CDI Corp. Reports Third Quarter 2013 Results

PHILADELPHIA, Oct. 30, 2013 /PRNewswire/ -- CDI Corp. (NYSE: CDI) (the "Company") today reported results for the third quarter ended September 30, 2013.   

Third Quarter Highlights

  • Revenue of $277.9 million, a decline of 0.5% versus the third quarter 2012
  • Gross profit margin of 19.0% versus 19.6% for the third quarter 2012
  • Operating and administrative expenses as a percentage of revenue of 16.5% versus 16.4% for the third quarter 2012
  • Earnings per share of $0.23 versus $0.27 for the third quarter 2012

"This quarter we achieved sequential improvement in quarterly revenue and operating profit margin.  Although we are not converting wins into revenue at the pace we expected, we continue to see opportunities in our strategic engineering verticals," said CDI President and CEO Paulett Eberhart. "In addition, challenges remain in Hi-Tech staffing, MRI and our government business." 

For the third quarter 2013, the Company reported revenue of $277.9 million, a decrease of 0.5% versus the year-ago quarter. The Company reported third quarter 2013 operating profit of $6.9 million compared to an operating profit of $9.0 million in the prior-year third quarter. The Company reported third quarter 2013 net income of $4.5 million, or $0.23 per diluted share, versus net income of $5.3 million, or $0.27 per diluted share, in the prior-year quarter.

Business Segment Discussion

The Company's Global Engineering and Technology Solutions segment (GETS) reported third quarter revenue of $81.5 million, a decrease of 2.5% when compared to the prior-year quarter. Increased revenue in the Oil, Gas & Chemicals vertical (OGC) was offset by declines in Aerospace & Industrial Equipment (AIE), Hi-Tech and the infrastructure and government services businesses reported in "Other." Operating profit decreased to $6.5 million compared to $7.5 million in the prior-year third quarter, reflecting lower gross profit margins partially offset by reduced operating expenses.

The Company's Professional Services Staffing segment (PSS) reported a 2.0% revenue increase in the third quarter to $182.0 million when compared to the prior-year quarter. Revenue gains in the OGC vertical and "Other" were partially offset by declines in the AIE and Hi-Tech verticals. PSS operating profit decreased to $4.2 million versus $4.5 million in the prior-year third quarter, driven primarily by increased operating expenses.

Management Recruiters International (MRI) third quarter revenue decreased 17.5% to $14.4 million, compared to the prior-year quarter, driven by lower income in both revenue categories. MRI's third quarter operating profit was $2.2 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 fourth quarter of 2013 in the range of $263 million to $273 million, compared to $270.5 million in the year-ago fourth quarter.

Fourth Quarter Settlement

In October 2013, the Company entered into a settlement agreement with a third party to resolve claims pursued by the Company. Under this agreement, the Company received a favorable settlement payment in the amount of $3.25 million, which will be reflected in fourth quarter 2013 results.

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 third 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) subsidiary. 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 and a possible federal government shutdown if necessary appropriations bills are not passed by Congress and signed by the President; 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


Nine Months Ended


September 30,


September 30,

Consolidated Statements of Income:

2013


2012


2013


2012









Revenue

$

277,916



$

279,390



$

810,745



$

834,415


Cost of services

225,219



224,670



656,352



668,482


Gross profit

52,697



54,720



154,393



165,933


Operating and administrative expenses

45,751



45,711



137,292



141,671


Operating profit

6,946



9,009



17,101



24,262


Other income (expense), net

(57)



(47)



(170)



(165)


Income before income taxes

6,889



8,962



16,931



24,097


Income tax expense

2,323



3,556



6,315



9,706


Net income

4,566



5,406



10,616



14,391


Less: Income attributable to the noncontrolling interest

38



57



159



267


Net income attributable to CDI

$

4,528



$

5,349



$

10,457



$

14,124










Earnings per common share:








