CDI Corp. Reports Fourth Quarter, Full Year 2003
Financial Results and Announces Dividend
PHILADELPHIA, Feb. 25 /PRNewswire-FirstCall/ -- CDI Corp. (NYSE: CDI)
today reported earnings for the fourth quarter and for the full year ended
December 31, 2003 and announced a quarterly cash dividend.
For the quarter ended December 31, 2003, the company reported net earnings
of $5.0 million, or $0.25 per diluted share, on revenues of $256.4 million.
Net earnings from continuing operations decreased 18.7% versus the fourth
quarter 2002. The company also announced a quarterly dividend of $0.09 per
share to be paid to all shareholders of record as of March 9, 2004. The
dividend will be paid on March 23, 2004.
For the year ended December 31, 2003, the company reported net earnings of
$22.5 million, or $1.14 per diluted share, on revenues of $1.1 billion. For
the year ended December 31, 2002, the company reported a net loss of $9.4
million, or $0.48 per diluted share, on revenues of $1.2 billion. This net
loss included a previously disclosed after-tax impairment charge of $14
million ($0.71 per diluted share), reflecting a required change in accounting
for goodwill; income from discontinued operations of $0.5 million ($0.03 per
diluted share); and after-tax restructuring and event-driven charges of $13.3
million ($0.68 per diluted share).
"2003 was a challenging year as geopolitical events and corporate scandals
roiled the economy. Regardless, we were able to deliver a substantial increase
on profitability for the year," said President and Chief Executive Officer
Roger H. Ballou. "Our business model, predicated on operational efficiency
and financial discipline, delivered growth in profit, increasing operating
profit margins by 250 basis points to 3.1% and pre-tax returns on average
shareholders' equity by 910 basis points to 11.3% for the year. In addition,
CDI ended the year with approximately $73 million in cash and short-term
investments leaving us sufficient resources to fund future growth. CDI paid
shareholders a special dividend of $2.00 per share and two quarterly dividends
of $0.09 per share during the second half of 2003," said Ballou.
"Operationally, we remain sound with our break-even level at approximately
$850 million and essentially no debt.
"Our revenue in 2003, however, was soft as a number of customers in our
vertical markets cut capital spending and reduced staffing levels due to the
uncertain economy," said Ballou. "The fourth quarter was adversely impacted
by a major setback suffered by a customer in our life sciences business and
expenses related to the cancellation of their capital project. Aside from
this loss, which is not expected to reoccur, results for the fourth quarter
were consistent with our expectations and followed normal seasonal patterns."
Business Unit Discussion
Operating profits at CDI Professional Services improved sequentially $0.6
million or 11.3% during the fourth quarter 2003, resulting from lower
operating costs that more than offset deterioration in direct margin due to a
seasonal fall off in high margin permanent placements. AndersElite, CDI's
business in the United Kingdom, continued to have strong revenue performance.
Operating profits at CDI Project Management declined sequentially $0.8
million or 19.8% during the fourth quarter 2003. This decline was directly
attributable to the cancellation of a capital project from the previously
mentioned client that resulted in a pre-tax loss of approximately $1.0
million.
Todays Staffing operating profits declined sequentially $1.1 million
during the fourth quarter 2003 almost entirely due to volume-based reductions
in revenue as a result of persistent softness in staffing demand, which was
prevalent throughout the year, as well as normal year-end seasonality.
Operating profits at Management Recruiters International declined
sequentially $0.7 million during the fourth quarter 2003 resulting from a
continuing weakness in the permanent placement job market exacerbated by
normal seasonal declines.
Corporate Summary
Corporate overhead costs were flat sequentially reflecting continued
spending discipline in the company's headquarter operations.
Business Outlook
"Looking ahead, in keeping with normal seasonal patterns, we would expect
our revenues in the first quarter of 2004 to be relatively flat compared to
the fourth quarter of 2003, but we hope to see a small upturn," said Ballou.
"We are cautiously optimistic that the economy will continue to improve and,
eventually, translate into increased capital investment and hiring.
Regardless of the economy, we will continue to refine our business model and
go-to-market strategy to sustain profitable growth. We hope to grow
organically by 5% this year."
