PHILADELPHIA, Feb. 23 /PRNewswire-FirstCall/ -- CDI Corp.
(NYSE:CDI) today reported financial results for the fourth quarter
and year ended December 31, 2009, and announced a quarterly cash
dividend. For the quarter ended December 31, 2009, the company
reported a net loss of $6.9 million, or $0.36 per diluted share,
versus a net loss of $3.6 million, or $0.19 per diluted share, in
the prior-year fourth quarter. For the fourth quarter 2009, the
operating loss was $6.4 million compared to $3.2 million in the
fourth quarter 2008. The fourth quarter 2009 operating loss of $6.4
million includes a $4.3 million charge associated with a
previously-disclosed claim under the federal False Claims Act that
the company received from the Civil Division of the U.S. Department
of Justice (DOJ) in August 2009. Also included are $0.4 million in
legal expenses associated with the DOJ claim, $0.6 million in
charges for severance and real estate exit costs, $0.6 million in
non-income based tax items, and an increase in bad debt reserves of
$0.3 million for potential credit losses associated with a
previously-disclosed bankruptcy of a large customer in the
Engineering Solutions segment. Excluding these charges, the
company's operating loss for the fourth quarter 2009 was $0.3
million while the net loss was $1.6 million or $0.09 per diluted
share. Fourth quarter 2008 operating profit, when excluding charges
totaling $5.3 million disclosed in that prior-year period, was $2.1
million, while the net loss was $0.1 million or $0.01 per diluted
share. Fourth quarter 2009 revenue declined 14.4% (16.7% in
constant currency) to $217.2 million compared to revenue of $253.6
million in the prior-year fourth quarter. For the year ended
December 31, 2009, the company reported a net loss of $19.9
million, or $1.05 per diluted share, on revenue of $885.0 million.
In addition to the aforementioned fourth quarter 2009 charges, the
major factor contributing to the full year 2009 loss is a $12.3
million charge which the company recorded in the third quarter of
2009 related to the previously-disclosed fine imposed by the United
Kingdom's Office of Fair Trading. For the full year 2008, the
company reported net earnings of $19.4 million, or $0.97 per
diluted share, on revenue of $1.12 billion. The company also
announced a quarterly cash dividend of $0.13 per share to be paid
on March 23, 2010 to all shareholders of record as of March 9,
2010. "Although CDI's markets remained challenging in the fourth
quarter, we saw some signs that a modest recovery is underway in
sectors of our business," said President and Chief Executive
Officer, Roger H. Ballou. "Our IT Solutions business experienced
year-over-year revenue growth of 13.0% due to successful business
development efforts and increased spending across most industry
segments, while our Management Recruiters International division
saw a moderation in royalty revenue decline versus the prior-year
which resulted in sequential royalty growth. However, we saw
continued softness in some areas of our Engineering Solutions
business as customer capital projects -- primarily in the chemical,
petrochemical and commercial aerospace markets -- continued to be
delayed. Additionally, we continued to see softness at AndersElite
driven by the weak UK construction industry." Business Segment
Discussion CDI Engineering Solutions (ES) revenue declined 19.2%
(21.1% in constant currency) versus the year-ago fourth quarter
primarily driven by continued weakness in the Process &
Industrial vertical (particularly in the petrochemical and chemical
areas) as well as by weakness in commercial aviation in the
Aerospace vertical. ES reported an operating loss of $4.6 million
versus an operating profit of $0.9 million in the year-ago fourth
quarter. ES' performance was driven by the revenue decline, the
aforementioned DOJ charge of $4.3 million and associated legal
expense of $0.4 million. Fourth quarter operating results also
include $0.5 million in losses from the company's ownership in
joint ventures, $0.4 million in real estate exit and severance
costs, and $0.3 million in increased bad debt reserves. Fourth
quarter 2008 results included bad debt charges of $2.5 million due
to the bankruptcy of a large customer, reorganization charges of
$0.6 million, $0.5 million in costs associated with unsuccessful
acquisition negotiations, and a $0.5 million goodwill adjustment.
