BUFFALO, N.Y., Feb. 19, 2013 /PRNewswire/ -- CTG (NASDAQ:
CTGX), an information technology (IT) solutions and services
company, announced its financial results for the 2012 fourth
quarter and full year which ended on December 31, 2012. The increase in higher
margin solutions work from the ramp-up of new healthcare projects
and expansion of larger healthcare engagements, the operating
leverage from revenue growth, and increased billable headcount were
the primary contributors to the strength of 2012 fourth quarter and
full year financial results.
Diluted net income per share for the 2012 fourth quarter
included proceeds of $0.8 million,
included in other income, from life insurance benefits paid to the
Company upon the death in the quarter of a former CTG senior
executive. Excluding this non-recurring gain, net income per
diluted share for the 2012 fourth quarter was $0.24, 20% higher than the 2011 fourth quarter.
The initial quarterly cash dividend of $0.05 declared by CTG's Board of Directors at its
February meeting is payable on April 1,
2013 to shareholders of record on March 22, 2013.
2012 Fourth Quarter Review
Revenue, operating income, net income, and diluted net income
per share for the 2012 fourth quarter as compared with the 2011
fourth quarter are as follows (dollar amounts in thousands except
per share data):
|
|
Dec.
31, 2012
|
|
|
Dec.
31, 2011
|
|
|
$
Change
|
|
%
Change
|
Revenue
|
$
|
107,925
|
|
$
|
100,920
|
|
$
|
7,005
|
|
7%
|
Operating
income
|
$
|
6,397
|
|
$
|
5,458
|
|
$
|
939
|
|
17%
|
Net
income
|
$
|
4,869
|
*
|
$
|
3,289
|
|
$
|
1,580
|
|
48%
|
Diluted
net income per share
|
$
|
0.29
|
*
|
$
|
0.20
|
|
$
|
0.09
|
|
45%
|
|
|
|
|
|
|
|
|
|
|
|
|
* Includes
the effect of a gain of $0.8 million, or 5 cents per diluted share,
from life insurance proceeds paid to the Company in the 2012 fourth
quarter
|
The Company's operating margin expanded by 50 basis points to
5.9% from 5.4% in the 2011 fourth quarter.
"CTG closed out another excellent year with a very strong fourth
quarter highlighted by earnings per share, excluding the one-time
gain, at the top of guidance and up 20%, an operating margin of
5.9%, and further growth of our healthcare business to one-third of
total revenue," said CTG Chairman and Chief Executive Officer
James R. Boldt. "For the quarter, we
again delivered significant growth in earnings and margins, along
with a continued shift in our business mix to more profitable
solutions work which was 42% of revenue. As expected, client
concerns about domestic and global economic uncertainty are muting
growth in our less profitable staffing business which was up 3.4%
in the quarter and 0.7% in 2012. The 18% increase in
healthcare IT revenue to 33% of 2012 revenue was the primary driver
of the increases in solutions work and CTG's revenue and earnings
last year."
Mr. Boldt continued, "Reflecting CTG's strong balance sheet and
our optimism in the company's growth prospects, the Board decided
to initiate a quarterly cash dividend. CTG joins the ranks of
other high performing technology companies that are able to further
enhance shareholder value by paying a dividend. Based
on CTG's record of earnings growth over several years, significant
cash flows, and favorable future outlook, we are confident in our
ability to fund further investments in our business, continued
share repurchases, and a regular dividend."
Solutions revenue in the 2012 fourth quarter increased by
$5.0 million or 12.3% to $45.3 million, representing 42% of total revenue
compared with 40% in the 2011 fourth quarter. Staffing
revenue increased by $2.0 million or
3.4% to $62.6 million, or 58% of
total revenue, compared with 60% in the 2011 fourth quarter.
European revenue was $18.3 million,
or 17.0% of total revenue, in the 2012 fourth quarter, a
$1.8 million increase from
$16.5 million, or 16.4% of total
revenue, in the 2011 fourth quarter. Foreign currency
exchange fluctuations had a $0.7
million unfavorable effect on revenue in the quarter
compared with the 2011 fourth quarter. There were 64 billing
days in the fourth quarter of 2012 and 63 billing days in the
fourth quarter of 2011.
Selling, general, and administrative (SG&A) expenses were
$17.1 million or 15.8% of revenue,
compared with $17.3 million or 17.2%
of revenue in the 2011 fourth quarter.
Cash provided from operations was $11.4
million in the 2012 fourth quarter, compared with cash
provided from operations of $10.2
million in the 2011 fourth quarter. At December 31, 2012, the Company had $40.6 million in cash compared with $22.4 million at the end of the 2011 fourth
quarter. The Company had no outstanding debt at the end of
the 2012 or 2011 fourth quarters.
