Hudson Highland Group. Investor Presentation

Transcription

1 Hudson Highland Group Investor Presentation 1

2 Forward Looking Statements Please be advised that except for historical information, the statements 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, including factors outside of our control, may cause actual results to differ materially from those contained in the forward-looking statements, including economic and other conditions in the markets in which we operate, risks associated with acquisitions, competition, seasonality 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

3 Hudson Highland Group Hudson (89% of Q1 05 GM) - permanent and contract professional staffing, and human capital solutions (HCS) Highland (11%) - retained executive search Worldwide capabilities from over 110 offices in over 20 countries Approximately 3,800 employees 3

4 Product Offerings Q Gross Margin $128.2 M Perm Perm Contingent and retained search, professional mid market to executive level 55% Temp 35% 10% HCS Short to long term contingent placements Focused on specialty staffing IT, Legal, and A&F Temp HCS Assessment, career development, training and coaching Competency and performance mgmt Outsourcing and re-integration 4

5 Diversified Global Operations Q Revenue $352.9 M Q Gross Margin $128.2 M Asia Pac 30% Asia Pac 29% 35% 41% 35% 30% Europe North America Europe North America 5

6 Industry Specialization Represents Hudson s 3 Major Regions (2004 GM of $280m) Accounting & Finance 19% IT 22% Legal 12% Engineering 7% Sales & Marketing 6% HR 4% Other 30% Includes Hudson North America, UK, and Australia. Other primarily includes Office Services, Technical and Operations, Commercial, and Trade. 6

7 Strategy Increased Predictability Increase proportion of specialized contract staffing revenue - Less cyclical - Built on client relationships - Solutions orientation Revenue Growth Strong growth in North America and Asia Grow high margin specialty staffing (IT, Legal, A&F) Continue to improve salesforce productivity Operating Leverage Significant profit improvement since spin-off from Monster Target 25 50% of incremental GM to EBITDA 7

8 Hudson North America ($US in millions) Business Overview Key Drivers in 2004 and 2005 Temp-focused specialty staffing (+80% of GM) complemented by midmarket permanent placement Practice groups focused on IT, Legal, and A&F (+70% of GM) Strong growth in 2004 and Q GM % improved to 24.1% in Q1 2005, up from 23.2% in Q Shifted to solutions focus in IT, Legal and A&F Offered increased value proposition to clients Increased bill rates Increase productivity through volume Temp GM % improved to 20.8% in Q1 2005, up from 19.5% in Q

9 Hudson Europe Hudson UK Q GM Regional GM Split is 60% perm, with the balance split evenly between HCS and temp 63% Perm 60% of European GM is in the UK, 40% in Continental Europe (primarily Belgium, France, Netherlands) Temp practice predominantly based in the UK, focused primarily on Finance, IT&T and Legal HCS 3% 34% Temp GM % of 41.2% in Q1 05 vs. 42.1% in Q1 04 Hudson Continental Europe Q GM HCS is primarily based in Continental Europe Expansion via organic growth and strategic acquisitions 51% Perm 1% Temp 48% HCS 9

10 Hudson Asia Pacific ($US in millions) Permanent placement contributes approx 60% of gross margin, with 35% Temp, 5% HCS $9 $8 $7 $6.4 $7.8 $7.5 $6.8 9% 8% 7% Market leader in Australia and New Zealand $6 $5 $4 6% 5% 4% Strong productivity improvements in ANZ market continue, consistent profitability $3 $2 $1 $2.1 3% 2% 1% $0 0% GM % of 34.9% in Q1 05 vs. 32.6% in Q1 04 Q Q Q Q Q EBITDA (1) EBITDA Margin Growth opportunity in Asia and market leadership positions in Singapore and Shanghai (1) EBITDA is a non-gaap measure defined as earnings before interest, income taxes, depreciation and amortization. 10

11 Highland Partners ($US in millions) Highland Partners Revenue Successfully repositioned as profitable North American boutique with additional offices in London and Sydney for global execution $60 $50 $40 $30 $20 $64.0 $61.7 Specializes in recruiting at the C-level and board of director level $10 $ average billings per partner near $1m Primary focus on profitability $0 -$5 -$10 -$15 -$20 -$25 -$30 -$35 Highland Partners EBITDA (1) $(0.1) $(30.8) (1) EBITDA is a non-gaap measure defined as earnings before interest, income taxes, depreciation and amortization. 11

