Q4 2019 Earnings Call
Ladies and gentlemen, please continue to hold your conference call build the can only Charles.
[music].
I'll call. This morning will be led by Chief Executive Officer, Jeff Eberwein, and Chief Financial Officer, Mike Darling.
Please be advised to 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 could differ materially from dose can say I look forward looking statements. These risks are discussed in all form 8-K filed yesterday and the no other filings made with the Securities and Exchange Commission, including <unk> Annual report on.
Okay.
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 adjusted EBITDA.
Adjusted EBITDA reconciliation is included in our earnings release quarterly slides, both posted on our website Hudson RPL Dot Com I encourage you to access on earnings materials at this time as they will serve as a healthy weapons guy doing alcohol.
I'll turn the call over to Jeff Eberwein.
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 fourth quarter 2019 highlights and Matt Diamond our CFO will provide some additional details on our results.
I will then give some perspective.
On our RPL business, including current trends.
Since corporate costs in our share buyback initiatives.
For the fourth quarter of 2019, we reported revenue of 25.4 million up 57% year over year in constant currency.
Revenue less certain direct cost of 11.1 million increased 10% year over year in constant currency and we grew revenue less certain direct costs in all three regions.
We saw particularly strong growth in our businesses in Australia in Continental Europe in Q4.
I see any cost were 10.2 million in the fourth quarter down 2% versus the same period last year in constant currency.
Reported adjusted EBITDA of 900000 compared to an adjusted EBITDA loss of 300000, a year ago.
In addition, we reported net income of 1.5 million or 48 cents per share versus a net loss of 600000 or 19 cents per share in the same period.
Last year [noise].
Importantly, I want to thank all of our highly dedicated employees for their hard work in 2019.
We believe that our fourth quarter 2019 results starting to show the pay off from Oliver hard work to grow the business, while cutting overhead costs.
Well discuss current business trends later in this call.
Turning to performance for the quarter by region, Our Asia Pacific business had very strong year on year growth in revenue up 101%.
While revenue less certain direct costs grew 5% in constant currency.
The year over year revenue growth was driven by the commencement of a large MSP contract and Australia earlier in 2019 as discussed on previous calls.
Growth in revenue less certain direct costs in Q4 was particularly strong in Australia, largely due to higher volumes at existing clients.
A mere had an increase in revenue less certain direct costs of 2% year over year in constant currency with strong performance at several newly won clients being partially offset by lower volumes at some legacy clients.
Adjusted EBITDA of 200000 was flat versus a year ago.
Or a may have business produced another very solid quarter with revenue less certain direct costs up 36% in constant currency.
The growth was driven by strong results in our businesses in Continental Europe.
Adjusted EBITDA of 400000 increase from an adjusted EBITDA loss of 300000 in Q4 last year.
We're very proud of the growth and momentum in our EMEA business.
Lastly, I'd like to extend especial congratulations to Matt Diamond for his promotion to CFO on January Onest I speak for the entire Hudson team when I say that we appreciate his hard work and dedication to our company.
I'll now turn the call over the Mats review some additional financial the details from the fourth quarter.
Thank you Jeff good morning, everyone.
Our fourth quarter tax benefit from continuing operations was 900000, primarily reflecting the release of reserves relating to uncertain tax positions from prior years.
The company generated 2.7 million in cash flow from operations during the fourth quarter.
Day sales outstanding was 42 days at December 2019, well improved from DSL 50 days that we had in December 2018.
We ended the quarter with 31.7 million in cash unrestricted cash as a reminder, in April 2019, we finalized a new credit facility in Australia to support the expected growth in working capital needs as a result of new client wins in that market, but we had nothing drawn on this facility at the end of Q4.
I'll now turn the call back over to Jeff to give some more perspective on our PEO business Hudson's corporate costs and to review current trends in our business.
Thank you, Matt turning to Hudson's corporate costs immediately following the closing of the divestitures at the end of the first quarter 2018 management reviewed the company's corporate costs on a line by line basis and began to rightsize. These cost for the new business model.
We believe corporate costs in 2020 should be approximately 4 million, excluding nonrecurring items for similar to the annualized run rate for corporate costs in Q3 in Q4 2019.
This reduction in corporate costs is not impacted our operating business.
