Full Year Revenue and Earnings Guidance
Raised
- First quarter revenue exceeded guidance and EPS was at the
top of guidance
- Operating margin expanded 90 basis points to 4.8% from 2010
first quarter
- Total healthcare revenue increased 30% and was 28% of total
first quarter revenue
- Electronic medical records (EMR) revenue increased 61% to
53% of healthcare revenue and 15% of total first quarter
revenue
- New 2011 guidance indicates 18% revenue growth and 35% EPS
Growth at midpoint of new ranges
- Headcount increased by 200 in the first quarter to
3,600
BUFFALO, N.Y. -- April 25, 2011 -- CTG (NASDAQ: CTGX), an
international information technology (IT) solutions and services
company, announced its financial results for the
2011 first quarter which ended on April 1, 2011. Strong demand
for external IT resources, an increase in new healthcare solutions
projects, and the operating leverage from higher revenue were the
primary contributors to CTG's significant growth in revenue,
margins, and earnings in the 2011 first quarter.
Strong Revenue and Earnings Growth Highlight First
Quarter Results
Revenue, operating income, net income, and diluted net income
per share for the 2011 first quarter as compared with the 2010
first quarter are as follows:
|
|
|
April 1, 2011
|
|
|
April 2, 2010
|
|
|
$ Change
|
|
|
% Change
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
95,909
|
|
$
|
78,489
|
|
$
|
17,420
|
|
|
22%
|
|
Operating income
|
$
|
4,599
|
|
$
|
3,089
|
|
$
|
1,510
|
|
|
49%
|
|
Net income
|
$
|
2,828
|
|
$
|
1,786
|
|
$
|
1,042
|
|
|
58%
|
|
Diluted net income per share
|
$
|
0.17
|
|
$
|
0.11
|
|
$
|
0.06
|
|
|
55%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The Company's operating margin expanded by 90 basis points to
4.8% from 3.9% in the 2010 first quarter.
"We are reporting excellent financial results for the first
quarter with earnings per share up 55% on 22% revenue growth," said
CTG Chairman and Chief Executive Officer James R. Boldt. "The
demand for managed staffing services was higher than expected in
the quarter resulting in revenue exceeding our guidance and
earnings per share at the top end of guidance. There also were
several large new business wins in our healthcare practice in the
quarter."
Mr. Boldt continued, "We are pleased by the continued strong
demand in the healthcare market as this industry is the major focus
of our growth efforts. In the first quarter, healthcare revenue
increased 30% over last year with 17 EMR projects making up over
half of total healthcare revenue in the quarter. Our win rate on
major EMR proposals remains very high as we have won nearly all of
the major proposals we have bid on over the last four years.
Margins for EMR and other healthcare-related work are significantly
higher than our managed staffing services business so we expect the
continued growth of our healthcare business will drive further
increases in CTG's profitability."
2011 First Quarter Review
Solutions revenue in the 2011 first quarter increased by $8.6
million or 34% to $33.7 million, and represented 35% of total
revenue. Staffing revenue increased by $8.8 million or 17% to $62.2
million, or 65% of total revenue. European revenue was $17.1
million or 18% of total revenue in the 2011 first quarter, compared
with $16.6 million or 21% of total revenue in the 2010 first
quarter. Foreign currency exchange fluctuations had a $0.2 million
unfavorable effect on revenue in the quarter. There were 65 billing
days in both the first quarters of 2011 and 2010.
Selling, general, and administrative (SG&A) expenses were
$15.2 million or 15.8% of revenue, compared with $13.9 million or
17.7% of revenue in the 2010 first quarter. The decline in
SG&A as a percent of revenue reflects the operating leverage
from revenue growth, cost controls, and the increase in the
Company's IT staffing business in the quarter, which has
significantly lower SG&A costs than the Company's IT solutions
business.
CTG's effective tax rate for the 2011 first quarter was 38%
compared with 41% in the 2010 first quarter.
The Company used cash from operations of $7.2 million in the
2011 first quarter compared with cash used from operations of $5.0
million in the 2010 first quarter. At April 1, 2011, the
Company had $8.9 million in cash compared with $4.2 million at the
end of the 2010 first quarter. Cash usage from operations in
both quarters primarily reflects the quarters ending on a payroll
date for the Company's U.S. operations. At the end of the
2011 first quarter, the Company had no outstanding debt compared
with $0.9 million a year earlier. CTG finances its working
capital needs through a $35 million revolving credit agreement that
is in place through April 2014.
Stock Repurchase Program
CTG repurchased 51,000 of its shares in the 2011 first quarter
at an average price of $11.80 per share. In April 2011, 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
22, 2011, approximately 1.1 million shares were available under its
current repurchase authorizations.
2011 Revenue and Earnings Guidance
Increased
The Company is providing guidance for the 2011 second quarter.
CTG expects its 2011 second quarter revenue to range from $97
million to $99 million, a 21% increase from 2010 at the midpoint of
this range. The Company projects 2011 second quarter net income per
diluted share of $0.16 to $0.18, a 42% increase from 2010 at the
midpoint of this range. There are 64 billing days in the 2011
second quarter, equal to the 2010 second quarter.