2012 Full Year Review
Results for the 2012 full year reflect the same trends seen in
the fourth quarter. Revenue, operating income, net income,
and diluted net income per share for 2012 as compared with 2011
were as follows (dollar amounts in thousands except per share
data):
|
|
2012
|
|
|
2011
|
|
|
$
Change
|
|
%
Change
|
Revenue
|
$
|
424,415
|
|
$
|
396,275
|
|
$
|
28,140
|
|
7%
|
Operating
income
|
$
|
24,462
|
|
$
|
19,310
|
|
$
|
5,152
|
|
27%
|
Net
income
|
$
|
16,165
|
*
|
$
|
11,938
|
|
$
|
4,227
|
|
35%
|
Diluted
net income per share
|
$
|
0.96
|
*
|
$
|
0.71
|
|
$
|
0.25
|
|
35%
|
|
|
|
|
|
|
|
|
|
|
|
* Includes
the effect of gains of $1.3 million, or 7 ½ cents per diluted
share, from life insurance proceeds paid to the Company in
2012
|
The Company's operating margin in 2012 expanded by 90 basis
points to 5.8% from 4.9% in 2011. In 2012, CTG's solutions
business increased 17.9% to $173.6
million, or 41% of total revenue, and its staffing business
grew 0.7% to $250.8 million, or 59%
of total revenue. European revenue increased 2.4% in 2012 to
$68.6 million and represented 16.2%
of total revenue. Foreign currency exchange fluctuations had
a $5.4 million unfavorable effect on
revenue in 2012 compared with 2011. At December 31, 2012, headcount was 3,900, an
increase of 200, or 5%, from 3,700 at year-end 2011.
Selling, general, and administrative expenses were $66.9 million, or 15.8% of revenue, compared with
$65.0 million, or 16.4% of revenue,
in 2011. In 2012, CTG recorded $2.9
million in depreciation and $1.9
million for capital expenditures.
The Company's effective tax rate in 2012 was 36.5% compared with
37.6% in 2011. The lower tax rate in 2012 reflected the
effect of the non-taxable life insurance proceeds received in
2012.
Stock Repurchase Program
CTG repurchased 25,000 of its shares in the 2012 fourth quarter
at an average price of $17.55 per
share. In 2012, the Company repurchased 326,000 shares at an
average price of $14.03 per
share. In January 2013, 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, 2012, approximately
535,000 shares were available under its current repurchase
authorizations.
2013 Guidance
CTG is issuing the following initial guidance for 2013 based on
its current business activity and forecast:
2013
First Quarter (63 billing days vs. 64 in 2012)
|
Range
|
Range
midpoint
|
Change
from 2012 first
quarter
at range midpoint
|
|
|
|
|
Revenue
|
$107-$109
million
|
$108
million
|
+
4%
|
Diluted
net income per share
|
$0.23 -
$0.25
|
$0.24
|
+
20%
|
2013
Full Year (Projected tax rate of 37% to 39%)
|
Range
|
Range
midpoint
|
Change
from 2012
at
range midpoint
|
|
|
|
|
Revenue
|
$450-$460
million
|
$455
million
|
+
7%
|
Diluted
net income per share*
|
$1.02 -
$1.12
|
$1.07
|
+
22%
|
|
|
|
|
*Comparison to 2012 results excludes the effect of
gains of $1.3 million, or 7 ½ cents per diluted share, from life
insurance proceeds paid to the Company in 2012
|
Mr. Boldt commented, "We have excellent momentum going into 2013
and look for growth this year to primarily come from our very
profitable healthcare IT business. We expect 2013 first
quarter revenue and earnings to be comparable to the 2012 fourth
quarter despite the first quarter having one less billing
day. Implementation of electronic medical records (EMR)
systems will continue to be a major contributor to healthcare
revenue as we are currently working on 17 large EMR projects and
also have two proposals, previously bid on, that are awaiting
client decisions. We also expect growth in multiple areas including
EMR optimization projects for healthcare providers, short- and
long-term application management outsourcing engagements, other
system implementations, and consulting work in both the provider
and payer markets. Work from the engagement that began last
year for our medical treatment evaluation tool will continue
through most of
2013.
Over the last decade, the expansion of CTG's healthcare IT
business has come entirely from internal growth that has
established us as one of the largest U.S. healthcare IT providers.
With our recent acquisition of etrinity, a Belgium-based provider of healthcare IT
services, we are particularly optimistic about our prospects in
Western Europe as several
countries there are moving toward adopting U.S. EMR systems and
some of the major healthcare software companies have recently set
up European operations. Based on CTG's significant EMR
experience, the etrinity acquisition, and the fact that we are
already a large provider of IT services in the Benelux region, we
are very well positioned to capitalize on the emerging European EMR
opportunity."
Mr. Boldt concluded, "We remain very excited about CTG's growth
prospects as we further our transformation to an IT service and
solutions company with a focus on healthcare IT. The strength
of our healthcare IT business and industry demand, combined with
our acquisition of etrinity and our recently announced genomics
offering, puts us on course for growth in 2013 and
beyond."
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 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 3,900 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, February
19, 2013 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 19, 2013 and
11:00 p.m. Eastern Time February 21, 2013 by dialing 1-800-475-6701 and
entering the conference ID number 269072.
