NEW ONE MILLION SHARE REPURCHASE AUTHORIZATION ANNOUNCED BUFFALO,
N.Y., Feb. 24 /PRNewswire-FirstCall/ -- CTG (NASDAQ:CTGX), an
international information technology (IT) solutions and services
company, today announced its financial results for the 2008 fourth
quarter and full year which ended on December 31, 2008. CTG also
announced today that its Board of Directors approved a new
repurchase authorization for 1.0 million shares. For the 2008
fourth quarter, the growth in more profitable solutions work and
disciplined cost control produced the significant increase in
operating margins and profitability in the fourth quarter despite a
small decrease in total revenue. CTG reported revenue of $83.3
million, a 1.4% decrease from 2007 fourth quarter revenue of $84.5
million. CTG's operating income increased 75% to $3.2 million from
$1.8 million in the 2007 fourth quarter while its operating margin
expanded to 3.9%, a 170 basis point improvement from 2.2% in the
2007 fourth quarter. CTG's net income was $2.3 million, 90% higher
than 2007 fourth quarter net income of $1.2 million. On a per
diluted share basis, net income was $0.15, a 114% increase from
$0.07 in the 2007 fourth quarter. In the 2008 fourth quarter, a
$0.5 million favorable effect from currency exchange on
intercompany borrowings, included in other income, increased net
income per diluted share by $0.03. Excluding this effect, 2008
fourth quarter net income per diluted share would have been $0.12,
71% higher than the 2007 fourth quarter. For the 2008 full year,
earnings and margin growth reflected strong operating leverage,
expense control, and higher revenue from both its staffing business
and its higher margin solutions business. Additionally, solutions
work in 2008 was more profitable than 2007. CTG reported 2008
revenue of $353.2 million, an 8.6% increase from 2007 revenue of
$325.3 million. Operating income increased 101% to $13.1 million
from 2007 operating income of $6.5 million. The operating margin
for 2008 expanded to 3.7%, a 170 basis point improvement over 2007.
CTG's 2008 net income was $7.8 million, an 85% increase from 2007
net income of $4.2 million. On a per diluted share basis, 2008 net
income was $0.49, 96% higher than $0.25 in 2007. "CTG's strong
results in the quarter and the full year reflect the value of our
strategy to increase our solutions business with a focus on the
healthcare market. We nearly doubled earnings on 9% revenue growth
and achieved our major strategic objectives of increasing our
solutions portfolio and business, significantly expanding margins,
and continuing to grow at a rate well above U.S. technology
spending which Forrester estimates increased 4.1% in 2008," said
CTG Chairman and Chief Executive Officer James R. Boldt. "While
CTG's results demonstrate our progress in moving our strategy
forward in 2008, the further downturn in the economy began to
affect our business in the fourth quarter with the largest impact
coming from our lower margin staffing business as client and market
demand for external IT resources declined. Our ability to quickly
adjust our cost structure in response to lower revenue combined
with the growth of our solutions business helped us achieve fourth
quarter core earnings at the high end of our guidance despite
revenue slightly below our forecast." Mr. Boldt added, "From a
longer-term strategic perspective, we made significant progress in
advancing our solutions under development which primarily focus on
the healthcare payer market. Most of these solutions are now at the
pilot stage at various client sites and based on preliminary
results we are confident these offerings will be ready for
commercial launch in 2009." 2008 Fourth Quarter Review Solutions
revenue increased by $0.7 million, or 2.3%, to $29.9 million, or
36% of total revenue in the 2008 fourth quarter. Staffing revenue
decreased by $1.9 million, or 3.3%, to $53.4 million, 64% of total
revenue, with the managed staffing services component remaining the
primary contributor to the revenue from this business. European
revenue was $19.1 million, or 23%, of total revenue in the 2008
fourth quarter, down 3.8% from the prior year fourth quarter.
