Core Viewpoint - The merger between Star Equity Holdings, Inc. and Hudson Global, Inc. aims to create a larger, more diversified holding company, enhancing shareholder value and accelerating growth opportunities for both companies [1][5]. Transaction Highlights - The merger will result in a new entity, "NewCo," with pro-forma annualized revenues of $210 million and a goal of achieving $40 million in Adjusted EBITDA by 2030 [6]. - The merger is expected to generate at least $2 million in annualized cost savings within 12 months, translating to approximately $0.57 in incremental pro-forma EPS [6]. - NewCo will benefit from Hudson's $240 million in U.S. Federal net operating losses (NOL), which are more likely to be utilized than if Hudson operated independently [6]. Transaction Details - The merger will be a stock-for-stock transaction, with Hudson acquiring all outstanding shares of Star, issuing 0.23 shares of HSON common stock for each share of STRR common stock [6]. - Upon completion, Hudson shareholders will own approximately 79% of NewCo, while Star shareholders will own about 21% of the estimated 3.49 million shares outstanding [6]. - The merger is anticipated to close in the second half of 2025, pending regulatory and shareholder approvals [6]. Management and Structure - NewCo will have four reporting segments: Building Solutions, Business Services, Energy Services, and Investments [7]. - The board of directors for NewCo will include three independent directors from each company, with Jeff Eberwein as CEO and Rick Coleman as COO [7]. Company Background - Hudson Global, Inc. is a global total talent solutions provider, while Star Equity Holdings, Inc. operates as a diversified holding company with divisions in Building Solutions, Energy Services, and Investments [15][16].

Revenue Performance - Revenue for the three months ended March 31, 2025, was $31.9 million, a decrease of $2.0 million, or 6.0%, compared to $33.9 million in the same period in 2024[134] - Adjusted net revenue increased to $16.4 million for the three months ended March 31, 2025, compared to $16.3 million for the same period in 2024, reflecting a growth of $0.1 million, or 0.4%[134] - Contracting revenue in the Americas increased by $0.9 million, or 483%, while RPO revenue decreased by $0.1 million, or 1%, compared to the same period in 2024[143] - The company reported a decrease in contracting revenue of $1.3 million, or 7.2%, on a constant currency basis, partially offset by a $0.2 million, or 1.1%, increase in RPO revenue[134] - For the three months ended March 31, 2025, adjusted net revenue in the Americas was $6.0 million, an increase of $0.2 million or 3% compared to $5.8 million in 2024[144] - In Asia Pacific, total revenue decreased by $1.5 million, or 7%, to $19.1 million for the three months ended March 31, 2025, compared to $20.6 million in 2024[149] - Adjusted net revenue in Asia Pacific increased by $0.9 million, or 14%, to $7.2 million for the three months ended March 31, 2025, compared to $6.3 million in 2024[152] - In EMEA, adjusted net revenue decreased by $0.7 million, or 19%, to $3.2 million for the three months ended March 31, 2025, compared to $3.9 million in 2024[162] Expense Management - SG&A and Non-Op expenses decreased to $17.9 million for the three months ended March 31, 2025, down $1.1 million, or 5.8%, from $19.0 million in the same period in 2024[134] - SG&A and Non-Op expenses in the Americas decreased by $0.5 million, or 8%, to $6.2 million for the three months ended March 31, 2025, compared to $6.7 million in 2024[146] - SG&A and Non-Op expenses in EMEA increased by $0.2 million, or 5%, to $3.8 million for the three months ended March 31, 2025, compared to $3.7 million in 2024[165] Profitability and Loss - EBITDA loss improved to $1.5 million for the three months ended March 31, 2025, compared to a loss of $2.7 million for the same period in 2024, a decrease in loss of $1.2 million[134] - Net loss for the three months ended March 31, 2025, was $1.8 million, a reduction of $1.1 million from a net loss of $2.9 million in the same period in 2024[134] - The operating loss in the Americas improved to $0.2 million for the three months ended March 31, 2025, a reduction of $0.9 million or 82% from the operating loss of $1.2 million in 2024[147] - The EBITDA loss in the Americas improved to $0.1 million for the three months ended March 31, 2025, a reduction of $0.7 million or 84% from the EBITDA loss of $0.9 million in 2024[147] - For the three months ended March 31, 2025, operating loss was $0.5 