EX-99.1 2 dex991.htm PRESS RELEASE OF HUDSON HIGHLAND GROUP, INC. ISSUED ON JULY 25, 2007. Press Release of Hudson Highland Group, Inc. issued on July 25, 2007.

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 Second Quarter Financial Results

NEW YORK, NY – July 25, 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 second quarter ended June 30, 2007.

2007 Second Quarter Summary

 

  •  

Revenue of $348.9 million, a decrease of 0.9 percent from $352.1 million for the second quarter of 2006

 

  •  

Gross margin of $137.6 million, or 39.4 percent of revenue, up 7.0 percent from $128.6 million, or 36.5 percent of revenue, for the same year-ago period

 

  •  

Adjusted EBITDA of $13.2 million, or 3.8 percent of revenue, up 42.7 percent from $9.3 million for the second quarter of 2006

 

  •  

EBITDA of $11.7 million, or 3.3 percent of revenue, up 36.9 percent from $8.5 million for the same period last year

 

  •  

Net income of $3.2 million, or $0.13 per basic and $0.12 per diluted share, compared with net income of $2.2 million, or $0.09 per basic and diluted share, for the second quarter of 2006

“During the second quarter, we delivered strong improvement over the same period last year, largely driven by our Europe and Asia Pacific operations,” said Jon Chait, Hudson Highland Group chairman and chief executive officer. “EBITDA increased faster than gross margin as we continue to benefit from operating leverage.”

“While last year’s particularly strong third quarter performance will be tough to beat, we remain squarely focused on driving steady operational and profitability improvements,” said Mary Jane Raymond, executive vice president and chief financial officer.

Guidance

The company currently expects third quarter 2007 revenue of $340 - $355 million at prevailing exchange rates and adjusted EBITDA of $9 - $12 million. This compares with revenue of $352.5 million and adjusted EBITDA of $12.1 million in the third quarter of 2006.

2007 Six-Month Results

For the first six months of 2007, the company reported revenue of $686.8 million, up 1.1 percent from $679.4 million for the same six month period last year. Net income was $3.6 million, or $0.14 per basic and diluted share, compared with a net loss of $5.9 million, or ($0.24) per basic and diluted share, for the same six month period last year.

Additional Information

Please find additional information about the company’s quarterly results in the shareholder letter in the investor information section of the company’s website at www.hhhgroup.com.

Conference Call/Webcast

Hudson Highland Group will conduct a conference call Thursday, July 26, 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 7025727 at 8:50 AM ET. For those outside the United States, please call in on 1-706-634-5594 followed by the participant passcode 7025727. 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.

The archived call will be available for one week by dialing 1-800-642-1687 followed by the participant passcode 7025727. For those outside the United States, the call will be available on 1-706-645-9291 followed by the participant passcode 7025727.

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; and 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

June 30,

    

Six Months Ended

June 30,

  
     2007 (1)     2006 (1)     2007 (1)     2006 (1)  

Revenue

    $ 348,861     $ 352,084     $ 686,760     $ 679,368  

Direct costs

      211,258       223,458       423,277       440,061  
                                

Gross margin

      137,603       128,626       263,483       239,307  

Operating expenses:

         

Selling, general and administrative

      124,399       119,374       243,465       233.670  

Depreciation and amortization

      3,952       4,028       7,761       8,213  

Business reorganization expenses

      1,578       658       4,694       658  

Merger and integration expenses (recoveries)

      (42 )     72       (42 )     72  
                                

Total operating expenses

      129,887       124,132       255,878       242,613  

Operating income (loss)

      7,716       4,494       7,605       (3,306 )

Other income (expense):

         

Interest, net

      435       (760 )     657       (1,152 )

Other, net

      (21 )     128       2,579       1,059  
                                

Income (loss) from continuing operations before income taxes

      8,130       3,862       10,841       (3,399 )

Provision for income taxes

      4,637       2,586       7,014       4,026  
                                

Income (loss) from continuing operations

      3,493       1,276       3,827       (7,425 )

