GlobeNewswire Inc | Nov 5, 2021 08:30AM EDT

November 05, 2021

OLD GREENWICH, Conn., Nov. 05, 2021 (GLOBE NEWSWIRE) -- Hudson Global, Inc. (Nasdaq: HSON) ("Hudson Global" or "the Company"), a leading global total talent solutions company, announced today financial results for the third quarter ended September30, 2021.

2021 Third Quarter Summary

-- Revenue of $45.0 million increased 77.1% from the third quarter of 2020 and 71.8% in constant currency. -- Adjusted net revenue of $18.0 million increased 98.8% from the third quarter of 2020 and 92.7% in constant currency. -- Net income increased to $1.5 million, or $0.49 per diluted share, compared to net loss of $1.2 million, or $0.41 per diluted share, for the third quarter of 2020. Adjusted net income per diluted share (non-GAAP measure)* was $0.78 compared to adjusted net loss per diluted share of $0.38 in the third quarter of 2020. -- Adjusted EBITDA (non-GAAP measure)* was $3.0 million compared to adjusted EBITDA loss of $0.7 million in the third quarter of 2020. -- Total cash including restricted cash was $26.5 million at September30, 2021.

"Our business exhibited very strong growth in revenue, adjusted net revenue, and adjusted EBITDA across all three regions in the third quarter of 2021 versus the prior year quarter," said Jeff Eberwein, Chief Executive Officer of Hudson Global. "I continue to be particularly encouraged by the success and collaboration of our sales teams globally as our new business pipeline remains robust and growing. Coit Group, our 2020 acquisition, has significantly outperformed our expectations this year and we are very excited to see what Karani, our new 2021 acquisition, will be able to do as part of Hudson RPO."

* 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 $32.3 million increased 58% and adjusted net revenue of $7.9 million increased 54% in the third quarter of 2021 compared to the same period in 2020. EBITDA was $1.8 million in the third quarter of 2021 compared to EBITDA of $0.5 million in the same period one year ago, and adjusted EBITDA was $2.2 million compared to adjusted EBITDA of $0.9 million in the third quarter of 2020.

Americas

In the third quarter of 2021, Americas revenue of $7.4 million increased 280% and adjusted net revenue of $7.0 million increased 315% from the third 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 increased to $0.6 million in the third quarter of 2021 compared to EBITDA loss of $0.8 million in same period last year. The region recorded adjusted EBITDA of $1.4 million in the third quarter of 2021 compared to adjusted EBITDA loss of $0.8 million in the same period last year.

Europe

Europe revenue in the third quarter of 2021 increased 39% to $5.3 million and adjusted net revenue of $3.1 million increased 22% from the third quarter of 2020. EBITDA increased to $0.1 million in the third quarter of 2021 compared to EBITDA loss of $0.0million in the same period one year ago. Adjusted EBITDA increased to $0.2 million in the third quarter of 2021 compared to adjusted EBITDA of $0.0 million in the third quarter of 2020.

Corporate Costs

In the third quarter of 2021, the Company's corporate costs were $0.9 million, flat versus the prior year quarter. Corporate costs for the third quarters of 2021 and 2020 excluded non-recurring expenses of $0.2 million and $0.1 million, respectively.

Liquidity and Capital Resources

The Company ended the third quarter of 2021 with $26.5 million in cash, including $0.3 million in restricted cash. The Company generated $2.3 million in cash flow from operations during the third quarter of 2021, compared to an outflow of $0.5 million of cash flow from operations in the third quarter of 2020.

Share Repurchase Program

Since the beginning of 2019, the Company has reduced its share count by 15% 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 #: 5243489

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 Nine Months Ended September 30, September 30, 2021 2020 2021 2020Revenue $ 45,010 $ 25,413 $ 119,145 $ 74,117 Operating expenses:Directcontractingcosts and 26,979 16,343 73,305 46,319 reimbursedexpensesSalaries and 14,130 8,098 37,001 24,650 relatedOther selling,general and 2,423 2,049 6,825 5,584 administrativeDepreciation and 117 25 340 73 amortizationTotal operating 43,649 26,515 117,471 76,626 expensesOperating income 1,361 (1,102 ) 1,674 (2,509 ) (loss)Non-operatingincome (expense):Interest income, 8 14 27 133 netOther income 33 96 (57 ) 474 (expense), netNet income(loss) before 1,402 (992 ) 1,644 (1,902 ) income taxes(Benefit from)provision for (92 ) 165 475 538 income taxesNet income $ 1,494 $ (1,157 ) $ 1,169 $ (2,440 ) (loss)Earnings (loss) per share:Basic $ 0.51 $ (0.41 ) $ 0.40 $ (0.84 ) Diluted $ 0.49 $ (0.41 ) $ 0.39 $ (0.84 ) Weighted-averageshares outstanding:Basic 2,931 2,858 2,910 2,920 Diluted 3,022 2,858 2,976 2,920

