BUFFALO, N.Y., Feb. 21, 2012 /PRNewswire/ -- CTG (NASDAQ: CTGX),
an information technology (IT) solutions and services company,
announced its financial results for the 2011 fourth quarter and
full year which ended on December 31,
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 and earnings in the 2011 fourth quarter and full
year.
2011 Fourth Quarter Review
Revenue, operating income, net income, and diluted net income
per share for the 2011 fourth quarter as compared with the 2010
fourth quarter are as follows (dollar amounts in thousands except
per share data):
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Dec. 31,
2011
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Dec.
31,
2010
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$
Change
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%
Change
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|
|
|
|
|
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Revenue
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$
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100,920
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$
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87,313
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$
|
13,607
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15.6%
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Operating income
|
$
|
5,458
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$
|
4,235
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$
|
1,223
|
|
|
28.9%
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Net income
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$
|
3,289
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$
|
2,654
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$
|
635
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23.9%
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|
Diluted net income per
share
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$
|
0.20
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|
$
|
0.16
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|
$
|
0.04
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|
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25.0%
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The Company's operating margin expanded by 50 basis points to
5.4% from 4.9% in the 2010 fourth quarter.
"We are very pleased to end an excellent year with quarterly
margins and earnings at the high point of the year, an excellent
indicator of the increasing profitability of our business," said
CTG Chairman and Chief Executive Officer James R. Boldt. "In the fourth quarter,
CTG's operating margin exceeded 5% and the solutions business
reached 40% of revenue, important milestones for these two key
profitability metrics. Our healthcare business led the way in
these improvements increasing by 33% in the quarter to 31% of
revenue, its highest level ever. Revenue, margins, and earnings for
the year were the highest in over a decade."
Mr. Boldt continued, "Electronic medical records (EMR) projects
continue to be the major contributor to the growth of our
healthcare business with EMR revenue up 33% from the 2010 fourth
quarter and 36% for the full year. We finished the year
working on 18 EMR projects up from 17 at the end of the 2011 third
quarter. While we completed work on several EMR engagements
in 2011, the projects we are bringing on are significantly larger
than those rolling off. Several large multi-year transitional
application management engagements were also awarded to CTG in
2011, and we will see the full impact of this new business in
2012."
Solutions revenue in the 2011 fourth quarter increased by
$9.4 million or 30% to $40.5 million, representing 40% of total revenue
compared with 36% in the 2010 fourth quarter. Staffing
revenue increased by $4.2 million or
8.0% to $60.4 million, or 60% of
total revenue, compared with 64% in the 2010 fourth quarter.
European revenue was $16.5
million, or 16.4% of total revenue, in the 2011 fourth
quarter, a $0.6 million increase from
$15.9 million, or 18.2% of total
revenue, in the 2010 fourth quarter. Foreign currency
exchange fluctuations had a $0.1
million unfavorable effect on revenue in the quarter
compared with the 2010 fourth quarter. There were 63 billing
days in the fourth quarter of 2011 and 62 billing days in the
fourth quarter of 2010.
Selling, general, and administrative (SG&A) expenses were
$17.3 million or 17.2% of revenue,
compared with $14.9 million or 17.1%
of revenue in the 2010 fourth quarter.
Cash provided from operations was $10.2
million in the 2011 fourth quarter, compared with cash
provided from operations of $6.6
million in the 2010 fourth quarter. At December 31, 2011, the Company had $22.4 million in cash compared with $14.8 million at the end of the 2010 fourth
quarter. The Company had no outstanding debt at the end of
the 2011 and 2010 fourth quarters.
During the 2011 fourth quarter, the Company executed a new
three-year agreement with IBM to remain a primary supplier under
its National Technical Services program. The Company expects
that it will continue to derive a significant portion of its future
revenue from IBM.
2011 Full Year Review
Results for the 2011 full year reflect the same trends seen in
the fourth quarter.