million, a decrease from operating income of $0.3 million in the same period in 2024, representing a change of (293)%[167] - EBITDA loss for the same period was $0.6 million, or 11% of revenue, compared to an EBITDA loss of $0.3 million, or 4% of revenue in 2024, indicating a change of (338)%[167] - Basic and diluted loss per share were both $0.59 for the three months ended March 31, 2025, down from $0.95 in the same period in 2024[172] Cash and Liquidity - Cash, cash equivalents, and restricted cash totaled $17.2 million as of March 31, 2025, a slight decrease from $17.7 million as of December 31, 2024[173] - Net cash used in operating activities was $0.8 million for the three months ended March 31, 2025, a decrease of $1.0 million from $1.8 million used in the same period in 2024[174] - As of March 31, 2025, the Company had cash and cash equivalents on hand of $16.6 million, with $6.8 million held in the U.S.[179][180] - The Company expects to make capital expenditures of less than $0.5 million for the full year 2025[179] - The Company has the capability to borrow an additional 4 million Australian dollars under the NAB Facility Agreement[179] - There were no off-balance sheet arrangements that could materially affect the Company's financial condition as of March 31, 2025[181] Market Outlook and Strategic Initiatives - The company anticipates continued challenging market conditions into the next quarter of 2025 due to persistent inflation and higher interest rates[129] - The company is exploring strategic alternatives to maximize shareholder value, including potential acquisitions and share repurchases[125] - The company aims to enhance its service offerings and delivery capabilities to improve client satisfaction and operational efficiency[124] - In Asia, revenue increased by $0.9 million, or 29%, for the three months ended March 31, 2025, compared to the same period in 2024, driven by higher demand from existing clients[151] - Total adjusted net revenue as a percentage of revenue in the Americas decreased to 87% for the three months ended March 31, 2025, down from 97% in 2024, attributed to a lower mix of RPO to contracting revenue[145]

Financial Data and Key Metrics Changes - For Q1 2025, the company reported revenue of $31.9 million, down 3.3% year over year in constant currency, while adjusted net revenue increased by 2.2% year over year in constant currency to $16.4 million [5] - Adjusted EBITDA for Q1 2025 was a loss of $700,000, an improvement from a loss of $1.5 million a year ago [5] - The net loss for Q1 2025 was $1.8 million or $0.59 per diluted share, compared to a net loss of $2.9 million or $0.95 per diluted share in the same period last year [5] Business Line Data and Key Metrics Changes - Revenue for the Americas business increased by 15%, and adjusted net revenue increased by 3% year over year in constant currency [7] - Asia Pacific revenue decreased by 7%, while adjusted net revenue increased by 14% year over year in constant currency [8] - EMEA revenue decreased by 7% year over year in constant currency, and adjusted net revenue decreased by 19% [8][9] Market Data and Key Metrics Changes - Overall days sales outstanding increased to 56 days as of March 31, 2025, compared to 51 days at December 31, 2024 [9] - The company ended Q1 2025 with $17.2 million in cash, including $700,000 of restricted cash [9] Company Strategy and Development Direction - The company is focused on improving operations internally and enhancing its digital capabilities through strategic hires, including a Chief Digital Officer [11][30] - The company aims to expand its geographical reach and service offerings to existing and prospective clients, securing approximately $20 million of adjusted net revenue from renewals and extensions at existing clients [12] - The company is actively looking for acquisition opportunities to fill geographic gaps and enhance service capabilities [32][34] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to position itself for strong future growth despite current macroeconomic uncertainties [6] - The management noted that while there was initial momentum in Q1 2025, uncertainty in the macro environment has created hesitation in hiring demands from clients [20] - The management is optimistic about the potential for future growth as market conditions stabilize [57] Other Important Information - The company reported a cash outflow of $800,000 in cash flow from operations during Q1 2025, an improvement from a $1.8 million outflow in the same period last year [9] - The