CDI Corp. reports YOY Q1 drop in EBITDA to $4.9m
"We are implementing with a sense of urgency multiple business improvement initiatives to deliver profitable growth and transform CDI," said Scott J. Freidheim, chief executive officer and president.
"We are adding new leadership in key corporate and operational roles, restoring revenue production capacity, enhancing service delivery, and pursuing corporate development opportunities. We look forward to communicating results of these and other actions in the coming quarters."
First Quarter Overview
• Revenue of $257.5 million, a decrease of 6.8% versus first quarter 2014
• Adjusted EBITDA of $4.9 million versus $8.9 million in first quarter 2014
• Adjusted earnings per diluted share of $0.04 versus $0.16 for first quarter 20141
• Signed business development alliance with Ascent Engineering to add front-end design capabilities to solution offerings for large Oil, Gas & Chemicals projects
• Increased North American staffing total productive headcount by 13% and U.S. local and regional sales capacity by 65% versus year-end 2014
• Recorded first quarterly MRI net franchise additions in more than seven years
In the first quarter 2015, the Company's net income attributable to CDI was $0.5 million versus net income attributable to CDI of $2.0 million in the prior-year first quarter. In the first quarter 2015, the Company's net earnings per diluted share were $0.02 versus $0.10per diluted share in the prior-year first quarter.
Business Segment Results
Global Engineering and Technology Solutions segment (GETS) reported $82.5 million in first quarter revenue, an increase of 0.3% versus the prior-year first quarter. Growth in the Oil, Gas & Chemicals (OGC) vertical continued at a double-digit rate, offsetting declines in the other verticals. GETS operating profit was $0.3 million compared to $1.6 million in the prior-year quarter. First quarter 2015 operating profit includes a $0.3 million charge for loss on disposal of our Mexico JV, while first quarter 2014 operating profit includes a $0.3 million restructuring charge. During the period, the Company formed a business development and solutions alliance with Ascent Engineering that will provide CDI with access to front-end engineering design capabilities, and therefore a more complete service offering for larger oil, gas and chemicals projects.
Professional Staffing Services segment (PSS) reported $161.4 million in revenue for the first quarter 2015, a decrease of 10.4% compared to the prior-year first quarter with declines across our North American industry verticals, partially offset by strong growth in AndersElite, the UK staffing business. PSS operating profit was $4.2 million versus $6.1 million in the prior-year first quarter both quarters' results include nominal restructuring charges. To increase its revenue generating capacity, the Company grew North American total productive headcount (defined as recruiting, delivery and sales personnel) by 13% since the end of 2014, reversing a multi-year trend within our local and regional account business, CDI increased its sales headcount by 65%. In addition, CDI launched an ERP Solutions practice offering staffing and program management services as part of CDI's strategy to enhance its margin profile through increased specialization in high-skills based segments.
Management Recruiters International, Inc. (MRI) reported first quarter 2015 revenue of $13.5 million, a decrease of 2.7% compared to the prior-year first quarter, as an increase in royalty and franchise fee revenue was offset by a decrease in contract staffing revenue. MRI's first quarter 2015 operating profit was $1.5 million compared to $1.3 million in the prior-year first quarter. During the quarter, MRI signed eight new franchises, marking its first quarter of net franchise additions in more than seven years.
Balance Sheet and Liquidity
CDI ended the quarter with $28.1 million in cash and cash equivalents versus $36.3 million at the end of fourth quarter 2014, and $6.2 million at the end of first quarter 2014. Total liquidity, including availability under CDI's bank and credit facilities, totaled $96.9 million atMarch 31, 2015 versus $106.8 million at the end of fourth quarter 2014, and $67.8 million at the end of first quarter 2014. Net cash used in operations during first quarter 2015 was $4.6 million versus $40.8 million used in the prior-year quarter.
The Company anticipates revenue for the second quarter 2015 in the range of $245 million to $255 million. This guidance reflects expected weakness in our North American staffing business, particularly within the PSS OGC vertical, while the Company implements its programs to restore and grow its revenue generation capability. We expect this weakness will be partially offset by sequential growth in GETS OGC, GETS government services business and the UK-based AndersElite staffing business.