Exhibit 99
CDI CORP. REPORTS PROFITABLE THIRD QUARTER FINANCIAL RESULTS AND ANNOUNCES
DIVIDEND
PHILADELPHIA, Oct. 27 /PRNewswire-FirstCall/ -- CDI Corp. (NYSE: CDI) today
reported earnings for the third quarter and announced a quarterly cash dividend.
For the quarter ended September 30, 2005, the company reported net earnings
of $4.2 million, or $0.21 per diluted share, on revenues of $290.5 million. The
company also announced a quarterly dividend of $0.11 per share to be paid on
November 23, 2005 to all shareholders of record as of November 9, 2005.
"Our year-over-year operating performance demonstrated solid momentum as
revenue increased by 10.4% and operating profits more than doubled," said
President and Chief Executive Officer Roger H. Ballou. "Sequentially, revenue
increased by 1.4% and operating profits increased by 10.6%. This momentum was
constrained due to the impact of the Gulf Coast hurricanes which caused a loss
of approximately $1.5 million in revenues and approximately $0.7 million in
operating profits.
"During the quarter, the company incurred approximately $0.7 million in
start-up costs associated with a previously-announced major account win in our
IT Services vertical which should produce profitable revenue growth in later
quarters. The company also incurred an expense of $0.5 million to increase
accruals recorded during 2004 for real estate exit costs in Business Solutions
and Management Recruiters International."
Business Segment Discussion
The Business Solutions segment reported year-over-year revenue growth of
6.0% due to solid business momentum in the Process & Industrial vertical.
Operating profits increased 43.4% vs. the comparable period last year in spite
of the aforementioned impact of the hurricanes and the new account start-up
expenses.
U.K.-based AndersElite reported record revenues in the third quarter as
revenues grew 13.7% on a year-over-year basis driven by continued demand for
skilled contract and permanent professionals in the U.K. infrastructure
marketplace. Operating profits more than tripled vs. the comparable period last
year as the Anders' sales and recruitment organization continued to improve
productivity.
Todays Staffing third quarter revenues increased by 31.9% on a
year-over-year basis reflecting a solid increase in demand. Operating profits
more than doubled vs. the comparable period last year as sales personnel hired
in 2004 continued to improve productivity.
Management Recruiters International, Inc. (MRI) revenues increased 10.8% on
a year-over-year basis as contract staffing revenues increased. Operating
profits were down 5.7% vs. the comparable period last year due to a slowing rate
of growth in its high margin royalty revenue and an increase in sales mix to
less-profitable contract staffing revenue, as well as to an increase in
headquarter staff investment.
Sequential data for the business segments can be found in the attached
tables.
Corporate Summary
CDI ended the quarter with approximately $12.3 million in cash and cash
equivalents compared to $22.5 million at the end of the second quarter.
Additionally, CDI ended the quarter with $6.1 million in short-term debt from a
credit facility. Capital spending for the quarter increased to $5.7 million as
the company continued development of a new recruitment software system and
significantly increased office space to support engineering growth in the
Process & Industrial vertical. The decline in cash is primarily due to higher
working capital requirements driven by higher revenue run rates, new business
ramp ups and timing of certain cash outlays including those for an executive
relocation at MRI.
"The combination of our cash generative business model and our opening cash
balance is sufficient to support accelerating growth and anticipated capital
spending in 2005," said Ballou. "We also have significant debt capacity if
necessary to fund potential acquisitions."
Business Outlook
"While we are pleased with our robust organic revenue growth in the third
quarter and the strong acceleration in operating profit margin to 2.4%, we are
still targeting the company to, over time, achieve historical operating profit
returns of 5%," said Ballou. "Looking ahead, we anticipate a 1-3% sequential
revenue decline in the fourth quarter reflecting normal seasonality somewhat
offset by a ramp-up of new account wins. We expect particular strength in the IT
Services vertical and continued growth in demand in the petrochemical, chemical
and aerospace industries. This would translate into revenue growth in our
previously described range of 7-9% for the entire year.
"We expect to see significant year-over-year revenue momentum as we exit the
fourth quarter and continue to ramp up 2005 account wins in our IT Services and
Process & Industrial verticals and as we maintain our revenue momentum at
Anders. Our business model is sound and we should be able to generate low to
mid-teen variable contribution margins on these incremental sales."
