Hudson Global Q1 2024 Earnings Call Transcript

Quartr
Provided by Quartr
May 10, 2024

There are 5 speakers on the call.

Operator

Good morning, and welcome to the Hudson Global Conference Call for the Q1 of 2024. Our call today will be led by Chief Executive Officer, Jeff Eberwein Chief Financial Officer, Matt Diamond and Global CEO of Hudson RPO, Jay Zabkowicz. Please be advised that the statements made during the presentation include forward looking statements under applicable securities laws. Such forward looking statements involve certain risks and uncertainties that may cause actual results to differ materially from those contained in the forward looking statements. These risks are discussed in our Form 8 ks to be filed today and in our other filings made with the Securities and Exchange Commission, including our annual report on Form 10 ks.

Operator

The company disclaims any obligation to update any forward looking statements. During the course of this conference call, references will be made to non GAAP terms such as constant currency, adjusted EBITDA and adjusted earnings per diluted share. Reconciliations for these measures are included in our earnings release and quarterly slides, both posted on our website, hudsonrpo.com. I encourage you to access our earnings materials at this time as they will serve as a helpful reference guide during our call. Please note today's conference is being recorded.

Operator

I will now turn the call over to Jeff Eberwein.

Speaker 1

Thank you, operator, and welcome, everyone. We thank you for your interest in Hudson Global and for joining us today. I'll start by reviewing the Q1 2024 results and Matt Diamond, our CFO, will provide some additional details on our financials. We're also excited to be joined on the call today by Jake Zapowitz, Global CEO of our Hudson RPO business, who joined the team in November and will provide us with an update today. As you can see in our news release issued this morning, our Q1 2024 results were weak due to lower than normal hiring volumes at many of our clients.

Speaker 1

For the Q1 of 2024, we reported revenue of $33,900,000 down 20 percent year over year in constant currency, while our adjusted net revenue was $16,300,000 down 25 percent year over year in constant currency. Our adjusted EBITDA loss for the Q1 was $1,500,000 versus positive adjusted EBITDA of $1,100,000 a year ago. In addition, we reported net loss of $2,900,000 or $0.95 per diluted share versus net income of $400,000 or $0.11 per diluted share in the same period of last year. Q1 2024 adjusted net loss per diluted share was $0.72 compared to net income per diluted share of $0.22 in the Q1 of 2023. Now I'll turn the call over to Matt Diamond, our CFO, to review our financial results by region as well as some additional financial details from the Q1.

Speaker 2

Thank you, Jeff, and good morning, everyone. Revenue and adjusted net revenue for our Americas business both decreased 35% year over year in constant currency. We reported an adjusted EBITDA loss of $700,000 for the quarter versus last year's breakeven adjusted EBITDA.

Speaker 1

Revenue for

Speaker 2

our Asia Pacific business decreased 18%, while adjusted net revenue decreased 20% year over year in constant currency. In Q1, 2024, we reported an adjusted EBITDA loss of $200,000 compared to adjusted EBITDA of $1,700,000 a year ago. Revenue for our Europe business decreased 6% versus the prior year quarter in constant currency and adjusted net revenue decreased 13%. Our Q1 2024 adjusted EBITDA was $300,000 compared to adjusted EBITDA of $500,000 in the Q1 of 2023. Turning to some additional financial details from the Q1.

Speaker 2

We ended the Q1 with $21,000,000 in cash, including $600,000 of restricted cash. Day sales outstanding was 52 days at March 31, 2024 compared to 49 days at December 31, 2023. In connection with our recent acquisitions, including Coit Group in 2020, Kirani in 2021, Hunt and Badge in 2022 and Hudson Singapore in 2023, our balance sheet as of March 31, 2024 reflects $5,700,000 of goodwill and $3,300,000 of net amortizable intangible assets. The company's working capital excluding cash was $10,200,000 compared to $12,000,000 at year end 2023. SG and A expense in the Q1 was $18,000,000 down 13% versus the same period last year in constant currency.

Speaker 2

The company used $1,800,000 in cash flow from operations during the first quarter of 2024 compared to a $5,000,000 cash outflow from operations in the Q1 of 2023. I'll now turn the call over to Jake Zapowitz, Global CEO of Hudson RPO to give some perspective on our RPO business.

Speaker 3

Thank you, Matt, and good morning. Hudson RPO made considerable strides in the Q1 of 2024 in both our service offerings our global market presence to better position ourselves for our long term success. Thus far, we have announced an organic enhancement of our boutique search offering and 2 small but very important UAE based acquisitions of Executive Solutions and STRIVR. These acquisitions give us an immediate presence and book of business in the Middle East and ensure that we continue to find and place the best talent globally for our clients. We also initiated internal reorganization, allowing us greater agility to support our client current clients and future partners and also invested in our global sales organization to support the expansion issues that we've put in place.

Speaker 3

We've expanded our team with the hiring of Jeff Boettinger as the Chief Administrative Officer and Rachel Marcellusi as the Director of Client Solutions for EMEA. Both Jeff and Rachel bring extensive experience and leadership excellence to our team and tremendous value to our organization as we continue to grow our global footprint. We are starting to see the market come back to life in certain sectors such as industrial and life sciences. Our clients are becoming more bullish in their workforce plans and we are at the early stages of seeing incremental growth within our current base. I'm optimistic about our future path forward.

Speaker 3

Our pipeline is continuing to grow with a diverse set of opportunities, both enterprise and project solutions, and it has never been as robust as it is today. Our investment in our go to market strategy is reaching new client groups across the globe. And in 6 months since joining Hudson, our leadership team continues to make necessary changes to become a leaner organization and provide excellent support to our clients. I will now turn the call back over to Jeff to review the outlook for our business and closing

Speaker 2

remarks. Thank you, Jake.

