CDI Corp. Reports Third Quarter 2015 Results

PHILADELPHIA, Nov. 4, 2015 /PRNewswire/ -- CDI Corp. (NYSE: CDI) (the "Company") today reported results for the third quarter ended September 30, 2015.

"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.  

Business Outlook

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.

Conference Call

At 8:30 a.m. Eastern Time on November 5, 2015, Scott J. Freidheim, CEO and President, and Michael S. Castleman, CFO and Executive Vice President, will host a conference call to discuss the 2015 third quarter results and business outlook. The call can be accessed live, via the Internet, at www.cdicorp.com. 

About CDI

CDI Corp. (NYSE: CDI) provides engineering, information technology and staffing solutions. Our customers operate in a variety of industries, ranging from Oil, Gas & Chemicals to Aerospace & Industrial Equipment, and High Technology, and include corporate, federal, state and municipal entities. We serve customers through offices and delivery centers in the United States, Canada and the United Kingdom. We also provide staffing services through our global MRINetwork^® of franchisees.  Learn more at www.cdicorp.com

Caution Concerning Forward-Looking Statements

This news release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  All statements that address expectations or projections about the future, including, but not limited to, statements about our strategies for growth and future financial results (such as revenue), are forward-looking statements. Some of the forward-looking statements can be identified by words like "anticipates," "believes," "expects," "may," "will," "could," "should," "intends," "plans," "estimates" and similar expressions. These statements are not guarantees of future performance and involve a number of risks, uncertainties and assumptions that are difficult to predict. Because these forward-looking statements are based on estimates and assumptions that are subject to significant business, economic and competitive uncertainties, many of which are beyond our control or are subject to change, actual outcomes and results may differ materially from what is expressed or forecasted in these forward-looking statements. Important factors that could cause actual results to differ materially from the forward-looking statements include, but are not limited to: weakness in general economic conditions and levels of capital spending by clients in the industries we serve; weakness or volatility in the financial and capital markets, which may result in the postponement or cancellation of our clients' capital projects or the inability of our clients to pay our fees; the termination or non-renewal of a major client contract or project; delays or reductions in government spending; credit risks associated with our clients; competitive market pressures; the availability and cost of qualified personnel; our level of success in attracting, training and retaining qualified management personnel and other staff employees; changes in tax laws and other government regulations including the impact of healthcare reform laws and regulations; the possibility of incurring liability for our business activities, including the activities of our temporary employees; our performance on client contracts; negative outcome of pending and future claims and litigation; and government policies, legislation or judicial decisions adverse to our businesses.  More detailed information about these and other risks and uncertainties may be found in our filings with the SEC, particularly in the "Risk Factors" section of our Form 10-K and the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section of our Form 10-Ks and Form 10-Qs. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. We assume no obligation to update such statements, whether as a result of new information, future events or otherwise, except as required by law. 

Use of Non-GAAP Financial Measures

This press release contains financial information calculated other than pursuant to U.S. Generally Accepted Accounting Principles (GAAP). In particular, it includes Adjusted EBITDA and Adjusted EBITDA Margin which are adjusted to exclude interest, income taxes, depreciation, amortization, impairment charges, restructuring charges, share-based compensation, leadership transition costs, loss on disposition, gain on sale of non-operating corporate asset, and acquisition related costs; Adjusted operating expenses, which is the sum of  "Operating and administrative expenses", "Restructuring and other related costs", "Impairment" and "Loss on disposition" in the consolidated statements of operations, depreciation and amortization expense, impairment charges, restructuring and other related costs, share-based compensation expense, leadership transition costs, and loss on disposition and acquisition related costs; and Adjusted EPS which is adjusted to exclude, impairment charges, restructuring charges, leadership transition costs, loss on dispositions, acquisition related costs, gain on sale of non-operating corporate asset and the related income tax effect. We present these as supplemental measures of performance.

These non-GAAP measures have limitations as analytical tools, should not be viewed as a substitute for financial information determined in accordance with GAAP, and should not be considered in isolation or as a substitute for analysis of the Company's results as reported under GAAP. Some of the limitations of Adjusted EBITDA, Adjusted operating expenses and Adjusted EPS as analytical tools are: (i) these measures do not reflect all our cash expenditures, or future requirements, for capital expenditures or contractual commitments; (ii) these measures do not reflect changes in, or cash requirements for, our working capital needs; (iii) these measures do not reflect interest expense, or the cash requirements necessary to service interest or principal payments, on our debts; (iv) although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA and Adjusted operating expenses does not reflect any cash requirements for such replacements; (v) share-based compensation is and will remain a key element of our overall long-term incentive compensation package, although we exclude it from Adjusted EBITDA and Adjusted operating expenses as an expense when evaluating our ongoing operating performance for a particular period; (vi) these measures do not reflect the impact of certain cash charges resulting from matters we consider not to be indicative of our ongoing operations; and (vii) other companies in our industry may calculate these measures differently than we do, limiting their usefulness as comparative measures.

We present these non-GAAP financial measures because we believe these assist investors and analysts in comparing our performance across reporting periods on a consistent basis by excluding items that we do not believe are indicative of our core operating performance. These non-GAAP financial measures are also used by management in its evaluation of core operations and financial and operational decision-making. 

Financial Tables Follow

SOURCE CDI Corp.

Related Links

http://www.cdicorp.com