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Exhibit 99

 

LOGO

NEWS RELEASE

CONTACTS:

Investors and Media:

James R. Boldt, Chairman & Chief Executive Officer

(716) 887-7244

Investors:

Brendan Harrington, Senior Vice President & Chief Financial Officer

(716) 888-3634

CTG REPORTS 2013 SECOND QUARTER EPS OF $0.24

 

   

PRIOR YEAR SECOND QUARTER EPS OF $0.25 INCLUDED A ONE-TIME, NON-OPERATIONAL GAIN OF 2 1/2 CENTS PER SHARE

 

   

OPERATING MARGIN INCREASED 20 BASIS POINTS TO 6.0%, THE HIGHEST LEVEL IN 14 YEARS

 

   

HEALTHCARE REVENUE WAS 32% OF REVENUE

 

   

TOTAL SOLUTIONS REVENUE WAS 40% OF REVENUE

BUFFALO, N.Y. — July 22, 2013 — CTG (NASDAQ: CTG), an information technology (IT) solutions and services company, announced its financial results for the 2013 second quarter which ended on June 28, 2013. Higher demand for technical resources at some staffing clients and medical data analytics work were the primary contributors to earnings growth offsetting the impact of recent reductions in billable headcount at a large staffing client and delays in the start-up of Electronic Medical Record (EMR) projects.


2013 Second Quarter Review

Revenue, operating income, net income, and diluted net income per share for the 2013 second quarter as compared with the 2012 second quarter were as follows (dollar amounts in thousands except per-share data):

 

     June 28,
2013
     June 29,
2012
    $
Change
    %
Change
 

Revenue

   $ 107,117       $ 106,705      $ 412        0.4

Operating income

   $ 6,399       $ 6,143      $ 256        4.2

Net income

   $ 4,055       $ 4,123   $ (68     (1.6 )%* 

Diluted net income per share

   $ 0.24       $ 0.25   $ (0.01 )*      (4.0 )%* 

 

*

Includes the effect of non-operational gain of $0.4 million, or 2 1/2 cents per diluted share, from life insurance proceeds received by the Company in the 2012 second quarter. Excluding this non-operational gain, diluted net income per share for the 2012 second quarter was $0.22.

The Company’s operating margin improved by 20 basis points to 6.0% from 5.8% in the 2012 second quarter and for the first time reached its long-term operating margin objective of 6% to 7% set over a decade ago.

“CTG’s second quarter earnings were at the mid-point of guidance and up 9%, excluding last year’s non-operational gain, despite lower than expected revenue growth due to a reduction in technical resource requirements from a large customer in our lower margin staffing business and delays in the start-up of EMR projects.” said CTG Chairman and Chief Executive Officer James R. Boldt. “Our focus on higher margin solutions work and the healthcare market is clearly paying off with the operating margin in the quarter reaching 6%, the highest level in over a decade. Healthcare revenue was down slightly from last year as many hospital clients are deferring system investments as a result of the U.S. federal budget sequestration. Long term, we remain optimistic in our healthcare opportunities in EMR and other areas such as post-implementation EMR production support, application management outsourcing, and medical data analytics. Earnings also benefited from work related to our IT medical management solution for chronic diseases. In the quarter, we began an implementation of our medical fraud, waste, and abuse (FWA) software as a service (SaaS) product for a small payer. While we did not record any revenue from this client in the second quarter of 2013, we expect a meaningful contribution to earnings from this engagement in the second half of the year.”


Mr. Boldt added, “Our success in steadily growing our healthcare business is reflected in CTG not only being recently named to the 2013 Healthcare Informatics HCI 100 list of the largest healthcare IT companies but also in our moving up 15 places on the list in the last three years to the current position of 54. Our European operations continue to be in a growth mode with revenue up 11% in the quarter based on increased business in our government and financial services practices and the addition of etrinity, our recently acquired Belgium-based health IT services provider. We look for etrinity to help drive further growth in our European business as countries there move toward adoption of U.S. EMR software over the next few years.”

Solutions revenue in the 2013 second quarter was $42.3 million, representing 40% of total revenue compared with 41% in the 2012 second quarter. Staffing revenue was $64.8 million, or 60% of total revenue, compared with 59% in the 2012 second quarter. European revenue, which includes the acquisition of etrinity in 2013, increased 11.0% to $18.6 million, or 17% of total revenue, compared with $16.8 million, or 16% of total revenue, in the 2012 second quarter. Foreign currency exchange fluctuations had a $0.3 million favorable effect on revenue in the quarter compared with a $1.9 million unfavorable effect in the 2012 second quarter. There were 64 billing days in the second quarter of 2013 and 2012.

Selling, general, and administrative (SG&A) expenses were $16.2 million or 15.2% of revenue, compared with $16.8 million or 15.7% of revenue in the 2012 second quarter.

Cash provided by operations was $4.9 million in the 2013 second quarter compared with cash provided by operations of $6.0 million in the 2012 second quarter. At June 28, 2013, the Company had $34.0 million in cash compared with $23.6 million at the end of the 2012 second quarter. The Company had no outstanding debt at the end of the 2013 and 2012 second quarters.

