Print Page  |  Close Window

Press Releases

Hudson Global Reports 2017 Fourth Quarter and Full-Year Results

NEW YORK, March 01, 2018 (GLOBE NEWSWIRE) -- Hudson Global, Inc. (Nasdaq:HSON), a leading global talent solutions company, today announced financial results for the fourth quarter and full-year ended December 31, 2017.

2017 Fourth Quarter Summary

  • Revenue of $121.6 million increased 21.2 percent from the fourth quarter of 2016, or 16.4 percent in constant currency.
     
  • Gross margin of $48.7 million increased 13.9 percent from the fourth quarter of 2016, or 8.7 percent in constant currency.
     
  • Net loss of $2.0 million, or $0.06 per basic and diluted share, including goodwill impairment in China of $1.9 million, compared with net loss of $0.3 million, or $0.01 per basic and diluted share, for the fourth quarter of 2016.
     
  • Adjusted EBITDA* of $1.9 million, net of $1.3 million of expenses related to the announced divestitures, compared with adjusted EBITDA of $0.9 million in the fourth quarter of 2016.

               
2017 Full-Year Summary

  • Revenue of $456.7 million increased 8.0 percent from 2016, or 7.9 percent in constant currency.
     
  • Gross margin of $186.7 million increased 7.1 percent from 2016, or 6.6 percent in constant currency.
     
  • Net loss of $2.9 million, or $0.09 per basic and diluted share, including goodwill impairment in China of $1.9 million, compared with net loss of $8.8 million, or $0.26 per basic and diluted share, in 2016.
     
  • Adjusted EBITDA* of $6.9 million, net of $2.1 million of expenses related to the announced divestitures, compared with adjusted EBITDA loss of $1.5 million in 2016.

* Adjusted EBITDA and EBITDA are defined in the segment tables at the end of this release.

"We delivered solid gross margin growth in the fourth quarter, with growth in every product line, including permanent recruitment, temporary contracting, recruitment process outsourcing (“RPO”) and talent management," said Stephen Nolan, chief executive officer at Hudson. "We are pleased to report positive adjusted EBITDA for the sixth consecutive quarter as well as positive cash flow from operations. For the 2017 year, we delivered revenue and gross margin growth, significantly improved adjusted EBITDA and positive operating cash flow."

Strategic Update

On December 17, 2017, Hudson announced it had entered into definitive sale agreements to sell its recruitment and talent management operations in Europe and Asia Pacific to strategic buyers in three transactions. Hudson intends to focus on its growing, global RPO business going forward. Under the terms of the agreements, Hudson will receive estimated proceeds of $41.2 million in cash, subject to adjustment.

The transactions are subject to the approval of the majority of the outstanding shares of Hudson. Hudson filed a definitive proxy statement with the SEC on February 13, 2018 seeking shareholder approval for the sale of substantially all of its assets as a result of the proposed transactions and has called a special meeting of shareholders for March 20, 2018 at 8:00 a.m. ET to obtain such shareholder approval. Subject to the receipt of shareholder approval and satisfaction of other customary closing conditions, the company expects to close the transactions at the end of March 2018.

Regional Highlights

Americas

In the fourth quarter of 2017, Hudson Americas' gross margin decreased 7 percent compared with the fourth quarter of 2016, as growth in the retained business was offset by a large contract that ended in the third quarter of 2017. EBITDA was $0.5 million in the fourth quarter, unchanged from a year ago. The region delivered adjusted EBITDA of $0.5 million for the fourth quarter, compared with adjusted EBITDA of $0.6 million a year ago.

Hudson Americas' gross margin in 2017 increased 6 percent in constant currency from 2016, with RPO growth driven by new client wins and increased business with existing clients. EBITDA was $1.6 million in 2017, compared with $0.8 million in 2016. Adjusted EBITDA was $1.8 million in 2017, compared with adjusted EBITDA of $1.2 million in 2016.

