BUFFALO, N.Y., July 23, 2012 /PRNewswire/ --
- Excluding the one-time gain from insurance proceeds, net
income per diluted share for the 2012 second quarter would have
been $0.22, 29% higher than the 2011
second quarter
- Earnings and margin growth driven by 25% growth in
healthcare revenue to 33% of total revenue up from 29% in
second quarter 2011
- Operating income up 31% and operating margin increased 100
basis points to 5.8%
- Solutions revenue increased 23% to 42% of total revenue up
from 37% in second quarter 2011
- Headcount Increased by 100 to 3,800
CTG (NASDAQ: CTGX), an information technology (IT) solutions and
services company, announced its financial results for the 2012
second quarter which ended on June
29, 2012. The ramp-up of new healthcare projects, the
expansion of larger multi-project healthcare engagements, operating
leverage from revenue growth, and increased billable headcount were
the primary contributors to the strength of 2012 second quarter
financial results. Diluted net income per share for the 2012
second quarter included one-time proceeds of $0.4 million, included in other income, from life
insurance proceeds paid to the Company upon the death of CTG
co-founder and director Randolph A.
Marks. Excluding this non-recurring gain, net income
per diluted share for the 2012 second quarter would have been
$0.22, 29% higher than the 2011
second quarter.
2012 Second Quarter Review
Revenue, operating income, net income, and diluted net income
per share for the 2012 second quarter as compared with the 2011
second quarter were as follows (dollar amounts in thousands except
per-share data):
|
|
June
29, 2012
|
|
|
July 1, 2011
|
|
|
$
Change
|
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
106,705
|
|
$
|
98,327
|
|
$
|
8,378
|
|
|
9%
|
Operating
income
|
$
|
6,143
|
|
$
|
4,677
|
|
$
|
1,466
|
|
|
31%
|
Net
income
|
$
|
4,123
|
|
$
|
2,830
|
|
$
|
1,293
|
|
|
46%
|
Diluted
net income per share
|
$
|
0.25
|
|
$
|
0.17
|
|
$
|
0.08
|
|
|
47%
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company's operating margin improved by 100 basis points to
5.8% from 4.8% in the 2011 second quarter.
"CTG's second quarter results were strong across the board with
revenue, operating income and margin, and earnings per share all
making significant gains over last year," said CTG Chairman and
Chief Executive Officer James R.
Boldt. "Our healthcare division, which is CTG's most
profitable business unit, continues to perform very well with a 25%
increase in revenue in the quarter to one-third of the Company's
total revenue. Increased healthcare revenue is the primary
contributor to the favorable shift in CTG's business mix to a
higher level of solutions revenue which is driving margin expansion
and earnings growth. For the third consecutive quarter,
solutions work was at least 40 percent of revenue and our operating
margin was above five percent. It is noteworthy that the
quarter's one-time gain was included in other income and
accordingly was not used in calculating operating income and margin
which increased from last year's second quarter by 31% and 100
basis points, respectively."
Mr. Boldt added, "Our success in steadily growing our healthcare
business is reflected in CTG not only being named again to the
Healthcare Informatics HCI 100 list of the largest
healthcare IT vendors but in our moving up 10 places on the list in
the last two years. Recent growth in our healthcare business
is coming from diverse sources on the provider and payer sides of
the business and includes EMR and other system implementations,
application management outsourcing, and consulting work. We
continue to benefit from the ramp-up and expansion of large EMR
projects won last year with a 30% increase in EMR revenue in the
second quarter to 52% of healthcare revenue and 17% of total
revenue in the quarter. At quarter end, we were working on 18
large EMR projects and two proposals, previously bid on, are
awaiting client decisions."
Solutions revenue in the 2012 second quarter increased by
$8.4 million or 23% to $44.3 million, representing 42% of total revenue
compared with 37% in the 2011 second quarter. Staffing
revenue was consistent year-over-year at $62.4 million, or 58% of total revenue, compared
with 63% in the 2011 second quarter. European revenue
decreased by 3.3% to $16.8 million,
or 16% of total revenue, compared with $17.3
million, or 18% of total revenue, in the 2011 second
quarter. Foreign currency exchange fluctuations had a
$1.9 million unfavorable effect on
revenue in the quarter compared with the 2011 second quarter.
As a leading Belgian provider of IT services based in Brussels, the location of most European Union
(EU) operations, CTG Europe continues to benefit from growth in EU
spending on external IT support that is offsetting lower corporate
IT spending and negative movement in foreign currency
exchange. There were 64 billing days in the second quarter of
2012 and 2011.
Selling, general, and administrative (SG&A) expenses were
$16.8 million or 15.7% of revenue,
compared with $16.1 million or 16.3%
of revenue in the 2011 second quarter.
Cash provided by operations was $6.0
million in the 2012 second quarter compared with cash
provided by operations of $2.8
million in the 2011 second quarter. At June 29, 2012, the Company had $23.6 million in cash compared with $13.0 million at the end of the 2011 second
quarter. The Company had no outstanding debt at the end of
the 2012 and 2011 second quarters.
