Print page
Email page
Download PDF
« Previous Release | Next Release »
PHILADELPHIA, July 30, 2009 /PRNewswire-FirstCall via COMTEX News Network/ -- CDI Corp. (NYSE: CDI) today reported financial results for the second quarter ended June 30, 2009 and announced a quarterly cash dividend.
For the quarter ended June 30, 2009, the company reported net earnings of $0.1 million, or $0.00 per diluted share, compared to net earnings of $7.0 million, or $0.34 per diluted share, in the prior-year quarter. Included in the current quarter results are $0.7 million in pre-tax severance charges. Excluding the severance charges, net earnings for the second quarter were approximately $0.5 million or $0.03 per diluted share.
Second quarter revenue decreased 25.5% (or 20.9% on a constant currency basis) to $215.4 million compared to revenue of $289.2 million in the prior-year quarter.
A quarterly cash dividend of $0.13 per share will be paid on August 27, 2009 to all shareholders of record as of August 13, 2009.
"We were somewhat encouraged by revenue trends during the second quarter which indicate that our business could be emerging from the trough that we saw in the previous two quarters," said President and CEO, Roger H. Ballou.
"During the quarter we saw month to month increases in project bid activity and in staffing services revenue in both our Engineering Solutions and IT Solutions segments. If these trends continue we do not anticipate further cost reduction charges, however we will remain vigilant to ensure that our structural costs are aligned with revenue run rates."
Business Segment Discussion
CDI Engineering Solutions revenue declined 22.6% (21.0% in constant currency) versus the year-ago quarter, driven by continued weakness in the Process & Industrial vertical somewhat offset by organic growth in Government Services and growth resulting from an acquisition in the Aerospace vertical during the third quarter 2008. Operating profit declined to $3.5 million, a decrease of 60.9% versus the prior-year quarter driven primarily by reductions in higher-margin project engineering and permanent placement revenue, as well as severance charges of $0.3 million. Operating profit for the quarter also includes $0.3 million in operating losses associated with the company's ownership in joint ventures.
Management Recruiters International, Inc. revenue decreased 31.8% versus the year-ago quarter, reflecting continued weakness in royalty revenue (driven by a decline in permanent placement activity by franchise offices) and by declines in contract staffing and franchise sales. Operating profit decreased $3.0 million to $0.5 million on a year-over-year basis primarily due to the decline in higher-margin royalties and severance charges of $0.1 million.
U.K.-based AndersElite (Anders) revenue declined 57.6% (45.3% in constant currency) versus the year-ago quarter driven by continued weakness both in permanent placement and contract staffing in the U.K. construction industry. Revenue did however stabilize during the quarter. Anders reported an operating loss of $1.9 million versus an operating profit of $1.5 million in the year-ago quarter primarily reflecting a decline in higher-margin permanent placement revenue. Operating profit for the quarter also includes $0.2 million in severance charges.
CDI IT Solutions revenue increased 3.1% versus the prior-year quarter driven by broad-based growth in staffing services. Operating profit increased 64.8% on a year-over-year basis to $1.9 million reflecting effective cost controls and the aforementioned revenue growth, somewhat offset by $0.1 million in severance charges.
Corporate Summary
Corporate overhead costs decreased by 15.1% on a year-over-year basis, primarily reflecting cost control steps.
"Cash and cash equivalents increased to $77.9 million during the quarter," said Ballou. "With cash on-hand and untapped borrowing capacity, we should have sufficient resources to support organic revenue growth, capital expenditures and shareholder dividends, as well as potential stock repurchases and acquisitions."
Business Outlook
"Based on prudent steps taken in previous periods and continuing into this quarter, we were able to reduce total operating and administrative expenses for the second quarter by $13.1 million versus the year-ago quarter and $4.3 million versus the first quarter," said Ballou. "Our reduced operating expense run rate and anticipated stabilization in revenue should produce an increase in profitability in the third quarter.
"While we anticipate continued weakness in permanent placement hiring demand, we anticipate improvement in segments of our business throughout the third quarter. Due to these factors, we expect that overall third quarter 2009 revenue could be 18-25% below the year-ago quarter - or 15-21% on a constant currency basis assuming recent foreign exchange rates."
