HSON - Earnings call transcript Q3 2020

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Operator

Good morning, and welcome to the Hudson Global Conference Call for the Third Quarter of 2020.

Our call this morning will be led by Chief Executive Officer, Jeff Eberwein; and Chief Financial Officer, Matt Diamond. Please be advised that the statements made during the presentation include forward-looking statements under applicable securities laws. Such forward-looking statements involve certain risks and uncertainties that may cause actual results to differ materially from those contained in the forward-looking statements. These risks are discussed in our Form 8-K filed today and our other filings made with the Securities and Exchange Commission, including our annual report on Form 10-K. obligation any any statements. disclaims company to forward-looking update The

will per references this made adjusted During release for and earnings our of both included call, measures EBITDA share. will are these time call I adjusted quarterly guide serve will as to as the helpful reference posted course earnings such conference hudsonrpo.com. to our they encourage on our the earnings be as access in Reconciliations terms our now call. to Jeff and slides, Eberwein. I during you over website, materials turn diluted at this non-GAAP a

Jeff Eberwein

highlights, you, Hudson Matt Financial Chief We will Global how everyone. thank give Diamond, I'll our provide and joining Officer, current in on some perspective for then XXXX we're interest today. conditions. us I'll your the navigating and Thank and business reviewing operator, some start results. our you details welcome, on additional by for quarter third

costs in versus same currency. XX% $XX.X a reported profit, $XXX,XXX last decreased million For quarter, down the compared the which constant gross loss were Reported adjusted year SG&A referred in as third of to of EBITDA net to Adjusted of constant we quarter EBITDA X% we formally revenue, XX% of revenue $X.X in currency. year-over-year million period million, adjusted $XXX,XXX constant the in positive currency. to $X.X XXXX, year year-over-year down ago.

net ago. net a share in million same loss loss adjusted per $X.XX net or $X.X a $X.XX or per We share reported of of of year versus QX we XXXX of year. share reported period net the addition, $XXX,XXX adjusted in share $X.XX In income $X.XX per per last an versus income

the to region. quarter Turning for performance by

of grew Pacific year. our constant Adjusted headwinds EBITDA been Our XX% team revenue somewhat million able XX% to I'm very the while of them declined constant the results a Asia generate in of net proud this from ago. EBITDA $X.X currency. adjusted declined $X.X given year in Asia currency, million adjusted business Pacific have facing

revenue adjusted net revenue. in business quarter. opposed currency, positive last in XXXX year's Europe breakeven XX% $XXX,XXX as but saw to constant of Our decline adjusted Adjusted was QX EBITDA in EBITDA XX% in

a CEO and had revenue Americas of the positive in respectively. and Adjusted our constant Europe business revenue EBITDA business. loss At regions adjusted we under versus formerly adjusted of Lancaster, Americas the net quarter of the of declining difficult last leadership with end Europe consolidated management of XX% Our EBITDA QX, of $XXX,XXX XX% year's $XXX,XXX. and currency, Darren

about to his We significantly Americas wealth stabilize with revamped and and experience accretive Officer, Coit lead believe Also, think, are sector. We business, global third will together quarter. I'll to financial the in forward. call Diamond, technology going also integrated the team over our excited generate for additional turn $X Chief over fully we this as our from the time, a to and considerable to the details value now clients' cost annual later Group Financial anticipate team Matt review stockholders this year, to some in technology excited million increased leverage relationships, change. Once our result and a recruiting RPO skills which Hudson the presence what fast-growing the team combined the brings we our this of in will space. combination sector expertise recent this and combined we're business in acquisition and of the sales Americas. of savings can we've grow accomplish over Coit

Matt Diamond

morning, good and Jeff, you, everyone. Thank

ended had XX September Days compared back the outstanding was XX tax days DSO We Our from sales to with third cash. restricted was the operations provision $XX.X XXXX, was and flow at days of continuing favorable million XXXX. in quarter in during quarter cash third approximately $XXX,XXX. The company we from cash $XXX,XXX used quarter. in operations September which

in XXXX, facility at growth that in to the finalized Australia a market, PPP drawn in XXXX, this working had for expected reminder, capital received end wins new support nothing on but In April new million. a result loan we the of credit through facility the a a in of QX. we program client we As needs as April SBA $X.X

the will loan. We have for or this be forgiven, income. it loan reflected applied a portion all forgiveness in for is to And extent this of other that

government turn other the for the in costs received exchange in to $XXX,XXX In addition of in COVID-XX of compensation we our quarter some certain on RPO in the response U.S., other This to business pandemic. to in trends over back and is current countries income the third Jeff in other assistance review business. the to more PPP in loan and perspective now reflected have call maintaining approximately give results. levels I'll our to

