BUFFALO, N.Y., Oct. 24 /PRNewswire-FirstCall/ -- CTG (NASDAQ:CTGX),
an international information technology (IT) staffing and solutions
company, today announced its financial results for the 2006 third
quarter which ended on September 29, 2006. CTG reported 2006 third
quarter revenue of $79.8 million, a 6.7% increase from 2005 third
quarter revenue of $74.8 million. Operating income was $1.7 million
in the third quarter of 2006, a 21.6% increase from $1.4 million in
the 2005 third quarter. CTG's net income for the 2006 third quarter
was $0.8 million or $0.05 per diluted share, an increase of 30.0%
from 2005 third quarter net income of $0.6 million, or $0.04 per
diluted share. Net income before equity-based compensation expense
(1) for the 2006 third quarter was $1.0 million or $0.06 per
diluted share, and excludes net equity-based compensation expense
of $0.2 million. "An increase in our higher margin solutions
business in the quarter enabled CTG to achieve earnings at the high
end of our guidance despite this quarter's sequential reduction in
revenue and headcount in our lower margin Strategic Staffing
business," said CTG Chairman and Chief Executive Officer James R.
Boldt. "As a result, the mix of our staffing/solutions business
improved to 70%/30% in the 2006 third quarter from 73%/27% in the
2006 second quarter. While the overall solutions market remains
below normal levels, we continue to see demand rising for CTG's
niche solutions offerings targeted to our major vertical markets.
While CTG's headcount is down approximately 500 from the end of the
2006 second quarter due to a significant customer's reduction for
their need in CTG staff, we are still up approximately 800 billable
staff from the end of 2004, a good indicator of the strong net
growth achieved in our business over the last two years." Mr. Boldt
continued, "During the quarter, we also secured significant new
business wins in both our staffing and solutions businesses. In our
healthcare vertical, we began work on two major transitional
outsourcing contracts including our largest ever healthcare
transitional outsourcing project, which is valued at $9 million
over three years and will fully ramp up in the fourth quarter.
CTG's European operations were awarded a $4.6 million, multi-year
application implementation for a large government agency. In our
Strategic Staffing business, we were among a small number of firms
selected as a preferred staffing supplier by a major technology
services provider that significantly reduced its number of approved
technology services vendors. We expect this designation to increase
future requirements CTG fulfills for this client which should
offset some of the recent reduction in staff supplied to another
significant staffing customer." For the first three quarters of
2006, CTG reported revenue of $249.2 million, a 15.2% increase from
revenue of $216.4 million for the first three quarters of 2005.
Year-to-date operating income in 2006 was $4.8 million, 37.7%
higher than $3.5 million in the same 2005 period. CTG's net income
in the first three quarters of 2006 was $2.4 million or $0.14 per
diluted share, a 38.9% increase from net income of $1.7 million, or
$0.10 per diluted share for the first three quarters of 2005. Net
income before equity-based compensation expense (1) for the first
three quarters of 2006 was $2.8 million or $0.17 per diluted share,
and excludes net equity-based compensation expense of $0.4 million.
During the 2006 third quarter, CTG repurchased 108,153 of its
shares in open market transactions. CTG has repurchased a total of
717,053 shares since announcing a 1.0 million share repurchase
authorization on May 12, 2005 in addition to an existing 210,000
share authorization. Mr. Boldt commented, "We believe CTG's shares
remain attractively valued and intend to continue actively
repurchasing our shares." CTG had no debt at the end of the 2006
third quarter, compared with $3.2 million at the end of the 2006
second quarter. CTG provided guidance on its revenue and earnings
forecasts for the 2006 fourth quarter and updated its guidance for
2006. Based on current business and market conditions, CTG expects
that for the fourth quarter of 2006 its revenue will range from
$79.0 million to $81.0 million, net income per diluted share before
equity-based compensation (1) will range from $0.05 to $0.07, and
net income per diluted share will range from $0.04 to $0.06. CTG
now expects that its 2006 revenue will range from $328 million to
$330 million, an increase of 11 to 12 percent over 2005. The
Company currently anticipates its 2006 net income per diluted share
will be in the range of $0.18 to $0.20, an increase of 29 to 43
percent over 2005. Net income per diluted share before equity-based
compensation expense(1) for 2006 is currently projected to be $0.22
to $0.24. Mr. Boldt concluded, "We are seeing significant
opportunities in several areas of our business with the most
promising in our healthcare practice in both the United States and
Europe. The ramp-up in the support we are providing on the United
Kingdom national healthcare systems project is proceeding and we
anticipate that there is also potential for significant new work in
Europe as other countries are expected to follow the UK's lead and
modernize their healthcare IT systems. Financially, we remain very
solid with no debt at the end of the third quarter of 2006 despite
the repurchase of over 100,000 of our shares during the quarter. We
are on track for our second consecutive year of double digit EPS
growth and our expanding higher margin solutions business points to
further improvement in CTG's operating profitability going
forward." Backed by 40 years' experience, CTG provides IT
application management, consulting, software development and
integration, and staffing solutions to help Global 2000 clients
focus on their core businesses and use IT as a competitive
advantage to excel in their markets. CTG combines in-depth
understanding of our clients' businesses with a full range of
integrated services and proprietary ISO 9001:2000-certified service
methodologies. Our 3,300 IT professionals based in an international
network of offices in North America and Europe have a proven track
record of delivering solutions that work. More information about
CTG is available on the Web at http://www.ctg.com/. 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 2005 Form 10-K and
Management's Discussion and Analysis section of the Company's 2005
annual report, which are incorporated by reference. The Company
assumes no obligation to update the forward-looking information
contained in this release. (1) On January 1, 2006, the Company
adopted the provisions of FAS No. 123R, "Share-Based Payment" on a
modified prospective basis, which required the Company to record
equity-based compensation expense for all awards granted after the
date of adoption and for the unvested portion of previously granted
awards outstanding as of the date of adoption. No compensation cost
was recognized in the statements of income for either the quarter
or three quarter's ended September 30, 2005 as the Company
continued to apply the recognition and measurement provisions of
Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees," (APB No. 25) and related interpretations, as
all options granted by the Company had an exercise price that was
equal to or greater than the underlying common stock at the date of
grant. For the purposes of this calculation, Net Income and Net
Income per Diluted Share before Equity-Based Compensation Expense
excludes all equity-based compensation expense, net of income tax.