Financial Tables Follow
Conference Call/Webcast
CDI Corp. will conduct a conference call at 11 a.m. (ET) today to discuss this announcement. The conference call will be broadcast live over the Internet and can be accessed by any interested party at www.cdicorp.com. An online replay will be available at www.cdicorp.com for 14 days after the call.
Company Information
Headquartered in Philadelphia, CDI Corp. (NYSE: CDI) is a leading provider of engineering & information technology outsourcing solutions and professional staffing. Its operating units include CDI Engineering Solutions, CDI IT Solutions, CDI AndersElite Limited, and Management Recruiters International, Inc. Visit CDI 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 statements about our strategies for growth and future financial results (such as revenues, pre-tax profit and tax rates), 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: continued weakness in general economic conditions and levels of capital spending by customers in the industries that we serve; further weakness in the financial and capital markets which may result in the postponement or cancellation of our customers' capital projects or the inability of our customers to pay our fees; competitive market pressures; our ability to maintain and grow our revenue base; the availability and cost of qualified labor; adverse consequences arising out of the U.K. Office of Fair Trading investigation; credit risks associated with our customers; our level of success in attracting, training, and retaining qualified management personnel and other staff employees; changes in customers' attitudes towards outsourcing; changes in tax laws and other government regulations; the possibility of incurring liability for our activities, including the activities of our temporary employees; our performance on customer contracts; and government policies or judicial decisions adverse to our businesses. More detailed information about some of these risks and uncertainties may be found in our filings with the SEC, particularly in the "Risk Factors" section of our Form 10-K's and the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of our Form 10-K's and Form 10-Q's. 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.
CDI Corp. and Subsidiaries
Consolidated Earnings Release Tables
(Unaudited)
(in thousands, except per share data)
For the three For the six
months ended months ended
-------------- -------------
June 30, March 31, June 30,
-------- --------
2009 2008 2009 2009 2008
---- ---- ---- ---- ----
Revenue $215,426 $289,211 $228,652 $444,078 $583,091
Cost of service 171,147 221,629 181,225 352,372 444,254
------- ------- ------- ------- -------
Gross profit 44,279 67,582 47,427 91,706 138,837
Operating and
administrative
expenses 43,751 56,826 48,078 91,829 117,118
------ ------ ------ ------ -------
Operating profit
(loss) 528 10,756 (651) (123) 21,719
Other income
(expense), net (143) 613 259 116 1,861
Equity in losses
from affiliated
companies (279) - (302) (581) -
---- --- ---- ---- ---
Earnings (loss)
before income
taxes 106 11,369 (694) (588) 23,580
Income tax
expense 50 4,390 226 276 8,677
-- ----- --- --- -----
Net earnings
(loss) 56 6,979 (920) (864) 14,903
Less: loss
attributable to
the noncontrolling
interest (3) - - (3) -
-- --- --- -- ---
Net earnings
(loss) attributable
to CDI $59 $6,979 $(920) $(861) $14,903
=== ====== ===== ===== =======
Diluted net
earnings (loss)
per share $0.00 $0.34 $(0.05) $(0.05) $0.73
Average diluted
number of shares 19,062 20,409 18,903 18,919 20,407
Selected Balance June 30, March 31, December 31, June 30,
Sheet Data: 2009 2009 2008 2008
---------------- ---- ---- ---- ----
Cash and cash
equivalents $77,932 $66,019 $61,761 $121,423
Accounts
receivable, net $182,277 $195,567 $193,338 $214,073
Current assets $277,903 $279,666 $273,293 $347,864
Total assets $388,530 $386,661 $383,199 $449,536
Current
liabilities $81,014 $87,901 $79,993 $92,289
CDI shareholders'
equity $295,765 $287,253 $291,385 $344,319
Noncontrolling
