PHILADELPHIA, Oct. 28, 2014 /PRNewswire/ -- CDI Corp. (NYSE: CDI) (the "Company") today reported results for the third quarter ended September 30, 2014.
Third Quarter Highlights
- Revenue of $295.7 million, an increase of 6.4% versus third quarter 2013
- Operating profit of $8.5 million, an increase of 22.1% versus third quarter 2013
- Earnings per diluted share of $0.27 versus $0.23 for third quarter 2013
"We are pleased with our financial results in the third quarter, including driving a 22% increase in operating profit," said Scott Freidheim Chief Executive Officer. "CDI has an attractive platform of businesses delivering valued engineering and staffing services. We look forward to leveraging this platform to create shareholder value."
For the third quarter of 2014, the Company reported revenue of $295.7 million, an increase of 6.4% versus the prior-year third quarter. The Company reported third quarter 2014 operating profit of $8.5 million, an increase of 22.1% versus the prior-year third quarter. The Company reported third quarter 2014 net income of $5.4 million, an increase of 19.3% versus the prior- year third quarter, or $0.27 per diluted share versus $0.23 per diluted share in the prior-year third quarter.
Business Segment Results
Global Engineering and Technology Solutions (GETS) third quarter revenue increased 8.5% to $88.4 million when compared to the prior-year third quarter driven by an increase in revenue in the Oil, Gas & Chemicals (OGC) and Hi-Tech verticals partially offset by declines in Aerospace & Industrial Equipment (AIE) and the infrastructure and government services businesses, both reported in "Other." GETS operating profit was $3.4 million compared to $2.9 million in the prior-year quarter, an increase of 17.6%.
Professional Staffing Services (PSS) third quarter revenue increased 5.7% to $192.4 million when compared to the prior-year third quarter driven by an increase in revenue in OGC, AIE and "Other" partially offset by a decline in Hi-Tech. PSS operating profit was $7.4 million versus $6.5 million in the prior-year quarter, an increase of 13.5%.
Management Recruiters International, Inc. (MRI) third quarter revenue increased 3.5% to $14.9 million compared to the prior-year third quarter driven by an increase in contract staffing revenue partially offset by a decline in royalty and franchise fee revenue. MRI's operating profit was $1.7 million compared to $2.0 million in the prior-year quarter, a decrease of 13.4%.
Business Outlook
The Company anticipates revenues for the fourth quarter of 2014 in the range of $270 million to $280 million, compared to $277.1 million in the prior-year fourth quarter.
Conference Call
At 8:30 a.m. Eastern Time on October 29, 2014, Scott Freidheim, President and CEO, and Robert Larney, Executive Vice President and CFO, will host a conference call to discuss the 2014 third 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 engineering and technology services firm providing differentiated, client-focused solutions in select global industries. CDI provides global engineering and technology solutions and professional staffing services through its global business operations. 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 future financial results, are forward-looking statements. 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 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 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 termination or non-renewal of a major client contract or project; delays or reductions in government spending, including 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.
Financial Tables Follow
CDI CORP. AND SUBSIDIARIES (Amounts in thousands, except per share data) (Unaudited) |
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| Three Months Ended |
| Nine Months Ended |
| September 30, |
| September 30, |
Consolidated Statements of Income: | 2014 |
| 2013 |
| 2014 |
| 2013 |
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Revenue | $ | 295,732 |
| $ | 277,916 |
| $ | 856,286 |
| $ | 810,745 |
Cost of services | 241,244 |
| 225,219 |
| 698,238 |
| 656,352 |
Gross profit | 54,488 |
| 52,697 |
| 158,048 |
| 154,393 |
Operating and administrative expenses (1) | 46,006 |
| 45,751 |
| 137,821 |
| 137,292 |
Restructuring and other related costs | — |
| — |
| 72 |
| — |
Operating profit | 8,482 |
| 6,946 |
| 20,155 |
| 17,101 |
Other income (expense), net | (133) |
| (57) |
| (207) |
| (170) |
Income before income taxes | 8,349 |
| 6,889 |
| 19,948 |
| 16,931 |
Income tax expense (1) | 2,908 |
| 2,323 |
| 8,014 |
| 6,315 |
Net income | 5,441 |
| 4,566 |
| 11,934 |
| 10,616 |
Less: Income attributable to the noncontrolling interest | 41 |
| 38 |
| 70 |
| 159 |
Net income attributable to CDI (1) | $ | 5,400 |
| $ | 4,528 |
| $ | 11,864 |
| $ | 10,457 |
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Earnings per common share: |
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Basic | $ | 0.28 |
| $ | 0.23 |
| $ | 0.61 |
| $ | 0.54 |
Diluted | $ | 0.27 |
| $ | 0.23 |
| $ | 0.60 |
| $ | 0.53 |
Weighted-average shares outstanding - Basic | 19,614 |
| 19,464 |
| 19,562 |
| 19,426 |
Weighted-average shares outstanding - Diluted | 19,799 |
| 19,712 |
| 19,765 |
| 19,726 |
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Selected Balance Sheet Data: |
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| September 30,
2014 |
| December 31,
2013 |
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Cash and cash equivalents |
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| $ | 43,078 |
| $ | 45,479 |
Accounts receivable, net |
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| 233,140 |
| 230,613 |
Total current assets |
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| 293,025 |
| 291,227 |
Total assets |
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| 405,664 |
| 405,807 |
Total current liabilities |
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| 100,152 |
| 103,236 |
Total CDI shareholders' equity |
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| 287,192 |
| 284,308 |
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| Nine Months Ended |
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| September 30, |
Selected Cash Flow Data: |
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| 2014 |
| 2013 |
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Net cash provided by operating activities |
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| $ | 16,449 |
| $ | 777 |
Depreciation and amortization |
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| 8,070 |
| 7,649 |
Capital expenditures |
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| 7,825 |
| 5,047 |
Dividends paid to shareholders |
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| 7,625 |
| 5,054 |
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| Three Months Ended |
| Nine Months Ended |
| September 30, |
| September 30, |
Selected Other Financial Data: | 2014 |
| 2013 |
| 2014 |
| 2013 |
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Gross profit margin | 18.4% |
| 19.0% |
| 18.5% |
| 19.0% |
Operating and administrative expenses as a percentage of revenue | 15.6% |
| 16.5% |
| 16.1% |
| 16.9% |
Operating profit margin | 2.9% |
| 2.5% |
| 2.4% |
| 2.1% |
Effective income tax rate | 34.8% |
| 33.7% |
| 40.2% |
| 37.3% |
Pre-tax return on net assets (2) | 9.7% |
| 9.9% |