HUDSON GLOBAL, INC.CONDENSED CONSOLIDATED BALANCE SHEETS(in thousands, except per share amounts)(unaudited) September December 31, 30, 2020 2021ASSETS Current assets: Cash and cash equivalents $ 26,190 $ 25,806 Accounts receivable, less allowance for doubtful 20,970 13,445 accounts of $2 and $10, respectivelyRestricted cash, current 109 152 Prepaid and other 1,317 889 Total current assets 48,586 40,292 Property and equipment, net 159 115 Operating lease right-of-use assets 514 210 Deferred tax assets 1,288 1,037 Restricted cash 225 241 Goodwill 2,088 2,088 Intangible assets, net 1,160 1,400 Other assets 5 3 Total assets $ 54,025 $ 45,386 LIABILITIES AND STOCKHOLDERS? EQUITY Current liabilities: Accounts payable $ 390 $ 576 Accrued expenses and other current liabilities 15,925 9,241 Operating lease obligations, current 344 192 Total current liabilities 16,659 10,009 Income tax payable 467 887 Operating lease obligations 177 22 Other liabilities 192 188 Total liabilities 17,495 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; 3,694 and 4 4 3,672 shares issued; 2,707 and 2,685 sharesoutstanding, respectivelyAdditional paid-in capital 488,620 486,825 Accumulated deficit (436,581 ) (437,750 ) Accumulated other comprehensive (loss) income, (184 ) 526 net of applicable taxTreasury stock, 987 and 987 shares, respectively, (15,329 ) (15,325 ) at costTotal stockholders' equity 36,530 34,280 Total liabilities and stockholders' equity $ 54,025 $ 45,386

HUDSON GLOBAL, INC.SEGMENT ANALYSIS - QUARTER TO DATERECONCILIATION OF ADJUSTED EBITDA(in thousands)(unaudited) For The ThreeMonths Ended Asia Americas Europe Corporate TotalSeptember 30, Pacific2021Revenue, fromexternal $ 32,273 $ 7,423 $ 5,314 $ ? $ 45,010 customersAdjusted netrevenue, from $ 7,925 $ 7,030 $ 3,076 $ ? $ 18,031 externalcustomers^ (1)Net income $ 1,494 Provision from (92 ) income taxesInterest (8 ) income, netDepreciationand 117 amortizationEBITDA (loss) $ 1,809 $ 604 $ 111 $ (1,013 ) 1,511 ^(2)Non-operatingexpense(income),including 319 75 32 (459 ) (33 ) corporateadministrationchargesStock-basedcompensation 102 139 91 367 699 expenseNon-recurringseverance and ? ? ? 231 231 professionalfeesCompensationexpenserelated to the ? 566 ? ? 566 Coitacquisition ^(3)AdjustedEBITDA (loss) $ 2,230 $ 1,384 $ 234 $ (874 ) $ 2,974 ^(2) For The ThreeMonths Ended Asia Americas Europe Corporate TotalSeptember 30, Pacific2020Revenue, fromexternal $ 19,877 $ 1,934 $ 3,602 $ ? $ 25,413 customersAdjusted netrevenue, from $ 5,002 $ 1,678 $ 2,390 $ ? $ 9,070 externalcustomers ^(1)Net loss $ (1,157 ) Provision for 165 income taxesInterest (14 ) income, netDepreciationand 25 amortizationEBITDA (loss) $ 517 $ (789 ) $ (40 ) $ (669 ) (981 ) ^(2)Non-operatingexpense(income),including 415 26 88 (625 ) (96 ) corporateadministrationchargesStock-basedcompensation 11 ? 1 322 334 expenseNon-recurringseverance and ? 1 ? 81 82 professionalfeesAdjustedEBITDA (loss) $ 943 $ (762 ) $ 49 $ (891 ) $ (661 ) ^(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(2) 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. 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 NineMonths Ended Asia Americas Europe Corporate TotalSeptember 30, Pacific2021Revenue, fromexternal $ 86,414 $ 17,350 $ 15,381 $ ? $ 119,145 customersAdjusted netrevenue, from $ 20,563 $ 16,232 $ 9,045 $ ? $ 45,840 externalcustomers^ (1)Net income $ 1,169 Provision from 475 income taxesInterest (27 ) income, netDepreciationand 340 amortizationEBITDA (loss) $ 3,574 $ 153 $ 657 $ (2,427 ) 1,957 ^(2)Non-operatingexpense(income),including 986 234 256 (1,419 ) 57 corporateadministrationchargesStock-basedcompensation 231 395 172 997 1,795 expenseNon-recurringseverance and ? 23 ? 330 353 professionalfeesCompensationexpenserelated to the ? 1,247 ? ? 1,247 Coitacquisition ^(3)AdjustedEBITDA (loss) $ 4,791 $ 2,052 $ 1,085 $ (2,519 ) $ 5,409 ^(2) For The NineMonths Ended Asia Americas Europe Corporate TotalSeptember 30, Pacific2020Revenue, fromexternal $ 55,661 $ 7,328 $ 11,128 $ ? $ 74,117 customersAdjusted netrevenue, from $ 14,331 $ 6,431 $ 7,036 $ ? $ 27,798 externalcustomers ^(1)Net loss $ (2,440 ) Provision for 538 income taxesInterest (133 ) income, netDepreciationand 73 amortizationEBITDA (loss) $ 1,879 $ (1,767 ) $ 323 $ (2,397 ) (1,962 ) ^(2)Non-operatingexpense(income),including 519 186 (120 ) (1,059 ) (474 ) corporateadministrationchargesStock-basedcompensation 49 (4 ) 5 521 571 expenseNon-recurringseverance and ? 319 ? 440 759 professionalfeesAdjustedEBITDA (loss) $ 2,447 $ (1,266 ) $ 208 $ (2,495 ) $ (1,106 ) ^(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(2) 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. 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 revenuegenerated outside of the United States. Accordingly, fluctuations in foreigncurrency exchange rates can affect its results of operations. Constantcurrency information compares financial results between periods as if exchangerates had remained constant period-over-period. The Company defines the term?constant currency? to mean that financial data for a previously reportedperiod are translated into U.S. dollars using the same foreign currencyexchange rates that were used to translate financial data for the currentperiod. Changes in revenue, adjusted net revenue, selling, general andadministrative expenses ("SG&A"), other non-operating income (expense),operating income (loss) and EBITDA (loss) include the effect of changes inforeign currency exchange rates. The Company?s management reviews and analyzesbusiness results in constant currency and believes these results betterrepresent the Company?s underlying business trends. The Company believes thatthese calculations are a useful measure, indicating the actual change inoperations. There are no significant gains or losses on foreign currencytransactions between subsidiaries. Therefore, changes in foreign currencyexchange rates generally impact only reported earnings.