Jeff Eberwein

Matt. you, Thank

our to back Turning business.

for other in COVID-XX spread previously evolving some the outbreak by economic this and and QX, regarding to we been disclosed in at business to the considering activity remains the well of our businesses some of intensity As landscape. uncertainty many reduction as as services impacted and issued various releases outbreak led clients. levels predict downturn our to for demand adversely a company like well The SEC global duration, downturn. the difficult accompanying duration This the this improvement has uncertain filings, started rapidly see reduction services the as year. our in press as demand In and

the activity starts better we the respond ability COVID-XX vigilantly proactively quickly and this business Globally, to to to as impact and evolves. its we're business, situation client monitoring the our situation to retaining now as match while it rebound. However, on address will needs continue surrounding we've rightsized

testament the our team. to resilience thus far of We of clients a our the with are is which business pleased of the and strength our flexibility

during believe as believe Our clients. will from we will our better partnerships have and clients and partner for this challenging a emerge and this deepened time, with -- our we we crisis stronger

clients in these our dedicated for of that we're work dedication conditions can open highly questions? all working all employees please you and for thank to business hard flexibility, to want I through. Operator, the our their challenging Importantly, our line and

Operator

Sidoti. line the Josh from comes Vogel with question first of Your Instructions] [Operator

Josh Vogel

hope you I are doing well. guys

of First level. could of of pipeline kind if Maybe you're terms size what talk well business as in new today question, opportunities And in as tone. you versus deal the the higher seeing just about MSP? RPO kind

Jeff Eberwein

very Yes. Thank about the you. future. We're excited

how went it's hard business of especially is Northern general, in course, level, But happen Of the at winter and much to with shutdowns, Hemisphere. more bunker have of and into -- grow being partner through specialize more better. -- having and Clients mentality. we high we that's what's going we the in. in a silver see to new need in do to for think we them what their all that more predict what to go clients talent going needs, X strongly terms of adapt a are as we to And tone help the is from virus their strongly been mentality lining are of we've do a that manage

new in give different could different both the and have a in a countries. beyond. go And about conversations really looking around made. I business in of sector think could different particular, general, a different lot MSP picked countries lot a a excited We're up. acquisition one. of we're it's significantly things, lot recent and of comments through on lot next the conversations, different to But of of sectors, lot we we're I bit And So sectors expand at the that and RPO of a each excited we tech of lot a and little year and

Josh Vogel

the Yes. business do and over prospects that building spring new starting or there, I months actually have to to pipeline. getting serious of question you pause Are the summer that. on that starting the of see clients any off headcount? But a up before about hit their those ramping reengage get just kind button or

Jeff Eberwein

by It's the region Sure, out. and They hit by Europe as first by version in were And the very And one yes. in or of country is the In first the Asia you country. been. client ones know, Pacific significant hard hasn't then by virus. virus client was the a first have general, impacted kind as has ones been U.S. as we business Australia. Australia and even

And up that country so better. hold that's helped

Josh Vogel

-- sorry. Yes, actually

Josh Vogel

Right.

Okay.

got just seemed a good to an a outside So opportunities you a it apparent client on deeper the also Coast the a talk base the the of global could and that scale. and office footprint. West like deal a up recent seems open for into wondering you you given that just little gave really to tech, you you, deal it be if good for on I But greater acquisition was overall U.S. bit. U.S. could

Jeff Eberwein

pitching larger companies of space area. our their really went well And a mainly San about nice on know in to X. we excited with the team combining to nice plus Coit Silicon got equal is really they've discussions built a capabilities, do different our expertise And Bay, the a because We think expertise -- we're One a Yes. in of through Valley X over is and year. that X for Group Sure. business, lot the Francisco franchise, really aspects. at aspect

That's able but to aspect really world, with and we growth offices Another that. them can has future all historically, excited international that clients the with been aspirations. their that people we're over clients really of not have many about helping their is and something we existing Coit and maximize help

be will plus angles lot of equal X a X. transaction, think, X we where there's So, different this

And say they've and buying their we a of revenues to The able be so honestly not earnings. or as been triple It more to is situation what part comes this with where do could double on can hope it's valuable own. just also much Hudson.

Josh Vogel

how Great. by And How them? Coit's dialogue received having acquisition general the clients? you've the with has been existing been is

Jeff Eberwein

well. Really

time lot about of for sees the of needs that And is joined But help have help dream. client everybody makes that the Their X needs the about excited able and much working it they have potential long in I think and with benefits and think together a have really needs China or to team lot help internally in expertise Germany And client. help these but or they're of felt more really, who is cliche developed they relationships to sense if that we now hiring now us. developed, well. I they this X it, need, they a really it a team, joke bigger it has they've a whole of we're a people.

