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CDI Corp. Reports 2012 First Quarter Results

May 8, 2012

PHILADELPHIA, May 8, 2012 /PRNewswire/ — CDI Corp. (NYSE: CDI) (the “Company”) today reported financial results for the first quarter ended March 31, 2012.

2012 First Quarter Key Points

  • Revenue of $280.6 million, up 9.3% compared to the prior-year first quarter, with all three segments reporting gains
  • Gross profit margin of 19.8% compared to 21.2% in the same period last year
  • Operating profit of $7.4 million up versus $2.8 million in prior-year quarter, leading to an operating margin of 2.6% versus 1.1% in the year-ago period
  • First quarter net income of $3.8 million, or $0.20 per diluted share

“The Company’s strong first quarter performance reflects sales growth in all three business segments, and savings from the restructuring we announced last December contributed to significant operating margin expansion,” said CDI President and Chief Executive Officer, Paulett Eberhart. “Going forward, we are focused on the successful execution of our strategic plan, designed to accelerate growth in targeted markets with a more efficient operating platform.”

For the first quarter ended March 31, 2012, CDI reported revenue of $280.6 million, an increase of 9.3% compared to $256.6 million for the 2011 first quarter.

For the quarter ended March 31, 2012, CDI reported operating profit of $7.4 million versus $2.8 million in 2011. Net income in the first quarter of 2012 increased to $3.8 million, or $0.20 per diluted share, compared to $0.7 million, or $0.04 per diluted share in the prior-year first quarter.

Business Segment Discussion

On December 8, 2011, the Company announced business model and organizational changes aligned with a new strategic plan. Effective this quarter, the Company began reporting on three operating segments: Global Engineering and Technology Solutions (GETS); Professional Services Staffing (PSS); and Management Recruiters International, Inc. (MRI). The restructuring announced in December has resulted in reduced operating expenses, which favorably impacted operating profit in all three business segments.

The Company’s Global Engineering and Technology Solutions segment (GETS) reported a 2.9% increase in first quarter revenue compared to the prior-year first quarter. Increases in the Oil, Gas and Chemical, and Hi-Tech verticals were somewhat offset by continued weakness in the Company’s infrastructure business and a slight decline in the Aerospace and Industrial Equipment vertical. Operating profit increased 49.1% to $5.9 million versus the prior-year first quarter driven primarily by lower expenses.

The Company’s Professional Services Staffing segment (PSS) reported a 12.2% increase in first quarter revenue versus the prior-year first quarter. PSS growth was driven by increased revenue in all three strategic verticals with particularly strong performance in the Oil, Gas and Chemical vertical. Operating profit more than doubled to $5.8 million versus the prior-year first quarter driven by the increased revenue and lower expenses.

The Company’s franchised recruitment segment (MRI) reported a 12.2% increase in first quarter revenue versus the prior-year first quarter due largely to increases in contract staffing revenue. Operating profit increased 27.9% to $2.3 million versus the prior year driven by the increased revenue and lower expenses.

Business Outlook

For the second quarter ending June 30, 2012, CDI anticipates a revenue increase in the range of 5% to 7% compared to the year-ago second quarter.

Conference Call

At 11:00 a.m. Eastern Time today, Paulett Eberhart, President and CEO, and Bob Larney, Executive Vice President and CFO, will host a conference call to discuss the 2012 first quarter results and business outlook. The call can be accessed live, via the Internet, at www.cdicorp.com.

Company Information
CDI Corp. (NYSE: CDI) is an integrated, market-leading engineering and technology services firm providing differentiated, client-focused solutions in select global industries. CDI provides Global Engineering and Technology Solutions and Professional Services Staffing through its global business operations in the Americas, EMEA and APAC. The Company also provides staffing services through its franchised Management Recruiters International, Inc. (MRI) operating unit. Learn more at 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, but not limited to, statements about our strategies for growth and future financial results (such as revenues and cost savings), 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 our 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: weakness in general economic conditions and levels of capital spending by clients in the industries we serve; weakness or volatility in the financial and capital markets, which may result in the postponement or cancellation of our clients’ capital projects or the inability of our clients to pay our fees; the inability to successfully implement our new strategic plan; the termination or non-renewal of a major client contract or project; our ability to maintain or expand our existing bank credit facility on satisfactory terms; credit risks associated with our clients; competitive market pressures; the availability and cost of qualified personnel; our 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 our business activities, including the activities of our temporary employees; our performance on client contracts; negative outcome of pending and future claims and litigation; and government policies, legislation or judicial decisions adverse to our businesses. More detailed information about these and other risks and uncertainties may be found in our filings with the SEC, particularly in the “Risk Factors” section of our Form 10-K and the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of our Form 10-Ks and Form 10-Qs. 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, except as required by law.