12 Improving Trends Globally Last 5 Quarters EBITDA ($US in millions) Hudson Americas Hudson Europe $5 $4.0 $4.7 $3 $2.5 $3.3 $3 $1 -$1 $2.0 $2.8 ($0.9) Q1 Q2 Q3 Q4 Q1 $1 -$1 -$3 ($0.3) $0.7 ($2.7) Q1 Q2 Q3 Q4 Q1 Hudson Asia Pac Highland Partners $8 $6 $6.4 $7.8 $7.5 $6.8 $2 $1.5 $4 $2 $0 $2.1 Q1 Q2 Q3 Q4 Q1 $1 $0 ($0.0) $0.6 $0.5 ($2.1) Q1 Q2 Q3 Q4 Q1 12

13 Financial Overview 13

14 Delivering Operating Leverage Initial Efforts Paying Off Significant leverage exists in our business model Target 25 50% of gross margin growth to flow to EBITDA Given restructuring of the business, we have been ahead of this plan so far Q leverage of 64% based on regional leverage of: - Hudson North America 37% - Hudson Europe 84% - Hudson Asia Pac 131% - Highland 107% Quarterly 2004 leverage over 80% in every quarter 14

15 Selected Financials $US in Millions (1) Var ($) Var (%) Revenue 1,256 1, % Gross Margin % SG&A (19) (3.9%) EBITDA (2) (3) (90) % Gross Margin % 37.4% 37.1% Temp GM % 17.4% 17.0% (1) Q1 results were before the spin-off from Monster Worldwide on April 1, (2) EBITDA is a non-gaap measure defined as earnings before interest, income taxes, depreciation and amortization. A reconciliation of EBITDA to operating loss follows. 15

16 Selected Financials $US in millions Q1 05 Q1 04 Var ($) Var (%) Revenue % Gross Margin % SG&A % EBITDA (1) 3 (11) % Gross Margin % 36.3% 36.7% Temp GM % 17.4% 16.3% (1) EBITDA is a non-gaap measure defined as earnings before interest, income taxes, depreciation and amortization. A reconciliation of EBITDA to operating loss is contained on the next page. 16

17 EBITDA Reconciliation to GAAP $US in millions (1) Q1 05 Q1 04 Adjusted EBITDA (2) 1 (60) 3 (11) Reorg Recovery (Cost) (3) (27) (1) (0) M&I Recovery (Cost) (1) (3) 0 0 EBITDA (2) (3) (90) 3 (11) D&A (20) (21) (5) (5) Goodwill Impairment - (203) - - Operating Income (Loss) (23) (314) (2) (16) (1) Q1 results were before the spin-off from Monster Worldwide on April 1, (2) Adjusted EBITDA is a non-gaap measure defined as earnings before interest, income taxes, depreciation, amortization, and also excludes merger and integration costs, business reorganization, and impaired goodwill. EBITDA is a non-gaap measure defined as earnings before interest, income taxes, depreciation and amortization. 17

18 Global Contributions EBITDA Improvement (1) Q1 05 v Q v 2003 HH Americas + $4.6m + $29.3m HH Europe + $6.1m + $40.0m HH Asia Pac + $4.1m + $23.0m (1) EBITDA is a non-gaap measure defined as earnings before interest, income taxes, depreciation and amortization. 18

19 2005 Outlook Expect to Continue to Make Progress toward our Goals Expect FY 2005 revenue growth of 12 15%, resulting in FY 2005 EBITDA of $22 29m, based on regional revenue growth of: 30 35% in Hudson North America 10 15% in Hudson Europe 0 5% in Hudson Asia Pacific 0 5% in Highland Partners Goal to build a sustainable, profitable business, regardless of revenue growth As presented May 5, 2005 on our Q earnings call. 19

20 2005 Outlook Expect to Continue to Make Progress toward our Goals Target long term EBITDA margins of 7 10% Expect 1.5 2% EBITDA margins for FY 2005, given current economic conditions Expect 3.5 4% EBITDA margins for FY 2006, given current economic conditions As presented May 5, 2005 on our Q earnings call. 20

21 Investment Highlights Experienced Management Team Specialty Staffing Focus Significant Scale and Diversified Global Operations Investing for Growth Operating Leverage 21

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