Hudson Global Inc (HSON) 2013 Q3 法說會逐字稿

Good morning.

My name is Jasmine and I will be your conference operator today.

At this time, I would like to welcome everyone to the Q3 2013 earnings conference call.

All lines have been placed on mute to prevent any background noise.

After the speakers' remarks, there will be a question-and-answer session.

(Operator Instructions)

Thank you.

I would now like to turn the conference over to you, David Kirby.

Please go ahead, sir.

Thank you, Jasmine, and good morning, everyone.

Welcome to the Hudson Global conference call for the third quarter of 2013.

Our call this morning will be led by Chairman and Chief Executive Officer, Manolo Marquez; and Executive Vice President and Chief Financial Officer, Stephen Nolan.

At this time, I will read the Safe Harbor statement.

Please be advised that, except for historical information, the statements made during the presentation constitute forward-looking statements under applicable securities laws.

Such forward-looking statements involve certain risks and uncertainties, including statements regarding the Company's strategic direction, prospects, and future results.

Certain factors, including factors outside of our control, may cause actual results to differ materially from those contained in the forward-looking statements, including economic and other conditions in the markets in which we operate; risks associated with competition, seasonality, and the other risks discussed in our filings made with the SEC.

These forward-looking statements speak only as of today.

The Company assumes no obligation, and expressly disclaims any obligation, to review or confirm analyst expectations or estimates, or to update any forward-looking statements, whether as a result of new information, future events, or otherwise.

During the course of this conference call, references will be made to non-GAAP terms such as EBITDA.

An EBITDA reconciliation is included in our earnings release and our quarterly slides, both posted on our website, Hudson.com.

I encourage you to access these materials at this time.

They're posted under Featured Documents and will serve as a helpful reference guide during our speakers' remarks.

With that, I will turn the call over to Manolo Marquez.

Thank you, David, and good morning, everyone.

Earlier today, we released results for the third quarter of 2013.

Our results were consistent with the guidance we provided on our second-quarter earnings call, with adjusted EBITDA slightly better than the top end of our estimated range, and revenue just slightly below our estimated range.

Our cash position remains strong, growing by [$5 million] (corrected by company after the call) in the quarter.

Last quarter, I spoke to you about our four areas of attention for the second half of the year.

We are aiming at returning the business to sustainable profitability and topline growth, and we made meaningful progress during the quarter.

As a reminder, those four areas of attention for the second half are -- first, build on the early traction evident in the second quarter, and restore topline growth to the business, particularly in our key markets.

Second, focus on RPO, eDiscovery, and higher-value recruitment and talent solutions services.

Third, enhance our processes and build efficiencies into our operations.

And, fourth, invest selectively in key markets to enable future growth while maintaining a solid balance sheet.

The first of the four areas is to build on our momentum and restore topline growth.

Through a continued focus on disciplined execution, we generated sequential traction in a number of our key markets this quarter.

Our recruitment market in Australia generated gross margin, increasing sequentially in the third quarter despite continued weakening of the Australian economy.

We believe that this sequential growth in the face of worsening market conditions in Australia validate the progress we are making there.

Australia is an important market for us long-term, and there will continue to be opportunities to win market share through our strong brand reputation, renewed emphasis on disciplined execution, and of course, our outstanding team.

Our talent management in Australia, which grew by 36% in 2012, is down in comparison with that record year.

Still, during the third quarter, we won major projects, which will be implemented in the coming quarters.

In Asia, after some challenging quarters, our China business has begun to stabilize, growing gross margin by 14% sequentially.

In our second-biggest market, the UK, our recruitment gross margin grew slightly sequentially, despite typical third quarter seasonality pressures.

However, our RPO and eDiscovery businesses there are not yet fulfilling to our expectations.

In Continental Europe, the seasonality-driven sequential decline of 15% this quarter was significantly better than the 21% decline in last year's third quarter.