Basic

$

0.23



$

0.27



$

0.54



$

0.73


Diluted

$

0.23



$

0.27



$

0.53



$

0.72


Weighted-average shares outstanding - Basic

19,464



19,541



19,426



19,342


Weighted-average shares outstanding - Diluted

19,712



19,970



19,726



19,750














Selected Balance Sheet Data:







September 30,
2013



December 31,
2012














Cash and cash equivalents






$

32,067


$

43,652


Accounts receivable, net







232,758



223,630


Total current assets







284,870



282,345


Total assets







398,528



400,705


Total current liabilities







98,429



104,208


Total CDI shareholders' equity







284,328



278,971

































Nine months ended









September 30,


Selected Cash Flow Data:







2013



2012














Net cash provided by operating activities






$

777


$

1,182


Depreciation and amortization







7,649



7,667


Capital expenditures







5,047



4,609


Dividends paid to shareholders







5,054



7,517



Three Months Ended


Nine Months Ended


September 30,


September 30,

Selected Earnings and Other Financial Data:

2013


2012


2013


2012









Revenue

$

277,916



$

279,390



$

810,745



$

834,415


Gross profit

$

52,697



$

54,720



$

154,393



$

165,933


Gross profit margin

19.0

%


19.6

%


19.0

%


19.9

%

Operating and administrative expenses as a percentage of revenue

16.5

%


16.4

%


16.9

%


17.0

%

Operating profit margin

2.5

%


3.2

%


2.1

%


2.9

%

Effective income tax rate

33.7

%


39.7

%


37.3

%


40.3

%

Pre-tax return on net assets (1)

9.9

%


9.1

%














Three Months Ended


Nine Months Ended


September 30,


September 30,

Selected Segment Data:

2013


2012


2013


2012









Global Engineering and Technology Solutions ("GETS")








Revenue:








Oil, Gas and Chemicals ("OGC")

$

31,677



$

27,713



$

91,463



$

83,908


Aerospace and Industrial Equipment ("AIE")

19,012



19,500



54,395



53,918


Hi-Tech

7,559



8,502



22,704



24,653


Other

23,247



27,835



70,921



83,108


Total revenue

$

81,495



$

83,550



$

239,483



$

245,587


Gross profit

$

22,665



$

24,241



$

66,944



$

70,942


Gross profit margin

27.8

%


29.0

%


28.0

%


28.9

%

Operating profit

$

6,476



$

7,515



$

17,759



$

19,474


Operating profit margin

7.9

%


9.0

%


7.4

%


7.9

%









Professional Services Staffing ("PSS")








Revenue:








Oil, Gas and Chemicals ("OGC")

$

41,120



$

31,551



$

101,483



$

85,589


Aerospace and Industrial Equipment ("AIE")

18,360



21,555



56,640



62,743


Hi-Tech

68,528



72,136



211,979



222,869


Other

53,994



53,130



157,767



164,179


Total revenue

$

182,002



$

178,372



$

527,869



$

535,380


Gross profit

$

22,990



$

22,679



$

67,133



$

70,878


Gross profit margin

12.6

%


12.7

%


12.7

%


13.2

%

Operating profit

$

4,195



$

4,525



$

11,694



$

15,388


Operating profit margin

2.3

%


2.5

%


2.2

%


2.9

%









Management Recruiters International ("MRI")








Revenue:








Contract Staffing

$

10,837



$

13,430



$

33,281



$

41,240


Royalties and Franchise Fees

3,582



4,038



10,112



12,208


Total revenue

$

14,419



$

17,468



$

43,393



$

53,448


Gross profit

$

7,042



$

7,800



$

20,316



$

24,113


Gross profit margin

48.8

%


44.7

%


46.8

%


45.1

%

Operating profit

$

2,172



$

2,727



$

6,299



$

7,718


Operating profit margin

15.1

%


15.6

%


14.5

%


14.4

%



(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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