Financial Tables Follow
Conference Call/Webcast
CDI Corp. will conduct a conference call at 11 a.m. (EST) 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
engineering and IT outsourcing company. Its subsidiaries include 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 and changes in economic
conditions. 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 Statements of Earnings
Unaudited
(in thousands, except per share data)
For the three months ended For the years ended
December 31, December 31,
2003 2002 2003 2002
Revenues $ 256,439 270,138 1,060,314 1,169,475
Cost of services 196,628 199,414 803,490 864,682
Gross profit 59,811 70,724 256,824 304,793
Operating and administrative
expenses 53,030 60,847 223,774 284,282
Restructuring (212) - (143) 12,551
Loss on sale of assets - - - 1,259
Operating profit 6,993 9,877 33,193 6,701
Interest income, net (257) (132) (1,053) (115)
Earnings from continuing
operations before income taxes,
minority interests and cumulative
effect of accounting change 7,250 10,009 34,246 6,816
Income tax expense 2,240 3,847 11,700 2,599
Earnings from continuing
operations before minority
interests and cumulative effect
of accounting change 5,010 6,162 22,546 4,217
Minority interests - - - 135
Earnings from continuing
operations before cumulative
effect of accounting change 5,010 6,162 22,546 4,082
Discontinued operations, net of
tax - 102 - 527
Cumulative effect of accounting
change, net of tax - - - (13,968)
Net earnings (loss) $ 5,010 6,264 22,546 (9,359)
Diluted earnings (loss) per
share:
Earnings from continuing
operations before
cumulative effect
of accounting change $ 0.25 0.31 1.14 0.21
Discontinued operations,
net of tax $ - 0.01 - 0.03
Cumulative effect of
accounting change, net
of tax $ - - - (0.71)
Net earnings (loss) $ 0.25 0.32 1.14 (0.48)
Diluted number of shares 20,043 19,658 19,771 19,579
December 31,
2003 2002
Selected Balance Sheet Data:
Cash, cash equivalents and short-term
investments $ 72,836 99,625
Accounts receivable, net $ 199,630 189,557
Accounts receivable as a % of revenues 18.8% 16.2%
Current assets $ 289,694 314,881
Total assets $ 401,562 432,774
Current liabilities $ 95,756 116,481
Shareholders' equity $ 296,861 307,801
For the three months ended For the years ended
December 31, December 31,
2003 2002 2003 2002
Selected Cash Flow Data:
Depreciation expense $ 2,405 4,001 11,863 24,457
Capital expenditures $ 2,981 3,386 14,757 10,144
Dividends paid $ 1,759 - 42,419 -
Selected Earnings and Other
Financial Data:
Revenues $256,439 270,138 1,060,314 1,169,475
Gross profit $ 59,811 70,724 256,824 304,793
Gross profit margin 23.3% 26.2% 24.2% 26.1%
Operating and administrative
expenses as a percentage of
revenue 20.7% 22.5% 21.1% 24.3%
Corporate expenses $ 2,960 3,915 12,951 17,990
Corporate expenses as a
percentage of revenue 1.2% 1.4% 1.2% 1.5%
Operating profit margin 2.7% 3.7% 3.1% 0.6%
Effective income tax rate 30.9% 38.4% 34.2% 38.1%
Pre-tax return on shareholders'
equity - last twelve
months (a) N/A N/A 11.3% 2.2%
(a) Current quarter combined with the three preceding quarters earnings
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 ($0.1)
and $21.4 million, respectively, of pre-tax restructuring and event-
driven (income) expenses.
For the three months ended For the years ended
December 31, December 31,
2003 2002 2003 2002
Selected Segment Data:
Professional Services
Revenues $ 141,660 141,874 564,790 622,931
Gross profit 27,946 29,954 114,131 123,838
Gross profit margin 19.7% 21.1% 20.2% 19.9%
Operating profit 5,779 3,988 19,799 6,880
Operating profit margin 4.1% 2.8% 3.5% 1.1%
Project Management
Revenues $ 72,061 75,322 302,902 311,256
Gross profit 16,032 18,956 68,913 75,365
Gross profit margin 22.2% 25.2% 22.8% 24.2%
Operating profit 3,147 4,754 16,352 9,423
Operating profit margin 4.4% 6.3% 5.4% 3.0%
Todays Staffing
Revenues $ 30,664 34,840 135,746 149,387
Gross profit 8,135 9,412 37,339 41,501
Gross profit margin 26.5% 27.0% 27.5% 27.8%
Operating profit 862 2,206 6,371 1,486
Operating profit margin 2.8% 6.3% 4.7% 1.0%
Management Recruiters International
Revenues $ 12,054 18,102 56,876 85,901
Gross profit 7,698 12,402 36,441 64,089
Gross profit margin 63.9% 68.5% 64.1% 74.6%
Operating profit 165 2,844 3,622 6,902
Operating profit margin 1.4% 15.7% 6.4% 8.0%
SOURCE CDI Corp.
-0- 02/25/2004
/CONTACT: Vincent Webb, Vice President, Corporate Communications and
Marketing, +1-215-636-1240, Vince.Webb@cdicorp.com, or Jay Stuart, Chief
Financial Officer, +1-215-636-1141, Jay.Stuart@cdicorp.com, both of CDI/
/Web site: http://www.cdicorp.com /
(CDI)
CO: CDI Corp.
ST: Pennsylvania
IN: CPR ITE
SU: ERN ERP MAV CCA DIV