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
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 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 For the
three months ended nine months ended
--------------------------------------- -------------------------
September 30, September 30,
------------------------- June 30, -------------------------
2005 2004 2005 2005 2004
----------- ----------- ----------- ----------- -----------
As Restated As Restated
(a) (a)
Revenues $ 290,530 263,152 286,411 842,860 783,978
Cost of services 222,395 200,928 220,165 647,694 597,663
Gross profit 68,135 62,224 66,246 195,166 186,315
Operating and
administrative expenses 61,207 59,544 59,980 178,852 171,029
Gain on sale of asset - - - (420) (1,295)
Operating profit 6,928 2,680 6,266 16,734 16,581
Interest income,
net and other (45) (39) (99) (291) (443)
Earnings before
income taxes 6,973 2,719 6,365 17,025 17,024
Income tax expense 2,800 1,012 2,367 6,540 5,825
Net earnings $ 4,173 1,707 3,998 10,485 11,199
Diluted earnings
per share:
Net earnings $ 0.21 0.08 0.20 0.53 0.56
Diluted number of shares
(000) 19,972 19,975 19,871 19,907 20,004
Sept. 30, Dec. 31, June 30, Sept. 30,
2005 2004 2005 2004
----------- ----------- ----------- -----------
As Restated
(a)
Selected Balance Sheet Data:
Cash, cash equivalents
and short-term
investments $ 12,284 32,716 22,455 34,188
Accounts receivable,
net $ 229,630 192,145 213,477 201,712
Current assets $ 254,777 242,628 249,626 249,859
Total assets $ 373,649 359,019 363,312 361,404
Current liabilities $ 95,959 83,623 88,192 84,320
Shareholders' equity $ 270,837 267,190 268,394 269,270
For the For the
three months ended nine months ended
--------------------------------- ---------------------
September 30, September 30,
--------------------- June 30, ---------------------
2005 2004 2005 2005 2004
--------- --------- --------- --------- ---------
Selected Cash Flow Data:
Depreciation expense $ 2,547 2,411 2,526 7,610 7,250
Capital expenditures $ 5,682 1,948 4,000 12,195 5,054
Dividends paid (b) $ 2,175 41,567 2,172 6,515 45,099
Free cash flow for the quarter
ended September 30, 2005
is shown below:
Net cash flow used
in operating
activities $ (7,398)
Less: capital
expenditures (5,682)
Less: dividend paid (2,175)
Free cash used for
the quarter ended
September 30, 2005 $ (15,255)
For the For the
three months ended nine months ended
--------------------------------- ---------------------
September 30, September 30,
--------------------- June 30, ---------------------
2005 2004 2005 2005 2004
--------- --------- --------- --------- ---------
As Restated As Restated
(a) (a)
Selected Earnings and
Other Financial Data:
Revenues $ 290,530 263,152 286,411 842,860 783,978
Gross profit $ 68,135 62,224 66,246 195,166 186,315
Gross profit margin 23.5% 23.6% 23.1% 23.2% 23.8%
Operating and
administrative expenses
as a percentage of
revenue 21.1% 22.6% 20.9% 21.2% 21.8%
Corporate expenses $ 4,458 4,655 4,043 12,691 11,455
Corporate expenses as a
percentage of revenue 1.5% 1.8% 1.4% 1.5% 1.5%
Operating profit margin 2.4% 1.0% 2.2% 2.0% 2.0%
Effective income tax rate 40.2% 37.2% 37.2% 38.4% 34.2%
Pre-tax return on
shareholders' equity -
last twelve months (c) 3.7% 8.7% 2.0% N/A N/A
For the For the
three months ended nine months ended
--------------------------------- ---------------------
September 30, September 30,
--------------------- June 30, ---------------------
2005 2004 2005 2005 2004
--------- --------- --------- --------- ---------
As Restated As Restated
(a) (a)
Selected Segment Data:
Business Solutions
Revenues $ 187,518 176,833 186,508 551,025 528,920
Gross profit 36,138 33,697 34,636 103,218 102,911
Gross profit margin 19.3% 19.1% 18.6% 18.7% 19.5%
Operating profit 5,002 3,489 3,753 12,091 14,412
Operating profit margin 2.7% 2.0% 2.0% 2.2% 2.7%
AndersElite
Revenues $ 48,933 43,052 46,695 137,438 122,953
Gross profit 12,294 10,635 11,687 34,522 30,398
Gross profit margin 25.1% 24.7% 25.1% 25.1% 24.7%
Operating profit 2,583 687 1,963 5,439 3,056
Operating profit margin 5.3% 1.6% 4.2% 4.0% 2.5%
Todays Staffing
Revenues $ 38,418 29,131 37,795 109,419 90,255
Gross profit 9,357 8,071 9,421 27,122 24,298
Gross profit margin 24.4% 27.7% 24.9% 24.8% 26.9%
Operating profit 1,237 440 839 1,892 1,730
Operating profit margin 3.2% 1.5% 2.2% 1.7% 1.9%
Management Recruiters
International
Revenues $ 15,661 14,136 15,413 44,978 41,850
Gross profit 10,346 9,821 10,502 30,304 28,708
Gross profit margin 66.1% 69.5% 68.2% 67.4% 68.6%
Operating profit (d) 2,564 2,719 3,754 9,583 8,838
Operating profit margin 16.4% 19.2% 24.4% 21.3% 21.1%
For the For the
three months ended nine months ended
--------------------------------- ---------------------
September 30, September 30,
--------------------- June 30, ---------------------
2005 2004 2005 2005 2004
--------- --------- --------- --------- ---------
As Restated As Restated
(a) (a)
Business Solutions
Revenue by Vertical:
CDI Information
Technology Services $ 67,097 70,689 65,536 196,417 213,065
CDI Process and
Industrial 85,286 70,392 87,055 252,017 204,928
CDI Aerospace 20,782 21,686 20,666 61,566 66,743
CDI Government Services 12,025 12,134 11,228 34,574 37,660
CDI Life Sciences 2,328 1,932 2,023 6,451 6,524
Total Business
Solutions Revenue $ 187,518 176,833 186,508 551,025 528,920
(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) The three and nine months ended September 30, 2004 included a special
dividend of $2.00 per share or $39.4 million.
(c) Current quarter combined with the three preceding quarters earnings or
(loss) from operations before income taxes divided by the average shareholders'
equity.
(d) The nine months operating profits in 2004 include a $1.3 million gain from
the sale of an MRI company-owned office.
SOURCE CDI Corp.
-0- 10/27/2005
/CONTACT: Vincent Webb, Vice President, Corporate Communications &
Marketing, +1-215-636-1240, Vince.Webb@cdicorp.com orJohn Fanelli, Vice
President andChief Accounting Officer, +1-215-282-8180,
John.Fanelli@cdicorp.com, both of CDI Corp./ /First Call Analyst: /
/FCMN Contact: vince.webb@cdicorp.com /
/Web site: http://www.cdicorp.com /
(CDI)