Revenue, operating income, net income, and diluted net income
per share for 2011 as compared with 2010 were as follows (dollar
amounts in thousands except per share data):
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2011
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2010
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$
Change
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%
Change
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Revenue
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$
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396,275
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$
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331,407
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$
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64,868
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19.6%
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Operating income
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$
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19,310
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$
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13,930
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$
|
5,380
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38.6%
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Net income
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$
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11,938
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$
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8,372
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$
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3,566
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42.6%
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Diluted net income per
share
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$
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0.71
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$
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0.52
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$
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0.19
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36.5%
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The Company's operating margin in 2011 expanded by 70 basis
points to 4.9% from 4.2% in 2010. In 2011, CTG's solutions
business increased 33% to $148.3
million, or 37% of total revenue, and its staffing business
grew 13% to $248.0 million, or 63% of
total revenue. European revenue increased 10.3% in 2011 to
$67.0 million and represented 17% of
total revenue. Foreign currency exchange fluctuations had a
$3.0 million favorable effect on
revenue in 2011 compared with 2010. At December 31, 2011, headcount was 3,700, an
increase of 300, or 9%, from 3,400 at year-end 2010.
Selling, general, and administrative expenses were $65.0 million, or 16.4% of revenue, compared with
$57.3 million, or 17.3% of revenue,
in 2010. In 2011, CTG recorded $2.3
million in depreciation and $1.9
million for capital expenditures.
Stock Repurchase Program
CTG repurchased 27,000 of its shares in the 2011 fourth quarter
at an average price of $11.08 per
share. In 2011, the Company repurchased 308,000 shares at an
average price of $11.65 per share.
In January 2012, 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
December 31, 2011, approximately 0.9
million shares were available under its current repurchase
authorizations.
2012 Guidance
CTG is issuing initial guidance for 2012 based on its current
business activity and forecast, and assuming that growth in its
healthcare business will continue to grow as demand for EMR support
and other healthcare consulting services increases and that its
U.S. staffing business will continue to grow but at a lower rate
than 2011. The guidance provided in the tables below reflects
these current assumptions.
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2012 First Quarter
(64 billing days vs. 65 in Q1
2011)
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Range
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Range midpoint
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Change from 2011
first
quarter at range
midpoint
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Revenue
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$102-$104 million
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$103 million
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+ 7.4%
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Diluted net income per
share
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$0.19 - $0.21
|
$0.20
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+ 17.6%
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2012 Full Year
(Projected tax rate of 38% to
40%)
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Range
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Range midpoint
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Change from 2011
at range midpoint
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Revenue
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$425-$435 million
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$430 million
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+ 8.5%
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Diluted net income per share
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$0.81 - $0.91
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$0.86
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+ 21.1%
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Mr. Boldt commented, "We have excellent momentum going into 2012
with demand rising for EMR implementation support. Based on
our pipeline and the RFPs we are currently responding to, we expect
the trend for larger EMR projects we saw in 2011 to continue.
As an established industry leader in healthcare IT with
significant EMR experience and expertise and proprietary data
analytics solutions, there are multiple future opportunities to
grow our healthcare business including EMR implementation and
optimization, ICD-10 compliance, accountable care support, and
medical informatics."
He added, "When we implemented our vertical market strategy a
decade ago, we chose technology services, financial services,
energy, and healthcare as our four major industries. That
decision has served CTG well with growth rates in revenue,
earnings, and shareholder returns significantly above the IT
solutions and services sector over the last ten years. With
healthcare now being one of the largest and fastest growing U.S.
industries, it is the lead industry we are focusing our growth
efforts on."
Mr. Boldt concluded, "Going forward, we expect further growth in
our higher margin solutions business primarily from healthcare
projects and that growth in our lower margin staffing business will
moderate. Accordingly, we are looking for CTG's earnings
growth rates to continue to accelerate faster than our revenue
growth rates. The many opportunities in the healthcare market
and the progress we made this year increasing the mix of solutions
business and expanding operating margins make us confident that our
goals to reach operating margins in the 6% to 7% range and a
revenue mix of 50% staffing/50% solutions are achievable."
