Delaware | 000-50129 | 59-3547281 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c) |
ITEM 2.02. | RESULTS OF OPERATIONS AND FINANCIAL CONDITION. |
ITEM 9.01. | FINANCIAL STATEMENTS AND EXHIBITS. |
HUDSON GLOBAL, INC. (Registrant) | ||
By: | /s/ STEPHEN A. NOLAN | |
Stephen A. Nolan | ||
Executive Vice President and Chief Financial Officer | ||
Dated: | May 11, 2015 |
Exhibit Number | Description | |
99.1 | Press Release of Hudson Global, Inc. issued on May 11, 2015. |
For Immediate Release | Contact: | David F. Kirby | ||
Hudson | ||||
212-351-7216 | ||||
david.kirby@hudson.com |
• | Revenue of $124.3 million, a decrease of 13.8 percent from the first quarter of 2014, and a decrease of 3.3 percent in constant currency, as currency changes alone led to $15.6 million reduction in revenue from a year ago. |
• | Gross margin of $47.9 million or 38.5 percent of revenue, a decrease of 11.3 percent from the same period in 2014, or 0.2 percent in constant currency. |
• | Adjusted EBITDA* loss of $4.3 million, including $0.7 million of severance costs related to the chief executive officer transition, compared with adjusted EBITDA loss of $1.9 million in the first quarter of 2014. |
• | Restructuring charges of $1.3 million in the first quarter of 2015. |
• | Net loss** of $6.8 million, or $0.21 per basic and diluted share, compared with net loss of $4.5 million, or $0.14 per basic and diluted share, for the first quarter of 2014. |
• | Investing in the core businesses and practices that present the greatest potential for profitable growth. |
• | Further improving the company’s cost structure and efficiency of its support functions and infrastructure. |
• | Building and differentiating the company's brand through its unique talent solutions offerings. |
• | Divestiture of the company's Netherlands operations to InterBalance Group B.V. effective on April 30, 2015 for €8.1 million in cash. |
• | Signed an agreement to divest the company's Americas IT staffing business to Mastech, Inc. for $17.0 million in cash as well as retained working capital, expected to close during the second quarter subject to customary closing conditions. |
• | Ceasing its non-profitable operations in countries in Central and Eastern Europe (Ukraine, Czech Republic and Slovakia). The company also approved the exit of operations in Luxembourg which is expected to cease operations during the course of 2015. For the full year 2014, operations in these countries generated a total of $2.9 million, $2.3 million and $0.5 million in Revenue, Gross Margin and EBITDA loss respectively. |
HUDSON GLOBAL, INC. | ||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||
(in thousands, except per share amounts) | ||||||||
(unaudited) | ||||||||
Three Months Ended March 31, | ||||||||
2015 | 2014 | |||||||
Revenue | $ | 124,317 | $ | 144,167 | ||||
Direct costs | 76,413 | 90,138 | ||||||
Gross margin | 47,904 | 54,029 | ||||||
Operating expenses: | ||||||||
Selling, general and administrative expenses | 52,166 | 55,919 | ||||||
Depreciation and amortization | 1,111 | 1,371 | ||||||
Business reorganization expenses | 1,343 | 114 | ||||||
Total operating expenses | 54,620 | 57,404 | ||||||
Operating income (loss) | (6,716 | ) | (3,375 | ) | ||||
Non-operating income (expense): | ||||||||
Interest income (expense), net | (80 | ) | (139 | ) | ||||
Other income (expense), net | 13 | (196 | ) | |||||
Income (loss) before provision for income taxes | (6,783 | ) | (3,710 | ) | ||||
