GlobeNewswire Inc | May 7, 2021 08:30AM EDT

May 07, 2021

OLD GREENWICH, Conn., May 07, 2021 (GLOBE NEWSWIRE) -- Hudson Global, Inc. (Nasdaq: HSON), a leading global total talent solutions company, announced today financial results for the first quarter ended March31, 2021.

2021 First Quarter Summary

-- Revenue of $34.5 million increased 42.8% from the first quarter of 2020 and 26.6% in constant currency. -- Adjusted net revenue of $12.7 million increased 29.8% from the first quarter of 2020 and 19.4% in constant currency. -- Net loss was $0.2 million, or $0.07 per basic and diluted share, compared to net loss of $0.5 million, or $0.17 per basic and diluted share, for the first quarter of 2020. Adjusted net income per diluted share (Non-GAAP measure)* was $0.07 compared to adjusted net loss per diluted share of $0.08 in the first quarter of 2020. -- Adjusted EBITDA (Non-GAAP measure)* was $0.8 million compared to adjusted EBITDA loss of $0.1 million in the first quarter of 2020. -- Total cash including restricted cash was $23.6 million at March31, 2021.

Our business exhibited solid growth in revenue, adjusted net revenue, and adjusted EBITDA across all three regions in the first quarter of 2021 versus the prior year quarter, said Jeff Eberwein, Chief Executive Officer of Hudson Global. Asia Pacific continued to perform well, and we are pleased about the recovery in our Americas results due to organic improvements made last year and the addition of our acquisition in 2020 of Coit Group. Although the recovery is uneven depending on country, we are seeing increased activity levels at our existing clients and an improving pipeline of potential clients.

* The Company provides Non-GAAP measures as a supplement to financial results based on accounting principles generally accepted in the United States ("GAAP"). Constant currency, Adjusted EBITDA, EBITDA, adjusted net income or loss, and adjusted net income or loss per diluted share are defined in the segment tables at the end of this release and a reconciliation of such Non-GAAP measures to the most directly comparable GAAP measures is included within such segment tables.

Regional Highlights

All growth rate comparisons are in constant currency.

Asia Pacific

Asia Pacific revenue of $25.3 million increased 29% and adjusted net revenue of $5.8 million increased 12% in the first quarter of 2021 compared to the same period in 2020. EBITDA was $0.8 million in the first quarter of 2021 compared to EBITDA of $0.3 million in the same period one year ago, and adjusted EBITDA was $1.1 million compared to adjusted EBITDA of $0.6 million in the first quarter of 2020.

Americas

In the first quarter of 2021, Americas revenue of $4.6 million increased 42% and adjusted net revenue of $4.2 million increased 46% from the first quarter of 2020. Most of this growth was attributable to the acquisition of Coit Group in Q4 2020. EBITDA loss was $0.3 million in the first quarter of 2021 compared to EBITDA loss of $0.1 million in same period last year. The region recorded adjusted EBITDA of $0.2 million compared to adjusted EBITDA of $0.1 million a year ago.

Europe

Europe revenue in the first quarter of 2021 increased 6% to $4.6 million and adjusted net revenue of $2.8 million increased 5% from the first quarter of 2020. EBITDA was $0.1 million in the first quarter of both 2021 and 2020. Adjusted EBITDA was $0.2 million in the first quarter of 2021 compared to adjusted EBITDA of $0.1 million a year ago.

Corporate Costs

In the first quarter of 2021, the Company's corporate costs were $0.8 million, flat versus the first quarter of 2020. Corporate costs in the first quarter of 2020 excluded non-recurring expenses of $0.3 million.

Liquidity and Capital Resources

The Company ended the first quarter of 2021 with $23.6 million in cash, including $0.4 million in restricted cash. The Company used $2.4 million in cash flow from operations during the first quarter of 2021, compared to using $2.7 million of cash flow from operations in the first quarter of 2020.

