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View All NewsCDI revenue falls, cites reduced spending at some clients
CDI Corp. (NYSE: CDI), a Philadelphia-based provider of IT and engineering staffing, reported revenue fell 8.2% in the second quarter vs. the year earlier. The decline was 7.0% in constant currency. The quarter included $11.0 million in revenue from Edgerock Technologies LLC, which CDI acquired in October 2015.
| (US$ thousands) | Q2 2016 | Q2 2015 | % change |
| Revenue | $226,693 | $246,821 | -8.2% |
| Gross profit | $42,095 | $46,647 | -9.8% |
| Gross margin percentage | 18.6% | 18.9% | |
| Net income/loss | -$7,484 | -$157 | nm |
Revenue fell 10.7% in CDI’s enterprise talent segment. North America staffing revenue fell 8.3%, or 7.2% in constant currency, amid reduced spending at the company’s largest client and among some oil and gas pipeline clients. UK staffing revenue fell 15.8% in constant currency due to reductions in the engineering and construction sectors, in part associated with uncertainty surrounding the Brexit vote.
Specialty talent and technology solutions revenue rose primarily as the result of the acquisition of EdgeRock. Technology solutions revenue rose 20.1%. Aerospace and industrial equipment revenue fell due to reduced spending by a large aviation client. However, the declines were partially offset by revenue growth in government services.
Engineering solutions revenue fell 20.1% because of declines in demand for engineering services by downstream and midstream clients in the energy, chemicals and infrastructure vertical.
Revenue by segment
| (US$ thousands) | Q2 2016 | Q2 2015 | % change |
| Enterprise talent | |||
| North America staffing | $112,978 | $123,169 | -8.3% |
| UK staffing | $20,502 | $26,223 | -21.8% |
| Total | $133,480 | $149,392 | -10.7% |
| Specialty talent and technology solutions | |||
| Specialty talent | $10,951 | -- | -- |
| Technology solutions | $8,178 | $7,901 | 3.5% |
| Total | $19,129 | $7,901 | 142.1% |
| Engineering solutions | |||
| Energy, chemicals and infrastructure | $33,279 | $46,158 | -27.9% |
| Aerospace and industrial equipment | $12,525 | $15,615 | -19.8% |
| Government services | $15,349 | $14,763 | 4.0% |
| Total | $61,153 | $76,536 | -20.1% |
| Management Recruiters International | |||
| Contract staffing | $9,752 | $9,628 | 1.3% |
| Royalties and franchise fees | $3,179 | $3,364 | -5.5% |
| Total | $12,931 | $12,992 | -0.5% |
Quote
“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 Freidheim.
Guidance
CDI forecasts third-quarter revenue of between $220 million and $230 million, a year-over-year decrease of between 6.0% and 10.0%. The company said there could be a restructuring charge in the third quarter, and it is also in discussions over possible acquisitions and divestitures.
Share price and market cap
Shares in CDI fell 8.25% in early afternoon trading to $5.34. The company had a market cap of $105.3 million, according to Yahoo.