For the full year 2019, the company's corporate costs of 4.1 million exclude 1.1 million of nonrecurring expenses.
For the full year 2018, corporate costs of 5.6 million, excluding nonrecurring expenses of 2.4 million related to severance expense.
Turning to our stock buyback program, we repurchased 5000 shares for six sorry, Yeah 5000 shares for $63000 in the fourth quarter under our 10 million dollar share repurchase program.
Since the inception of this program the third quarter of 2015 through the end.
Of the fourth quarter of 2019 the companies.
Britain 33000 shares for 8.3 million.
To accelerate buyback activity the company completed a tender offer in March of 2019 for 247000 shares of the company's common stock for an aggregate cost of 3.7 million, excluding fees and expenses related to the tender offer.
The company continues to view opportunistic share repurchases as an attractive use of capital and expects to continue its aggressive share repurchase strategy going forward.
As an example on March 27, 2020, the company completed transactions with certain shareholders to repurchase 259000 shares of the company's common stock for an aggregate cost of approximately 2.2 million.
Representing approximately 9% of the company shares outstanding.
As of the into February 2020.
No. These transactions were done at a price below our cash per share as of December 31st 2019.
Following these transactions the company has approximately 2.7 million shares outstanding as of the end of March 2020.
Turning back to our business as discussed as disclosed in our press release issued on March 13th as well as our 2019 form 10-K filed today our business maybe adversely impacted by the recent Kogut 19 outbreak in the accompanying economic downturn this downturn as well as the uncertainty regarding the duration.
And speed and intensity of the outbreak has led to an initial reduction in demand for our services.
Some of her customers have instituted temporary hiring freezes well other customers that are more capable of working remotely have been allowed to operate more or less as usual.
The expected timeline for this reduction in demand for services remains highly uncertain and difficult to predict considering the rapidly evolving landscape.
We are vigilantly monitoring the situation surrounded coding cobot 19, and we'll continue to proactively address the situation as it evolves. We're confident we can continue to take appropriate actions to manage the business in this challenging environment do the flexibility of her workforce and the strength of our balance sheet.
To this end, we're cutting discretionary costs, where we can and are prepared to further cut costs as necessary to protect our business.
That said, we're trying to take a balanced approach the situation, we don't want to overreact, nor under react as we remain focused on our objective of maximizing shareholder value over the long term.
Operator can you. Please open the line for questions.
Thank you Sir as a reminder to ask a question here, we need to press star one on your telephone to withdraw your question press the pound key.
Please standby, while we compile the today roster.
Our first question comes from Josh Vogel from Sidoti. Please go ahead.
Thank you good morning, Jeff and Matt Thanks for taking my questions and a.
Nice way to close out 2019.
My first question I think it'd be helpful to get better understanding around your client.
Demographics and end markets.
Could maybe any be classified as quote essential and what are you doing to help.
Help them navigate through these uncertain times and then maybe on a slight tangent.
What work if any is still getting done through maybe a remote capability. Thank you.
Hi, good good question Josh.
I think there were three in there so first off on our business mix, we have some really high quality clients there.
Mainly household names companies that you at all no fortune 500 type of companies.
That are in general healthy have strong balance sheets and good good credit ratings and our mix is roughly a third health care.
Third financial services and a third other.
And then within financial services, it's a healthy mix between commercial banking investment banking insurance pension funds, even one central bank is in there. So it's a diverse collection of a.
Financial services and so some of those businesses are fairly defensive and will hold up better in the economic downturn and certainly the healthcare businesses and consumer goods are deemed a central and are running.
And producing.
I will say that pretty much globally at least in the markets were in.
Our clients are working from home.
Working remotely.
Where they can and our teams are as well.
And all right. Thank you and yes, sorry.
No I was just going to say I we are.
Engaging a very actively with our clients in our employees and we are a partner Hey, I'm, a talent procurement talent management partner to our clients and.
Episodes lay it like this crises like this.
Do show clients and potential clients the need to have a partner and advisor to help them.
Navigate these these difficult times and so although economic activity is certainly being impacted.
We're hopeful that.
Some good things will will come out of this situation over the long term.
Great and you actually that led in are you answered My next question, which was around.
