March 13, 2019 – Hudson Global Inc. / (NASDAQ:HSON) posted 2018 full-year revenues of $66.9 million, a 12.3 percent from the prior year. The Old Greenwich, Conn-based recruiting firm posted net income of $7.9 million, or 24 cents per basic and diluted share, compared to net loss of $2.9 million, or nine cents per basic and diluted share, in 2017.
During the fourth quarter, Hudson posted revenue of $16.6 million, an 8.7 percent gain from its previous fourth quarter. The company also recorded a loss of $0.6 million, or two cents per basic and diluted share, compared with net loss of $2 million, or six cents per basic and diluted share, last year.
The firm delivered solid revenue and gross profit growth in the fourth quarter in constant currency, particularly in the Asia Pacific region, said Jeff Eberwein, chief executive officer at Hudson Global. “In addition, we are pleased to report positive cash flow from operations in the fourth quarter,” he said. “For 2018, we delivered revenue and gross profit growth while also focusing on carving out the RPO business from legacy entities and right-sizing the new company by reducing corporate costs. I am proud of how hard the team has worked over the past year to build the systems and infrastructure necessary for a successful separation from the legacy businesses.”
As previously announced, Hudson sold all of its recruitment agency and talent management businesses in three separate transactions that closed at the end of March 2018. These transactions were all structured as equity sales, meaning all the assets and liabilities of the legacy entities were assumed by the buyers, except for the RPO business which remained with the company but was largely embedded inside the businesses being sold. Since that time, the company has had a strong internal focus on creating new legal entities and obtaining new business licenses in each country in which it operates, creating an accounting and finance system from scratch, as well as creating a new IT system and website.
Now that the platform for the operating business has been built and corporate overhead costs have been right sized, the company has begun to look at bolt-on acquisition opportunities in addition to focusing intensively on organic growth, said the firm. As highlighted in the Investor Presentation issued in December, Hudson Global will focus on acquisition targets that are profitable, complementary to its RPO business, and accretive to stockholder value.
This year, Hudson RPO said it expects to grow gross profit more than 10 percent vs. 2018, and that adjusted EBITDA before corporate costs should grow faster than this rate. Such growth, along with the decline in corporate costs, should enable the company to generate positive adjusted EBITDA in 2019, said the firm. Longer term, Hudson RPO said it intends to grow its RPO business in line with industry growth, or faster, and for adjusted EBITDA margins to approach 20 percent of gross profit at the RPO division level, while holding corporate costs flat. “Successfully achieving this goal should allow corporate-level adjusted EBITDA margins as a percentage of gross profit to approach the mid-teens range,” the company said.
“RPO is our core business because it offers a compelling value proposition for our clients, as well as strong growth potential for our stockholders,” said Jeff Eberwein, CEO. “The size of the current global RPO market is an estimated $5 billion and is projected to grow 10 to 15 percent annually going forward.”
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“In our RPO business, we focus on partnering with our clients to design recruitment and talent solutions to support their strategic growth objectives, and we are delighted to introduce our new operating brand name, logo and website to showcase our vision of powering client success through our total talent solutions,” he said.
Hudson Global recently added Mimi Drake and Connia Nelson as new independent directors to its board of directors. Ms. Drake is the co-CEO of Permit Capital Advisors, an investment advisory firm based in suburban Philadelphia. Ms. Nelson is the SVP and CHRO for LifeWay,
“Last year we began a formal process to identify potential new directors to enhance our board,” said Richard Coleman, Hudson Global’s chairman of the board. “After conducting a thorough search, we are excited to announce the addition of Ms. Drake and Ms. Nelson to the Hudson Global board. Their extensive management, leadership, and human resources experience make them exceptionally qualified to serve as independent directors.”
“Ms. Drake’s board experience coupled with her passion for improving workplace diversity and inclusion will make a significant and immediate contribution to the company,” Mr. Coleman said. “Ms. Nelson’s human resources background and talent management expertise lend themselves particularly well to Hudson Global’s business and she brings a strong client perspective to our board. Both appointments reflect our strong belief that the makeup of our board should reflect the values, experiences, and diversity of thought of our employees and clients.”
Upon the release of its numbers, Hudson Global shares closed at $1.51, up 0.67 percent and 23.77 percent above the 52 week low of $1.22 set on January 24, 2019. Based on its current share price the company has a market value of $48.39 million.
Contributed by Scott A. Scanlon, Editor-in-Chief; Dale M. Zupsansky, Managing Editor; Stephen Sawicki, Managing Editor; and Andrew W. Mitchell, Managing Editor – Hunt Scanlon Media