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, February
21, 2012 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 1-888-276-0010 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
February 21, 2012 and 11:00 p.m. Eastern Time February 24, 2012 by dialing 1-800-475-6701 and
entering the conference ID number 221718.
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.
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COMPUTER
TASK GROUP, INCORPORATED (CTG)
Condensed
Consolidated Statements of Income
(Unaudited)
(amounts in
thousands except per share data)
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For the Quarter Ended
|
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For the Year
Ended
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Dec.
31,
2011
|
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Dec.
31,
2010
|
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|
Dec.
31,
2011
|
|
|
Dec.
31,
2010
|
|
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|
|
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|
|
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|
Revenue
|
$
|
100,920
|
|
$
|
87,313
|
|
$
|
396,275
|
|
$
|
331,407
|
|
Direct costs
|
|
78,126
|
|
|
68,152
|
|
|
311,984
|
|
|
260,172
|
|
Selling, general and
administrative expenses
|
|
17,336
|
|
|
14,926
|
|
|
64,981
|
|
|
57,305
|
|
Operating income
|
|
5,458
|
|
|
4,235
|
|
|
19,310
|
|
|
13,930
|
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Other expense, net
|
|
152
|
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|
2
|
|
|
187
|
|
|
161
|
|
Income before income
taxes
|
|
5,306
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|
4,233
|
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|
19,123
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|
13,769
|
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Provision for income
taxes
|
|
2,017
|
|
|
1,579
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|
7,185
|
|
|
5,397
|
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Net income
|
$
|
3,289
|
|
$
|
2,654
|
|
$
|
11,938
|
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$
|
8,372
|
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Net income per share:
|
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Basic
|
$
|
0.22
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$
|
0.18
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$
|
0.80
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$
|
0.57
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Diluted
|
$
|
0.20
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|
$
|
0.16
|
|
$
|
0.71
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$
|
0.52
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Weighted average shares
outstanding:
|
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Basic
|
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14,983
|
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|
14,674
|
|
|
14,968
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|
|
14,697
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Diluted
|
|
16,685
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|
16,287
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16,731
|
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|
16,073
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|
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|
|
COMPUTER
TASK GROUP, INCORPORATED (CTG)
Condensed
Consolidated Balance Sheets
(Unaudited)
(amounts in
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dec.
31,
2011
|
|
|
Dec.
31,
2010
|
|
|
Dec.
31,
2011
|
|
|
Dec.
31,
2010
|
|
|
|
|
|
|
|
|
|
|
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|
|
Current Assets:
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
22,414
|
|
$
|
14,837
|
Accounts payable
|
$
|
9,532
|
|
$
|
6,595
|
|
Accounts receivable,
net
|
|
67,801
|
|
|
57,540
|
Accrued compensation
|
|
30,971
|
|
|
29,646
|
|
Other current assets
|
|
3,097
|
|
|
3,102
|
Other current
liabilities
|
|
7,423
|
|
|
6,193
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Current Assets
|
|
93,312
|
|
|
75,479
|
Total Current
Liabilities
|
|
47,926
|
|
|
42,434
|
|
Property and equipment,
net
|
|
7,969
|
|
|
8,364
|
Long-term debt
|
|
-
|
|
|
-
|
|
Goodwill
|
|
35,678
|
|
|
35,678
|
Other liabilities
|
|
10,761
|
|
|
9,919
|
|
Other assets
|
|
10,533
|
|
|
10,752
|
Shareholders' equity
|
|
88,805
|
|
|
77,920
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
$
|
147,492
|
|
$
|
130,273
|
Total Liabilities
and
Shareholders'
Equity
|
$
|
147,492
|
|
$
|
130,273
|
|
|
|
|
|
|
|
|
|
|
|
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|
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