CDI Corp. Reports 2011 Second Quarter Results

CDI Corp. Reports 2011 Second Quarter Results

Revenue grows 20.0 percent compared to prior-year second quarter; Announces quarterly cash dividend

CDI Corp. has reported it’s financial results for the second quarter ended June 30, 2011. The Company also announced a quarterly cash dividend of $0.13 per share which will be paid on August 25, 2011 to all shareholders of record as of August 11, 2011.

2011 Second Quarter Key Points

Revenue of $262.7 million, representing growth of 20.0% compared to the prior-year second quarter and sequential quarterly growth of 2.4%

Second quarter net income of $12.0 million, or $0.62 per diluted share

Second quarter pre-tax earnings includes (i) the benefit of a previously-disclosed legal appeal totaling $9.7 million with a positive impact of $0.50 per diluted share and (ii) expenses associated with severance payments to senior level executives totaling $0.7 million with a negative impact of $0.02 per diluted share

"CDI continues to perform well in a still fluid economic environment and our second quarter and first half 2011 revenue performance reflects the underlying strength of our core business," commented Paulett Eberhart, CDI's President and Chief Executive Officer. "Although my optimism is still somewhat tempered by continuing softness in government-related sectors, I am pleased that our businesses are starting to generate increased momentum."

For the second quarter ended June 30, 2011, the Company reported revenue of $262.7 million, an increase of 20.0% compared to $219.0 million for the 2010 second quarter. Second quarter 2011 and 2010 revenue includes $13.4 million and $0.7 million, respectively, from the operations of L.R. Kimball (Kimball) which was acquired in June 2010 and now constitutes the CDI-Infrastructure vertical. Excluding Kimball revenue for both quarters, revenue for the second quarter 2011 increased 14.2% versus the prior-year second quarter.

For the quarter ended June 30, 2011, the Company reported net income of $12.0 million, or $0.62 per diluted share, versus net income of $2.6 million, or $0.13 per diluted share, in the year-ago second quarter.

Second quarter 2011 pre-tax earnings includes a non-taxable benefit of $9.7 million related to a previously-disclosed successful appeal of the level of fine imposed by the United Kingdom's Office of Fair Trading (OFT) in September 2009. The Company had previously recorded a charge to earnings in the full amount of the fine. This successful appeal had a positive impact of $0.50 per diluted share in the second quarter 2011.

Second quarter 2011 pre-tax earnings also includes expenses of $0.7 million associated with severance payments for senior-level executives. These expenses had a negative impact of $0.02 per diluted share in the second quarter 2011.

Second quarter 2010 pre-tax earnings included a benefit of $1.8 million, or $0.09 per diluted share, associated with a previously-disclosed legal settlement.

Business Segment Discussion

CDI Engineering Solutions reported a 27.1% increase in second quarter revenue versus the prior-year second quarter. Excluding Kimball results, revenue increased 15.7% driven by increases in the Process & Industrial and Aerospace verticals offset by a decrease in the Government Services vertical. Operating profit increased to $4.1 million versus $3.1 million in the prior-year second quarter driven primarily by the increase in revenue and a mix shift to higher margin project business. In addition, second quarter 2010 operating results included the $1.8 million benefit associated with the aforementioned legal settlement.

CDI IT Solutions revenue increased 18.2% compared to the prior-year second quarter driven by continued growth in larger accounts. Operating profit increased 22.9% to $3.5 million driven primarily by revenue growth.

Management Recruiters International, Inc. revenue increased 15.2% versus the second quarter 2010 driven by increases in contract staffing and royalty revenue. Operating profit increased 27.6% to $2.2 million driven primarily by the royalty revenue growth.

UK-based AndersElite (Anders) revenue decreased 14.5% versus the prior-year second quarter reflecting the continued impact of a weak UK construction market and contraction in Anders' transportation sector. Operating profit of $9.3 million was due to the aforementioned benefit of $9.7 million. Excluding that benefit, Anders operating loss would have been $0.4 million in the second quarter of 2011.