interest $152 $- $- $-
For the three For the six
months ended months ended
-------------- -------------
June 30, March 31, June 30,
-------- --------
Selected Cash
Flow Data: 2009 2008 2009 2009 2008
------------- ---- ---- ---- ---- ----
Depreciation and
amortization
expense $2,844 $2,848 $2,894 $5,738 $5,698
Capital
expenditures $2,225 $1,514 $1,721 $3,946 $5,958
Dividends paid $2,463 $2,637 $2,465 $4,928 $5,283
Free cash flow for
the quarter ended
June 30, 2009 is
shown below:
Net cash
provided by
operating
activities $10,059
Less:
capital
expenditures
(2,225)
Less:
dividends
paid (2,463)
------
Free cash
flow $5,371
======
For the three For the six
months ended months ended
-------------- -------------
June 30, March 31, June 30,
--------- --------
Selected
Earnings and
Other Financial
Data: 2009 2008 2009 2009 2008
---------------- ---- ---- ---- ---- ----
Revenue $215,426 $289,211 $228,652 $444,078 $583,091
Gross profit $44,279 $67,582 $47,427 $91,706 $138,837
Gross profit
margin 20.6% 23.4% 20.7% 20.7% 23.8%
Operating and
administrative
expenses as a
percentage of
revenue 20.3% 19.6% 21.0% 20.7% 20.1%
Corporate
expenses $3,667 $4,319 $4,435 $8,102 $9,405
Corporate
expenses as a
percentage of
revenue 1.7% 1.5% 1.9% 1.8% 1.6%
Operating profit
margin 0.3% 3.7% -0.3% 0.0% 3.7%
Effective income
tax rate 47.2% 38.6% -32.6% -46.9% 36.8%
After-tax return
on shareholders'
equity (a) 1.1% 9.3% 3.4%
Pre-tax return
on net assets (b) 2.2% 22.1% 7.5%
For the three For the six
months ended months ended
-------------- -------------
June 30, March 31, June 30,
--------- --------
Selected Segment
Data: 2009 2008 2009 2009 2008
---------------- ---- ---- ---- ---- ----
Engineering
Solutions
Revenue $118,456 $153,100 $128,555 $247,011 $309,252
Gross profit 23,265 32,600 25,167 48,432 67,300
Gross profit
margin 19.6% 21.3% 19.6% 19.6% 21.8%
Operating profit (c) 3,497 8,953 3,449 6,946 19,774
Operating profit
margin 3.0% 5.9% 2.7% 2.8% 6.4%
Management
Recruiters
International
Revenue $13,233 $19,401 $14,621 $27,854 $39,032
Gross profit 6,498 10,533 7,055 13,553 21,227
Gross profit
margin 49.1% 54.3% 48.3% 48.7% 54.4%
Operating profit 470 3,493 4 474 5,743
Operating profit
margin 3.6% 18.0% 0.0% 1.7% 14.7%
AndersElite
Revenue $25,517 $60,245 $28,034 $53,551 $121,985
Gross profit 3,954 13,529 4,899 8,853 29,193
Gross profit
margin 15.5% 22.5% 17.5% 16.5% 23.9%
Operating profit
(loss) (1,930) 1,489 (1,199) (3,129) 4,264
Operating profit
margin -7.6% 2.5% -4.3% -5.8% 3.5%
IT Solutions
Revenue $58,220 $56,465 $57,442 $115,662 $112,822
Gross profit 10,562 10,920 10,306 20,868 21,117
Gross profit
margin 18.1% 19.3% 17.9% 18.0% 18.7%
Operating profit 1,879 1,140 1,228 3,107 1,343
Operating profit
margin 3.2% 2.0% 2.1% 2.7% 1.2%
For the three For the six
months ended months ended
-------------- -------------
Engineering
Solutions
Revenue June 30, March 31, June 30,
----------- --------- --------
by Vertical: 2009 2008 2009 2009 2008
------------ ---- ---- ---- ---- ----
CDI Process and
Industrial $81,135 $118,598 $90,606 $171,741 $241,266
CDI Government
Services 22,163 21,257 21,894 44,057 41,102
CDI Aerospace 15,158 13,245 16,055 31,213 26,884
------ ------ ------ ------ ------
Total
Engineering
Solutions
Revenue $118,456 $153,100 $128,555 $247,011 $309,252
======== ======== ======== ======== ========
(a) Current quarter combined with the three preceding quarters' net
earnings attributable to CDI divided by the average CDI
shareholders' equity.
(b) Current quarter combined with the three preceding quarters'
pre-tax earnings divided by the average net assets. Net assets
include total assets minus total liabilities excluding cash,
external debt and income tax accounts.
(c) Includes $279, $302 and $581 of equity in losses associated with the
Company's non-consolidated joint ventures for the three months ended
June 30, 2009, the three months ended March 31, 2009 and the six
months ended June 30, 2009, respectively.
SOURCE CDI Corp.
http://www.cdicorp.com
Copyright (C) 2009 PR Newswire. All rights reserved