CDI Corp. Reports Second Quarter 2013 Results

Aug 01, 2013, 07:00 ET from CDI Corp.

PHILADELPHIA, Aug. 1, 2013 /PRNewswire/ -- CDI Corp. (NYSE: CDI) (the "Company") today reported results for the second quarter ended June 30, 2013. 

Second Quarter Highlights

  • Revenue of $263.4 million, a decline of 4.0% versus the second quarter 2012
  • Gross profit margin of 19.6% versus 20.2% for the second quarter 2012
  • Operating and administrative expenses as a percentage of revenue of 17.6% versus 17.4% for the second quarter 2012
  • Earnings per share of $0.17 in the second quarter 2013 versus $0.25 for the second quarter 2012

"While we are making good progress with the execution of our strategy to grow our focus verticals in both engineering and program staffing, our second quarter results were below last year's levels, as it is taking longer than expected to convert wins into revenues," said CDI President and CEO Paulett Eberhart. "We anticipate our new wins to convert into revenue at a progressively faster pace through the third and fourth quarters. In addition, we saw declines in non-program staffing and MRI revenue as well as lower spending by our largest client and government accounts during the second quarter." 

For the second quarter 2013, the Company reported revenue of $263.4 million, a decrease of 4% versus the year-ago quarter. The Company reported second quarter 2013 operating profit of $5.2 million compared to an operating profit of $7.9 million in the prior-year second quarter. The Company reported second quarter 2013 net income of $3.4 million, or $0.17 per diluted share, versus net income of $5.0 million, or $0.25 per diluted share, in the prior-year quarter.

Business Segment Discussion

The Company's Global Engineering and Technology Solutions segment (GETS) reported second quarter revenue of $80.0 million, a decrease of 1.0% when compared to the prior-year quarter. Increased revenue in the Oil, Gas & Chemicals (OGC) and Aerospace & Industrial Equipment (AIE) verticals was offset by declines in the infrastructure and government services businesses, both reported in "Other," as well as by lower Hi-Tech revenue. Operating profit was flat at $6.0 million compared to the prior-year quarter, reflecting additional cost savings recognized during the quarter.

The Company's Professional Services Staffing segment (PSS) reported a 3.7% revenue decrease in the second quarter to $168.8 million when compared to the prior-year quarter. Revenue gains in the OGC vertical were offset by lower revenue driven by project completions and weaker non-program staffing revenue in "Other," as well as by declines in the Hi-Tech and AIE verticals. PSS operating profit fell to $3.4 million versus $5.1 million in the prior-year second quarter, driven primarily by the revenue decrease.

Management Recruiters International (MRI) second quarter revenue decreased 20.2% to $14.7 million, compared to the prior-year quarter, driven by lower income across all revenue categories. MRI's second quarter operating profit was $2.3 million compared to $2.7 million in the prior-year quarter, driven primarily by the revenue decrease.

Business Outlook

The Company anticipates revenue for the third quarter of 2013 in the range of $263 million to $273 million, compared to $279.4 million in the year-ago third quarter.

Conference Call

At 11 a.m. Eastern Time today, Paulett Eberhart, President and CEO, and Bob Larney, Executive Vice President and CFO, will host a conference call to discuss the 2013 second quarter results and business outlook. The call can be accessed live, at www.cdicorp.com.

About CDI

CDI Corp. (NYSE: CDI) is an integrated, market-leading engineering and technology services firm providing differentiated, client-focused solutions in select global industries. CDI provides Global Engineering and Technology Solutions and Professional Services Staffing through its global business operations in the Americas, EMEA and APAC. The Company also provides staffing services through its franchised Management Recruiters International, Inc. (MRI) operating unit. Learn more at www.cdicorp.com.

Caution Concerning Forward-Looking Statements

This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  All statements that address expectations or projections about the future, including, but not limited to, statements about our strategies for growth and future financial results (such as revenue), are forward-looking statements. Some of the forward-looking statements can be identified by words like "anticipates," "believes," "expects," "may," "will," "could," "should," "intends," "plans," "estimates" and similar expressions. These statements are not guarantees of future performance and involve a number of risks, uncertainties and assumptions that are difficult to predict. Because these forward-looking statements are based on estimates and assumptions that are subject to significant business, economic and competitive uncertainties, many of which are beyond our control or are subject to change, actual outcomes and results may differ materially from what is expressed or forecasted in these forward-looking statements. Important factors that could cause actual results to differ materially from the forward-looking statements include, but are not limited to: weakness in general economic conditions and levels of capital spending by clients in the industries we serve; weakness or volatility in the financial and capital markets, which may result in the postponement or cancellation of our clients' capital projects or the inability of our clients to pay our fees; the inability to successfully execute on our strategic plan; the termination or non-renewal of a major client contract or project; delays or reductions in government spending, including the impact of sequestration on U.S. government defense spending; credit risks associated with our clients; competitive market pressures; the availability and cost of qualified personnel; our level of success in attracting, training and retaining qualified management personnel and other staff employees; changes in tax laws and other government regulations including the impact of healthcare reform laws and regulations; the possibility of incurring liability for our business activities, including the activities of our temporary employees; our performance on client contracts; negative outcome of pending and future claims and litigation; and government policies, legislation or judicial decisions adverse to our businesses.  More detailed information about these and other risks and uncertainties may be found in our filings with the SEC, particularly in the "Risk Factors" section of our Form 10-K and the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of our Form 10-Ks and Form 10-Qs. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We assume no obligation to update such statements, whether as a result of new information, future events or otherwise, except as required by law.