Asia Pacific

Hudson Asia Pacific's gross margin increased 19 percent in constant currency in the fourth quarter of 2017 compared with the same period in 2016. Gross margin growth across the region was led by Asia, up 23 percent, with strong growth in China and Singapore, up 37 percent and 36 percent respectively, from a year ago. Australia/New Zealand gross margin continued to grow, up 18 percent in the quarter, driven by double-digit growth in all product lines. EBITDA was $0.3 million in the fourth quarter, net of $1.9 million of goodwill impairment, compared with EBITDA of $0.0 million a year ago. Asia Pacific delivered adjusted EBITDA of $2.4 million, improving from adjusted EBITDA of $0.4 million in the fourth quarter of 2016.

In 2017, gross margin increased 9 percent in Hudson Asia Pacific in constant currency compared with 2016. Results were driven by 13 percent growth in temporary contracting and talent management, 12 percent growth in permanent recruitment, and 2 percent growth in RPO against 2016. Growth by country was led by Australia, up 6 percent, China, up 15 percent and Hong Kong, up 21 percent. EBITDA in 2017 was $2.5 million, net of $1.9 million of goodwill impairment, compared with an EBITDA loss of $0.3 million in 2016. Adjusted EBITDA was $6.7 million, improving from $2.6 million in 2016.

Europe

Hudson Europe's gross margin increased 0.3 percent in constant currency in the fourth quarter of 2017 compared with the fourth quarter of 2016. Gross margin growth was driven by Continental Europe, up 3 percent, led by growth in France, Poland, and Spain. In the U.K., gross margin declined 4 percent from the fourth quarter of 2016, as growth in talent management and RPO was offset by declines in recruitment. EBITDA was $1.5 million in the fourth quarter, compared with $0.3 million a year ago. Adjusted EBITDA was $1.9 million in the fourth quarter of 2017, improving from $1.3 million a year ago.

Hudson Europe's gross margin increased 4 percent in 2017 in constant currency compared with 2016. Continental Europe delivered 9 percent growth, driven by growth in Belgium, Spain, France and Poland, offset by the U.K., which was down 5 percent against 2016. In the U.K., growth in RPO and talent management of 4 percent and 21 percent, respectively, was offset by recruitment, down 8 percent from 2016. EBITDA was $4.6 million in 2017, compared with $1.1 million in 2016. Adjusted EBITDA was $7.1 million, compared with $4.2 million in 2016.

Liquidity and Capital Resources

The company ended the fourth quarter of 2017 with $43.1 million in liquidity, composed of $21.0 million in cash and $22.1 million in availability under its credit facilities. This compares with $16.8 million in cash and $20.1 million in availability under its credit facilities at the end of the third quarter of 2017. The company generated $6.0 million in cash flow from operations during the fourth quarter, compared with $5.6 million in the fourth quarter of 2016. The company had $7.1 million in outstanding borrowings at the end of the fourth quarter of 2017, primarily in Australia and the U.K.
           
Share Repurchase Program

During the fourth quarter, the company continued its share repurchase program which has an authorization of up to $10 million of the company’s common stock. The company purchased 106,644 shares for $0.2 million as part of its existing Rule 10b5-1 repurchase program during the fourth quarter. Since the inception of this program in the third quarter of 2015 through the end of the fourth quarter of 2017, the company has purchased 3,639,405 shares for $7.4 million.

Business Outlook

Given the expected timing of the pending sale transactions, the company will not provide guidance for the first quarter of 2018.

Conference Call/Webcast

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 Hudson.com.

The archived call will be available on the investor information section of the company's web site at Hudson.com.

About Hudson

Hudson is a global talent solutions company with expertise in leadership and specialized recruitment, recruitment process outsourcing, talent management and contracting solutions. We help our clients and candidates succeed by leveraging our expertise, deep industry and market knowledge, and proprietary assessment tools and techniques. Operating around the globe through relationships with millions of specialized professionals, we bring an unparalleled ability to match talent with opportunities by assessing, recruiting, developing and engaging the best and brightest people for our clients. We combine broad geographic presence, world-class talent solutions and a tailored, consultative approach to help businesses and professionals achieve higher performance and outstanding results. More information is available at Hudson.com.