Understanding that one of the biggest risk fallout from what's going on could maybe be that clients may.
Tempur or lower the amount of employees, they're looking to add over a certain period of time, but on the other side of it there is a tailwind or benefit that could arise from this and that that is the need for a partner are there any other tailwinds or benefits that you could see emerging from all this uncertainty out there.
Sure win.
Clients are surfaid about what they like about the RPL model and working with a partner one of the things they often say is flexibility.
And we provide partners the ability to flex up and down with their hiring needs and a one thing. That's helpful. On that is disease or are these centers of excellence that we have around the world that can help clients a ramp up and ramp down there they're hiring.
Levels.
And so I think companies that are going on.
I think rethink their their business model and think.
We need to have more flexibility.
Because it is a volatile world out there and we need a partner who can help us I think it will strengthen.
Demand for Rpos overtime.
So that could be a good thing to come out of this and we also think.
Based on emerging from prior downturns that.
Some clients will look to add a contingent a contractor type people.
Before they add permanent employees and so our push into the contracting space.
We think will will position us well for that environment.
Thank you for that.
Shifting gears, a little bit we know how strong the balance sheet is especially entering or exiting 2019, as just hoping you could share some insights around the overall liquidity position today.
Yeah sure.
You know we.
Do have some seasonality in our cash flows at least historically it might out in my now night might not always be like this in the future, but Q4 tends to be a strong cash generating quarter.
That's that's been true in recent years and we're certainly true in 2019 Q1 tends to be a weaker cash generating quarter for a variety of reasons. It's a slow period for us. It's also one bonuses are paid and we're a people business.
We do think.
We don't like to give guidance by quarter. We do think this year's first quarter will be much better than.
And last year's first quarter in terms of.
Earnings and cash flow generation.
And we're going to.
Fight really hard to protect our cash generation abilities and also protect our balance sheet said another way, we're going to do everything in our power.
To not have any kind of meaningful.
Cash burn going forward.
Okay.
The you have a little less than 2 million remaining on the current repurchase authorization is it likely that you in the board will increase this at some point.
Short version is yes, we just and a series of privately negotiated transactions last week.
We just negotiated some private transactions too.
Buyback, 9% of our shares and we did it below cash per share so were.
We're pretty excited about that from a value accretion.
Point of view accompany can buy back stock below cash per share it actually increases cash per share in addition to increasing.
Value per share because the share count dropped.
More than the cash dropped.
And having a strong balance sheet is really helpful to our business. We want to continue to have a strong balance sheet, but we think.
At the stock price levels repurchasing shares is most attractive.
Thing we can do so as you mentioned, we still have 1.7 remaining on our authorization and when that is fully used up I would expect.
US to Institute, a new buyback program.
Yes, great makes sense, there and then just from one more please.
Clearly a period of uncertainty.
In times like these suppress valuations, but also favorably position others with available capital like yourself. So, let's let's maybe flash forward a few months I was just wondering if you can discuss your appetite for M&A activity, whether from a geographic or service perspective, and again understanding there's so much uncertainty out there, but do you think that EBITDA multi.
Couples could meaningfully contract two year benefit.
It's certainly possible.
We do look.
We think it's helpful to.
In the market and to look at things and Weve learned.
Quite a bit by by doing that I would say just in general.
The environment, we've been in until very very recently was more of a sellers market than a buyers market.
Sellers had quite lofty expectations at times and so if one is a value oriented the way. We are there can often be a gap between the bid in the ask and perhaps.
That gap.
Closes more due to this environment.
On the same token though.
Visibility is really really low right now it is very hard to predict when things get better how quickly they get better at least for US I mean, we're in a client service business and that we want to be we talked to our clients. All the time, we want to be closely attuned to the needs of arc of our clients.
We don't want to overreact, we don't want to under react.
And it's it's hard looking at any kind of target or M&A possibility.
It's hard to have a lot of confidence and.
The numbers that were looking at and any kind of target because theres, so much uncertainty and the and the environment right now.
Of course that makes sense. Thank you guys for taking my questions and us they tape out there.
Thanks for your questions.
Thank you and I'm next question comes from Adam Waldo Lismore Partners LLC. Please go ahead.
Good day gentlemen, thank you very much for taking my questions.