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| Three Months Ended |
| Nine Months Ended |
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| September 30, |
| September 30, |
Selected Segment Data: |
| 2014 |
| 2013 |
| 2014 |
| 2013 |
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Global Engineering and Technology Solutions (GETS) |
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Revenue: |
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Oil, Gas and Chemicals (OGC) |
| $ | 39,786 |
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| $ | 31,677 |
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| $ | 107,054 |
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| $ | 91,463 |
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Aerospace and Industrial Equipment (AIE) |
| 17,799 |
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| 19,012 |
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| 57,452 |
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| 54,395 |
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Hi-Tech |
| 8,273 |
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| 7,559 |
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| 24,291 |
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| 22,704 |
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Other |
| 22,530 |
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| 23,247 |
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| 66,133 |
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| 70,921 |
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Total revenue |
| $ | 88,388 |
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| $ | 81,495 |
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| $ | 254,930 |
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| $ | 239,483 |
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Gross profit |
| $ | 24,391 |
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| $ | 22,665 |
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| $ | 69,596 |
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| $ | 66,944 |
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Gross profit margin |
| 27.6 | % |
| 27.8 | % |
| 27.3 | % |
| 28.0 | % |
Operating profit |
| $ | 3,429 |
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| $ | 2,917 |
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| $ | 7,200 |
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| $ | 7,639 |
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Operating profit margin |
| 3.9 | % |
| 3.6 | % |
| 2.8 | % |
| 3.2 | % |
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Professional Staffing Services (PSS) |
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Revenue: |
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Oil, Gas and Chemicals (OGC) |
| $ | 51,386 |
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| $ | 41,120 |
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| $ | 140,866 |
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| $ | 101,483 |
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Aerospace and Industrial Equipment (AIE) |
| 21,216 |
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| 18,360 |
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| 61,716 |
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| 56,640 |
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Hi-Tech |
| 57,837 |
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| 68,528 |
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| 177,866 |
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| 211,979 |
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Other |
| 61,987 |
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| 53,994 |
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| 176,847 |
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| 157,767 |
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Total revenue |
| $ | 192,426 |
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| $ | 182,002 |
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| $ | 557,295 |
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| $ | 527,869 |
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Gross profit |
| $ | 23,141 |
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| $ | 22,990 |
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| $ | 67,896 |
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| $ | 67,133 |
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Gross profit margin |
| 12.0 | % |
| 12.6 | % |
| 12.2 | % |
| 12.7 | % |
Operating profit |
| $ | 7,367 |
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| $ | 6,489 |
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| $ | 20,379 |
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| $ | 17,823 |
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Operating profit margin |
| 3.8 | % |
| 3.6 | % |
| 3.7 | % |
| 3.4 | % |
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Management Recruiters International (MRI) |
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Revenue: |
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Contract Staffing |
| $ | 11,600 |
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| $ | 10,837 |
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| $ | 34,480 |
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| $ | 33,281 |
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Royalties and Franchise Fees |
| 3,318 |
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| 3,582 |
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| 9,581 |
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| 10,112 |
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Total revenue |
| $ | 14,918 |
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| $ | 14,419 |
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| $ | 44,061 |
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| $ | 43,393 |
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Gross profit |
| $ | 6,956 |
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| $ | 7,042 |
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| $ | 20,556 |
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| $ | 20,316 |
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Gross profit margin |
| 46.6 | % |
| 48.8 | % |
| 46.7 | % |
| 46.8 | % |
Operating profit |
| $ | 1,721 |
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| $ | 1,987 |
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| $ | 4,733 |
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| $ | 5,676 |
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Operating profit margin |
| 11.5 | % |
| 13.8 | % |
| 10.7 | % |
| 13.1 | % |
____________________ |
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(1) | In the first quarter of 2014, the Company recorded an aggregate $0.9 million charge to net income related to the separation of the Company's former CEO that was comprised of a $0.7 million pre-tax charge ($0.4 million after tax) to operations and an additional $0.5 million charge to income tax expense for the write-off of certain deferred tax assets related to the forfeiture of outstanding equity awards. |
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(2) | 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. |
CONTACT: Vincent Webb, Vice President, Investor Relations and Communications, 215-636-1240, Vince.Webb@cdicorp.com
