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Hudson Highland Group Reports 2010 Fourth Quarter and Full Year Financial Results

Hudson Highland Group Reports 2010 Fourth Quarter and Full Year Financial Results
Hudson Highland Group, Inc. has announced its financial results for the fourth quarter and full year ended December 31, 2010.
Hudson delivered net income of $1.2 million, or $0.04 per basic and diluted share, driven by strong revenue and gross margin growth, in the fourth quarter of 2010. The company achieved $219.1 million in revenue and $3.6 million in EBITDA during that period. These results were driven by 40% revenue growth in permanent recruitment and 17% revenue growth in temporary contracting, compared with the prior year quarter. Sequentially, revenue grew 9% and cash flow from operations in the quarter was $5.7 million.
2010 Fourth Quarter Summary
-- Revenue of $219.1 million, an increase of 20.0% over the fourth quarter of 2009, and an increase of 9.3% from the third quarter of 2010-- Gross margin of $82.9 million, or 37.9% of revenue, up 19.5% from the same period last year, and an increase of 10.6% from the third quarter of 2010-- EBITDA* of $3.6 million, or 1.6% of revenue, improved from an EBITDA loss of $5.0 million for the fourth quarter of 2009, which included $5.9 million of restructuring charges -- Net income of $1.2 million, or $0.04 per basic and diluted share, compared with net loss of $10.4 million, or $0.40 per basic and diluted share, for the fourth quarter of 2009
2010 Full Year Summary
-- Revenue of $794.5 million, an increase of 15.0% from $691.1 million for 2009 -- Gross margin of $298.6 million, or 37.6% of revenue, up 14.6% from $260.5 million, or 37.7% of revenue for prior year -- EBITDA* of $6.5 million, or 0.8% of revenue, up from an EBITDA loss of $35.5 million for 2009 -- Net loss of $4.7 million, or $0.16 per basic and diluted share, compared with net loss of $40.6 million, or $1.56 per basic and diluted share, for 2009
* EBITDA is defined in the segment tables at the end of this release and includes other non-operating income.
"Hudson delivered its fourth consecutive quarter of increasing year-over-year revenue and gross margin growth during the fourth quarter, led by continued strong growth in permanent recruitment and a double-digit increase in temporary contracting," said Jon Chait, Hudson Highland Group's chairman and chief executive officer. "Sequential results were also outstanding, indicating a strong trend going into 2011."
"The company achieved $5.7 million of positive cash flow from operations in the fourth quarter and a greatly improved net cash position," said Mary Jane Raymond, the company's executive vice president and chief financial officer. "Despite a still-challenging macroeconomic environment, the company delivered strengthening financial results in 2010."
Regional Results
Regional results for the fourth quarter in constant currency were:
-- Europe gross margin was up 20%, led by 30% growth in the U.K., compared with fourth quarter 2009. Sequentially, Europe gross margin was up 12% compared with third quarter 2010.-- Australia/New Zealand (ANZ) gross margin was up 23% compared with fourth quarter 2009, led by an increase of 53% in permanent recruitment. Sequentially, ANZ gross margin was seasonally down 4% compared with third quarter 2010.-- Asia gross margin was up 26% compared with fourth quarter 2009 and up 6% compared with third quarter 2010.-- North America gross margin was up 5% compared with fourth quarter 2009 and up 16% compared with third quarter 2010, delivering positive EBITDA for the second consecutive quarter.
Liquidity and Capital Resources
The company ended the fourth quarter of 2010 with $73.4 million in liquidity, composed of $29.5 million in cash and $43.9 million in availability under its credit facilities. The company generated $5.7 million in cash flow from operations during the quarter and reduced its outstanding borrowings by $12.5 million from $13.9 million at the end of the third quarter to $1.3 million at the end of the fourth quarter. Availability under the U.S., U.K., and Australian facilities at the end of the fourth quarter totaled $36.7 million, while availability under other local country facilities totaled $7.1 million.
Guidance
The company currently expects first quarter 2011 revenue of $200 - $210 million and EBITDA of $1 - $4 million at prevailing exchange rates. This compares with revenue of $180.1 million and an EBITDA loss of $1.4 million in the first quarter of 2010.

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