CDI Corp revenue decreases over 8% YoY
CDI Corp. has reported results for the second quarter ended 30th June 2016.
CEO and president, Scott J. Freidheim, said, "During the second quarter we made progress on our transformation and operational turnaround through additional improvements in our business development and delivery capabilities.
"As we continue to execute our plan, we are committed to managing our costs and capital to deliver future growth and to improve operating profitability during the second half of 2016."
For the second quarter 2016, revenue decreased by $20.1m or 8.2% (7.0% in constant currency) compared to the prior-year second quarter. Results for the second quarter of 2016 include $11.0m in revenue from EdgeRock Technologies, LLC, acquired in October 2015 and now comprising our Specialty Talent vertical within the Specialty Talent and Technology Solutions segment.
Enterprise Talent revenue declined $15.9m or 10.7% from the prior-year period. Revenue declined in both the North America Staffing and UK Staffing verticals. North America Staffing revenue decreased 8.3% (7.2% in constant currency), driven by reduced spending at the company's largest client and among certain oil and gas pipeline clients. UK staffing declined 21.8% (15.8% in constant currency), primarily due to reductions across engineering and construction sectors, in part associated with uncertainty surrounding the referendum by British voters to exit the European Union.
Specialty Talent and Technology Solutions revenue increased $11.2m from the prior year, principally as a result of the inclusion of $11.0m in revenue from the acquisition of EdgeRock. In Technology Solutions, revenue increased 3.5% due to increased spending by certain existing clients and the ramp up of new projects, partially offset by client reductions as part of their overall savings initiatives.
Engineering Solutions revenue declined $15.4m or 20.1% versus the prior-year period, primarily due to declines in demand for engineering services by downstream and midstream clients in the energy, chemicals & infrastructure vertical, impacted by the decline in oil and gas prices. Revenue in aerospace & industrial equipment declined due to reduced spending by a large commercial aviation client. These declines were partially offset by revenue growth in the government services vertical driven by new naval defense contracts.
MRI revenue in the second quarter was down $0.1m or 0.5% compared to the prior year due to a decline in royalty revenue offset by an increase in franchise fees and contract staffing.
The Company's gross profit decreased by $4.6m, primarily due to the decrease in revenue. Gross profit margin rates declined 30 basis points due to reductions in gross margins in all segments, partially offset by a shift in revenue mix to higher margin Specialty Talent revenue.
The company reported an operating loss in the second quarter of $6.5m compared to an operating profit of $1.2m in the year-ago quarter, primarily due to a decrease in gross profit and an increase in operating and administrative expenses.
Operating and administrative expenses in the second quarter increased $2.9m or 6.3% compared to the second quarter of 2015, primarily due to inclusion of expenses for EdgeRock. On an organic basis, operating expenses declined versus the prior-year period as increased personnel-related investments in management, sales, and delivery within select business verticals were offset by reduced corporate expenses associated with international business development activities and stock compensation.
More detailed segment data are included in the tables incorporated in this release and in the Company's Form 10-Q Report.
CDI ended the second quarter with $4.7m in cash and cash equivalents versus $16.9m at the end of the fourth quarter 2015 and $39.2m at the end of the second quarter 2015. Total debt outstanding was $25.9m at 30th June 2016, versus $18.8m at 31st December 2015. Net cash used in operating activities was $7.7m for the first half 2016 versus net cash provided of $12.2m in the prior-year period. Total liquidity, including availability under CDI's bank and credit facilities, totalled $120.9m at 30t June 2016, versus $137.6m at the end of the fourth quarter 2015.