Forward-Looking Statements

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 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 important factors, risks, uncertainties and assumptions, including industry and economic conditions' that could cause actual results to differ materially from those described in the forward-looking statements. Such factors, risks, uncertainties and assumptions include, but are not limited to, Hudson’s ability to complete the sales of its recruitment and talent management operations in Europe and Asia Pacific on anticipated terms and timetable; the possibility that various closing conditions for the proposed sales may not be satisfied or waived; Hudson’s ability to obtain shareholder approval for the sale of substantially all of its assets as a result of the proposed sales; Hudson’s ability to achieve anticipated benefits from the proposed sales and operate successfully as a company focused on its RPO business; global economic fluctuations; the company’s ability to successfully achieve its strategic initiatives; risks related to fluctuations in the company's operating results from quarter to quarter; the ability of clients to terminate their relationship with the company at any time; competition in the company's markets; the negative cash flows and operating losses that may recur in the future; restrictions on the company's operating flexibility due to the terms of its credit facilities; risks associated with the company's investment strategy; risks related to international operations, including foreign currency fluctuations; the company's dependence on key management personnel; the company's ability to attract and retain highly skilled professionals; the company's ability to collect accounts receivable; the company’s ability to maintain costs at an acceptable level; the company's heavy reliance on information systems and the impact of potentially losing or failing to develop technology; risks related to providing uninterrupted service to clients; the company's exposure to employment-related claims from clients, employers and regulatory authorities, current and former employees in connection with the company’s business reorganization initiatives and limits on related insurance coverage; the company’s ability to utilize net operating loss carry-forwards; volatility of the company's stock price; the impact of government regulations; restrictions imposed by blocking arrangements; and risks related to potential acquisitions or dispositions of businesses by the company. 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 document. The company assumes no obligation, and expressly disclaims any obligation, to update any forward-looking statements, whether as a result of new information, future events or otherwise.

Important Additional Information and Where to Find It

This communication does not constitute a solicitation of a vote or proxy. In connection with the proposed transaction, Hudson has filed relevant materials with the SEC, including a proxy statement. INVESTORS ARE URGED TO READ THE PROXY STATEMENT AND ANY OTHER RELEVANT MATERIALS BECAUSE THEY  CONTAIN IMPORTANT INFORMATION ABOUT HUDSON AND THE PROPOSED TRANSACTION. The proxy statement and certain other relevant materials and other documents filed by Hudson with the SEC may be obtained free of charge at the SEC’s website at http://www.sec.gov. In addition, investors may obtain copies of these documents free of charge by written request Hudson Global, Inc., 1325 Avenue of the Americas, 12th Floor, New York, New York 10019 or by calling (212) 351-7300.

Participants in the Solicitation

Hudson and its executive officers and directors may be deemed to be participants in the solicitation of proxies in connection with the proposed transaction. Information about the executive officers and directors of Hudson and the number of shares of Hudson’s common stock beneficially owned by such persons is set forth in the proxy statement for Hudson’s special meeting of stockholders which was filed with the SEC on February 13, 2018, and Hudson’s Annual Report on Form 10-K for the period ended December 31, 2017. Investors may obtain additional information regarding the direct and indirect interests of Hudson and its executive officers and directors in the transaction by reading the proxy statement regarding the transaction.


