EX-99.1 2 dex991.htm PRESS RELEASE OF HUDSON HIGHLAND GROUP, INC. Press Release of Hudson Highland Group, Inc.

Exhibit 99.1

LOGO

 

For Immediate Release    Contact:    David F. Kirby
      Hudson Highland Group
      212-351-7216
      david.kirby@hhgroup.com

Hudson Highland Group Reports 2007 First Quarter Financial Results

NEW YORK, NY – May 2, 2007 – 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 first quarter ended March 31, 2007.

2007 First Quarter Summary

 

   

Revenue of $337.9 million, an increase of 3.2 percent from $327.3 million for the first quarter of 2006

 

   

Gross margin of $125.9 million, or 37.3 percent of revenue, up 13.7 percent from $110.7 million, or 33.8 percent of revenue, for the same year-ago period

 

   

Adjusted EBITDA of $6.8 million, or 2.0 percent of revenue, up from an adjusted EBITDA loss of $3.6 million for the first quarter of 2006

 

   

EBITDA of $3.7 million, or 1.1 percent of revenue, up from an EBITDA loss of $3.6 million for the same period last year

 

   

Net income of $0.4 million, or $0.01 per basic and diluted share, compared with a net loss of $8.1 million, or ($0.33) per basic and diluted share, for the first quarter of 2006

“Considering the first quarter is historically weaker given our seasonality and business mix, we achieved solid results,” said Jon Chait, chairman and chief executive officer. “Hudson Asia Pacific and Hudson Europe continued to build upon their strengthening performance. Further, our Hudson Americas business is steadier than a year ago, though we still have work ahead to re-ignite the growth of our core markets within that region.”

“With the completion of our restructuring program this quarter, our financial strength continues to build and we believe we are well positioned for increased operating leverage,” said Mary Jane Raymond, executive vice president and chief financial officer.


Guidance

The company currently expects second quarter 2007 revenue of $355 - $370 million at prevailing exchange rates and EBITDA of $12.5 - $13.5 million. This compares with revenue of $352 million and EBITDA of $8.5 million in the second quarter of 2006.

Conference Call/Webcast

Hudson Highland Group will conduct a conference call Thursday, May 3, 2007 at 9:00 AM ET to discuss this announcement. Investors wishing to participate can join the conference call by dialing 1-800-374-1532 followed by the participant passcode 5699225 at 8:50 AM ET. For those outside the United States, please call in on 1-706-634-5594 followed by the participant passcode 5699225. Hudson Highland Group’s quarterly conference call can also be accessed online through Yahoo! Finance at www.yahoo.com and the investor information section of the company’s website at www.hhgroup.com.

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 3,600 professionals serving clients and candidates in more than 20 countries. More information is available at www.hhgroup.com.

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 those under the caption “Guidance” and other 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 risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These factors include, but are not limited to, the company’s history of negative cash flows and operating losses may continue, the ability of clients to terminate their relationship with the company at any time, the impact of global economic fluctuations on temporary contracting operations; risks and financial impact associated with acquisitions and dispositions of non-strategic assets; the company’s reliance on information systems and technology; competition; fluctuations in operating results; risks relating to foreign operations, including foreign currency fluctuations; dependence on highly skilled professionals and key management personnel; restrictions imposed by blocking arrangements; exposure to employment-related claims and limits on insurance coverage related thereto; government regulations; restrictions on the company’s operating flexibility due to the terms of its credit facility. 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 press release. The company assumes no obligation, and expressly disclaims any obligation, to review or confirm analysts’ expectations or estimates or to update any forward-looking statements, whether as a result of new information, future events or otherwise.

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Financial Tables Follow


HUDSON HIGHLAND GROUP, INC.

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(in thousands, except share and per share amounts)

(unaudited)

 

    

Three Months Ended

March 31,

 
     2007     2006 (1)  

Revenue

   $ 337,899     $ 327,284  

Direct costs

     212,019       216,603  
                

Gross margin

     125,880       110,681  

Operating expenses:

    

Selling, general and administrative

     119,066       114,296  

Depreciation and amortization

     3,809       4,185  

Business reorganization expenses

     3,116       —    
                

Total operating expenses

     125,991       118,481  

Operating loss

     (111 )     (7,800 )

Other income (expense):

    

Interest, net

     222       (392 )

Other, net

     2,600       931  
                

Income (loss) from continuing operations before income taxes

     2,711       (7,261 )

Provision for income taxes

     2,377       1,440  
                

Income (loss) from continuing operations

     334       (8,701 )

Income from discontinued operations, net of income taxes

     19       621  
                

Net income (loss)

   $ 353     $ (8,080 )

Basic income (loss) per share:

    

Income (loss) from continuing operations

   $ 0.01     $ (0.36 )

Income from discontinued operations

     0.00       0.03  

Net income (loss)

   $ 0.01     $ (0.33 )

Diluted income (loss) per share:

    

Income (loss) from continuing operations

   $ 0.01     $ (0.36 )

Income from discontinued operations

     0.00       0.03  

Net income (loss)

   $ 0.01     $ (0.33 )
                

Weighted average shares outstanding

    

Basic

     24,919,000       24,224,000  

Diluted

     25,661,000       24,224,000  

(1) 2006 financial statements have been adjusted to reflect the Highland Partners segment as a discontinued operation. The sale of Highland Partners was completed effective on October 1, 2006.


