BUFFALO, N.Y., Oct. 24, 2011 /PRNewswire/ -- CTG (NASDAQ: CTGX),
an information technology (IT) solutions and services company,
announced its financial results for the 2011 third quarter which
ended on September 30, 2011.
New larger healthcare solutions projects, higher demand for
external IT resources, and the operating leverage from higher
revenue were the primary contributors to CTG's significant growth
in revenue, margins, and earnings in the third quarter and first
three quarters of 2011.
2011 Third Quarter Review
Revenue, operating income, net income, and diluted net income
per share for the 2011 third quarter as compared with the 2010
third quarter are as follows (dollar amounts in thousands except
per share data):
|
|
|
|
Sept.
30,
2011
|
|
|
Oct.
1,
2010
|
|
|
$
Change
|
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
101,119
|
|
$
|
84,463
|
|
$
|
16,656
|
|
|
20%
|
|
Operating income
|
$
|
4,576
|
|
$
|
3,117
|
|
$
|
1,459
|
|
|
47%
|
|
Net income
|
$
|
2,991
|
|
$
|
2,027
|
|
$
|
964
|
|
|
48%
|
|
Diluted net income per
share
|
$
|
0.18
|
|
$
|
0.13
|
|
$
|
0.05
|
|
|
38%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
The Company's operating margin expanded by 80 basis points to
4.5% from 3.7% in the 2010 third quarter.
"We are pleased to report excellent third quarter results with
revenue exceeding guidance and earnings per share at the top of
guidance, a noteworthy achievement in a slowing economy," said CTG
Chairman and Chief Executive Officer James
R. Boldt. "Demand in our higher margin healthcare
business remained very strong with healthcare revenue up 32% in the
third quarter increasing to 30% of total revenue, its highest level
ever. As we expected, growth rates in our lower margin
managed staffing services business are subsiding in the second half
of the year as compared to the 15% growth experienced in the first
half of 2011. Our percentage of solutions business, which is
more profitable than our staffing business, increased to 38% of
total revenue in the third quarter."
Mr. Boldt continued, "Electronic medical records (EMR) work was
again the primary driver of the growth in our healthcare business
in the quarter with EMR revenue up 23% over the 2010 third quarter.
At the end of the quarter the number of EMR projects remained
unchanged at 17 from the second quarter of 2011. However, new
EMR projects are much larger in scope and revenue than those
completed. We are also seeing more revenue from other types
of healthcare solutions projects, including transitional
application management."
Solutions revenue in the 2011 third quarter increased by
$10.4 million or 36% to $38.8 million, representing 38% of total revenue
compared with 34% in the 2010 third quarter. Staffing revenue
increased by $6.3 million or 11% to
$62.3 million, or 62% of total
revenue, compared with 66% in the 2010 third quarter.
European revenue was $16.0
million, or 16% of total revenue, in the 2011 third quarter,
a $2.2 million increase from
$13.8 million, or 16% of total
revenue, in the 2010 third quarter. Foreign currency exchange
fluctuations had a $1.3 million
favorable effect on revenue in the quarter compared with the 2010
third quarter. There were 63 billing days in the third
quarters of 2011 and 2010.
Selling, general, and administrative (SG&A) expenses were
$16.4 million or 16.2% of revenue,
compared with $14.2 million or 16.8%
of revenue in the 2010 third quarter. The decline in SG&A
as a percent of revenue reflects the operating leverage from
revenue growth and cost controls.
Cash provided from operations was $2.8
million in the 2011 third quarter, compared with cash
provided from operations of $0.9
million in the 2010 third quarter. At September 30, 2011, the Company had $12.6 million in cash compared with $9.8 million at the end of the 2010 third
quarter. The Company had no outstanding debt at the end of
the 2011 and 2010 third quarters. CTG finances its working
capital needs through a $35 million
revolving credit agreement that is in place through April 2014.