Income (loss) from discontinued operations, net of income taxes

      (258 )     890       (239 )     1,511  
                                

Net income (loss)

    $ 3,235     $ 2,166     $ 3,588     $ (5,914 )
                                

Basic income (loss) per share:

         

Income (loss) from continuing operations

    $ 0.14     $ 0.05     $ 0.15     $ (0.31 )

Income (loss) from discontinued operations

      (0.01 )     0.04       (0.01 )     0.07  
                                

Net income

    $ 0.13     $ 0.09     $ 0.14     $ (0.24 )
                                

Diluted income (loss) per share:

         

Income (loss) from continuing operations

    $ 0.13     $ 0.05     $ 0.15     $ (0.31 )

Income (loss) from discontinued operations

      (0.01 )     0.04       (0.01 )     0.07  
                                

Net income (loss)

    $ 0.12     $ 0.09     $ 0.14     $ (0.24 )
                                

Weighted average shares outstanding

         

Basic

      25,247,000       24,414,000       25,084,000       24,318,000  

Diluted

      26,164,000       25,172,000       25,907,000       24,318,000  
(1) Note – 2007 and 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)

 

    

June 30,

2007 (1)

    

December 31,

2006 (1)

  
     (unaudited)        
ASSETS     

Current assets:

     

Cash and cash equivalents

    $ 56,727     $ 44,649  

Accounts receivable, net

      225,593       218,722  

Prepaid and other

      16,428       16,736  
                

Total current assets

      298,748       280,107  

Intangibles, net

      45,227       37,612  

Property and equipment, net

      28,730       28,105  

Other assets

      5,774       5,045  
                

Total assets

    $ 378,479     $ 350,869  
                
LIABILITIES AND STOCKHOLDERS’ EQUITY     

Current liabilities:

     

Accounts payable

    $ 31,981     $ 24,075  

Accrued expenses and other current liabilities

      132,589       134,043  

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

      321       238  

Accrued business reorganization expenses

      3,805       5,077  

Accrued merger and integration expenses

      384       837  
                

Total current liabilities

      169,080       164,270  

Other non-current liabilities

      17,643       8,204  

Accrued business reorganization expenses, non-current

      4,305       3,409  

Accrued merger and integration expenses, non-current

      1,380       1,721  

Long-term debt, less current portion

      100       235  
                

Total liabilities

      192,508       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: 25,540,213 and 24,957,732 shares, respectively

      26       25  

Additional paid-in capital

      436,835       427,645  

Accumulated deficit

      (298,290 )     (298,344 )

Accumulated other comprehensive income—translation adjustments

      47,681       43,934  

Treasury stock, 18,431 and 15,798 shares, respectively

      (281 )     (230 )
                

Total stockholders’ equity

      185,971       173,030  
                
   $ 378,479     $ 350,869  
                
(1) Note – 2007 and 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.

SEGMENT ANALYSIS

(in thousands)

(unaudited)

 

For the Three Months Ended

June 30, 2007 (1)

   

Hudson

Americas

    

Hudson

Europe

    

Hudson

Asia Pacific

    Corporate     Total  

Revenue

    $ 106,615     $ 125,745     $ 116,501    $ —       $ 348,861  
                                       

Gross margin

    $ 25,962     $ 64,488     $ 47,153    $ —       $ 137,603  
                                       

Adjusted EBITDA (2)

    $ (751 )   $ 10,886     $ 9,617    $ (6,548 )   $ 13,204  

Business reorganization expenses

      (7 )     (7 )     17      1,575       1,578  

Merger and integration recoveries

      (42 )     —         —        —         (42 )
                                       

EBITDA (2)

      (702 )     10,893       9,600      (8,123 )     11,668  

Depreciation and amortization

      1,180       1,714       992      66       3,952  
                                       

Operating income (loss)

