CDI Corp. Reports Fourth Quarter and Full Year 2011 Results
CDI Corp. Reports Fourth Quarter and Full Year 2011 Results
CDI Corp. (NYSE:CDI) (the “Company”) today reported results for the fourth quarter and full year ended December 31, 2011.
Fourth Quarter and Full Year Highlights
• Revenue up 8.0% during the fourth quarter and 14.4% for the full year versus prior periods
• Fourth quarter and full year operating results and earnings per share improved versus prior periods
• Operating cash flow of $28 million for full year reflects an increase over prior year
• Implementation of fourth quarter strategic restructuring proceeding as planned
For the fourth quarter 2011, the Company reported revenue of $268.0 million, an increase of 8.0% versus the year ago quarter.
The Company reported a fourth quarter 2011 operating loss of $0.5 million compared to a $9.4 million operating loss in the prior year fourth quarter. The 2011 fourth quarter results include a restructuring charge of $8.1 million related to the Company’s recently announced strategic plan. The 2010 fourth quarter operating loss includes previously disclosed goodwill impairment at AndersElite (Anders) of $8.3 million partially offset by $1.0 million of payroll tax credits under the Hiring Incentives to Restore Employment (HIRE) Act.
The Company reported a fourth quarter 2011 net loss of $0.7 million, or $0.03 per diluted share, versus a net loss of $14.9 million, or $0.78 per diluted share, in the prior year quarter. 2011 fourth quarter results include a $5.0 million after-tax charge for restructuring ($0.26 per diluted share) partially offset by a $0.2 million HIRE Act income tax credit ($0.01 per diluted share). The 2010 fourth quarter net loss includes a non-tax deductible goodwill impairment of $8.3 million ($0.44 per diluted share), a write off of deferred tax assets of $3.4 million ($0.18 per diluted share), a non-tax deductible write-off of the Kuwait joint venture of $1.0 million ($0.05 per diluted share), and an after-tax benefit from the HIRE Act payroll tax credit of $0.6 million ($0.03 per diluted share).
On December 8, 2011, CDI announced a strategic plan to enhance long-term growth. As part of the plan, the Company announced a restructuring charge to reduce costs and improve competitiveness. The $8.1 million pre-tax restructuring charge taken in the fourth quarter was in line with the estimate provided in the December news release. The strategic restructuring is proceeding as planned and the Company has fixed the remaining affected employee departure dates to occur by the end of the second quarter 2012.
“We were pleased with our strong performance in the fourth quarter, represented by double-digit revenue growth in three of our four business units. In particular, our continued focus on profitable growth, prudent cost reductions and solid execution resulted in a significant turnaround quarter for CDI in terms of operating results, EPS comparisons and increased cash flow,” said CDI President and CEO Paulett Eberhart. “As a result of actions already taken to align our organization and business model with the Company’s recently announced strategic growth plan, we begin 2012 with a more efficient operating platform to support future revenue and profit growth.”
For the year ended December 31, 2011, the Company reported revenue of $1.060 billion, a 14.4% increase over $926.3 million reported in 2010. 2011 and 2010 results include revenue from the Company’s Infrastructure vertical, which was acquired on June 28, 2010. Excluding Infrastructure vertical revenue in both years, revenue increased 12.5%.
Operating profit for the full year was $20.4 million versus an operating loss of $0.3 million in 2010. 2011 operating profit includes the $8.1 million restructuring charge and a benefit of $9.7 million related to a successful legal appeal in connection with the previously disclosed UK Office of Fair Trading (OFT) matter. Full year 2010 operating profit includes a goodwill impairment of $8.3 million, a benefit of $1.8 million related to the settlement of a previously disclosed U.S. Department of Justice (DOJ) matter, and $4.1 million in HIRE Act payroll tax credits.
