Exhibit 99.1
CDI CORP. REPORTS FIRST QUARTER FINANCIAL RESULTS AND ANNOUNCES DIVIDEND
PHILADELPHIA, May 4 /PRNewswire-FirstCall/ -- CDI Corp. (NYSE: CDI) today
reported earnings for the first quarter ended March 31, 2005 and announced a
quarterly cash dividend.
For the quarter ended March 31, 2005, the company reported net earnings of
$2.3 million, or $0.12 per diluted share, on revenues of $265.9 million. Net
earnings include a pre-tax gain of $0.4 million related to a sale of a company
asset. The company also announced a quarterly dividend of $0.11 per share to be
paid on June 1, 2005 to all shareholders of record as of May 18, 2005.
"As anticipated, we saw positive revenue momentum both on a sequential and
year-over-year basis," said President and Chief Executive Officer Roger H.
Ballou. "This momentum was driven by increased demand for both permanent
placement and contingent staffing and by increases in capital spending by
clients in our key vertical industries.
"We were also pleased with the sequential improvement in earnings in
Business Solutions, Management Recruiters International and Anders. Investments
in sales-building capabilities during 2004 are beginning to bear fruit and we
anticipate that these investments will continue to generate profitable revenue
growth as we move forward."
Business Segment Discussion
The Business Solutions segment reported sequential revenue growth of 3.0%
and year-over-year revenue growth of 2.6%. Growth occurred primarily in the
Process & Industrial vertical as new account wins in 2004 began to ramp-up.
Operating profits increased sequentially but declined on a year-over-year basis
primarily due to margin pressures in the IT Services vertical and continued
increases in employee benefit costs.
AndersElite revenues were down sequentially due to normal seasonality but up
5.8% on a year-over-year basis. Operating profits increased sequentially driven
by increased permanent placement activity in the quarter as solid demand
continued in the U.K. infrastructure marketplace. In spite of the sequential
rebound, operating profits have not yet returned to year-ago levels primarily
due to investments in revenue generating staff.
Todays Staffing first quarter revenues were up 3.7% sequentially and up
11.1% on a year-over-year basis driven by growth in both retail accounts and
national account wins. Operating profits declined both sequentially and
year-over-year due primarily to continued investment in sales and recruiting
infrastructure, increases in employee benefit costs and margin deterioration.
Management Recruiters International (MRI) first quarter revenues declined
both sequentially and year-over-year by 2.1% and 1.5% respectively. Sequential
revenues were affected primarily by soft sales of new franchises. Year-over-year
revenues were also impacted by soft franchise sales largely offset by royalties
increasing by 18.6%. Operating profits increased both sequentially and on a
year-over-year basis due to continued strong royalty flow and reductions in
expenses.
Corporate Summary
Corporate overhead costs were essentially flat sequentially after excluding
approximately $1.2 million in expenses and legal fees associated with the
resolution of litigation, claims and disputes incurred in the fourth quarter of
2004. Included in first quarter results are higher-than-anticipated costs the
company incurred related to Sarbanes-Oxley compliance and expenses related to
previous years' financial restatements totaling $0.7 million which are not
expected to reoccur.
CDI ended the quarter with approximately $26.4 million in cash and
short-term investments compared to a year-end total of $32.7 million. The
decline is primarily due to working capital requirements of significant new
projects in Aerospace and the Process & Industrial verticals. "We expect to
continue to generate sufficient cash in 2005 to support organic growth, capital
spending and potential acquisitions," said Ballou.
Business Outlook
"Looking ahead, we anticipate an increase in sequential revenue growth in
the second quarter," continued Ballou. "We believe that this revenue momentum
combined with anticipated revenue from our pipeline of new account wins could
translate into 5 to 7% annualized revenue growth for the entire year. We should
be able to generate low to mid-teen variable contribution margins on these
incremental sales. Client investment in capital spending and both permanent and
temporary hiring is expected to continue into the second quarter. We see the
effect of these investment decisions in a continued strong project pipeline in
Business Solutions, increased staffing requisition activity in Todays and in
increased rates of permanent hiring reported by a broad cross-section of our MRI
franchise owners."
