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CDI Corp. Reports Second Quarter 2016 ResultsPHILADELPHIA, Aug. 3, 2016 /PRNewswire/ -- CDI Corp. (NYSE: CDI) (the "Company") today reported results for the second quarter ended June 30, 2016. "During the second quarter we made progress on our transformation and operational turnaround through additional improvements in our business development and delivery capabilities," said CEO and President Scott J. Freidheim. "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." Second Quarter Overview
Summary Results from Operations for the Second Quarter For the second quarter 2016, revenue decreased by $20.1 million or 8.2% (7.0% in constant currency) compared to the prior-year second quarter. Results for the second quarter of 2016 include $11.0 million 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 $15.9 million 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 $11.2 million from the prior year, principally as a result of the inclusion of $11.0 million 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 $15.4 million 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 $0.1 million 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 $4.6 million, 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 $6.5 million compared to an operating profit of $1.2 million 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 $2.9 million 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. Balance Sheet and Liquidity CDI ended the second quarter with $4.7 million in cash and cash equivalents versus $16.9 million at the end of the fourth quarter 2015 and $39.2 million at the end of the second quarter 2015. Total debt outstanding was $25.9 million at June 30, 2016, versus $18.8 million at December 31, 2015. Net cash used in operating activities was $7.7 million for the first half 2016 versus net cash provided of $12.2 million in the prior-year period. Total liquidity, including availability under CDI's bank and credit facilities, totaled $120.9 million at June 30, 2016, versus $137.6 million at the end of the fourth quarter 2015. Business Outlook and Strategy The Company estimates revenue for the third quarter of 2016 in the range of $220 million to $230 million, with business mix generally representative of that experienced in the second quarter. Also, the Company is evaluating plans to reduce costs and improve profitability, which could result in a restructuring charge during the third quarter. The Company continues to pursue its CDI 2020 strategic plan. As part of our strategic plan:
Conference Call At 8:30 a.m. Eastern Time on August 4, 2016, Scott J. Freidheim, CEO and President, and Michael S. Castleman, CFO and Executive Vice President, will host a conference call to discuss the 2016 second quarter results and business outlook. The call can be accessed live, via the Internet, at www.cdicorp.com. About CDI CDI Corp. (NYSE: CDI) seeks to create extraordinary outcomes with our clients by delivering solutions based on highly skilled and professional talent. Our business is comprised of four segments: Enterprise Talent, Specialty Talent & Technology Solutions, Engineering Solutions and MRI. Our client offerings include an array of engineering design project solutions, information technology project solutions and managed services, specialty technology staff augmentation, and program and managed staffing services. Our clients are corporations in multiple industries, including energy, chemicals, infrastructure, aerospace, industrial equipment, technology, as well as municipal and state governments, and the U.S. Department of Defense. We have offices and delivery centers in the United States, Canada and the United Kingdom. In addition, we also provide recruiting and staffing services through our global MRINetwork® of franchisees. Learn more at www.cdicorp.com. Caution Concerning Forward-Looking Statements This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In addition, from time to time, we and our representatives may make statements that are forward-looking. All statements that address expectations or projections about the future, including, but not limited to, statements about our plans, strategies, adequacy of resources and future financial results (such as revenue, gross profit, operating profit, cash flow, and tax rate), 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 references to future periods. 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 these forward-looking statements include, but are not limited to: weakness or volatility in general economic conditions and levels of capital spending by clients in the industries we serve, including as a result of the Brexit referendum or the U.S. elections; weakness or volatility in the financial and capital markets, which may result in the postponement or cancellation of our clients' projects or the inability of our clients to pay our fees; the termination of one or more major client contracts or projects; the uncertain timing and funding of new contract awards and renewals; a high concentration of our business with a few large clients; the failure to achieve the anticipated benefits of acquisitions, and difficulties in integrating acquired businesses with CDI; the inability to obtain favorable price and other terms for any acquisitions and divestitures we may do; delays or reductions in U.S. government spending; credit risks associated with our clients; competitive market pressures; foreign currency fluctuations; restrictions on the availability of funds and on our activities under our asset-based, secured credit facility; the availability, retention and cost of qualified labor; 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 health care reform laws and regulations; the possibility of incurring liability for our business activities, including, but not limited to, the activities of our professional employees and our temporary employees; our performance on client contracts; negative outcome of pending and future claims and litigation; improper disclosure or loss of sensitive or confidential company, client, government, employee or candidate information, including personal data; 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 United States Securities and Exchange Commission (SEC), particularly in the "Risk Factors" section in Part I, Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2015. 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 from net income (loss) attributable to CDI, interest, income taxes, depreciation and amortization expense, restructuring and other related costs, share-based compensation expense, leadership transition costs, loss on disposition, certain acquisition-related items, reserve for project-related disputes and earnout adjustments, and Adjusted EPS, which excludes from diluted earnings per common share, restructuring and other related costs, leadership transition costs, loss on disposition, certain acquisition-related items, reserve for project-related disputes, earnout adjustments, amortization of acquired intangibles and the related income tax effect of each of the adjustments. 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 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 often will have to be replaced in the future, and Adjusted EBITDA 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 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 its usefulness as a comparative measure. 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.
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To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/cdi-corp-reports-second-quarter-2016-results-300308888.html SOURCE CDI Corp. 
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