Share Repurchase Program

Since the beginning of 2019, the Company has reduced its share count by 16% and continues to view share repurchases as an attractive use of capital. Under its $10 million common stock share repurchase program, the Company has $1.7 million remaining.

COVID-19 Update

As disclosed in previously issued Company press releases as well as in our 2020 Form 10-K, our business has been adversely impacted by the COVID-19 outbreak and the accompanying economic downturn. This downturn, as well as the uncertainty regarding the duration, spread and intensity of the outbreak, led to a reduction in demand for our services in 2020. Some of our customers have instituted hiring freezes, while other customers that are more capable of working remotely have been allowed to operate somewhat as usual. The expected timeline for this reduction in demand for our services remains uncertain and difficult to predict considering the rapidly evolving landscape, but we have begun to see signs of positive momentum at certain clients.

The Company is vigilantly monitoring the business environment surrounding COVID-19 and continues to proactively address this situation as it evolves. The Company is confident that it can continue to take appropriate actions to manage the business in this challenging environment due to the flexibility of its workforce and the strength of its balance sheet.

Conference Call/Webcast

The Company 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 hudsonrpo.com.

If you wish to join the conference call, please use the dial-in information below:

-- Toll-Fee Dial-In Number: (866) 220-5784 -- International Dial-In Number: (615) 622-8063 -- Conference ID #: 9799225

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

About Hudson Global

Hudson Global, Inc. is a leading global 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 strive to exceed expectations.

For more information, please visit us at hudsonrpo.comor contact us at ir@hudsonrpo.com.

Investor Relations:The Equity GroupLena Cati212 836-9611 / lcati@equityny.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, global economic fluctuations; the adverse impacts of the recent coronavirus, or COVID-19 outbreak; the Companys ability to successfully achieve its strategic initiatives; risks related to potential acquisitions or dispositions of businesses by the Company; the Companys ability to retain and recruit qualified management and/or advisors; the Companys ability to operate successfully as a company focused on its RPO business; risks related to fluctuations in the Company's operating results from quarter to quarter; the loss of or material reduction in our business with any of the Companys largest customers; 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; risks relating to how future credit facilities may affect or restrict our operating flexibility; risks associated with the Company's investment strategy; risks related to international operations, including foreign currency fluctuations, political events, natural disasters or health crises, including the ongoing COVID-19 outbreak; 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 Companys 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 Companys business reorganization initiatives, and limits on related insurance coverage; the Companys ability to utilize net operating loss carry-forwards; volatility of the Company's stock price; the impact of government regulations; and restrictions imposed by blocking arrangements. 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.

Financial Tables Follow

HUDSON GLOBAL, INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(in thousands, except per share amounts)(unaudited) Three Months Ended March 31, 2021 2020Revenue $ 34,461 $ 24,131 Operating expenses: Direct contracting costs and reimbursed 21,743 14,333 expensesSalaries and related 10,590 8,217 Other selling, general and administrative 2,000 2,081 Depreciation and amortization 110 24 Total operating expenses 34,443 24,655 Operating income (loss) 18 (524 )Non-operating income (expense): Interest income, net 10 79 Other (expense) income, net (53 ) 41 Loss before provision for income taxes (25 ) (404 )Provision for income taxes 178 107 Net loss $ (203 ) $ (511 )Basic and diluted loss per share: Loss per share $ (0.07 ) $ (0.17 )Weighted-average shares outstanding: Basic 2,891 3,065 Diluted 2,891 3,065

