World News: 13:30 GMT Wednesday 14th August 2019. [Hudson Global, Inc. via Globe Newswire via SPi World News]
OLD GREENWICH, Conn., Aug. 14, 2019 (GLOBE NEWSWIRE) -- Hudson Global, Inc. (Nasdaq: HSON), a leading global talent solutions company, announced today financial results for the second quarter ended June 30, 2019.
"In the second quarter, we reported double-digit revenue growth across all three regions and double-digit gross profit growth in our Americas and Europe businesses. The Company also generated positive adjusted EBITDA excluding non-recurring expenses," said Jeff Eberwein, Chief Executive Officer of Hudson Global. Mr. Eberwein continued, "In the second quarter, we added two new significant client relationships, one in Australia and one in the Americas, maintained a strong financial position, and continued to reduce corporate costs excluding non-recurring items."
Mr. Eberwein continued, "Earlier this year, market experts ranked Hudson RPO among the very top RPO providers in the Asia Pacific region (APAC). I met with many APAC clients and employees this quarter and was impressed with our client satisfaction, robust sales pipeline, market position, and strong reputation in this region. I’m encouraged by this and similar feedback from our Americas and Europe regions and believe we are in a strong position to continue to grow with the talent solutions market."
Asia Pacific revenue of $17.5 million increased 87% while gross profit of $5.4 million decreased 1% in constant currency in the second quarter of 2019 compared to the same period in 2018. The revenue growth was driven by the commencement of a significant contract in Australia to manage a portion of the contingent workforce for a large Asia-based technology company. Gross profit was down 1% in constant currency due to lower volumes at existing clients in Australia, which was mostly offset by strong growth in the rest of the Asia Pacific region. EBITDA was $0.4 million in the second quarter of 2019 compared to EBITDA of $0.5 million in the same period one year ago, and adjusted EBITDA was $0.7 million compared to adjusted EBITDA of $0.9 million in the second quarter of 2018.
In the second quarter of 2019, Americas revenue of $4.0 million increased 13%, while gross profit of $3.6 million rose 23% from the second quarter of 2018. Growth was driven by new client wins, which included a new relationship with a global industrials company. EBITDA was $0.4 million in the second quarter of 2019 compared to EBITDA loss of $0.1 million in the year ago period, and adjusted EBITDA was $0.6 million for the second quarter of 2019 compared to adjusted EBITDA of $0.1 million in last year's second quarter.
Europe revenue in the second quarter of 2019 rose 34% to $5.0 million while gross profit of $2.6 million increased 37% in constant currency from the second quarter of 2018. The UK and Continental Europe both contributed to revenue growth, increasing by $0.7 million and $0.5 million, respectively. EBITDA was break-even in both periods, and Adjusted EBITDA was $0.2 million in both periods.
The Company ended the second quarter of 2019 with $29.1 million in cash, which included $0.5 million in restricted cash. The Company used $1.5 million in cash flow from operations during the second quarter, mainly due to increases in working capital needed to support revenue growth, compared to a $3.5 million use of cash flow from operations in the second quarter of 2018.
In April, the Company finalized a new credit facility with National Australia Bank Limited in Australia to support the expected growth in working capital needs in that market. As of June 30, 2019, the Company had no borrowings outstanding under the credit facility.
Under its $10 million common stock share repurchase program initiated in the third quarter of 2015 through the end of the second quarter of 2019, the Company has purchased 405 thousand shares for a total of $8.0 million. The Company continues to view opportunistic share repurchases as an attractive use of capital and expects to continue its aggressive share repurchase strategy going forward. After the current $10.0 million authorization is completed, the Company expects to approve a new share repurchase authorization.
In addition, the Company completed a tender offer in March 2019 for 247 thousand shares of the Company's common stock for an aggregate cost of $3.7 million, excluding fees and expenses relating to the tender offer. The 247 thousand shares purchased as part of this tender offer were in addition to the 405 thousand shares purchased under the above-referenced common stock repurchase plan.
In early 2018, management reviewed the Company's corporate costs on a line-by-line basis and began to right-size these costs to the new business model. The Company believes the run rate for corporate costs in 2019 should be approximately $4 million, excluding non-recurring items. This is about 50% lower than in 2018 including severance costs, or about one-third lower excluding severance costs. This reduction should not impact its operating business.
In the second quarter of 2019, the Company's corporate costs of $1.8 million included severance expense of $0.4 million as well as non-recurring professional fees for legal and proxy-related items of $0.3 million. Corporate costs of $3.3 million for the six months ended June 30, 2019 included $0.9 million of non-recurring expenses. In the second quarter and first half of 2018, non-recurring expenses in corporate costs included $0.6 million and $2.4 million, respectively, due to severance expense.
For 2019, the Company continues to expect growth in revenues and gross profit of at least 10% versus 2018, and adjusted EBITDA before corporate costs should grow at a faster rate. As corporate costs continue to decline in the second half of 2019 and our business continues to grow, the Company expects to generate positive adjusted EBITDA in the second half of 2019 as well as full year 2019 excluding non-recurring items.
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 .
If you wish to join the conference call, please use the dial-in information below:
The archived call will be available on the investor information section of the Company's web site at .
Hudson Global, Inc. is a leading total talent solutions provider operating under the brand name Hudson RPO. We deliver innovative, customized recruitment outsourcing and total talent solutions to organizations worldwide. Through our consultative approach, we develop tailored talent solutions designed to meet our clients’ strategic growth initiatives. As a trusted advisor, we meet our commitments, deliver quality and value, and always aim to exceed expectations.
For more information, please visit us at or contact us at .
The Company operates on a global basis, with the majority of its gross profit generated outside of the United States. Accordingly, fluctuations in foreign currency exchange rates can affect its results of operations. Constant currency information compares financial results between periods as if exchange rates had remained constant period-over-period. The Company currently defines the term “constant currency” to mean that financial data for a previously reported period are translated into U.S. dollars using the same foreign currency exchange rates that were used to translate financial data for the current period. Changes in revenue, gross profit, selling, general and administrative expenses ("SG&A"), operating income (loss) and EBITDA (loss) include the effect of changes in foreign currency exchange rates. Variance analysis usually describes period-to-period variances that are calculated using constant currency as a percentage. The Company’s management reviews and analyzes business results in constant currency and believes these results better represent the Company’s underlying business trends. The Company believes that these calculations are a useful measure, indicating the actual change in operations. There are no significant gains or losses on foreign currency transactions between subsidiaries. Therefore, changes in foreign currency exchange rates generally impact only reported earnings.
Globe Newswire: 13:30 GMT Wednesday 14th August 2019
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