By region, Hudson Asia Pacific led the charge, recording a revenue gain of 35 percent. Meanwhile, Hudson America and Hudson Europe struggled, posting revenue decreases of 14 percent and two percent, respectively.
The New York-based recruiting company posted net income of $10.7 million, or 33 cents per basic and diluted share, compared with net loss of $1.3 million, or four cents per basic and diluted share, for the first quarter of 2017. This reflects income from discontinued operations of $13.6 million related to the sale of its recruitment and talent management businesses.
“Revenue growth in the first quarter was boosted by growth in Asia Pacific, while revenue was impacted by the loss of a global contract in 2017 in the Americas and Europe,” said Jeff Eberwein, CEO. “We are pleased to have completed our recent divestitures and are focused squarely on the recruitment process outsourcing business. After a busy first month in this new role, I look forward to continuing to work closely with our global leaders, developing strong client relationships, driving growth in our RPO business, improving our cost structure and delivering improved performance going forward.”
While the company’s share repurchase program remains in place, no purchases were made during the first quarter. The program has an authorization of up to $10 million of the company’s common stock. Since the inception of this program in the third quarter of 2015 through the end of the first quarter of 2018, the company has purchased 3,639,405 shares for $7.4 million.
Hudson Global recently appointed its chairman Mr. Eberwein as its new CEO. He replaced Stephen A. Nolan. Richard K. Coleman Jr., Hudson’s compensation committee chairman, is now chairman of the board. Mr. Eberwein has more than 20 years of Wall Street experience, and has valuable public company and financial expertise gained through his employment history and directorships. Most recently, he served as CEO of Lone Star Value Management LLC, an investment firm he founded in 2013.
“Since Jeff joined Hudson’s board in 2014, he has set the strategic direction for the board and the company and implemented a series of changes to improve governance and enhance stockholder value,” said Mr. Coleman. “He has the strategic and financial experience and leadership skills to serve as our next CEO. As the company focuses on its global RPO business, we have confidence that Jeff will drive performance and execution at Hudson and ensure we continue Hudson’s legacy of exceptional customer service.”
Sale of Three Business Units
In three transactions, Hudson Global has completed the sale of recruitment and talent management operations in Europe and Asia Pacific. The company intends to focus on its growing global recruitment process outsourcing (RPO) business going forward.
“We are excited to focus on the RPO business going forward and pleased to have reached these agreements for the sale of our recruitment and talent management businesses,” said Mr. Nolan. “This decision is a result of a lengthy and thorough review of our strategic alternatives and our desire to focus on the growing RPO business.”
Value Plus NV, led by Hudson Benelux CEO Ivan De Witte, has purchased Hudson’s recruitment and talent management operations in Belgium, the Netherlands and Luxembourg for $24.7 million in estimated net proceeds. The business was established by Mr. De Witte in 1982 and has a team of 250 people including consultants, researchers, R&D and support staff. Morgan Philips Group SA acquired Hudson’s recruitment and talent management operations in the rest of Europe for $10.5 million in estimated net proceeds.
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The deal covers Hudson Global operations in the U.K., France, Spain and Poland as well as a network of franchise operations in Denmark, Sweden, Norway, Czech Republic, Ukraine and Slovakia. Established in 2013, Morgan Philips Group has offices in the U.S., Europe, Latin America, the Middle East and Asia. It provides executive search, permanent and temporary recruitment, interim management and talent management. The acquisition will create a combined business with a turnover of 130 million euros with 600 employees in 20 countries, according to industry sources.
Recent Shareholder Activity
While it remains to be seen how shareholders will react, Hudson’s stock has seen a wave of activity in recent months. Zacks Investment Research recently raised shares of Hudson Global from a “strong sell” rating to a “hold” rating. In addition, major shareholder Sagard Capital Partners L.P. sold 1.1 million shares of the stock in a recent transaction. The shares were sold at an average price of $1.80, for a total value of $1.98 million. The sale was disclosed in a filing with the Securities & Exchange Commission. Currently, just 12.2 percent of the stock is owned by company insiders.
Several institutional investors have recently added to or reduced their stakes in Hudson. Renaissance Technologies boosted its position in the company by 14.8 percent since the start of the year. Renaissance now owns 248,096 shares, valued at $588,000 after buying an additional 31,996 shares during the period. Geode Capital Management raised its holdings in Hudson Global by 2.3 percent. Geode now owns 95,731 shares, valued at $226,000 after buying an additional 2,119 shares during the period. And Frontier Investment Management Co. increased its position by .8 percent in the second quarter. Frontier now owns 521,901 shares valued at $1,028,000 after buying an additional 4,269 shares during the period. Institutional investors currently own just under 75 percent of the company’s stock.
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