Additionally, the prior-year fourth quarter included $0.4 million
of operating losses associated with the company's ownership in
joint ventures. Management Recruiters International, Inc. (MRI)
revenue declined by 21.9% versus the prior-year fourth quarter
reflecting a moderation in royalty revenue declines as well as
declines in staffing and franchise sales. MRI reported operating
profit of $1.0 million, versus a $1.1 million operating profit in
the year-ago fourth quarter, primarily due to declines in
higher-margin royalties mostly offset by cost reduction efforts.
UK-based CDI AndersElite (Anders) revenue declined 35.6% (41.5% in
constant currency) versus the prior-year fourth quarter reflecting
moderating, but still weak, market conditions in the UK
construction industry. Anders reported an operating loss of $1.3
million versus an operating loss of $1.7 million in the year-ago
fourth quarter reflecting the revenue decline offset by cost
reduction efforts. CDI IT Solutions fourth quarter revenue
accelerated to a growth rate of 13.0% when compared to the year-ago
fourth quarter reflecting ramp-up of previous new business wins and
continued business development efforts. Operating profit of $1.7
million was more than double the prior-year fourth quarter
reflecting the revenue increase, operating leverage and effective
cost controls during the quarter. Corporate Summary Corporate
overhead costs decreased by 16.5% compared to the prior-year fourth
quarter primarily related to cost control efforts which included
lower professional services fees somewhat offset by severance costs
of $0.1 million. "CDI ended the quarter with $73.5 million in cash
and cash equivalents," said Ballou. "With our existing cash and
cash equivalents, and untapped borrowing capacity, we should have
sufficient resources to support organic revenue growth, capital
spending, shareholder dividends and potential strategic
acquisitions." Business Outlook "While some areas of our business
have shown resilience - particularly in IT Solutions, MRI and
Government Services - the nascent economic recovery has not yet
affected all areas of CDI's current business mix," said Ballou. "We
anticipate that our customers will increase their capital spending
in CDI's Engineering Solutions verticals later in the business
cycle and that permanent placement hiring in technical,
professional and managerial areas will ramp-up during the year. The
prudent expense reductions we have taken during the previous six
quarters have enabled us to reduce total CDI operating and
administrative expenses by over $10 million during the fourth
quarter versus the prior year and by over $49 million for the full
year versus the prior year when excluding the DOJ and OFT charges
and other previously-disclosed out-of-pattern charges. This has
created an efficient operating structure which could provide upside
operating leverage. We anticipate that overall first quarter 2010
revenue declines could narrow to 5% to 8% on a year-over-year
basis. As a result of the relative weakness of the US dollar
compared to the year-ago first quarter, we anticipate that in
constant currency our revenue decline could likely be in the range
of 8% to 11%." 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 & information technology
outsourcing solutions and professional staffing. Its operating
units include CDI Engineering Solutions, CDI IT Solutions, CDI
AndersElite Limited, and Management Recruiters International, Inc.
Visit CDI at http://www.cdicorp.com/. Caution Concerning
Forward-Looking Statements This new 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,
but not limited to, statements about the Company's strategies for
growth and future financial results (such as revenues, pre-tax
profit and tax rates), are forward-looking statements. Some of the
forward-looking statements can be identified by words like
"anticipates," "believes," "expects," "may," "will," "could,"
"should," "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. Because these forward-looking statements are
based on estimates and assumptions that are subject to significant
business, economic and competitive uncertainties, many of which are
beyond the Company's control or are subject to change, actual
outcomes and results may differ materially from what is expressed
or forecasted in these forward-looking statements. Important
factors that could cause actual results to differ materially from
the forward-looking statements include, but are not limited to:
continued weakness in general economic conditions and levels of
capital spending by customers in the industries the Company serves;
further weakness in the financial and capital markets, which may
result in the postponement or cancellation of the CDI customers'
capital projects or the inability of CDI's customers to pay the
Company's fees; loss of business and other adverse customer
consequences as a result of the UK Office of Fair Trading decision
or the Department of Justice investigation; credit risks associated
with the Company's customers; competitive market pressures; the
availability and cost of qualified labor; the Company's level of
success in attracting, training, and retaining qualified management
personnel and other staff employees; changes in tax laws and other
government regulations; the possibility of incurring liability for
the Company's activities, including the activities of the Company's
temporary employees; the Company's performance on customer
contracts; negative outcome of pending and future claims and
litigation; and government policies or judicial decisions adverse
to the Company's businesses. 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. The Company assumes no obligation to update such
statements, whether as a result of new information, future events
or otherwise, except as required by law. Note on Constant Currency
Calculations Constant currency year-over-year changes should be
considered in addition to, and not as a substitute for or superior
to, changes in revenue prepared on a US dollar reported basis.
