CDI CORP. 
By PHILADELPHIA, May 2, 2013 /PRNewswire/ -- CDI Corp. (NYSE: CDI) (the "Company") today reported results for the first quarter ended March 31, 2013.
First Quarter Highlights
-- Revenue of $269 million, a decline of 4.0% during the first quarter 2013
versus the first quarter 2012
-- Gross profit margin of 18.6% for the first quarter 2013 versus 19.8% for
the first quarter 2012
-- Operating and administrative expenses as a percentage of revenue of
16.8% for the first quarter 2013 versus 17.2% for the first quarter 2012
-- Earnings per share of $0.13 in the first quarter 2013 versus $0.20 for
the first quarter 2012
"During the first quarter, gross profit margin was below last year as revenue in the higher-margin government business within GETS declined versus the year-ago quarter," said CDI President and CEO Paulett Eberhart. "In addition, we saw a shift to lower margin business within PSS, as well as continued weakness in higher-margin MRI permanent placement and contract business. We were pleased to sustain our competitive cost structure during the first quarter, as reflected by lower operating and administrative expenses as a percentage of revenue. Also encouraging are recent wins and increased bid activity in engineering and staffing. We remain confident in our strategy of focusing on select verticals, higher-margin engineering projects and client service excellence."
For the first quarter 2013, the Company reported revenue of $269 million, a decrease of 4.0% versus the year-ago quarter.
The Company reported first quarter 2013 operating profit of $4.9 million compared to an operating profit of $7.4 million in the prior-year first quarter. The Company reported first quarter 2013 net income of $2.5 million, or $0.13 per diluted share, versus net income of $3.8 million, or $0.20 per diluted share, in the prior-year quarter.
Business Segment Discussion
The Company's Global Engineering and Technology Solutions segment (GETS) reported first quarter revenue of $78.0 million, a 4.0% decrease when compared to the prior-year quarter. Increased revenue in the Oil, Gas & Chemicals (OGC) vertical was offset by declines in the infrastructure and government services businesses, both reported in "Other," as well as by lower Hi-Tech revenue. Aerospace and Industrial Equipment (AIE) revenue was essentially flat versus the year-ago quarter. Operating profit declined to $5.3 million versus $5.9 million in the prior-year quarter, driven primarily by the revenue decrease offset somewhat by additional cost savings.
The Company's Professional Services Staffing segment (PSS) reported a 2.5% revenue decrease in the first quarter to $177.1 million when compared to the prior-year quarter. Revenue gains in the OGC vertical were offset by lower revenue driven by project completions in "Other," as well as by declines in Hi-Tech and AIE. PSS operating profit fell to $4.1 million versus $5.8 million in the prior-year first quarter, driven primarily by the revenue decrease offset somewhat by additional cost savings.
Management Recruiters International (MRI) first quarter revenue decreased 18.7% to $14.3 million, compared to the prior-year quarter, driven by lower contract staffing and royalty and franchise fee income. MRI's first quarter operating profit fell to $1.9 million compared to $2.3 million in the prior-year quarter, driven primarily by the revenue decrease offset somewhat by additional cost savings.
Business Outlook
The Company anticipates revenue for the second quarter of 2013 in the range of $260 million to $270 million, compared to $274 million in the year-ago second quarter, with gross profit margin at a level similar to that of the first quarter 2013.
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 2013 first quarter results and business outlook. The call can be accessed live, via the Internet, 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.
CDI CORP. AND SUBSIDIARIES
(Amounts in thousands, except per share data)
(Unaudited)
Three Months Ended
March 31,
---------
Consolidated
Statements
of
Income: 2013 2012
------------ ---- ----
Revenue $269,466 $280,627
Cost of
services 219,315 224,942
------- -------
Gross
profit 50,151 55,685
Operating
and
administrative
expenses 45,238 48,296
------ ------
Operating
profit 4,913 7,389
Other
income
(expense),
net (51) (38)
--- ---
Income
before
income
taxes 4,862 7,351
Income tax
expense 2,309 3,437
----- -----
Net income 2,553 3,914
Less:
Income
attributable
to the
noncontrolling
interest 62 91
Net income
attributable
to CDI $2,491 $3,823
------ ------
Earnings per common share:
Basic $0.13 $0.20
Diluted $0.13 $0.20
Weighted-
average
shares
outstanding
- basic 19,378 19,200
Weighted-
average
shares
outstanding
-
diluted 19,723 19,573
Selected
Balance
Sheet
Data: March 31, December 31,
2013 2012
--- ---- ----
Cash and
cash
equivalents $18,416 $43,652
Accounts
receivable,
net 237,065 223,630
Total
current
assets 274,233 282,345
Total
assets 390,628 400,705
Total
current
liabilities 92,945 104,208
Total CDI
shareholders'
equity 279,583 278,971
Three months ended
March 31,
---------
Selected
Cash Flow
Data: 2013 2012
---------- ---- ----
Net cash
used in
operating
activities $(21,620) $(14,837)
Depreciation
and
amortization 2,561 2,534
Capital
expenditures 1,093 1,259
Dividends
paid to
shareholders - 2,500
Three Months Ended
March 31,
---------
Selected
Earnings
and Other
Financial
Data: 2013 2012
---------- ---- ----
Revenue $269,466 $280,627
Gross
profit $50,151 $55,685
Gross
profit
margin 18.6% 19.8%
Operating
and
administrative
expenses
as a
percentage
of
revenue 16.8% 17.2%
Operating
profit
margin 1.8% 2.6%
Effective
income
tax rate 47.5% 46.8%
Pre-tax
return on
net
assets
(1) 11.6% 10.0%
Three Months Ended
March 31,
---------
Selected
Segment
Data: 2013 2012
-------- ---- ----
Global Engineering and
Technology Solutions
("GETS")
Revenue:
Oil, Gas
and
Chemicals
("OGC") $29,650 $28,264
Aerospace
and
Industrial
Equipment
("AIE") 16,869 16,912
Hi-Tech 7,621 8,065
Other 23,897 28,034
------ ------
Total
revenue $78,037 $81,275
------- -------
Gross
profit $21,524 $23,247
Gross
profit
margin 27.6% 28.6%
Operating
profit $5,275 $5,938
Operating
profit
margin 6.8% 7.3%
Professional Services
Staffing ("PSS")
Revenue:
Oil, Gas
and
Chemicals
("OGC") $33,342 $30,994
Aerospace
and
Industrial
Equipment
("AIE") 18,917 19,791
Hi-Tech 71,994 74,307
Other 52,855 56,641
------ ------
Total
revenue $177,108 $181,733
-------- --------
Gross
profit $22,270 $24,438
Gross
profit
margin 12.6% 13.4%
Operating
profit $4,105 $5,794
Operating
profit
margin 2.3% 3.2%
Management Recruiters
International ("MRI")
Revenue:
Contract
Staffing $11,236 $13,681
Royalties
and
Franchise
Fees 3,085 3,938
----- -----
Total
revenue $14,321 $17,619
------- -------
Gross
profit $6,357 $8,000
Gross
profit
margin 44.4% 45.4%
Operating
profit $1,877 $2,253
Operating
profit
margin 13.1% 12.8%
(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.