Speaker 1

While first quarter results were weak and some of this weakness has continued into Q2, we are encouraged by the overall trends we're seeing in the RPO market and the feedback we are receiving from our clients. In general, we expect hiring to expand as we expand our footprint through organic and inorganic growth. We believe our stock remains undervalued and during the Q1 we continue to make share repurchases under our $5,000,000 common share repurchase program initiated in August 2023. Under this program to date, we have repurchased almost 21,000 shares in the open market for a total of 400,000. In addition, we repurchased a total of 44 1,000 additional shares in the Q1 of 2024 and appropriately negotiated transaction, leaving a balance of $4,000,000 available for purchase under our 2023 authorization.

Speaker 1

We continue to view share repurchases as an attractive use of capital and we expect to buy more over time. I want all of our highly dedicated employees to be thanked for their flexibility, hard work and dedication to our clients and business in the challenging conditions we've been working through. Operator, can you please open the line for questions?

Operator

We will now begin the question and answer session. Our first question comes from Marc Riddick with Sidoti and Company. Please go ahead.

Speaker 4

Hey, good morning.

Speaker 1

Good morning.

Speaker 2

So I

Speaker 4

was wondering if you could talk a little bit about regional differentiation as far as what you're seeing with the client activity and potential for recovery? And maybe if you're seeing any green shoots that whether it's by industry vertical or any call outs that we should be thinking about as far as folks that are sort

Speaker 2

of willing to sort of pick up activity?

Speaker 1

Yes. Good question, Mark. Jake, can you handle all that one?

Speaker 3

Yes, absolutely. Mark, good morning. Good morning. So I would say geographical footprint. Good morning, sir.

Speaker 3

From a geographical footprint, I think we're seeing signs of life back in the U. S. And also in EMEA holistically. The Middle East is continuing to be strong as in the geographical footprint. There a lot of investments with both regional companies and also multinationals coming into the Middle East.

Speaker 3

I think areas in APAC, you do see some strength coming back online, but it's a little bit slower compared to the other regions I just mentioned. From the industrial from the sector specific, life sciences continues to be stable and strong. I do expect that to continue to be that cornerstone for us as we continue to move forward. And we're also seeing signs of life both in financial and also manufacturing and industrial. Tech is still being a little bit of a lagger right now for us, but we're bullish in tech picking back up in H2 of this next year.

Speaker 3

But from the standpoint of sector, we're seeing some strong signs, again, in life sciences, industrial and manufacturing and financial services.

Speaker 4

Great. That's helpful. And I was wondering if you could talk a little bit about, are you seeing changes as far as pricing environment, pricing dynamic? And maybe, are there any particular areas that we should be thinking about as far as some of the expense accrete for the next couple of quarters or so ahead of future demand recovery?

Speaker 3

Yes, Mark, I think that's another great question. I would from a pricing and cost basis analysis with some of our partners, I would say, yes, a lot of our partners are under cost pressure to look at different solutions on ways to create value for their businesses, but also reduce costs within their businesses. And we're responding and reacting and partnering with a lot of our current clients as well as future clients on unique solutions to bring that to market for them. Is it as robust as it has been in the past around cost pressures? I think that's loosened up a little bit, but it's still top of mind coming out of the pandemic and into 2023.

Speaker 3

Now we're in 2024, of course. So that is there. We're being both aggressive in our go to market strategy and investing in our growth to be able to help support our clients and meet them where they are. And that's why you saw the recent acquisitions of the Middle East, because we have a lot of our partners that would like to drive some solutions and partnerships in those regions.

Speaker 2

Great.

Speaker 4

And that actually leads me right into what my next question was going to be, which is sort of the general sort of acquisition pipeline that you see out there. And maybe you could sort of talk about maybe if you've seen much of a change of availability of targets, valuation, competition for assets, things like that?

Speaker 1

Jeff, would you like to take that? No, you go ahead.

Speaker 3

Okay. Thanks, Mark. So from a standpoint of acquisition targets, part of our growth strategy is M and A and we're going to continue down this route. We're very bullish about the targets that are out there. I could tell you that we are having many opportunities come across our door and in our desk and we're looking at every opportunity holistically.

Speaker 3

I do I am bullish about H2 for us, both from organic growth and from M and A activity. And from M and A activity, I could share with you, there's a lot of partners or there are a lot of opportunities that are out there, both from a geographical standpoint, but also from an industrial and sector expertise that we're looking to bring in to round out our overall service offerings for our clients.

Speaker 1

Mark, I would just add to that that our preference always is organic growth, investing in our team, making some key hires, growing our team And with a couple of these small acquisitions in the Middle East, it was felt more like we just hired the teams than did an acquisition, which is a faster, more effective way to do some of the small ones. So acquisitions are really just meant to fill in gaps in our geographies or maybe some of our sector expertise. And we continue to look. We benefit a lot from being in the market and looking, but our bar is really high to complete 1.

Speaker 4

Got you. Thank you very much.

Operator

That concludes today's question and answer session. I will now turn the call over to Jeff Eberwein for closing remarks.

Speaker 1

Thank you all for joining us today and for your interest in Hudson Global. Feel free to contact us anytime using the contact information found in our press release or on our Investor Relations website. We look forward to next quarter's update call. Have a good day, everybody.

Operator

Thank you for joining the Hudson Global First Quarter Conference Call. Today's call has been recorded and will be available on the Investors section of the website, hudsonerp0.com. You may now disconnect.

Remove Ads
Powered by Quartr
Earnings Conference Call
Hudson Global Q1 2024
00:00 / 00:00
Remove Ads