Hudson Global Reports 2021 First Quarter Results

Friday, 07. May 2021 14:30

OLD GREENWICH, Conn., May 07, 2021 (GLOBE NEWSWIRE) -- Hudson Global, Inc. (Nasdaq: HSON), a leading global total talent solutions company, announced today financial results for the first quarter ended March 31, 2021.

2021 First Quarter Summary

  • Revenue of $34.5 million increased 42.8% from the first quarter of 2020 and 26.6% in constant currency.
  • Adjusted net revenue of $12.7 million increased 29.8% from the first quarter of 2020 and 19.4% in constant currency.
  • Net loss was $0.2 million, or $0.07 per basic and diluted share, compared to net loss of $0.5 million, or $0.17 per basic and diluted share, for the first quarter of 2020. Adjusted net income per diluted share (Non-GAAP measure)* was $0.07 compared to adjusted net loss per diluted share of $0.08 in the first quarter of 2020.
  • Adjusted EBITDA (Non-GAAP measure)* was $0.8 million compared to adjusted EBITDA loss of $0.1 million in the first quarter of 2020.
  • Total cash including restricted cash was $23.6 million at March 31, 2021.

“Our business exhibited solid growth in revenue, adjusted net revenue, and adjusted EBITDA across all three regions in the first quarter of 2021 versus the prior year quarter,” said Jeff Eberwein, Chief Executive Officer of Hudson Global. “Asia Pacific continued to perform well, and we are pleased about the recovery in our Americas results due to organic improvements made last year and the addition of our acquisition in 2020 of Coit Group. Although the recovery is uneven depending on country, we are seeing increased activity levels at our existing clients and an improving pipeline of potential clients.”

* The Company provides Non-GAAP measures as a supplement to financial results based on accounting principles generally accepted in the United States ("GAAP"). Constant currency, Adjusted EBITDA, EBITDA, adjusted net income or loss, and adjusted net income or loss per diluted share are defined in the segment tables at the end of this release and a reconciliation of such Non-GAAP measures to the most directly comparable GAAP measures is included within such segment tables.

Regional Highlights

All growth rate comparisons are in constant currency.

Asia Pacific

Asia Pacific revenue of $25.3 million increased 29% and adjusted net revenue of $5.8 million increased 12% in the first quarter of 2021 compared to the same period in 2020. EBITDA was $0.8 million in the first quarter of 2021 compared to EBITDA of $0.3 million in the same period one year ago, and adjusted EBITDA was $1.1 million compared to adjusted EBITDA of $0.6 million in the first quarter of 2020.

Americas

In the first quarter of 2021, Americas revenue of $4.6 million increased 42% and adjusted net revenue of $4.2 million increased 46% from the first quarter of 2020. Most of this growth was attributable to the acquisition of Coit Group in Q4 2020. EBITDA loss was $0.3 million in the first quarter of 2021 compared to EBITDA loss of $0.1 million in same period last year. The region recorded adjusted EBITDA of $0.2 million compared to adjusted EBITDA of $0.1 million a year ago.

Europe

Europe revenue in the first quarter of 2021 increased 6% to $4.6 million and adjusted net revenue of $2.8 million increased 5% from the first quarter of 2020. EBITDA was $0.1 million in the first quarter of both 2021 and 2020. Adjusted EBITDA was $0.2 million in the first quarter of 2021 compared to adjusted EBITDA of $0.1 million a year ago.

Corporate Costs

In the first quarter of 2021, the Company's corporate costs were $0.8 million, flat versus the first quarter of 2020. Corporate costs in the first quarter of 2020 excluded non-recurring expenses of $0.3 million.

Liquidity and Capital Resources

The Company ended the first quarter of 2021 with $23.6 million in cash, including $0.4 million in restricted cash. The Company used $2.4 million in cash flow from operations during the first quarter of 2021, compared to using $2.7 million of cash flow from operations in the first quarter of 2020.

Share Repurchase Program

Since the beginning of 2019, the Company has reduced its share count by 16% and continues to view share repurchases as an attractive use of capital. Under its $10 million common stock share repurchase program, the Company has $1.7 million remaining.