company has made significant investments in sales, marketing, and technology to enhance its competitive position [30] Q&A Session Summary Question: Impact of headlines on client reactions - Management noted that uncertainty in the macro environment has created hesitation in hiring demands from clients, impacting enterprise-level clients [20] Question: Geographic differences in activity levels - Management indicated that there is hesitation across all regions due to macroeconomic impacts, with some resilience seen in pharmaceuticals and life sciences [22] Question: Digital launch and expected outcomes - The company plans to offer a proprietary digital solution by the end of Q3 or beginning of Q4 2025, aiming to enhance service delivery and client satisfaction [43] Question: Cash usage prioritization and acquisition pipeline - The company prioritizes organic growth and is actively looking for acquisitions that can fill geographic gaps and enhance service capabilities [32][34] Question: Attrition rate and its implications - Management confirmed that the attrition rate is returning to historical levels, which could serve as a tailwind for the company [51]

Financial Data and Key Metrics Changes - For Q1 2025, the company reported revenue of $31.9 million, down 3.3% year over year in constant currency, while adjusted net revenue increased to $16.4 million, up 2.2% year over year in constant currency [5] - Adjusted EBITDA for Q1 was a loss of $700,000, an improvement from a loss of $1.5 million a year ago [5] - The net loss was $1.8 million or $0.59 per diluted share, compared to a net loss of $2.9 million or $0.95 per diluted share in the same period last year [5] Business Line Data and Key Metrics Changes - Revenue for the Americas business increased by 15%, with adjusted net revenue up 3% year over year in constant currency [8] - Asia Pacific revenue decreased by 7%, but adjusted net revenue increased by 14% year over year in constant currency [8] - EMEA revenue decreased by 7% year over year in constant currency, with adjusted net revenue down 19% [9] Market Data and Key Metrics Changes - Overall days sales outstanding increased to 56 days as of March 31, 2025, compared to 51 days at December 31, 2024 [10] - The company ended Q1 with $17.2 million in cash, including $700,000 of restricted cash [10] Company Strategy and Development Direction - The company is focusing on a land and expand strategy to enhance geographical reach and service offerings [12] - A new Chief Digital Officer has been appointed to launch a digital division aimed at improving digital capabilities and enterprise strategies [12] - The company secured approximately $20 million of adjusted net revenue from renewals and extensions at existing clients, plus $2.4 million in new logo wins for the quarter [13] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to position itself for strong future growth despite current macroeconomic uncertainties [6] - The management noted that while there was initial momentum entering Q1, uncertainty in the macro environment has created hesitation in hiring demands from clients [20] - The company is optimistic about future growth, particularly in regions like India and Latin America, while facing challenges in the US, China, and the UK [23] Other Important Information - The company has been investing in its capabilities in sales, marketing, and technology to enhance its competitive position [30] - The management is open to share repurchases and is considering various options for cash usage prioritization, including potential acquisitions [31][35] Q&A Session Summary Question: Impact of headlines on client reactions - Management noted that uncertainty in the macro environment has created hesitation in hiring demands from clients, impacting enterprise-level clients [19] Question: Geographic differences in activity levels - Management indicated that there is hesitation across all regions due to macroeconomic impacts, with some resilience seen in pharmaceuticals and financial services [22] Question: Digital launch details - The proprietary digital solution is expected to be available by the end of Q3 or beginning of Q4 2025 [43] Question: Seasonal spikes in renewals and expansions - Management acknowledged cyclical nature in contracts but emphasized ongoing efforts to expand services with existing clients [45] Question: Attrition rate and its implications - Management confirmed that the attrition rate is returning to historical levels, which could be a tailwind for the company [52] Question: Progress since the new CEO's appointment - The CEO expressed satisfaction with the progress made in building capabilities and investing in leadership, aiming to compete at a larger enterprise scale [56]

