CDI Corp. (CDI), a provider of engineering and technology services, reported decent fourth quarter and full year 2012 results. Earnings in the reported quarter came to 25 cents per share beating the Zacks Consensus Estimate of 23 cents by 8.7%. It also surpassed the loss of 3 cents in the year-ago period significantly, resulting from an increase in revenue and lower operating and administrative expenses. However, the earnings for 2011 were adjusted for restructuring expenses as well as HIRE income tax credit.
In 2012, earnings were reported to be 97 cents compared with 77 cents in 2011 by 26.0%, along with the adjustments in 2011. Earnings also beat the Zacks Consensus Estimate of 95 cents for 2012 by 2.1%.
Revenue: In the fourth quarter of 2012, CDI generated revenue of $270.5 million,increasing from $268.0 million in the year-ago period, driven by the company’s strategic restructuring plans. However, revenue missed the Zacks Consensus Estimate of $272.0 million.
In 2012, total revenue amounted to $1,105.0 million, against $1,060.0 recorded in 2011.
On a segmental basis, revenue in the Global Engineering and Technology Solutions segment (:GETS) declined 2.1% year over year to $79.5 million, resulting from a decrease in revenue from the infrastructure business and government services. In 2012, GETS revenue increased a meager 0.5% to $325.0 million.
Professional Services Staffing segment (:PSS) stood at $174.9 million in the quarter, an increase of 3.5%. The rise was led by an increase in revenue across three out of four strategic verticals of the segment. In 2012, PSS revenue was $710.3 million, increasing 6.4% year over year.
Revenue generated from Management Recruiters International (:MRI) was badly impacted by deterioration in the contract staffing and royalty and franchise fee income, leading to a decline of 9.0% year over year. Revenue from this segment was recorded at $16.2 million. In 2012, revenue increased 1.5% to $69.6 million.
Costs/Margins: In the quarter, CDI recorded a gross profit of $53.5 million, declining from $56.3 million in the year-ago quarter. Gross profit margin was 19.8%, declining 20 basis points year over year.
Balance Sheet/Cash Flow: Exiting the fourth quarter 2012, CDI had cash and cash equivalents of $43.7 million, compared with $17.1 at the end of the preceding quarter. Cash flow from operating activities was recorded at $36.0 million against $29.9 million in the comparable quarter last year.
Outlook: CDI expects revenue to continue to grow in 2013 despite the challenging economic conditions. For the first quarter of 2013, the company expects revenue to lie in the range of $265.0 million to $275.0 million.
The stock currently bears a Zacks Rank #3 (Hold). Other stocks worth a look in the service industry are AECOM Technology Corporation (ACM), AMN Healthcare Services Inc. (AHS) and Heidrick & Struggles International Inc. (HSII); each bearing a Zacks Rank #2 (Buy).
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