CDI Corp. reports 6.4% revenue increase for Q3
Third Quarter Highlights
Revenue of $295.7 million, an increase of 6.4% versus third quarter 2013
Operating profit of $8.5 million, an increase of 22.1% versus third quarter 2013
Earnings per diluted share of $0.27 versus $0.23 for third quarter 2013
"We are pleased with our financial results in the third quarter, including driving a 22% increase in operating profit," said Scott Freidheim Chief Executive Officer. "CDI has an attractive platform of businesses delivering valued engineering and staffing services. We look forward to leveraging this platform to create shareholder value."
For the third quarter of 2014, the Company reported revenue of $295.7 million, an increase of 6.4% versus the prior-year third quarter. The Company reported third quarter 2014 operating profit of $8.5 million, an increase of 22.1% versus the prior-year third quarter. The Company reported third quarter 2014 net income of $5.4 million, an increase of 19.3% versus the prior- year third quarter, or $0.27 per diluted share versus $0.23 per diluted share in the prior-year third quarter.
Business Segment Results
Global Engineering and Technology Solutions (GETS) third quarter revenue increased 8.5% to $88.4 million when compared to the prior-year third quarter driven by an increase in revenue in the Oil, Gas & Chemicals (OGC) and Hi-Tech verticals partially offset by declines in Aerospace & Industrial Equipment (AIE) and the infrastructure and government services businesses, both reported in "Other." GETS operating profit was $3.4 million compared to $2.9 million in the prior-year quarter, an increase of 17.6%.
Professional Staffing Services (PSS) third quarter revenue increased 5.7% to $192.4 million when compared to the prior-year third quarter driven by an increase in revenue in OGC, AIE and "Other" partially offset by a decline in Hi-Tech. PSS operating profit was $7.4 million versus $6.5 million in the prior-year quarter, an increase of 13.5%.
Management Recruiters International, Inc. (MRI) third quarter revenue increased 3.5% to $14.9 million compared to the prior-year third quarter driven by an increase in contract staffing revenue partially offset by a decline in royalty and franchise fee revenue. MRI's operating profit was $1.7 million compared to $2.0 million in the prior-year quarter, a decrease of 13.4%.
The Company anticipates revenues for the fourth quarter of 2014 in the range of $270 million to $280 million, compared to$277.1 million in the prior-year fourth quarter.
CDI also announced that it has added three corporate leaders to its executive management team. David Arkless will serve as President, International Michael Castleman will be Executive Vice President, Corporate Development and Operations and Hugo Malan will join as Executive Vice President, President of Staffing for North America. Together, these hires signify a focused effort by the company to build an executive team that will accelerate value creation for shareholders.
"These are high performance hires for CDI and signal the standard by which we will run the company," said CEO Scott Freidheim. "Given an assessment of our company's talent and our aspirations toward value creation, there was an opportunity to enhance leadership in the areas of staffing, operating analytics, strategic thinking, acquisitions and partnerships, and geographic coverage outside of North America and the U.K. These accomplished executives were attracted to the opportunity to grow CDI and capitalize on our business opportunities."
A veteran of the human capital management industry, Arkless spent more than 20 years with ManpowerGroup in strategic services, global account sales, global consulting, and corporate and government affairs, along with serving as a member of the organization's global executive team. A renowned global expert in the areas of labor market strategy and business development in the sector, he has served as vice president of CIETT, the international confederation of private employment agencies, and played a major role in the development of inward investment strategies into China as vice president of the China International Council for the Development of Multi-National Corporations. Arkless will assume responsibility for all international operations focusing on global business development for CDI.
Castleman most recently served as president of Kenmore, Craftsman and DieHard brands. In that role, he oversaw all strategy and operations related to product development and management, brand marketing, strategic sourcing, business development and brand extension. He initially joined as chief financial officer, responsible for financial management and operational performance improvement. Previously, Castleman founded or co-founded several investment firms, including Lehman Brothers Venture Partners, where he served as managing director and co-head. At CDI, Castleman will lead enterprise analytics and performance optimization, as well as corporate development via partnerships, mergers and acquisitions.
Malan is the former president of fitness, sporting goods & toys business at Sears Holdings Corporation. He was responsible for all aspects of the growth and profitability of the fitness, sporting goods & toys businesses across both the Sears and Kmart formats, in-store and online. Previously, he held the title of managing director at Barclays Capital and Lehman Brothers. Malan also served as associate principal with McKinsey & Company, an information technology consultant, and researcher at Los Alamos National Laboratories. He will run all of CDI's North American staffing operations.
Like Freidheim, who joined CDI Corp. six weeks ago, the compensation contracts for these new executives are structured to emphasize the creation of tangible shareholder value. "Shareholder returns will guide everything we do as an executive team," said Freidheim. "These executives saw an opportunity to build upon CDI's current strengths and were committed to our philosophy of compensation contingent upon value creation."