Three Months Ended September 30, 2021 2020 As As Currency Constant reported reported translation currencyRevenue: Asia Pacific $ 32,273 $ 19,877 $ 555 $ 20,432 Americas 7,423 1,934 19 1,953 Europe 5,314 3,602 213 3,815 Total $ 45,010 $ 25,413 $ 787 $ 26,200 Adjusted net revenue ^(1)Asia Pacific $ 7,925 $ 5,002 $ 140 $ 5,142 Americas 7,030 1,678 16 1,694 Europe 3,076 2,390 130 2,520 Total $ 18,031 $ 9,070 $ 286 $ 9,356 SG&A:^(2) Asia Pacific $ 5,795 $ 4,070 $ 108 $ 4,178 Americas 6,350 2,537 23 2,560 Europe 2,934 2,245 121 2,366 Corporate 1,474 1,295 ? 1,295 Total $ 16,553 $ 10,147 $ 252 $ 10,399 Operating income (loss):Asia Pacific $ 2,108 $ 919 $ 29 $ 948 Americas 590 (767 ) (7 ) (774 ) Europe 137 42 4 46 Corporate (1,474 ) (1,296 ) ? (1,296 ) Total $ 1,361 $ (1,102 ) $ 26 $ (1,076 ) EBITDA (loss): Asia Pacific $ 1,809 $ 517 $ 25 $ 542 Americas 604 (789 ) (6 ) (795 ) Europe 111 (40 ) 6 (34 ) Corporate (1,013 ) (669 ) ? (669 ) Total $ 1,511 $ (981 ) $ 25 $ (956 )

(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 September Net Income Outstanding Share30, 2021Net income $ 1,494 3,022 $ 0.49 Non-recurring items (after-tax) 231 3,022 0.08 Compensation expense related to the 625 3,022 0.21 Coit acquisition (after tax) ^(2)Adjusted net income ^(3) $ 2,350 3,022 $ 0.78

Adjusted Diluted Per Shares DilutedFor The Three Months Ended Net Loss Outstanding ShareSeptember 30, 2020 ^(1)Net loss $ (1,157 ) 2,858 $ (0.41 )Non-recurring items (after-tax) 82 2,858 0.03 Adjusted net loss ^(3) $ (1,075 ) 2,858 $ (0.38 )

The weighted average number of shares outstanding used in the computation of diluted net loss per share for the three months ended(1) September 30, 2020 did 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(2) the 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(3) capital 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.