And in the Americas, we are making continual progress towards attaining year-over-year quarterly gross margin growth.

And we have improved adjusted EBITDA by 71% on a year-over-year basis this quarter, principally through a sharp focus on operational effectiveness and a determined emphasis on cost management.

In our second area of attention, focus on our global practices and higher value businesses, I'll start by highlighting the ongoing industry acknowledgment of the quality of scope of the work we do in RPO.

Our RPO business was once again recognized as one of the premier providers of outsourced recruitment solutions in the world, moving up to ninth place in the prestigious HRO magazine, Baker's Dozen ranking globally.

We created our RPO business 15 years ago in Australia, and are now ranked number two in the Baker's Dozen in Asia-Pacific.

After ending our relationship with Origin Energy in the second quarter, we initiated our relationship this quarter with Energy Australia.

The Energy Australia relationship will begin to generate revenue in the fourth quarter, and it's expected to become our second-largest client in Australia in 2014.

In the Americas, our RPO business was up 9% this quarter as compared to the same quarter a year ago.

And we won two high profile accounts, which will begin to deliver revenue in the fourth quarter.

In our eDiscovery business, we have streamlined the operational and delivery model to ensure consistently high quality service delivered efficiently.

We are not yet satisfied with the sales performance of this business, but with the new sales leader in place as of August, which I announced last quarter, and the addition of experienced sales executives in his team, we expect to drive revenue growth in the coming quarters.

Our third area of attention, to enhance our processes and build efficiencies into our operations has been a subject of significant emphasis for us.

And the importance we have placed on disciplined operations and cost management is continuing to gain momentum.

In his first few months, Stephen Nolan has worked closely with the operational leaders of the Company to create additional efficiencies in our cost base.

Overall, SG&A is down sequentially by 5.5%, with lower cost in Europe, including both the UK and the Continent, as well as in Asia-Pacific, and specifically in Australia and New Zealand.

America's costs are flat sequentially, but down 12% or $1 million from the third quarter a year ago.

And having focused last year on the front office and an initial implementation of shared services, we are now working hard to realize more efficiency and sharpen our effectiveness in our back office operations.

The last of our four areas of attention addressed investing selectively in our key markets to grow the top line, while also maintaining a strong balance sheet.

I have spoken about the tremendous talent we have been able to attract in Hudson in recent months, and how that underscores the broader markets' confidence in our future.

That pattern continued this quarter, as we invested in the strengthening of our teams in key markets.

The most notable addition is that of Tulika Tripathi, who has joined us as Managing Director of Asia.

She built Michael Page India after managing its Singapore business, and Switzerland prior to that.

She brings creativity, business savvy, industry experience, and a track record of great success to these key region.

She complements our strong existing team of leaders in Asia-Pacific.

The new leadership team we have recently put in place globally brings excellent track record of disciplined execution and topline growth generation in similar roles, with some of our leading competitors.

The combination of very skilled and experienced from outside of Hudson, along with the great existing leadership talent we see in Hudson, is already demonstrating that it will be a powerful driver of success in the future.

Though, as we anticipated, the third quarter was tough, the signs of progress in our financial and business performance were more numerous than in previous quarters, driven by a number of activities, specifically a greater focus on operational and cost management that has allowed us to offset much of the year-over-year gross margin decline.

Our reinforced leadership team who is driving disciplined execution, and has started to become evident in sequential growth in several main markets, and will positively impact our results.

We have prioritized our investment into our key geographies and high-potential businesses.

We are increasing our operating leverage by taking cost out of the business, and we are maintaining a strong liquidity position.

As we look to our fourth quarter, we expect to be able to demonstrate further progress towards achieving profitability.

I'm particularly pleased and heartened by the display of confidence in our future and commitment to our direction by the Board and management team in their significant share purchases during the third quarter.

The leadership team and I intend to reward that commitment and the commitment of all our shareholders with improved performance and increased value.