You guys were having terrific success here as you were exiting 2019, and obviously if they cobot outbreak.
Let's turn on a time, so I wonder if you could give us a sense for a couple of things in terms of the macro environment.
Goldman Sachs is out, let's say a forecast today for U.S. GDP to be down over 30% year over year in the second quarter Global GDP.
For the second quarter to be down mid to high single digits.
That kind of environment with employment levels rising rapidly I guess, a two part question. One is about how much of your revenue is tied to a conditional on employment levels per client.
And then on a related point can you give us a sense for.
How you would expect revenue to develop in the second quarter, if something like Goldman Sachs is global GDP Kleinwort two were to eventually.
Yeah.
So it's.
Really hard to have a lot of confidence and any.
Forecast right now and I applaud.
Plus people for for trying.
To us the Big question is what do clients do for the full year and.
There are very few examples at least right now where clients have radically change their plans for the year.
So in other words, if they hire.
You were than planned in Q1.
The big question hanging out there is do they make that back up in Q3 in Q4 in which case, we need to be ready for that.
Or.
Is there a.
Production and hiring volumes.
For the full year such that.
Companies that tell us they are going to higher say 500 people this year and up only hiring 200, and even our own clients don't know what they're going to do yet.
Even if they had.
Perfect knowledge or even if we had perfect knowledge into what they're thinking.
It could change on a dime and so it's just too early to say and so what we've done in this environment is.
Started to cut costs, where we can discretionary costs.
And we are prepared to do more.
If this evolve into.
A I don't want to say permanent reduction activity or I would say a multi quarter reduction in an activity as opposed to a one quarter reduction in activity.
That's tremendously helpful perspective, I wonder, if we could turn to sort of capital allocation balance sheet for a minute.
You touched on the notion of M&A in this environment and the sort of.
Risks and potential opportunities there.
It seems like and I don't want to put words in your mouth, but seems like in terms of capital allocation prioritization that with their shares trading below.
Cash per share.
It's a pretty high bar to even think about M&A is that fair.
Freds to take out from a from a investment return standpoint management distraction standpoint, and all the rest.
That's a great way to put it it's a high bar, it's not an impossible bar, but it's not low bar. So it's a high bar and it's very attractive to buyback our own stock at current levels and so that is the.
Obvious thing to do and our minds and if a interesting acquisition target.
Came along and we do look at things we'd look at it.
Short term medium term long term, we don't want to buy something just to buy something or buy something just to get bigger it's got a really fit into what we're doing so it's got to add something to the mix that makes us better geography or a skill set that we don't have are made.
Maybe a sector that we'd like to be stronger end.
And it would be much more likely to be on the smaller side than a bigger side. We strongly believe in a walk runs Brent philosophy. When it comes to something like that where you do want to see how it goes and then if it goes well you've earned the right to do another one.
But in this environment with great uncertainty.
Never say never if some phenomenal deal came along but.
Anything compared to buying back stock at current levels.
It's just a tough comparison because buying back stock is so incredibly attractive right now.
Absolutely at risk rate [laughter].
Thank you very much for taking my questions. So good luck in the coming quarters and.
Hopefully things will be very strong for you on the other side of this thank you.
Thank you on next question comes from Harry Solves from South Valley partner. Please go ahead.
Good morning, I want to start by saying congratulations on a strong year end that I really appreciate the discussion of shareholder value really throughout this call.
At least for me, especially in this small cap space, especially with companies that are trading below cash like this.
Theres a lot of manager don't seem to really understand that the way that you all seem to switch.
It's really good to see that here with Hudson.
Thank you.
My first question, how would you describe how Hudson differentiates itself from your competition.
That's a great question and it is incredibly to hard to put it in a nutshell, but when I've tried to do it.
Probably the best.
Just a few phrases pop out one is.
Big company capability, but small company field.
We were rated in the industry survey number one in the industry on customer service and we take a lot of we take a lot of pride in that.
Because of our small size, we're able to be nimble and customize things Taylor thing.
Solutions to our clients and not have a cookie cutter approach.
I'd also say our are real sweet spot is working with companies at higher 500 to 5000 people per year.
And there's other companies peers of ours too.
