Q1 2022 Hudson Global Inc Earnings Call
Today's conference is scheduled to begin shortly please continue to standby and thank you for your patience.
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Yeah.
Good afternoon and welcome.
Going to the Hudson Global conference call for the first quarter of 2022.
I'll call. This afternoon will be led by Chief Executive Officer, Jeff Eberwein, and Chief Financial Officer, Matt Diamond.
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Statements made during the presentation.
Statements.
Securities laws.
Such forward looking statements involve certain risks and uncertainties that may cause actual results to differ materially.
And in the forward looking statement.
These risks are discussed in our form 8-K filed today and other filings made with the Securities and Exchange Commission, including our annual report on Form 10-K.
The company disclaims any obligation to update any forward looking statements.
The close of this conference call references will be made to non-GAAP terms, such as constant currency adjusted EBITDA and adjusted earnings per diluted share you can tiliaceous for these measures.
In our earnings release and quarterly slides, both posted on our web site Hudson.
Dot com.
How did your taxes.
Earnings materials at this time.
As a helpful reference guide.
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I will now turn the call over to Jeff Eberwein.
Sir you may begin.
Thank you operator and welcome everyone.
Thank you for your interest in Hudson Global and for joining us today.
I'll start by reviewing the first quarter 2022 highlights and Matt Diamond, our CFO , who will provide some additional details on our financial results.
I'll, then give an update on current business conditions.
For the first quarter of 2022, we reported revenue of $51 9 million up 58% year over year in constant currency.
Adjusted net revenue was $25 6 million, an increase of 107% year over year in constant currency.
And I would note that our organic adjusted revenue growth was 86% in constant currency.
SG&A costs were $20 3 million in the first quarter up 74% versus the same period last year in constant currency.
And we reported adjusted EBITDA of $5 2 million versus 800000, a year ago.
In addition, we reported net income of $3 million or <unk> 97 per diluted share versus a net loss of 200000 or seven cents per diluted share in the same period last year.
We reported adjusted net income per diluted share of $1 23 in first quarter 2022 versus seven cents.
Sure.
I'll now 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 first quarter.
Thank you, Jeff and good morning, everyone.
Our Americas business grew revenue and adjusted net revenue 200, 220% in 226% in constant currency, respectively with approximately 75% of this growth attributable to organic growth and the remainder coming from the acquisition of Corona in the fourth quarter of 2021.
Adjusted EBITDA of $3 $5 million increased versus last year's adjusted EBITDA of $2 million.
Our Asia Pacific business grew revenues, 30% in constant currency and adjusted net revenue was 50%.
Adjusted EBITDA of $2 4 million increase from adjusted EBITDA of $1 1 million a year ago.
Our EMEA business grew revenue, 40% and adjusted net revenue, 37% in constant currency adjusted.
Adjusted EBITDA of $3 million in Q1, 2022 increased slightly compared to adjusted EBITDA of <unk> 2 million in Q1 of last year.
Lastly, we believe it is important to highlight that adjusted net revenue again grew at a faster rate than SG&A across each of our three regions in Q1.
This operational leverage we are seeing is critical to achieving our goal of growing adjusted EBITDA before corporate costs as a percentage of adjusted net revenue to the 20% level over the long term.
Turning to some additional financial details from the first quarter.
We ended Q1 with $19 5 million in cash and restricted cash.
Days sales outstanding was 47 days at March 2022.
From DSO of 41 days at March 2021.
In connection with the acquisition of Cui group in the fourth quarter of 2020 and karate in the fourth quarter of 2021, our balance sheet as of March 31, 2022 reflects $4 2 million of goodwill and $5 2 million of net amortized <unk> intangible assets.
The company's working capital ex cash increased to $13 3 million in the first quarter of 2022 from $7 8 million at the end of 2021.
As a reminder, in April 2019 annualized a 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 Q1.
The company had a cash outflow from operations of $2 4 million during the first quarter.
I'll now turn the call back over to Jeff to give some more perspective on our business and to review current trends in our business.
Thank you Matt as you can see in Q1 2022, we continue to see strong activity levels as our teams in each region.
Capitalized on the strong demand for our services.
Our business exhibited very strong growth in revenue adjusted net revenue and adjusted EBITDA across all three regions in the first quarter of 2022 versus the prior year quarter.
Our sales activity levels and pipelines remain robust and I continue to be encouraged by the increasing level of collaboration.
Cross our teams globally and by the integration of Kuwait and Connie.
Our 2020 in 2021 acquisitions.
Both of these acquisitions have delivered exceptional results thus far.
Globally, the demand for our services remains robust and we expect to continue to deliver strong growth going forward.
Importantly, I want to thank all of our highly dedicated employees for their flexibility hard work and dedication to our clients and business in the challenging conditions, we have been working through.
Operator can you. Please open the line for questions.
Yes. Thank you.
Yes.
To ask a question you will need to press star one on your telephone.
To withdraw your question. Please press the pound key standby as we compile the Q&A roster.
Okay.
And again to ask a question. Please press star one on your telephone.
Our first question comes from Walter.
Andrew Schenker of mass partners.
Your line is open.
Actually it's two questions a little myself to two first hopefully everyone's doing well and feeling well congratulations on a good quarter and then I'll flow into my question.
