Exhibit 99
CDI CORP. REPORTS FIRST QUARTER 2006 EPS MORE THAN DOUBLES
AND ANNOUNCES DIVIDEND
PHILADELPHIA, April 27 /PRNewswire-FirstCall/ -- CDI Corp. (NYSE: CDI) today
reported earnings for the first quarter ended March 31, 2006 and announced a
quarterly cash dividend.
For the quarter ended March 31, 2006, the company reported net earnings of
$5.0 million, or $0.25 per diluted share, on revenues of $307.7 million. Total
first quarter revenue increased 15.7% compared to $265.9 million for the first
quarter of 2005 and net earnings increased 118% compared to the first quarter of
2005. The company also announced a quarterly dividend of $0.11 per share to be
paid on May 25, 2006 to all shareholders of record as of May 11, 2006.
"Continued strength in the hiring environment in all of our businesses and
in capital spending in our key vertical industries, as well as focused execution
by our sales and operations teams, produced solid revenue and profit gains,"
said President and Chief Executive Officer Roger H. Ballou. "We are pleased with
both our organic revenue growth of 15.7% versus the year-ago quarter and with
the breadth of growth which was reflected in every business unit.
"Our business model yielded anticipated results, producing a variable
contribution margin in the low- to mid-teens and overall year-over-year net
earnings that more than doubled. This was in spite of higher expenses related to
increased financial control and compliance spending and stock-based compensation
expenses totaling approximately $0.8 million."
Effective January 1, 2006, the company adopted the accounting required under
SFAS No. 123(R) for its stock-based compensation plan. The change in accounting,
plus the effect of additional awards which were granted during the first quarter
of 2006, resulted in an increase of $0.5 million in stock-based compensation
expenses versus the prior year.
Business Segment Discussion
The Business Solutions segment reported a strong year-over-year revenue
increase of 15.2% as every vertical reported double-digit percentage growth. New
project wins and expansion of existing client relationships were key drivers in
all of the verticals. Operating profits increased 122% on a year- over-year
basis reflecting the aforementioned account wins and increased capital spending
by clients.
U.K.-based AndersElite (Anders) revenues increased 16.2% versus the prior-
year period due to continued strength in both permanent and contract demand
partially offset by unfavorable currency movement of 9.4%. Year-over-year
operating profits increased 51.4% driven by continued improvement in Anders
productivity in the healthy U.K. construction industry environment.
Todays Staffing first quarter revenues continue to reflect broad client
demand as revenues increased 18.8% versus the year-ago period. Sales
productivity gains contributed to year-over-year operating profit improvement to
$0.7 million versus a loss during the first quarter of 2005.
Management Recruiters International, Inc.'s (MRI) revenue increased 13.2%
versus the prior-year quarter. However, results were affected by a revenue mix
shift with much of the year-over-year growth generated by lower-margin staffing.
During the quarter, MRI also experienced lower royalty revenue growth and
reduced franchise sales versus the previous year. Operating profit was
marginally down when compared to the year-ago quarter due to the aforementioned
factors and increases in expenses for the quarter.
Year-over-year and sequential data for the business segments can be found in
the attached tables.
Corporate Summary
Corporate overhead costs increased 19.9% versus the year-ago period
primarily due to increases in costs related to Sarbanes-Oxley compliance and
financial control spending, legal expenses and stock-based compensation expenses
for corporate personnel.
"CDI ended the quarter with approximately $20.7 million in cash and cash
equivalents compared to a year-end total of $13.4 million," said Ballou. "This
was in spite of increased sales and was driven by faster collection of
receivables. We continue to have significant debt capacity, if necessary, to
fund potentially higher working capital requirements driven by our revenue
growth, capital spending and potential acquisitions."
Business Outlook
"Continued strength in capital spending by key clients and strong staffing
and permanent placement demand indicates continued robust business momentum,"
said Ballou. "Looking ahead, this momentum could produce organic revenue growth
of 10 to 12% for the full year as well as in the second quarter on a
year-over-year basis.
"We should be able to generate low- to mid-teen variable contribution
margins on these incremental sales as our management team continues to
effectively execute our business plan."
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
Headquartered in Philadelphia, 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.
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 statements about
our strategy for growth, expected expenditures and future financial results are
forward-looking statements. Some of the forward-looking statements can be
identified by words like "anticipates," "believes," "expects," "may," "will,"
"could," "intends," "plans," "estimates," and similar expressions. These
statements are not guarantees of future performance and involve a number of
risks, uncertainties and assumptions that are difficult to predict. Actual
outcomes and results may differ materially from what is expressed or forecasted
in these forward-looking statements depending on a variety of factors, including
the following: changes in general economic conditions and levels of capital
spending by customers in the industries we serve; possible inaccurate
assumptions or forecasts regarding the bill rate, profit margin, duration of
assignment and utilization rate applicable to our billable personnel;
competitive market pressures; the availability of qualified labor; changes in
customers' attitudes towards outsourcing; our level of success in attracting,
training, and retaining qualified management personnel and other staff
employees; our ability to pass on to customers increases in our costs (such as
those relating to workers' compensation insurance or which may arise from
regulatory requirements); our performance on our customer contracts; the
possibility of our incurring liability for our activities, including the
activities of our temporary employees; and government policies or judicial
decisions adverse to the staffing industry. More detailed information about some
of these risks and uncertainties may be found in our filings with the SEC,
particularly in the "Risk Factors" section of our Form 10-K's and the
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" section of our Form 10-K's and Form 10-Q's. 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.