Now let me hand it over to Stephen Nolan, who will provide you with more detail on our third-quarter performance.

Thanks, Manolo, and thank you all for joining us this morning.

As Manolo detailed, it is essential that we restore topline growth to the business as soon as possible, while we continue to identify and exploit opportunities to gain efficiencies in our operations.

We have been able to offset the majority of our year-over-year gross margin decline with lower costs, and we are closely working with our business leaders to institutionalize a number of key elements, including operational focus and disciplined execution.

As we continue to reduce costs, a portion of those savings should improve our bottom-line performance, while another portion will allow for investment in front-line staff.

When we invest, we are allocating resources as efficiently as possible to our most promising markets and product offerings.

Looking at the third quarter results, there are a number of highlights.

Our revenue was down 3% sequentially on a constant currency basis, which is much improved from the 9% sequential decline we experienced a year ago in the third quarter.

While our overall revenue in Australia declined by 4% sequentially in constant currency, due to the major RPO client transition that Manolo mentioned, we are seeking stabilization in our recruitment business in Asia-Pacific and its tough economic conditions.

And we will start to see the impact of the new large RPO client in Q4.

UK revenue was up 3% sequentially in constant currency, led by sector growth in financial services, retail, and pharmaceuticals.

And we had solid cash generation and an increase in the availability as well, with cash up 17% and availability up 8% from the prior quarter.

At the same time, we continue to face challenges in many of our markets and have been unable to deliver year-over-year topline growth.

Reversing these declines is a priority for us.

In the third quarter, our revenue declined 13% from prior-year and 10% in constant currency.

We were able to narrow the year-over-year constant currency decline for the fourth consecutive quarter, an indication that we are moving in the right direction.

In Asia-Pacific, gross margin declined 23% year-over-year in constant currency, primarily weaker results in RPO and recruitment.

The strengthening of our business in Australia is critical to our long-term success in the region, and we were pleased to see sequential improvement in our recruitment business there.

China remains mixed, down on a year-over-year basis, but growing sequentially, as did Hong Kong.

In Europe, our gross margin was down 12% year-over-year in constant currency, driven by slower temp contracting in the UK, and weaker results in talent management, primarily Belgium, which was somewhat offset by a strong performance in our Dutch business.

In the Americas, gross margin dropped 5%, due to weaker performance in IT.

eDiscovery revenues slowed during the quarter.

However, we do expect to see an impact in the coming quarters, as our recently hired sales leadership ramps up.

Here are some additional data points on the third quarter.

We incurred $700,000 in restructuring charges in Q3 for actions across nearly all our markets.

Year-to-date, we have incurred $4 million in restructuring.

We continue to expect approximately 1.5 times annual return on the charges we have taken.

Our third-quarter results included $400,000 of stock compensation compared to $500,000 a year ago.

And the full cost of equity is expected to be approximately -- for the full year, cost is expected to be about $2.5 million.

Our third-quarter tax provision was $45,000 as compared to $1 million a year ago.

The reduction in the provision results largely from lower earnings in the current year.

For the full year, we expect to record an overall tax benefit of approximately $300,000, principally for countries where we can record a benefit for losses, partially offset by adjustments for tax rate changes and withholding taxes.

Our DSO was 49 days, flat to a year ago, and a one day improvement from the second quarter.

We ended the quarter with $33 million in cash and $39 million in available borrowings, totaling $72 million in liquidity.

We generated $5.6 million in operating cash flow during the quarter and had no borrowings at quarter-end.

In the third quarter, over 85% of our availability came from our two largest credit facilities -- RBS, supported by the accounts receivable in the US and UK, and Westpac Bank, supported by the accounts receivable in Australia and New Zealand.

The remaining availability came from our smaller facilities in Continental Europe and Asia.

We did renegotiate our fixed charge covenant with Westpac during the third quarter, as our business in Australia navigates more challenging market conditions.

