GlobeNewswire Inc | Aug 6, 2021 08:30AM EDT

August 06, 2021

OLD GREENWICH, Conn., Aug. 06, 2021 (GLOBE NEWSWIRE) -- Hudson Global, Inc. (Nasdaq: HSON), a leading global total talent solutions company, announced today financial results for the second quarter ended June30, 2021.

2021 Second Quarter Summary

-- Revenue of $39.7 million increased 61.5% from the second quarter of 2020 and 41.4% in constant currency. -- Adjusted net revenue of $15.1 million increased 69.0% from the second quarter of 2020 and 52.7% in constant currency. -- Net loss decreased to $0.1 million, or $0.04 per basic and diluted share, compared to net loss of $0.8 million, or $0.27 per basic and diluted share, for the second quarter of 2020. Adjusted net income per diluted share (non-GAAP measure)* was $0.15 compared to adjusted net loss per diluted share of $0.13 in the second quarter of 2020. -- Adjusted EBITDA (non-GAAP measure)* was $1.7 million compared to adjusted EBITDA loss of $0.4 million in the second quarter of 2020. -- Total cash including restricted cash was $24.5 million at June30, 2021.

Our business exhibited strong growth in revenue, adjusted net revenue, and adjusted EBITDA across each of our three regions in the second quarter of 2021 versus the prior year quarter, said Jeff Eberwein, Chief Executive Officer of Hudson Global. I am very proud of how well our team has responded to and capitalized on the rebound in demand for our services. I am also encouraged by our pace of new business wins so far this year as well as the robust growth of our sales pipeline.

* 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 $28.8 million increased 32% and adjusted net revenue of $6.9 million increased 26% in the second quarter of 2021 compared to the same period in 2020. EBITDA was $1.0 million in the second quarter of 2021 compared to EBITDA of $1.0 million in the same period one year ago, and adjusted EBITDA was $1.4 million compared to adjusted EBITDA of $1.0 million in the second quarter of 2020.

Americas

In the second quarter of 2021, Americas revenue of $5.4 million increased 139% and adjusted net revenue of $5.0 million increased 159% from the second quarter of 2020. Strong organic growth in the Americas as well as the acquisition of Coit Group in Q4 2020 contributed to the region's top line growth. EBITDA loss decreased to $0.2 million in the second quarter of 2021 compared to EBITDA loss of $0.9 million in same period last year. The region recorded adjusted EBITDA of $0.5 million compared to adjusted EBITDA loss of $0.6 million a year ago.

Europe

Europe revenue in the second quarter of 2021 increased 39% to $5.5 million and adjusted net revenue of $3.2 million increased 30% from the second quarter of 2020. EBITDA increased to $0.5 million in the second quarter of 2021 compared to EBITDA of $0.3million in the same period one year ago. Adjusted EBITDA increased to $0.6 million in the second quarter of 2021 compared to adjusted EBITDA of $0.1 million in the second quarter of 2020.

Corporate Costs

In the second quarter of 2021, the Company's corporate costs were $0.8 million, flat versus the prior year quarter. Corporate costs for each of the second quarters of 2021 and 2020 excluded non-recurring expenses of $0.1 million.

Liquidity and Capital Resources

The Company ended the second quarter of 2021 with $24.5 million in cash, including $0.3 million in restricted cash. The Company generated $1.0 million in cash flow from operations during the second quarter of 2021, compared to $1.9 million of cash flow from operations in the second 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

The Company is vigilantly monitoring the business environment surrounding COVID-19 and continues to proactively address this situation as it evolves. The Company believes 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 #: 8387899

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 athudsonrpo.com or 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 June 30, Six Months Ended June 30, 2021 2020 2021 2020Revenue $ 39,674 $ 24,573 $ 74,135 $ 48,704 Operating expenses:Directcontractingcosts and 24,583 15,643 46,326 29,976 reimbursedexpensesSalaries and 12,281 8,335 22,871 16,552 relatedOther selling,general and 2,402 1,454 4,402 3,535 administrativeDepreciation and 113 24 223 48 amortizationTotal operating 39,379 25,456 73,822 50,111 expensesOperating income 295 (883 ) 313 (1,407 ) (loss)Non-operatingincome (expense):Interest income, 9 40 19 119 netOther (expense) (37 ) 337 (90 ) 378 income, netNet income(loss) before 267 (506 ) 242 (910 ) provision forincome taxesProvision for 389 266 567 373 income taxesNet loss $ (122 ) $ (772 ) $ (325 ) $ (1,283 ) Basic anddiluted loss per share:Loss per share $ (0.04 ) $ (0.27 ) $ (0.11 ) $ (0.43 ) Weighted-averageshares outstanding:Basic 2,906 2,839 2,899 2,952 Diluted 2,906 2,839 2,899 2,952