Work for companies that higher many many more than that companies are higher 10, 15, 20000, a year and almost by definition when you get to the that size range.
[music].
You have to have more of a cookie cutter and more of an automated.
One size fits all approach.
And.
Our sweet spot is more and that a 500 to 5000.
Size and it tends to be.
Professional roles were getting the right talent is mission critical to success. So for example, our clients are heavily in healthcare and even within that its pharma medical devices life Sciences.
Financial services were getting the right talent is just incredibly critical.
Someone that has not to knocked us at all there there is a great business to be and but.
Client that has.
20000 factory workers.
Probably.
It's going to be a better fit for one of our peers and for us.
Okay. Thank you in a similar vein.
How long is your average client relationship.
It's hard to answer with precision.
We have had clients we had one client for almost 20 years are very very first client was a pharmacy well known pharmaceutical company that hired us in.
Australia about 20 years ago, and so that was an incredibly long relationship. We have many clients that have been ones is for 10 years.
Contracts in this business typically are three years.
And I'm very with a very high renewal rate, sometimes the contracts get renewed for three years, sometimes too.
Sometimes there's a one year extension before you do a three year extension. So it's it's different by by client and even by industry.
But in general we have.
Long term relationships, we have long term clients.
We have a very high renewal rate when contracts come up for renewal.
That said, we're out trying to get new clients. All the time, it's often companies that have never used in ARPU before and it's a very long sales cycle, because we have to educate them on the benefits of ARPO and we're asking them to change how theyve done talent procurement.
Talent management.
Versus how they've done it in some cases for decades.
Occasionally we win business from.
Competitors and occasionally we lose business to competitors, but the vast enjoy the time when we get new business. It's.
A first time are what we call first time ARPO somebody's never used arfield before.
Right and almost always it ends up being a long term relationship and we have a really good track record.
Of expanding those relationships once we get a footnote or.
Alright, thank you.
So you discussed that there has been some initial reduction.
In client business due to the opened 19 issue.
How large has this been.
Relative to your total revenues in the past on a percentage basis.
Well, let me.
Give you a few a few anecdotes that might be helpful and a press release a few weeks ago. We did mentioned China that was the first place.
That we saw weakness, which makes sense, China, China is less than 5% of our global revenue.
And what we saw was very well, we always knew Q1 would be on the weaker side. It always is because the Chinese new year, and it's just a weird coincidence that the virus started to hit that country around.
Chinese new year, so the whole country was on holiday in late January the first thing that government did was extend the national holiday.
And then when people came back from holiday everybody.
As pretty much order to work from home.
Right.
We saw a huge reduction and.
And activity defined as hiring volumes it certainly didnt go to zero.
But it all but it was a significant decline and that lasted about six weeks and then a fair rapidly returning to normal in China, it's not quite back to normal.
A few weeks ago might have been 70% back to normal now it might be 90, 95% back to normal.
Men and we're hoping.
Similar pattern and other countries that started to be impacted.
Later, so if you just think about that.
Very significant.
Decline in activity for six weeks or so and then returned to normal.
And the critical question that hasn't.
Been answered yet and we won't know for several months is that lower hiring volume in that six week period is that made up for later in the year or is it never made up for.
We just don't know that yet.
Sure.
Alright, well.
Well I appreciate those insights there.
How much in costs could be caught in emergency situation I know you've discussed mature.
We're willing to do what it takes to make sure that were not just burning through cash because obviously, especially with the opportunity to buy back stock below cash.
You know thats a very.
Vital piece of our balance sheet and our strength this year.
So yeah, how much could you you know assuming a scoping 19.
Lets say it goes on for another year, how much it in your cost could you cut that.
Well we.
We have the.
Fortune that we don't really have any assets in our business.
It's all it's all people and widened.
So we could talk about how much of our cost structures fixed or variable, but in some ways is pretty much all variable because it's it's people.
What we've done thus far is what I would say is a.
Discretionary cost reduction and that.
Obviously, theres no travel and entertainment right now.
We have reduced our.
Activity levels and certain.
And in certain places, it's very much a client by client basis, but some people are taking time off taking.
Occasion, there some furloughs and a few playbook.
And we can do more of that if this.
Turns into a year long downturn instead of a quick one quarter.
And so if we have.
