Significant improvements in gross margin for Hudson Global as it publishes its Q1 results
2014 First Quarter Summary
? Revenue of $161.9 million, down 2.3 percent from the first quarter of 2013, or 1.4 percent in constant currency. Sequentially, from the fourth quarter of 2013 to the first quarter of 2014 revenue increased 1.5 percent or 1.4 percent in constant currency, as compared with a decline of 10.1 percent for the same period in 2013.
? Gross margin of $57.5 million, an increase of 1.5 percent from the first quarter of 2013, or 2.3 percent in constant currency. Sequentially, gross margin improved 1.1 percent in reported and constant currency, as compared with a decrease of 15.3 percent for the same period in 2013.
? Adjusted EBITDA* loss of $2.1 million, as compared with a loss of $4.9 million in the same period last year. Sequentially, adjusted EBITDA loss increased $0.1 million or 4.6 percent and 12.5 percent in constant currency.
? Restructuring charges of $0.1 million in the first quarter of 2014, compared with $2.0 million in the first quarter of 2013 and $2.8 million in the fourth quarter of 2013.
? Net loss of $4.5 million, or $0.14 per basic and diluted share, as compared with net loss of $8.2 million, or $0.25 per basic and diluted share in the same period last year. Sequentially, net loss was reduced by 59.8 percent.
* Adjusted EBITDA is defined in the segment tables at the end of this release.
"The progress we are making in our transformation was even more evident in the first quarter as we again delivered sequential improvements and achieved year-over-year quarterly gross margin growth," said Manolo Marquez, chairman and chief executive officer at Hudson. "As we execute our plans we will continue to take further actions to sharpen our focus, invest in our core and build strong momentum in our performance."
Stephen Nolan, chief financial officer at Hudson said, "We continue to be focused on disciplined execution and investing in our fee earner headcount while aggressively seeking efficiencies and cost savings in our expense base to achieve our goal of positive quarterly adjusted EBITDA during 2014 and deliver sustained growth, profitability and value creation."
To accelerate the implementation of the company's strategy, we have engaged in the following initiatives:
? Investing in the core businesses and practices that present the greatest potential for profitable growth
? Further improve the company's cost structure and efficiency of its support functions and infrastructure
? Build and differentiate our brand through our unique talent solutions offerings
On April 29, 2014, the company's board of directors authorized management to explore opportunities to divest the Legal eDiscovery business. The purpose of this action is to refocus the company's core businesses that are expected to maximize stockholder value. On April 30, 2014, the company's management, under the aforementioned authorization by its board of directors, engaged Duff & Phelps to assist the company in exploring a possible sale.
In addition, the company has engaged AlixPartners, LLP, a premier consulting firm in the areas of organization design and operational improvement, to assist management in a comprehensive assessment of the company's organization and operations. The engagement with AlixPartners is focused on identifying opportunities to better align the organization model to support future growth, and to identify actions that can improve operating efficiencies and effectiveness.
Americas' gross margin decreased 18 percent in the first quarter as compared with the same period in 2013. RPO continued to deliver strong results and, with 53 percent gross margin growth in the first quarter, has become the largest practice in theAmericas on a gross margin basis. This growth was offset by declines in Legal eDiscovery and IT of 39 percent and 10 percent, respectively. Sequential gross margin in the Americas decreased 14 percent, as compared with a decrease of 13 percent for the same period in 2013. The sequential decline was driven primarily by gross margin reductions in Legal eDiscovery and IT of 28 percent and 7 percent, respectively. This was partially offset by 18 percent sequential gross margin growth in RPO. Adjusted EBITDA loss was $0.6 million for the first quarter, or 2.4 percent of revenue, compared with a $0.4 million loss, or 1.0 percent of revenue for the same quarter a year ago and adjusted EBITDA of $1.1 million in the fourth quarter of 2013.
Asia Pacific's gross margin increased 6 percent in constant currency in the first quarter as compared with the same period in 2013. Growth in the region was driven by strength in talent management, RPO and permanent recruitment in China. Talent management delivered 35 percent growth in Asia Pacific, led by large assessment and career transition projects in Australia. RPO experienced increasing demand from both new and existing clients, up 14 percent year-over-year in constant currency. Sequential gross margin also increased 6 percent in the region, as compared with a decrease of 18 percent for the same period in 2013. Sequential growth was driven by strength in Australia recruitment, as well as 28 percent growth in talent management in Australia and 24 percent growth in RPO. The region delivered adjusted EBITDA of $0.1 million, or 0.2 percent of revenue, as compared with adjusted EBITDA loss of $0.4 million, or 0.8 percent of revenue in the first quarter of 2013 and adjusted EBITDA loss of $1.3 million in the fourth quarter of 2013.
Europe's gross margin increased 5 percent in constant currency compared with the first quarter of 2013. Against prior year, gross margin growth was driven primarily by permanent recruitment in the UK and France, growing 15 percent and 17 percent in constant currency, respectively. Talent management also grew in the quarter, with gross margin up 6 percent compared with prior year, led by Belgium and the UK. Sequentially, gross margin increased 2 percent in constant currency as compared with a 13 percent sequential decline for the same period a year ago. Sequential gross margin growth was driven by 18 percent temporary contracting growth in the UK and 7 percent permanent recruitment growth in Continental Europe, led by increases inFrance and Belgium. Europe delivered adjusted EBITDA of $2.4 million, or 3.0 percent of revenue, as compared with adjusted EBITDA loss of $0.1 million, or 0.2 percent of revenue for the quarter a year ago, and positive adjusted EBITDA of $1.1 million in the fourth quarter of 2013.