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CDI Corp. Reports First Quarter 2010 Results

CDI Corp. Reports First Quarter 2010 Results and Announces Dividend

CDI Corp. has reported financial results for the first quarter ended March 31, 2010 and announced a quarterly cash dividend.

For the quarter ended March 31, 2010, the company reported a net loss of $0.2 million, or $(0.01) per diluted share, compared to a net loss of $0.9 million, or $(0.05) per diluted share, in the prior-year first quarter.

Included in the current quarter results are $0.4 million in adjustments to deferred tax assets related to stockbased compensation. Excluding these items, net earnings for the first quarter 2010 were $0.2 million, or $0.01 per diluted share. First quarter 2009 net losses included $1.3 million in charges associated with severance and real estate exit costs.

First quarter 2010 revenue declined 8.2% (10.8% in constant currency) to $209.9 million compared to revenue of $228.7 million in the prior-year first quarter.
The company also announced a quarterly cash dividend of $0.13 per share to be paid on May 27, 2010 to all shareholders of record as of May 13, 2010.
Signs of a modest recovery that we saw in the fourth quarter continued into the first quarter as our IT Solutions segment achieved year-over-year revenue growth of 12.0%, said President and Chief Executive Officer, Roger H. Ballou. Additionally, permanent placement activity continued to improve on a sequential basis particularly in our Management Recruiters International segment as the domestic white collar employment market continued to recover.
While we continued to see softness in some areas of our Engineering Solutions segment particularly in the chemical, petrochemical and commercial aerospace markets as customer capital projects continued to be delayed we did see an encouraging uptick in both engineering project bid activity and engineering staffing request-for-proposal (RFP) activity. Business
Segment Discussion
CDI Engineering Solutions (ES) revenue declined 14.7% (17.2% in constant currency) versus the year-ago first quarter driven by a decrease in business by chemical, petrochemical and commercial aviation customers and also by an 8.4% decline in the Government Services vertical. Operating profit decreased to $1.5 million, a decline of 57.4% versus the year-ago first quarter, driven primarily by the decline in revenue and by a reduction in higher-margin project engineering and permanent placement revenue. ES operating profit in the first quarter 2009 included $0.8 million in severance and real estate exit costs.

Management Recruiters International, Inc. (MRI) revenue declined 1.8% versus the prior-year first quarter reflecting a moderating rate of decline in royalty revenue and a decrease in contract staffing revenue somewhat offset by an increase in franchise sales revenue. Operating profit increased by $1.4 million on a year-over-year basis primarily due to ongoing expense controls and a shift in mix to franchise sales and royalties which have higher margins. First quarter 2009 MRI operating profit included $0.2 million in reorganization charges.

UK-based CDI AndersElite (Anders) revenue declined 23.1% (29.9% in constant currency) versus the prioryear first quarter reflecting weak market conditions in the UK construction industry. Anders reported an operating loss of $0.5 million versus an operating loss of $1.2 million in the year-ago first quarter reflecting effective expense controls somewhat offset by the decline in revenue.

CDI IT Solutions (ITS) continued to generate year-over-year revenue growth with a current quarter revenue increase of 12.0% when compared to the prior-year first quarter. These gains were driven by successful business development efforts across most retail and national accounts. Operating profit increased by 46.3% to $1.8 million driven by the aforementioned revenue growth, operating leverage and effective cost control efforts during the quarter. Operating profit in the year-ago quarter included $0.2 million in severance charges.


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