Company Performance - Hudson Global reported a quarterly loss of $0.46 per share, significantly worse than the Zacks Consensus Estimate of $0.06, representing an earnings surprise of -866.67% [1] - The company posted revenues of $31.87 million for the quarter ended March 2025, missing the Zacks Consensus Estimate by 1.50% and down from $33.89 million a year ago [2] - Over the last four quarters, Hudson Global has surpassed consensus EPS estimates two times and topped consensus revenue estimates just once [2] Stock Movement and Outlook - Hudson Global shares have declined approximately 23.3% since the beginning of the year, contrasting with the S&P 500's decline of -0.6% [3] - The company's earnings outlook is mixed, with current consensus EPS estimates at $0.17 on $34.38 million in revenues for the coming quarter and $0.74 on $138.9 million in revenues for the current fiscal year [7] Industry Context - The Outsourcing industry, to which Hudson Global belongs, is currently ranked in the top 9% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8]

Revenue Performance - Revenue for Q1 2025 was $31.9 million, a decrease of 6.0% from Q1 2024, and a 3.3% decrease in constant currency[6] - Total revenue for the three months ended March 31, 2025, was $31,866 million, a decrease of 6.2% from $33,891 million in the same period of 2024[25] - Revenue from the Americas segment was $6,852 million, a decrease of 18% in constant currency compared to $5,994 million in Q1 2024[28] - Asia Pacific revenue was $19,127 million, down from $21,509 million in Q1 2024, representing a constant currency decline of $862 million[28] - EMEA revenue decreased to $5,887 million from $6,388 million in the previous year, a constant currency decline of $53 million[28] Adjusted Net Revenue - Adjusted net revenue increased by 0.4% to $16.4 million compared to Q1 2024, with a 2.2% increase in constant currency[6] - Adjusted net revenue for the same period was $16,398 million, slightly up from $16,330 million year-over-year[25] - Americas revenue increased by 15% to $6.9 million, while adjusted net revenue rose by 3% to $6.0 million compared to Q1 2024[7] - Asia Pacific revenue decreased by 7% to $19.1 million, but adjusted net revenue increased by 14% to $7.2 million compared to the same period last year[8] - EMEA revenue decreased by 7% to $5.9 million, with adjusted net revenue down 19% to $3.2 million compared to Q1 2024[9] Net Loss and Earnings - Net loss for Q1 2025 was $1.8 million, or $0.59 per diluted share, an improvement from a net loss of $2.9 million, or $0.95 per diluted share, in Q1 2024[6] - The net loss for Q1 2025 was $1,756 million, an improvement from a net loss of $2,898 million in Q1 2024[31] - The company reported an adjusted net loss per diluted share of $0.46 for Q1 2025, compared to an adjusted net loss per diluted share of $0.72 in Q1 2024[31] Operational Efficiency - EBITDA loss for Q1 2025 was $1,512 million, compared to a loss of $2,682 million in Q1 2024, indicating a reduction in operational losses[28] - Adjusted EBITDA loss for Q1 2025 was $668 million, compared to a loss of $1,542 million in Q1 2024, reflecting improved operational efficiency[25] - Total selling, general and administrative expenses (SG&A) for Q1 2025 were $17,839 million, down from $18,973 million in Q1 2024, indicating cost control measures[28] Cash and Corporate Costs - Total cash, including restricted cash, was $17.2 million as of March 31, 2025[6] - Corporate costs decreased to $0.9 million in Q1 2025 from $1.0 million in the prior year[11] Share Repurchase Program - The company approved a $5 million share repurchase program, with $2.1 million remaining as of 2024[13] Net Operating Losses - The company has $240 million of usable net operating losses (NOL) in the U.S. as of December 31, 2024, which is considered a valuable asset[14]

Q1 2025 Earnings Call M a y 1 3 , 2 0 2 5 Forward-Looking Statements © 2024 Hudson RPO. All rights reserved. 2 Q1 2025: Consolidated Financial Results US$ in Millions, except EPS | | '+ / - (1) | | CC (2) | Q1 2025 | Q1 2024 | | --- | --- | --- | --- | --- | --- | | Revenue | - | 6.0% | | $31.9 | $33.9 | | | - | 3.3% | CC | | | | Adjusted net revenue | + | 0.4% | | $16.4 | $16.3 | | | + | 2.2% | CC | | | | SG&A(3)(4) | - | 4.5% | | $17.1 | $17.9 | | | - | 2.8% | CC | | | | Adjusted EBITDA(5) | + | 56.7% | | ...