What we have done in prior downturns.
We have done some reductions of our.
Half levels.
But we've also done things to preserve that capability for when activity returns we've done.
Four day work weeks or even three day work weeks.
And and we can do things like that again.
On a client by client basis.
It's all about maximizing value over the long term and so we don't want to overreact, we don't want to under react said another way.
We don't want to cut too little.
Cut cost too little because that could lead to losses and cash burn, but on the same token if we cut too much and client activity demand rebound and we're not there to service our clients that's very bad for a long term shareholder value.
Right, yes, but could you give any hard figures in regard to that.
It's really hard to do that at this time.
But we will do everything in our power to.
Not have losses and cash burn over any meaningful period of time.
I appreciate that and I have one last question for you or are you looking at taking advantage of any government programs.
The available to you to strengthen the business yes.
Tell me a bit about that.
You know weve.
It's so rapidly evolving.
We've actually created an internal team task force to monitor all of the programs being offered all around the world. Just so we can keep track of them and take advantage of them and the and these are anecdotes.
But China for example is paying for two months of rent.
For people that experienced the disruption so we're taking advantage of that.
The UK recently passed and measure where employers can.
For though employees.
And the government will reimburse wages up to 80% with a cat.
And so we have taken advantage of that and in one location.
And it's a really good way too.
Preserve workforce capability, it's a good way to keep our team safe so they can be at home and and isolate.
But at the same time, they still have a job they still have benefits.
And then it's in the government's interest to not have massive layoffs and you're starting to see programs to help company get through this difficult period and so we are we have an internal task force, we're staying on top of it and we will.
Partner with with governments on these programs.
Wherever and whenever they become available.
Sure what about on ones from the U.S. governments.
We're still analyzing those.
Were were about 25% of our businesses in the Americas, and obviously, who use the biggest country in that but we also have Canada and some activity in Latin America.
So we're studying it.
But it just got finalize last week.
Right and I imagine, there's more to come up as well yes.
All right well in any case I appreciate you taking my questions today.
Yes.
Okay.
Thank you as a reminder to ask a question you would need to press star one on your telephone. So what are your question press the pound cake.
I'm sure. Our next question comes from Mark from Investor. Please go ahead.
Hi, Thanks for taking the question.
Just on that last question.
How many reporting you have in heavy threats right now and globally.
Sure.
Probably a good way to answer that and this is going to be kind of rough terms is that our business is 50% in Asia Pac, 25%, UK Europe, 25%, the Americas and we have about 400 employees.
Globally so.
The math across.
Roughly where it might be a little bit less than that the U.S., but the math is going to be roughly right there.
Okay, that's great.
Jeremy.
Yes.
Okay great.
So that would make you a small I believe that would make you a small business under the U.S stimulus plan is that right.
We are studying that we think so.
Certainly true if the definition is just our U.S. employees.
I think it's 500 total isn't it the iwear.
You're right. We are we are under 500 total.
So even if one looks at it globally.
We're under 500 total.
Okay. That's a great so that would be new good grants from the U.S. government eventually assuming that you use it for.
For a job.
Right, that's number actually potentially we're studying that.
Okay or there's some is.
What's the is there a particular issue with that.
Well there there's different programs that we've seen.
Some from the SPJ some from other organizations and.
If you participate in one program you might not be able to participate in others and a lot of these were just passed last week. So we are studying it and.
We'll look into it and we're not going to let any.
Opportunities.
Passes by.
Im sure you won't Thats, great Alright, that's terrific.
And then on.
The you answered a lot of my questions are on the.
So on the.
Cash flow is there any willingness of any of your customers too.
Or any of them discussing helping you in any way or that at all.
There are worried about their own cash flow or would any of them.
Have you had a discussions about spreading out your cash flow someone's or is that not helpful. Q.
Well the the answer to that is yes.
I think so we talked to our clients all the time.
And our clients tend to be smart and.
Long term oriented and and by Smart I mean there.
They're not penny wise in pound foolish, so if the discussion discussion.
Is often about what their need is and what should our team size b to meet their need and they are there have been times in the past and I think there will be times now and also in the future where.
Clients request X y and Z and they know it's a partnership and they know that Theyre requesting X Y and Z they'll have to pay for X Y and Z and that's the way a partnership works and it's got to be fair and it's got to work for all sides.
