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) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common Stock, $0.001 par value | HSON | The NASDAQ Stock Market LLC |
Preferred Share Purchase Rights | The NASDAQ Stock Market LLC |
ITEM 2.02. | RESULTS OF OPERATIONS AND FINANCIAL CONDITION. |
ITEM 9.01. | FINANCIAL STATEMENTS AND EXHIBITS. |
HUDSON GLOBAL, INC. (Registrant) | ||
By: | /s/ JEFFREY E. EBERWEIN | |
Jeffrey E. Eberwein | ||
Chief Executive Officer | ||
Dated: | November 1, 2019 |
• | Revenue of $25.8 million increased 50.4% from the third quarter of 2018 and 56.8% in constant currency. |
• | Gross profit of $11.4 million increased 4.7% from the third quarter of 2018 and 8.6% in constant currency. |
• | Net income improved to $0.4 million, or $0.12 per basic and diluted share, from a net loss of $0.9 million, or $0.26 per basic and diluted share, for the third quarter of 2018. |
• | Adjusted EBITDA (Non-GAAP measure)* improved to $0.8 million from an adjusted EBITDA loss of $0.3 million in the third quarter of 2018. |
• | Share count reduced by 8.3% over the past year. |
• | Total cash was $28.9 million at September 30, 2019. |
• | Toll-Fee Dial-In Number: (877) 497-1434 |
• | International Dial-In Number: (929) 387-3951 |
• | Conference ID #: 2098893 |
HUDSON GLOBAL, INC. | ||||||||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||
(in thousands, except per share amounts) | ||||||||||||||||
(unaudited) | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Revenue | $ | 25,762 | $ | 17,127 | $ | 68,363 | $ | 50,357 | ||||||||
Direct costs | 14,366 | 6,246 | 35,912 | 18,521 | ||||||||||||
Gross profit | 11,396 | 10,881 | 32,451 | 31,836 | ||||||||||||
Operating expenses: | ||||||||||||||||
Salaries and related | 8,857 | 8,925 | 27,758 | 28,586 | ||||||||||||
Other selling, general and administrative | 2,022 | 2,696 | 6,911 | 7,905 | ||||||||||||
Depreciation and amortization | 23 | 1 | 62 | 3 | ||||||||||||
Total operating expenses | 10,902 | 11,622 | 34,731 | 36,494 | ||||||||||||
Operating income (loss) | 494 | (741 | ) | (2,280 | ) | (4,658 | ) | |||||||||
Non-operating income (expense): | ||||||||||||||||
Interest income, net | 88 | 102 | 526 | 162 | ||||||||||||
Other expense, net | (87 | ) | (72 | ) | (215 | ) | (184 | ) | ||||||||
Income (loss) from continuing operation before provision for income taxes | 495 | (711 | ) | (1,969 | ) | (4,680 | ) | |||||||||
Provision for income taxes from continuing operations | 149 | 112 | 356 | 393 | ||||||||||||
Income (loss) from continuing operations | 346 | (823 | ) | (2,325 | ) | (5,073 | ) | |||||||||
Income (loss) from discontinued operations, net of income taxes | 18 | (47 | ) | (113 | ) | 13,560 | ||||||||||
Net income (loss) | $ | 364 | $ | (870 | ) | $ | (2,438 | ) | $ | 8,487 | ||||||
Earnings per share:(a) | ||||||||||||||||
Basic | ||||||||||||||||
Earnings (loss) per share from continuing operations | $ | 0.11 | $ | (0.25 | ) | $ | (0.74 | ) | $ | (1.55 | ) | |||||
Earnings (loss) per share from discontinued operations | 0.01 | (0.01 | ) | (0.04 | ) | 4.14 | ||||||||||
Earnings (loss) per share | $ | 0.12 | $ | (0.26 | ) | $ | (0.77 | ) | $ | 2.59 | ||||||
Diluted | ||||||||||||||||
Earnings (loss) per share from continuing operations | $ | 0.11 | $ | (0.25 | ) | $ | (0.74 | ) | $ | (1.55 | ) | |||||
Earnings (loss) per share from discontinued operations | 0.01 | (0.01 | ) | (0.04 | ) | 4.14 | ||||||||||