During the 2011 third quarter, the Company's current National
Technical Services (NTS) agreement with IBM was extended from
September 28 to December 31, 2011,
following a prior three-month extension as IBM, in the normal
course of its business, periodically reviews the NTS contract it
has with its vendors. IBM has informed CTG that it has been
selected to continue as a supplier under the NTS agreement for the
next three years. CTG expects the NTS agreement to be
executed during the 2011 fourth quarter, and that the Company will
continue to derive a significant portion of its revenue from IBM
throughout the remainder of 2011 and in future years.
2011 Year-to-date Review
Results for the first three quarters of the year reflect the
same trends seen in the third quarter.
Revenue, operating income, net income, and diluted net income
per share for the first three quarters of 2011 as compared with the
first three quarters of 2010 are as follows (dollar amounts in
thousands except per share data):
|
|
|
|
Sept.
30,
2011
|
|
|
Oct.
1,
2010
|
|
|
$
Change
|
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
295,355
|
|
$
|
244,094
|
|
$
|
51,261
|
|
|
21%
|
|
Operating income
|
$
|
13,852
|
|
$
|
9,695
|
|
$
|
4,157
|
|
|
43%
|
|
Net income
|
$
|
8,649
|
|
$
|
5,718
|
|
$
|
2,931
|
|
|
51%
|
|
Diluted net income per
share
|
$
|
0.52
|
|
$
|
0.36
|
|
$
|
0.16
|
|
|
44%
|
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The Company's operating margin increased by 70 basis points to
4.7% in the first three quarters of 2011 from 4.0% in the same
period in 2010. During the first three quarters of 2011,
CTG's solutions business increased 34% to $107.4 million, or 36% of total revenue, and its
staffing business grew 15% to $188.0
million, or 64% of total revenue. European revenue
increased 13% to $50.5 million in the
first three quarters of 2011 and represented 17% of total revenue.
On a year-to-date basis, headcount increased 300, or 9%, to
3,700 since year-end 2010.
Selling, general, and administrative expenses for the first
three quarters of 2011 were $47.6
million, or 16.1% of revenue, compared with $42.4 million, or 17.4% of revenue, in the same
2010 period.
Stock Repurchase Program
CTG repurchased 187,000 of its shares in the 2011 third quarter
at an average price of $11.33 per
share. In October 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
October 24, 2011, approximately 0.9
million shares were available under its current repurchase
authorizations.
2011 Revenue and Earnings Guidance
The Company is providing guidance for the 2011 fourth quarter.
CTG expects its 2011 fourth quarter revenue to range from
$100 million to $102 million, a 16%
increase from 2010 at the midpoint of this range. The Company
projects 2011 fourth quarter net income per diluted share of
$0.18 to $0.20, a 19% increase from
2010 at the midpoint of this range. There are 63 billing days
in the 2011 fourth quarter compared with 62 days in the 2010 fourth
quarter.
Based on year-to-date results and trends in its business, the
Company tightened the ranges of revenue and earnings guidance for
the full year with the midpoint of guidance for both revenue and
earnings increased. Guidance for 2011 revenue was moved
higher to $395 million to $397
million from $390 million to $396
million, a 19% increase from 2010 at the midpoint of the
range. Guidance for 2011 net income per diluted share was
tightened to $0.70 to $0.72 from
$0.67 to $0.73, a 37% increase from
2010 at the midpoint of the range. A tax rate of
approximately 37% is projected for 2011.
Mr. Boldt commented, "CTG is firmly on track for another year of
robust double-digit revenue and earnings growth. We look for
the fourth quarter to be our most profitable of the year as our new
larger EMR projects ramp up and as we continue to market our new
data analytics solutions. While EMR projects will be a major
contributor to revenue for several years, we expect work supporting
the conversion from ICD-9 to ICD-10, the new U.S. standard for
diagnostic codes and healthcare billing codes, to become a
significant revenue growth opportunity for the next two years as
providers and payers must make the switch to ICD-10 by the
federally mandated deadline of October 1,
2013. We are currently in discussions about ICD-10
conversion support with several clients where CTG has also
successfully performed EMR work."