We remain in regular dialogue with each of our banks, and are confident that those relationships will continue to benefit us going forward.

Capital expenditure was $700,000 in the quarter, and we expect full-year capital expenditures of about $3 million to $4 million.

In terms of the fourth-quarter outlook, we considered a number of factors.

Number one, conditions remain challenging, but there are signs of improvements that are evident in some markets.

Number two, the impact of new leaders and new talent we have put in place during 2013.

And number three, seasonality will improve in Europe in Q4, but slows in Australia and New Zealand.

With all this in mind, our outlook for the fourth quarter is for revenue of $155 million to $165 million of prevailing exchange rates, and adjusted EBITDA of between a $1 million and $3 million loss.

This revenue range implies a year-over-year decline of between 10% and 16%.

I expect the revenue decline in each of our regions to be relatively consistent with the overall range.

Sequentially, the Americas should be consistent with Q3, while Europe should be better, and Asia-Pacific may lag a bit, as the third quarter seasonality reverses for both markets.

The focus for me going forward is two-fold -- working directly with our operating leaders to help them generate topline growth, and identifying areas where we can reduce our cost base.

As I review our expense structure, there are a number of areas that we can continue to target for improvements.

For example, real estate remains a focus for me, and we are working on lowering our annual rent in a number of key markets.

All areas of support costs are under review, as we continue -- as we need to continue to find ways to be more efficient and more cost-effective in how we service our clients.

I'm encouraged by the strong commitment of our teams, and the very talented people in our front office around the globe that I've come to know over the past few months.

I know we have all the ingredients to be successful.

With a commitment to effective cost management, smart, and disciplined execution, aggressive marketplace activity, and a continued focus on delivering the highest quality of service to our clients and candidates, we should experience improved business results in the coming quarters.

Jasmine, please open the line to Q&A.

Operator, we'll open the line for Q&A now.

(Operator Instructions) Bill Nasgovitz.

Just a couple of questions.

You said you won a couple major -- we won a couple major contracts in Australia.

Could you just elaborate a little bit in terms of what's the differentiating feature?

Or why we were chosen?

And then, secondly, in terms of restructuring charges, when will they end?

The couple of major contracts that we won in Australia I was referring to, was in talent management.

The contracts are won on the assessment ground of talent management and the other one on the outplacement world.

On the outplacement, it's a contract for all the Teachers departments of the District of the Victoria, where we will be helping outplacement, all the teachers that the government is going to outplace because of the colliding budgets in the government.

And the assessment is in the government of New South Wales, where they want us to assess over 400 leaders of the government of New South Wales.

Our reputation in Australia in talent management is really top of class in most areas.

We have been working with the government of New South Wales on similar projects for the past few years, and we have proven excellence in delivery.

And in the outplacement in Victoria, we've been working with them just for a year and a half or so, and we have beaten all our competition in all our delivery parameters.

I will leave that to Stephen on the restructuring question.

Thanks, Manolo.

Bill, I think we are obviously focused on delivering topline growth as well as ensuring profitability, so we look very hard at the actions we need to take to optimize our support costs across our network.

And I think we are still looking at the area of opportunities there, and as far as possible.

For example, in the case of real estate, we will adjust our cost base without taking any restructuring charges, but there may be a need, as we go forward, to take some more.

So you do anticipate perhaps additional charges in Q4?

We are working on some programs now, as I said, and it's a possibility, yes.

Okay.

Thank you.

(Operator Instructions) Mark Marcon, Robert W. Baird.

I have a number of questions.

I'd like to follow on to Bill's to start.

Can you just talk about -- Steve, can you talk a little bit more about the -- some of the -- how you're thinking about the potential for cost reductions?

We have talked in the past about potential levels.

And how -- now that you've been with the Company for a while, and you've had a chance to go and see different operations, what's your general assessment in terms of how significant those opportunities could be?

