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View All NewsCDI first-quarter revenue falls 9%
Engineering and IT staffing provider CDI Corp. (NYSE: CDI) reported first-quarter revenue fell 9.3%. The decrease was 7.6% in constant currency.
Results include $10.0 million in revenue from EdgeRock Technologies LLC, acquired in October 2015 and now comprising CDI’s specialty talent vertical within its specialty talent and technology solutions segment.
Effective this quarter, CDI reports on four new operating segments: Enterprise talent, specialty talent and technology solutions, engineering solutions, and Management Recruiters International. Historical results have been reclassified for the sake of comparison.
Revenue decreased year over year in three of the company’s four reporting segments. Revenue in CDI’s enterprise talent segment, which includes North America and UK staffing, fell 13.5%. North America staffing revenue fell 12.6%, or 10.2% in constant currency, driven primarily by decreased spending among certain oil and gas pipeline clients and the company’s largest client. UK Staffing fell 17.8%, or 13.3% in constant currency, driven by softness in both network rail and general construction contract hiring.
| (US$ thousands) | Q1 2016 | Q1 2015 | % change |
| Revenue | $233,524 | $257,458 | -9.3% |
| Gross profit | $43,275 | $46,770 | -7.5% |
| Gross margin percentage | 18.5% | 18.2% | |
| Net income/loss | -$4,817 | $470 | nm |
Philadelphia-based CDI ranks No. 20 on Staffing Industry Analysts’ list of largest staffing firms in the US.
Quote
“During the first quarter we made progress on implementing our long-term strategic plan. In multiple areas of our business, we are beginning to realize the benefits of our focus on client service and new business development,” CEO and President Scott Freidheim said. “While there is evidence of success from our performance improvement programs, much work remains. We will continue to channel resources to our strategic areas of focus to execute our plan.”
Revenue by segment
| (US$ thousands) | Q1 2016 | Q1 2015 | % change |
| Enterprise talent | |||
| North America staffing | $116,684 | $133,489 | -12.6% |
| UK staffing | $22,965 | $27,937 | -17.8% |
| Total | $139,649 | $161,426 | -13.5% |
| Specialty talent and technology solutions | |||
| Specialty talent | $10,020 | -- | -- |
| Technology solutions | $8,373 | $7,690 | 8.9% |
| Total | $18,393 | $7,690 | 139.2% |
| Engineering solutions | |||
| Energy, chemicals and infrastructure | $33,951 | $44,703 | -24.1% |
| Aerospace and industrial equipment | $13,131 | $15,697 | -16.3% |
| Government services | $16,172 | $14,431 | 12.1% |
| Total | $63,254 | $74,831 | -15.5% |
| Management Recruiters International | |||
| Contract staffing | $9,227 | $10,318 | -10.6% |
| Royalties and franchise fees | $3,001 | $3,193 | -6.0% |
| Total | $12,228 | $13,511 | -9.5% |
Gross margin by segment
| Q1 2016 | Q1 2015 | |
| Enterprise talent | 11.8% | 11.9% |
| Specialty talent and technology solutions | 28.9% | 33.3% |
| Engineering solutions | 24.5% | 24.6% |
| Management Recruiters International | 49.1% | 48.6% |
Guidance
CDI estimates second-quarter revenue in the range of $225 million to $235 million. The company anticipates some sequential improvement in specialty talent and technology solutions, engineering solutions and MRI, offset by enterprise talent as a result of seasonality in the Western Canada oil and gas business within North America staffing.
Share price and market cap
Shares in CDI fell 5.58% to $6.09 in afternoon trading today; CDI has a market cap of approximately $120.10 million, according to Yahoo!