CDI Corp. has reported its results for the fourth quarter and full year ended December 31, 2010
CDI Corp. has reported its results for the fourth quarter and full year ended December 31, 2010.
For the fourth quarter 2010, the company reported revenue of $248.0 million, an increase of 14.2% (14.6% in constant currency) compared to $217.2 million for the fourth quarter 2009. Fourth quarter 2010 revenue includes $13.0 million from the operations of L.R. Kimball which was acquired on June 28, 2010 and is included in the CDI-Infrastructure vertical. Excluding L.R. Kimball, revenue for the fourth quarter 2010 increased 8.2% (8.6% in constant currency) versus the prior year. For the quarter ended December 31, 2010, the company reported a net loss of $14.6 million, or $0.77 per diluted share, compared to a net loss of $6.9 million, or $0.36 per diluted share, in the fourth quarter 2009.
"I am pleased to report solid year-over-year fourth quarter revenue growth, which reflects the strength of the company's fundamentals. CDI has an underlying business capable of delivering continued growth in what appears to be an improving economic environment," said Paulett Eberhart, President and Chief Executive Officer of CDI Corp.
For the year ended December 31, 2010, the company reported a net loss of $10.5 million, or $0.55 per diluted share, on revenue of $926.3 million. For the full year 2009, the company reported a net loss of $19.9 million, or $1.05 per diluted share, on revenue of $885.0 million.
As previously announced, the company recorded charges and impairments in the fourth quarter 2010 totaling $12.4 million, which are described below.
The company recorded a preliminary $8.0 million impairment charge related to a goodwill write-down in the company's AndersElite segment. This goodwill impairment charge is an estimate and will be finalized through a third-party valuation process. The final goodwill impairment charge, along with its effects on the company's provision for income taxes, if any, will be included in results of operations, planned to be filed in March 2011 with the company's Annual Report on Form 10-K.
The company also recorded a $1.0 million charge for writing off the company's investment in its Kuwait-based joint venture in its Engineering Solutions segment.
Additionally, the company had previously recorded deferred tax assets of $2.8 million as a result of AndersElite's net operating losses. Because of a three year cumulative loss at AndersElite, the company is required to, and did record a 100% valuation allowance against this deferred tax asset.
Notwithstanding this write-off, net operating losses can be carried forward indefinitely under current law in the UK and can be used against future profits.
Finally, the company recorded additional tax expense of $0.6 million related to a non-realizable tax asset.
Business Segment Discussion
CDI Engineering Solutions (ES) revenue increased 12.8% (12.7% in constant currency) versus the prior-year fourth quarter. Excluding L.R. Kimball results, ES revenue increased 1.5% driven by an increase in energy and chemical areas in the Process & Industrial vertical, somewhat offset by year-over-year decreases in fourth quarter revenue particularly in the Government Services vertical. ES operating profit increased to $0.2 million in the fourth quarter versus an operating loss of $4.6 million in the prior-year quarter. Fourth quarter 2010 operating results include $1.0 million for the write-off of the investment in the Kuwait joint venture.
Management Recruiters International, Inc. (MRI) reported a 15.6% increase in fourth quarter revenue versus the year-ago fourth quarter driven by increased royalty revenue, contract staffing and franchise sales. Operating profit declined 3.2% versus the prior-year fourth quarter.
UK-based CDI AndersElite (Anders) revenue declined 43.9% (41.6% in constant currency) versus the prior-year fourth quarter driven by declines in contract staffing. This reflects continued weak market conditions in the UK construction industry. Anders operating loss increased to $10.4 million versus a loss of $1.3 million in the prior-year fourth quarter driven by the decrease in revenue and the aforementioned $8.0 million of goodwill impairment.
CDI IT Solutions (ITS) fourth quarter revenue grew 36.9% when compared to the year-ago fourth quarter reflecting successful business development efforts in staffing services and solutions delivery. Operating profit more than doubled to $3.5 million versus the year-ago fourth quarter reflecting the revenue increases.
Solid Balance Sheet
On December 31, 2010, the company had cash and cash equivalents of $28.7 million and short term debt of $13.9 million. The net cash position of $14.8 million and expected continued net cash flow generation should be sufficient to support the company's growth and ongoing capital needs.
For the first quarter ending March 31, 2011, the company anticipates revenue increase in the range of 15% to 18% compared to the year-ago first quarter and 9% to 12% when excluding revenue from the L.R. Kimball acquisition. The company's revenue assumption reflects revenue growth in ITS, continued permanent placement demand in MRI and staffing and project outsourcing growth, particularly in the ES Process & Industrial vertical, somewhat offset by continued weakness in Anders.