look what so at goal, share and market, faster rate our was grow challenge, market but a we if that and out. should a a have to And theoretically, of the our same pan should target is forecasts growth that if just those a projections than an constant, we like illustration grow

Unidentified Analyst

an you share than gains? faster think opportunity market to actually that with there's grow So

Jeffrey Eberwein

Right, there and to is have that we execute. opportunity

Unidentified Analyst

would a the that to that growing to organically of how and terms guess do regards cost roughly? it people point rather bring I Can is business like to as much preference think et elaborate you that on sounds cetera. on money your new grow you sales in with spend

Jeffrey Eberwein

just and total. the prior of to some piece Sure a in RPO give perspective, the was small company

areas: -- of it's business, that the three Let's XX% always that's it focused really we're didn't investment, a RPO, get say, on and just sole didn't as get because a of that and sales, approximately, always total. imagine, business the our small investing And the in been global the it marketing. now focus, we're technology, you was And have under-invested. we're might so revenues I standalone areas part and and mentioned

quick I potentially paybacks. grow the And also drive potential where the investments than with have up to should said market. these that some market, to less is to $X but not are like of could than minor keep major I a and when growth said, they investments, it's million we it's that year faster And

we months. payoff hire it that specialized in -- months, six definitely real that a investment hard be if investment. first of person in six we next a but So should within to a a from And sales hire good the in a it's expect it really who's person the should see productive year, lot

Unidentified Analyst

So like of there organization guess sales and and really here modernize million dollars grow kind that thing? the sounds couple just it the it's just just a IT to and to I

Jeffrey Eberwein

Yes would million a than year. I say, less $X

Unidentified Analyst

got I of context the and you color it to guess growing direction. the the business in mention, for the year trending right sounds did corporate regards the next in with like you've costs thanks and

or, and as I full than margin expansion -- to to this What scale the generate you're revenue, normalized is target currently You is grow how did growth. my to run doing mention margin think revenue a rate be that margin to opportunity margin I business the you you would EBITDA what me revenue of much guess, get a have that kind up that XX% about faster for Can give to really it's normalized -- EBITDA business what might your you $XX a and mean, you think normalized be gross and the I would subscale? understanding million, is able you margin? $XX XX% business? guess, million of roughly do sense,

Jeffrey Eberwein

really as guidance Yes, it's specific is XXXX about giving some think we're so for question really XXXX. to and beyond, how it. that guidance. that Not And giving we're a giving great to specific framework more and for

my comment theoretical high was nature. more of so level and And kind in

effectively we costs should have leverage, as costs. And is they and we sense this and have some over base. get Just revenue would do get I some larger see costs fixed any they of in we're variable those that that the costs fixed scale say, larger because true if fixed a allocating business,

our from it margin can... rate should so be And growth gross follows than just EBITDA if growth Patrick we're -- rate. faster that that that our and revenue

Unidentified Analyst

growth Can you gross mean is rate of give it me I an the Xx magnitude, order of the like margin?

Jeffrey Eberwein

do in structure. It's variable costs probably quite not bit high. a our We that of have

Patrick Lyons

want for Lee, get specific into this to At stage we providing XXXX. guidance don't

have margin. detail be will as our to yes, expands, line we've call, little and rate rate as we a plan work think and as well, the grows, XXXX. more XXXX, a grows, so top growth later helps compared But as as corporate focused line. the EBITDA that be happy I give that would get addition, the And costs bit the top the normally case later grow year some faster business will we than to higher in do our growth in we our build strategic in this business on more on to revenue obviously for EBITDA have emphasized in to the we we typical are and on gross on in

Unidentified Analyst

really XX% costs can are to at I business in just grows right generate I'm guess year [indiscernible] and business balance of more all have, grow the outlay value there's that huge the given you enterprise is the million curious the it and capital now. of half, together million and it's the assuming EBITDA am provided, $X of and probably business. you XX% doesn't $XX cut variables EBITDA putting a that that given that that seem organically possible of just least I next cash the corporate just

was if meeting buying that why know back two and between the had Just that was I what more and you bought stock, X,XXX thoughts haven't curious meeting are, I'm I conclusion quarters active the your board you the curious what you just noticed a been there. shares. board wonder in there I

Jeffrey Eberwein

Sure.

performance and the about board very and spend two to CEO, business, everything urgent the and could became that immersed three the I were but the maximize to which came about more talked margins was were, our really in ago, was all growth what RPO So time four priorities up help months the important, and with one we business. to doing when things are first that we in first getting

which over focus coming strategy, mentioned the so a is the over all our second you long-term are mission as do achieve are costs third And more have And stockholder area from cash big been an make focus. started allocation, capital one the and is some that's to changes minded of also have very important, coming. reductions and on the of we And position value corporate been area growing there where especially we are balance. table has then And to a we open of long-term. options our then,

plan articulate the be will the a path in forward we more So future. on and

Unidentified Analyst

one stocks not I'm add the there's buying going rightsizing seems much parse got these back to your and longer, final your like things and the right And outlook I time. in you the and that suggest for of and will so sure be terms I -- we that just just are out, can comment $X.XX definitely in consider turning I given levels. strategy strongly appreciate business would that obviously stock at direction you

Jeffrey Eberwein

we And your companies to attention $XX might think we in and mentioned put I have pay before, addition but questions and stock like something and a think years I And this we do to what it's appreciate Sure. approximately interest place program few bought they important what to in million your I million $X.X ago plan. buyback on a a say. do did

have the size back relative sizable our we a amount to so bought of And of company. stock

Operator

[Operator Instructions]

Jeffrey Eberwein

e-mailed way was was to us we for question of e-mail kind on depends offer a if for a product bundled bundled to the is answer on questions RPO stockholders an question the us would call. And answer is, answer because you many that the a I they to not one headwind And us clients in a there that Candace new winning to what peers? like like means by e-mailed And have do we is that product. encourage a So, to Hudson us.

traditional it's RPO with do business. And the that RPO bundled because a our RPO. With don't our helpful recruitment of we the just clearer have see And and play agency very businesses we not, conflicts to from interest. with offering bundled business, strategy historically, by a actually a and any we we being did think separate businesses much pure it reduces go-to-market recruitment be

standalone to we talk is do RPO they talk RPO Another don't of temp have also when our it's addition that we for a do that do more combine in of at we as business products and as our complement XX-Q do businesses clients. a our bundled request permanent thing We and clients. it that to earnings people a in slides. temps business, the breakdown management about type of our of contract in temp to that about the and typically RPO And work

Operator

Thank queue. Okay showing for questions the and the… no joining I'm you in

Jeffrey Eberwein

Go ahead, Candace.

Operator

Thank investor and Today's I am the you website sorry. of section has been available the call. quarter for second our will Hudson conference call Global hudson.com. joining be on recorded

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Hudson Global (HSON) 5 Aug 182018 Q2 Earnings call transcript