News Release
CDI Corp. Reports Fourth Quarter Earnings Increase by 35%, Announces Full Year 2007 Results, Dividend and Stock Repurchase Program
PHILADELPHIA, Feb. 28 /PRNewswire-FirstCall/ -- CDI Corp. (NYSE:CDI) today reported earnings for the fourth quarter and full year ended December 31, 2007 and announced a quarterly cash dividend. The company also announced that its Board of Directors has authorized a stock repurchase program.
For the quarter ended December 31, 2007, the company reported net earnings from continuing operations of $8.2 million, or $0.40 per diluted share, on revenue of $299.0 million. Fourth quarter revenue from continuing operations increased 4.9% and net earnings from continuing operations increased 35.5% compared to the year-ago quarter.
A quarterly dividend of $0.13 per share will be paid on March 27, 2008 to all shareholders of record as of March 12, 2008.
For the full year ended December 31, 2007, the company reported net earnings from continuing operations of $31.8 million, or $1.56 per diluted share, on revenue of $1.19 billion. Full year revenue from continuing operations increased 6.6% and net earnings from continuing operations increased 53.4% compared to the full year 2006.
CDI also announced today that its Board of Directors approved the repurchase of up to $50 million of the company’s outstanding common stock. The company believes that, at current price levels, the repurchase of its shares represents an attractive investment opportunity benefiting both the company and its shareholders. Repurchases will be made from time to time depending upon the company’s share price and other relevant factors. Repurchases may be made on the open market or through privately-negotiated transactions. The company is not required to repurchase any specific number of shares and the company may terminate the repurchase program at any time. CDI currently has approximately 20.3 million shares of common stock outstanding.
“Continued strength in global capital spending by clients in our key vertical industries and a generally steady hiring environment produced solid revenue gains,” said President and Chief Executive Officer, Roger H. Ballou. “Growth in our higher-margin businesses produced an overall gross profit increase of 10.4% - more than double the rate of revenue growth contributing to a very strong variable contribution margin of 17% for the fourth quarter. For the full year, earnings performance was driven by a shift to higher-margin, higher-value services and effective productivity enhancements.
“Our long term strategy to focus on delivering global engineering and professional staffing services to firms in refining, oil and gas, alternative energy, aerospace, defense, life sciences and infrastructure marketplaces is producing solid profit momentum and is providing CDI with a broad global base for future profitable growth. In fact, over 75% of our total revenue base is in these longer-cycle capital expenditure-driven marketplaces. We remain committed to creating value for our shareholders and believe we will, over time, continue to be able to deliver 12% to 14% in variable contribution margin on our increasingly global business mix.”
Business Segment Discussion
The CDI Engineering Solutions segment reported a 12.8% increase in fourth quarter revenue compared to the prior-year quarter driven by strength in engineering outsourcing demand in the Process & Industrial and Government Services verticals, and strong permanent placement demand. Operating profit increased 68.3% due to the aforementioned revenue growth and an increase in mix of higher-margin engineering project and permanent placement business.
Management Recruiters International, Inc.’s fourth quarter revenue increased 21.2% versus the prior-year quarter driven by strong contract staffing revenue growth. Operating profit increased by 5.0% but operating profit margin declined from 21.2% to 18.3% due to growth in the contract staffing business which produces lower margins than MRI’s other revenues.
Revenue at U.K.-based AndersElite increased by 7.6% versus the prior-year quarter (or 0.8% on a constant currency basis) reflecting steady demand for construction professionals in the U.K. and Australia marketplace. Operating profit increased by 18.4% (or 10.8% on a constant currency basis) driven by effective expense controls and continued improvements in recruiter productivity.
CDI IT Solutions revenue declined 17.8% versus the year-ago quarter due to decreases in staffing services provided to smaller accounts and staffing demand reductions by a large IT client. Operating profit declined by 83.7% reflecting the decline in revenue.
Discontinued operations for the fourth quarter reflect $0.4 million in costs related to the sale of the Todays Staffing subsidiary which closed at the end of the third quarter of 2007.
Corporate Summary
Corporate overhead costs increased by 28.1% versus the prior-year quarter due to higher performance-based variable and stock-based compensation costs.
“CDI ended the year with approximately $127 million in cash and cash equivalents,” said Ballou. “We were pleased that we were able to generate over $50 million in cash during the year in addition to $40 million in cash proceeds from the previously-announced sale of our Todays Staffing subsidiary. With our cash on-hand and untapped borrowing capacity, we should have sufficient resources to support organic revenue growth, capital spending, our stock repurchase program, shareholder dividends and potential strategic acquisitions in targeted engineering verticals.”
Business Outlook
“In spite of current economic conditions, we still see the potential for full year 2008 revenue growth in the range of 3% to 6%,” said Ballou. “Our business model remains sound and we anticipate that we could generate 12% to 14% variable contribution margin on this revenue growth in 2008. Additionally, we anticipate revenue growth in the range of 1% to 3% in the first quarter 2008 versus the prior-year quarter.”
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 http://www.cdicorp.com. An online replay will be available at http://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 http://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, variable contribution margin 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: changes in general economic conditions and levels of capital spending by customers in the industries that we serve; competitive market pressures; our ability to maintain and grow our revenue base; the availability and cost of qualified labor; our level of success in attracting, training, and retaining qualified management personnel and other staff employees; changes in customers' attitudes towards outsourcing; credit risks associated with our customers; 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; adverse consequences arising out of the U.K. Office of Fair Trading investigation; 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.
Contacts:
Vincent Webb
Vice President, Corporate Communications & Marketing
215-636-1240
Vince.Webb@cdicorp.com
Mark Kerschner
Chief Financial Officer
215-636-1105
Mark.Kerschner@cdicorp.com
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