Earnings (loss) per share | $ | 0.12 | $ | (0.26 | ) | $ | (0.77 | ) | $ | 2.59 | ||||||
Weighted-average shares outstanding:(a) | ||||||||||||||||
Basic | 3,082 | 3,310 | 3,150 | 3,275 | ||||||||||||
Diluted | 3,118 | 3,310 | 3,150 | 3,275 |
HUDSON GLOBAL, INC. | ||||||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
(in thousands, except per share amounts) | ||||||||
(unaudited) | ||||||||
September 30, 2019 | December 31, 2018 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 28,383 | $ | 40,562 | ||||
Accounts receivable, less allowance for doubtful accounts of $160 and $41, respectively | 15,691 | 9,893 | ||||||
Prepaid and other | 1,250 | 671 | ||||||
Current assets of discontinued operations | — | 941 | ||||||
Total current assets | 45,324 | 52,067 | ||||||
Property and equipment, net | 189 | 170 | ||||||
Operating lease right-of-use assets | 445 | — | ||||||
Deferred tax assets, non-current | 808 | 583 | ||||||
Restricted cash, non-current | 376 | 352 | ||||||
Other assets, non-current | 7 | 7 | ||||||
Total assets | $ | 47,149 | $ | 53,179 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 1,484 | $ | 1,461 | ||||
Accrued expenses and other current liabilities | 8,968 | 8,984 | ||||||
Operating lease obligations, current | 241 | — | ||||||
Current liabilities of discontinued operations | — | 115 | ||||||
Total current liabilities | 10,693 | 10,560 | ||||||
Income tax payable, non-current | 2,116 | 1,982 | ||||||
Operating lease obligations, non-current | 210 | — | ||||||
Other non-current liabilities | 172 | 150 | ||||||
Total liabilities | 13,191 | 12,692 | ||||||
Commitments and contingencies | ||||||||
Stockholders’ equity: | ||||||||
Preferred stock, $0.001 par value, 10,000 shares authorized; none issued or outstanding | — | — | ||||||
Common stock, $0.001 par value, 20,000 and 10,000 shares authorized; 3,660 and 3,613 shares issued; 2,939 and 3,190 shares outstanding, respectively (a) | 4 | 4 | ||||||
Additional paid-in capital | 485,938 | 485,127 | ||||||
Accumulated deficit | (437,990 | ) | (435,552 | ) | ||||
Accumulated other comprehensive loss, net of applicable tax | (985 | ) | (606 | ) | ||||
Treasury stock, 721 and 423 shares, respectively, at cost (a) | (13,009 | ) | (8,486 | ) | ||||
Total stockholders’ equity | 33,958 | 40,487 | ||||||
Total liabilities and stockholders' equity | $ | 47,149 | $ | 53,179 |
HUDSON GLOBAL, INC. | ||||||||||||||||||||
SEGMENT ANALYSIS - QUARTER TO DATE (continued) | ||||||||||||||||||||
Reconciliation of Non-GAAP Financial Measures | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
For The Three Months Ended September 30, 2019 | Asia Pacific | Americas | Europe | Corporate | Total | |||||||||||||||
Revenue, from external customers | $ | 17,436 | $ | 3,510 | $ | 4,816 | $ | — | $ | 25,762 | ||||||||||
Gross profit, from external customers | $ | 5,574 | $ | 3,205 | $ | 2,617 | $ | — | $ | 11,396 | ||||||||||
Net income | $ | 364 | ||||||||||||||||||
Income from discontinued operations, net of income taxes | 18 | |||||||||||||||||||
Income from continuing operations | 346 | |||||||||||||||||||
Provision from income taxes | 149 | |||||||||||||||||||
Interest income, net | (88 | ) | ||||||||||||||||||
Depreciation and amortization | 23 | |||||||||||||||||||
EBITDA (loss) (1) | $ | 821 | $ | 3 | $ | 178 | $ | (572 | ) | 430 | ||||||||||