Financial Tables Follow


 
HUDSON GLOBAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
(unaudited)
               
  Three Months Ended   Year Ended
  December 31,   December 31,
  2017   2016   2017   2016
Revenue $ 121,617     $ 100,314     $ 456,721     $ 422,744  
Direct costs 72,884     57,540     269,985     248,327  
Gross margin 48,733     42,774     186,736     174,417  
Operating expenses:              
Selling, general and administrative expenses 47,224     42,033     181,090     177,334  
Depreciation and amortization 698     796     2,748     3,090  
Business reorganization 76     616     712     1,580  
Goodwill impairment 1,909         1,909      
Total operating expenses 49,907     43,445     186,459     182,004  
Operating income (loss) (1,174 )   (671 )   277     (7,587 )
Non-operating income (expense):              
Interest income (expense), net (86 )   (93 )   (403 )     (357 )
Other income (expense), net 1       198     (510 )   (247 )
Income (loss) before provision for income taxes from continuing operations (1,259 )   (566 )     (636 )   (8,191 )
Provision for (benefit from) income taxes 759     (458 )   2,284     742  
Income (loss) from continuing operations (2,018 )   (108 )   (2,920 )   (8,933 )
Income (loss) from discontinued operations, net of income taxes 13     (184 )   (21 )   143  
Net income (loss) $ (2,005 )   $ (292 )   $ (2,941 )   $ (8,790 )
Earnings (loss) per share:              
Basic and diluted              
Income (loss) from continuing operations $ (0.06 )   $     $ (0.09 )   $ (0.27 )
Income (loss) from discontinued operations     (0.01 )       0.01  
Net income (loss) $ (0.06 )   $ (0.01 )   $ (0.09 )   $ (0.26 )
Weighted-average shares outstanding:              
Basic 32,063     32,227     32,106     33,174  
Diluted 32,063     32,227     32,106     33,174  


 
 
 
HUDSON GLOBAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except per share amounts)
(unaudited)
         
  December 31,
 2017
  December 31,
 2016
ASSETS      
Current assets:      
Cash and cash equivalents $ 21,040     $ 21,322  
Accounts receivable, less allowance for doubtful accounts of $684 and $799, respectively 71,878     58,517  
Prepaid and other 4,125     4,265  
Current assets of discontinued operations     38  
Total current assets 97,043     84,142  
Property and equipment, net 6,251     7,041  
Deferred tax assets, non-current 6,404     6,494  
Other assets 1,942     4,135  
Total assets $ 111,640     $ 101,812  
LIABILITIES AND STOCKHOLDERS’ EQUITY      
Current liabilities:      
Accounts payable $ 6,957     $ 4,666  
Accrued expenses and other current liabilities 45,565     36,154  
Short-term borrowings 7,080     7,770  
Accrued business reorganization 919     1,756  
Current liabilities of discontinued operations 56     233  
Total current liabilities 60,577     50,579  
Deferred rent and tenant improvement contributions 1,833     2,968  
Income tax payable, non-current 2,231     2,211  
Other non-current liabilities 3,847     4,169  
Total liabilities 68,488     59,927  
Stockholders’ equity:      
Preferred stock, $0.001 par value, 10,000 shares authorized; none issued or outstanding      
Common stock, $0.001 par value, 100,000 shares authorized; issued 34,959 and 34,910 shares, respectively 34     34  
Additional paid-in capital 483,558     482,265  
Accumulated deficit (443,419 )   (440,478 )
Accumulated other comprehensive income 10,709     6,931  
Treasury stock, 3,800 and 3,145 shares, respectively, at cost (7,730 )   (6,867 )
Total stockholders’ equity 43,152     41,885  
Total liabilities and stockholders' equity $ 111,640     $ 101,812  


 
 
 
HUDSON GLOBAL, INC.
SEGMENT ANALYSIS - QUARTER TO DATE
(in thousands)
(unaudited)
                             
For The Three Months Ended December 31, 2017   Hudson
Americas
  Hudson
Asia Pacific
  Hudson
Europe
  Corporate   Total
Revenue, from external customers   $ 3,677     $ 77,341     $ 40,599     $     $ 121,617  
Gross margin, from external customers   $ 3,180     $ 25,049     $ 20,504     $     $ 48,733  
Adjusted EBITDA (loss) (1)   $ 517     $ 2,408     $ 1,856     $ (2,914 )   $ 1,867  
Business reorganization expenses (recovery)   9         67         76  
Stock-based compensation expense   23     16     56     262     357  
Impairment of long-lived assets       1,909             1,909  
Non-operating expense (income),
including corporate administration charges
  25     229     268     (522 )    
EBITDA (loss) (1)   $ 460     $ 254     $ 1,465     $ (2,654 )   $ (475 )
Depreciation and amortization expenses                   698  
Interest expense (income), net                   86  
Provision for (benefit from) income taxes                   759  
Income (loss) from continuing operations                   (2,018 )
Income (loss) from discontinued operations, net of income taxes                   13  
Net income (loss)                   $ (2,005 )
                     
