Company Increases 2008 Revenue and EPS Guidance BUFFALO, N.Y.,
April 23 /PRNewswire-FirstCall/ -- CTG (NASDAQ:CTGX), an
international information technology (IT) solutions and staffing
company, today announced its financial results for the 2008 first
quarter which ended on March 28, 2008. For the 2008 first quarter,
CTG reported revenue growth of 8.3 percent, or $6.7 million, to
$86.7 million compared with 2007 first quarter revenue of $80.0
million. Operating income was $2.4 million in the first quarter of
2008, an 86.1 percent increase from $1.3 million in the first
quarter of 2007. CTG's net income for the 2008 first quarter was
$1.4 million, 25.1 percent higher than 2007 first quarter net
income of $1.1 million. On a per diluted share basis, 2008 first
quarter net income was $0.09, a 28.6 percent increase from $0.07 in
the 2007 first quarter. CTG's increased profitability reflected the
benefit of operating leverage and margin expansion resulting from
higher revenue, disciplined cost management, and the continued
growth of its solutions business. Excluding 2008 first quarter
merger evaluation costs, CTG's net income per diluted share for the
2008 first quarter rose 42.9 percent to ten cents from seven cents
in 2007 (1). First quarter 2007 net income also included a gain on
the sale of marketable securities of approximately two cents per
diluted share. "Our first quarter results reflect growth in the
sales of recently launched solutions that we offer to the
healthcare industry. As a result of strong customer demand for
these new offerings, both revenue and earnings exceeded our
guidance for the current quarter, and we have raised our
expectations for the year," said CTG Chairman and Chief Executive
Officer James R. Boldt. "Strategically, we are focused on
continuing to develop niche solutions for the rapidly growing
healthcare industry, particularly the payer market." Mr. Boldt
added, "In the 2008 first quarter, healthcare represented 27
percent of our business, up from 25 percent for the 2007 full year.
Our overall solutions revenue increased nine percent in the 2008
first quarter over last year's first quarter. Operating results
reflect the strong operating leverage we have in the solutions
business, which will continue to drive profit growth at a greater
pace than sales throughout 2008." 2008 First Quarter Review The 8.3
percent increase in 2008 first quarter revenue was achieved on 63
billing days, one less billing day than the 2007 first quarter.
Solutions revenue for the 2008 first quarter was 34 percent, or
$29.5 million, of total revenue, while staffing revenue, was 66
percent, or $57.2 million, of total revenue. Staffing revenue
increased 7.9 percent, or $4.2 million, in the first quarter this
year driven by continued gains in market share. European revenue
increased 9.8 percent to $19.0 million in the 2008 first quarter,
up from $17.3 million in the prior year first quarter, primarily
due to currency fluctuations. The operating margin in the 2008
first quarter was 2.7 percent, a 110 basis point improvement from
1.6 percent in the 2007 first quarter. Selling, general, and
administrative expenses, including merger evaluation costs, were
$16.4 million in the 2008 first quarter representing 18.9 percent
of revenue compared to $16.2 million, or 20.2 percent of revenue,
in the 2007 first quarter. The 2008 first quarter SG&A expenses
included $0.2 million in merger evaluation costs for advisory fees
incurred in connection with consideration of two unsolicited merger
proposals received in 2007 from RCM Technologies, Inc. that CTG's
Board unanimously rejected as inadequate. CTG does not anticipate
recording any additional merger evaluation costs in 2008 for these
proposals. The Company recorded equity-based compensation expense
of $0.2 million in both the 2008 and 2007 first quarter which
reduced net income per diluted share by $0.01 in each of the
respective quarters. The effective tax rate for the 2008 first
quarter was approximately 40.0 percent. CTG anticipates its
effective tax rate for the 2008 full year to range between 38 and
41 percent. On March 28, 2008, the Company's long-term debt was
$2.6 million, the same as a year earlier. Revenue and Earnings
Guidance Increased Based on Strength of Current Business and
Solutions Pipeline CTG issued guidance for the 2008 second quarter
with revenue expected to range from $88 million to $90 million, 10
to 12 percent above the 2007 second quarter. The Company projects
2008 second quarter net income per diluted share will range from
$0.10 to $0.12, an increase of 67 to 100 percent from the 2007
second quarter. Based on the strength of its current business and
solutions pipeline, CTG is increasing its 2008 revenue guidance
from a range of $340 to $350 million to $345 to $355 million, an
increase of six to nine percent over 2007 revenue. The Company also
increased its guidance for 2008 net income per diluted share from a
range of $0.33 to $0.43 to $0.36 to $0.44, an increase of 44 to 76
percent over 2007. Mr. Boldt noted, "2008 is off to a very strong
start putting CTG on track for our fourth consecutive year of
double-digit earnings growth. Our strategy to focus on offering
in-demand, niche solutions to higher growth industries continues to
generate very favorable results even in the current economic
environment. Notably, CTG's strength in healthcare, the fastest
growing U.S. industry, positions us very well because demand in
this market is primarily driven by government mandates and cost
reduction initiatives rather than consumer or industrial spending.
