- Midpoint of new 2010 guidance ranges indicate 34% EPS
increase and 15% revenue growth
- 2010 first quarter revenue per billing day increased
11% from the 2009 fourth quarter
- Operating margin expands 70 basis points from 2009 first
quarter
- Healthcare business 27% of total revenue;
electronic medical records projects 11% of total revenue
- Strong demand drives headcount increase of 200 or
7%
BUFFALO, N.Y. - April 27, 2010 - CTG (NASDAQ: CTGX), an
international information technology (IT) solutions and services
company, announced its financial results for the 2010 first quarter
which ended on April 2, 2010. Increased client demand for
external IT resources and new healthcare solutions projects were
the primary drivers of CTG's significant growth in revenue,
margins, and earnings in the 2010 first quarter.
CTG reported 2010 first quarter revenue of $78.5 million, a 5%
increase from 2009 first quarter revenue of $74.6 million and a 16%
increase from 2009 fourth quarter revenue of $67.7 million. On
a sequential basis, revenue per billing day increased by 11% from
the 2009 fourth quarter. CTG's operating income was $3.1
million, a 28% improvement from $2.4 million a year ago. The
operating margin expanded by 70 basis points to 3.9% from 3.2% in
the 2009 first quarter. Net income for the first quarter of
2010 was $1.8 million, 37% higher than 2009 first quarter net
income of $1.3 million. On a per diluted share basis, net
income was $0.11, a 22% increase from $0.09 in the 2009 first
quarter.
"Our 2010 first quarter results were very favorable with
revenue, margins, and earnings all increasing over last year," said
CTG Chairman and Chief Executive Officer James R. Boldt. "The
strength of our current business, an increase in proposals for new
electronic medical records (EMR) projects, and further growth in
client demand for technical resources, is prompting us to increase
our 2010 revenue and earnings guidance. At the end of the
first quarter, we closed on a significant multi-year engagement for
a large physician practice that includes an enterprise-wide
electronic health records system implementation to meet the
meaningful use criteria for receiving federal stimulus
money. In addition, in the first quarter of 2010 one of the
largest states notified us that we had been selected to perform
state-wide planning for Health Information Exchanges. This award is
funded by the American Recovery and Reinvestment Act of 2009 (ARRA)
through the Office of the National Coordinator for Health
Information Technology (ONC). We also anticipate bidding on
several new EMR opportunities in the second quarter of 2010."
Mr. Boldt added, "Healthcare remains the market with the
greatest opportunity for CTG to measurably increase our mix of
higher margin solutions work. Healthcare revenue in the first
quarter was 27% of total revenue in the quarter. Electronic
medical records projects represented 11% of total revenue in the
quarter, indicating the start of a favorable growth trend from 9%
of total annual revenue in 2009. Reflecting our excellent
reputation and track record as an EMR provider, CTG was recently
cited in Information Week as one of the top three firms
for healthcare organizations looking for help in implementing
electronic medical records and other health IT investments."
2010 First Quarter Review
Solutions revenue in the 2010 first quarter increased by $0.1
million to $25.1 million, and represented 32% of total
revenue. Staffing revenue increased by $3.8 million to $53.4
million, or 68% of total revenue. European revenue was $16.6
million, or 21% of total revenue, in the 2010 first quarter,
compared with $17.7 million, or 24% of total revenue, in the 2009
first quarter. Foreign currency exchange fluctuations had a $0.9
million favorable effect on revenue in the quarter. There
were 65 billing days in the 2010 first quarter compared with 66
billing days in the 2009 first quarter.
Selling, general, and administrative (SG&A) expenses were
$13.9 million, or 17.7% of revenue, compared with $14.3 million, or
19.2% of revenue, in the 2009 first quarter. The decline in
SG&A as a percent of revenue reflects operating leverage from
revenue growth and continued disciplined cost management.
CTG's effective tax rate for the 2010 first quarter was 41%
compared with 42% in the 2009 first quarter.
The Company used cash from operations of $5.0 million in the
2010 first quarter compared with cash used from operations of $0.4
million in the 2009 first quarter. At April 2, 2010, the
Company had $4.2 million in cash compared with $7.9 million at the
end of the 2009 first quarter. At the 2010 first quarter end,
outstanding debt was $0.9 million compared with no debt a year
earlier. CTG finances its working capital needs through a $35
million revolving credit agreement that is in place through April
2011.
Stock Repurchase Program
CTG repurchased 131,000 of its shares in the 2010 first quarter
at an average price of $7.26 per share. In April 2010, 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
April 20, 2010, approximately 400,000 shares were available under
its current repurchase authorizations.