HUDSON GLOBAL, INC.CONDENSED CONSOLIDATED BALANCE SHEETS(in thousands, except per share amounts)(unaudited) June 30, December 31, 2021 2020ASSETS Current assets: Cash and cash equivalents $ 24,195 $ 25,806 Accounts receivable, less allowance for doubtful 19,569 13,445 accounts of $1 and $10, respectivelyRestricted cash, current 116 152 Prepaid and other 817 889 Total current assets 44,697 40,292 Property and equipment, net 174 115 Operating lease right-of-use assets 630 210 Deferred tax assets 1,253 1,037 Restricted cash 217 241 Goodwill 2,088 2,088 Intangible assets, net 1,240 1,400 Other assets 4 3 Total assets $ 50,303 $ 45,386 LIABILITIES AND STOCKHOLDERS? EQUITY Current liabilities: Accounts payable $ 538 $ 576 Accrued expenses and other current liabilities 13,203 9,241 Operating lease obligations, current 396 192 Total current liabilities 14,137 10,009 Income tax payable 923 887 Operating lease obligations 243 22 Other liabilities 197 188 Total liabilities 15,500 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; 3,677 and 4 4 3,672 shares issued; 2,690 and 2,685 sharesoutstanding, respectivelyAdditional paid-in capital 487,921 486,825 Accumulated deficit (438,075 ) (437,750 ) Accumulated other comprehensive loss, net of 282 526 applicable taxTreasury stock, 987 and 987 shares, respectively, (15,329 ) (15,325 ) at costTotal stockholders' equity 34,803 34,280 Total liabilities and stockholders' equity $ 50,303 $ 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 TotalJune 30, 2021Revenue, fromexternal $ 28,801 $ 5,366 $ 5,507 $ ? $ 39,674 customersAdjusted netrevenue, from $ 6,880 $ 4,993 $ 3,218 $ ? $ 15,091 externalcustomers^ (1)Net loss $ (122 ) Provision from 389 income taxesInterest (9 ) income, netDepreciationand 113 amortizationEBITDA (loss) $ 1,003 $ (173 ) $ 476 $ (935 ) 371 ^(2)Non-operatingexpense(income),including 351 94 85 (493 ) 37 corporateadministrationchargesStock-basedcompensation 86 145 62 501 794 expenseNon-recurringseverance and ? 8 ? 82 90 professionalfeesCompensationexpenserelated to the ? 390 ? ? 390 Coitacquisition ^(3)AdjustedEBITDA (loss) $ 1,440 $ 464 $ 623 $ (845 ) $ 1,682 ^(2) For The Three AsiaMonths Ended Pacific Americas Europe Corporate TotalJune 30, 2020Revenue, fromexternal $ 18,833 $ 2,206 $ 3,534 $ ? $ 24,573 customersAdjusted netrevenue, from $ 4,818 $ 1,893 $ 2,219 $ ? $ 8,930 externalcustomers ^(1)Net loss $ (772 ) Provision for 266 income taxesInterest (40 ) income, netDepreciationand 24 amortizationEBITDA (loss) $ 1,025 $ (918 ) $ 300 $ (929 ) (522 ) ^(2)Non-operatingexpense(income),including (86 ) 23 (209 ) (65 ) (337 ) corporateadministrationchargesStock-basedcompensation 14 (10 ) 2 87 93 expenseNon-recurringseverance and ? 318 ? 81 399 professionalfeesAdjustedEBITDA (loss) $ 953 $ (587 ) $ 93 $ (826 ) $ (367 ) ^(2)

^ Represents Revenue less the Direct contracting costs and reimbursed(1) 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^ evaluate its performance. Management also uses these measurements to(2) 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, common stock, and earn-out payments.

