Hudson Global, Inc.

Good morning and welcome to the Hudson Global Conference call for the second quarter of 2022. Our call today will be led by Chief Executive Officer Jeff Eberwine and Chief Financial Officer Matt Diamond. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. And please note that this conference is being recorded. 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 filed today and in our 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. During the course of the 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. And I will now turn the call over to Jeff Eberwine. Please go ahead, sir.

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 second quarter 2022 highlights, and Matt Diamond, our CFO, will provide some additional information and then give an update on our current business conditions. For the second quarter of 2022, we reported revenue of 51 million of 37% in constant currency. Adjusted net revenue, which we used to refer to as gross profit, was 27.3 million and increased 91% year-over-year in constant currency. SG&A costs were 21.6 million in the second quarter, up 68% versus the same period a year ago. We reported adjusted EBITDA of $5.7 million up $1.7 million from a year ago and reported net income of $3.1 million, $0.98 per share versus a net loss of $100,000 or $0.04 a share in the same period a year ago. We reported adjusted net income per diluted share of $1.25 in Q2 versus $0.15 a year ago. I'm now going to turn the call over to Matt Diamond, our CFO, to review some financial results by region, as well as some additional details from the second quarter.

Thank you, Jeff, and good morning, everyone. Our Americas business grew revenue and adjusted net revenue 169% and 177% in constant currency, respectively, with approximately 70% of this growth attributable to organic growth, and the remainder coming from the acquisition of Karani in the fourth quarter of 2021. Adjusted EBITDA of $3.4 million increased versus last year's adjusted EBITDA of $0.5 million. Our Asia-Pacific business grew revenue 12% in constant currency and adjusted net revenue 42% in constant currency. Adjusted EBITDA of $2.6 million increased from adjusted EBITDA of $1.4 million a year ago. Our EMEA business grew revenue 34% and adjusted net revenue 49% in constant currency. Adjusted EBITDA of $0.8 million in Q2 2022 increased compared to adjusted EBITDA of $0.6 million in Q2 of last year. Lastly, we believe it is important to highlight that adjusted net revenue again grew at a faster rate than SG&A in the second quarter. This operational leverage we have been 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 second quarter, we ended Q2 with $26.2 million in cash and restricted cash. Day sales outstanding was 52 days at June 2022, up from DSO of 41 days in June 2021. In connection with the acquisition of Coit Group in the fourth quarter of 2020 and Karani in the fourth quarter of 2021, our balance sheet, as of June 30, 2022, reflects $4.2 million of goodwill and $4.9 million of net amortizable intangible assets. The company's working capital, excluding cash, increased to $8 million in the second quarter of 2022 from $7.8 million at the end of 2021. As a reminder, in April of 2019, we finalized 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 Q2. The company generated cash flow from operations of $7.6 million during the second 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.