Provision for (benefit from) income taxes | (129 | ) | 402 | |||||
Income (loss) from continuing operations | (6,654 | ) | (4,112 | ) | ||||
Income (loss) from discontinued operations, net of income taxes | (184 | ) | (432 | ) | ||||
Net income (loss) | $ | (6,838 | ) | $ | (4,544 | ) | ||
Basic and diluted earnings (loss) per share: | ||||||||
Basic and diluted earnings (loss) per share from continuing operations | $ | (0.20 | ) | $ | (0.13 | ) | ||
Basic and diluted earnings (loss) per share from discontinued operations | (0.01 | ) | (0.01 | ) | ||||
Basic and diluted earnings (loss) per share | $ | (0.21 | ) | $ | (0.14 | ) | ||
Weighted-average shares outstanding: | ||||||||
Basic | 33,053 | 32,641 | ||||||
Diluted | 33,053 | 32,641 |
HUDSON GLOBAL, INC. | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(in thousands) | ||||||||
(unaudited) | ||||||||
March 31, 2015 | December 31, 2014 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 13,894 | $ | 33,989 | ||||
Accounts receivable, less allowance for doubtful accounts of $944 and $986 respectively | 79,509 | 74,079 | ||||||
Prepaid and other | 7,805 | 9,604 | ||||||
Current assets of discontinued operations | 476 | 1,249 | ||||||
Total current assets | 101,684 | 118,921 | ||||||
Property and equipment, net | 8,895 | 9,840 | ||||||
Deferred tax assets, non-current | 6,033 | 5,648 | ||||||
Other assets | 4,559 | 5,263 | ||||||
Total assets | $ | 121,171 | $ | 139,672 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 6,529 | $ | 6,371 | ||||
Accrued expenses and other current liabilities | 46,025 | 54,065 | ||||||
Accrued business reorganization expenses | 3,440 | 3,169 | ||||||
Current liabilities of discontinued operations | 2,928 | 3,512 | ||||||
Total current liabilities | 58,922 | 67,117 | ||||||
Deferred rent and tenant improvement contributions | 5,240 | 5,899 | ||||||
Income tax payable, non-current | 2,292 | 2,397 | ||||||
Other non-current liabilities | 4,265 | 5,002 | ||||||
Total liabilities | 70,719 | 80,415 | ||||||
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 34,089 and 33,671 shares, respectively | 34 | 34 | ||||||
Additional paid-in capital | 477,118 | 476,689 | ||||||
Accumulated deficit | (437,454 | ) | (430,616 | ) | ||||
Accumulated other comprehensive income | 10,833 | 13,613 | ||||||
Treasury stock, 25 and 129 shares, respectively, at cost | (79 | ) | (463 | ) | ||||
Total stockholders’ equity | 50,452 | 59,257 | ||||||
Total liabilities and stockholders' equity | $ | 121,171 | $ | 139,672 |
HUDSON GLOBAL, INC. | ||||||||||||||||||||
SEGMENT ANALYSIS - QUARTER TO DATE | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
For The Three Months Ended March 31, 2015 | Hudson Americas | Hudson Asia Pacific | Hudson Europe | Corporate | Total | |||||||||||||||
Revenue, from external customers | $ | 10,978 | $ | 53,139 | $ | 60,200 | $ | — | $ | 124,317 | ||||||||||
Gross margin, from external customers | $ | 4,621 | $ | 20,876 | $ | 22,407 | $ | — | $ | 47,904 | ||||||||||
Adjusted EBITDA (loss) (1) | $ | (906 | ) | $ | 891 | $ | (23 | ) | $ | (4,224 | ) | $ | (4,262 | ) | ||||||
Business reorganization expenses (recovery) | 421 | 8 | 880 | 34 | 1,343 | |||||||||||||||
Non-operating expense (income), including corporate administration charges | 292 | 80 | 1,246 | (1,631 | ) | (13 | ) | |||||||||||||
EBITDA (loss) (1) | $ | (1,620 | ) | $ | 804 | $ | (2,150 | ) | $ | (2,626 | ) | $ | (5,592 | ) | ||||||
