Hudson Global, Inc. (NASDAQ:HSON), a leading global talent solutions company, today announced financial results for the third quarter ended September 30, 2016.

2016 Third Quarter Summary

Revenue of $108.1 million declined 1.7 percent from the third quarter of 2015 but increased 1.6 percent in constant currency.

Gross margin of $43.5 million declined 3.6 percent from the third quarter of 2015 or 1.4 percent in constant currency.

Net loss of $2.5 million, or $0.07 per basic and diluted share, compared with net loss of $2.1 million, or $0.06 per basic and diluted share, for the third quarter of 2015.

Adjusted EBITDA of $0.4 million, compared with an adjusted EBITDA loss of $0.2 million in the third quarter of 2015.

“We delivered solid gross margin growth in seven of our ten markets in the third quarter, including Australia/New Zealand, Belgium, France and the Americas,” said Stephen Nolan, chief executive officer at Hudson. “RPO gross margin continued to grow globally, led by the Americas, the U.K. and Australia, as we continued to deliver outstanding service and value to our clients.”

Regional Highlights

Americas

In the third quarter, Hudson Americas’ gross margin increased 16 percent compared with the third quarter of 2015. RPO gross margin increased in the third quarter on higher demand from a broad group of clients. EBITDA was $0.3 million in the third quarter, compared with an EBITDA loss of $1.0 million a year ago. The region delivered adjusted EBITDA of $0.4 million for the third quarter, compared with an adjusted EBITDA loss of $0.3 million a year ago, driven by gross margin growth and lower SG&A expenses.

Asia Pacific

Hudson Asia Pacific’s gross margin decreased 6 percent in constant currency in the third quarter of 2016 compared with the same period in 2015. Gross margin growth in Australia/New Zealand of 5 percent was more than offset by a 27 percent decline in Asia, driven by tougher conditions and internal challenges in China following rapid growth in recent years. RPO gross margin declined by 7 percent, with 4 percent growth in Australia offset by a 34 percent decline in Asia. EBITDA was a loss of $0.3 million in the third quarter, compared with EBITDA of $1.7 million a year ago. Asia Pacific delivered adjusted EBITDA of $1.1 million, down from adjusted EBITDA of $2.3 million in the third quarter of 2015.

Europe

Hudson Europe’s gross margin increased 2 percent in constant currency from the third quarter of 2015. Growth was driven by Continental Europe, with gross margin higher by 19 percent, with double-digit growth in Belgium, France and Spain. In the U.K., gross margin declined 16 percent, as 12 percent gross margin growth in RPO was offset by a 21 percent decline in recruitment, driven by reduced demand in Financial Services and slower hiring patterns following the U.K. vote to exit the European Union. EBITDA was a loss of $0.5 million in the third quarter, compared with an EBITDA loss of $2.1 million a year ago. Adjusted EBITDA was $0.1 million in the third quarter of 2016, flat compared with a year ago.

Strategic Actions

The company’s strategic actions are focused on supporting its three core businesses — Recruitment Process Outsourcing (RPO), Talent Management and Recruitment — and delivering consistent, sustainable growth and profitability. To this end, we are investing in recruitment businesses and practices that present the greatest potential for profitable growth. In addition, we are facilitating growth and development of the global RPO business, recently ranked in HRO Today magazine’s “Baker’s Dozen” of top enterprise RPO providers for the seventh consecutive year. Finally, we are building and differentiating our brand through our unique talent solutions offerings and were recently ranked 4th among large global firms on LinkedIn’s prestigious ‘Most Socially Engaged Staffing Agencies’ 2016 ranking, making the list for the second consecutive year.

Liquidity and Capital Resources

The company ended the third quarter of 2016 with $36.5 million in liquidity, composed of $17.4 million in cash and $19.1 million in availability under its credit facilities. This compares with $24.9 million in cash and $19.8 million in availability under its credit facilities at the end of the second quarter of 2016. The company used $5.0 million in cash flow from operations during the third quarter, largely due to an additional, monthly contractor payroll in the U.K. that fell within the calendar quarter. This compares with $4.8 million generation of cash in the third quarter of 2015, which included $3 million of receivables retained in the sale of the Americas IT business in June 2015. The company had $8.1 million in outstanding borrowings at the end of the third quarter of 2016, primarily in Australia.

Share Repurchase Program

During the third quarter, the company continued its share repurchase program which has an authorization of up to $10 million of the company’s common stock. The company purchased 1,370,199 shares for $2.6 million as part of the repurchase program during the third quarter. Since the inception of this program in the third quarter of 2015 through the end of the third quarter of 2016, the company has purchased 2,846,456 shares for $6.3 million.

Business Outlook

With respect to forward-looking non-GAAP measures, a reconciliation of the non-GAAP measures to the corresponding GAAP measures is not available without unreasonable efforts due to the variability, complexity and low visibility of the non-cash and other items described below that we exclude from the non-GAAP outlook measures. The variability of these items is likely to have a significant impact on our future GAAP financial results.

Given current economic conditions, the company expects fourth quarter 2016 revenue of between $95 million and $105 million and adjusted EBITDA of between breakeven and $2.0 million at prevailing exchange rates. In the fourth quarter of 2015, revenue was $106.1 million and adjusted EBITDA was $1.4 million. This outlook assumes an average exchange rate of 1.23 US Dollars to the British Pound, 1.10 US Dollars to the Euro and 0.76 US Dollars to the Australian Dollar.

Conference Call/Webcast

Hudson will conduct a conference call today at 10:00 a.m. ET to discuss this announcement. Individuals wishing to listen can access the webcast on the investor information section of the company’s web site at Hudson.com.

The archived call will be available on the investor information section of the company’s web site at Hudson.com.