BUFFALO, N.Y., July 25, 2011 /PRNewswire/ -- CTG (Nasdaq: CTGX),
an information technology (IT) solutions and services company,
announced its financial results for the 2011 second quarter which
ended on July 1, 2011. Strong
demand for external IT resources, an increase in new healthcare
solutions projects, and the operating leverage from higher revenue
were the primary contributors to CTG's significant growth in
revenue, margins, and earnings in the second quarter and first half
of 2011.
2011 Second Quarter Review
Revenue, operating income, net income, and diluted net income
per share for the 2011 second quarter as compared with the 2010
second quarter are as follows (dollar amounts in thousands except
per share data):
|
|
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|
July 1,
2011
|
|
|
July 2,
2010
|
|
|
$
Change
|
|
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%
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
98,327
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|
$
|
81,142
|
|
$
|
17,185
|
|
|
21%
|
|
Operating income
|
$
|
4,677
|
|
$
|
3,489
|
|
$
|
1,188
|
|
|
34%
|
|
Net income
|
$
|
2,830
|
|
$
|
1,905
|
|
$
|
925
|
|
|
49%
|
|
Diluted net income per
share
|
$
|
0.17
|
|
$
|
0.12
|
|
$
|
0.05
|
|
|
42%
|
|
|
|
|
|
|
|
|
|
|
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|
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|
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|
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|
The Company's operating margin expanded by 50 basis points to
4.8% from 4.3% in the 2010 second quarter.
"At mid-year, CTG is firmly on track for another year of
double-digit earnings growth, our fifth in the last six years,"
said CTG Chairman and Chief Executive Officer James R. Boldt. "Demand remains strong in
our managed staffing services and healthcare businesses and is
driving the significant growth we are achieving this year.
Our headcount has increased by 9% thus far in 2011, a 300
person increase from 2010 year-end with about 100 of these
resources added in the second quarter. Healthcare revenue was
up 30% in the second quarter increasing to 29% of total revenue,
its highest level ever. The growth in our healthcare business
was also the major contributor to a favorable change in our
business mix to higher margin solutions revenue, increasing to 37%
of revenue from 32% a year ago."
Mr. Boldt continued, "Electronic medical records work again
contributed to most of the growth in our healthcare business with
EMR revenue increasing 31% over last year's second quarter.
EMR projects made up 50% of healthcare revenue and 14% of
total revenue in the quarter. At the end of the second
quarter of 2011 we were working on 17 significant EMR projects.
We are seeing the start of demand for ICD-10 conversion
support as U.S. healthcare providers and payers prepare to switch
from ICD-9 to ICD-10, the international standard for diagnostic
codes and the codes to be used for healthcare billing in
the United States by the federally
mandated deadline of October 1, 2013.
CTG is working on its first ICD-10 project and expects to add
others this year with the more lucrative, large project
opportunities for ICD-10 implementation work coming next year."
Solutions revenue in the 2011 second quarter increased by
$9.7 million or 37% to $36.0 million, representing 37% of total revenue
compared with 32% in the 2010 second quarter. Staffing
revenue increased by $7.5 million or
14% to $62.3 million, or 63% of total
revenue, compared with 68% in the 2010 second quarter.
European revenue was $17.3
million, or 18% of total revenue, in the 2011 second
quarter, a $2.9 million increase from
$14.4 million, or 18% of total
revenue, in the 2010 second quarter. Foreign currency
exchange fluctuations had a $1.9
million favorable effect on revenue in the quarter.
There were 64 billing days in both the second quarters of
2011 and 2010.
Selling, general, and administrative (SG&A) expenses were
$16.1 million or 16.3% of revenue,
compared with $14.3 million or 17.6%
of revenue in the 2010 second quarter. The decline in
SG&A as a percent of revenue reflects the operating leverage
from revenue growth and cost controls.
The Company provided cash from operations of $2.8 million in the 2011 second quarter compared
with cash provided from operations of $6.7
million in the 2010 second quarter. The decrease in
the cash provided from operations in the second quarter 2011 is
primarily a result of the timing of payments for insurance
premiums, income taxes, and employee compensation. At
July 1, 2011, the Company had
$13.0 million in cash compared with
$8.6 million at the end of the 2010
second quarter. The Company had no outstanding debt at the
end of the 2011 and 2010 second quarters. CTG finances its
working capital needs through a $35
million revolving credit agreement that is in place through
April 2014.