Financial Tables Follow

                              CDI CORP. AND SUBSIDIARIES
                    (Amounts in thousands, except per share data)
                                     (Unaudited)
                                          Three Months Ended
                                               March 31,
                                               ---------
    Consolidated
     Statements of
     Income:                                     2012                     2011
    --------------                               ----                     ----

    Revenue                                             $280,627                $256,636
    Cost of
     services                                 224,942                  202,306
                                              -------                  -------
    Gross profit                               55,685                   54,330
    Operating and
     administrative
     expenses                                  48,296                   51,577
                                               ------                   ------
    Operating
     profit                                     7,389                    2,753
    Other income
     (expense), net                               (38)                     (43)
                                                  ---                      ---
    Income before
     income taxes                               7,351                    2,710
    Income tax
     expense                                    3,437                    1,970
                                                -----                    -----
    Net income                                  3,914                      740
    Less: Income
     attributable
     to the
     noncontrolling
     interest                                      91                       46
    Net income
     attributable
     to CDI                                               $3,823                    $694
                                                          ------                    ----

    Earnings per
     common share:
    Basic                                                  $0.20                   $0.04
    Diluted                                                $0.20                   $0.04
    Basic weighted-
     average shares                            19,200                   19,082
    Diluted
     weighted-
     average shares                            19,573                   19,327
    Selected
     Balance Sheet
     Data:                                                        December 31,
                                        March 31,                         2011
                                                 2012
    ---                                          ----

    Cash and cash
     equivalents                                          $6,476                 $26,644
    Accounts
     receivable,
     net                                      246,340                  222,889
    Total current
     assets                                   270,518                  271,730
    Total assets                              389,067                  390,696
    Total current
     liabilities                              103,937                  109,961
    Total CDI
     shareholders'
     equity                                   270,489                  266,575

                                        Three Months Ended
                                             March 31,
                                             ---------
    Selected Cash
     Flow Data:                                  2012                     2011
    -------------                                ----                     ----

    Net cash (used
     in) provided
     by operating
     activities                                         $(14,837)                 $1,979
    Depreciation
     and
     amortization                               2,534                    2,745
    Capital
     expenditures                               1,259                    1,638
    Dividends paid
     to
     shareholders                               2,500                    2,484

                                Three Months Ended
                                     March 31,
                                     ---------
    Selected Earnings and
     Other Financial Data:              2012               2011
    ----------------------              ----               ----

    Revenue                                     $280,627         $256,636
    Gross profit                                 $55,685          $54,330
    Gross profit margin                 19.8%              21.2%
    Operating and
     administrative expenses
     as a percentage of
     revenue                            17.2%              20.1%
    Operating profit margin              2.6%               1.1%
    Effective income tax rate           46.8%              72.7%
    After-tax return on CDI
     shareholders' equity (1)            6.8%             (3.8)%
    Pre-tax return on net
     assets (2)                         10.0%             (0.4)%

                              Three Months Ended
                                   March 31,
                                   ---------
    Selected Segment Data:              2012               2011
    ----------------------              ----               ----

    Global Engineering and
     Technology Solutions
     ("GETS")
    Revenue:
    Oil, Gas and Chemicals
     ("OGC")                                     $28,264          $23,141
    Aerospace and Industrial
     Equipment ("AIE")                16,912             17,691
    Hi-Tech                            8,065              7,429
    Other                             28,034             30,736
                                      ------             ------
    Total revenue                                $81,275          $78,997
                                                 -------          -------
    Gross profit                                 $23,247          $23,945
    Gross profit margin                 28.6%              30.3%
    Operating profit                              $5,938           $3,982
    Operating profit margin              7.3%               5.0%

    Professional Services
     Staffing ("PSS")
    Revenue:
    Oil, Gas and Chemicals                       $30,994          $17,219
    Aerospace and Industrial
     Equipment                        19,791             14,530
    Hi-Tech                           74,307             70,766
    Other                             56,641             59,425
                                      ------             ------
    Total revenue                               $181,733         $161,940
                                                --------         --------
    Gross profit                                 $24,438          $22,735
    Gross profit margin                 13.4%              14.0%
    Operating profit                              $5,794           $2,198
    Operating profit margin              3.2%               1.4%

    Management Recruiters
     International ("MRI")
    Revenue:
    Contract Staffing                            $13,681          $11,822
    Royalties and Franchise
     Fees                              3,938              3,877
                                       -----              -----
    Total revenue                                $17,619          $15,699
                                                 -------          -------
    Gross profit                                  $8,000           $7,650
    Gross profit margin                 45.4%              48.7%
    Operating profit                              $2,253           $1,761
    Operating profit margin             12.8%              11.2%

    (1) After-tax return on CDI
     shareholders' equity is
     calculated as net income (loss)
     attributable to CDI divided by
     the average of the beginning and
     ending period balances of CDI
     shareholders' equity for the
     prior 12 consecutive months.

    (2) Pre-tax return on net assets
     is calculated as earnings before
     income taxes divided by the
     average of the beginning and
     ending period net assets for the
     prior 12 consecutive months. Net
     assets include total assets minus
     total liabilities excluding cash
     and cash equivalents and income
     tax accounts.

SOURCE CDI Corp.


Source: PR Newswire