Exhibit 99
CDI CORP. REPORTS THIRD QUARTER 2006 NET EARNINGS INCREASE 46.2%
AND ANNOUNCES DIVIDEND
PHILADELPHIA, Oct. 26 /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, 2006, the company reported net earnings
of $6.1 million, or $0.30 per diluted share, on revenues of $322.5 million.
Total third quarter revenue increased 11.0% compared to $290.5 million for the
third quarter of 2005 and net earnings increased 46.2% compared to the year-ago
quarter. The company also announced a quarterly dividend of $0.11 per share to
be paid on November 22, 2006 to all shareholders of record as of November 8,
2006.
"Solid year-over-year revenue growth in the third quarter was driven by
continued strength in our clients' capital spending as well as by generally
steady demand for permanent and contingent hiring," said President and Chief
Executive Officer Roger H. Ballou. "We were pleased that our variable
contribution margin was 10.9% indicating sound execution of our business model."
Business Segment Discussion
The Business Solutions segment reported a strong 11.8% gain in revenue on a
year-over-year basis as capital expenditures by clients drove revenue in most
vertical markets. Operating profit increased 41.9% over the year-ago quarter.
U.K.-based AndersElite reported robust revenue growth of 19.8% (or 15.1% on
a constant currency basis) versus the comparable period last year driven by
continued demand for skilled contract and permanent professionals in the U.K.
infrastructure marketplace. Operating profit climbed by 11.3% on a year-over-
year basis (or 6.8% on a constant currency basis) even as investment in new
offices continued.
Todays Staffing year-over-year revenue declined 4.9% largely due to
reductions in mortgage processing business and large account billable hours.
Operating profit declined 32.9% versus the previous year due to the above- noted
revenue decline and continuing gross margin pressure.
Management Recruiters International, Inc. year-over-year revenue increased
by 12.5% reflecting solid growth in staffing revenue and franchise sales, and
modestly improved domestic royalty results. Year-over-year operating profit
increased by 48.4% driven by the above-mentioned factors and effective cost
control initiatives.
Corporate Summary
CDI ended the quarter with approximately $18.9 million in cash and cash
equivalents and no debt, compared to $14.4 million in cash and $3.8 million in
short-term debt at the end of the second quarter. Corporate expenses declined to
1.4% of revenue for the quarter reflecting effective cost control programs.
Business Outlook
"We are pleased with our operating performance this quarter and with the
year-over-year growth in operating profit margin from 2.4% to 3.2%. Our
management team is focused on, over time, achieving operating profit margins of
5%," said Ballou. "We believe that we can achieve this goal through continued
revenue growth and through effective execution of our business model which can
generate low to mid-teen variable contribution margins.
"Looking ahead, we anticipate year-over-year revenue growth of 6% to 8% in
the fourth quarter with full year revenue growth in the expected range of 10% to
12%. A broad look at our pipeline of new business and overall economic forecasts
indicate the possibility of 7% to 9% revenue growth in 2007 versus 2006. We also
believe that we can continue to deliver 11% to 13% variable contribution margin
on this revenue growth in 2007."
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; adverse consequences arising out of the
previously disclosed U.K. Office of Fair Trading investigation; 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 For the nine months ended
September 30, September 30,
---------------------------- June 30, ---------------------------
2006 2005 2006 2006 2005
------------ ------------ ------------ ------------ ------------
Revenues $ 322,451 $ 290,530 $ 314,478 $ 944,260 $ 842,860
Cost of services 247,597 222,395 242,170 726,527 647,694
Gross profit 74,854 68,135 72,308 217,733 195,166
Operating and
administrative
expenses 64,447 61,207 64,049 191,233 178,852
Gain on sale of
asset - - - - (420)
Operating profit 10,407 6,928 8,259 26,500 16,734
Other (expense)
income, net (42) 45 (697) (576) 291
Earnings before
income taxes 10,365 6,973 7,562 25,924 17,025
Income tax expense 4,263 2,800 2,108 9,462 6,540
Net earnings $ 6,102 $ 4,173 $ 5,454 $ 16,462 $ 10,485
Diluted earnings per
share $ 0.30 $ 0.21 $ 0.27 $ 0.82 $ 0.53
Diluted number of
shares (000) 20,102 19,972 20,128 20,079 19,907
Sept. 30, June 30, Dec. 31, Sept. 30,
2006 2006 2005 2005
------------ ------------ ------------ ------------
Selected Balance
Sheet Data:
Cash and cash
equivalents $ 18,882 $ 14,447 $ 13,407 $ 12,284
Accounts receivable, net $ 265,506 $ 257,453 $ 232,365 $ 229,630
Current assets $ 301,316 $ 287,883 $ 259,755 $ 254,777