Revenue in the 2008 fourth quarter was unfavorably affected by $2.0
million from foreign currency exchange fluctuations when compared
with the year-ago quarter. There were 66 billing days in the 2008
fourth quarter compared with 64 billing days in the 2007 fourth
quarter. Selling, general, and administrative (SG&A) expenses
were $15.4 million, or 18.5%, of revenue compared with $16.9
million, or 20.0%, of revenue in the 2007 fourth quarter. The
decline in SG&A as a percentage of revenue reflects disciplined
cost control and reductions in overhead expenses primarily tied to
lower staffing demand. The Company recorded equity-based
compensation expense, net of tax, of $0.2 million in both the 2008
and 2007 fourth quarters, which reduced net income per diluted
share by $0.01 in each of the respective quarters. CTG's effective
tax rate for the 2008 fourth quarter was 37.2% compared with 36.5%
in the 2007 fourth quarter. The lower fourth quarter 2008 tax rate
in comparison with the full year 2008 rate of 41.2% was due
primarily to the benefit of research and development tax credits of
approximately $0.1 million and the utilization of foreign net
operating loss carryforwards from the exchange gain recognized from
intercompany balances. The Company generated cash from operations
of $4.9 million in the 2008 fourth quarter compared with $0.7
million in the 2007 fourth quarter. At December 31, 2008, the
Company had $11.0 million in cash. CTG had no outstanding debt at
2008 and 2007 year-end. CTG finances its working capital needs
through a $35 million revolving credit agreement that is in place
through April 2011. 2008 Year Review In 2008, CTG's solutions
business increased 8.4% to $120.9 million, or 34%, of total
revenue, and its staffing business increased 8.7% to $232.3
million, or 66%, of total revenue. The growth of its higher margin
solutions business was the major contributor to the increase in
CTG's 2008 profitability. European revenue increased 8.5% in 2008
to $78.2 million and represented 22.1% of total revenue. The
Company generated cash from operations of $16.6 million in 2008
compared with $5.3 million in 2007. Selling, general, and
administrative expenses in 2008 were $65.6 million, or 18.6%, of
revenue compared with 20.3% of revenue in 2007. In 2008, CTG
recorded $2.0 million in depreciation expense and $3.1 million for
capital expenditures. The Company recorded equity-based
compensation expense, net of tax, of $0.6 million in both 2008 and
2007, which reduced net income per diluted share by $0.04 in 2008
and $0.03 in 2007. CTG's effective tax rate for 2008 was 41.2%
compared with 37.6% in 2007. Stock Repurchase Program CTG
repurchased 444,000 of its shares in the 2008 fourth quarter and a
total of 1.1 million shares in 2008. In December 2008, the Company
extended its 10b5-1 stock repurchase plan to facilitate in 2009 the
repurchase of its common stock during its self-imposed blackout
periods prior to the announcement of quarterly results. On February
24, 2009, the Company was authorized to acquire approximately 0.2
million shares under its prior repurchase program. Combined with
the new 1.0 million repurchase authorization, approximately 1.2
million shares are currently available for repurchase by the
Company. Mr. Boldt commented, "Our Board's new 1.0 million share
repurchase authorization reflects our continued confidence in CTG's
future prospects and our belief that CTG's shares are undervalued
at recent prices. We intend to continue the active repurchase of
CTG stock in 2009." 2009 Guidance On October 17, 2008, the Company
was informed by a significant customer of a reduction in its need
for approximately 250 existing CTG staff with an approximately $21
million effect on annualized revenue. Over the next several months,
that customer further reduced its need for CTG personnel by an
additional 175 persons bringing the aggregate reduction in
headcount to 425 billable staff and its annualized impact on
revenue to approximately $36 million. The Company has appropriately
adjusted its selling, general, and administrative expenses in
conjunction with these billable staff reductions. CTG remains a
prime supplier of external IT resources to this client, and the
reduction reflects a change in this client's business needs and is
not related to CTG's performance. CTG is issuing initial guidance
for 2009 based on its current business activity and forecast, and
assuming that the global economy will remain weak for the first
three quarters of the year and begin to recover in the fourth
quarter as government stimulus packages begin to have an impact.
Reflecting these assumptions, CTG expects its 2009 first quarter
revenue to range from $73 million to $75 million, a 15% decrease
from 2008 at the midpoint of this range. The Company projects 2009
first quarter net income per diluted share of $0.07 to $0.09, an
11% decrease from 2008 at the midpoint of this range. There are 66
billing days in the 2009 first quarter compared with 63 billing
days in the 2008 first quarter. CTG expects that its 2009 revenue
will range from $285 million to $305 million, a 16% decrease from
2008 at the midpoint of this range. The Company currently projects
2009 net income per diluted share of $0.30 to $0.40, a 29% decrease
from 2008 at the midpoint of this range, or a 24% decrease from
2008 when the 2008 exchange gain is excluded. Mr. Boldt commented,
"While we are forecasting lower revenue and earnings in 2009, we
are also moving forward with our strategy to further increase our
mix of higher margin solutions work and expand our strong
healthcare IT business. Additionally, in the current economic
environment, the strength of CTG's balance sheet provides
significant benefits to our business. At year-end, we had no debt
and nearly $11 million in cash, despite repurchasing 1.1 million of
CTG's shares in 2008 and making significant investments in new
solutions development. We continue to have the liquidity to support
our business needs and growth plans. At the same time, we are
remaining vigilant on cost control to help us weather what is
certain to be a difficult year for businesses and consumers."