Depreciation and amortization expenses | 1,111 | |||||||||||||||||||
Interest expense (income), net | 80 | |||||||||||||||||||
Provision for (benefit from) income taxes | (129 | ) | ||||||||||||||||||
Income (loss) from continuing operations | (6,654 | ) | ||||||||||||||||||
Income (loss) from discontinued operations, net of income taxes | (184 | ) | ||||||||||||||||||
Net income (loss) | $ | (6,838 | ) | |||||||||||||||||
For The Three Months Ended March 31, 2014 | Hudson Americas | Hudson Asia Pacific | Hudson Europe | Corporate | Total | |||||||||||||||
Revenue, from external customers | $ | 12,244 | $ | 56,430 | $ | 75,493 | $ | — | $ | 144,167 | ||||||||||
Gross margin, from external customers | $ | 4,502 | $ | 20,911 | $ | 28,616 | $ | — | $ | 54,029 | ||||||||||
Adjusted EBITDA (loss) (1) | $ | 4 | $ | 110 | $ | 1,884 | $ | (3,888 | ) | $ | (1,890 | ) | ||||||||
Business reorganization expenses (recovery) | 91 | — | 23 | — | 114 | |||||||||||||||
Non-operating expense (income), including corporate administration charges | 370 | 414 | 1,172 | (1,760 | ) | 196 | ||||||||||||||
EBITDA (loss) (1) | $ | (456 | ) | $ | (305 | ) | $ | 688 | $ | (2,127 | ) | $ | (2,200 | ) | ||||||
Depreciation and amortization expenses | 1,371 | |||||||||||||||||||
Interest expense (income), net | 139 | |||||||||||||||||||
Provision for (benefit from) income taxes | 402 | |||||||||||||||||||
Income (loss) from continuing operations | $ | (4,112 | ) | |||||||||||||||||
Income (loss) from discontinued operations, net of income taxes | (432 | ) | ||||||||||||||||||
Net income (loss) | $ | (4,544 | ) |
(1) | 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, goodwill and other impairment charges, business reorganization expenses and other 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 |
HUDSON GLOBAL, INC. | ||||||||||||||||||||
SEGMENT ANALYSIS - QUARTER TO DATE (continued) | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
For The Three Months Ended December 31, 2014 | Hudson Americas | Hudson Asia Pacific | Hudson Europe | Corporate | Total | |||||||||||||||
Revenue, from external customers | $ | 11,709 | $ | 58,351 | $ | 66,617 | $ | — | $ | 136,677 | ||||||||||
Gross margin, from external customers | $ | 5,293 | $ | 22,930 | $ | 25,033 | $ | — | $ | 53,256 | ||||||||||
Adjusted EBITDA (loss) (1) | $ | (138 | ) | $ | 186 | $ | 1,840 | $ | (4,280 | ) | $ | (2,392 | ) | |||||||
Business reorganization expenses (recovery) | — | 67 | 963 | 733 | 1,763 | |||||||||||||||
Impairment of long-lived assets | — | 314 | 348 | — | 662 | |||||||||||||||
Non-operating expense (income), including corporate administration charges | (579 | ) | 62 | 1,224 | (1,234 | ) | (526 | ) | ||||||||||||
EBITDA (loss) (1) | $ | 441 | $ | (257 | ) | $ | (695 | ) | $ | (3,779 | ) | $ | (4,290 | ) | ||||||
Depreciation and amortization expenses | 1,317 | |||||||||||||||||||
Interest expense (income), net | 128 | |||||||||||||||||||
Provision for (benefit from) income taxes | (2,196 | ) | ||||||||||||||||||
Income (loss) from continuing operations | (3,539 | ) | ||||||||||||||||||
Income (loss) from discontinued operations, net of income taxes | 6,282 | |||||||||||||||||||
Net income (loss) | $ | 2,743 | ||||||||||||||||||
For The Three Months Ended June 30, 2014 | Hudson Americas | Hudson Asia Pacific | Hudson Europe | Corporate | Total | |||||||||||||||
Revenue, from external customers | $ | 13,158 | $ | 65,101 | $ | 72,811 | $ | — | $ | 151,070 | ||||||||||
