EPS IS AT HIGH END OF GUIDANCE - Operating margin expands 40 basis
points from 2009 first quarter to 3.6% - Healthcare business was
25% of revenue - Electronic medical records proposal activity
accelerating - Demand for staffing Services stabilized during the
quarter - Strong balance sheet with $14.7 million in cash and no
debt at quarter-end BUFFALO, N.Y., July 28 /PRNewswire-FirstCall/
-- CTG (NASDAQ:CTGX), an international information technology (IT)
solutions and services company, today announced its financial
results for the 2009 second quarter which ended on July 3, 2009. In
the 2009 second quarter, new solutions work with higher margins and
disciplined cost management reduced the impact of lower revenue on
CTG's earnings and operating margin. CTG reported 2009 second
quarter revenue of $66.6 million, a 29% decrease from 2008 second
quarter revenue of $94.1 million. CTG's operating income declined
to $2.4 million from $4.0 million a year ago while its operating
margin contracted to 3.6% from 4.2% in the 2008 second quarter. The
Company's 2009 second quarter operating margin expanded 40 basis
points from 3.2% in the 2009 first quarter. CTG's net income was
$1.4 million, 32% less than 2008 second quarter net income of $2.1
million. On a per diluted share basis, net income was $0.09, a 31%
decrease from $0.13 in the 2008 second quarter and flat compared
with the 2009 first quarter. "Higher margins on new solutions
business in 2009 and effective expense control enabled us to
achieve earnings at the high end of our guidance," CTG Chairman and
Chief Executive Officer James R. Boldt said. "These factors also
helped limit the contraction of our operating margin from last
year--which was the highest in almost ten years--while driving
margin expansion from this year's first quarter. Demand for
staffing resources stabilized during the quarter while proposal
activity for electronic medical records (EMR) work increased." Mr.
Boldt continued, "Demand for EMR support is growing rapidly as the
recently issued American Recovery and Reinvestment Act (ARRA)
guidelines make it most advantageous financially for providers to
implement EMRs that fit ARRA criteria by 2011. We are starting up
new EMR implementation engagements now and expect to start up more
engagements as the year progresses. CTG is also one of a small
number of firms with experience supporting the formation of a
communitywide EMR system within a regional health information
organization. CTG's significant EMR experience, consistently high
ratings from KLAS, and an attractive pricing structure give us a
competitive advantage to capitalize on the substantial and
expanding EMR opportunity." 2009 Second Quarter Review Solutions
revenue in the 2009 second quarter decreased by $8.8 million, or
28%, to $23.1 million, or 35% of total revenue, compared with 34%
in the 2008 second quarter. Staffing revenue declined by $18.7
million, or 30%, to $43.5 million, or 65% of total revenue, with
managed staffing services the primary contributor to revenue from
this business. European revenue was $15.0 million, or 23% of total
revenue, in the 2009 second quarter, down 30% from the prior year
second quarter. There were 63 billing days in the 2009 second
quarter compared with 64 billing days in the 2008 second quarter.
Selling, general, and administrative (SG&A) expenses were $12.5
million, or 18.8% of revenue, compared with $17.7 million, or 18.8%
of revenue, in the 2008 second quarter. The reduction in expenses
and consistency in SG&A as a percentage of revenue reflect the
Company's ability to quickly align costs with revenue as market
demand declined given the weakness in the global economy. The
Company recorded equity-based compensation expense, net of tax, of
$0.2 million in both the 2009 and 2008 second quarters, which
reduced net income per diluted share by $0.01 in each of the
respective quarters. The Company's effective tax rate for the 2009
second quarter was 42%. It continues to project a tax rate of
approximately 42% for the 2009 full year. The Company provided cash
from operations of $6.8 million in the 2009 second quarter compared
with cash used in operations of $0.3 million in the 2008 second
quarter. At July 3, 2009, the Company had $14.7 million in cash and
no outstanding debt, compared with $4.3 million in cash and $3.8
million in debt at the 2008 second quarter-end. CTG finances its
working capital needs through a $35 million revolving credit
agreement that is in place through April 2011. Mr. Boldt commented,
"The strength of CTG's cash flow and balance sheet is notable in
the current economic environment. Our client base is primarily
comprised of Fortune 1000 companies and large financially strong
hospital systems and health insurers, which is reflected in our
stable DSOs. At quarter-end, we were again debt-free and our cash
position at nearly $15 million is more than triple a year ago
despite significant investments in solutions development and the
repurchase of over one million shares of CTG stock in the last
twelve months." 2009 First Half Review CTG's revenue in the first
half of 2009 decreased 22%, or $39.7 million, to $141.1 million
compared with 2008 first half revenue of $180.8 million. Operating
income was $4.8 million, 24% lower than 2008 first half operating
income of $6.4 million. CTG's net income was $2.7 million, a 22%
decrease from 2008 first half net income of $3.5 million. On a per
diluted share basis, 2009 first half net income per share was
$0.18, 18% lower than $0.22 in 2008. During the first half of 2009,
CTG's solutions business decreased 24% to $46.5 million, or 33% of
total revenue, and its staffing business declined 21% to $94.6
million, or 67% of total revenue. European revenue decreased 19% in
the 2009 first half and represented 23% of consolidated revenue.
