Hudson Global (NasdaqGS:HSON) Conference Transcript

Summary of Hudson Global Conference Call - September 17, 2025 Company Overview - Company: Hudson Global (NasdaqGS:HSON) - Recent Merger: Hudson Global merged with Star Equity Holdings, completed on August 21, 2025, with Hudson as the surviving entity due to its $240 million net operating loss (NOL) [4][3] Core Business Strategy - Vision: Aim to be the "Berkshire Hathaway of microcaps" by focusing on excellent businesses, management, and capital allocation [3] - Revenue Projections for 2026: Expected revenue of $250 million, adjusted EBITDA of $15 million, and adjusted earnings per share of approximately $1.50 [5][11] - Long-term EBITDA Goal: Anticipate reaching $40 million in EBITDA by the end of the decade, driven by organic growth and market share increase in growing industries [6] Acquisition Strategy - Focus on Bolt-on Acquisitions: Targeting acquisitions that enhance existing businesses, aiming for each to generate at least $10 million in EBITDA [6][20] - Capital Allocation: Plans to use cash, debt, and preferred stock for acquisitions, avoiding stock issuance due to perceived undervaluation [8][9] - Asset Monetization: Over $20 million in non-EBITDA generating assets expected to be monetized, which could significantly impact market cap [9] Financial Metrics and Valuation - Current Valuation: Stock is considered undervalued with a PE ratio of 6 and EV/EBITDA of 3 based on 2026 estimates [12][11] - Preferred Stock: Approximately $27 million in preferred stock, viewed as a flexible acquisition currency [12][30] - Free Cash Flow Yield: High free cash flow yield available for shareholder value creation through acquisitions or stock buybacks [34] Industry Dynamics - Staffing Business Outlook: Experienced a peak in 2022, followed by a decline, but is seeing a gradual return to normal hiring levels, particularly among Fortune 500 clients [31][33] - Attrition Rates: Noted a significant drop in attrition rates post-COVID, indicating a stabilization in the workforce [32] Key Business Segments - Building Solutions: Expected to grow at an average of 10% revenue growth over the next five years, with a focus on engineered wood products [22] - Business Services: Largest division, aiming to return to 2022 profitability levels with a focus on long-term contracts with Fortune 500 companies [23] - Energy Services: Looking for acquisitions in non-capital intensive, mission-critical products and services [24] Management and Team Structure - Management Team: Comprised of experienced individuals from both Hudson and Star, with a focus on operational efficiency and strategic growth [36] Conclusion - Future Outlook: Hudson Global is positioned for long-term value creation through strategic acquisitions, organic growth, and effective capital allocation, with a strong focus on enhancing shareholder value [5][9][34]