Good morning, and welcome to the Hudson Global conference call for the fourth quarter of 2020. Our call this morning will be led by Chief Executive Officer, Jeff Eberwein; and Chief Financial Officer, Matt Diamond. .

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 this 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 their earnings release and quarterly slides, both posted on their website, hudsonrpo.com.

I encourage you to access their earnings materials at this time as they will serve as helpful reference guide during our call. .

I will now turn the call over to Jeff Eberwein. .

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 fourth quarter 2020 highlights, and Matt Diamond, our CFO, will provide some additional details on our financial results. I'll then give an update on current business conditions. .

For the fourth quarter of 2020, we reported revenue of $27.3 million, up 2% year-over-year in constant currency. Adjusted net revenue, formerly referred to as gross profit, was $11.3 million and decreased 2% year-over-year in constant currency. SG&A costs were $10.5 million in the fourth quarter, down 1% versus the same period a year ago.

We reported adjusted EBITDA of $700,000 compared to adjusted EBITDA of $900,000 a year ago. In addition, we reported net income of $1.2 million or $0.41 per share versus net income of $1.5 million or $0.48 per share in the same period last year.

We reported adjusted net income per share of $0.20 in the fourth quarter 2020 versus adjusted net income per share of $0.51 a year ago. .

Turning to performance for the quarter by region. Our Asia Pacific business grew 5% in constant currency, while adjusted net revenue declined 8% in constant currency. Adjusted EBITDA of $1.5 million increased from adjusted EBITDA of $1.2 million a year ago.

For the full year 2020, our Asia Pacific business grew adjusted EBITDA to $3.9 million from $3.3 million in 2019. To generate this level of growth in 2020 is an amazing accomplishment, and I'm very proud of the results our Asia Pacific team have been able to produce given the headwinds facing them this year. .

Our Americas business grew revenue and adjusted net revenue 20% and 16% in constant currency, respectively. Adjusted EBITDA loss of $100,000 decreased versus last year's adjusted EBITDA of positive $200,000. Our EMEA business saw revenue decline 20% in constant currency, adjusted net revenue declined 9% in constant currency.

Adjusted EBITDA of $200,000 in the fourth quarter decreased compared to adjusted EBITDA of $400,000 in the fourth quarter of last year. .

I'll now turn the call over to Matt Diamond, our CFO, to review some additional financial details from the fourth quarter. .

Thank you, Jeff, and good morning, everyone. In connection with the acquisition of Coit Group, our balance sheet as of December 31, 2020, reflects $2.1 million of goodwill and $1.4 million of net intangible assets. The company used $100,000 in cash flow from operations during the fourth quarter.

Days sales outstanding was 41 days at December 2020, which was slightly below DSO of 42 days we had at December 2019. We ended the quarter with $26.2 million in cash and restricted cash.

As a reminder, in April 2019, we finalized a new 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 down on this facility at the end of Q4. In April 2020, we received a loan through the SBA PPP program for $1.3 million.

In the fourth quarter of 2020, we received full forgiveness for this loan. This is split out into its own line item labeled PPP loan forgiveness in our fourth quarter results. .

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. .

Thank you, Matt. 2020 was a uniquely challenging year for our clients and our business due to the impacts of the COVID-19 pandemic.

Although the recovery from COVID-19 is uneven and uncertain, we've begun to see activity levels rebound, especially in the life sciences and technology sectors, and we believe we're well positioned to return to growth alongside our clients in 2021.

As a reminder, we acquired Coit Group in the fourth quarter and are very pleased with its integration thus far. Also, we believe we have improved our sales and marketing effectiveness, while also lowering our cost structure, particularly in the Americas, which will enable us to drive profitable growth as our business recovers in 2021. .

Importantly, I want to thank all of our highly dedicated employees for their flexibility, hard work and dedication to our clients in our business and the challenging conditions we've been working through. .

Operator, can you please open the line for questions. .

[Operator Instructions] Presenters, your first question will come from the line of Josh Vogel from Sidoti & Company. .

Jeff, you just mentioned that the integration with Coit was going well. And I know it's still relatively early in the game here. I guess actually, it's -- we're about 5 or 6 months in, but there is talk about how that business expands your tech presence. It also potentially positions you to serve clients within that region on a global basis.

I was curious if you were seeing any of that come to fruition or opportunities in the pipeline around that. .

Yes. No, good question. They've had a good business for a really long time and really good growth. And if the -- our thought in partnering with them was that if they just keep doing what they're doing, it will be a really good acquisition and really good partnership.

But the 2 areas of potential synergy where 1 plus 1 equals 3 is being able to go after larger tech company projects that neither one of us could have done separately. And then the other is international. And interestingly, we're seeing more momentum on some of the international projects that we couldn't have done or might not have done separately.

So for example, we've won -- it's ramping up a medium-sized technology project in Australia through a referral that came through Coit. So they couldn't have done it on their own because they historically haven't had a presence in Australia and it's a client that we might not have known about had we not acquired Coit.

So we are starting to see some nice synergies, and we think that's only going to grow and get bigger and better over time. .

That's helpful.

And when we think about the pipeline, can you just talk about where you're seeing more opportunity today with regard to small- and medium-sized projects versus those larger projects of years past?.

Yes. No, good question. Most of our clients are larger Fortune 500 companies. And our 2 biggest sectors are health care and financial services. And we are seeing that business start to improve, start to thaw and conversations on new business are emerging. But that has always been a slow-moving phenomenon.

Said another way, our business has a long sales cycle to it. And this recovery is no different in that regard. But where we are seeing a lot of good wins and good momentum is in more medium-sized businesses, medium-sized projects, and particularly in the life sciences and technology sectors.

