NEW YORK, Oct. 27, 2010 (GLOBE NEWSWIRE) -- Hudson Highland Group, Inc. (Nasdaq:HHGP), one of the world's leading providers of permanent recruitment, contract professionals and talent management solutions, today announced financial results for the third quarter ended September 30, 2010.
2010 Third Quarter Summary
- Revenue of $200.4 million, an increase of 18.1 percent over the third quarter of 2009, and an increase of 2.8 percent from the second quarter of 2010
- Gross margin of $75.0 million, or 37.4 percent of revenue, up 16.8 percent from the same period last year, and an increase of 1.0 percent from the second quarter of 2010
- EBITDA* of $1.2 million, or 0.6 percent of revenue, improved from an EBITDA loss of $6.0 million for the third quarter of 2009, which included $2.9 million of restructuring charges
- Net loss of $1.9 million, or $0.06 per basic and diluted share, compared with net loss of $6.9 million, or $0.26 per basic and diluted share, for the third quarter of 2009
* EBITDA is defined in the segment tables at the end of this release and includes other non-operating income.
"Hudson achieved year-over-year revenue and gross margin growth in all four of our core regions globally during the third quarter, led by strength in permanent recruitment in Australia, the U.K. and Asia," said Jon Chait, Hudson Highland Group's chairman and chief executive officer. "Our underlying operational trends remained positive in the third quarter, despite the negative seasonal impact."
"We continue to take disciplined actions and make certain key investments to position the company for growth," said Mary Jane Raymond, the company's executive vice president and chief financial officer. "The improvements to our capital structure in 2010 will help the company achieve its long-term objectives."
Regional Results
Regional results in constant currency were as follows:
- Europe gross margin was up 19 percent, led by 38 percent growth in the U.K., compared with third quarter 2009. Sequentially, Europe gross margin was down 9 percent compared with second quarter 2010.
- Australia/New Zealand (ANZ) gross margin was up 19 percent compared with third quarter 2009, led by an increase of 63 percent in permanent recruitment. Sequentially, ANZ gross margin was up 7 percent compared with second quarter 2010.
- Asia gross margin was up 29 percent compared with third quarter 2009 and up 9 percent compared with second quarter 2010.
- North America gross margin was up slightly compared with third quarter 2009 and down 7 percent compared with second quarter 2010, delivering positive EBITDA for the first time this year.
Liquidity and Capital Resources
During the third quarter, the company signed two new revolving credit facilities, including a $40 million facility with RBS secured by receivables in the U.S. and the U.K., and an AUD$15 million facility ($14.5 million) with Commonwealth Bank of Australia (CBA) secured by receivables in Australia. The combination of these new credit facilities increased the company's availability by over $10 million.
The company ended the third quarter of 2010 with $34.2 million in cash, and had breakeven cash flow from operations. During the quarter, the company made its final earn-out payment to Tony Keith Associates in China and recorded costs associated with the new credit facilities. The company ended the quarter with $13.9 million in borrowings under all credit facilities.
Availability under the new RBS and CBA agreements at the end of the third quarter totaled $26.9 million. Availability under other local country facilities is $5.8 million for a total availability of $32.8 million.
The company incurred termination costs related to the prior credit facility of approximately $0.9 million, consisting of $0.6 million for early termination and $0.3 million for unamortized costs. The latter is recorded in interest expense.
Guidance
The company currently expects fourth quarter 2010 revenue of $210 - $220 million and EBITDA of $3 - $5 million at prevailing exchange rates. This compares with revenue of $182.5 million and an EBITDA loss of $5.0 million in the fourth quarter of 2009.
Additional Information
Additional information about the company's quarterly results can be found in the shareholder letter and the quarterly earnings slides in the investor information section of the company's Web site at .
Conference Call/Webcast
Hudson Highland Group will conduct a conference call Thursday, October 28, 2010 at 10:00 a.m. ET to discuss this announcement. Individuals wishing to listen can access the Web cast on the investor information section of the company's Web site at .
The archived call will be available on the investor information section of the company's Web site at .
About Hudson Highland Group
Hudson Highland Group, Inc. is a leading provider of permanent recruitment, contract professionals and talent management services worldwide. From single placements to total outsourced solutions, Hudson helps clients achieve greater organizational performance by assessing, recruiting, developing and engaging the best and brightest people for their businesses. The company employs more than 2,000 professionals serving clients and candidates in approximately 20 countries. More information is available at .
Safe Harbor Statement
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 ability of clients to terminate their relationship with the company at any time; risks in collecting the company's accounts receivable; the company's history of negative cash flows and operating losses may continue; the company's limited borrowing availability under its credit facilities, which may negatively impact its liquidity; restrictions on the company's operating flexibility due to the terms of its credit facility; risks related to fluctuations in the company's operating results from quarter to quarter; risks related to international operations, including foreign currency fluctuations; risks associated with the company's investment strategy; risks and financial impact associated with dispositions of underperforming assets; implementation of the company's cost reduction initiatives effectively; the company's heavy reliance on information systems and the impact of potentially losing or failing to develop technology; competition in the company's markets; the company's exposure to employment-related claims from both clients and employers and limits on related insurance coverage; the company's dependence on key management personnel; the company's ability to attract and retain highly skilled professionals; 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.
CONTACT: Hudson Highland Group David F. Kirby 212-351-7216 david.kirby@hudson.com