CDI Corp. Reports Third Quarter 2015 Results
"We are continuing to make progress on key elements of our transformation and operational turnaround. While consistent with previously articulated expectations, our third quarter 2015 results reflect the continuing macroeconomic and discrete challenges associated with our concentrated client base," said Scott J. Freidheim, Chief Executive Officer and President. "As we move into 2016, our business should benefit from improving new business development and client retention, the strengthening of our operational leadership team, strategic transactions that enrich our client offerings, and our enhanced financial flexibility."
Third Quarter Overview
· Revenue of $244.7 million, a decrease of 17.3% versus third quarter 2014
· Adjusted EBITDA of $3.3 million versus $12.0 million in third quarter 20141
· Adjusted earnings per diluted share of $0.06 versus $0.29 for third quarter 20141
· Acquired EdgeRock Technologies, LLC, a provider of specialty IT skills
· Acquired recruitment business of UK-based Ship Shape Resources
· Closed $150 million secured credit facility
In the third quarter 2015, the Company's net loss attributable to CDI was $20.2 million versus net income attributable to CDI of $5.4 million in the prior-year third quarter. In the third quarter 2015, the Company's net loss per share was $(1.03) versus earnings of$0.27 per diluted share in the prior-year third quarter.
In the third quarter 2015, the Company recorded $21.5 million of impairment charges related to certain businesses within the Global Engineering and Technology Solutions segment and the Professional Staffing Services segment. This amount included charges to goodwill in the aerospace and industrial equipment business within GETS and in the Company's U.K.-based AndersElite business within PSS.
Business Segment Results
Global Engineering and Technology Solutions segment (GETS) reported $84.3 million in third quarter revenue, a decrease of 4.6% versus the prior-year third quarter. Revenue growth in Government Services reported in "Other" was offset by declines in the segment's other verticals. GETS reported an operating loss of $9.8 million versus an operating profit of $3.4 million in the prior-year quarter. GETS reported operating loss in the third quarter 2015 includes $10.9 million of goodwill and certain fixed asset impairment charges and $0.2 million in restructuring charges.
Professional Staffing Services segment (PSS) reported $146.9 million in revenue for the third quarter 2015, a decrease of 23.7% compared to the prior-year third quarter with declines across our North American industry verticals and in our UK-based staffing business. PSS reported an operating loss of $9.1 million versus an operating profit of $7.4 million in the prior-year third quarter. PSS reported third quarter 2015 operating loss includes $10.7 million of goodwill impairment charges and $0.3 million in restructuring charges.
Management Recruiters International, Inc. (MRI) reported third quarter 2015 revenue of $13.5 million, a decrease of 9.5% compared to the prior-year third quarter, driven by a decline in contract staffing revenue. MRI's third quarter 2015 operating profit was $1.9 million compared to $1.7 million in the prior-year third quarter.
Balance Sheet and Liquidity
CDI ended the quarter with $26.4 million in cash and cash equivalents versus $36.3 million at the end of fourth quarter 2014, and$43.1 million at the end of third quarter 2014. Net cash generated by operations during first nine months 2015 was $2.4 million versus$16.4 million generated in the prior-year period. Total liquidity, including availability under CDI's bank and credit facilities, totaled$65.6 million at September 30, 2015 versus $106.9 million at the end of fourth quarter 2014, and $113.0 million at the end of third quarter 2014. On October 30, 2015, the Company closed on a new five-year $150 million secured credit facility, replacing the existing$75 million facility scheduled to mature in November 2017.
The Company anticipates revenue for the fourth quarter 2015 in the range of $230 million to $240 million, including revenue related to the EdgeRock and Ship Shape acquisitions. This guidance reflects expected continued weakness in our staffing business consistent with previously reported trends and challenges, as well as reduced demand in our GETS oil, gas and chemicals vertical largely as a result of reductions and delays in project spending.