HUDSON GLOBAL, INC. Q3 2015 EARNINGS CALL October 30, 2015 - PowerPoint PPT Presentation

HUDSON GLOBAL, INC. Q3 2015 EARNINGS CALL October 30, 2015

Forward-Looking Statements Please be advised that except for historical information, the comments made during this presentation and in these slides constitute forward-looking statements under applicable securities laws. Such forward-looking statements involve certain risks and uncertainties, including statements regarding the company's strategic direction, prospects and future results. Certain factors may cause actual results to differ materially from those contained in the forward- looking statements, including global economic fluctuations, risks related to fluctuations in our operating results, the ability of clients to terminate their relationship at anytime, competition, limited availability under our credit facilities and our ability to successfully achieve our strategic initiatives and the other risks discussed in our filings made with the Securities and Exchange Commission. These forward-looking statements speak only as of the date of this presentation. The company assumes no obligation, and expressly disclaims any obligation, to review or confirm analysts' expectations or estimates or to update any forward- looking statements, whether as a result of new information, future events or otherwise. 2

Q3 2015: Consolidated Financial Results $US in Millions, except EPS Q3 2015 Q3 2014 B+ / W- (2) Revenue - 26% $110.0 $149.3 - 15% CC (1 ) Gross Margin - 19% $45.1 $55.7 - 7% CC SG&A + 22% $45.5 $58.5 + 12% CC Adjusted EBITDA + 85% ($0.4) ($2.9) + 86% CC EBITDA + 24% ($2.6) ($3.5) + 19% CC EBITDA, as a % of Revenue -2.4% -2.3% Net Income (Loss) + 70% ($2.1) ($7.0) + 68% CC Basic and Diluted EPS ($0.06) ($0.21) (1) CC represents constant currency variance. (2) B/W indicates whether the result was better (+) or worse (-) than the comparison period. (3) NM: Not meaningful 3

Q3 2015: Hudson Americas $US in Millions Q3 2015 Q3 2014 B+ / W- (1 ) Revenue - 71% $3.7 $13.0 Gross Margin - 43% $3.2 $5.6 SG&A + 28% $3.5 $4.8 Adjusted EBITDA - 143% ($0.3) $0.7 Adjusted EBITDA, as a % of Revenue -8.6% 5.7% (1) B/W indicates whether the result was better (+) or worse (-) than the comparison period. 4

Q3 2015: Hudson Asia Pacific $US in Millions Q3 2015 Q3 2014 B+ / W- (2) Revenue - 17% $55.6 $67.0 + 3% CC (1 ) Gross Margin - 5% $23.4 $24.7 + 13% CC SG&A + 13% $20.9 $24.0 - 4% CC Adjusted EBITDA NM $2.3 $0.6 NM CC Adjusted EBITDA, as a % of Revenue 4.2% 0.9% (1) CC represents constant currency variance. (2) B/W indicates whether the result was better (+) or worse (-) than the comparison period. 5

Q3 2015: Hudson Europe $US in Millions Q3 2015 Q3 2014 B+ / W- (2) Revenue - 27% $50.7 $69.3 - 18% CC (1 ) Gross Margin - 27% $18.6 $25.5 - 17% CC SG&A + 29% $18.5 $25.8 + 19% CC Adjusted EBITDA + 152% $0.1 ($0.3) + 171% CC Adjusted EBITDA, as a % of Revenue 0.3% -0.4% (1) CC represents constant currency variance. (2) B/W indicates whether the result was better (+) or worse (-) than the comparison period. 6

Q3 2015: Reconciliation of Retained Revenue $US in Millions Reported Retained (1) Variance Constant Variance Constant Q3 2015 vs Q3 2014 Currency Q3 2015 vs Q3 2014 Currency Americas $ 3.7 -71.3% -71.3% $ 3.7 1.1% 2.0% Asia Pacific 55.6 -17.0% 3.4% 55.6 -17.0% 3.4% Europe 50.7 -26.8% -18.5% 50.7 -11.5% -2.8% Total $ 110.0 -26.3% -14.7% $ 110.0 -14.0% 0.4% Retained revenue and gross margin and divested revenue and gross margin are non-GAAP terms (1) that management believes provide a better understanding of the underlying revenue and gross margin trends in the business following the divestitures in the second quarter of 2015. Divested revenue and gross margin includes such items attributable to the following businesses: the Americas IT staffing business, the Netherlands business, Ukraine, Czech Republic, Slovakia and Luxembourg. The non-GAAP financial measures do not replace the presentation of GAAP financial results and should only be used as a supplement to, not as a substitute for, Hudson’s financial results presented in accordance with GAAP. The above table provides a reconciliation of the non-GAAP financial measure used in its financial reporting to the most directly comparable GAAP financial measure. 7