Because we haven't seen any example of.
Clients, putting pressure on us or trying to take advantage of the situation or.
Cut pricing or get out of contracts or anything like that our clients are long term oriented partnership oriented.
They are big companies with healthy balance sheets, and there that are more trying to figure out how to navigate this crisis and looking for help and navigating the crisis.
That's terrific.
And.
So then on the the last thing is on the buybacks that you'd mentioned I know that you're limited by your annual wells. What you could do you just bought back.
Wherever it was close to 9% of your stock.
Is there.
Is there.
I know, it's a difficult formula but last year you did a similar amount in the first quarter and then you kind of.
Good only a small amount the rest three year I believe unless you can correct me if thats falls.
Is there would you imagine that that would probably tie your hands in a similar way this year or.
Or.
Has something changed in the shareholder large large hold or composition or something that changes the math that lets you do significantly more this year.
Yeah, you're you're right that.
This gets very complicated very quickly the NFL calculations are very complicated and.
Unfortunately, we have a thinly traded stock and so when so we have done two things historically, one is had a ongoing tenbfive program that buys a little bit and the market and there are a lot of complicated rules around that in terms of how much volume we can buy.
Times of day, we can trade and not trade it can only be on.
An uptick I think so.
There's just a lot of days that.
Even if we're in the market everyday there is lot of days that we just don't buyback very much stock because our stock instantly traded and then from time to time, we have done bigger things like last year, we did the tender offer.
This time around we had the opportunity to do.
A couple of privately negotiated with trans transactions with.
Stockholders that we're wanting to reallocate and their portfolios and wanted to liquidity and wanted to wanted to reallocate.
So we've done.
All of those things in the past and will continue.
To to to do them in the future I think.
Okay. So.
Is there.
I guess I'm not familiar with the.
All the rules.
Complicated but for me.
But.
Two.
The.
Besides the little by Little program, you got going.
Is there a similar limited on what you couldn't do from time to time with somebody calls you up so I want to sell some shares.
Or does that somehow free your hands under the rules and you can just by whatever they offer.
That's not yet that's not an easy one to answer either it's it's easy or if the window is open.
To do a trade with someone if the window is not open and obviously it wasn't open last week. When we did these trades they have to sign a.
Somewhat link the.
Legal agreement that says.
They acknowledge that the company has material non public information they don't.
So there are acknowledging the information asymmetry and they want to do the trade anyway. So you can imagine that.
From the time the discussion started we drafted the document Senate to them legal review did finally got it signed off.
Theres just a lot it.
Stockholders out there that just wouldn't want to.
Messed with that or wouldn't want to sign a document like that we found two significant stockholders, who were willing to trade and those are circumstances, and we're willing to sign that document and so that enable us to do these privately negotiated.
Transactions.
Okay, that's great, but it is still within about the same amount that you bought last year as a percentage.
So my question is whether it once the windows open.
Couldn't can you go meaningfully higher under the I know well rules or does that.
Are there other rules under the annual wells thing that limit your ability to do private transactions too.
What are the depending on whether as a one.
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5% shareholder or not that students.
Yeah, the 5%.
Shareholder.
Thing does does come into play because we have to watch.
The shareholdings of those who are above 5% and then every time, we shrink the share count someone who is above five actually.
It goes up if they're not participating in the buyback.
So that that gets complicated, but it's also true that.
Most tax attorneys.
I would advise clients the if they haven't in a well to be careful about.
Exceeding 10% and any one year, so not a hard and fast rule, but it is.
Guidance that is given.
So there's circumstances, where we would stay below that and then there is other circumstances, where we would.
Go above it despite a potential risk.
Okay. Thank you very much.
That's all I have thanks, thanks, very much through earlier.
Today sure. Thanks for the question.
Thank you. This concludes today's question and answer session I will now turn the call over to Jeff Eberwein for closing remarks.
Thank you all again for joining us today and your interest in Hudson Global we look forward to next quarter's update call. Thank you.
Thank you.
Thank you for joining the Hudson Global fourth quarter Conference call. Today's call has been recorded and will be available on the investor section of our website Hudson RP old Dotcom you may now disconnect.
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