Hudson Global, Inc. (NASDAQ:HSON) Q4 2023 Earnings Call Transcript
Hudson Global, Inc. (NASDAQ:HSON) Q4 2023 Earnings Call Transcript March 14, 2024
Hudson Global, Inc. isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Good morning, and welcome to the Hudson Global's Fourth Quarter 2023 Financial Results Conference Call. Our call today will be led by Chief Executive Officer, Jeff Eberwein; and Chief Financial Officer, Matt Diamond. 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-K to be filed today and in our other filings made by the Securities and Exchange Commission, including our annual report on Form 10-K. 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. I will now turn the call over to Jeff Eberwein.
Jeffrey 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 2024 highlights, and Matt Diamond, our CFO, will provide some additional details on our financial results. I'll then give an update on current business conditions. For the fourth quarter of 2023, we reported revenue of $34 million, down 22% year-over-year in constant currency. Adjusted net revenue was $17 million and decreased 26% year-over-year in constant currency. SG&A costs were $16 million in the fourth quarter, down 17% versus the same period last year in constant currency. We reported adjusted EBITDA of $0.1 million, down from $2.4 million a year ago.
In addition, we reported a net income of $0.7 million or $0.23 per diluted share versus net income of $0.1 million or $0.02 per diluted share in the same period last year. We reported adjusted net income per diluted share of $0.04 in fourth quarter 2023 versus $0.33 a year ago. For further context, I would add that our fourth quarter 2023 adjusted EBITDA included $400,000 of expenses related to a true-up to our accounts receivable and related reserves. These kind of expenses tend to be lumpy in nature, and our team is working hard to high-grade our client portfolio and therefore, our AR going forward. So adjusted EBITDA would have been $0.5 million, excluding these expenses. I'll now turn the call over to Matt Diamond, our CFO, to review our financial results by region as well as add some additional financial details from the fourth quarter.
Matthew Diamond: Thank you, Jeff, and good morning, everyone. Revenue for Americas business decreased 38% and adjusted net revenue decreased 37% in constant currency. Adjusted EBITDA loss of $0.7 million decreased versus last year's adjusted EBITDA of $0.5 million. . Revenue and adjusted net revenue for our Asia Pacific business each decreased 18% year-over-year in constant currency. Adjusted EBITDA of $0.9 million decreased from adjusted EBITDA of $2.1 million a year ago. Revenue and adjusted net revenue for our Europe business each decreased 17% versus the prior year quarter in constant currency. Adjusted EBITDA of $0.6 million in the fourth quarter of 2023 increased slightly from adjusted EBITDA of $0.5 million a year ago.
Turning to some additional financial details from the fourth quarter. We ended the fourth quarter with $23 million in cash and restricted cash. Days sales outstanding was 49 days at December 2023, down slightly from DSO of 50 days in December 2022. In connection with the acquisitions of Coit Group in 2020, Karani in 2021, Hunt & Badge in 2022 and Hudson Singapore in the fourth quarter of 2023, our balance sheet as of December 31, 2023, reflects $5.7 million of goodwill and $3.6 million of net amortizable intangible assets. The company's working capital, excluding cash, increased significantly to $12.0 million at year-end 2023 from $7.3 million at the end of 2022. The company generated $3.3 million in cash flow from operations during the fourth quarter.
I'll now turn the call back over to Jeff to give some more perspective on our RPO business and to review current trends in our business.
Jeffrey Eberwein: Thank you, Matt. Our fourth quarter financial results continue to reflect the year-over-year impact of the slowdown in the U.S. tech sector hiring as well as fourth quarter hiring delays at certain clients which we expect to recover at the beginning in the second quarter of 2024. In addition, we've made significant reductions to our cost structure in the second half of 2023 and the first quarter of 2024 while retaining the ability to deliver excellent service to our clients when activity rebounds. The fourth quarter represented a strategic shift for Hudson RPO. In November, we hired Jake Zabkowicz as Hudson RPO's Global CEO, and he has begun implementing numerous positive changes to the business, including expanding our geographic presence as well as our service offering to existing RPO clients.
These growth initiatives, coupled with 2023's significant new business wins give us high confidence in our business improving in 2024. This confidence is demonstrated by our extensive history of opportunistic share repurchases, including a recent January repurchase via a privately negotiated transaction. In addition, as a reminder, the company approved a new $5 million common stock share repurchase program in August 2023. Under this program, the company acquired 11,000 shares in the fourth quarter of 2024. And thus far -- sorry, in the fourth quarter of 2023 and thus far in 2024, we acquired a little over 44,000 shares. The company continues to view share repurchases as an attractive use of capital going forward, and we expect to buy more when we can.
Finally, we were excited to announce our Middle East acquisition on March 12. This small but important bolt-on acquisition gives us an immediate presence and book of business in the Middle East. This acquisition will give our clients across the globe confidence that we can find in place the best talent in the UAE and the Middle East for their strategic business needs. Building off our recent additions in Southeast Asia and the Middle east, we're excited to continue to expand our footprint as we execute on our strategy of global expansion through organic and inorganic growth. Importantly, I want to thank all of our highly dedicated employees for their flexibility, hard work, 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. [Operator Instructions] The first question comes from Marc Riddick with Sidoti & Company.
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