The Company's tax rate for the quarter was 36.8%. The
lower than expected tax rate for the 2012 second quarter reflects
the effect of the non-taxable life insurance proceeds that were
received in the quarter.
2012 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 2012 first half as
compared with the 2011 first half are as follows (dollar amounts in
thousands except per share data):
|
|
June
29, 2012
|
|
|
July 1, 2011
|
|
|
$
Change
|
|
|
%
Change
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
210,072
|
|
$
|
194,236
|
|
$
|
15,836
|
|
|
8%
|
Operating
income
|
$
|
11,742
|
|
$
|
9,276
|
|
$
|
2,466
|
|
|
27%
|
Net
income
|
$
|
7,483
|
|
$
|
5,658
|
|
$
|
1,825
|
|
|
32%
|
Diluted
net income per share
|
$
|
0.45
|
|
$
|
0.34
|
|
$
|
0.11
|
|
|
32%
|
The Company's operating margin increased by 80 basis points to
5.6% in the 2012 first half from 4.8% in the 2011 first half.
During the first half of 2012, CTG's solutions business increased
23% to $85.4 million, or 41% of total
revenue, and its staffing business was consistent at $124.7 million, or 59% of total revenue.
European revenue decreased 1.4% to $33.9
million in the 2012 first half and represented 16% of total
revenue.
Selling, general, and administrative expenses were $33.0 million, or 15.7% of revenue, compared with
$31.3 million, or 16.1% of revenue,
in the 2011 first half.
Stock Repurchase Program
CTG repurchased 204,000 of its shares in the 2012 second quarter
at an average price of $13.43 per
share. In July 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
June 29, 2012, approximately 0.6
million shares were available for repurchase under current
authorizations.
2012 Third Quarter and Full Year Guidance
CTG is providing guidance for the 2012 third quarter and 2012
full year in the table below. Revenue guidance for the 2012
full year remains unchanged from the guidance provided in the
Company's April 23, 2012 first
quarter earnings release while earnings guidance increased
slightly. CTG's guidance for 2012 is based on its current
business activity and forecast, and assumes that growth in its
healthcare business will continue as demand for EMR support and
other healthcare consulting services increases and that its
staffing business will remain relatively stable in 2012.
2012
Third Quarter (63 billing days
vs. 63 in Q3 2011)
|
Range
|
Range
midpoint
|
Change
from 2011 third
quarter
at range midpoint
|
|
|
|
|
Revenue
|
$105-$107
million
|
$106
million
|
+
4.8%
|
Diluted
net income per share
|
$0.21 -
$0.23
|
$0.22
|
+
22.2%
|
|
|
|
|
2012
Full Year (Projected tax rate
of 38% to 40%)
|
Range
|
Range
midpoint
|
Change
from 2011
at
range midpoint
|
|
|
|
|
Revenue
|
$420-$430
million
|
$425
million
|
+
7.2%
|
Diluted
net income per share before
one-time gain of 2½
cents
|
$0.83 -
$0.91
|
$0.87
|
+
22.5%
|
Mr. Boldt commented, "At mid-year, CTG is firmly on track for
another year of double-digit earnings growth, our sixth in the last
seven years. We are slightly ahead of our guidance for the first
half of 2012 and visibility for the rest of this year is
favorable. Reflecting trends in the market, demand in our
staffing business is modestly above our expectations at the start
of the year. In the last month, we moved several new large
healthcare projects from our pipeline to billable work. While
competition for healthcare IT technical resources remains strong
and a challenge for all healthcare IT providers, we are still
achieving robust growth in revenue from our healthcare
business."
Mr. Boldt concluded, "Looking ahead, more healthcare
organizations are permanently outsourcing some existing
applications in addition to the transitional outsourcing of
outgoing applications. We recently announced a large
healthcare application management contract that includes both
transitional and permanent outsourcing of multiple applications,
and expect more of this lucrative work going forward. A
significant new contract for our IT medical management model is
indicative of growing market interest in medical analytics tools
that support better and lower cost healthcare. Our business
supporting the health insurance market is increasing.
Overall, we are confident that the many growth opportunities in our
healthcare business will continue to drive increases in higher
margin solutions revenue and keep us steadily moving toward our
goal of operating margins between six and seven percent."
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 over 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 3,800 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 2011 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 24,
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 July 24, 2012 and
11:00 p.m. Eastern Time July 27, 2012 by dialing 1-800-475-6701 and
entering the conference ID number 221720.