COVID-19 Update

As disclosed in previously issued Company press releases as well as in our 2020 Form 10-K, our business has been adversely impacted by the COVID-19 outbreak and the accompanying economic downturn. This downturn, as well as the uncertainty regarding the duration, spread and intensity of the outbreak, led to a reduction in demand for our services in 2020. Some of our customers have instituted hiring freezes, while other customers that are more capable of working remotely have been allowed to operate somewhat as usual. The expected timeline for this reduction in demand for our services remains uncertain and difficult to predict considering the rapidly evolving landscape, but we have begun to see signs of positive momentum at certain clients.

The Company is vigilantly monitoring the business environment surrounding COVID-19 and continues to proactively address this situation as it evolves. The Company is confident that it can continue to take appropriate actions to manage the business in this challenging environment due to the flexibility of its workforce and the strength of its balance sheet.

Conference Call/Webcast

The Company will conduct a conference call today at 10:00 a.m. ET to discuss this announcement. Individuals wishing to listen can access the webcast on the investor information section of the Company's web site at hudsonrpo.com.

If you wish to join the conference call, please use the dial-in information below:

  • Toll-Fee Dial-In Number: (866) 220-5784
  • International Dial-In Number: (615) 622-8063
  • Conference ID #: 9799225

The archived call will be available on the investor information section of the Company's web site at hudsonrpo.com.

About Hudson Global

Hudson Global, Inc. is a leading global total talent solutions provider operating under the brand name Hudson RPO. We deliver innovative, customized recruitment outsourcing and total talent solutions to organizations worldwide. Through our consultative approach, we develop tailored talent solutions designed to meet our clients’ strategic growth initiatives. As a trusted advisor, we meet our commitments, deliver quality and value, and strive to exceed expectations.

For more information, please visit us at hudsonrpo.com or contact us at ir@hudsonrpo.com.

Investor Relations:
The Equity Group
Lena Cati
212 836-9611 / lcati@equityny.com

Forward-Looking Statements

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 important factors, risks, uncertainties, and assumptions, including industry and economic conditions that could cause actual results to differ materially from those described in the forward-looking statements. Such factors, risks, uncertainties and assumptions include, but are not limited to, global economic fluctuations; the adverse impacts of the recent coronavirus, or COVID-19 outbreak; the Company’s ability to successfully achieve its strategic initiatives; risks related to potential acquisitions or dispositions of businesses by the Company; the Company’s ability to retain and recruit qualified management and/or advisors; the Company’s ability to operate successfully as a company focused on its RPO business; risks related to fluctuations in the Company's operating results from quarter to quarter; the loss of or material reduction in our business with any of the Company’s largest customers; the ability of clients to terminate their relationship with the Company at any time; competition in the Company's markets; the negative cash flows and operating losses that may recur in the future; risks relating to how future credit facilities may affect or restrict our operating flexibility; risks associated with the Company's investment strategy; risks related to international operations, including foreign currency fluctuations, political events, natural disasters or health crises, including the ongoing COVID-19 outbreak; the Company's dependence on key management personnel; the Company's ability to attract and retain highly skilled professionals; the Company's ability to collect accounts receivable; the Company’s ability to maintain costs at an acceptable level; the Company's heavy reliance on information systems and the impact of potentially losing or failing to develop technology; risks related to providing uninterrupted service to clients; the Company's exposure to employment-related claims from clients, employers and regulatory authorities, current and former employees in connection with the Company’s business reorganization initiatives, and limits on related insurance coverage; the Company’s ability to utilize net operating loss carry-forwards; volatility of the Company's stock price; the impact of government regulations; 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 document. The Company assumes no obligation, and expressly disclaims any obligation, to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Financial Tables Follow

HUDSON GLOBAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
     
  Three Months Ended March 31,
  2021 2020
Revenue $34,461  $24,131 
     
Operating expenses:    
Direct contracting costs and reimbursed expenses 21,743  14,333 
Salaries and related 10,590  8,217 
Other selling, general and administrative 2,000  2,081 
Depreciation and amortization 110  24 
Total operating expenses 34,443  24,655 
Operating income (loss) 18  (524)
Non-operating income (expense):    
Interest income, net 10  79 
Other (expense) income, net (53) 41 
Loss before provision for income taxes (25) (404)
Provision for income taxes 178  107 
Net loss $(203) $(511)
Basic and diluted loss per share:    
Loss per share $(0.07) $(0.17)
Weighted-average shares outstanding:    
Basic 2,891  3,065 
Diluted 2,891  3,065 


HUDSON GLOBAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
(unaudited)
     
