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Hudson Highland Group Reports 2011 First Quarter Financial Results

Hudson Highland Group Reports 2011 First Quarter Financial Results

Hudson Highland Group, Inc. has announced its financial results for the first quarter ended March 31, 2011.

2011 First Quarter Summary
-- Revenue of $218.5 million, an increase of 21.3 percent over the first
quarter of 2010, and approximately flat to the fourth quarter of 2010
-- Permanent recruitment continued to deliver the strongest service line
revenue growth, up 31.8 percent from the prior year quarter
-- Temporary contracting revenue increased 20.8 percent in the first
quarter, representing the fifth consecutive quarter of accelerating
growth over the prior year period
-- Gross margin of $81.2 million, or 37.2 percent of revenue, up 22.2
percent from the same period last year, and a decrease of 2.1 percent
from the fourth quarter of 2010
-- All regions contributed to strong top-line growth, reporting
double-digit revenue and gross margin increases in the first quarter
compared with the prior year period
-- EBITDA* of $2.5 million, or 1.2 percent of revenue, improved from an
EBITDA loss of $1.4 million for the first quarter of 2010
-- Net loss of $0.0 million, or $0.00 per basic and diluted share, compared
with net loss of $4.2 million, or $0.16 per basic and diluted share, in
the first quarter of 2010

* EBITDA is defined in the segment tables at the end of this release and includes other non-operating income.
"We are encouraged that the demand for our services continues to grow," said Mary Jane Raymond, Hudson Highland Group's interim chief executive officer and chief financial officer. "This quarter was Hudson's fifth consecutive quarter of increased revenue growth over prior year. Even as some clients continue to face economic uncertainty, they are increasingly relying on Hudson to select their strategic hires."

Regional Results
Regional results for the first quarter in constant currency were:
-- Europe gross margin was up 18 percent, led by 21 percent growth in the U.K. and 16 percent growth in continental Europe, compared with first quarter 2010
-- Australia/New Zealand gross margin was up 22 percent compared with the prior year period, led by 44 percent growth in permanent recruitment
-- Asia gross margin was up 9 percent compared with first quarter 2010
-- Americas gross margin was up 11 percent compared with the prior year period, driven by 9 percent growth in temporary contracting and 27 percent growth in permanent recruitment

Liquidity and Capital Resources
The company ended the first quarter of 2011 with $71.0 million in liquidity, composed of $28.3 million in cash and $42.7 million in availability under its credit facilities. The company used $10.3 million in cash flow from operations during the quarter and increased its outstanding borrowings from $1.3 million at the end of the fourth quarter to $11.2 million at the end of the first quarter. Cash usage in the first quarter was driven by revenue more weighted to the end of the quarter and payment of annual bonuses. Days Sales Outstanding (DSO) rose to 55 days from 49 at the end of 2010 and 53 a year ago.

Guidance
The company currently expects second quarter 2011 revenue of $230 - $240 million and EBITDA of $5 - $8 million at prevailing exchange rates. This compares with revenue of $195.0 million and EBITDA of $3.1 million in the second quarter of 2010.

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