For The Three Months Ended December 31, 2016   Hudson
Americas
  Hudson
Asia Pacific
  Hudson
Europe
  Corporate   Total
Revenue, from external customers   $ 3,901     $ 59,122     $ 37,291     $     $ 100,314  
Gross margin, from external customers   $ 3,400     $ 20,524     $ 18,850     $     $ 42,774  
Adjusted EBITDA (loss) (1)   $ 587     $ 373     $ 1,302     $ (1,355 )   $ 907  
Business reorganization expenses (recovery)   2     (24 )   606     32     616  
Stock-based compensation expense   27     (4 )   13     130     166  
Non-operating expense (income),
including corporate administration charges
  100     383     378     (1,059 )   (198 )
EBITDA (loss) (1)   $ 458     $ 18     $ 305     $ (458 )   $ 323  
Depreciation and amortization expenses                   796  
Interest expense (income), net                   93  
Provision for (benefit from) income taxes                   (458 )
Income (loss) from continuing operations                   (108 )
Income (loss) from discontinued operations, net of income taxes                   (184 )
Net income (loss)                   $ (292 )
 
  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 and other 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. EBITDA and adjusted 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, 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)
(in thousands)
(unaudited)
                                                 
For The Three Months Ended September 30, 2017   Hudson
Americas
  Hudson
Asia Pacific
  Hudson
Europe
  Corporate   Total
Revenue, from external customers   $ 4,044     $ 76,509     $ 37,555     $     $ 118,108  
Gross margin, from external customers   $ 3,668     $ 25,407     $ 18,170     $     $ 47,245  
Adjusted EBITDA (loss) (1)   $ 579     $ 2,338     $ 621     $ (2,236 )   $ 1,302  
Business reorganization expenses (recovery)           477         477  
Stock-based compensation expense   20     24     45     140     229  
Non-operating expense (income),
including corporate administration charges
  76     629     479     (1,063 )   121  
EBITDA (loss) (1)   $ 483     $ 1,685     $ (380 )   $ (1,313 )   $ 475  
Depreciation and amortization expenses                   697  
Interest expense (income), net                   110  
Provision for (benefit from) income taxes                   500  
Income (loss) from continuing operations                   (832 )
Income (loss) from discontinued operations, net of income taxes                   (16 )
Net income (loss)                   $ (848 )
                     
For The Three Months Ended March 31, 2017   Hudson
Americas
  Hudson
Asia Pacific
  Hudson
Europe
  Corporate   Total
Revenue, from external customers   $ 4,315     $ 59,710     $ 39,380     $     $ 103,405  
Gross margin, from external customers   $ 3,836     $ 19,735     $ 18,861     $     $ 42,432  
Adjusted EBITDA (loss) (1)   $ 334     $ 121     $ 1,493     $ (1,594 )   $ 354  
Business reorganization expenses (recovery)   (92 )       336     (22 )   222  
Stock-based compensation expense   33     6     43     109     191  
Non-operating expense (income),
including corporate administration charges
  59     848     235     (761 )   381  
EBITDA (loss) (1)   $ 334     $ (733 )   $ 879     $ (920 )   $ (440 )
Depreciation and amortization expenses                   666  
Interest expense (income), net                   88  
Provision for (benefit from) income taxes                   155  
Income (loss) from continuing operations                   (1,349 )
Income (loss) from discontinued operations, net of income taxes                   35  
Net income (loss)                   $ (1,314 )
                         
  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 and other 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. EBITDA and adjusted 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, EBITDA and adjusted EBITDA as presented above may not be comparable with similarly titled measures reported by other companies.
 
