CDI Corp. Reports 2012 Third Quarter Results

PHILADELPHIA, Oct. 30, 2012 /PRNewswire/ -- CDI Corp. (NYSE: CDI) (the "Company") today reported financial results for the third quarter ended September 30, 2012.

2012 Third Quarter Key Points

• Revenue of $279.4 million, up 2.5% compared to the prior-year third quarter
• Gross profit margin of 19.6% compared to 21.2% in the same period last year
• Operating profit of $9.0 million versus $4.4 million in prior-year quarter, leading to an operating margin of 3.2% versus 1.6% in the year ago period. Operating profit in the third quarter ended September 30, 2011, included $0.6 million of severance expense related to senior level executives
• Net income of $5.3 million, or $0.27 per diluted share, versus net income of $2.8 million, or $0.15 per diluted share, in the prior-year quarter. Net income in the third quarter ended September 30, 2011, included the benefit of an income tax credit of $0.3 million under the Hiring Incentives to Restore Employment (HIRE) Act.

"We are pleased with the Company's third quarter performance as we achieved revenue growth within our target range, and operating income, net income and earnings per share all showed significant gains," said CDI President and Chief Executive Officer, Paulett Eberhart. "We reported solid revenue increases in each of our strategic industry verticals, and we continued to focus aggressively on cost containment efforts that are appropriate with current economic conditions."

Business Segment Discussion

The Company's Global Engineering and Technology Solutions segment (GETS) reported revenue of $83.6 million in the third quarter, essentially flat compared to the prior-year third quarter. Revenue rose in each of the segment's three strategic verticals, Oil, Gas & Chemicals, Aerospace & Industrial Equipment, and Hi-Tech, but was offset by continued weakness in the infrastructure business results in the "Other" vertical. Operating profit increased 30.3% to $7.5 million versus the prior-year third quarter driven by lower operating expenses related to the restructuring announced in December 2011 as well as by additional cost savings realized during the quarter.

The Company's Professional Services Staffing segment (PSS) reported a 4.0% increase in third quarter revenue versus the prior-year third quarter.  PSS revenue growth was driven by gains in all three strategic verticals, Oil, Gas & Chemicals, Aerospace & Industrial Equipment, and Hi-Tech, partially offset by lower revenues in the "Other" vertical. Operating profit was $4.5 million during the third quarter of 2012, an increase of 9.7% versus the 2011 third quarter. Improvement in PSS operating profit was driven by lower operating expenses related to the 2011 restructuring as well as by additional expense reductions realized during the quarter.

The Company's franchised Management Recruiters International, Inc. segment (MRI) reported a 1.3% decline in third quarter revenue versus the prior-year third quarter due to lower royalty and franchise fee revenue. Operating profit increased 10.8% to $2.7 million versus the prior year quarter driven primarily by lower operating expenses related the 2011 restructuring.

Business Outlook

For the fourth quarter ending December 31, 2012, CDI anticipates a revenue increase in the range of 0% to 2% compared to the year-ago fourth quarter. 

Conference Call

At 11:00 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 2012 third quarter results and business outlook.  The call can be accessed live, via the Internet, at www.cdicorp.com. 

Company Information
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 & 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 implement our new strategic plan; the termination or non-renewal of a major client contract or project; our ability to expand or replace our existing bank credit facility on terms comparable to, or more favorable than, those currently in place; 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

(1) In the second quarter of 2011, the Company's PSS segment recorded a $9.7 million benefit related to the successful legal appeal of the United Kingdom Office of Fair Trading matter.

(2) After-tax return on CDI shareholders' equity is calculated as net income (loss) attributable to CDI for the prior 12 consecutive months divided by the average of the corresponding beginning and ending period balances of CDI shareholders' equity.

(3) 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.