HUDSON GLOBAL, INC.SEGMENT ANALYSIS - YEAR TO DATE (continued)RECONCILIATION OF ADJUSTED EBITDA(in thousands)(unaudited) For The Six AsiaMonths Ended Pacific Americas Europe Corporate TotalJune 30, 2021Revenue, fromexternal $ 54,141 $ 9,927 $ 10,067 $ ? $ 74,135 customersAdjusted netrevenue, from $ 12,638 $ 9,202 $ 5,969 $ ? $ 27,809 externalcustomers^ (1)Net loss $ (325 ) Provision from 567 income taxesInterest (19 ) income, netDepreciationand 223 amortizationEBITDA (loss) $ 1,765 $ (451 ) $ 546 $ (1,414 ) 446 ^(2)Non-operatingexpense(income),including 667 159 224 (960 ) 90 corporateadministrationchargesStock-basedcompensation 129 256 81 630 1,096 expenseNon-recurringseverance and ? 23 ? 99 122 professionalfeesCompensationexpenserelated to the ? 681 ? ? 681 Coitacquisition ^(3)AdjustedEBITDA (loss) $ 2,561 $ 668 $ 851 $ (1,645 ) $ 2,435 ^(2) For The Six AsiaMonths Ended Pacific Americas Europe Corporate TotalJune 30, 2020Revenue, fromexternal $ 35,784 $ 5,394 $ 7,526 $ ? $ 48,704 customersAdjusted netrevenue, from $ 9,329 $ 4,753 $ 4,646 $ ? $ 18,728 externalcustomers ^(1)Net loss $ (1,283 ) Provision for 373 income taxesInterest (119 ) income, netDepreciationand 48 amortizationEBITDA (loss) $ 1,362 $ (978 ) $ 363 $ (1,728 ) (981 ) ^(2)Non-operatingexpense(income),including 104 160 (208 ) (434 ) (378 ) corporateadministrationchargesStock-basedcompensation 38 (4 ) 4 199 237 expenseNon-recurringseverance and ? 318 ? 359 677 professionalfeesAdjustedEBITDA (loss) $ 1,504 $ (504 ) $ 159 $ (1,604 ) $ (445 ) ^(2)

^ Represents Revenue less the Direct contracting costs and reimbursed(1) 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^ evaluate its performance. Management also uses these measurements to(2) 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, common stock, 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 June 30, 2021 2020 As As Currency Constant reported reported translation currencyRevenue: Asia Pacific $ 28,801 $ 18,833 $ 3,020 $ 21,853 Americas 5,366 2,206 39 2,245 Europe 5,507 3,534 426 3,960 Total $ 39,674 $ 24,573 $ 3,485 $ 28,058 Adjusted net revenue ^ (1)Asia Pacific $ 6,880 $ 4,818 $ 658 $ 5,476 Americas 4,993 1,893 38 1,931 Europe 3,218 2,219 258 2,477 Total $ 15,091 $ 8,930 $ 954 $ 9,884 SG&A:^(2) Asia Pacific $ 5,542 $ 3,878 $ 516 $ 4,394 Americas 5,058 2,790 42 2,832 Europe 2,656 2,127 251 2,378 Corporate 1,427 994 (1 ) 993 Total $ 14,683 $ 9,789 $ 808 $ 10,597 Operating income (loss):Asia Pacific $ 1,338 $ 927 $ 135 $ 1,062 Americas (168 ) (900 ) (5 ) (905 ) Europe 553 85 7 92 Corporate (1,428 ) (995 ) ? (995 ) Total $ 295 $ (883 ) $ 137 $ (746 ) EBITDA (loss): Asia Pacific $ 1,003 $ 1,025 $ 155 $ 1,180 Americas (173 ) (918 ) (2 ) (920 ) Europe 476 300 36 336 Corporate (935 ) (929 ) ? (929 ) Total $ 371 $ (522 ) $ 189 $ (333 )

^ Represents Revenue less the Direct contracting costs and reimbursed(1) 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 Diluted SharesFor The Three Months Ended June Net Income Outstanding Share30, 2021 ^(1)Net loss $ (122 ) 2,906 $ (0.04 ) Non-recurring items (after-tax) 90 2,974 0.03 Compensation expense related tothe Coit acquisition (after 482 2,974 0.16 tax) ^(2)Adjusted net income ^(3) $ 450 2,974 $ 0.15

Adjusted Diluted Per Diluted SharesFor The Three Months Ended June Net Loss Outstanding Share30, 2020Net loss $ (772 ) 2,839 $ (0.27 ) Non-recurring items (after-tax) 399 2,839 0.14 Adjusted net loss ^(3) $ (373 ) 2,839 $ (0.13 )

The weighted average number of shares outstanding used in the computation of diluted net loss per share for the three months ended June 30, 2020 did^ not include potentially outstanding shares of common stock because the(1) 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.