Gross margin, from external customers | $ | 5,393 | $ | 24,519 | $ | 29,959 | $ | — | $ | 59,871 | ||||||||||
Adjusted EBITDA (loss) (1) | $ | 843 | $ | 996 | $ | 2,678 | $ | (4,860 | ) | $ | (343 | ) | ||||||||
Business reorganization expenses (recovery) | 3 | 1,115 | — | — | 1,118 | |||||||||||||||
Non-operating expense (income), including corporate administration charges | 741 | 462 | 1,566 | (2,463 | ) | 306 | ||||||||||||||
EBITDA (loss) (1) | $ | 99 | $ | (581 | ) | $ | 1,112 | $ | (2,397 | ) | $ | (1,767 | ) | |||||||
Depreciation and amortization expenses | 1,404 | |||||||||||||||||||
Interest expense (income), net | 202 | |||||||||||||||||||
Provision for (benefit from) income taxes | 193 | |||||||||||||||||||
Income (loss) from continuing operations | (3,566 | ) | ||||||||||||||||||
Income (loss) from discontinued operations, net of income taxes | (808 | ) | ||||||||||||||||||
Net income (loss) | $ | (4,374 | ) |
(1) | 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, goodwill and other impairment charges, business reorganization expenses and other 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. |
Three Months Ended March 31, | |||||||||||||||
2015 | 2014 | ||||||||||||||
As | As | Currency | Constant | ||||||||||||
reported | reported | translation | currency | ||||||||||||
Revenue: | |||||||||||||||
Hudson Americas | $ | 10,978 | $ | 12,244 | $ | (26 | ) | $ | 12,218 | ||||||
Hudson Asia Pacific | 53,139 | 56,430 | (6,508 | ) | 49,922 | ||||||||||
Hudson Europe | 60,200 | 75,493 | (9,102 | ) | 66,391 | ||||||||||
Total | $ | 124,317 | $ | 144,167 | $ | (15,636 | ) | $ | 128,531 | ||||||
Gross margin: | |||||||||||||||
Hudson Americas | $ | 4,621 | $ | 4,502 | $ | (24 | ) | $ | 4,478 | ||||||
Hudson Asia Pacific | 20,876 | 20,911 | (2,052 | ) | 18,859 | ||||||||||
Hudson Europe | 22,407 | 28,616 | (3,960 | ) | 24,656 | ||||||||||
Total | $ | 47,904 | $ | 54,029 | $ | (6,036 | ) | $ | 47,993 | ||||||
SG&A (1): | |||||||||||||||
Hudson Americas | $ | 5,520 | $ | 4,495 | $ | (20 | ) | $ | 4,475 | ||||||
Hudson Asia Pacific | 19,954 | 20,731 | (1,862 | ) | 18,869 | ||||||||||
Hudson Europe | 22,467 | 26,805 | (3,740 | ) | 23,065 | ||||||||||
Corporate | 4,225 | 3,888 | — | 3,888 | |||||||||||
Total | $ | 52,166 | $ | 55,919 | $ | (5,622 | ) | $ | 50,297 | ||||||
Business reorganization expenses: | |||||||||||||||
Hudson Americas | $ | 421 | $ | 91 | $ | — | $ | 91 | |||||||
Hudson Asia Pacific | 8 | — | — | — | |||||||||||
Hudson Europe | 880 | 23 | (2 | ) | 21 | ||||||||||
Corporate | 34 | — | — | — | |||||||||||
Total | $ | 1,343 | $ | 114 | $ | (2 | ) | $ | 112 | ||||||
Operating income (loss): | |||||||||||||||
Hudson Americas | $ | (1,429 | ) | $ | (206 | ) | $ | (4 | ) | $ | (210 | ) | |||
Hudson Asia Pacific | 212 | (635 | ) | (104 | ) | (739 | ) | ||||||||
Hudson Europe | (1,131 | ) | 1,515 | (188 | ) | 1,327 | |||||||||
Corporate | (4,368 | ) | (4,049 | ) | 1 | (4,048 | ) | ||||||||
Total | $ | (6,716 | ) | $ | (3,375 | ) | $ | (295 | ) | $ | (3,670 | ) | |||
EBITDA (loss): | |||||||||||||||
Hudson Americas | $ | (1,620 | ) | $ | (456 | ) | $ | 2 | $ | (454 | ) | ||||
Hudson Asia Pacific | 804 | (305 | ) | (164 | ) | (469 | ) | ||||||||
Hudson Europe | (2,150 | ) | 688 | (82 | ) | 606 | |||||||||
Corporate | (2,626 | ) | (2,127 | ) | (4 | ) | (2,131 | ) | |||||||
Total | $ | (5,592 | ) | $ | (2,200 | ) | $ | (248 | ) | $ | (2,448 | ) |
(1) | SG&A is a measure that management uses to evaluate the segments’ expenses. |