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Economy and hurricanes take its toll on CDI

October 30 2008

CDI Corp. posted a drop of 5.6% in revenue for the quarter ended Sept. 30, ending the quarter at $281.9 million. The company reported net earnings from continuing operations of $8.1 million, up 1.3% from $8.0 generated in the prior-year quarter.

Third quarter 2008 net earnings include a $3.3 million reduction in income tax expense due to the recognition of foreign research and development credits, and $0.5 million in pre-tax costs related to the credit.  

President and CEO Roger Ballou attributed the fall in revenue to the "effects of the Gulf Coast hurricanes of $4.2 million and an unfavorable foreign currency impact of $3.1 million, with the remainder primarily reflecting the weakening in North America and U.K. employment markets. The company also incurred $0.5 million in costs during the quarter to obtain a previously-announced major account expansion in our IT Solutions segment which should produce profitable revenue growth in later quarters."

Gross profit for the quarter was 22.2%, down from 24.2% posted in the same period in 2007.

Results for the various segments of CDI were:
- CDI Engineering Solutions reported a 1.4% decrease to $151.8 million in third quarter revenue compared to the prior-year quarter due to the effects of the Gulf storms. 
- Management Recruiters International Inc. (MRI) reported a revenue decline of 12.7% to $18.2 million compared to the third quarter of 2007, reflecting weakness in royalty revenue and a decline in contract staffing. 
- CDI IT Solutions third quarter revenue was essentially flat compared to the year-ago quarter at $56.4 million reflecting the ramp-up of a previously-announced account expansion of a large IT client offset by staffing declines in retail staffing and the automotive sector. 
- At U.K.-based AndersElite, revenue declined 16.3% (or 11.3% on a constant currency basis) to $55.6 million versus the prior-year quarter driven by continued significant weakness in permanent placement in both property development and residential housing construction in the U.K.  

For the fourth quarter of the year, Ballou said the company expects revenue to decline 9% to 12% (or 4% to 6% on a constant currency basis).

CDI Corp. (NYSE: CDI)
For the quarter ended Sept. 30, 2008
compared with the same period in 2007
Revenue: $281.9 million, -5.6%
Net income: $8.1 million, 1.3%

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