And where that business is different in that having a rapid response and being able to help them quickly is really, really important. A lot of cases there are less price-sensitive and much more time-sensitive.

And we've developed teams in each region in order to respond to that market demand, and we call it rapid response teams, but each region is developing that. And that's our fastest-growing client base and where our new wins have been in recent months. .

I appreciate the insight there. And shifting gears a little bit. We know last quarter, you consolidated the management of the Americas and Europe under Darren.

And I was just curious, how is that going? And are there any other potential strategic moves that you may make to either rationalize some bench costs or drive efficiencies?.

Yes. Good question. No, that has gone really, really well thus far. We have, like you said, the management team of -- we combined the management team of Americas and Europe.

And we are seeing some really good synergies there, where people that do things like HR or marketing or working on client proposals or doing market research were able to do that in both markets rather than just doing it in one market. And then we've taken some of those savings and invested that in sales and marketing.

So we have been growing the sales team in the U.S. and that investment is starting to pay off because we have been winning a lot of new business in the Americas, and that was for a variety of reasons, the geographic area that was hit the hardest for us in 2020, and that's going to be the area that has the strongest rebound, we believe. .

Great. And one more question. I'll jump back in the queue. Obviously, your balance sheet remains very robust. Just when we think about capital allocation strategy in 2021, especially in an environment where COVID-related challenges are easing, appetite for acquisitions, also, maybe just some commentary around what you're seeing with asking prices.

Are they too high? Or are they somewhat in your wheelhouse? And just what your priorities are around capital allocation. .

Yes. No, that's a really important area, particularly over the medium to long term. And our top priority has been in internal growth investments. And we've talked previously about those being focused on technology, sales and marketing, and those will always be areas of investment but maybe it won't grow quite as much as it has in the past few years.

We had some catching up to do in that regard. But internal growth investments are the highest priority. And then we look at acquisition opportunities all the time, and we look at buybacks all the time.

And we have a history of buying back a significant amount of stock in the past, and it's a really great tool to have in the toolkit, particularly when our stock price is cheap. And so I would just encourage people to look at our past actions as a guide there. .

And on acquisition front, we are looking at things. And it's a really good environment to be looking, but it's so hard to predict which ones are ones that are going to be over the goal line. It takes a willing buyer and willing seller. And I guess the most important thing I would say in that regard is we're not looking to get bigger per se.

Growth is just a means to an end. We're really looking at those situations where there is a strong 1 plus 1 equals 3, where we can look at the target's business and team and say, "Gee, inside our company, there are so many things we could do together to make it a 1 plus 1 equal 3.".

[Operator Instructions] Presenters, we do have a follow-up question coming from the line of Josh Vogel from Sidoti & Company. .

It's me again. In the absence of any sort of guidance, but just directionally when we think about 2021 and the geographic split of your business exiting 2020, how should we think about potential geographic mix based on what you're seeing today and just like if we're sitting here a year from today? Just curious your thoughts around that. .

Yes. Good question. Rough rule of thumb, and this is on adjusted net revenue, in particular, is that Asia Pac is around 50%, Americas around 25% and Europe around 25%. But because Asia Pac is so much bigger, and this is just a basic math problem, if everyone has the same dollar growth, it's a lower percentage for them because it's a much bigger base.

And that business held up incredibly well in 2020. Our team did a really good job managing costs and transitioning to the virtual environment, that was part of it. Another part of it is just our client base wasn't heavily, heavily impacted.

We don't really have exposure to travel, hospitality, luxury, retail, some of the areas that were really hit hard last year. .

And then Australia, which is our biggest country in the whole company, was not as impacted by COVID as the Europe or the U.S. was. And so that business held up really, really well.

So it's just starting at a higher level, and the Americas was hit the hardest, and we did have some client loss there and just the clients that we had disproportionately had more hiring freezes and reduced activity. And that -- and then we've lowered the cost structure and now business is rebounding.

So Americas is going to see the highest growth by far in 2021, but it's off a lower base. And then we think we're going to have good growth in Europe and good growth in Asia Pac. And we have a goal for all of our regions to grow at least 10% a year, and we think that, that growth will be met.

But just to reiterate, we think the strongest growth we'll be seen in the Americas. .

That's helpful. And just one last one. When we spoke back on the November call and thinking just about reinvesting in the business, you mentioned about looking to add more centers of excellence over time. And I was just curious how we should think about that from a timing and location perspective.

What do you need to see and where before you feel comfortable opening one of those CoEs?.

Yes. No, that's a -- I'm really glad you asked that question because it's a really important part of our business model. And it's a key to winning business, and it's a key to being flexible, which is what people like about RPO. And it's also a key in developing these rapid response teams which is in high demand in life sciences and technology.

So I'm happy to say that we, just in Q1, opened a center of excellence in Tampa. And so the office is open. We're hiring aggressively in that office, and that team is going to support our Americas business. .

And we've mentioned before that we have a center of excellence in Scotland, and we have 2 in Asia Pac. And we're studying other areas to open centers of excellence. And so I think it's just a matter of time before we see a second one in the U.S., probably somewhere in the West.

And then there could be a second one in Europe at some point, in the EMEA region, and there could be a third one in Asia Pac at some point. So at the beginning of the year, we had 3 centers of excellence. We now have 4. And I think there'll be a point in the future where we have more like 6. .

[Operator Instructions] That concludes today's question-and-answer session. I will now turn the call over to Jeff Eberwein for closing remarks. .

Thank you all again for joining us today and for your interest in Hudson Global. We look forward to next quarter's update call. .

Thank you, sir. Thank you so much, presenters. And again, thank you for joining the Hudson Global fourth quarter conference call. Today's call has been recorded and will be available on the Investors section of our website, hudsonrpo.com. Stay safe, and have a lovely day..