BUFFALO, N.Y., April 22, 2013 /PRNewswire/ -- CTG (NASDAQ:
CTGX), an information technology (IT) solutions and services
company, announced its financial results for the 2013 first quarter
which ended on March 29, 2013.
Continued growth in higher margin solutions work primarily in its
healthcare IT business, higher billable headcount, and expense
control were the largest contributors to the strength of CTG's 2013
first quarter results.
2013 First Quarter Review
Revenue, operating income, net income, and diluted net income
per share for the 2013 first quarter as compared with the 2012
first quarter are as follows (dollar amounts in thousands except
per share data):
|
|
Mar.
29,
2013
|
|
|
Mar.
30,
2012
|
|
|
$
Change
|
|
%
Change
|
Revenue
|
$
|
108,495
|
|
$
|
103,367
|
|
$
|
5,128
|
|
5%
|
Operating
income
|
$
|
6,182
|
|
$
|
5,599
|
|
$
|
583
|
|
10%
|
Net
income
|
$
|
4,057
|
|
$
|
3,360
|
|
$
|
697
|
|
21%
|
Diluted
net income per share
|
$
|
0.24
|
|
$
|
0.20
|
|
$
|
0.04
|
|
20%
|
|
|
|
|
|
|
|
|
|
|
|
The Company's operating margin expanded by 30 basis points to
5.7% from 5.4% in the 2012 first quarter.
"CTG is reporting another excellent quarter, delivering results
consistent with our expectations with revenue above the mid-point
of guidance, even with this quarter having one less billing day
than the 2012 first and fourth quarters," said CTG Chairman and
Chief Executive Officer James R.
Boldt. "Revenue in our staffing business was bolstered in
the quarter by increased demand for technical resources as clients
are becoming more confident in the sustainability of the domestic
and global economic recovery. Our European operations continue to
be in a growth mode with revenue up 13% in the quarter primarily
based on increased business in our testing, healthcare, government
and financial services practices. Healthcare revenue
increased to 32% of total revenue from 31% a year ago though its
growth was muted in the quarter as three large electronic medical
records (EMR) projects awarded in February will not be staffed
until the second quarter of 2013. Additionally, we started an
ICD-10 remediation project in the first quarter and expect to begin
two large legacy application management engagements in the second
quarter."
Mr. Boldt continued, "Notable events in the quarter included the
board's initiation in February 2013
of a quarterly cash dividend, which underscores our confidence in
CTG's current performance and long-term prospects. During the
quarter, we also completed the acquisition of etrinity, a
Belgium-based health IT services
provider that markets to healthcare providers and specializes in
clinical systems integration and implementation, application
management, technology support for medical imaging, training, and
technical resources. We are very optimistic about the long-term
growth prospects for this business as healthcare organizations in
several European countries are moving toward adoption of U.S. EMR
software over the next few years. CTG is ideally positioned
to capitalize on the Western Europe EMR opportunity as we bring our
deep U.S. EMR selection and implementation experience and can
leverage the significant technical resources of our European
operations that have over 500 IT consultants based in the Benelux
region and the United
Kingdom."
Solutions revenue in the 2013 first quarter increased by
$1.9 million or 4.7% to $42.7 million, representing 39.4% of total
revenue compared with 39.5% in the 2012 first quarter.
Staffing revenue increased by $3.2
million or 5.1% to $65.8
million, or 60.6% of total revenue, compared with 60.5% in
the 2012 first quarter. European revenue in the 2013 first
quarter increased 13% to $19.4
million, or 17.9% of total revenue, from $17.2 million, or 16.6% of total revenue, in the
2012 first quarter. There were 63 billing days in the first
quarter of 2013 and 64 billing days in the first and fourth
quarters of 2012.
Selling, general, and administrative (SG&A) expenses were
$16.4 million or 15.1% of revenue,
compared with $16.3 million or 15.7%
of revenue in the 2012 first quarter due to disciplined cost
management and the effect of operating leverage resulting from
revenue growth.
Cash used in operations was $7.1
million in the 2013 first quarter, compared with cash used
in operations of $2.4 million in the
2012 first quarter. At March 29,
2013, the Company had $30.7
million in cash compared with $19.3
million at the end of the 2012 first quarter and
$40.6 million at year-end 2012.
Cash balances reflect both the 2013 and 2012 first quarters ending
on a payroll date while the 2012 fourth quarter did not. The
Company had no outstanding debt at the end of the 2013 or 2012
first quarters.
The Company's effective tax rate in the 2013 first quarter was
33.2% compared with 39.4% in the 2012 first quarter. The
lower tax rate in the quarter reflected the extension in
January 2013, retroactive to 2012, of
the federal R&D tax credit that expired in
2011.
The Company did not repurchase any of its shares in the 2013
first quarter. In April 2013, the
Company extended its 10b5-1 stock repurchase plan to facilitate the
repurchase of its common stock during its self-imposed blackout
periods prior to the announcement of quarterly results. On
March 29, 2013, approximately 535,000
shares were available under its current repurchase
authorization.