Stronger Outlook for 2010 Drives Increase in Revenue and
Earnings Guidance
The Company is providing guidance for the 2010 second
quarter. CTG expects its 2010 second quarter revenue to range
from $78 million to $82 million, a 20% increase from 2009 at the
midpoint of this range. The Company projects 2010 second
quarter net income per diluted share of $0.11 to $0.13, a 33%
increase from 2009 at the midpoint of this range. There are
64 billing days in the 2010 second quarter compared with 63 billing
days in the 2009 second quarter.
Based on the strength of its current business and trends in its
healthcare and staffing businesses, CTG has raised its 2010 revenue
and earnings guidance. The Company is increasing the range of
its 2010 revenue guidance from $301 million to $309 million to $314
million to $322 million, a 15% increase from 2009 at the midpoint
of this range. The Company currently projects 2010 net income
per diluted share of $0.47 to $0.55, a $0.01 increase from the
initial range and a 34% increase from 2009 at the midpoint of the
new range. A tax rate of approximately 41% is projected for
2010.
Mr. Boldt commented, "All indicators are that 2010 will be a
very good year for CTG, reinforcing our forecast of a return to
double-digit revenue and earnings growth. Consistent with a
normal economic recovery cycle, in the 2010 first quarter our
managed services staffing business continued to grow at the strong
and steady pace that began in mid-2009. EMR proposal activity
appears to be accelerating as credit is becoming more available to
help healthcare providers implement the systems to meet the
meaningful use criteria for receiving federal stimulus money.
Additionally, the first portion of the $19 billion in federal
stimulus funds allocated to EMRs has been released to help states
advance EMR projects.
EMRs are an exceptionally large multi-year opportunity that is
just beginning and is expected to drive healthcare IT spending for
several years. As an industry leader in healthcare IT with
substantial EMR expertise and experience, CTG is in a very strong
position to capitalize on this opportunity. Additionally in
the first quarter, we started work on the first engagement using
our medical care management tool, and see this offering and our
other medical informatics solutions having the potential to add
significantly to our long-term profitability. Our strategy
continues to be to focus our growth initiatives and solutions
investments on healthcare offerings that generate higher margins
than traditional solutions work. We are confident this
strategy will produce significant gains in CTG's revenue and
earnings in the years ahead."
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 nearly 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's 3,100 IT
professionals are based in an international network of offices 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 2009 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 Wednesday April 28, 2010, at 10:00 AM
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 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 April 28, 2010, and 11:00 p.m. Eastern Time
May 1, 2010, by dialing 1-800-475-6701 and entering the conference
ID number 121485.
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.
NOTE - financial tables are under development and will be
corrected by go-live date.
COMPUTER TASK GROUP,
INCORPORATED (CTG)
Condensed Consolidated Statements of
Income
(Unaudited)
(amounts in thousands except per
share data)
For the Quarter Ended
April
2,
April 3,
2010 2009
Revenue
$
78,489 $
74,556
Direct
costs
61,481
57,836
Selling, general and administrative expenses
13,919 14,313
Operating
income
3,089
2,407
Other expense,
net
(47) (151)
Income before income
taxes
3,042
2,256
Provision for income
taxes
1,256 954
Net
income
$ 1,786 $
1,302
Net income per share:
Basic
$ 0.12
$ 0.09
Diluted
$ 0.11
$ 0.09
Weighted average shares outstanding:
Basic
14,722 14,943
Diluted
16,006
15,046
|
COMPUTER TASK GROUP, INCORPORATED (CTG)
Condensed Consolidated Balance Sheets
(Unaudited)
(amounts in thousands)
|
April 2, April
3,
April
2,
April 3,
2010 2009 2010
2009
Current
Assets:
Current Liabilities:
Cash and cash equivalents
$
4,163
$
7,891
Accounts payable
$ 5,652
$
6,266
Accounts receivable,
net
51,949
46,380 Accrued
compensation
20,088 20,841
Other current
assets
3,392 3,844 Other current
liabilities
6,562 6,421
Total Current Assets
59,504
58,115 Total
Current Liabilities 32,302
33,528
Property and equipment,
net
8,284
7,118
Long-term
debt
945
-
Goodwill
35,678
35,678 Other
liabilities
9,456
8,864
Other
assets
11,643 9,442 Shareholders'
equity 72,406
67,961
Total Liabilities and
Total Assets
$ 115,109
$ 110,353 Shareholders' Equity $
115,109 $ 110,353