Selling, general, and administrative expenses were $26.8 million,
or 19.0% of revenue, compared with $34.0 million, or 18.8% of
revenue, in the 2008 first half. Lower revenue and earnings in the
2009 first half reflect the impact of the global recession on CTG's
business which was partially offset by effective cost control and
higher margins on new solutions work. Stock Repurchase Program CTG
repurchased approximately 213,000 of its shares in the 2009 second
quarter at an average price of $5.25 per share. In June 2009, 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 3,
2009, approximately 0.9 million shares were available for
repurchase by the Company under its current repurchase
authorizations. Third Quarter and Annual Guidance Based on the
Company's current business activity and pipeline, CTG expects its
2009 third quarter revenue to range from $66 million to $68
million, a 25% decrease from 2008 at the midpoint of this range.
The Company projects 2009 third quarter net income per diluted
share of $0.07 to $0.09, a 38% decrease from 2008 at the midpoint
of this range. There are 64 billing days in the 2009 third quarter
compared with 63 billing days in the 2008 third quarter. The
Company's current revenue forecast for the full year ranges from
$275 million to $285 million, a 21% decrease from 2008 at the
midpoint of this range. CTG 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
fourth quarter exchange gain is excluded. Mr. Boldt commented,
"While the recession continues to have a significant impact on
external IT spending, the strength of our healthcare business and
prudent expense control is reducing part of its effect on CTG.
Although the tight credit markets have decreased demand in our
solutions business, particularly from the healthcare provider
market, we are encouraged that access to financing is beginning to
open up for EMR projects. A continuation of that trend and the
recent stability in our staffing business would have a favorable
impact on our financial results going forward." CTG Added to
Russell 3000 Index and Named to the Healthcare Informatics 100
After the close of trading on June 26, 2009, CTG was added to the
Russell 3000 Index and Russell 2000 Index as part of the annual
reconstitution of the indices. The Russell 3000 Index measures the
stock performance of the largest 3,000 U.S. companies, based on
total market capitalization, while the Russell 2000 Index is a
subset of the Russell 3000 Index and includes the smallest 2,000
companies included in that index. As one of the 1,000 smallest
companies in the Russell 2000 Index, CTG is also included in the
Russell Microcap Index. In June 2009, CTG was named by Healthcare
Informatics to its annual ranking of the largest healthcare IT
providers, the Healthcare Informatics 100 (HCI 100). In the
consulting category, CTG was ranked eighth by HCI in consulting
revenues to the provider market. Mr. Boldt commented, "Our addition
to the Russell indices increases CTG's profile with the investment
community at a time when we are focused on growing our strong
healthcare IT business and capitalizing on our significant EMR
experience. Being named again to the HCI 100 further increases our
visibility as a leader in healthcare IT." Positioned to Weather the
Recession and Benefit from a Recovery Mr. Boldt concluded, "Looking
ahead, we are encouraged by the stabilizing demand in our staffing
business, and with the margins on new solutions. The federal
stimulus package is now just beginning to expand EMR work, aligning
well with our strategy to build on our position as a leading
provider of healthcare IT. Overall, the relative strength of our
business--particularly our healthcare business--combined with
consistent profitability and financial strength, put CTG in an
excellent position to continue weathering this major recession and
to benefit significantly from the opportunities of economic
recovery." 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 2,700 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 2008 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 on
Wednesday July 29, 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,
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 29, 2009 and 11:00 p.m.
Eastern Time August 1, 2009 by dialing 1-800-475-6701 and entering
the conference ID number 978257. 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 For the Two Quarter Ended Quarters Ended July 3, June 27, July
3, June 27, 2009 2008 2009 2008 ---- ---- ---- ---- Revenue $66,580
$94,071 $141,136 $180,754 Direct costs 51,628 72,425 109,464
140,366 Selling, general and administrative expenses 12,528 17,658
26,841 34,018 ------ ------ ------ ------ Operating income 2,424
3,988 4,831 6,370 Other expense, net (29) (69) (180) (117) --- ---
---- ---- Income before income taxes 2,395 3,919 4,651 6,253
Provision for income taxes 1,000 1,869 1,954 2,799 ----- -----
----- ----- Net income $1,395 $2,050 $2,697 $3,454 ====== ======
====== ====== Net income per share: Basic $0.09 $0.13 $0.18 $0.22
===== ===== ===== ===== Diluted $0.09 $0.13 $0.18 $0.22 ===== =====
===== ===== Weighted average shares outstanding: Basic 14,874
15,387 14,908 15,460 Diluted 15,373 15,914 15,210 15,923 COMPUTER
TASK GROUP, INCORPORATED (CTG) Condensed Consolidated Balance
Sheets (Unaudited) (amounts in thousands) July 3, June 27, 2009
2008 ---- ---- Current Assets: Cash and cash equivalents $14,694
$4,285 Accounts receivable, net 42,612 61,188 Other current assets
3,947 5,100 ----- ----- Total Current Assets 61,253 70,573 Property
and equipment, net 7,430 6,585 Goodwill 35,678 35,678 Other assets
9,581 9,655 ----- ----- Total Assets $113,942 $122,491 ========
======== July 3, June 27, 2009 2008 ---- ---- Current Liabilities:
Accounts payable $7,499 $11,077 Accrued compensation 22,742 23,309
Other current liabilities 5,150 7,221 ----- ----- Total Current
Liabilities 35,391 41,607 Long-term debt - 3,790 Other liabilities
8,812 9,255 Shareholders' equity 69,739 67,839 ------ ------ Total
Liabilities and Shareholders' Equity $113,942 $122,491 ========
======== 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 Web Site: http://www.ctg.com/
Copyright