Non-operating expense (income), including corporate administration charges | 267 | 161 | 144 | (485 | ) | 87 | ||||||||||||||
Stock-based compensation expense | 22 | (3 | ) | (9 | ) | 192 | 202 | |||||||||||||
Non-recurring severance and professional fees | — | — | — | 37 | 37 | |||||||||||||||
Adjusted EBITDA (loss) (1) | $ | 1,110 | $ | 161 | $ | 313 | $ | (828 | ) | $ | 756 | |||||||||
For The Three Months Ended September 30, 2018 | Asia Pacific | Americas | Europe | Corporate | Total | |||||||||||||||
Revenue, from external customers | $ | 9,306 | $ | 3,590 | $ | 4,231 | $ | — | $ | 17,127 | ||||||||||
Gross profit, from external customers | $ | 5,741 | $ | 2,990 | $ | 2,150 | $ | — | $ | 10,881 | ||||||||||
Net loss | $ | (870 | ) | |||||||||||||||||
Loss from discontinued operations, net of income taxes | (47 | ) | ||||||||||||||||||
Loss from continuing operations | (823 | ) | ||||||||||||||||||
Provision for income taxes | 112 | |||||||||||||||||||
Interest income, net | (102 | ) | ||||||||||||||||||
Depreciation and amortization | 1 | |||||||||||||||||||
EBITDA (loss) (1) | $ | 460 | $ | 87 | $ | (226 | ) | $ | (1,133 | ) | (812 | ) | ||||||||
Non-operating expense (income), including corporate administration charges | 248 | 213 | 175 | (564 | ) | 72 | ||||||||||||||
Stock-based compensation expense | 17 | 23 | 12 | 404 | 456 | |||||||||||||||
Adjusted EBITDA (loss) (1) | $ | 725 | $ | 323 | $ | (39 | ) | $ | (1,293 | ) | $ | (284 | ) |
(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, stock-based compensation expense and other non-recurring 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. However, EBITDA and adjusted EBITDA are not measures of financial performance under GAAP and should not be considered in isolation or as a substitute for net income, operating income, cash flows from operating activities, and other income or cash flow statement data prepared in accordance with GAAP 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) | ||||||||||||||||||||
Reconciliation of Non-GAAP Financial Measures | ||||||||||||||||||||
(in thousands) | ||||||||||||||||||||
(unaudited) | ||||||||||||||||||||
For The Nine Months Ended September 30, 2019 | Asia Pacific | Americas | Europe | Corporate | Total | |||||||||||||||
Revenue, from external customers | $ | 43,569 | $ | 10,632 | $ | 14,162 | $ | — | $ | 68,363 | ||||||||||
Gross profit, from external customers | $ | 15,584 | $ | 9,558 | $ | 7,309 | $ | — | $ | 32,451 | ||||||||||
Net loss | $ | (2,438 | ) | |||||||||||||||||
Loss from discontinued operations, net of income taxes | (113 | ) | ||||||||||||||||||
Loss from continuing operations | (2,325 | ) | ||||||||||||||||||
Provision from income taxes | 356 | |||||||||||||||||||
Interest income, net | (526 | ) | ||||||||||||||||||
Depreciation and amortization | 62 | |||||||||||||||||||
EBITDA (loss) (1) | $ | 1,135 | $ | 17 | $ | (139 | ) | $ | (3,446 | ) | (2,433 | ) | ||||||||
Non-operating expense (income), including corporate administration charges | 810 | 449 | 407 | (1,451 | ) | 215 | ||||||||||||||
Stock-based compensation expense | 80 | 20 | 5 | 706 | 811 | |||||||||||||||
Non-recurring severance and professional fees | — | — | — | 975 | 975 | |||||||||||||||
Adjusted EBITDA (loss) (1) | $ | 2,025 | $ | 486 | $ | 273 | $ | (3,216 | ) | $ | (432 | ) | ||||||||
For The Nine Months Ended September 30, 2018 | Asia Pacific | Americas | Europe | Corporate | Total | |||||||||||||||