HUDSON GLOBAL, INC.CONDENSED CONSOLIDATED BALANCE SHEETS(in thousands, except per share amounts)(unaudited) March 31, December 2021 31, 2020ASSETS Current assets: Cash and cash equivalents $ 23,150 $ 25,806 Accounts receivable, less allowance for doubtful 17,118 13,445 accounts of $2 and $10, respectivelyRestricted cash, current 210 152 Prepaid and other 904 889 Total current assets 41,382 40,292 Property and equipment, net 125 115 Operating lease right-of-use assets 737 210 Deferred tax assets 1,093 1,037 Restricted cash 231 241 Goodwill 2,088 2,088 Intangible assets, net 1,320 1,400 Other assets 5 3 Total assets $ 46,981 $ 45,386 LIABILITIES AND STOCKHOLDERS? EQUITY Current liabilities: Accounts payable $ 437 $ 576 Accrued expenses and other current liabilities 10,547 9,241 Operating lease obligations, current 448 192 Total current liabilities 11,432 10,009 Income tax payable 903 887 Operating lease obligations 302 22 Other liabilities 193 188 Total liabilities 12,830 11,106 Commitments and contingencies Stockholders' equity: Preferred stock, $0.001 par value, 10,000 shares ? ? authorized; none issued or outstandingCommon stock, $0.001 par value, 20,000 sharesauthorized; 3,675 and 4 4 3,672 shares issued; 2,688 and 2,685 sharesoutstanding, respectivelyAdditional paid-in capital 487,127 486,825 Accumulated deficit (437,953 ) (437,750 )Accumulated other comprehensive loss, net of 300 526 applicable taxTreasury stock, 987 and 987 shares, respectively, at (15,327 ) (15,325 )costTotal stockholders' equity 34,151 34,280 Total liabilities and stockholders' equity $ 46,981 $ 45,386

HUDSON GLOBAL, INC.SEGMENT ANALYSIS - QUARTER TO DATE (continued)RECONCILIATION OF ADJUSTED EBITDA(in thousands)(unaudited) For The Three AsiaMonths Ended Pacific Americas Europe Corporate TotalMarch 31, 2021Revenue, fromexternal $ 25,340 $ 4,561 $ 4,560 $ ? $ 34,461 customersAdjusted netrevenue, from $ 5,758 $ 4,209 $ 2,751 $ ? $ 12,718 externalcustomers^ (1)Net loss $ (203 )Provision from 178 income taxesInterest income, (10 )netDepreciation and 110 amortizationEBITDA (loss) ^ $ 762 $ (278 ) $ 70 $ (479 ) 75 (2)Non-operatingexpense (income),including 316 65 139 (467 ) 53 corporateadministrationchargesStock-basedcompensation 43 111 19 129 302 expenseNon-recurringseverance and ? 15 ? 17 32 professional feesCompensationexpense related ? 291 ? ? 291 to the Coitacquisition ^(3)Adjusted EBITDA $ 1,121 $ 204 $ 228 $ (800 ) $ 753 (loss) ^(2) For The Three AsiaMonths Ended Pacific Americas Europe Corporate TotalMarch 31, 2020Revenue, fromexternal $ 16,951 $ 3,188 $ 3,992 $ ? $ 24,131 customersAdjusted netrevenue, from $ 4,511 $ 2,860 $ 2,427 $ ? $ 9,798 externalcustomers ^(1)Net loss $ (511 )Provision for 107 income taxesInterest income, (79 )netDepreciation and 24 amortizationEBITDA (loss) ^ $ 337 $ (60 ) $ 63 $ (799 ) (459 )(2)Non-operatingexpense (income),including 190 137 1 (369 ) (41 )corporateadministrationchargesStock-basedcompensation 24 6 2 112 144 expenseNon-recurringseverance and ? ? ? 278 278 professional feesAdjusted EBITDA $ 551 $ 83 $ 66 $ (778 ) $ (78 )(loss) ^(2)



(1) Represents Revenue less the Direct contracting costs and reimbursed expenses caption on the Condensed Consolidated Statements of Operations. 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, 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(2) 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. Represents compensation expense payable to the principals of Coit per the(3) terms of the acquisition agreement, including a promissory note and earn-out payments.

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

The Company operates on a global basis, with the majority of its revenue 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 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, adjusted net revenue, selling, general and administrative expenses ("SG&A"), other non-operating income (expense), operating income (loss) and EBITDA (loss) include the effect of changes in foreign currency exchange rates. The Companys management reviews and analyzes business results in constant currency and believes these results better represent the Companys 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.