2013 Second Quarter and Full Year Guidance
CTG is providing guidance for the 2013 second quarter and 2013
full year in the table below. Based on its current business
activity and trends in its business, the Company is reiterating
revenue and earnings guidance from the initial guidance provided in
its 2012 fourth earnings release issued on February 19, 2013.
2013
Second Quarter (64 billing days vs. 64 in 2012)
|
Range
|
Range
midpoint
|
Change
from 2012 second
quarter
at range midpoint
|
|
|
|
|
Revenue
|
$111-$113
million
|
$112
million
|
+
5%
|
Diluted
net income per share *
|
$0.23 -
$0.25
|
$0.24
|
+9%
|
|
|
|
|
*Comparison to 2012 results excludes the effect of
non-operational gains of $0.4 million, or 2 ½ cents per diluted
share, from life insurance proceeds paid to the Company in the 2012
second quarter
|
|
2013
Full Year (Projected tax rate of 37% to 39%)
|
Range
|
Range
midpoint
|
Change
from 2012
at
range midpoint
|
|
|
|
|
Revenue
|
$450-$460
million
|
$455
million
|
+
7%
|
Diluted
net income per share*
|
$1.02 -
$1.12
|
$1.07
|
+
22%
|
|
|
|
|
*Comparison to 2012 results excludes the effect of
non-operational gains of $1.3 million, or 7 ½ cents per diluted
share, from life insurance proceeds paid to the Company in
2012
|
Mr. Boldt commented, "We are confirming our revenue guidance for
the year based upon first quarter demand for staffing and our
current expectations for our healthcare business. Growth in our
healthcare business is expected from several sources this year
including the EMR projects already underway, the three recently
awarded EMR projects, and prospective new EMR wins. We are
currently working on 15 significant EMR projects; we will begin
three new projects in the second quarter which we announced in
February 2013; and we are awaiting
decisions on three requests for proposals received from clients for
new EMR projects. We also expect growth from ICD-10 remediation
engagements, our new genomics offering, consulting work related to
health reform mandates, and the expansion of our application
management practice. We are very encouraged by our sales
efforts for our software as a service offerings, especially our
fraud, waste and abuse (FWA) offering. We recently sold
our FWA offering to a second health insurance client and, based
upon where we are in the sales cycle with other prospective
clients, are forecasting that we will sell our FWA offering to
additional clients this year. We look for the continued
growth in solutions work from these higher margin offerings to move
operating margins above the six percent mark in 2013. Overall, we
expect 2013 will be an excellent year and the seventh year of the
last eight of significant double-digit earnings growth."
About CTG
CTG develops innovative IT solutions to address the business
needs and challenges of companies in several higher-growth
industries including healthcare, financial services, energy, and
technology services. As a leading provider of IT and business
consulting solutions to the healthcare market, CTG offers
hospitals, physician groups, and health information exchanges a
full range of electronic medical record services.
Additionally, CTG has developed for the healthcare provider and
payer markets unique, proprietary software solutions that support
better and lower cost healthcare. CTG also provides managed
services IT staffing for major technology companies and large
corporations. Backed by over 45 years' experience,
proprietary methodologies, and an ISO 9001-certified management
system, CTG has a proven track record of delivering high-value,
industry-specific solutions. CTG has approximately 4,000
employees and operates in North
America and Western Europe. CTG posts news and other
important information on the Web at www.ctg.com.
Safe Harbor Statement
This document contains
certain forward-looking statements concerning the Company's current
expectations as to future growth. These statements are based upon a
review of industry reports, current business conditions in the
areas where the Company does business, the availability of
qualified professional staff, the demand for the Company's
services, and other factors that involve risk and uncertainty. As
such, actual results may differ materially in response to a change
in such factors. Such forward-looking statements should be read in
conjunction with the Company's disclosures set forth in the
Company's 2012 Form 10-K, which is incorporated by reference. The
Company assumes no obligation to update the forward-looking
information contained in this release.
Conference Call and Webcast
CTG will hold a conference call to discuss its financial results
and business strategy on Tuesday, April 23,
2013 at 10:00 a.m. Eastern
Time. CTG Chairman and Chief Executive Officer
James R. Boldt will lead the
call. Interested parties can dial in to 1-888-276-0010
between 9:45 a.m. and 9:50 a.m. and
ask for the CTG conference call. A replay of the call will be
available between 12:00 p.m. Eastern
Time April 23, 2013 and
11:00 p.m. Eastern Time April 26, 2013 by dialing 1-800-475-6701 and
entering the conference ID number 269073.
A live webcast of the call will be available on CTG's web site:
http://www.ctg.com. The webcast will also be archived on CTG's
web site at http://investor.ctg.com/events.cfm for 90
days following completion of the conference call.
Financial statements follow.