Mr. Boldt concluded, "The significant growth in CTG's margins
and earnings over the last five years underscores the benefit of
growing our healthcare business. Looking ahead, healthcare
clearly remains the best place to be focusing CTG's growth efforts
and investments on. At 17% of the current U.S. GDP and
growing, healthcare is a significant part of the economy that is
also far less vulnerable than most other domestic industries to
economic downturns. Additionally, healthcare reform and the
new federal mandates covering the healthcare industry are all
requiring significant technology expenditures and investments.
As an established and respected leader in healthcare IT with
significant implementation experience and expertise, along with
proprietary medical informatics solutions that support lower costs
and better patient outcomes, CTG is in a very strong position to
continue capitalizing on the growth in demand for healthcare IT
support."
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 has
approximately 3,700 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 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, October
25, 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. and ask for the
CTG conference call. A replay of the call will be available
between 12:00 p.m. Eastern Time
October 25, 2011 and 11:00 p.m. Eastern Time October 28, 2011 by dialing 1-800-475-6701 and
entering the conference ID number 175415.
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
|
|
For the
Three
Quarters Ended
|
|
|
|
Sept.
30,
2011
|
|
|
Oct.
1,
2010
|
|
|
Sept.
30,
2011
|
|
|
Oct.
1,
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
101,119
|
|
$
|
84,463
|
|
$
|
295,355
|
|
$
|
244,094
|
|
Direct costs
|
|
80,152
|
|
|
67,189
|
|
|
233,858
|
|
|
192,020
|
|
Selling, general and
administrative expenses
|
|
16,391
|
|
|
14,157
|
|
|
47,645
|
|
|
42,379
|
|
Operating income
|
|
4,576
|
|
|
3,117
|
|
|
13,852
|
|
|
9,695
|
|
Other income (expense),
net
|
|
50
|
|
|
(41)
|
|
|
(35)
|
|
|
(159)
|
|
Income before income
taxes
|
|
4,626
|
|
|
3,076
|
|
|
13,817
|
|
|
9,536
|
|
Provision for income
taxes
|
|
1,635
|
|
|
1,049
|
|
|
5,168
|
|
|
3,818
|
|
Net income
|
$
|
2,991
|
|
$
|
2,027
|
|
$
|
8,649
|
|
$
|
5,718
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.20
|
|
$
|
0.14
|
|
$
|
0.58
|
|
$
|
0.39
|
|
Diluted
|
$
|
0.18
|
|
$
|
0.13
|
|
$
|
0.52
|
|
$
|
0.36
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
15,072
|
|
|
14,666
|
|
|
14,963
|
|
|
14,705
|
|
Diluted
|
|
16,723
|
|
|
15,904
|
|
|
16,747
|
|
|
16,002
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMPUTER
TASK GROUP, INCORPORATED (CTG)
Condensed
Consolidated Balance Sheets
(Unaudited)
(amounts in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sept.
30,
2011
|
|
|
Oct.
1,
2010
|
|
|
Sept.
30,
2011
|
|
|
Oct.
1,
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
12,641
|
|
$
|
9,814
|
Accounts payable
|
$
|
7,968
|
|
$
|
7,718
|
|
Accounts receivable,
net
|
|
68,254
|
|
|
56,960
|
Accrued compensation
|
|
29,827
|
|
|
26,720
|
|
Other current assets
|
|
3,382
|
|
|
3,748
|
Other current
liabilities
|
|
5,078
|
|
|
5,611
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Current Assets
|
|
84,277
|
|
|
70,522
|
Total Current
Liabilities
|
|
42,873
|
|
|
40,049
|
|
Property and equipment,
net
|
|
8,367
|
|
|
8,457
|
Long-term debt
|
|
-
|
|
|
-
|
|
Goodwill
|
|
35,678
|
|
|
35,678
|
Other liabilities
|
|
9,801
|
|
|
9,432
|
|
Other assets
|
|
11,630
|
|
|
11,002
|
Shareholders' equity
|
|
87,278
|
|
|
76,178
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
$
|
139,952
|
|
$
|
125,659
|
Total Liabilities
and
Shareholders'
Equity
|
$
|
139,952
|
|
$
|
125,659
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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