CDI Corp. Reports Second Quarter 2013 Results

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.



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