Economia
Hudson Global Reports 2014 Fourth Quarter and Full-Year Results
NEW YORK, Feb. 26, 2015 (GLOBE NEWSWIRE) -- Hudson Global, Inc. (Nasdaq:HSON), a leading global talent solutions company, today announced financial results for the fourth quarter and full-year ended December 31, 2014.
2014 Fourth Quarter Summary
2014 Full-Year Summary
"We delivered our fourth consecutive quarter of constant currency revenue and gross margin growth," said Manolo Marquez, chairman and chief executive officer at Hudson. "In 2014, we realized double-digit constant currency growth in Recruitment Process Outsourcing (RPO), talent management and permanent recruitment. We have made meaningful progress in the company's transformation, narrowed our focus on our core business lines with the sale of Legal eDiscovery and further strengthened our path to profitability."
Stephen Nolan, chief financial officer at Hudson said, "We are encouraged by the growth we are experiencing in most of our key markets and the benefits of our cost reduction actions. With strong liquidity and a focus on core markets, we are committed to delivering positive adjusted EBITDA in 2015."
Strategic Actions
The company's strategic actions are focused on driving consistent, sustainable growth and profitability. To accelerate the implementation of the company's strategy, we have engaged in the following initiatives:
During the fourth quarter, the company continued to implement its strategy narrowing its focus on core businesses by divesting its Legal eDiscovery business. To better align the organization model and support profitable growth in core areas, the company continued driving cost reductions in the expense base, particularly in support and real estate, based on the recommendations of AlixPartners, LLP. The Hudson Board of Directors has approved restructuring charges of up to $11.1 million to be taken by the third quarter of 2015. This includes $4.1 million approved in December 2014 for real estate optimization costs, including real estate related to the company's former Legal eDiscovery business. During the fourth quarter the company incurred restructuring charges in continuing operations totaling $1.8 million for headcount reductions primarily in Europe and Corporate, and $2.3 million in discontinued operations primarily related to real estate exit costs. The company expects an ongoing annualized return of 1.5 to 2x on continuing operations charges.
The company also made investments in core markets to drive profitable growth, expanding consultant headcount by 14 percent during 2014. The productivity of new hires gradually increased during 2014 and is expected to continue improving in 2015.
Regional Highlights
Americas
In the fourth quarter, Hudson Americas' gross margin increased 8 percent as compared with the fourth quarter in 2013. This was driven by growth in RPO, up 46 percent in the fourth quarter against prior year, partially offset by a 19 percent decline in IT. The company continues to support some stranded costs remaining in the Americas following the November 2014 sale of its eDiscovery business, which totaled approximately $0.5 million in the fourth quarter. Adjusted EBITDA declined to $0.1 million or 1.2 percent of revenue for the fourth quarter, compared with $1.2 million or 10.0 percent of revenue for the same period a year ago.
Hudson Americas' gross margin in 2014 increased 11 percent from 2013. RPO gross margin increased by 47 percent in 2014 and is now the largest gross margin practice in the Americas. In November 2014, the company sold its Legal eDiscovery business for $23 million. Adjusted EBITDA was $1.4 million, or 2.9 percent of revenue, compared with $2.3 million, or 4.5 percent of revenue, in 2013.
Asia Pacific
Hudson Asia Pacific's gross margin increased 21 percent in constant currency in the fourth quarter of 2014 from the same period in 2013. This was the fourth consecutive quarter of year-over-year gross margin growth. Results were fueled by permanent recruitment, up 40 percent, and RPO, up 17 percent, against the fourth quarter of 2013. This growth was primarily realized in China and Australia with gross margin increasing 52 percent and 16 percent, respectively, against the prior year. Asia Pacific delivered adjusted EBITDA of $0.2 million, or 0.3 percent of revenue, improving from adjusted EBITDA loss of $1.3 million in the fourth quarter of 2013.
In 2014, gross margin increased 11 percent in Hudson Asia Pacific in constant currency compared with 2013. Results were driven by 18 percent growth in permanent recruitment, 19 percent growth in RPO and 20 percent growth in talent management against 2013. Growth by country was led by Australia and China, up 12 percent and 33 percent, respectively, against prior year. During 2014, Hudson invested in additional consultants, up 24 percent from 2013, with their productivity improving throughout the year. Adjusted EBITDA was $1.9 million, or 0.8 percent of revenue, improving from adjusted EBITDA loss of $1.4 million in 2013.
Europe
During the fourth quarter of 2014, Hudson Europe's gross margin decreased 5 percent in constant currency from the fourth quarter of 2013. Continental Europe increased 1 percent in the quarter on strength in permanent recruitment and talent management, particularly in Belgium. This was offset by softer results in the UK, as permanent recruitment was particularly strong a year ago. Adjusted EBITDA of $1.8 million, or 2.8 percent of revenue, improved from $1.0 million, or 1.3 percent of revenue, in the fourth quarter of 2013.
Hudson Europe's gross margin increased 3 percent in 2014 in constant currency compared with 2013. Both Continental Europe and the UK delivered gross margin growth for the year, up 5 percent and 1 percent, respectively. Growth was led by strength in permanent recruitment, up 12 percent from 2013, and talent management, up 8 percent. Those were offset by declines in RPO, down 21 percent as some projects concluded, and temporary contracting, down 4 percent. The region delivered full year adjusted EBITDA of $6.1 million, or 2.2 percent of revenue, improved from $0.6 million, or 0.2 percent of revenue in 2013.
Liquidity and Capital Resources
The company ended the fourth quarter of 2014 with $58.0 million in liquidity, composed of $34.0 million in cash and $24.0 million in availability under its credit facilities. This compares with $37.4 million in cash and $29.8 million in availability under its credit facilities at the end of 2013. The company generated $2.9 million in cash flow from operations during the fourth quarter and used $17.8 million in cash flow from operations for the year of 2014. The company had no outstanding borrowings at the end of the fourth quarter of 2014.
Business Outlook
Given current economic conditions, the company expects first quarter 2015 revenue of between $115 million and $125 million and an adjusted EBITDA loss of between $2.0 million and $4.0 million at prevailing exchange rates. This outlook assumes an average exchange rate of 1.52 US Dollars to the British Pound, 1.13 US Dollars to the Euro and 0.78 US Dollars to the Australian Dollar. In the first quarter of 2014, revenue was $144.2 million and adjusted EBITDA was a loss of $1.9 million.
Conference Call/Webcast
Hudson 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 Hudson.com.
The archived call will be available on the investor information section of the company's web site at Hudson.com.
About Hudson
Hudson is a global talent solutions company with expertise in leadership and specialized recruitment, recruitment process outsourcing, talent management and contracting solutions. We help our clients and candidates succeed by leveraging our expertise, deep industry and market knowledge, and proprietary assessment tools and techniques. Operating in nearly 20 countries through relationships with millions of specialized professionals, we bring an unparalleled ability to match talent with opportunities by assessing, recruiting, developing and engaging the best and brightest people for our clients. We combine broad geographic presence, world-class talent solutions and a tailored, consultative approach to help businesses and professionals achieve higher performance and outstanding results. More information is available at Hudson.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 company's ability to successfully achieve its strategic initiatives; risks related to fluctuations in the company's operating results from quarter to quarter; 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; restrictions on the company's operating flexibility due to the terms of its credit facilities; risks associated with the company's investment strategy; risks related to international operations, including foreign currency fluctuations; 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 achieve anticipated cost savings through its cost reduction initiatives; 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; restrictions imposed by blocking arrangements; and risks related to activist stockholders. 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.
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