And the say, place go sorry, China. in in help so fulfilling be can't more you to than we back to it's a much client to

and we together, matter executing it. about a on things So, there's we're a just that it, and lot it's of excited of can do

Josh Vogel

right. All slogan the there. Definitely company like new

also tech queue, like gave seemed and a were Coit sense from the the your a good acquisition pipeline, and a standpoint. back deals and for bigger should footprint appetite saying you one, but in because geographic we we thinking in How about the hop future deal think makes I'll general it here? Just in last you from expansion global like about

Jeff Eberwein

got equal stream to that inside likely the earnings valuable can or just important say a X more look and business at current the year, more most more Pac. Coit of business team, small. a beginning Group its aspect. honestly the It the X not and it much being would to on looking. employees, educated to think helps maybe what's than just is Asia historically that boxes been the of out think have are revenue had in employees. be is what XX also lot big, in models our those this on our was business different synergistic we're And It's lot too right market be This Sure. available, not being we to -- example, XXX X got is But that a own. an benefits bar have At about business the around and size, a of as be way emphasize it could be valuable, because in we the where thing market plus a are has of and We the roughly looking. it's too high I always half we can't in us we buying check of The situation we the there's constantly market there. current

be business. thing that's able And you important. any is looking us a well-run truly then not unique it's open to to kind people be it so to really the kind than a getting to to will business. of business, without any see synergies more having really to fit how other people just teamwork special where in of And of combining is This bigger acquisitions, secret it own. We're culture either RPO X That's and or X and acquisition. can important accretive, the is it. sauce on MSP, accomplish is our or would we're for got And but teams incredibly together a good something

be good to got it's fit culture so a And fit. and people

Josh Vogel

the more insights in, if sneak for Matt. just maybe I appreciate I could more And there. X

to in thinking there's will about shouldn't as the expect other Just foreign loan the the forgiveness potential see QX, for but today, any hit up we government it that stimulus PPP line. income stands

Matt Diamond

XXX% we're on this systems. announced about of see so to additional some get we mentioned But There's couple will loan. the the in and about for information happen. be like year-to-date to do the a you mean, U.S., supposed we some they a a as file see more the PPP close $XXX,XXX to for be were furlough in I there's -- that But anything, far. the after It's did forgiveness foreign program market recently that go ago. front. anticipate We apply the of Yes. on U.K. on that worth have from forgiveness. days hoping that front, time you $XXX,XXX extending Q, income that through other for today. activity turnaround as We see. We'll believe but their there that XX-day process to we to can had we'll Certainly,

the So other assistance P&L hope receive the other for we'll answer in our all extent we've the that similar that will reflected have be foreign amount portion the in it to received. an on QX. of that this to forgiven, income And is we

Operator

Bishop. [Operator comes Mark your from Instructions] next question line of the And

Mark Bishop

Thanks taking question. about things the just a Hi. few for I acquisition. have the

that's executives at -- you million not next I filing $X I then $X.X their are by in any EBITDA would cost -- million seems of might those And $X let's those have Would to the goals, numbers calculation Just you forward, cuts? -- meet the and the like year. compensation looking see. at include any their are -- And in make that numbers least maybe another to to for -- is it the going my you that about they're made that Or second it payout meet year cuts million or think, expecting -- question. make? cost supposed

Jeff Eberwein

The the cost Sure. to add side, It people, we is, cuts doing. not include cost anticipating actually significant doesn't version they're certainly nothing any on to recruiters short what no. cuts. people We're want add

and get helping they stay the they that, the give had any roughly upfront, So But upside on we're we our time it. owners coming into and side. as doesn't the EBITDA help include they that the reductions the and this half then cost kind on and personnel to grow not looking to of office be to over then on support consideration going is are invest back-office staying are some it targets, synergies concept us your together things, And to and grow and any think, right, of business. plan certainly half costs, us with to things the is reading I execute the grow like other the business

Mark Bishop

that would Or in also, for example, Or second those be before corporate And of just in inclusive? the year? from And or Great. that numbers months costs? where Okay. that Or in them you see a some number XX% growth? is those is or numbers growth -- each some that does to Or year where that are was any of represent where is numbers is revenue percentage the in that kind from they last -- grow the that costs? EBITDA, would the require Coit currently the all it is from their XX it? synergies

Jeff Eberwein

Yes.