Total assets $ 420,308 $ 408,324 $ 379,494 $ 373,649
Current liabilities $ 118,787 $ 113,483 $ 97,766 $ 95,959
Shareholders' equity $ 293,366 $ 285,673 $ 271,478 $ 270,837
For the three months ended For the nine months ended
September 30, September 30,
---------------------------- June 30, ---------------------------
2006 2005 2006 2006 2005
------------ ------------ ------------ ------------ ------------
Selected Cash Flow
Data:
Depreciation expense $ 2,687 $ 2,547 $ 2,543 $ 7,740 $ 7,610
Capital expenditures $ 2,991 $ 5,682 $ 2,728 $ 8,790 $ 12,195
Dividends paid $ 2,202 $ 2,175 $ 2,196 $ 6,582 $ 6,515
Free cash flow for
the quarter ended
September 30, 2006
is shown below:
Net cash
provided by
operating
activities $ 13,012
Less: capital
expenditures (2,991)
Less:
dividends
paid (2,202)
Free cash flow for
the quarter ended
September 30, 2006 $ 7,819
For the three months ended For the nine months ended
September 30, September 30,
---------------------------- June 30, ---------------------------
2006 2005 2006 2006 2005
------------ ------------ ------------ ------------ ------------
Selected Earnings
and Other Financial
Data:
Revenues $ 322,451 $ 290,530 $ 314,478 $ 944,260 $ 842,860
Gross profit $ 74,854 $ 68,135 $ 72,308 $ 217,733 $ 195,166
Gross profit margin 23.2% 23.5% 23.0% 23.1% 23.2%
Operating and
administrative
expenses as a
percentage of
revenue 20.0% 21.1% 20.4% 20.3% 21.2%
Corporate expenses $ 4,458 $ 4,459 $ 4,629 $ 14,111 $ 12,690
Corporate expenses
as a percentage of
revenue 1.4% 1.5% 1.5% 1.5% 1.5%
Operating profit
margin 3.2% 2.4% 2.6% 2.8% 2.0%
Effective income tax
rate 41.1% 40.2% 27.9% 36.5% 38.4%
After-tax return on
shareholders'
equity (a) 7.0% 2.5% 6.4%
Pre-tax return on
net assets (b) 11.7% 4.1% 10.8%
Variable
contribution
margin (c) 10.9% 19.1% 7.1% 9.63% 2.42%
For the three months ended For the nine months ended
September 30, September 30,
---------------------------- June 30, ---------------------------
2006 2005 2006 2006 2005
------------ ------------ ------------ ------------ ------------
Selected Segment
Data (d):
Business Solutions
Revenues $ 209,643 $ 187,518 $ 206,662 $ 619,852 $ 551,023
Gross profit 40,301 36,138 38,832 118,701 103,218
Gross profit margin 19.2% 19.3% 18.8% 19.1% 18.7%
Operating profit 7,439 5,244 6,100 21,277 12,866
Operating profit
margin 3.5% 2.8% 3.0% 3.4% 2.3%
AndersElite
Revenues $ 58,639 $ 48,934 $ 51,623 $ 158,848 $ 137,438
Gross profit 14,938 12,294 13,488 40,353 34,522
Gross profit margin 25.5% 25.1% 26.2% 25.4% 25.1%
Operating profit 2,706 2,431 1,901 5,724 4,950
Operating profit
margin 4.6% 5.0% 3.7% 3.6% 3.6%
Todays Staffing
Revenues $ 36,546 $ 38,418 $ 39,791 $ 115,791 $ 109,420
Gross profit 8,625 9,357 9,610 27,328 27,123
Gross profit margin 23.6% 24.4% 24.2% 23.6% 24.8%
Operating profit 651 970 1,375 2,750 1,032
Operating profit
margin 1.8% 2.5% 3.5% 2.4% 0.9%
Management
Recruiters
International
Revenues $ 17,623 $ 15,661 $ 16,402 $ 49,769 $ 44,979
Gross profit 10,990 10,346 10,378 31,351 30,303
Gross profit margin 62.4% 66.2% 63.3% 63.0% 67.2%
Operating profit 4,069 2,742 3,512 10,860 10,156
Operating profit
margin 23.1% 17.5% 21.4% 21.8% 22.6%
For the three months ended For the nine months ended
September 30, September 30,
---------------------------- June 30, ---------------------------
2006 2005 2006 2006 2005
------------ ------------ ------------ ------------ ------------
Business Solutions
Revenue by
Vertical:
CDI Process and
Industrial $ 93,331 $ 85,286 $ 90,775 $ 274,772 $ 252,015
CDI Information
Technology Services 78,323 67,097 77,744 229,521 196,417
CDI Aerospace 20,616 20,782 20,828 64,250 61,566
CDI Government
Services 14,188 12,025 14,438 42,774 34,574
CDI Life Sciences 3,185 2,328 2,877 8,535 6,451
Total Business
Solutions Revenue $ 209,643 $ 187,518 $ 206,662 $ 619,852 $ 551,023
(a) Current quarter combined with the three preceding quarters' net earnings or
(loss) divided by the average shareholders' equity.
(b) Current quarter combined with the three preceding quarters' pre-tax
earnings or (loss) divided by the average net assets. Net assets include
total assets minus total liabilities excluding cash and income tax
accounts.
(c) Year-over-year change in operating profit divided by year-over- year change
in revenue.
(d) Commencing January 1, 2006, the company changed its method of allocating
certain support services expenses to the business segments. The operating
profit for the three and nine-month periods ended September 30, 2005 has
been revised for comparative purposes.
SOURCE CDI Corp.
-0- 10/26/2006
/CONTACT: Vincent Webb, Vice President, Corporate Communications &
Marketing, +1-215-636-1240, or Vince.Webb@cdicorp.com, or Mark Kerschner,
Chief Financial Officer, +1-215-636-1105, or Mark.Kerschner@cdicorp.com, both
of CDI Corp./
/Web site: http://www.cdicorp.com /
(CDI)