q3 2015 earnings call - hudsonrpo.com€¦ · earnings call october 30, 2015 . 2 forward-looking...
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HUDSON GLOBAL, INC. Q3 2015 EARNINGS CALL
October 30, 2015
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Forward-Looking Statements
Please be advised that except for historical information, the comments made during this presentation and in these slides constitute forward-looking statements under applicable securities laws. Such forward-looking statements involve certain risks and uncertainties, including statements regarding the company's strategic direction, prospects and future results. Certain factors may cause actual results to differ materially from those contained in the forward-looking statements, including global economic fluctuations, risks related to fluctuations in our operating results, the ability of clients to terminate their relationship at anytime, competition, limited availability under our credit facilities and our ability to successfully achieve our strategic initiatives and the other risks discussed in our filings made with the Securities and Exchange Commission. These forward-looking statements speak only as of the date of this presentation. 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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Q3 2015: Consolidated Financial Results
$US in Millions, except EPS
Revenue - 26% $110.0 $149.3
- 15% CC (1)
Gross Margin - 19% $45.1 $55.7
- 7% CC
SG&A + 22% $45.5 $58.5
+ 12% CC
Adjusted EBITDA + 85% ($0.4) ($2.9)
+ 86% CC
EBITDA + 24% ($2.6) ($3.5)
+ 19% CC
EBITDA, as a % of Revenue -2.4% -2.3%
Net Income (Loss) + 70% ($2.1) ($7.0)
+ 68% CC
Basic and Diluted EPS ($0.06) ($0.21)
(1) CC represents constant currency variance.
(2) B/W indicates whether the result was better (+) or worse (-) than the comparison period.
(3) NM: Not meaningful
Q3 2015 Q3 2014B+ / W- (2)
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Q3 2015: Hudson Americas
$US in Millions
Revenue - 71% $3.7 $13.0
Gross Margin - 43% $3.2 $5.6
SG&A + 28% $3.5 $4.8
Adjusted EBITDA - 143% ($0.3) $0.7
Adjusted EBITDA, as a % of Revenue -8.6% 5.7%
(1) B/W indicates whether the result was better (+) or worse (-) than the comparison period.
Q3 2015 Q3 2014B+ / W- (1)
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Q3 2015: Hudson Asia Pacific
$US in Millions
Revenue - 17% $55.6 $67.0
+ 3% CC (1)
Gross Margin - 5% $23.4 $24.7
+ 13% CC
SG&A + 13% $20.9 $24.0
- 4% CC
Adjusted EBITDA NM $2.3 $0.6
NM CC
Adjusted EBITDA, as a % of Revenue 4.2% 0.9%
(1) CC represents constant currency variance.
(2) B/W indicates whether the result was better (+) or worse (-) than the comparison period.
Q3 2015 Q3 2014B+ / W- (2)
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Q3 2015: Hudson Europe
$US in Millions
Revenue - 27% $50.7 $69.3
- 18% CC (1)
Gross Margin - 27% $18.6 $25.5
- 17% CC
SG&A + 29% $18.5 $25.8
+ 19% CC
Adjusted EBITDA + 152% $0.1 ($0.3)
+ 171% CC
Adjusted EBITDA, as a % of Revenue 0.3% -0.4%
(1) CC represents constant currency variance.
(2) B/W indicates whether the result was better (+) or worse (-) than the comparison period.
Q3 2015 Q3 2014B+ / W- (2)
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Q3 2015: Reconciliation of Retained Revenue
$US in Millions
(1) Retained revenue and gross margin and divested revenue and gross margin are non-GAAP terms that management believes provide a better understanding of the underlying revenue and gross margin trends in the business following the divestitures in the second quarter of 2015. Divested revenue and gross margin includes such items attributable to the following businesses: the Americas IT staffing business, the Netherlands business, Ukraine, Czech Republic, Slovakia and Luxembourg. The non-GAAP financial measures do not replace the presentation of GAAP financial results and should only be used as a supplement to, not as a substitute for, Hudson’s financial results presented in accordance with GAAP. The above table provides a reconciliation of the non-GAAP financial measure used in its financial reporting to the most directly comparable GAAP financial measure.
Q3 2015
Variance
vs Q3 2014
Constant
Currency Q3 2015
Variance
vs Q3 2014
Constant
Currency
Americas 3.7$ -71.3% -71.3% 3.7$ 1.1% 2.0%
Asia Pacific 55.6 -17.0% 3.4% 55.6 -17.0% 3.4%
Europe 50.7 -26.8% -18.5% 50.7 -11.5% -2.8%
Total 110.0$ -26.3% -14.7% 110.0$ -14.0% 0.4%
Reported Retained (1)
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Q3 2015: Reconciliation of Retained Gross Margin
$US in Millions
(1) Retained revenue and gross margin and divested revenue and gross margin are non-GAAP terms that management believes provide a better understanding of the underlying revenue and gross margin trends in the business following the divestitures in the second quarter of 2015. Divested revenue and gross margin includes such items attributable to the following businesses: the Americas IT staffing business, the Netherlands business, Ukraine, Czech Republic, Slovakia and Luxembourg. The non-GAAP financial measures do not replace the presentation of GAAP financial results and should only be used as a supplement to, not as a substitute for, Hudson’s financial results presented in accordance with GAAP. The above table provides a reconciliation of the non-GAAP financial measure used in its financial reporting to the most directly comparable GAAP financial measure.