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
Two
Quarters Ended
|
|
|
|
June
29,
|
|
July
1,
|
|
June
29,
|
|
July
1,
|
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
106,705
|
|
$
|
98,327
|
|
$
|
210,072
|
|
$
|
194,236
|
Direct
costs
|
|
|
83,810
|
|
|
77,594
|
|
|
165,325
|
|
|
153,706
|
Selling,
general and administrative expenses
|
|
16,752
|
|
|
16,056
|
|
|
33,005
|
|
|
31,254
|
Operating
income
|
|
|
6,143
|
|
|
4,677
|
|
|
11,742
|
|
|
9,276
|
Other
income (expense), net
|
|
|
384
|
|
|
(48)
|
|
|
334
|
|
|
(85)
|
Income
before income taxes
|
|
|
6,527
|
|
|
4,629
|
|
|
12,076
|
|
|
9,191
|
Provision
for income taxes
|
|
|
2,404
|
|
|
1,799
|
|
|
4,593
|
|
|
3,533
|
Net
income
|
|
$
|
4,123
|
|
$
|
2,830
|
|
$
|
7,483
|
|
$
|
5,658
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.27
|
|
$
|
0.19
|
|
$
|
0.49
|
|
$
|
0.38
|
|
Diluted
|
|
$
|
0.25
|
|
$
|
0.17
|
|
$
|
0.45
|
|
$
|
0.34
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
15,123
|
|
|
15,050
|
|
|
15,147
|
|
|
14,909
|
|
Diluted
|
|
|
16,747
|
|
|
16,864
|
|
|
16,810
|
|
|
16,759
|
COMPUTER TASK GROUP, INCORPORATED (CTG)
|
Condensed
Consolidated Balance Sheets
|
(Unaudited)
|
(amounts in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
June
29,
|
|
December 31,
|
|
July
1,
|
|
|
|
2012
|
|
2011
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
|
|
|
|
|
Cash and
cash equivalents
|
|
$
|
23,624
|
|
$
|
22,414
|
|
$
|
13,002
|
|
Accounts
receivable, net
|
|
|
71,928
|
|
|
67,801
|
|
|
66,766
|
|
Other
current assets
|
|
|
3,336
|
|
|
3,097
|
|
|
4,119
|
Total
current assets
|
|
|
98,888
|
|
|
93,312
|
|
|
83,887
|
|
|
|
|
|
|
|
|
|
|
|
|
Property
and equipment, net
|
|
|
7,249
|
|
|
7,969
|
|
|
8,641
|
|
Goodwill
|
|
|
35,678
|
|
|
35,678
|
|
|
35,678
|
|
Other
assets
|
|
|
12,040
|
|
|
10,533
|
|
|
12,610
|
|
|
|
|
|
|
|
|
|
|
|
Total
Assets
|
|
$
|
153,855
|
|
$
|
147,492
|
|
$
|
140,816
|
|
|
|
|
|
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
11,768
|
|
$
|
9,532
|
|
$
|
8,464
|
|
Accrued
compensation
|
|
|
30,950
|
|
|
30,971
|
|
|
30,853
|
|
Other
current liabilities
|
|
|
6,428
|
|
|
7,423
|
|
|
5,029
|
Total
current liabilities
|
|
|
49,146
|
|
|
47,926
|
|
|
44,346
|
|
|
|
|
|
|
|
|
|
|
|
|
Long-term
debt
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Other
liabilities
|
|
|
10,470
|
|
|
10,761
|
|
|
9,820
|
|
Shareholders' equity
|
|
|
94,239
|
|
|
88,805
|
|
|
86,650
|
|
|
|
|
|
|
|
|
|
|
|
Total
Liabilities and Shareholders' Equity
|
|
$
|
153,855
|
|
$
|
147,492
|
|
$
|
140,816
|
COMPUTER TASK GROUP, INCORPORATED
(CTG)
|
Condensed
Consolidated Statements of Cash Flows
|
(Unaudited)
|
(amounts in thousands)
|
|
|
|
|
|
|
|
For the
Two
Quarters Ended
|
|
|
|
June
29,
|
|
July
1,
|
|
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
7,483
|
|
$
|
5,658
|
|
Depreciation and amortization expense
|
|
|
1,304
|
|
|
978
|
|
Equity-based compensation expense
|
|
|
985
|
|
|
696
|
|
Other
operating items
|
|
|
(6,177)
|
|
|
(11,670)
|
Net cash
provided by (used in) operating activities
|
|
|
3,595
|
|
|
(4,338)
|
Net cash
used in investing activities
|
|
|
(733)
|
|
|
(1,284)
|
Net cash
provided by (used in) financing activities
|
|
|
(1,168)
|
|
|
3,062
|
Effect of
exchange rates on cash and cash equivalents
|
|
|
(484)
|
|
|
725
|
Net
increase (decrease) in cash and cash equivalents
|
|
|
1,210
|
|
|
(1,835)
|
Cash and
cash equivalents at beginning of period
|
|
|
22,414
|
|
|
14,837
|
Cash and
cash equivalents at end of period
|
|
$
|
23,624
|
|
$
|
13,002
|
CTG news releases are available on the Web at
www.ctg.com.
ctgx-e
SOURCE CTG