Based on the strength of its current business and trends in its
healthcare and staffing businesses, CTG has raised its 2011 revenue
and earnings guidance. The Company is increasing the range of its
2011 revenue guidance to $380 million to $400 million from $365
million to $385 million, an 18% increase from 2010 at the midpoint
of the new projected range. The Company currently projects 2011 net
income per diluted share of $0.65 to $0.75, an increase of $0.02
from the previous range and a 35% increase from 2010 at the
midpoint of the new range. A tax rate of approximately 38% is
projected for 2011.
Mr. Boldt commented, "All indicators are that 2011 will be
another very good year for CTG with a continuation of robust
double-digit revenue and earnings growth. We are increasing our
revenue and earnings guidance for the year based on the stronger
than expected growth we are experiencing in our managed staffing
services business and the number of new healthcare business wins in
the first quarter."
Mr. Boldt concluded, "We are capitalizing on the EMR opportunity
and are in an excellent position to continue to grow this business
at a vigorous pace. Finding and hiring the number of technical
resources required to support the higher volume of new healthcare
work expected is an industry-wide challenge that we feel better
equipped to address than many competitors given our strengths in
recruiting and training. Looking to the future, we are also
expanding the scope of our healthcare solutions offerings to
address the further impact of healthcare reform on providers and
payers. These new offerings include support for conversions to
ICD-10--the international standard for diagnostic codes--and for
the formation of accountable care organizations to improve care
quality and reduce unnecessary costs. By building a robust suite of
offerings, we are positioning CTG to continue growing as a leading
full service provider of health IT and consulting services and
solutions. We are confident that our strategic focus on growing our
healthcare business will increase our mix of higher margin
solutions business and produce significant gains in CTG's revenue
and profitability over the next few years."
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's 3,600 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 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 April 26, 2011, 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 1-888-276-0009 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 noon Eastern Time April 26, 2011, and 11:00 p.m.
Eastern Time April 29, 2011, by dialing 1-800-475-6701 and entering
the conference ID number 175310.
A webcast of the call will also 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.
COMPUTER TASK GROUP, INCORPORATED (CTG)
Condensed Consolidated Statements of Income
(Unaudited)
(amounts in thousands except per share data)
|
|
For the Quarter Ended
|
|
|
|
|
|
April 1,
2011
|
|
|
|
|
April 2,
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
95,909
|
|
|
|
$
|
78,489
|
|
|
|
|
|
Direct costs
|
|
76,112
|
|
|
|
|
61,481
|
|
|
|
|
|
Selling, general and administrative expenses
|
|
15,198
|
|
|
|
|
13,919
|
|
|
|
|
|
Operating income
|
|
4,599
|
|
|
|
|
3,089
|
|
|
|
|
|
Other expense, net
|
|
(37)
|
|
|
|
|
(47)
|
|
|
|
|
|
Income before income taxes
|
|
4,562
|
|
|
|
|
3,042
|
|
|
|
|
|
Provision for income taxes
|
|
1,734
|
|
|
|
|
1,256
|
|
|
|
|
|
Net income
|
$
|
2,828
|
|
|
|
$
|
1,786
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.19
|
|
|
|
$
|
0.12
|
|
|
|
|
Diluted
|
$
|
0.17
|
|
|
|
$
|
0.11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
14,767
|
|
|
|
|
14,722
|
|
|
|
|
|
Diluted
|
|
16,653
|
|
|
|
|
16,006
|
|
|
|
|
|
COMPUTER TASK GROUP, INCORPORATED (CTG)
Condensed Consolidated Balance Statements
(Unaudited)
(amounts in thousands except per share data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
April 1,
2011
|
|
|
April 2,
2010
|
|
|
April 1,
2011
|
|
|
April 2,
2010
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets:
|
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
|
|
Cash and cash equivalents
|
$
|
8,868
|
|
$
|
4,163
|
Accounts payable
|
$
|
7,840
|
|
$
|
5,652
|
|
Accounts receivable, net
|
|
65,339
|
|
|
51,949
|
Accrued compensation
|
|
24,996
|
|
|
20,088
|
|
Other current assets
|
|
3,269
|
|
|
3,392
|
Other current liabilities
|
|
6,878
|
|
|
6,562
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Current Assets
|
|
77,476
|
|
|
59,504
|
Total Current Liabilities
|
|
39,714
|
|
|
32,302
|
|
Property and equipment, net
|
|
8,544
|
|
|
8,284
|
Long-term debt
|
|
-
|
|
|
-
|
|
Goodwill
|
|
35,678
|
|
|
35,678
|
Other liabilities
|
|
9,930
|
|
|
9,456
|
|
Other assets
|
|
11,102
|
|
|
11,643
|
Shareholders' equity
|
|
83,156
|
|
|
72,406
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
$
|
132,800
|
|
$
|
115,109
|
Total Liabilities and
Shareholders' Equity
|
$
|
132,800
|
|
$
|
115,109
|