Three Months Ended March 31, 2021 2020 As As Currency Constant reported reported translation currencyRevenue: Asia Pacific $ 25,340 $ 16,951 $ 2,765 $ 19,716 Americas 4,561 3,188 19 3,207 Europe 4,560 3,992 305 4,297 Total $ 34,461 $ 24,131 $ 3,089 $ 27,220 Adjusted net revenue ^(1) Asia Pacific $ 5,758 $ 4,511 $ 645 $ 5,156 Americas 4,209 2,860 19 2,879 Europe 2,751 2,427 185 2,612 Total $ 12,718 $ 9,798 $ 849 $ 10,647 SG&A:^(2) Asia Pacific $ 4,680 $ 3,991 $ 539 $ 4,530 Americas 4,421 2,783 22 2,805 Europe 2,542 2,357 169 2,526 Corporate 947 1,167 1 1,168 Total $ 12,590 $ 10,298 $ 731 $ 11,029 Operating income (loss): Asia Pacific $ 1,063 $ 514 $ 87 $ 601 Americas (298 ) 72 (2 ) 70 Europe 200 59 16 75 Corporate (947 ) (1,169 ) ? (1,169 )Total $ 18 $ (524 ) $ 101 $ (423 )EBITDA (loss): Asia Pacific $ 762 $ 337 $ 49 $ 386 Americas (278 ) (60 ) (6 ) (66 )Europe 70 63 15 78 Corporate (479 ) (799 ) ? (799 )Total $ 75 $ (459 ) $ 58 $ (401 )



(1) Represents Revenue less the Direct contracting costs and reimbursed expenses caption on the Condensed Consolidated Statements of Operations. SG&A is a measure that management uses to evaluate the segments? expenses(2) and includes salaries and related costs and other selling, general and administrative costs.

HUDSON GLOBAL, INC.RECONCILIATION OF ADJUSTED NET LOSS PER DILUTED SHARE(in thousands, except per share amounts)(unaudited)

Adjusted Diluted Per Shares DilutedFor The Three Months Ended March 31, Net Outstanding Share2021 Income ^(1)Net loss $ (203 ) 2,891 $ (0.07 )Non-recurring items (after-tax) 32 2,932 0.01 Compensation expense related to the 381 2,932 0.13 Coit acquisition (after tax) ^(2)Adjusted net income ^(3) $ 210 2,932 $ 0.07

Adjusted Diluted Per Shares DilutedFor The Three Months Ended March 31, Net Loss Outstanding Share2020Net loss $ (511 ) 3,065 $ (0.17 )Non-recurring items (after-tax) 278 3,065 0.09 Adjusted net loss ^(3) $ (233 ) 3,065 $ (0.08 )

The weighted average number of shares outstanding used in the computation of diluted net loss per share for the three months ended March 31, 2021 did(1) not include potentially outstanding shares of common stock because the effect would have been anti-dilutive. However, these shares have been added to the adjusted net income per share reconciliation when their impact would be dilutive. Represents compensation expense payable to the principals of Coit per the(2) terms of the acquisition agreement, including a promissory note, common stock, and earn-out payments. Adjusted net income or loss and adjusted net income or loss per diluted share are Non-GAAP measures defined as reported net income or loss and reported net income or loss per diluted share before items such as PPP loan forgiveness, acquisition-related costs, and non-recurring severance and professional fees after tax that are presented to provide additional information about the company's operations on a basis consistent with the measures that the Company uses to manage its operations and evaluate its performance. Management also uses these measurements to evaluate capital(3) needs and working capital requirements. Adjusted net income or loss and adjusted net income or loss per diluted share should not be considered in isolation or as substitutes for net income or loss and net income or loss per share and other income or cash flow statement data prepared in accordance with generally accepted accounting principles or as measures of the company's profitability or liquidity. Further, adjusted net income or loss and adjusted net income or loss per diluted share as presented above may not be comparable with similarly titled measures reported by other companies.