Hudson Highland Reports 2008 First Quarter Financial Results

2008 First Quarter Summary

-- Revenue of $297.5 million, an increase of 3.2 percent from $288.2 million for the first quarter of 2007

-- Gross margin of $126.2 million, or 42.4 percent of revenue, up 7.2 percent from $117.7 million, or 40.9 percent of revenue for the same period last year

-- Adjusted EBITDA* of $6.7 million, or 2.3 percent of revenue, up 40.4 percent from $4.8 million for the first quarter of 2007

-- EBITDA of $5.3 million, or 1.8 percent of revenue, up 289.4 percent from $1.4 million for the same period last year

-- Net income from continuing operations of $0.3 million, or $0.01 per basic and diluted share, compared with net loss of ($1.8) million, or ($0.07) per basic and diluted share, for the first quarter of 2007

-- Net income of $1.4 million, or $0.05 per basic and diluted share, compared with net income of $0.1 million, or $0.00 per basic and diluted share, for the first quarter of 2007

"During the first quarter, we benefited from our geographic diversification and specialized, professional-level recruitment focus," said Jon Chait, Hudson Highland Group chairman and chief executive officer. "While strong performances continued in Asia Pacific and Europe, our North America business performed admirably, including a particularly strong period for Hudson Legal, one of our specialized markets less impacted by economic cycles."

"The energy and engineering business divestiture helped us further our strategic focus and drive additional operational cost reduction," added Mary Jane Raymond, executive vice president and chief financial officer. "We believe this will position Hudson for improved profitability when markets recover and, in the meantime, cushion our exposure to the economic cycle."

Share Repurchase Program

On February 4, 2008, the company announced that its board of directors authorized the repurchase of up to $15 million of the company's common stock. The company intends to make purchases from time to time as market conditions warrant. Through March 31, 2008, the company had repurchased 701,173 shares for a total cost of approximately $5.3 million.

Restructuring Program

During 2008, the company will streamline its support operations to match its focus on specialization. The company expects to have $5 - $7 million of restructuring actions throughout this year, including $1 - $2 million in the second quarter. During the first quarter of 2008, the company incurred $1.6 million of restructuring expenses, predominantly related to lease terminations and severance in Hudson Americas following he sale of its energy and engineering business.

Sale of Energy and Engineering Business

On February 4, 2008, the company announced it had completed the asset sale of its energy and engineering staffing business to System One Holdings LLC. The company received approximately $11 million in cash, subject to post-closing adjustment; a five-year, secured subordinated $5 million seller note; and a warrant exercisable for 10 percent of the equity of System One. Hudson Highland Group also retained $3.6 million of receivables of the business, all of which has been collected, and has the right to receive an additional $600,000 in cash upon resolution of certain liabilities. The company has treated the business as a discontinued operation effective December 31, 2007. As a result of the sale, the company allocated $6.9 million of goodwill and recorded a loss on sale of ($0.6) million.

Guidance

The company currently expects second quarter 2008 revenue of $300 - $315 million at prevailing exchange rates and adjusted EBITDA of $10 - $13 million, excluding the impact of any restructuring, acquisitions or divestitures. This compares with revenue of $298.5 million and adjusted EBITDA of $12.2 million in the second quarter of 2007. -- Hudson Highland Group, Inc.