Constant currency year-over-year changes in revenue are calculated
by translating the prior period's revenue in local currencies into
US dollars using the average exchange rates of the current period.
CDI Corp. and Subsidiaries Consolidated Earnings Release Tables
(Unaudited) (in thousands, except per share data) For the three
months ended For the year ended --------------------------
------------------ December 31, September 30, December 31, 2009
2008 2009 2009 2008 ---- ---- ---- ---- ---- Revenue $217,199
$253,641 $223,673 $884,950 $1,118,597 Cost of service 176,232
199,617 179,782 708,386 863,150 ------- ------- ------- -------
------- Gross profit 40,967 54,024 43,891 176,564 255,447 Operating
and administrative expenses (a)(b) 47,406 57,205 55,464 194,699
230,089 ------ ------ ------ ------- ------- Operating profit
(loss) (6,439) (3,181) (11,573) (18,135) 25,358 Other income
(expense), net 16 844 (51) 81 3,770 Equity in losses from
affiliated companies (498) (406) (278) (1,357) (406) ---- ---- ----
------ ---- Earnings (loss) before income taxes (6,921) (2,743)
(11,902) (19,411) 28,722 Income tax expense (benefit) (48) 871 280
508 9,307 --- --- --- --- ----- Net earnings (loss) (6,873) (3,614)
(12,182) (19,919) 19,415 Less: loss attributable to the
noncontrolling interest (4) - (10) (17) - -- --- --- --- --- Net
earnings (loss) attributable to CDI $(6,869) $(3,614) $(12,172)
$(19,902) $19,415 ======= ======= ======== ======== ======= Diluted
net earnings (loss) per share $(0.36) $(0.19) $(0.64) $(1.05) $0.97
====== ====== ====== ====== ===== Average diluted number of shares
18,946 18,975 18,944 18,932 20,009 ====== ====== ====== ======
====== Selected Balance December 31, September 30, December 31,
Sheet Data: 2009 2009 2008 ----------- ---- ---- ---- Cash and cash
equivalents $73,528 $70,531 $61,761 Accounts receivable, net
$176,677 $187,727 $193,338 Current assets $264,697 $277,144
$273,293 Total assets $375,034 $385,802 $383,199 Current
liabilities $87,193 $91,595 $79,993 CDI shareholders' equity
$274,755 $281,942 $291,385 Noncontrolling interest $141 $138 $-
Selected For the three months ended For the year ended Cash
-------------------------- ------------------ Flow December 31,
September 30, December 31, Data: 2009 2008 2009 2009 2008 -----
---- ---- ---- ---- ---- Depreciation and amortization expense
$2,678 $3,104 $2,791 $11,207 $11,903 Capital expenditures $1,300
$682 $740 $5,986 $10,136 Dividends paid $2,463 $2,461 $2,463 $9,854
$10,342 Free cash flow for the quarter ended December 31, 2009 is
shown below: Net cash provided by operating activities $4,845 Less:
capital expenditures (1,300) Less: dividends paid (2,463) ------
Free cash flow $1,082 ====== Selected Earnings For the three months
ended For the year ended and Other --------------------------
------------------ Financial December 31, September 30, December
31, Data: 2009 2008 2009 2009 2008 ----- ---- ---- ---- ---- ----
Revenue $217,199 $253,641 $223,673 $884,950 $1,118,597 Gross profit
$40,967 $54,024 $43,891 $176,564 $255,447 Gross profit margin 18.9%
21.3% 19.6% 20.0% 22.8% Operating and administrative expenses as a
percentage of revenue 21.8% 22.6% 24.8% 22.0% 20.5% Corporate
expenses $3,757 $4,500 $4,018 $15,877 $18,277 Corporate expenses as
a percentage of revenue 1.7% 1.8% 1.8% 1.8% 1.6% Operating profit
margin -3.0% -1.3% -5.2% -2.0% 2.3% Effective income tax rate 0.7%