 
 
HUDSON GLOBAL, INC.
SEGMENT ANALYSIS - YEAR TO DATE
(in thousands)
(unaudited)
                             
For The Year Ended December 31, 2017   Hudson
Americas
  Hudson
Asia Pacific
  Hudson
Europe
  Corporate   Total
Revenue, from external customers   $ 16,196     $ 282,824     $ 157,701   $     $ 456,721  
Gross margin, from external customers   $ 14,420     $ 93,623     $ 78,693   $     $ 186,736  
Adjusted EBITDA (loss) (1)   $ 1,834     $ 6,731     $ 7,051   $ (8,676 )   $ 6,940  
Business reorganization expenses (recovery)     (82 )     1       815     (22 )     712  
Stock-based compensation expense     96       69       189     940       1,294  
Impairment of long-lived assets           1,909                 1,909  
Non-operating expense (income),
including corporate administration charges
    242       2,248       1,464     (3,444 )     510  
EBITDA (loss) (1)   $ 1,578     $ 2,504     $ 4,583   $ (6,150 )   $ 2,515  
Depreciation and amortization expenses                     2,748  
Interest expense (income), net                     403  
Provision for (benefit from) income taxes                     2,284  
Income (loss) from continuing operations                     (2,920 )
Income (loss) from discontinued operations, net of income taxes                     (21 )
Net income (loss)                   $ (2,941 )
                     
For The Year Ended December 31, 2016   Hudson
Americas
  Hudson
Asia Pacific
  Hudson
Europe
  Corporate   Total
Revenue, from external customers   $ 15,561     $ 236,839     $ 170,344   $     $ 422,744  
Gross margin, from external customers   $ 13,609     $ 84,126     $ 76,682   $     $ 174,417  
Adjusted EBITDA (loss) (1)   $ 1,209     $ 2,614     $ 4,194   $ (9,485 )   $ (1,468 )
Business reorganization expenses (recovery)     (39 )     248       1,387     (16 )     1,580  
Stock-based compensation expense     108       161       206     974       1,449  
Non-operating expense (income),
including corporate administration charges
    370       2,543       1,537     (4,203 )     247  
EBITDA (loss) (1)   $ 770     $ (338 )   $ 1,064   $ (6,240 )   $ (4,744 )
Depreciation and amortization expenses                     3,090  
Interest expense (income), net                     357  
Provision for (benefit from) income taxes                     742  
Income (loss) from continuing operations                     (8,933 )
Income (loss) from discontinued operations, net of income taxes                     143  
Net income (loss)                   $ (8,790 )
                 
  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 and other 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. EBITDA and adjusted 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, EBITDA and adjusted EBITDA as presented above may not be comparable with similarly titled measures reported by other companies.


HUDSON GLOBAL, INC.
RECONCILIATION FOR CONSTANT CURRENCY
(in thousands)
(unaudited)

The company operates on a global basis, with the majority of its gross margin 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 margin, selling, general and administrative expenses ("SG&A"), business reorganization expenses and other non-operating income (expense), 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.