CDI CORP. AND SUBSIDIARIES
Consolidated Statements of Earnings
Unaudited
(in thousands, except per share data)
For the three months ended
--------------------------------------
March 31, December 31,
----------------------- ------------
2006 2005 2005
---------- ---------- ------------
Revenues $ 307,680 $ 265,919 $ 290,724
Cost of services 236,760 205,134 223,322
Gross profit 70,920 60,785 67,402
Operating and administrative expenses 62,871 57,665 62,580
Restructuring - - (126)
(Gain) on sale of asset - (420) -
Operating profit 8,049 3,540 4,948
Interest income, net and other 163 147 16
Earnings before income taxes and
cumulative effect of accounting
change 8,212 3,687 4,964
Income tax expense 3,174 1,373 1,492
Earnings before cumulative effect of
accounting change 5,038 2,314 3,472
Cumulative effect of accounting
change, net of tax - - 152
Net earnings $ 5,038 $ 2,314 $ 3,320
Diluted earnings per share:
Earnings before cumulative effect of
accounting change $ 0.25 $ 0.12 $ 0.17
Cumulative effect of accounting
change - - (0.01)
Net earnings $ 0.25 $ 0.12 $ 0.16
Diluted number of shares (000) 20,009 19,878 20,038
March 31, December 31,
----------------------- ------------
2006 2005 2005
---------- ---------- ------------
Selected Balance Sheet Data:
Cash, cash equivalents and short-term
investments $ 20,684 $ 26,439 $ 13,407
Accounts receivable, net $ 246,895 $ 208,795 $ 232,365
Current assets $ 281,520 $ 251,185 $ 259,755
Total assets $ 402,053 $ 366,197 $ 379,494
Current liabilities $ 116,680 $ 92,004 $ 97,766
Shareholders' equity $ 276,213 $ 266,709 $ 271,478
For the three months ended
--------------------------------------
March 31, December 31,
----------------------- ------------
2006 2005 2005
---------- ---------- ------------
Selected Cash Flow Data:
Depreciation expense $ 2,510 $ 2,537 $ 2,690
Capital expenditures $ 3,071 $ 2,513 $ 3,503
Dividends paid $ 2,184 $ 2,168 $ 2,181
Free cash flow for the three months
ended March 31, 2006 is shown below:
Net cash flow provided by
operating activities $ 14,248
Less: capital expenditures (3,071)
Less: dividends paid (2,184)
Free cash flow for the quarter ended
March 31, 2006 $ 8,993
Selected Earnings and Other Financial
Data:
Revenues $ 307,680 $ 265,919 $ 290,724
Gross profit $ 70,920 $ 60,785 $ 67,402
Gross profit margin 23.0% 22.9% 23.2%
Operating and administrative expenses
as a percentage of revenue 20.4% 21.7% 21.5%
Corporate expenses $ 5,024 $ 4,190 $ 4,581
Corporate expenses as a percentage of
revenue 1.6% 1.6% 1.6%
Operating profit margin 2.6% 1.3% 1.7%
Effective income tax rate 38.7% 37.2% 30.1%
After-tax return on shareholders'
equity - last twelve months (a) 6.1% 3.5% 5.1%
For the three months ended
--------------------------------------
March 31, December 31,
----------------------- ------------
2006 2005 2005
---------- ---------- ------------
Selected Segment Data (b):
Business Solutions
Revenues $ 203,896 $ 176,997 $ 186,730
Gross profit 39,917 32,445 35,463
Gross profit margin 19.6% 18.3% 19.0%
Operating profit 7,953 3,581 2,890
Operating profit margin 3.9% 2.0% 1.5%
AndersElite
Revenues $ 48,586 $ 41,810 $ 46,981
Gross profit 11,927 10,542 10,446
Gross profit margin 24.5% 25.2% 22.2%
Operating profit 1,117 738 524
Operating profit margin 2.3% 1.8% 1.1%
Todays Staffing
Revenues $ 39,454 $ 33,207 $ 39,728
Gross profit 9,093 8,345 9,657
Gross profit margin 23.0% 25.1% 24.3%
Operating profit (loss) 724 (456) 1,378
Operating profit margin 1.8% (1.4)% 3.5%
Management Recruiters International
Revenues $ 15,744 $ 13,905 $ 17,285
Gross profit 9,983 9,453 11,836
Gross profit margin 63.4% 68.0% 68.5%
Operating profit 3,279 3,446 4,737
Operating profit margin 20.8% 24.8% 27.4%
For the three months ended
--------------------------------------
March 31, December 31,
----------------------- ------------
2006 2005 2005
---------- ---------- ------------
Business Solutions Revenue by
Vertical:
CDI Information Technology Services $ 73,454 $ 63,783 $ 69,017
CDI Process and Industrial 91,015 79,675 81,926
CDI Aerospace 22,806 20,118 20,949
CDI Government Services 14,148 11,321 12,921
CDI Life Sciences 2,473 2,100 1,917
Total Business Solutions Revenue $ 203,896 $ 176,997 $ 186,730
(a) Current quarter combined with the three preceding quarters' earnings or
(loss) divided by the average shareholders' equity.
(b) Commencing January 1, 2006, the company changed its method of allocating
certain support services expenses to the business segments. The operating profit
for the quarters ended March 31, 2005 and December 31, 2005 have been revised
for comparative purposes.
SOURCE CDI Corp.
-0- 04/27/2006
/CONTACT: Vincent Webb, Vice President, Corporate Communications &
Marketing, +1-215-636-1240, Vince.Webb@cdicorp.com, or Mark Kerschner, Chief
Financial Officer, +1-215-636-1105, Mark.Kerschner@cdicorp.com, both of CDI
Corp./
/Web site: http://www.cdicorp.com /
(CDI)