CDI Corp. Reports Profitable First Quarter 2003
PHILADELPHIA, April 23 /PRNewswire-FirstCall/ -- CDI Corp. (NYSE: CDI) today
reported earnings for the quarter ended March 31, 2003.
For the quarter ended March 31, 2003, the company reported net earnings of $5.5
million, or $0.28 per diluted share, on revenues of $269.5 million. For the
quarter ended March 31, 2002, the company reported a net loss of $0.86 per
diluted share, on revenues of $313.1 million. This loss included pre-tax
restructuring charges of $4.1 million, or $0.13 per share, event-driven charges
of $3.4 million, or $0.12 per share, and a net gain after tax from discontinued
operations of $468,000, or $0.02 per share, as well as a previously disclosed
after-tax impairment charge of $14 million ($0.73 per share), reflecting a
required change in accounting for goodwill.
"We continue to reap the benefits of the restructuring program we concluded two
quarters ago, enabling CDI to remain profitable despite a very challenging
business climate," said President and Chief Executive Officer Roger H. Ballou.
"We also invested in growth, spending approximately $1 million to ramp up a very
large new engineering contract and upgrade our technology for our new Shared
Services Center in West Virginia.
"Our revenues were a little better than we had anticipated sequentially, given
that first quarter revenues tend to be the lowest of the year. The
year-over-year decline in revenues is attributable to our exiting low-margin
accounts, the sale of our MRI permanent placement offices, the implosion of the
telecommunications industry, and continued softness in information technology
staffing. However, we continue to win new business and improve our mix of
longer-cycle project work and our penetration of high-growth vertical markets,"
said Ballou.
Business Unit Discussion
"Although the market is still tepid in many sectors and demand for IT
professionals remains suppressed, these areas of weakness were offset by
particular strength in some of our longer-cycle, higher margin operations,
particularly in the engineering area," said Ballou.
CDI's Project Management segment showed a slight sequential improvement in
revenues of 4.8 percent from the fourth quarter of 2002, driven primarily by the
aerospace, chemical and government services components of the CDI Engineering
Solutions division and strength in CDI Innovantage, the company's information
technology outsourcing business.
Revenues at CDI Professional Services showed a slight sequential decline of only
1.1 percent from the fourth quarter of 2002, reflecting continued softness in
information technology staffing. AndersElite, which specializes in professional
staffing for the U.K. construction market, continues to experience robust
growth.
Todays Staffing revenues were basically flat as compared with the fourth quarter
of 2002, mostly due to lower revenues from its Canadian operations.
Management Recruiters International showed the most significant sequential
decline in revenues, 13.4 percent as compared with the fourth quarter of 2002,
indicating continued suppressed demand in permanent placement.
Corporate Summary
Corporate overhead costs decreased both sequentially and year-over-year, as CDI
continued to impose further financial discipline on its operations.
Business Outlook
"It is too difficult to give earnings guidance for the remainder of 2003 due to
the unpredictability of external forces," said Ballou. "Our approach to the
business remains very conservative. It assumes a flat revenue trend and no
appreciable improvement in the economy. Even so, we believe we can leverage our
industry-leading cost structure to continue winning attractive new business at
healthy margins and remain solidly profitable."
Financial Tables Follow
Conference Call/Webcast
CDI Corp. will conduct a conference call at 11 a.m. (Eastern) 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
CDI Corp. (NYSE: CDI) is a Fortune 1000 professional services and outsourcing
company. Its divisions and subsidiaries include CDI Engineering Solutions, CDI
Professional Services, Todays Staffing, and Management Recruiters International,
the world's largest executive search and recruitment organization. Visit CDI on
the web at www.cdicorp.com.
Safe Harbor Statement
Certain information in this news release contains forward-looking statements
as such term is defined in Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934. Certain forward-looking statements
can be identified by the use of forward-looking terminology such as "believes,"
"expects," "may," "will," "should," "seeks," "approximately," "intends,"
"plans," "estimates," or "anticipates" or the negative thereof or other
comparable terminology, or by discussions of strategy, plans or intentions.