Net income in 2011 increased to $14.8 million, or $0.77 per diluted share, versus a net loss of $10.9 million, or $0.57 per diluted share, in 2010. Net income in 2011 includes the after-tax restructuring charge of $5.0 million ($0.26 per diluted share), the non-taxable OFT appeal benefit of $9.7 million ($0.50 per diluted share), and a $0.9 million HIRE Act income tax credit ($0.05 per diluted share). Net income in 2010 includes a non-tax deductible goodwill impairment of $8.3 million ($0.44 per diluted share), a write-off of deferred tax assets of $3.4 million ($0.18 per diluted share), a $1.0 million non-tax deductible charge for the write-off of a joint venture ($0.05 per diluted share), as well as the following after-tax items: a $2.6 million benefit from the HIRE Act payroll tax credit ($0.14 per diluted share) and a benefit of $1.0 million related to the settlement of the DOJ matter ($0.05 per diluted share).
Business Segment Discussion
CDI Engineering Solutions (ES) reported a 17.7% increase in fourth quarter revenue to $152.5 million. The results were driven by increases in the Process & Industrial, Government Services, and Aerospace verticals and were partially offset by lower revenues in the Infrastructure vertical. Operating profit increased to $1.4 million versus $0.2 million in the prior-year quarter. ES operating profit in the fourth quarter of 2011 includes $5.8 million of the restructuring charge. Fourth quarter 2010 operating profit includes charges of $1.0 million for the write-off of a joint venture, and a $0.4 million HIRE Act payroll tax credit.
For the full year, ES reported a 20.4% increase in revenue to $582.6 million. Excluding Infrastructure results, revenue increased 17.0% versus the prior year. Full year operating profit increased 70.0% to $14.8 million driven primarily by revenue growth, increases in higher margin project business and a partial offset by $5.8 million in restructuring charges. 2010 results include the impact of $1.5 million in HIRE Act payroll tax credits and the benefit of the $1.8 million settlement of the DOJ matter.
CDI IT Solutions (ITS) fourth quarter revenue declined 10.1% to $80.6 million versus the year-ago period driven primarily by lower sales in large national accounts. ITS operating profit fell to $2.5 million versus $3.5 million in the prior-year fourth quarter. Fourth quarter 2011 operating profit includes $1.3 million of the restructuring charge. Fourth quarter 2010 operating profit includes a $0.6 million HIRE Act payroll tax credit.
For the full year 2011, ITS revenue rose 9.6% to $346.2 million driven by increases in sales to large national accounts. Full year operating profit increased 12.9% to $13.6 million driven by the revenue gain, partially offset by $1.3 million of the restructuring charge in 2011. Full year 2010 results include $2.2 million in HIRE Act payroll tax credits.
Management Recruiters International, Inc. (MRI) fourth quarter revenue increased 12.7% to $17.8 million driven primarily by increases in contract staffing revenue. MRI operating profit improved to $2.5 million versus $1.0 million in the prior-year quarter due primarily to operating expense improvements. Fourth quarter 2011 operating profit includes $0.5 million of the restructuring charge.
For the full year, MRI reported an 11.9% revenue increase to $68.6 million driven primarily by growth in contract staffing services. Operating profit increased 40.5% to $8.6 million driven primarily by revenue growth and operating expense improvements partially offset by the $0.5 million restructuring charge.
UK-based AndersElite (Anders) fourth quarter revenue grew 31.5% reflecting increases in permanent placement and contract staffing. Anders fourth quarter operating loss of $0.3 million improved versus a year-ago fourth quarter operating loss of $10.7 million. Fourth quarter 2011 operating results include $0.2 million of the restructuring charge. Anders fourth quarter 2010 operating results include a goodwill impairment of $8.3 million.
For the full year, Anders revenue decreased 4.4% to $62.5 million due to weakness in Anders transportation business. Anders reported operating profit of $7.7 million in 2011 versus an operating loss of $13.6 million in 2010. Anders 2011 results include the benefit of $9.7 million related to the OFT legal appeal and a partial offset by the $0.2 million restructuring charge. Anders 2010 results include a goodwill impairment charge of $8.3 million.
For the first quarter ending March 31, 2012, the Company anticipates revenue increases in the range of 4% to 6% compared to the year-ago first quarter.
Beginning in the first quarter 2012, CDI will report on three operating segments: Global Engineering and Technology Solutions (GETS) Professional Services Staffing (PSS) and MRI. The Company will also report revenue based on its geographic regions: the Americas and Europe, the Middle East and Africa (EMEA).
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 2011 fourth quarter and full year results and business outlook. The call can be accessed live, via the Internet, at www.cdicorp.com.