-31.8% -2.4% -2.6% 32.4% After-tax return on CDI shareholders'
equity (c) -7.0% 6.2% -5.5% -7.0% 6.2% Pre-tax return on net assets
(d) -9.7% 14.0% -7.2% -9.7% 14.0% For the three months ended For
the year ended Selected --------------------------
------------------ Segment December 31, September 30, December 31,
Data: 2009 2008 2009 2009 2008 ---- ---- ---- ---- ---- ----
Engineering Solutions Revenue $114,880 $142,217 $121,864 $483,755
$603,223 Gross profit 19,715 28,290 22,623 90,770 125,742 Gross
profit margin 17.2% 19.9% 18.6% 18.8% 20.8% Operating profit
(loss)(a)(e) (4,555) 865 2,969 5,360 27,069 Operating profit margin
-4.0% 0.6% 2.4% 1.1% 4.5% Management Recruiters International
Revenue $13,653 $17,487 $12,468 $53,975 $74,703 Gross profit 6,638
9,231 6,395 26,586 40,784 Gross profit margin 48.6% 52.8% 51.3%
49.3% 54.6% Operating profit 1,009 1,117 823 2,306 9,923 Operating
profit margin 7.4% 6.4% 6.6% 4.3% 13.3% AndersElite Revenue $23,182
$35,992 $26,559 $103,292 $213,535 Gross profit 3,357 5,967 4,215
16,425 47,036 Gross profit margin 14.5% 16.6% 15.9% 15.9% 22.0%
Operating profit (loss)(b) (1,285) (1,736) (13,380) (17,794) 3,917
Operating profit margin -5.5% -4.8% -50.4% -17.2% 1.8% IT Solutions
Revenue $65,484 $57,945 $62,782 $243,928 $227,136 Gross profit
11,257 10,536 10,658 42,783 41,885 Gross profit margin 17.2% 18.2%
17.0% 17.5% 18.4% Operating profit 1,651 667 1,755 6,513 2,320
Operating profit margin 2.5% 1.2% 2.8% 2.7% 1.0% Engineering For
the three months ended For the year ended Solutions
-------------------------- ------------------ Revenue December 31,
September 30, December 31, by Vertical: 2009 2008 2009 2009 2008
------------ ---- ---- ---- ---- ---- CDI Process and Industrial
$80,457 $104,716 $85,346 $337,544 $459,746 CDI Government Services
21,733 20,963 22,698 88,488 82,909 CDI Aerospace 12,690 16,538
13,820 57,723 60,568 ------ ------ ------ ------ ------ Total
Engineering Solutions Revenue $114,880 $142,217 $121,864 $483,755
$603,223 ======== ======== ======== ======== ======== (a) Includes
a $4.3 million charge associated with the Department of Justice
investigation for the three months and the year ended December 31,
2009. (b) Includes a $12.3 million charge (Pounds Sterling 7.6
million) associated with the fine imposed by the United Kingdom's
Office of Fair Trading for the three months ended September 30,
2009 and the year ended December 31, 2009. (c) Current quarter
combined with the three preceding quarters' net earnings (loss)
attributable to CDI divided by the average CDI shareholders'
equity. (d) Current quarter combined with the three preceding
quarters' earnings (loss) before income taxes divided by the
average net assets. Net assets include total assets minus total
liabilities excluding cash, external debt and income tax accounts.
(e) Includes $498, $406, $278, $1,357 and $406 of equity in losses
associated with the Company's non-consolidated joint ventures for
the three months ended December 31, 2009 and 2008, the three months
ended September 30, 2009 and the years ended December 31, 2009 and
2008, respectively. DATASOURCE: CDI Corp. CONTACT: Vincent Webb,
Vice President, Corporate Communications & Marketing,
+1-215-636-1240, , or Mark Kerschner, Chief Financial Officer,
+1-215-636-1105, , both of CDI Corp. Web Site:
http://www.cdicorp.com/
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