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View All NewsCDI revenue falls in Q4
CDI Corp. (NYSE: CDI), a Philadelphia-based provider of IT and engineering staffing, reported revenue fell 22.3% year over year in the fourth quarter. The decline was 13.1% when adjusted for sale of its UK-based subsidiary, CDI AndersElite Ltd., which the company sold to the Anders management team and employees in September 2015.
Revenue declined for enterprise talent, engineering solutions and Management Recruiters International, partially offset by an increase in specialty talent and technology solutions.
Two CDI shareholders in December called on the engineering and IT staffing provider to evaluate strategic alternatives, including a possible sale, and announced they intend to nominate independent directors for election at CDI’s 2017 annual meeting of shareholders.
As part of a strategic alternatives review, the shareholders also demanded the board suspend its search for a permanent CEO. In September, President and CEO Scott Freidheim resigned from the firm and CFO Michael Castleman was promoted to president and interim CEO.
| (US$ thousands) | Q4 2016 | Q4 2015 | % change |
| Revenue | $183,890 | $236,553 | -22.3% |
| Gross profit | $36,217 | $44,657 | -18.9% |
| Gross margin percentage | 19.7% | 18.9% | |
| Net loss | -$1,454 | -$17,114 | nm |
Revenue by segment
| (US$ thousands) | Q4 2016 | Q4 2015 | % change |
| Enterprise talent | |||
| North America staffing | $95,338 | $113,277 | -15.8% |
| UK staffing | - | $25,005 | nm |
| Total | $95,338 | $138,282 | -31.1% |
| Specialty talent and technology solutions | |||
| Specialty talent | $10,584 | $10,242 | 3.3% |
| Technology solutions | $7,887 | $7,873 | 0.2% |
| Total | $18,471 | $18,115 | 2.0% |
| Engineering solutions | |||
| Energy, chemicals and infrastructure | $30,803 | $38,888 | -20.8% |
| Aerospace and industrial equipment | $11,402 | $13,692 | -16.7% |
| Government services | $15,834 | $14,424 | 9.8% |
| Total | $58,039 | $67,004 | -13.4% |
| Management Recruiters International | |||
| Contract staffing | $9,267 | $9,992 | -7.3% |
| Royalties and franchise fees | $2,775 | $3,160 | -12.2% |
| Total | $12,042 | $13,152 | -8.4% |
Gross margin by segment
| Q4 2016 | Q4 2015 | |
| Enterprise talent | 11.1% | 11.7% |
| Specialty talent and technology solutions | 30.6% | 32.3% |
| Engineering solutions | 24.3% | 24.1% |
| Management Recruiters International | 48.7% | 49.4% |
Full-year results
| (US$ thousands) | 2016 | 2015 | % change |
| Revenue | $864,367 | $985,494 | -12.3% |
| Gross profit | $162,120 | $184,901 | -12.3% |
| Gross margin percentage | 18.8% | 18.8% | |
| Net income/loss | -$31,573 | -$37,086 | nm |
Quote
“We are pleased to see the benefit of our efficiency and cost management actions on our operating expenses and cash flows in the fourth quarter, providing a stronger foundation for our future success,” said President and Interim CEO Michael Castleman. “As we enter 2017, the entire CDI team remains squarely focused on our transformation. Through targeted programs that leverage inherent strengths of the CDI platform, we are aligned on our primary mission: to deliver profitable growth and thereby generate improved investor returns.”
Guidance
CDI forecasts first-quarter revenue in the range of $180 million to $185 million, a year-over-year decrease of between 22.9% and 20.8%. The company cited slower activity experienced in the first part of the quarter, consistent with that experienced in the late part of the 2016 fourth quarter, followed by increased activity levels across multiple segments, including enterprise talent, beginning in late January. However, overall demand trends among large clients and programs remain uncertain.
Share price and market cap
Shares in CDI fell 1.28% in early afternoon trading today to $7.70. The company had a market cap of $143.68 million, according to Yahoo.