   
  For The Three Months Ended December 31,
  2017   2016
  As   As   Currency   Constant
  reported   reported   translation   currency
Revenue:              
Hudson Americas $ 3,677     $ 3,901     $ 11     $ 3,912  
Hudson Asia Pacific 77,341     59,122     1,276     60,398  
Hudson Europe 40,599     37,291     2,907     40,198  
Total $ 121,617     $ 100,314     $ 4,194     $ 104,508  
Gross margin:              
Hudson Americas $ 3,180     $ 3,400     $ 9     $ 3,409  
Hudson Asia Pacific 25,049     20,524     475     20,999  
Hudson Europe 20,504     18,850     1,590     20,440  
Total $ 48,733     $ 42,774     $ 2,074     $ 44,848  
SG&A (1):              
Hudson Americas $ 2,681     $ 2,836     $ 5     $ 2,841  
Hudson Asia Pacific 22,596     20,065     426     20,491  
Hudson Europe 18,772     17,651     1,450     19,101  
Corporate 3,174     1,481         1,481  
Total $ 47,223     $ 42,033     $ 1,881     $ 43,914  
Business reorganization expenses:              
Hudson Americas $ 9     $ 2     $     $ 2  
Hudson Asia Pacific     (24 )   1     (23 )
Hudson Europe 67     606     44     650  
Corporate     32         32  
Total $ 76     $ 616     $ 45     $ 661  
Operating income (loss):              
Hudson Americas $ 484     $ 552     $ 5     $ 557  
Hudson Asia Pacific 81     (53 )   37     (16 )
Hudson Europe 1,557     419     81     500  
Corporate (3,296 )   (1,589 )       (1,589 )
Total $ (1,174 )   $ (671 )   $ 123     $ (548 )
EBITDA (loss):              
Hudson Americas $ 460     $ 458     $ (5 )   $ 453  
Hudson Asia Pacific 254     18     59     77  
Hudson Europe 1,465     305     58     363  
Corporate (2,654 )   (458 )       (458 )
Total $ (475 )   $ 323     $ 112     $ 435  

Note: Certain prior year amounts have been reclassified to conform to the current period presentation.

  1. SG&A is a measure that management uses to evaluate the segments’ expenses.


HUDSON GLOBAL, INC.
RECONCILIATION FOR CONSTANT CURRENCY (continued)
(in thousands)
(unaudited)

  For The Year Ended December 31,
  2017   2016
  As   As   Currency   Constant
  reported   reported   translation   currency
Revenue:              
Hudson Americas $ 16,196     $ 15,561     $ 22     $ 15,583  
Hudson Asia Pacific 282,824     236,839     5,796     242,635  
Hudson Europe 157,701     170,344     (5,400 )   164,944  
Total $ 456,721     $ 422,744     $ 418     $ 423,162  
Gross margin:              
Hudson Americas $ 14,420     $ 13,609     $ 19     $ 13,628  
Hudson Asia Pacific 93,623     84,126     1,442     85,568  
Hudson Europe 78,693     76,682     (729 )   75,953  
Total $ 186,736     $ 174,417     $ 732     $ 175,149  
SG&A (1):              
Hudson Americas $ 12,712     $ 12,495     $ 11     $ 12,506  
Hudson Asia Pacific 86,716     81,409     1,188     82,597  
Hudson Europe 72,047     72,978     (913 )   72,065  
Corporate 9,615     10,452         10,452  
Total $ 181,090     $ 177,334     $ 286     $ 177,620  
Business reorganization expenses:              
Hudson Americas $ (82 )   $ (39 )   $     $ (39 )
Hudson Asia Pacific 1     248         248  
Hudson Europe 815     1,387     (2 )   1,385  
Corporate (22 )   (16 )       (16 )
Total $ 712     $ 1,580     $ (2 )   $ 1,578  
Operating income (loss):              
Hudson Americas $ 1,818     $ 1,090     $ 8     $ 1,098  
Hudson Asia Pacific 3,041     454     209     663  
Hudson Europe 5,370     1,709     210     1,919  
Corporate (9,952 )   (10,840 )       (10,840 )
Total $ 277     $ (7,587 )   $ 427     $ (7,160 )
EBITDA (loss):              
Hudson Americas $ 1,578     $ 770     $ 7     $ 777  
Hudson Asia Pacific 2,504     (338 )   221     (117 )
Hudson Europe 4,583     1,064     142     1,206  
Corporate (6,150 )   (6,240 )       (6,240 )
Total $ 2,515     $ (4,744 )   $ 370     $ (4,374 )
  1. SG&A is a measure that management uses to evaluate the segments’ expenses.                                                
     
Contact:       David F. Kirby
    Hudson
    212-351-7216
    david.kirby@hudson.com


Primary Logo

Hudson Global, Inc.