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
Year Ended
|
|
|
|
Dec.
31,
|
|
Dec.
31,
|
|
Dec.
31,
|
|
Dec.
31,
|
|
|
|
2012
|
|
2011
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
$
|
107,925
|
|
$
|
100,920
|
|
$
|
424,415
|
|
$
|
396,275
|
Direct
costs
|
|
|
84,478
|
|
|
78,126
|
|
|
333,086
|
|
|
311,984
|
Selling,
general and administrative expenses
|
|
17,050
|
|
|
17,336
|
|
|
66,867
|
|
|
64,981
|
Operating
income
|
|
|
6,397
|
|
|
5,458
|
|
|
24,462
|
|
|
19,310
|
Other
income (expense), net
|
|
|
717
|
|
|
(152)
|
|
|
983
|
|
|
(187)
|
Income
before income taxes
|
|
|
7,114
|
|
|
5,306
|
|
|
25,445
|
|
|
19,123
|
Provision
for income taxes
|
|
|
2,245
|
|
|
2,017
|
|
|
9,280
|
|
|
7,185
|
Net
income
|
|
$
|
4,869
|
|
$
|
3,289
|
|
$
|
16,165
|
|
$
|
11,938
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.32
|
|
$
|
0.22
|
|
$
|
1.07
|
|
$
|
0.80
|
|
Diluted
|
|
$
|
0.29
|
|
$
|
0.20
|
|
$
|
0.96
|
|
$
|
0.71
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
15,314
|
|
|
14,983
|
|
|
15,172
|
|
|
14,968
|
|
Diluted
|
|
|
16,938
|
|
|
16,685
|
|
|
16,841
|
|
|
16,731
|
COMPUTER TASK GROUP,
INCORPORATED (CTG)
Condensed Consolidated Balance Sheets
(Unaudited)
(amounts in
thousands)
|
|
|
|
|
|
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
Current
Assets:
|
|
|
|
|
|
|
|
Cash and
cash equivalents
|
|
$
|
40,614
|
|
$
|
22,414
|
|
Accounts
receivable, net
|
|
|
70,459
|
|
|
67,801
|
|
Other
current assets
|
|
|
2,595
|
|
|
3,097
|
Total
current assets
|
|
|
113,668
|
|
|
93,312
|
|
|
|
|
|
|
|
|
|
Property
and equipment, net
|
|
|
6,916
|
|
|
7,969
|
|
Goodwill
|
|
|
35,678
|
|
|
35,678
|
|
Other
assets
|
|
|
9,943
|
|
|
10,533
|
|
|
|
|
|
|
|
|
Total
Assets
|
|
$
|
166,205
|
|
$
|
147,492
|
|
|
|
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
10,170
|
|
$
|
9,532
|
|
Accrued
compensation
|
|
|
32,162
|
|
|
30,971
|
|
Other
current liabilities
|
|
|
7,869
|
|
|
7,423
|
Total
current liabilities
|
|
|
50,201
|
|
|
47,926
|
|
|
|
|
|
|
|
|
|
Long-term
debt
|
|
|
-
|
|
|
-
|
|
Other
liabilities
|
|
|
13,223
|
|
|
10,761
|
|
Shareholders' equity
|
|
|
102,781
|
|
|
88,805
|
|
|
|
|
|
|
|
|
Total
Liabilities and Shareholders' Equity
|
|
$
|
166,205
|
|
$
|
147,492
|
COMPUTER TASK GROUP, INCORPORATED
(CTG)
Condensed
Consolidated Statements Cash Flows
(Unaudited)
(amounts in thousands)
|
|
|
|
|
|
|
|
For the
Year Ended
|
|
|
|
December 31,
|
|
December 31,
|
|
|
|
2012
|
|
2011
|
|
|
|
|
|
|
|
|
Net
income
|
|
$
|
16,165
|
|
$
|
11,938
|
|
Depreciation and amortization expense
|
|
|
2,919
|
|
|
2,271
|
|
Equity-based compensation expense
|
|
|
2,236
|
|
|
1,654
|
|
Other
operating items
|
|
|
(164)
|
|
|
(7,258)
|
Net cash
provided by operating activities
|
|
|
21,156
|
|
|
8,605
|
Net cash
used in investing activities
|
|
|
(1,980)
|
|
|
(1,675)
|
Net cash
provided by (used in) financing activities
|
|
|
(1,315)
|
|
|
1,020
|
Effect of
exchange rates on cash and cash equivalents
|
|
|
339
|
|
|
(373)
|
Net
increase in cash and cash equivalents
|
|
|
18,200
|
|
|
7,577
|
Cash and
cash equivalents at beginning of period
|
|
|
22,414
|
|
|
14,837
|
Cash and
cash equivalents at end of period
|
|
$
|
40,614
|
|
$
|
22,414
|
CTG news releases are available on
the Web at www.ctg.com.
ctgx-e
SOURCE CTG