Well, I think, there is a part of it, Mark, that if you look at the inherent nature of the business that Hudson has built up of these different pieces, and there is a piece now with the declining revenue that says there are obviously some costs that we need to take out; at the same time, when I was in Australia and in Shanghai, a month ago or two, it's clear we need more fee-earners.

I think it's the same way in the UK.

So my goal at the moment is to -- and we have done this so far this year, taken out over $2 million in real estate.

That's coming on an annualized basis, not all in this year.

And we will continue to look very, very hard at that.

We have some large offices in some expensive cities that we need to figure out how that -- make sure operations can run as efficiently as possible, but perhaps not with the same burden.

At the same time, there were some jobs that were eliminated in the third quarter -- quite senior folks -- and we will continue to look at areas where we can simplify our business, take out cost.

And so, for me, it's a view I'm trying to take out the money to invest back because we need to add people.

At the same time, we would have to head towards profitability.

So would you view it more as a situation where whatever you end up taking out, probably ends up getting reinvested in terms of fee-earners in order to get the top line growth going?

Well, I think it's a mix, Bill, it's not a dollar -- sorry, Mark -- it's not a dollar for dollar.

I think it's -- there's a piece that says we have to be able to reduce our cost base and have an increased gross margin.

So that's -- and as we -- in some markets, head towards that, starting to see year-over-year growth, the leverage there has to allow us to have more of that gross margin growth drop down.

So it's not -- I think it's a mixed from a balance of the two.

I mean, I think we have to do both.

We have to invest and we have to take cost, and we have to take more cost than what we invest back, because we still are aiming at recovering the 7% to 10% EBITDA margin that we said.

I mean, it will take time until we do that.

But that obviously goes to making sure that the platform that we have to operate our business is simplified.

We have discussed other times, we have inherited a platform that is -- was decentralized and didn't take into account any synergy about our operation.

And the difficulty -- I mean, we did take cost in 2012.

The difficulty of the second round of restructuring that we are doing now, and this is where Stephen, with his sharp eye in operations, is helping us tremendously.

As we engage in these second phase, we need to change the processes to drive those efficiencies.

When we talk about increasing our fee-earners, the one thing that we are doing now is be very focused on bringing people with experience in our industry.

The people that we have brought this year have more of a profile of experienced recruiters that are coming from other areas that we need to train.

And in markets such as Australia, for example, where we are measuring very, very fast -- we are getting more traction on the recruiting part of the business with this sequential growth that Stephen and I have referred to.

The speed to which one of the new consultants is bringing profits to the Company and has grown from approximately three quarters to four months, on average.

So if we continue with that trend, we would not see much of an impact of the investment of the new hires within the year.

It could have impact within the quarter, but not within the year.

So we definitely will continue taking cost out of the business and invest less than the cost we are taking to improve our profitability.

Okay.

And can you tell us, roughly speaking, where the overall headcount of the internal staff is right now?

Yes.

So it's about 1700.

1700?

And would you --

(multiple speakers) Out of which we've got 1100 approximately on the fee-earners area.

Okay.

Great.

But that's where we will continue to potentially invest.

So would you anticipate that the overall headcount would be roughly the same with more of a mix shift toward the fee-earners?

Or would it -- on an overall basis, would it come down?

No.

I think it would come up, but we will change the mix to the fee-earners, decreasing the ratio of support to fee-earners.

Okay.

Great.

And then, can you talk a little bit about the -- we are seeing signs of improvement in Europe and the US, just broadly speaking.

Can you talk about what you are seeing by geography?

And, Manolo, really appreciate your perspective, particularly as it relates to Europe.

I mean, I think that, I mean, we talk about the economic sentiment, which is before you start to kind of get into the macro performance of countries with the GDP and the unemployment, which is still not there, the economic sentiment is the one that starts bouncing back the recruiting industry.

On the economic sentiment, it is certainly improving in Europe and for sure in America.

