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World – Q4 impairment charges send CDI into loss

04 March 2015

US-based engineering and technology services firm CDI Corp (CDI: NYSE) yesterday reported revenue of USD 266.7 million for the fourth quarter ending 31 December 2014, a decrease of 3.8% from USD 277.1 million during the same period last year.

  Q4 2014 Q4 2013 Change
Revenue USD 266.7 million USD 277.1 million -3.8%
Gross Profit USD 48.5 million USD 52.2 million -7.2%
Operating Income (loss) (USD 14.8 million) USD 3.8 million N/A

In the fourth quarter 2014, the company recorded USD 14.7 million of impairment charges related to certain businesses within the Global Engineering and Technology Solutions segment. This amount included charges to goodwill in the infrastructure business and, to intangibles and other assets in the data acquisition and analysis systems business. The company also reported an aggregate pre-tax charge of USD 3.6 million due to the previously announced restructuring.

On an annual basis, the company achieved revenue growth of 3.2% to USD 1.12 billion, up from USD 1.09 billion in 2013.

  FY 2014 FY 2013 Change
Revenue USD 1,123.0 million USD 1,087.9 million +3.2%
Gross Profit USD 206.6 million USD 206.6 million 0.0%
Operating Income USD 5.4 million USD 20.9 million -74.2%

Scott J. Freidheim, The fourth quarter represents the beginning of the transformation of the CDI platform. We are executing with a sense of urgency the cultural, operational, and strategic initiatives to create value for our clients and shareholders.”

CDI Corp operates across the Americas, EMEA, and APAC, but provides no geographical breakdown of their financial results. In the UK, the company operates under the brand CDI Anders Elite.

CDI Corp provides Global Engineering & Technology Solutions (GETS) and Professional Services Staffing (PSS). Each division derives revenue from Oil, Gas, & Chemical (OGC), Aerospace & Industrial Equipment (AIE), Hi-Tech, and Other.

Revenue from GETS and PPS during the fourth quarter of last year, compared with the same quarter in 2013, was as follows:

(USD) GETS PPS
(Millions) Q4 2014 Q4 2013 Change Q4 2014 Q4 2013 Change
OGC 35.3 31.0 +13.8% 43.4 42.9 +1.2%
AIE 16.0 20.3 -21.5% 21.2 18.1 +16.8
Hi-Tech 7.9 7.7 +1.9% 50.3 65.8 -23.5%
Other 21.3 22.8 +9.4% 56.4 53.9 +4.8%
Total 80.5 81.8 -1.7% 171.4 180.7 -5.2%

On an annual basis, both segments achieved revenue as follows:

(USD) GETS PPS
(Millions) FY 2014 FY 2013 Change FY 2014 FY 2013 Change
OGC 142.4 122.5 +16.2% 184.3 144.4 +27.6%
AIE 73.4 74.7 -1.8% 82.9 74.8 +10.9%
Hi-Tech 32.1 30.4 +5.7% 228.2 277.8 -17.2%
Other 87.5 93.7 -6.6% 233.3 211.6 +10.2%
Total 335.4 321.3 +4.4% 728.7 708.6 +2.8%

The company also provides staffing services through its franchised Management Recruiters International (MRI) subsidiary.

(USD) MRI
(Millions) Q4 2014 Q4 2013 Change FY 2014 FY 2013 Change
Contract Staffing 11.3 11.0 +2.5% 45.8 44.3 +3.3%
Royalties/Fees 3.5 3.5 -0.5% 13.1 13.6 -4.0%
Total 14.8 14.6 +1.8% 58.9 58.0 +1.6%

Looking forward, the company expects to achieve revenue in the first quarter ending 31 March 2015 of between USD 250 million and USD 260 million.

In trading yesterday, the company’s share price closed down 0.3% at USD 18.43, an increase of 3.4% compared with a year ago. Based on its current share price, the company has a market value of USD 361.6 million.