  March 31,
2021
 December 31,
2020
ASSETS    
Current assets:    
Cash and cash equivalents $23,150  $25,806 
Accounts receivable, less allowance for doubtful accounts of $2 and $10, respectively 17,118  13,445 
Restricted cash, current 210  152 
Prepaid and other 904  889 
Total current assets 41,382  40,292 
Property and equipment, net 125  115 
Operating lease right-of-use assets 737  210 
Deferred tax assets 1,093  1,037 
Restricted cash 231  241 
Goodwill 2,088  2,088 
Intangible assets, net 1,320  1,400 
Other assets 5  3 
Total assets $46,981  $45,386 
LIABILITIES AND STOCKHOLDERS’ EQUITY    
Current liabilities:    
Accounts payable $437  $576 
Accrued expenses and other current liabilities 10,547  9,241 
Operating lease obligations, current 448  192 
Total current liabilities 11,432  10,009 
Income tax payable 903  887 
Operating lease obligations 302  22 
Other liabilities 193  188 
Total liabilities 12,830  11,106 
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, 20,000 shares authorized; 3,675 and
3,672 shares issued; 2,688 and 2,685 shares outstanding, respectively
 4  4 
Additional paid-in capital 487,127  486,825 
Accumulated deficit (437,953) (437,750)
Accumulated other comprehensive loss, net of applicable tax 300  526 
Treasury stock, 987 and 987 shares, respectively, at cost (15,327) (15,325)
Total stockholders' equity 34,151  34,280 
Total liabilities and stockholders' equity $46,981  $45,386 


HUDSON GLOBAL, INC.
SEGMENT ANALYSIS - QUARTER TO DATE (continued)
RECONCILIATION OF ADJUSTED EBITDA
(in thousands)
(unaudited)
           
For The Three Months Ended March 31, 2021 Asia Pacific Americas Europe Corporate Total
Revenue, from external customers $25,340  $4,561  $4,560  $  $34,461 
Adjusted net revenue, from external customers (1) $5,758  $4,209  $2,751  $  $12,718 
Net loss         $(203)
Provision from income taxes         178 
Interest income, net         (10)
Depreciation and amortization         110 
EBITDA (loss) (2) $762  $(278) $70  $(479) 75 
Non-operating expense (income), including corporate administration charges 316  65  139  (467) 53 
Stock-based compensation expense 43  111  19  129  302 
Non-recurring severance and professional fees   15    17  32 
Compensation expense related to the Coit acquisition (3)   291      291 
Adjusted EBITDA (loss) (2) $1,121  $204  $228  $(800) $753 
           
For The Three Months Ended March 31, 2020 Asia Pacific Americas Europe Corporate Total
Revenue, from external customers $16,951  $3,188  $3,992  $  $24,131 
Adjusted net revenue, from external customers (1) $4,511  $2,860  $2,427  $  $9,798 
Net loss         $(511)
Provision for income taxes         107 
Interest income, net         (79)
Depreciation and amortization         24 
EBITDA (loss) (2) $337  $(60) $63  $(799) (459)
Non-operating expense (income), including corporate administration charges 190  137  1  (369) (41)
Stock-based compensation expense 24  6  2  112  144 
Non-recurring severance and professional fees       278  278 
Adjusted EBITDA (loss) (2) $551  $83  $66  $(778) $(78)

 

(1)Represents Revenue less the Direct contracting costs and reimbursed expenses caption on the Condensed Consolidated Statements of Operations.
(2)Non-GAAP earnings before interest, income taxes, and depreciation and amortization (“EBITDA”) and Non-GAAP earnings before interest, income taxes, depreciation and amortization, non-operating income, business reorganization expenses, stock-based compensation expense, and other non-recurring expenses (“Adjusted 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. EBITDA and adjusted 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, EBITDA and adjusted EBITDA as presented above may not be comparable with similarly titled measures reported by other companies.
(3)Represents compensation expense payable to the principals of Coit per the terms of the acquisition agreement, including a promissory note and earn-out payments.