In America we are too dependent on eDiscovery, which is a different business, but in Europe, clearly, the sentiment is improving.

And I see that in all the countries around Europe, UK and continent.

Australia is a different matter.

Now the issues are more in Australia.

You follow very closely, Mark, what is going on there.

I know our competitors.

You see that our competitors are all having now year-on-year fall in Australia around the 20% range.

I think we are starting to beat our competitors sequentially.

We have made our comparisons on our sequential performance quarter-on-quarter against our major competitors.

And we believe that we are better than they are in Q3 and we were better than they were in Q2 -- which reconfirms to us that, even if we are not driving our EBITDA to the levels that we'd like to be in Australia, at least we are not only preserving now, but re-conquering market share there.

Our company platform is very peculiar, as you know, because 30% of our gross margin has been coming from Australia.

And that has been our most profitable region.

And the fact that the Australian economy is down is affecting our EBITDA and is delaying the recovery of our profitability, which is not obviously what we were expecting.

But the situation there is really tough.

And, as I said, you can see that everywhere.

(multiple speakers) In Asia-Pac, the situation is also peculiar.

You cannot trust all the data that you receive on the macro-front from China, because it's data that is not totally consistent.

Clearly, as Europe and America recovers, the investment flow that we have seen in the emerging markets is decreasing, so the investment of the multinationals in China is dropping, and the mix in the market is moving from multinationals to local investments in China -- in Chinese companies.

And our growth before in China was pretty much driven by the growth in multinationals.

And we are using that platform, our experience and the fantastic references that we've got on the multinational clients to educate the Chinese local clients on the use of our type of search, which is more premium than the one that other Chinese competitors offer.

Great.

I appreciate the detail.

With regards to Australia, do you think that -- do you think we're hitting a bottom?

Or do you think it's going to get worse?

The economic situation in Australia is totally uncertain, but we have reason of the excuses about the market is tough.

We need to win market share.

We need to take the opportunity that we are now to recruit the best fee earners from our competitors and fight back.

So there is always business.

You can go on the trend of the market or you can try to gain market share.

That's exactly what we are doing.

The sequential growth that we are getting in Australia is by winning market share.

Unfortunately, we did lose market share before.

So our objective is to regain market position and achieve year-on-year growth in Australia as soon as we can in spite of the economic environment.

We have attracted many, many consultants and managers from our competitors, and I think we are getting traction of demonstrating that we have a great opportunity in Hudson.

And while others are now restructuring, we are able to cherrypick the best consultants to put the Australia operations for growth.

Great.

And can you give us a sense -- you gave us very specific guidance with regards to revenue by region.

I was wondering if you could give us a little bit of a sense in terms of the gross margin trends by region that you would anticipate?

Well, Mark, I think, obviously, it depends on the -- where our topline ends up and (multiple speakers) --.

Yes.

I'm just assuming -- like, for example, you said in the Americas you would anticipate that things would be flat.

We did see a nice sequential improvement for two quarters in a row in terms of gross margins.

So that would suggest that the mix of business is getting a little bit better.

Should we anticipate that the gross margins in the Americas stays close to where it is?

Or would it dip back down?

No, I think, for the Americas, we would expect a similar trend to the third quarter.

Europe should pick up.

Obviously, it was a tough quarter, both in terms of the seasonality as well as we had some weakness there in talent management.

And, as Manolo said, Asia-Pacific is a bit harder to predict right now, especially Australia.

But we, I think, are reasonably comfortable with the range that's there.

Probably staying kind of where it is right now?

I mean, in terms of your best assessment at this point.

Yes.

Okay.

I mean, subject to seasonality, I think that -- which, obviously, they start to head off around mid-December.

So -- but, yes.

I mean, that's kind of -- that's a tough one to talk about, just simply from the standpoint that if we took a look at the traditional trajectory -- taking a look at the last three years in terms of your Asia-Pac experience, typically going from Q3 to Q4, you typically end up staying relatively close?