COMPUTER TASK GROUP, INCORPORATED
(CTG)
Condensed
Consolidated Statements of Income
(Unaudited)
(amounts in thousands except per share
data)
|
|
|
|
For the
Quarter Ended
|
|
March
29,
|
|
March
30,
|
|
2013
|
|
2012
|
|
|
|
|
|
|
Revenue
|
$
|
108,495
|
|
$
|
103,367
|
Direct
costs
|
|
85,896
|
|
|
81,515
|
Selling,
general and administrative expenses
|
|
16,417
|
|
|
16,253
|
Operating
income
|
|
6,182
|
|
|
5,599
|
Other
expense, net
|
|
(109)
|
|
|
(50)
|
Income
before income taxes
|
|
6,073
|
|
|
5,549
|
Provision
for income taxes
|
|
2,016
|
|
|
2,189
|
Net
income
|
$
|
4,057
|
|
$
|
3,360
|
|
|
|
|
|
|
Net income
per share:
|
|
|
|
|
|
|
Basic
|
$
|
0.26
|
|
$
|
0.22
|
|
Diluted
|
$
|
0.24
|
|
$
|
0.20
|
|
|
|
|
|
|
|
Weighted
average shares outstanding:
|
|
|
|
|
|
|
Basic
|
|
15,430
|
|
|
15,169
|
|
Diluted
|
|
17,066
|
|
|
16,872
|
|
|
|
|
|
|
|
Cash
dividend declared per share
|
$
|
0.05
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
COMPUTER TASK GROUP, INCORPORATED (CTG)
Condensed Consolidated Balance Sheets
(Unaudited)
(amounts in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
March
29,
|
|
December 31,
|
|
March
30,
|
|
|
|
2013
|
|
2012
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents
|
|
$
|
30,745
|
|
$
|
40,614
|
|
$
|
19,265
|
|
Accounts
receivable, net
|
|
|
74,916
|
|
|
70,459
|
|
|
67,799
|
|
Other
current assets
|
|
|
3,242
|
|
|
2,595
|
|
|
3,675
|
Total
current assets
|
|
|
108,903
|
|
|
113,668
|
|
|
90,739
|
|
|
|
|
|
|
|
|
|
|
|
|
Property
and equipment, net
|
|
|
6,956
|
|
|
6,916
|
|
|
7,659
|
|
Goodwill
|
|
|
37,879
|
|
|
35,678
|
|
|
35,678
|
|
Other
assets
|
|
|
10,385
|
|
|
9,943
|
|
|
10,994
|
|
|
|
|
|
|
|
|
|
|
|
Total
Assets
|
|
$
|
164,123
|
|
$
|
166,205
|
|
$
|
145,070
|
|
|
|
|
|
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
9,264
|
|
$
|
10,170
|
|
$
|
8,796
|
|
Accrued
compensation
|
|
|
26,055
|
|
|
32,162
|
|
|
24,838
|
|
Dividend
payable
|
|
|
762
|
|
|
-
|
|
|
-
|
|
Other
current liabilities
|
|
|
8,612
|
|
|
7,869
|
|
|
7,999
|
Total
current liabilities
|
|
|
44,693
|
|
|
50,201
|
|
|
41,633
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term
debt
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Other
liabilities
|
|
|
13,214
|
|
|
13,223
|
|
|
10,741
|
|
Shareholders' equity
|
|
|
106,216
|
|
|
102,781
|
|
|
92,696
|
|
|
|
|
|
|
|
|
|
|
|
Total
Liabilities and Shareholders' Equity
|
$
|
164,123
|
|
$
|
166,205
|
|
$
|
145,070
|
|
|
|
|
|
|
|
|
|
|
|
COMPUTER TASK GROUP, INCORPORATED
(CTG)
Condensed
Consolidated Statements Cash Flows
(Unaudited)
(amounts in thousands)
|
|
|
|
|
|
|
|
For the
Quarter Ended
|
|
|
|
March
29,
|
|
March
30,
|
|
|
|
2013
|
|
2012
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
4,057
|
|
$
|
3,360
|
|
Depreciation and amortization expense
|
|
|
631
|
|
|
648
|
|
Equity-based compensation expense
|
|
|
546
|
|
|
424
|
|
Other
operating items
|
|
|
(12,307)
|
|
|
(6,856)
|
Net cash
used in operating activities
|
|
|
(7,073)
|
|
|
(2,424)
|
Net cash
used in investing activities
|
|
|
(3,465)
|
|
|
(738)
|
Net cash
provided by (used in) financing activities
|
|
|
1,141
|
|
|
(285)
|
Effect of
exchange rates on cash and cash equivalents
|
|
(472)
|
|
|
298
|
Net
decrease in cash and cash equivalents
|
|
|
(9,869)
|
|
|
(3,149)
|
Cash and
cash equivalents at beginning of period
|
|
|
40,614
|
|
|
22,414
|
Cash and
cash equivalents at end of period
|
|
$
|
30,745
|
|
$
|
19,265
|
|
|
|
|
|
|
|
|
CTG news releases are available on
the Web at www.ctg.com.
ctgx-e
SOURCE CTG