In the healthcare market, CTG is also an early entrant in
electronic medical records solutions, which offer significant
long-term potential demand from both the healthcare provider and
payer markets." Mr. Boldt added, "CTG's success in building our
higher margin solutions business, particularly in the healthcare
market, is driving our current and projected growth in revenue and
profitability. CTG's solutions pipeline and proposal activity
remain very strong with several new healthcare industry projects
coming on line in the second quarter to contribute to our margin
expansion and earnings growth." Stock Repurchase Activity CTG
repurchased 331,000 of its shares in the 2008 first quarter. In
April 2008, the Company again 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 April 23, 2008, approximately 1.1 million
shares were available for repurchase under current authorizations.
Mr. Boldt commented, "CTG continues to be an active buyer of our
shares based on our continued confidence in the Company's future
prospects and our belief that CTG's shares are undervalued at
recent prices." About CTG Backed by over 40 years' experience, CTG
provides IT solutions and staffing 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 3,400 IT professionals based in an international
network of offices in North America and Europe have a proven track
record of delivering high-value, industry-specific solutions. More
information about CTG is available on the Web at
http://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 2007 Form 10-K and Management's Discussion and Analysis
section of the Company's 2007 annual report, which are incorporated
by reference. The Company assumes no obligation to update the
forward-looking information contained in this release. (1) During
the second and third quarter of 2007, the Company received two
unsolicited merger proposals from RCM Technologies, Inc. and
incurred costs to evaluate those proposals. For the purposes of
these calculations, Net Income and Net Income per Diluted Share
before Merger Evaluation Costs exclude all merger evaluation costs,
net of income tax. Net Income and Net Income per Diluted Share
before Merger Evaluation Costs 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 calculations of
Net Income and Net Income per Diluted Share before Merger
Evaluation Costs 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 and net income per
diluted share excluding merger evaluation costs, net of income tax,
on a year-over- year 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.
Other than to measure net income and net income per share
year-over- year on a consistent basis excluding merger evaluation
costs, net of tax, the Company does not utilize Net Income and Net
Income per Diluted Share before Merger Evaluation Costs for any
other purpose. Conference Call and Webcast CTG will hold a
conference call on Thursday April 24, 2008 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 1-800-288-9626 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 12:00 p.m. Eastern Time April 24, 2008
and 11:00 p.m. Eastern Time April 27, 2008 by dialing
1-800-475-6701 and entering the conference ID number 899688. A
webcast of the call will also be available on CTG's web site:
http://www.ctg.com/. You must have Windows Media Player or
RealPlayer's audio software on your computer to listen to the
webcast. Both are available for downloading at no charge when
accessing the webcast. 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 28, March 30,
2008 2007 Revenue $86,683 $ 80,016 Direct costs 67,941 62,586
Selling, general and administrative expenses 16,116 16,150 Merger
evaluation costs 244 - Operating income 2,382 1,280 Other income
(expense), net (48) 514 Income before income taxes 2,334 1,794
Provision for income taxes 930 672 Net income $1,404 $1,122 Net
income per share: Basic $0.09 $0.07 Diluted $0.09 $0.07 Weighted
average shares outstanding: Basic 15,535 16,368 Diluted 15,933
16,840 Calculations of Net Income and Net Income per Diluted Share
before Merger Evaluation Costs (1) For the Quarter Ended March 28,
March 30, 2008 2007 Net income $1,404 $1,122 Merger evaluation
costs, net of income tax 147 - Net income before merger evaluation
costs $1,551 $1,122 Net income per diluted share before merger
evaluation costs $0.10 $0.07 COMPUTER TASK GROUP, INCORPORATED
(CTG) Condensed Consolidated Balance Sheets (Unaudited) (amounts in
thousands) March 28, March 30, March 28, March 30, 2008 2007 2008
2007 Current Assets: Current Liabilities: Cash and cash Accounts
equivalents $4,743 $5,004 payable $10,448 $8,236 Accounts
receivable, Accrued net 59,182 55,708 compensation 24,265 24,513
Other current Other current assets 4,780 4,339 liabilities 7,608
7,210 Total Current Total Current Assets 68,705 65,051 Liabilities
42,321 39,959 Property and equipment, Long-term net 6,275 5,809
debt 2,645 2,600 Goodwill 35,678 35,678 Other liabilities 9,247
9,749 Other assets 9,814 8,297 Shareholders' equity 66,259 62,527
Total Liabilities and Total Shareholders' Assets $120,472 $114,835
Equity $120,472 $114,835 Today's news release, along with CTG news
releases for the past year, is available on the Web at
http://www.ctg.com/. CONTACTS: Investors and Media: James R. Boldt,
Chairman & Chief Executive Officer (716) 887-7244 Investors:
Brendan Harrington, Chief Financial Officer (716) 888-3634
DATASOURCE: CTG CONTACT: Investors and Media: James R. Boldt,
Chairman & Chief Executive Officer, +1-716-887-7244, Investors:
Brendan Harrington, Chief Financial Officer, +1-716-888-3634, both
of CTG Web site: http://www.ctg.com/ Company News On-Call:
http://www.prnewswire.com/comp/198025.html
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