Q3 2015: Reconciliation of Retained Gross Margin $US in Millions Reported Retained (1) Variance Constant Variance Constant Q2 2015 vs Q2 2014 Currency Q2 2015 vs Q2 2014 Currency Americas $ 3.2 -43.0% -42.7% $ 3.2 -0.8% 0.1% Asia Pacific 23.4 -5.2% 13.4% 23.4 -5.2% 13.4% Europe 18.6 -27.0% -17.2% 18.7 -17.1% -6.9% Total $ 45.1 -18.9% -7.2% $ 45.2 -10.3% 3.1% Retained revenue and gross margin and divested revenue and gross margin are non-GAAP terms (1) that management believes provide a better understanding of the underlying revenue and gross margin trends in the business following the divestitures in the second quarter of 2015. Divested revenue and gross margin includes such items attributable to the following businesses: the Americas IT staffing business, the Netherlands business, Ukraine, Czech Republic, Slovakia and Luxembourg. The non-GAAP financial measures do not replace the presentation of GAAP financial results and should only be used as a supplement to, not as a substitute for, Hudson’s financial results presented in accordance with GAAP. The above table provides a reconciliation of the non-GAAP financial measure used in its financial reporting to the most directly comparable GAAP financial measure. 8

Q3 2015: Global Services Split - Retained Revenue Gross Margin Talent Talent Management Management Permanent Permanent Recruitment Recruitment RPO RPO Temporary Temporary Contracting Contracting 9

Q3 2015: Regional Split - Retained Revenue Gross Margin Asia Pacific Asia Pacific 51% 52% 3% Americas 46% Americas 7% 41% Europe Europe 10

Balance Sheet: Select Items $US in Millions Selected Assets September 30, December 31, 2015 2014 Cash $36.4 $34.0 Accounts Receivable $65.7 $74.1 Selected Liabilities September 30, December 31, 2015 2014 Short-term Borrowings $0.0 $0.0 Shareholders' Equity $64.1 $59.3 Working Capital September 30, December 31, 2015 2014 Current Assets $109.3 $118.9 Current Liabilities $53.0 $67.1 Working Capital $56.3 $51.8 11

Q3 2015: Cash Flow Summary $US in Millions QTD QTD Sep-15 Sep-14 Net income (loss) $ (2.1) $ (7.0) Depreciation and amortization 1.0 1.5 Stock-based compensation 0.2 0.1 Change in accounts receivable 6.8 1.9 Change in accounts payable and other liabilities (1.7) (1.4) Other 0.6 2.5 Cash provided by (used in) operations 4.8 (2.4) Capital expenditures (1.1) (1.5) Free cash flow 3.7 (3.9) Change in net borrowings (repayments) (1.1) 6.3 Other (0.7) (0.6) Effect of exchange rates (0.4) (0.9) Change in cash $ 1.5 $ 0.9 12

Flexible Liquidity $US in Millions 13

Retained GM by Region Temporary Contracting GM Q3 2015 Q3 2014 America 4.5% 30.8% Asia Pacific 12.4% 12.2% Europe 13.8% 15.2% Hudson Total 13.1% 13.7% Total GM Q3 2015 Q3 2014 America 85.0% 86.5% Asia Pacific 36.9% 39.3% Europe 41.8% 36.7% Hudson Total 41.0% 39.4% 14

Appendix 15

Q3 2015 Regional Gross Margin Mix Approximate mix of gross margin by product around the globe Temp Perm Talent Mgmt Americas 0% 100% 0% Europe 25% 50% 25% UK 45% 50% 5% Cont. Europe 0% 55% 45% Asia Pacific 20% 70% 10% ANZ 30% 55% 15% ASIA 0% 100% 0% Hudson Total 20% 65% 15% 16

Q3 EBITDA Reconciliation $US in Millions Hudson Hudson Q3 2014 Americas Asia Pacific Europe Corp Total Q3 2015 Americas Asia Pacific Europe Corp Total Revenue $ 13.0 $ 67.0 $ 69.3 $ - $ 149.3 Revenue $ 3.7 $ 55.6 $ 50.7 $ - $ 110.0 Gross margin $ 5.6 $ 24.7 $ 25.5 $ - $ 55.7 Gross margin $ 3.2 $ 23.4 $ 18.6 $ - $ 45.1 Adjusted EBITDA (loss) $ (0.3) $ 2.3 $ 0.1 $ (2.6) $ (0.4) Adjusted EBITDA (loss) $ 0.7 $ 0.6 $ (0.3) $ (3.9) $ (2.9) Business reorg expenses - 0.1 0.4 0.2 0.8 Business reorg expenses 0.6 0.3 1.3 0.1 2.3 Non-operating expenses (income) 0.7 0.2 1.6 (2.7) (0.2) Non-operating expenses (income) 0.1 0.3 0.8 (1.5) (0.2) EBITDA (Loss) $ - $ 0.2 $ (2.3) $ (1.5) $ (3.5) EBITDA (Loss) $ (1.0) $ 1.7 $ (2.1) $ (1.2) $ (2.6) Depreciation and amortization 1.0 Depreciation and amortization 1.5 Interest expense (income) 0.1 Interest expense (income) 0.2 Provision for (benefit from) income taxes (1.6) Provision for (benefit from) income taxes (0.6) Loss (income) from disc ops, net of taxes 0.1 Loss (income) from disc ops, net of taxes 2.5 Net income (loss) $ (2.1) Net income (loss) $ (7.0) EBITDA is a non-GAAP measure defined as earnings before interest, income taxes, depreciation and amortization. (1) Adjusted EBITDA is a non-GAAP measure defined as earnings before interest, income taxes, depreciation and amortization, non-operating income, goodwill and other impairment charges, business reorganization expenses and other charges. 17