So based and revenue, EBITDA U.S. those earnout numbers on on. based the the are It's we in is it's based not on that NOLs EBITDA all also have

offset companies well, we're XX-Ks But the filing good so we And the won't QX. on-- truly should and starting has in Coit -- on through U.S. we so of tax company -- numbers numbers in X an XX-Qs, with income can a audit any thing NOL, into and can pretax acquisitions our on because private a about audited say. it their having pay I that unlike income look our been is all historically, incorporating at any go U.S. public basis doing we

financials when that's so start. And kind of the

and So XX-Ks They great really not have in and been everything business. And to over are was in they've very, by They've time. it did the not profitable, managed and based been all is audited past. say through COVID-XX Area pretty the it year, profitable the most this They past clients well. and XXXX business, nicely very But I the in numbers us. would done XX-Qs. of York have similar impacted Bay they've stayed are which XXXX in what and like to to but Bay impressive shutdowns City businesses, grow realistic able significant a Area, the New they very on their

nothing really, So make what we're well, the crisis I poised forward. owners would the all acquisition happier do together business than well, that them would doing as this really going think them goal. mean because and navigated the compensation of together they're to at the us doing, repeatedly, winning are getting we experienced, and told from well very know really managers, Coit we're the is And maximum really

Mark Bishop

Okay. Maybe the after the done. how just a is question on you COVID generally recovering see market

Would their you've would you over Or you of customers about this kind about X are your some that a impact growth hire emergence be thinking of years? faster and it slow see or for seeing they see cautious next do more? talking growth said Like at over the or think you it would clients -- as X You expectations at their hiring. the slower seen -- meaningfully years. increasing or industry something some as next the end the than some that then terms would in point might

industry to that comment I grow too. that, XX% think like I a year don't on if know something some the reports that. that can supposed I you is saw said or

Jeff Eberwein

industry answers all a But say better anyone the would and I great we're no different really business wish growth do knew business mean things. different just and consultants growth crystal question, a the strongly to -- I few we That's than we have my rates. that I else's. Yes. probably is is think myself and a I ball in that,

margin, I see year to Other a people through XXXX. at projected way that right, think an fixed we growth. we XX% X fast did growing. drop-down before have low revenue got revenue. That's people a size range. XX% by get really kind not without margins a then look think in industry the the you at all net margin. said a strongly as high-growth profitable incremental other XX% the the EBITDA the And the of of it, the if for. midyear our I'm That's crisis at our we want for And to EBITDA least starting way to grow corporate of them, as could just the But to strongly, we and costs is business, than and XXXX. into We But started, double line. goal metric slice I adding corner growth this we're XX% We've top in the industry turned of XX% have divided adjusted grow you're good paid costs. any faster want main I we sake felt growth said and adjusted we having in before were was the as fixed teens. growing, actually growth at. is mid-teens, net we a That We roughly had defining look grow business and were it's like not We the growth. increase margins, much company industry think costs not have as

up at the time, over you the And goal. XX% if is get mean, double business margin you're I to adding and a that's margin XX% margin point and mathematically, starting so should the XX%. new

almost catch other had clients of So up. some or And hiring to coming that have to continue hiring hire grow. that freezes continue there are we that need to clients no or out this, just

back be very trend that clients should it's painting I'm to kind the business-by-business that So there a be mid-teens-ish for the much business line a on is picture trend could and good, really, really of catch-up line. some our thing. for But get

is would offices cities. as are big this we're think Clients thing that good people of ago. excellence. in that. pandemic. big of more can remotely they is say Another very, I in kind And very started in have well have to working rethinking the a for investing set environment. years up some don't they thing. everything Maybe flexible people to Maybe in And I many due centers need many or working we

very a have X We in Scotland. good

We have X in the Philippines.

China. more in X add time. looking over have to those We're of We

X in and and vision. for models a works than of we well are XXX% that going team XX% model in back the the client's excellence, that of years maybe pretty employees precrisis. these office, either that all XX XX% And works other the would forward, And That centers accepting been and more they it's have So office. that only ago, clients the like think is have or have office were to us, maybe of our that's to of

Operator

session. [Operator Instructions] Jeff over Eberwein question-and-answer for turn concludes now will closing I to And today's that the remarks. call

Jeff Eberwein

just everybody. thank say you, And I you to to team. our thank Well, want

year held see Our in up combined And the Coit and hard have think that, to team really we has restructuring about in going the we're the well. in forward really we Americas persevered what acquisition, some excited and us Pac has business as makes with a going environment, done worked Americas, and through and Asia the has really this difficult very well Europe.

look excited your thanks appreciate and and you on today, another to our call. We next future. for interest quarter's the So, forward company, in us we're update giving about we joining

Operator

recorded Hudson and of hudsonrpo.com. has the for will joining conference the our Investors you section call be on Thank third been website, Global quarter Today's available call.

Hudson Global (HSON) 8 Nov 202020 Q3 Earnings call transcript