    $ (1,882 )   $ 9,179     $ 8,608    $ (8,189 )   $ 7,716  
                                       

For the Three Months Ended

June 30, 2006 (1)

   

Hudson

Americas

    

Hudson

Europe

    

Hudson

Asia Pacific

    Corporate     Total  

Revenue

    $ 119,145     $ 122,062     $ 110,877    $ —       $ 352,084  
                                       

Gross margin

    $ 28,971     $ 56,225     $ 43,430    $ —       $ 128,626  
                                       

Adjusted EBITDA (2)

    $ (1,416 )   $ 7,972     $ 9,541    $ (6,845 )   $ 9,252  

Business reorganization expenses (recoveries)

      250       (57 )     152      313       658  

Merger and integration expense

      72       —         —        —         72  
                                       

EBITDA (2)

      (1,738 )   $ 8,029       9,389      (7,158 )     8,522  

Depreciation and amortization

      1,313       1,776       771      168       4,028  
                                       

Operating income (loss)

    $ (3,051 )   $ 6,253     $ 8,618    $ (7,326 )   $ 4,494  
                                       
(1) Note – 2007 and 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. Amortization for 2006 includes accelerated amortization expense related to changes in estimates and valuations.

HUDSON HIGHLAND GROUP, INC.

SEGMENT ANALYSIS

(in thousands)

(unaudited)

 

For the Six Months Ended

June 30, 2007 (1)

   

Hudson

Americas

    

Hudson

Europe

    

Hudson

Asia Pacific

    Corporate     Total  

Revenue

    $ 219,419     $ 247,753     $ 219,588    $ —       $ 686,760  
                                       

Gross margin

    $ 53,032     $ 123,511     $ 86,940    $ —       $ 263,483  
                                       

Adjusted EBITDA (2)

    $ (882 )   $ 18,133     $ 15,565    $ (12,798 )   $ 20,018  

Business reorganization expenses

      722       2,440       31      1,501       4,694  

Merger and integration recoveries

      (42 )     —         —        —         (42 )
                                       

EBITDA (2)

      (1,562 )     15,693       15,534      (14,299 )     15,366  

Depreciation and amortization

      2,329       3,367       1,884      181       7,761  
                                       

Operating income (loss)

    $ (3,891 )   $ 12,326     $ 13,650    $ (14,480 )   $ 7,605  
                                       

For the Six Months Ended

June 30, 2006 (1)

   

Hudson

Americas

    

Hudson

Europe

    

Hudson

Asia Pacific

    Corporate     Total  

Revenue

    $ 229,750     $ 238,203     $ 211,415    $ —       $ 679,368  
                                       

Gross margin

    $ 51,826     $ 107,190     $ 80,291    $ —       $ 239,307  
                                       

Adjusted EBITDA (2)

    $ (7,391 )   $ 13,522     $ 14,273    $ (14,767 )   $ 5,637  

Business reorganization expenses (recoveries)

      250       (57 )     152      313       658  

Merger and integration expense

      72       —         —        —         72  
                                       

EBITDA (2)

      (7,713 )     13,579       14,121      (15,080 )     4,907  

Depreciation and amortization

      2,819       3,515       1,546      333       8,213  
                                       

Operating income (loss)

    $ (10,532 )   $ 10,064     $ 12,575    $ (15,413 )   $ (3,306 )
                                       
(1) Note – 2007 and 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. Amortization for 2006 includes accelerated amortization expense related to changes in estimates and valuations.

HUDSON HIGHLAND GROUP, INC.

(in thousands)

 

For the Three Months Ended

September 30, 2006 (1)

    Total

Adjusted EBITDA (2)

    $ 12,122

Business reorganization expenses

      2,090

Merger and integration (recoveries)

      14
      

EBITDA (2)

      10,018

Depreciation and amortization

      3,868
      

Operating income

    $ 6,150
(1) Note – 2007 and 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. Amortization for 2006 includes accelerated amortization expense related to changes in estimates and valuations.