And looking at the first quarter, which was clearly.
Extraordinarily good from an earnings standpoint, we haven't seen dollar quarters.
What if anything was unusual in the quarter I know you are going to make a forecast. So that it is not reflective broadly of the current state of the business.
It's sort of a forecast.
Yeah. So good question Walter.
You know I would say the first quarter was a continuation of the strong trends we saw last year.
And are those those haven't.
Let up.
I can point to a few.
Minor things here or there.
Usually the first quarter is our weakest quarter of the year.
And usually it declines from fourth quarter and that didn't happen.
This year I just business activity levels were very strong in virtually every region.
We did have a few new clients, who has started up and sometimes when new clients start they start slowly and gradually ramp other times. They start very aggressively and we end up doing an unusual amount of activity and we had a few examples of that but in general the takeaway from Q1. It is.
Business activity remains really strong and continues to.
Okay.
Okay. My second question is we've.
We've had about 7% share creep year over year.
Year over year I know the company has good in stock historically and again this is not a forecast, but if I annualize the first quarter, it's $4 a share in earnings you've got a lot of cash the stocks to eight times that number nine times that number why wouldn't you be buying in stock.
Just traded down to.
To at least offset the share creep from compensation.
Yeah, no that is very much on the menu.
And I would just encourage everybody to look at our history, we have.
Been opportunistic.
We have shrunk the share count and absolute terms.
That doesn't happen every quarter or even every year, but.
We have shrunk the share count historically, so we've done way more than just offset.
Dilution and we've also bought back shares every way company can through.
Tender offer through block trades through.
Just regular purchasing in the market.
I think we still have.
Something like $1 7 million left on our share repurchase authorization. So we have all the all the tools in the toolkit.
It's a it's something on the menu.
Okay. Thank you Jeff.
Thank you.
Thank you.
As a reminder to ask a question. Please press star one on your telephone to withdraw your question. Please press the pound key.
Our next question comes from Marc Riddick of Sidoti.
Your line is open.
Hi, good afternoon.
So what am I going.
So I wanted to go into <unk>.
Thoughts around our labor trends and opportunities and you know given the revenue strength that you saw in the first quarter and what seems to be and you can sort of maybe ill add to this a little bit and given the profitability and the order flow and it seem to be a fairly high utilization level, particularly for our first quarter.
So I was wondering if you can sort of talk about sort of how that shakes out as the potential hiring opportunities.
Yeah. So good question there there could be two ways to answer that one is when you talk about labor.
What we're doing on behalf of clients and at least right now I'm hiring activity levels are really strong.
There is in general a shortage of talent and many areas of the world in many sectors and the mentality is.
I need as much help as I can hiring as much talent and the best talent.
I can.
And then that's also true for us if you're talking about.
If you're talking about our labor and.
We continue to get more and more efficient.
And part of our job is to recruit recruiters to recruit people.
Yes.
Who are involved in and talent acquisition, and <unk> and talent management and <unk>.
Can't do a good job of that we're in the wrong business. So.
It's a good environment for us.
Do do we struggled to retain people of course, we do the same as everybody else, but we'd much rather have this than the opposite.
Gotcha, and then wonder if you could talk a little bit about the sort.
Sort of the demand.
So that mix that youre seeing are you seeing any particular specific areas of strength, particularly maybe particular industry verticals or or geographies that that maybe surprised on the upside given the revenue strength that you saw.
Yeah, I would say.
Australia, and the U S, where both are really strong for us.
And within.
Verticals.
I'd say all of them were pretty strong that the three main industries that we work for it if you look at our clients or health care.
<unk> services and technology and all three of those were pretty strong in Q1.
Right right excellent B I was wondering if could talk a little bit about maybe what youre seeing would be.
With the acquisition pipeline availability.
On the valuation levels that you're seeing out there and sort of how that maybe looks compared to maybe six months ago or so.
Yeah, I know I really good really good question. So we're always looking.
In all markets.
US air.
As a business and as a management team too.
Just learn about different different companies different targets what their business model is we are we always learn something and it's it's it's good we think to be kind of constantly in the market looking so one of the things we like to say is that our bar.
Look is low.
Our two bi is high so.
I would say.
The acquisition pipeline is it is interesting.
There might be a few more targets than.
A year ago or six months ago, but not incredibly so and it's really just about finding the right fit at the right time and as we've said before we're really looking for those special situations where.
It's inside our company, we can do more with it we can accelerate their growth or reduce their costs or integrate them with what we're doing to really create.
One plus one equals three so we're not just looking to get bigger.
Or size say, we're really looking for things that are.
Meaning fully accretive to the business in addition to being accretive on the financial metrics.
Got it.
Excellent. Thank you.
Thank you for your questions.
Thank you.
Again to ask a question. Please press star one on your telephone.
Your question please.
Please press the pound key.
And standby as we compile the Q&A roster.
Yeah.
I am seeing no further questions in the queue.
That 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 for your interest in Hudson Global feel free to contact us anytime using the contact information found in the press release.
Or on our Investor Relations website, we look forward to next quarter's update call have a great day.
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 our web site Hudson RP O Dot com.
Okay.
Thank you for participating you may now disconnect and have a pleasant day.
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