HUDSON HIGHLAND GROUP, INC.

CONSOLIDATED CONDENSED BALANCE SHEETS

(in thousands, except share and per share amounts)

 

     March 31,
2007
    December 31,
2006
 
     (unaudited)        
ASSETS     

Current assets:

    

Cash and cash equivalents

   $ 47,009     $ 44,649  

Accounts receivable, net

     228,984       218,722  

Prepaid and other

     16,980       16,736  
                

Total current assets

     292,973       280,107  

Intangibles, net

     36,749       37,612  

Property and equipment, net

     27,985       28,105  

Other assets

     5,997       5,045  
                

Total assets

   $ 363,704     $ 350,869  
LIABILITIES AND STOCKHOLDERS’ EQUITY     

Current liabilities:

    

Accounts payable

   $ 31,875     $ 24,075  

Accrued expenses and other current liabilities

     131,557       134,043  

Short-term borrowings and current portion of long-term debt

     5,129       238  

Accrued business reorganization expenses

     5,524       5,077  

Accrued merger and integration expenses

     634       837  
                

Total current liabilities

     174,719       164,270  

Other non-current liabilities

     7,650       8,204  

Accrued business reorganization expenses, non-current

     4,710       3,409  

Accrued merger and integration expenses, non-current

     1,418       1,721  

Long-term debt, less current portion

     170       235  
                

Total liabilities

     188,667       177,839  
                

Commitments and contingencies

    

Stockholders’ equity:

    

Preferred stock, $0.001 par value, 10,000,000 shares authorized; none issued or outstanding

     —         —    

Common stock, $0.001 par value, 100,000,000 shares authorized; issued: 25,221,955 and 24,957,732 shares, respectively

     25       25  

Additional paid-in capital

     431,996       427,645  

Accumulated deficit

     (301,528 )     (298,344 )

Accumulated other comprehensive income—translation adjustments

     44,774       43,934  

Treasury stock, 15,798 shares

     (230 )     (230 )
                

Total stockholders’ equity

     175,037       173,030  
                
   $ 363,704     $ 350,869  
                



HUDSON HIGHLAND GROUP, INC.

SEGMENT ANALYSIS

(in thousands)

(unaudited)

 

For the Three Months Ended

March 31, 2007

   Hudson
Americas
    Hudson
Europe
   Hudson
Asia Pacific
   Corporate     Total  

Revenue

   $ 112,804     $ 122,008    $ 103,087    $ —       $ 337,899  

Gross margin

   $ 27,070     $ 59,023    $ 39,787    $ —       $ 125,880  

Adjusted EBITDA (2)

   $ (131 )   $ 7,247    $ 5,948    $ (6,250 )   $ 6,814  

Business reorganization expenses

     729       2,447      14      (74 )     3,116  

EBITDA (2)

     (860 )     4,800      5,934      (6,176 )     3,698  

Depreciation and amortization

     1,149       1,653      892      115       3,809  

Operating income (loss)

   $ (2,009 )   $ 3,147    $ 5,042    $ (6,291 )   $ (111 )

For the Three Months Ended

March 31, 2006 (1)

    
 
Hudson
Americas
 
 
   
 
Hudson
Europe
    
 
 
Hudson
Asia
Pacific
     Corporate       Total  

Revenue

   $ 110,605     $ 116,141    $ 100,538    $ —       $ 327,284  

Gross margin

   $ 22,855     $ 50,965    $ 36,861    $ —       $ 110,681  

Adjusted EBITDA (2)

   $ (5,975 )   $ 5,550    $ 4,732    $ (7,922 )   $ (3,615 )
               (  

EBITDA (2)

     (5,975 )   $ 5,550    $ 4,732    $ (7,922 )   $ (3,615 )

Depreciation and amortization

     1,506       1,739      775      165       4,185  

Operating income (loss)

   $ (7,481 )   $ 3,811    $ 3,957    $ (8,087 )   $ (7,800 )

(1) 2006 financial statements have been adjusted to reflect the Highland Partners segment as a discontinued operation. The sale of Highland Partners was completed effective on October 1, 2006.

(2) Non-GAAP earnings before interest, income taxes, special charges, other non-operating expense, and depreciation and amortization (“Adjusted EBITDA”) and non-GAAP earnings before interest, income taxes, other non-operating expense, and depreciation and amortization (“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. Adjusted EBITDA and 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, adjusted EBITDA and EBITDA as presented above may not be comparable with similarly titled measures reported by other companies.

 

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