Q2 2015
Variance
vs Q2 2014
Constant
Currency Q2 2015
Variance
vs Q2 2014
Constant
Currency
Americas 3.2$ -43.0% -42.7% 3.2$ -0.8% 0.1%
Asia Pacific 23.4 -5.2% 13.4% 23.4 -5.2% 13.4%
Europe 18.6 -27.0% -17.2% 18.7 -17.1% -6.9%
Total 45.1$ -18.9% -7.2% 45.2$ -10.3% 3.1%
Reported Retained (1)
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Q3 2015: Global Services Split - Retained
Gross Margin
Temporary Contracting
Talent Management
Revenue
RPO
Permanent Recruitment
RPO
Talent Management Permanent
Recruitment
Temporary Contracting
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Q3 2015: Regional Split - Retained
Gross Margin
Europe
Asia Pacific
Americas 41%
52%
7%
Revenue
Europe
Asia Pacific
Americas 46%
51%
3%
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Balance Sheet: Select Items $US in Millions
September 30, December 31,
2015 2014
Cash $36.4 $34.0
Accounts Receivable $65.7 $74.1
September 30, December 31,
2015 2014
Short-term Borrowings $0.0 $0.0
Shareholders' Equity $64.1 $59.3
September 30, December 31,
2015 2014
Current Assets $109.3 $118.9
Current Liabilities $53.0 $67.1
Working Capital $56.3 $51.8
Selected Assets
Selected Liabilities
Working Capital
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Q3 2015: Cash Flow Summary
$US in Millions
Net income (loss) $ (2.1) $ (7.0)
Depreciation and amortization 1.0 1.5
Stock-based compensation 0.2 0.1
Change in accounts receivable 6.8 1.9
Change in accounts payable and other l iabilities (1.7) (1.4)
Other 0.6 2.5
Cash provided by (used in) operations 4.8 (2.4)
Capital expenditures (1.1) (1.5)
Free cash flow 3.7 (3.9)
Change in net borrowings (repayments) (1.1) 6.3
Other (0.7) (0.6)
Effect of exchange rates (0.4) (0.9)
Change in cash $ 1.5 $ 0.9
QTD QTD
Sep-15 Sep-14
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Flexible Liquidity $US in Millions
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Retained GM by Region
Q3 2015 Q3 2014
America 4.5% 30.8%
Asia Pacific 12.4% 12.2%
Europe 13.8% 15.2%
Hudson Total 13.1% 13.7%
Q3 2015 Q3 2014
America 85.0% 86.5%
Asia Pacific 36.9% 39.3%
Europe 41.8% 36.7%
Hudson Total 41.0% 39.4%
Temporary Contracting GM
Total GM
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Appendix
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Q3 2015 Regional Gross Margin Mix
Approximate mix of gross margin by product around the globe
Temp Perm Talent Mgmt
Americas 0% 100% 0%
Europe 25% 50% 25%
UK 45% 50% 5%
Cont. Europe 0% 55% 45%
Asia Pacific 20% 70% 10%
ANZ 30% 55% 15%
ASIA 0% 100% 0%
Hudson Total 20% 65% 15%
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Q3 EBITDA Reconciliation $US in Millions
(1) EBITDA is a non-GAAP measure defined as earnings before interest, income taxes, depreciation and amortization. Adjusted EBITDA is a non-GAAP measure defined as earnings before interest, income taxes, depreciation and amortization, non-operating income, goodwill and other impairment charges, business reorganization expenses and other charges.
Americas Asia Pacific Europe Corp Total
Revenue 3.7$ 55.6$ 50.7$ -$ 110.0$
Gross margin 3.2$ 23.4$ 18.6$ -$ 45.1$
Adjusted EBITDA (loss) (0.3)$ 2.3$ 0.1$ (2.6)$ (0.4)$
Business reorg expenses 0.6 0.3 1.3 0.1 2.3
Non-operating expenses (income) 0.1 0.3 0.8 (1.5) (0.2)
EBITDA (Loss) (1.0)$ 1.7$ (2.1)$ (1.2)$ (2.6)$
Depreciation and amortization 1.0
Interest expense (income) 0.1
Provision for (benefit from) income taxes (1.6)
Loss (income) from disc ops, net of taxes 0.1
Net income (loss) (2.1)$
Hudson
Q3 2015 Americas Asia Pacific Europe Corp Total
Revenue 13.0$ 67.0$ 69.3$ -$ 149.3$
Gross margin 5.6$ 24.7$ 25.5$ -$ 55.7$
Adjusted EBITDA (loss) 0.7$ 0.6$ (0.3)$ (3.9)$ (2.9)$
Business reorg expenses - 0.1 0.4 0.2 0.8
Non-operating expenses (income) 0.7 0.2 1.6 (2.7) (0.2)
EBITDA (Loss) -$ 0.2$ (2.3)$ (1.5)$ (3.5)$
Depreciation and amortization 1.5
Interest expense (income) 0.2
Provision for (benefit from) income taxes (0.6)
Loss (income) from disc ops, net of taxes 2.5
Net income (loss) (7.0)$
Hudson
Q3 2014