Financial Tables Follow

CDI CORP. AND SUBSIDIARIES

(Amounts in thousands, except per share data)

(Unaudited)

Three Months Ended

Six Months Ended

June 30,

June 30,

Consolidated Statements of Income:

2013

2012

2013

2012

Revenue

$

263,363

$

274,398

$

532,829

$

555,025

Cost of services

211,818

218,870

431,133

443,812

  Gross profit

51,545

55,528

101,696

111,213

Operating and administrative expenses

46,303

47,664

91,541

95,960

  Operating profit

5,242

7,864

10,155

15,253

Other income (expense), net

(62)

(80)

(113)

(118)

  Income before income taxes

5,180

7,784

10,042

15,135

Income tax expense

1,683

2,713

3,992

6,150

  Net income

3,497

5,071

6,050

8,985

Less: Income attributable to the noncontrolling interest

59

119

121

210

  Net income attributable to CDI

$

3,438

$

4,952

$

5,929

$

8,775

Earnings per common share:

  Basic

$

0.18

$

0.26

$

0.31

$

0.46

  Diluted

$

0.17

$

0.25

$

0.30

$

0.45

Weighted-average shares outstanding - Basic

19,436

19,285

19,407

19,243

Weighted-average shares outstanding - Diluted

19,743

19,707

19,733

19,640

Selected Balance Sheet Data:

June 30, 2013

December 31, 2012

Cash and cash equivalents

$

23,409

$

43,652

Accounts receivable, net

230,762

223,630

Total current assets

273,753

282,345

Total assets

388,325

400,705

Total current liabilities

91,781

104,208

Total CDI shareholders' equity

279,697

278,971

Six months ended

June 30,

Selected Cash Flow Data:

2013

2012

Net cash used in operating activities

$

12,007

$

7,832

Depreciation and amortization

5,123

5,101

Capital expenditures

3,023

3,095

Dividends paid to shareholders

2,524

5,004

 

Three Months Ended

Six Months Ended

June 30,

June 30,

Selected Earnings and Other Financial Data:

2013

2012

2013

2012

Revenue

$

263,363

$

274,398

$

532,829

$

555,025

Gross profit

$

51,545

$

55,528

$

101,696

$

111,213

Gross profit margin

19.6

%

20.2

%

19.1

%

20.0

%

Operating and administrative expenses as a percentage of revenue

17.6

%

17.4

%

17.2

%

17.3

%

Operating profit margin

2.0

%

2.9

%

1.9

%

2.7

%

Effective income tax rate

32.5

%

34.9

%

39.8

%

40.6

%

Pre-tax return on net assets (1)

10.7

%

7.4

%

Three Months Ended

Six Months Ended

June 30,

June 30,

Selected Segment Data:

2013

2012

2013

2012

Global Engineering and Technology Solutions ("GETS")

Revenue:

Oil, Gas and Chemicals ("OGC")

$

30,136

$

27,931

$

59,786

$

56,195

Aerospace and Industrial Equipment ("AIE")

18,514

17,506

35,383

34,418

Hi-Tech

7,524

8,086

15,145

16,151

Other

23,777

27,239

47,674

55,273

Total revenue

$

79,951

$

80,762

$

157,988

$

162,037

Gross profit

$

22,755

$

23,454

$

44,279

$

46,701

Gross profit margin

28.5

%

29.0

%

28.0

%

28.8

%

Operating profit

$

6,008

$

6,021

$

11,283

$

11,959

Operating profit margin

7.5

%

7.5

%

7.1

%

7.4

%

Professional Services Staffing ("PSS")

Revenue:

Oil, Gas and Chemicals ("OGC")

$

27,021

$

23,044

$

60,363

$

54,038

Aerospace and Industrial Equipment ("AIE")

19,363

21,397

38,280

41,188

Hi-Tech

71,457

76,426

143,451

150,733

Other

50,918

54,408

103,773

111,049

Total revenue

$

168,759

$

175,275

$

345,867

$

357,008

Gross profit

$

21,873

$

23,761

$

44,143

$

48,199

Gross profit margin

13.0

%

13.6

%

12.8

%

13.5

%

Operating profit

$

3,394

$

5,069

$

7,499

$

10,863

Operating profit margin

2.0

%

2.9

%

2.2

%

3.0

%

Management Recruiters International ("MRI")

Revenue:

Contract Staffing

$

11,208

$

14,129

$

22,444

$

27,810

Royalties and Franchise Fees

3,445

4,232

6,530

8,170

Total revenue

$

14,653

$

18,361

$

28,974

$

35,980

Gross profit

$

6,917

$

8,313

$

13,274

$

16,313

Gross profit margin

47.2

%

45.3

%

45.8

%

45.3

%

Operating profit

$

2,250

$

2,738

$

4,127

$

4,991

Operating profit margin

15.4

%

14.9

%

14.2

%

13.9

%

(1) Pre-tax return on net assets is calculated as earnings before income taxes for the prior 12 consecutive months divided by the average of the corresponding beginning and ending period net assets. Net assets include total assets minus total liabilities excluding cash and cash equivalents, income tax accounts and debt.

SOURCE CDI Corp.



RELATED LINKS

http://www.cdicorp.com