Forward-looking statements involve risks and uncertainties that could cause
actual results to differ materially from those in the forward-looking
statements. These include risks and uncertainties such as competitive market
pressures, material changes in demand from larger customers, availability of
labor, the company's performance on contracts, changes in customers' attitudes
towards outsourcing, government policies or judicial decisions adverse to the
staffing industry, changes in economic conditions, and delays or unexpected
costs associated with its restructuring program. Readers are cautioned not to
place undue reliance on these forward-looking statements, which speak only as of
the date hereof. The company assumes no obligation to update such information.
CDI CORP. AND SUBSIDIARIES
Consolidated Statement of Earnings
Unaudited
(in thousands, except share and per share data)
For the three months
ended March 31,
2003 2002
Revenues $269,526 313,134
Cost of services 201,150 233,810
Gross profit 68,376 79,324
Operating and administrative expenses 60,014 79,639
Provision for restructure - 4,053
Operating profit (loss) 8,362 (4,368)
Interest (income) expense, net (374) 85
Earnings (loss) from continuing operations
before income taxes, minority interests and
cumulative effect of accounting change 8,736 (4,453)
Income tax (expense) benefit (3,276) 1,593
Earnings (loss) from continuing operations
before minority interests and cumulative
effect of accounting change 5,460 (2,860)
Minority interests - 66
Earnings (loss) from continuing operations 5,460 (2,926)
Discontinued operations - 468
Cumulative effect of accounting change, net of tax - (13,968)
Net earnings (loss) $5,460 (16,426)
Diluted earnings (loss) per share:
Earnings (loss) from continuing operations $0.28 (0.15)
Discontinued operations $- 0.02
Cumulative effect of accounting change $- (0.73)
Net earnings (loss) $0.28 (0.86)
Diluted number of shares (000) 19,554 19,116
CDI CORP.
FINANCIAL HIGHLIGHTS
UNAUDITED
(in thousands, except ratios)
Selected Balance Sheet Data: March 31, March 31,
2003 2002
Cash, cash equivalents and short-term
investments $93,369 49,727
Accounts receivable, net $203,939 242,482
Accounts receivable as a % of revenues 75.7% 77.4%
Current assets $322,135 326,928
Total assets $436,108 475,163
Current liabilities $114,539 153,612
Shareholders' equity $313,576 308,953
For the three months ended
March 31,
2003 2002
Selected Cash Flow Data:
Depreciation expense $3,085 8,343
Capital expenditures $4,207 2,671
Selected Earnings and Other Financial Data:
Revenues $269,526 313,134
Direct margin $68,376 79,324
Direct margin rate 25.4% 25.3%
Indirect expenses as a percentage of revenue 22.3% 25.4%
Corporate expenses $3,429 4,564
Corporate expenses as a percentage of revenue 1.3% 1.5%
Operating profit (loss) margin 3.1% (1.4%)
Effective income tax rate 37.5% 35.8%
Pre-tax return on stockholders' equity -
last twelve months (a) 6.5% (10.9%)
(a) Current quarter combined with the three preceding quarters' earnings (loss)
from continuing operations before income taxes, minority interests and
cumulative effect of accounting change divided by the average shareholders'
equity.Included in pre-tax earnings (loss) in the previous twelve months for the
2003 and 2002 calculations are $13.9 and $36.0 million respectively of
event-driven and restructuring expenses.
CDI CORP.
FINANCIAL HIGHLIGHTS
UNAUDITED
(in thousands, except ratios)
For the three months ended
March 31,
SELECTED SEGMENT DATA: 2003 2002
Professional Services
Revenues $140,357 169,550
Direct margin $29,172 31,672
Direct margin rate 20.8% 18.7%
Operating profit (loss) $4,555 (568)
Operating profit (loss) margin 3.2% (0.3%)
Project Management
Revenues $78,924 80,943
Direct margin $19,316 18,908
Direct margin rate 24.5% 23.4%
Operating profit (loss) $5,161 (2,140)
Operating profit (loss) margin 6.5% (2.6%)
Todays Staffing
Revenues $34,572 39,932
Direct margin $9,821 10,925
Direct margin rate 28.4% 27.4%
Operating profit $1,392 1,049
Operating profit margin 4.0% 2.6%
Management Recruiters International
Revenues $15,673 22,709
Direct margin $10,067 17,819
Direct margin rate 64.2% 78.5%
Operating profit $683 1,855
Operating profit margin 4.4% 8.2%