Revenue, from external customers | $ | 27,731 | $ | 10,799 | $ | 11,827 | $ | — | $ | 50,357 | ||||||||||
Gross profit, from external customers | $ | 16,423 | $ | 9,039 | $ | 6,374 | $ | — | $ | 31,836 | ||||||||||
Net Income | $ | 8,487 | ||||||||||||||||||
Income from discontinued operations, net of income taxes | 13,560 | |||||||||||||||||||
Loss from continuing operations | (5,073 | ) | ||||||||||||||||||
Provision for income taxes | 393 | |||||||||||||||||||
Interest income, net | (162 | ) | ||||||||||||||||||
Depreciation and amortization | 3 | |||||||||||||||||||
EBITDA (loss) (1) | $ | 1,511 | $ | 303 | $ | (176 | ) | $ | (6,477 | ) | (4,839 | ) | ||||||||
Non-operating expense (income), including corporate administration charges | 670 | 472 | 358 | (1,316 | ) | 184 | ||||||||||||||
Stock-based compensation expense | 30 | 66 | 18 | 984 | 1,098 | |||||||||||||||
Non-recurring severance and professional fees | — | — | — | 2,381 | 2,381 | |||||||||||||||
Adjusted EBITDA (loss) (1) | $ | 2,211 | $ | 841 | $ | 200 | $ | (4,428 | ) | $ | (1,176 | ) |
(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, stock-based compensation expense and other non-recurring 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. However, EBITDA and adjusted EBITDA are not measures of financial performance under GAAP and should not be considered in isolation or as a substitute for net income, operating income, cash flows from operating activities, and other income or cash flow statement data prepared in accordance with GAAP 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 September 30, | |||||||||||||||
2019 | 2018 | ||||||||||||||
As | As | Currency | Constant | ||||||||||||
reported | reported | translation | currency | ||||||||||||
Revenue: | |||||||||||||||
Asia Pacific | $ | 17,436 | $ | 9,306 | $ | (464 | ) | $ | 8,842 | ||||||
Americas | 3,510 | 3,590 | (4 | ) | 3,586 | ||||||||||
Europe | 4,816 | 4,231 | (226 | ) | 4,005 | ||||||||||
Total | $ | 25,762 | $ | 17,127 | $ | (694 | ) | $ | 16,433 | ||||||
Gross profit: | |||||||||||||||
Asia Pacific | $ | 5,574 | $ | 5,741 | $ | (266 | ) | $ | 5,475 | ||||||
Americas | 3,205 | 2,990 | (3 | ) | 2,987 | ||||||||||
Europe | 2,617 | 2,150 | (115 | ) | 2,035 | ||||||||||
Total | $ | 11,396 | $ | 10,881 | $ | (384 | ) | $ | 10,497 | ||||||
SG&A:(1) | |||||||||||||||
Asia Pacific | $ | 4,477 | $ | 5,032 | $ | (256 | ) | $ | 4,776 | ||||||
Americas | 3,052 | 2,689 | (1 | ) | 2,688 | ||||||||||
Europe | 2,295 | 2,202 | (118 | ) | 2,084 | ||||||||||
Corporate | 1,055 | 1,698 | — | 1,698 | |||||||||||
Total | $ | 10,879 | $ | 11,621 | $ | (375 | ) | $ | 11,246 | ||||||
Operating income (loss): | |||||||||||||||
Asia Pacific | $ | 1,075 | $ | 708 | $ | (10 | ) | $ | 698 | ||||||
Americas | 160 | 300 | — | 300 | |||||||||||
Europe | 316 | (53 | ) | 3 | (50 | ) | |||||||||
Corporate | (1,057 | ) | (1,696 | ) | (2 | ) | (1,698 | ) | |||||||
Total | $ | 494 | $ | (741 | ) | $ | (9 | ) | $ | (750 | ) | ||||
EBITDA (loss): | |||||||||||||||
Asia Pacific | $ | 821 | $ | 460 | $ | 1 | $ | 461 | |||||||
Americas | 3 | 87 | — | 87 | |||||||||||
Europe | 178 | (226 | ) | 12 | (214 | ) | |||||||||
Corporate | (572 | ) | (1,133 | ) | — | (1,133 | ) | ||||||||
Total | $ | 430 | $ | (812 | ) | $ | 13 | $ | (799 | ) |
(1) | SG&A is a measure that management uses to evaluate the segments’ expenses and includes salaries and related costs and other selling, general and administrative costs. |