CDI Corp. Reports Third Quarter
CDI Corp. Reports Third Quarter 2009 Results and Announces Dividend
Results Include Charge of $12.3 Million Related to Previously Disclosed OFT Decision
CDI Corp. has reported its financial results for the third quarter ended September 30, 2009 and announced a quarterly cash dividend.
For the quarter ended September 30, 2009, the company reported a net loss of $12.2 million, or$0.64 per diluted share, versus $8.1 million in net earnings, or $0.41 per diluted share, in the prior-year quarter.
Third quarter 2009 results include a $12.3 million pre-tax charge (7.6 million) associated with the previously-disclosed fine imposed by the United Kingdoms Office of Fair Trading (OFT). This fine is not tax deductible. Additionally, the current quarter results include $0.8 million in pre-tax severance charges. Excluding these charges, net earnings for the third quarter 2009 were $0.6 million, or $0.03 per diluted share. Third quarter 2008 net earnings included $3.3 million in foreign research and development tax credits and $0.5 million in pre-tax costs associated with these credits.
Third quarter 2009 revenue declined 20.6% (17.6% in constant currency) to $223.7 million compared to revenue of $281.9 million in the prior-year quarter.
The company also announced a quarterly cash dividend of $0.13 per share to be paid on November 25, 2009 to all shareholders of record as of November 12, 2009.
We were encouraged by a sequential uptick in revenue in the third quarter of 2009 of 3.8% versus the second quarter, said President and Chief Executive Officer, Roger H. Ballou. Historically, revenue remains relatively flat in the third quarter versus the second indicating that our business development efforts are beginning to build momentum in what appears to be a stabilizing economy. We did continue some staff reductions during the third quarter resulting in the additional severance charges which were primarily associated with support and back-office positions. While we anticipate some further severance charges in the fourth quarter, we expect to see that process end in the fourth quarter if the economy remains on its current path of slow recovery.
Business Segment Discussion
CDI Engineering Solutions (ES) revenue declined 19.7% (18.3% in constant currency) versus the year-ago quarter driven by continued weakness in the Process & Industrial vertical particularly in the chemical and oil & gas sectors somewhat offset by organic growth in the Government Services vertical. Operating profit declined by 53.8% to $3.0 million versus the year-ago quarter driven primarily by reductions in higher-margin project engineering and permanent placement revenue. ES operating profit for the quarter also included $0.3 million in severance charges as well as $0.3 million in operating losses associated with the companys ownership in joint
Management Recruiters International, Inc. revenue declined 31.4% versus the year-ago quarter, reflecting continued weakness in royalty revenue (driven by a decline in permanent placement activity by franchise offices) as well as declines in new franchise sales and contract staffing.
Operating profit declined by 73.1% on a year-over-year basis primarily due to the decline in higher-margin royalties.
UK-based AndersElite (Anders) revenue declined 52.2% (44.5% in constant currency) versus the year-ago quarter driven by continued weakness in both permanent placement and contract staffing in the UK construction industry. Anders reported an operating loss of $13.4 million (including the aforementioned $12.3 million OFT fine) versus a year-ago operating profit of $1.4 million. Third quarter operating profit also reflects a decline in higher-margin permanent placement revenue (which has stabilized on a sequential basis) and $0.1 million in severance
CDI IT Solutions third quarter revenue increased by 11.4% versus the year-ago quarter reflecting new account wins as well as additional sales from existing accounts across most industry segments. Operating profit increased to $1.8 million versus the prior-year level of $0.3 million reflecting operating leverage as well as effective cost controls during the quarter.