2011 First Half Review
Results for the first half of the year reflect the same trends
seen in the second quarter.
Revenue, operating income, net income, and diluted net income
per share for the 2011 first half as compared with the 2010 first
half are as follows (dollar amounts in thousands except per share
data):
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|
July 1,
2011
|
|
|
July 2,
2010
|
|
|
$
Change
|
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
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Revenue
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$
|
194,236
|
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$
|
159,631
|
|
$
|
34,605
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|
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22%
|
|
Operating income
|
$
|
9,276
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|
$
|
6,578
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$
|
2,698
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41%
|
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Net income
|
$
|
5,658
|
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$
|
3,691
|
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$
|
1,967
|
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53%
|
|
Diluted net income per
share
|
$
|
0.34
|
|
$
|
0.23
|
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$
|
0.11
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48%
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The Company's operating margin increased by 70 basis points to
4.8% in the 2011 first half from 4.1% in the 2010 first half.
During the first half of 2011, CTG's solutions business
increased 35% to $69.7 million, or
36% of total revenue, and its staffing business grew 15% to
$124.5 million, or 64% of total
revenue. European revenue increased 11% to $34.4 million in the 2011 first half and
represented 18% of total revenue. Strong client demand for
external technical resources in the 2011 first half accounted for a
year-to-date increase in headcount of 300, or 9%, since year-end
2010.
Selling, general, and administrative expenses were $31.3 million, or 16.1% of revenue, compared with
$28.2 million, or 17.7% of revenue,
in the 2010 first half.
Stock Repurchase Program
CTG repurchased 44,000 of its shares in the 2011 second quarter
at an average price of $13.20 per
share. In July 2011, 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
July 22, 2011, approximately 1.1
million shares were available under its current repurchase
authorizations.
2011 Revenue and Earnings Guidance
The Company is providing guidance for the 2011 third quarter.
CTG expects its 2011 third quarter revenue to range from
$98 million to $100 million, a 17%
increase from 2010 at the midpoint of this range. The Company
projects 2011 third quarter net income per diluted share of
$0.16 to $0.18, a 31% increase from
2010 at the midpoint of this range. There are 63 billing days
in the 2011 third quarter, equal to the 2010 third quarter.
Based on year-to-date results and trends in its business, the
Company has tightened the range of revenue and earnings guidance
with the midpoint of guidance for revenue increased and earnings
unchanged. Guidance for the full year revenue is $390 million to $396 million, a 19% increase from
2010 at the midpoint of the range. Guidance for 2011 net
income per diluted share is $0.67 to
$0.73, a 35% increase from 2010 at the midpoint of the
range. A tax rate of approximately 38% is projected for
2011.
Mr. Boldt commented, "Given the strong demand we are
experiencing, we are looking for third quarter results to
approximate the 2011 second quarter even with utilization rates
typically being the lowest of the year based on the higher number
of billable employees using vacation time and one less billing day
than this year's second quarter. With the continued ramping
up of more profitable solutions projects, new EMR work, and a
return to more normal utilization rates, we expect fourth quarter
earnings to be the highest of the year. In addition to the
double-digit revenue and earnings growth we see for the full year,
we are also on track for a meaningful improvement in our business
mix due to the amount of new higher margin solutions work we are
adding this year in our healthcare business."
Mr. Boldt concluded, "Our position as a leading healthcare IT
consultant gives us confidence in our ability to continue growing
healthcare revenue with EMR work remaining the major contributor in
the near term, and ICD-10 compliance support, accountable care
organization consulting services, and medical informatics solutions
next on the list of significant revenue growth opportunities.