Yes.

Yes.

I mean, I think that we have to see how much the sequential traction that we are building there is the seasonality.

What's the pricing on the new projects that you just got, relative to the projects that you lost?

Yes.

Well, those projects are talent management projects and we -- yes.

RPO.

Oh, the RPO project?

The Energy Australia project?

Right.

I'm not able to disclose the pricing of the projects, but -- (multiple speakers)

I mean, is it similar to what we ended up losing or --?

It's better.

It's better.

(multiple speakers).

Better pricing for you.

Yes.

I think it's -- I mean, approximately what I can tell you is approximately we expect next year to recruit with this RPO contract over 600 positions in that account.

Okay.

And then, with regards to corporate expenses, what's the level that we should anticipate on a go-forward basis?

This quarter it was a little bit more elevated than usual.

Yes.

I'd expect it to be a little bit shy of the $4 million mark.

For the quarter?

Yes.

It was just [4 points] -- oh, before the allocations.

I'm sorry.

I'm not sure of the number you're looking at there, but (multiple speakers) --

I'm looking at basically $2.8 million during this last quarter.

Then it should be slightly less.

It's much lower that I would say for about $2.5 million in Q4.

So around $2.5 million or so?

Yes.

Okay.

For the similar -- I'm looking at more of a gross number (multiple speakers) -- allocations, so.

Yes.

Okay.

So, all right.

Great.

And then, how are you thinking the cash balance is going to look as we look out towards the end of the year?

Are there any sort of factors that we should take into account?

I mean, we are managing this really carefully.

It's -- there's some pressure right now, I think.

And I think we obviously -- what we saw in Q3 is a bit of a seasonable pattern anyway, so it will be falling off a bit in Q4, that's for sure.

But we are -- it's a -- we are managing it as aggressively as we can.

How much would you anticipate it falling off in Q4?

Would it follow the typical -- there isn't a typical pattern, if we just look at the history.

So how should we think about that?

So the actual cash as opposed to the whole of it in liquidity -- I mean, I think it's going to be down a few million from -- to $3 million to $5 million from where we were at the end of Q3.

Okay.

So basically bounces between where we were between Q2 and Q3?

Yes.

All right.

Wonderful.

Thank you.

All right, Mark.

Thank you.

Bill Nasgovitz.

Yes.

Just a follow-up here.

You mentioned -- did I hear correctly -- 1700 total employees and 1100 fee-earners.

Yes.

Yes, Bill.

And where would that have stood a year ago?

We had about 1900 people and about 1300 fee-earners.

Okay.

And then, Manolo, you were talking about being able to recruit some top talent.

Why are people coming to us?

What's the driving issue or --?

Yes.

Well, I think they see mainly two things.

I think they think of the opportunity.

They're seeing that Hudson has a great brand, and that we have not put in place all the processes and go-to-market techniques that allows us to extract the value from the brands.

So they see that opportunity.

And they -- because they have experience in other firms, they know what they can do with the current systems and processes and teams.

And I think that the other thing is the culture.

I think that what we are trying to have at Hudson, it's a culture that allows to give people a space.

And that is more collegial.

And in some of the other companies, what they have seen is more of a command and control environment, and what I'm trying to bring at the top with my leadership team is more of a shared leadership culture.

Okay.

Thank you.

It's always difficult to kind of strike a balance between a smart and disciplined execution on the space and shared leadership.

And I think it's great that now having Stephen by my side, he can concentrate on the -- more on disciplined execution, while I'm continuing to attract the talent and make sure that we grow the top line.

Okay.

Thank you.

There are no further audio questions at this time.

Well, then, thank you, operator.

And thank you all for joining Hudson Global's third-quarter conference call.

Our call today has been recorded, and will be available later today on the Investor section of our website, Hudson.com.

Thank you and have a great day.

Thank you.

This concludes today's conference call.

You may now disconnect.