Net Income and Net income per Diluted Share before Equity-Based
Compensation Expense are not measurements calculated in accordance
with U.S. Generally Accepted Accounting Principles (GAAP), and are
not intended to be a replacement for, or considered to be more
important than, net income or net income per diluted share
calculated in accordance with GAAP. As the calculation of Net
Income or Net Income per Diluted Share before Equity-Based
Compensation are not in accordance with GAAP, the Company believes
that the use of the calculations is significantly limited, and
should only be used to compare net income or net income per diluted
share year-over-year on a consistent basis. To mitigate this
limitation, the Company has provided net income and net income per
diluted share calculated in accordance with GAAP, which should be
the measurements utilized to analyze the Company's financial
results. The Company has provided these additional disclosures
because net income and net income per share calculated on a GAAP
basis are not comparable year-over-year, and the Company did not
incur any equity- based compensation expense in 2005. Accordingly,
this reconciliation allows the Company to evaluate the financial
results of its operations year-over-year on a consistent basis.
Other than to measure net income and net income per share
year-over-year on a consistent basis, the Company does not utilize
Net Income or Net Income per Diluted Share before Equity-Based
Compensation Expense for any other purpose. CTG will hold a
conference call on Wednesday, October 25, 2006 at 10:00 AM Eastern
Time to discuss its financial results and business strategy. CTG
Chairman and Chief Executive Officer James R. Boldt will lead the
call. Interested parties can dial in to 1-888-428-4474 between 9:45
AM and 9:50 AM and ask for the CTG conference call and identify
James Boldt as the conference chairperson. A replay of the call
will be available between 1:00 PM Eastern Time October 25, 2006 and
1:00 PM Eastern Time October 28, 2006 by dialing 1-800-475-6701 and
entering the conference ID number 816210. COMPUTER TASK GROUP,
INCORPORATED (CTG) Condensed Consolidated Statements of Income
(Unaudited) (amounts in thousands except per share data) For the
Quarter Ended For the Three Quarters Ended Sept. 29, Sept. 30,
Sept. 29, Sept. 30, 2006 2005 2006 2005 Revenue $ 79,830 $ 74,805 $
249,238 $ 216,398 Direct costs 61,595 57,920 194,178 166,595
Selling, general and administrative expenses 16,493 15,452 50,214
46,284 Operating income 1,742 1,433 4,846 3,519 Net other expense
(143) (362) (614) (956) Income before income taxes 1,599 1,071
4,232 2,563 Provision for income taxes 767 431 1,805 816 Net income
$ 832 $ 640 $ 2,427 $ 1,747 Net income per share: Basic $ 0.05 $
0.04 $ 0.15 $ 0.10 Diluted $ 0.05 $ 0.04 $ 0.14 $ 0.10 Weighted
average shares outstanding: Basic 16,349 16,721 16,448 16,778
Diluted 16,653 17,050 16,775 17,107 Calculation of Net Income and
Net Income per Diluted Share before Equity-Based Compensation
Expense (1) For the Quarter Ended For the Three Quarters Ended
Sept. 29, Sept. 30, Sept. 29, Sept. 30, 2006 2005 2006 2005 Net
income $ 832 $ 640 $ 2,427 $ 1,747 Equity-based compensation, net
of income tax 167 - 401 - Net income before equity-based
compensation expense $ 999 $ 640 $ 2,828 $ 1,747 Net income per
diluted share before equity-based compensation expense $ 0.06 $
0.04 $ 0.17 $ 0.10 COMPUTER TASK GROUP, INCORPORATED (CTG)
Condensed Consolidated Balance Sheets (Unaudited) (amounts in
thousands) Sept. 29, Sept. 30, Sept. 29, Sept. 30, 2006 2005 2006
2005 Current Current Assets: Liabilities: Cash and Accounts cash
equivalents $ 3,363 $ 4,133 payable $ 6,402 $ 7,792 Accounts
Accrued receivable, net 53,315 67,224 compensation 28,138 25,753
Other current Other current assets 4,255 3,713 liabilities 7,895
6,866 Total Current Total Current Assets 60,933 75,070 Liabilities
42,435 40,411 Property and equipment, net 6,134 6,557 Long-term
debt - 17,920 Goodwill 35,678 35,678 Other liabilities 9,852 9,236
Other assets 9,471 7,709 Shareholders' equity 59,929 57,447 Total
Liabilities and Shareholders' Total Assets $ 112,216 $ 125,014
Equity $ 112,216 $ 125,014 Today's news release, along with CTG
news releases for the past year, is available on the Web at
http://www.ctg.com/. CONTACT: James R. Boldt, Chairman & Chief
Executive Officer (716) 887-7244 DATASOURCE: CTG CONTACT: James R.
Boldt, Chairman & Chief Executive Officer, CTG, +1-716-887-7244
Web site: http://www.ctg.com/ Company News On-Call:
http://www.prnewswire.com/comp/198025.html
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