Additionally, with the healthcare industry already at 17% of
U.S. GDP and projected to reach 20% by 2015, we expect market
demand for healthcare IT services to remain at high levels given
the contribution technology can make in containing costs,
increasing efficiencies, and improving outcomes. Continued
growth of the healthcare industry, federal government incentives
and requirements supporting healthcare technology investments, and
our strong and growing healthcare IT practice, all put CTG in a
very good position to advance our strategic focus on healthcare and
continue increasing revenue and earnings at a robust pace."
About CTG
CTG develops innovative IT solutions to address the business
needs and challenges of companies in several higher-growth
industries including healthcare, energy, and technology services.
As a leading provider of IT and business consulting solutions
to the healthcare market, CTG offers hospitals, physician groups,
and regional 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 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's
3,700 IT professionals are based in an international network of
offices 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 2010 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, July 26,
2011 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 1-888-276-0009 between 9:45 a.m. and 9:50 a.m., 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 July 26, 2011 and
11:00 p.m. Eastern Time July 29, 2011 by dialing 1-800-475-6701 and
entering the conference ID number 175311.
A webcast of the call will also 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
|
|
For the
Two
Quarters Ended
|
|
|
|
July
1,
2011
|
|
|
July
2,
2010
|
|
|
July
1,
2011
|
|
|
July
2,
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
98,327
|
|
$
|
81,142
|
|
$
|
194,236
|
|
$
|
159,631
|
|
Direct costs
|
|
77,594
|
|
|
63,350
|
|
|
153,706
|
|
|
124,831
|
|
Selling, general and
administrative expenses
|
|
16,056
|
|
|
14,303
|
|
|
31,254
|
|
|
28,222
|
|
Operating income
|
|
4,677
|
|
|
3,489
|
|
|
9,276
|
|
|
6,578
|
|
Other expense, net
|
|
(48)
|
|
|
(71)
|
|
|
(85)
|
|
|
(118)
|
|
Income before income
taxes
|
|
4,629
|
|
|
3,418
|
|
|
9,191
|
|
|
6,460
|
|
Provision for income
taxes
|
|
1,799
|
|
|
1,513
|
|
|
3,533
|
|
|
2,769
|
|
Net income
|
$
|
2,830
|
|
$
|
1,905
|
|
$
|
5,658
|
|
$
|
3,691
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
Net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.19
|
|
$
|
0.13
|
|
$
|
0.38
|
|
$
|
0.25
|
|
Diluted
|
$
|
0.17
|
|
$
|
0.12
|
|
$
|
0.34
|
|
$
|
0.23
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
Weighted average shares
outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
15,050
|
|
|
14,728
|
|
|
14,909
|
|
|
14,725
|
|
Diluted
|
|
16,864
|
|
|
16,095
|
|
|
16,759
|
|
|
16,051
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPUTER
TASK GROUP, INCORPORATED (CTG)
Condensed Consolidated Balance
Sheets
(Unaudited)
(amounts in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
July
1,
2011
|
|
|
July
2,
2010
|
|
|
July
1,
2011
|
|
|
July
2,
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
13,002
|
|
$
|
8,584
|
Accounts payable
|
$
|
8,464
|
|
$
|
5,583
|
|
Accounts receivable,
net
|
|
66,766
|
|
|
50,914
|
Accrued compensation
|
|
30,853
|
|
|
25,576
|
|
Other current assets
|
|
4,119
|
|
|
4,013
|
Other current
liabilities
|
|
5,029
|
|
|
5,083
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Current Assets
|
|
83,887
|
|
|
63,511
|
Total Current
Liabilities
|
|
44,346
|
|
|
36,242
|
|
Property and equipment,
net
|
|
8,641
|
|
|
8,362
|
Long-term debt
|
|
-
|
|
|
-
|
|
Goodwill
|
|
35,678
|
|
|
35,678
|
Other liabilities
|
|
9,820
|
|
|
9,441
|
|
Other assets
|
|
12,610
|
|
|
11,308
|
Shareholders' equity
|
|
86,650
|
|
|
73,176
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
$
|
140,816
|
|
$
|
118,859
|
Total Liabilities
and
Shareholders'
Equity
|
$
|
140,816
|
|
$
|
118,859
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Today's news release, along with CTG news releases for the past
year, is available on the Web at www.ctg.com.
ctgx-e
SOURCE CTG