HUDSON GLOBAL, INC.
RECONCILIATION OF CONSTANT CURRENCY MEASURES
(in thousands) (unaudited)

The Company operates on a global basis, with the majority of its revenue generated outside of the United States. Accordingly, fluctuations in foreign currency exchange rates can affect its results of operations. Constant currency information compares financial results between periods as if exchange rates had remained constant period-over-period. The Company defines the term “constant currency” to mean that financial data for a previously reported period are translated into U.S. dollars using the same foreign currency exchange rates that were used to translate financial data for the current period. Changes in revenue, adjusted net revenue, selling, general and administrative expenses ("SG&A"), other non-operating income (expense), operating income (loss) and EBITDA (loss) include the effect of changes in foreign currency exchange rates. The Company’s management reviews and analyzes business results in constant currency and believes these results better represent the Company’s underlying business trends. The Company believes that these calculations are a useful measure, indicating the actual change in operations. There are no significant gains or losses on foreign currency transactions between subsidiaries. Therefore, changes in foreign currency exchange rates generally impact only reported earnings.

 Three Months Ended March 31,
 2021 2020
 As As Currency Constant
 reported reported translation currency
Revenue:       
Asia Pacific$25,340  $16,951  $2,765  $19,716 
Americas4,561  3,188  19  3,207 
Europe4,560  3,992  305  4,297 
Total$34,461  $24,131  $3,089  $27,220 
Adjusted net revenue (1)       
Asia Pacific$5,758  $4,511  $645  $5,156 
Americas4,209  2,860  19  2,879 
Europe2,751  2,427  185  2,612 
Total$12,718  $9,798  $849  $10,647 
SG&A:(2)       
Asia Pacific$4,680  $3,991  $539  $4,530 
Americas4,421  2,783  22  2,805 
Europe2,542  2,357  169  2,526 
Corporate947  1,167  1  1,168 
Total$12,590  $10,298  $731  $11,029 
Operating income (loss):       
Asia Pacific$1,063  $514  $87  $601 
Americas(298) 72  (2) 70 
Europe200  59  16  75 
Corporate(947) (1,169)   (1,169)
Total$18  $(524) $101  $(423)
EBITDA (loss):       
Asia Pacific$762  $337  $49  $386 
Americas(278) (60) (6) (66)
Europe70  63  15  78 
Corporate(479) (799)   (799)
Total$75  $(459) $58  $(401)

 

(1)Represents Revenue less the Direct contracting costs and reimbursed expenses caption on the Condensed Consolidated Statements of Operations.
(2)SG&A is a measure that management uses to evaluate the segments’ expenses and includes salaries and related costs and other selling, general and administrative costs.


HUDSON GLOBAL, INC.
RECONCILIATION OF ADJUSTED NET LOSS PER DILUTED SHARE
(in thousands, except per share amounts)
(unaudited)

  Adjusted Diluted Shares Per Diluted
For The Three Months Ended March 31, 2021 Net Income Outstanding (1) Share
Net loss $(203) 2,891  $(0.07)
Non-recurring items (after-tax) 32  2,932  0.01 
Compensation expense related to the Coit acquisition (after tax) (2) 381  2,932  0.13 
Adjusted net income (3) $210  2,932  $0.07 


  Adjusted Diluted Shares Per Diluted
For The Three Months Ended March 31, 2020 Net Loss Outstanding Share
Net loss $(511) 3,065  $(0.17)
Non-recurring items (after-tax) 278  3,065  0.09 
Adjusted net loss (3) $(233) 3,065  $(0.08)


(1)The weighted average number of shares outstanding used in the computation of diluted net loss per share for the three months ended March 31, 2021 did not include potentially outstanding shares of common stock because the effect would have been anti-dilutive. However, these shares have been added to the adjusted net income per share reconciliation when their impact would be dilutive.
  
(2)Represents compensation expense payable to the principals of Coit per the terms of the acquisition agreement, including a promissory note, common stock, and earn-out payments.
  
(3)Adjusted net income or loss and adjusted net income or loss per diluted share are Non-GAAP measures defined as reported net income or loss and reported net income or loss per diluted share before items such as PPP loan forgiveness, acquisition-related costs, and non-recurring severance and professional fees after tax that are presented to provide additional information about the company's operations on a basis consistent with the measures that 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 net income or loss and adjusted net income or loss per diluted share should not be considered in isolation or as substitutes for net income or loss and net income or loss per share and other income or cash flow statement data prepared in accordance with generally accepted accounting principles or as measures of the company's profitability or liquidity. Further, adjusted net income or loss and adjusted net income or loss per diluted share as presented above may not be comparable with similarly titled measures reported by other companies.



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