Healthcare IT Component of Stimulus Package a Significant
Opportunity for CTG Mr. Boldt concluded, "We believe that the
advances we have made in risk analysis solutions and our early move
into electronic medical records (EMR) applications, combined with
our experience in providing solutions to both healthcare providers
and payers, are competitive advantages that position CTG very
favorably for the future. Looking to the latter part of 2009 and
beyond, we see a significant near-term opportunity for CTG in the
magnitude of healthcare IT spending contained in the federal
economic stimulus package. The U.S. federal stimulus package
includes $19 billion in federal funding for healthcare IT over the
next few years with the major focus of this investment being
directed toward President Obama's initiative to implement EMRs to
lower costs and improve patient care. CTG already has significant
EMR experience in addition to work supporting the formation and
development of Regional Healthcare Information Organizations
(RHIOs), which are essential to implementing communitywide EMRs.
Healthcare currently contributes 26% to CTG's revenue, and we
believe that this national EMR initiative will provide additional
power over several years to expand our healthcare focus and grow
CTG's business, profitability, and value." About CTG Backed by over
40 years' experience, CTG provides IT solutions and services to
help our clients use technology as a competitive advantage to excel
in their markets. CTG combines in-depth understanding of our
clients' businesses with a full range of integrated offerings, best
practices, and proprietary methodologies supported by an ISO
9001:2000-certified management system. Our 3,100 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. CTG serves companies in several
industries and is a leading provider of IT and business consulting
solutions to the healthcare market. CTG posts news and other
important information 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. Conference Call and Webcast CTG will
hold a conference call on Wednesday February 25, 2009 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
1-888-276-0010 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 February 25, 2009 and 11:00 p.m. Eastern Time
February 28, 2009 by dialing 1-800-475-6701 and entering the
conference ID number 978255. 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. CONTACTS: Investors and Media: James R.
Boldt, Chairman & Chief Executive Officer (716) 887-7244
Investors: Brendan Harrington, Chief Financial Officer (716)
888-3634 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 For the Year Ended Dec. 31, Dec. 31, Dec. 31, Dec.
31, 2008 2007 2008 2007 Revenue $83,328 $84,504 $353,213 $325,285
Direct costs 64,679 65,783 274,533 252,889 Selling, general and
administrative expenses 15,413 16,872 65,598 65,872 Operating
income 3,236 1,849 13,082 6,524 Other income, net 428 59 256 285
Income before income taxes 3,664 1,908 13,338 6,809 Provision for
income taxes 1,362 697 5,501 2,563 Net income $2,302 $1,211 $7,837
$4,246 Net income per share: Basic $0.15 $0.08 $0.51 $0.26 Diluted
$0.15 $0.07 $0.49 $0.25 Weighted average shares outstanding: Basic
15,072 15,887 15,328 16,181 Diluted 15,491 16,434 15,878 16,654
COMPUTER TASK GROUP, INCORPORATED (CTG) Condensed Consolidated
Balance Sheets (Unaudited) (amounts in thousands) Dec. 31, Dec. 31,
Dec. 31, Dec. 31, 2008 2007 2008 2007 Current Assets: Current
Liabilities: Cash and cash Accounts Equivalents $10,973 $4,290
payable $8,247 $10,109 Accounts Accrued receivable, net 49,152
52,314 compensation 24,574 21,299 Other current Other current
assets 3,810 4,628 liabilities 6,340 6,613 Total Current Total
Current Assets 63,935 61,232 Liabilities 39,161 38,021 Property and
Long-term debt - - equipment, net 6,767 5,741 Goodwill 35,678
35,678 Other liabilities 9,045 9,361 Other assets 9,460 9,810
Shareholders' Equity 67,634 65,079 Total Assets $115,840 $112,461
Total Liabilities and Shareholders' Equity $115,840 $112,461
Today's news release, along with CTG news releases for the past
year, is available on the Web at http://www.ctg.com/. CTGX-E
DATASOURCE: CTG CONTACT: Investors and Media: James R. Boldt,
Chairman & Chief Executive Officer, +1-716-887-7244, or
Investors: Brendan Harrington, Chief Financial Officer,
+1-716-888-3634, both of CTG Web Site: http://www.ctg.com/
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