Core Insights - Hudson Global, Inc. reported stronger financial results for Q1 2025 compared to Q1 2024, despite an uncertain overall talent environment due to macro conditions [3][8] - The company is optimistic about future growth, particularly in its Hudson RPO segment, which is expected to outperform peers [3] Financial Performance - Total revenue for Q1 2025 was $31.9 million, a decrease of 6% from Q1 2024, while adjusted net revenue increased slightly by 0.4% to $16.4 million [8] - The net loss for Q1 2025 was $1.8 million, or $0.59 per diluted share, an improvement from a net loss of $2.9 million, or $0.95 per diluted share, in Q1 2024 [8][20] - Adjusted EBITDA loss was $0.7 million, a decrease from an adjusted EBITDA loss of $1.5 million in the same period last year [8] Regional Highlights - **Americas**: Revenue increased by 15% to $6.9 million, with adjusted net revenue up 3% to $6.0 million. EBITDA loss improved to $0.1 million from $0.9 million in the previous year [4] - **Asia Pacific**: Revenue decreased by 7% to $19.1 million, while adjusted net revenue increased by 14% to $7.2 million. EBITDA improved to a profit of $0.3 million from a loss of $0.6 million [5] - **EMEA**: Revenue decreased by 7% to $5.9 million, with adjusted net revenue down 19% to $3.2 million. EBITDA loss was $0.6 million compared to a profit of $0.3 million in the previous year [6] Corporate Costs and Liquidity - Corporate costs for Q1 2025 were $0.9 million, down from $1.0 million in the prior year [9] - The company ended Q1 2025 with $17.2 million in cash, including $0.7 million in restricted cash, and used $0.8 million in cash flow from operations [10] Share Repurchase Program - Hudson Global has a $5 million share repurchase program, with $2.5 million spent in 2024 to buy back 154,084 shares, leaving $2.1 million remaining [11] NOL Carryforward - As of December 31, 2024, Hudson Global had $240 million of usable net operating losses (NOL) in the U.S., which the company considers a valuable asset for stockholders [12]

Group 1 - Hudson Global, Inc. will release its first quarter financial results for the period ended March 31, 2025, before the market opens on May 13, 2025 [1] - A conference call to discuss the financial results will take place on the same day at 10:00 am ET [1] - The call will be accessible via dial-in and a simultaneous webcast on the company's investor relations website [1] Group 2 - Hudson Global, Inc. operates as a leading global total talent solutions provider under the brand name Hudson RPO [2] - The company offers customized recruitment outsourcing and total talent solutions to organizations worldwide [2] - Hudson Global focuses on developing tailored talent solutions to align with clients' strategic growth initiatives [2]

Revenue Performance - Revenue for the year ended December 31, 2024, was $140.1 million, a decrease of $21.3 million, or 13%, compared to $161.3 million in 2023[112]. - RPO revenue decreased by $10.6 million, or 14%, and contracting revenue decreased by $10.7 million, or 13%, on a constant currency basis[112]. - In the Americas, revenue decreased by $3.4 million, or 11%, with RPO revenue down by $5.7 million, or 19%, while contracting revenue increased by $2.3 million, or 240%[118]. - Adjusted net revenue in the Americas was $25.1 million for 2024, a decrease of $5.0 million, or 17%, compared to $30.1 million in 2023[119]. - Asia Pacific revenue decreased by $16.5 million, or 16%, to $86.7 million in 2024, with contracting revenue down by $12.9 million, or 18%[124]. - In Australia, revenue decreased by $21.3 million, or 23%, primarily due to a 20% decline in