Conference Call/Webcast
CDI Corp. will conduct a conference call at 11 a.m. (EDT) 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
CDI Corp. (NYSE: CDI) is a leading provider of engineering and information
technology outsourcing solutions and professional staffing. Its operating
units include CDI Business Solutions, CDI AndersElite Limited, Todays
Staffing, Inc. and Management Recruiters International, Inc. Visit CDI on
the web at http://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," "could," "seeks," "approximately," "hopes,"
"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. Readers are urged to note the various risks and
uncertainties described in our public filings. In particular, these risks and
uncertainties include: 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
---------------------------------------------
March 31, December 31, March 31,
2005 2004 2004
------------- ------------- -------------
As Restated
(a)
Revenues $ 265,919 261,229 255,987
Cost of services 205,134 202,150 194,823
Gross profit 60,785 59,079 61,164
Operating and administrative
expenses 57,665 66,491 54,114
Restructuring - (200) -
(Gain) on sale of asset (420) - -
Operating profit (loss) 3,540 (7,212) 7,050
Interest income, net and other (147) (85) (268)
Earnings (loss) from operations
before taxes 3,687 (7,127) 7,318
Income tax expense (benefit) 1,373 (3,456) 2,599
Net earnings (loss) $ 2,314 (3,671) 4,719
Diluted earnings per share:
Net earnings (loss) $ 0.12 (0.19) 0.24
Diluted number of shares (000) 19,878 19,681 19,937
March 31, December 31, March 31,
2005 2004 2004
------------- ------------- -------------
As Restated
(a)
Selected Balance Sheet Data:
Cash, cash equivalents
and short-term
investments $ 26,439 32,716 78,719
Accounts receivable, net $ 208,795 192,145 201,490
Current assets $ 251,185 242,628 299,080
Total assets $ 366,196 359,019 411,915
Current liabilities $ 92,004 83,623 99,970
Shareholders' equity $ 266,708 267,190 304,283
For the three months ended
---------------------------------------------
March 31, December 31, March 31,
2005 2004 2004
------------- ------------- -------------
As Restated
(a)
Selected Cash Flow Data:
Depreciation expense $ 2,537 2,368 2,425
Capital expenditures $ 2,513 2,744 1,391
Dividends paid $ 2,169 2,168 1,765
Free cash flow for the three months
ended March 31, 2005 is shown below:
Net cash flow used in operating
activities $ (3,153)
Less: capital expenditures (2,513)
Less: dividends paid (2,169)
Free cash flow for the quarter ended
March 31, 2005 $ (7,835)
Selected Earnings and Other Financial
Data:
Revenues $ 265,919 261,229 255,987
Gross profit $ 60,785 59,079 61,164
Gross profit margin 22.9% 22.6% 23.9%
Operating and administrative expenses
as a percentage of revenue 21.7% 25.5% 21.1%
Corporate expenses $ 4,190 5,308 3,128
Corporate expenses as
a percentage of revenue 1.6% 2.0% 1.2%
Operating profit margin 1.3% (2.8)% 2.8%
Effective income tax rate 37.2% 48.5% 35.5%
Pre-tax return on shareholders'
equity - last twelve months (b) 2.2% 3.5% 10.1%
For the three months ended
---------------------------------------------
March 31, December 31, March 31,
2005 2004 2004
------------- ------------- -------------
As Restated
(a)
Selected Segment Data:
Business Solutions
Revenues $ 176,997 171,912 172,452
Gross profit 32,445 30,940 33,790
Gross profit margin 18.3% 18.0% 19.6%
Operating profit (loss) 3,336 (2,731) 5,878
Operating profit margin 1.9% (1.6)% 3.4%
AndersElite
Revenues $ 41,810 43,108 39,515
Gross profit 10,542 9,642 9,837
Gross profit margin 25.2% 22.4% 24.9%
Operating profit (loss) 893 (600) 1,518
Operating profit margin 2.1% (1.4)% 3.8%
Todays Staffing
Revenues $ 33,207 32,007 29,901
Gross profit 8,345 8,415 7,986
Gross profit margin 25.1% 26.3% 26.7%
Operating (loss) profit (184) 434 456
Operating profit margin (0.6)% 1.4% 1.5%
Management Recruiters International
Revenues $ 13,905 14,202 14,119
Gross profit 9,453 10,082 9,551
Gross profit margin 68.0% 71.0% 67.6%
Operating profit 3,265 992 2,326
Operating profit margin 23.5% 7.0% 16.5%
For the three months ended
---------------------------------------------
March 31, December 31, March 31,
2005 2004 2004
------------- ------------- -------------
As Restated
(a)
Business Solutions Revenue by Vertical:
CDI-Information Technology Services $ 63,783 66,831 69,263
CDI-Process and Industrial 79,675 72,103 65,346
CDI-Aerospace 20,118 19,253 22,855
CDI-Government Services 11,321 11,009 12,660
CDI-Life Sciences 2,100 2,716 2,328
Total Business Solutions Revenue $ 176,997 171,912 172,452
(a) As disclosed previously in the company's Form 10-K for 2004, CDI restated
its earnings for the first three quarters of 2004 for adjustments impacting
its Business Solutions segment.
(b) Current quarter combined with the three preceding quarters earnings or
(loss) from operations before income taxes divided by the average
shareholders' equity.
SOURCE CDI Corp.
-0- 05/04/2005
/CONTACT: Vincent Webb, Vice President, Corporate Communications &
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
Corp./
/First Call Analyst: /
/FCMN Contact: vince.webb@cdicorp.com/
/Web site: http://www.cdicorp.com