contracting revenue[125]. - EMEA revenue decreased by $1.4 million, or 5%, with RPO revenue down by $1.4 million, or 8%[135]. - Adjusted net revenue in EMEA decreased by $1.3 million, or 8%, driven by a 9% decline in RPO adjusted net revenue[138]. Financial Losses - EBITDA loss was $2.5 million for 2024, compared to EBITDA of $3.7 million for 2023, representing a decrease of $6.1 million on a constant currency basis[112]. - Net loss for the year ended December 31, 2024, was $4.8 million, compared to a net income of $2.2 million for 2023, a decrease of $7.1 million on a constant currency basis[112]. - Operating income in EMEA fell to $0.5 million in 2024 from $2.0 million in 2023, a decrease of 74%[143]. - Net loss for 2024 was $4.8 million, a decrease of $7.0 million compared to net income of $2.2 million in 2023[151]. Expenses and Cost Management - SG&A and Non-Op expenses were $72.6 million for 2024, a decrease of $4.0 million, or 5%, compared to $76.6 million in 2023[112]. - For the year ended December 31, 2024, SG&A and Non-Op in the Americas decreased by $6.2 million, or 20%, compared to 2023, with SG&A and Non-Op as a percentage of revenue decreasing from 100% to 90%[120]. - SG&A and Non-Op in Asia Pacific increased by $1.3 million, or 5%, with SG&A and Non-Op as a percentage of revenue rising to 33% in 2024 from 27% in 2023[131]. - Corporate expenses increased by $0.6 million, or 20%, to $3.6 million in 2024 from $3.0 million in 2023[145]. Cash Flow and Liquidity - Cash and cash equivalents decreased to $17.7 million as of December 31, 2024, down from $23.2 million in 2023[152]. - Net cash used in operating activities was $2.8 million in 2024, compared to a net cash provided of $0.3 million in 2023, a decline of $3.1 million[153]. - Net cash provided by investing activities was $1.1 million in 2024, contrasting with $2.2 million used in 2023, reflecting cash received from benefit payouts[154]. - Net cash used in financing activities increased to $3.1 million in 2024 from $2.5 million in 2023, primarily due to share repurchases of $2.8 million[155]. - The company believes it has sufficient liquidity to meet its needs for at least the next 12 months[158]. Market Conditions and Strategic Outlook - The company anticipates that challenging market conditions, including persistent inflation and higher interest rates, will continue into 2025[108]. - The company is exploring strategic alternatives to maximize shareholder value, including potential acquisitions and share repurchases[106]. Tax and Compliance - The effective tax rate for 2024 was negative 37.5%, compared to 14.4% in 2023, primarily due to pre-tax losses[150]. - As of December 31, 2024, the Company's gross liability for income taxes associated with uncertain tax positions was $0.1 million[171]. - The Company has provided for tax on all unremitted earnings of foreign subsidiaries, recognizing the tax on Global Intangible Low Taxed Income ("GILTI") as a period expense in the year incurred[174]. - The Company assesses tax positions and records tax benefits based on a greater than 50% likelihood of realization upon settlement with tax authorities[173]. - The Company believes its tax reserves reflect the probable outcome of known tax contingencies, although uncertainties may impact results[173]. Business Combinations and Accounting - Business combinations are accounted for under the acquisition method, with goodwill recorded when the purchase price exceeds the net fair value of assets acquired[175]. - Transaction costs in business combinations are expensed, while in asset acquisitions, they are considered part of the acquisition cost[175].