The Company’s tax rate for the 2013 second quarter was 35.6% compared with 36.8% in the 2012 second quarter. The tax rate for the 2013 second quarter benefited from a federal Work Opportunity Tax Credit attributable to recent hiring while the 2012 second quarter tax rate reflects the favorable effect of non-taxable life insurance proceeds received in the quarter. A tax rate of 36% to 38% is projected for the 2013 full year.


2013 First Half Review

Revenue, operating income, net income, and diluted net income per share for the 2013 first half as compared with the 2012 first half are as follows (dollar amounts in thousands except per share data):

 

     June 28,
2013
     June 29,
2012
    $
Change
    %
Change
 

Revenue

   $ 215,612       $ 210,072      $ 5,540        2.6

Operating income

   $ 12,581       $ 11,742      $ 839        7.1

Net income

   $ 8,112       $ 7,483   $ 629        8.4 %* 

Diluted net income per share

   $ 0.47       $ 0.45   $ 0.02     4.4 %* 

 

*

Includes the effect of non-operational gains of $0.4 million, or 2  1/2 cents per diluted share, from life insurance proceeds received by the Company in the 2012 second quarter. Excluding the non-operational gain in the 2012 second quarter, diluted net income per share for the 2012 first half was $0.42.

The Company’s operating margin increased by 20 basis points to 5.8% in the 2013 first half from 5.6% in the 2012 first half. During the first half of 2013, CTG’s solutions business was $84.6 million, or 39% of total revenue, and its staffing business was $131.0 million, or 61% of total revenue. European revenue, including the acquisition of etrinity in 2013, increased 12.0% to $38.0 million in the 2013 first half and represented 18% of total revenue.

Selling, general, and administrative expenses were $32.7 million, or 15.1% of revenue, compared with $33.0 million, or 15.7% of revenue, in the 2012 first half.

Stock Repurchase Program

CTG repurchased 59,000 of its shares in the 2013 second quarter at an average price of $20.00 per share. In July 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 June 28, 2013, approximately 0.5 million shares were available for repurchase under current authorizations.

2013 Third Quarter and Full Year Guidance

CTG is providing guidance for the 2013 third quarter and 2013 full year in the table below. Revenue and earnings guidance for the 2013 full year has been adjusted from previous guidance to reflect the reduction in the second quarter of technical resources currently needed by a large staffing client, a reduction in IT project spending, and delays in new EMR project starts.


2013 Third Quarter (63 billing days vs. 63 in Q3 2012)    Range    Range midpoint    Change from 2012 third
quarter at range midpoint
 

Revenue

   $105-$107 million    $106 million      -0.4

Diluted net income per share

   $0.22 - $0.24    $0.23      +0.0
2013 Full Year (Projected tax rate of 36% to 38%)    Range    Range midpoint    Change from 2012
at  range midpoint
 

Revenue

   $428-$436 million    $432 million      +1.8

Diluted net income per share

   $0.93 - $0.99    $0.96      +9.1

 

*

Comparison to 2012 excludes the effect of non-operational gains of $1.3 million, or 7  1/2 cents per diluted share, from life insurance proceeds received by the Company in 2012

Mr. Boldt commented, “Our earnings growth in 2013 will be less than we initially expected as our hospital clients deal with reimbursement reductions caused by the U.S. federal budget sequestration. That said, health providers and payers still have significant long-term information technology needs which continue to make healthcare an area for future growth with opportunity still ahead from more EMR implementations in the United States and Europe, as well as follow-on EMR work, application management outsourcing, health reform consulting services, and our innovative medical data analytics products. Notably, analytics products are making a larger contribution to earnings than a year ago, delivering promising results from just a small number of projects as we are still early in the introduction stage of the products’ life cycles.”


About CTG

CTG develops innovative IT solutions to address the business needs and challenges of companies in several higher-growth industries including healthcare, financial services, 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 2012 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 23, 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 July 23, 2013 and 11:00 p.m. Eastern Time July 26, 2013 by dialing 1-800-475-6701 and entering the conference ID number 269074.

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 28,     June 29,     June 28,     June 29,  
     2013     2012     2013     2012  

Revenue

   $ 107,117      $ 106,705      $ 215,612      $ 210,072   

Direct costs

     84,470        83,810        170,366        165,325   

Selling, general and administrative expenses

     16,248        16,752        32,665        33,005   
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     6,399        6,143        12,581        11,742   

Non-taxable insurance proceeds

     —          423        —          423   

Other expense, net

     (106     (39     (215     (89
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     6,293        6,527        12,366        12,076   

Provision for income taxes

     2,238        2,404        4,254        4,593   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 4,055      $ 4,123      $ 8,112      $ 7,483   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income per share:

        

Basic

   $ 0.26      $ 0.27      $ 0.53      $ 0.49   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.24      $ 0.25      $ 0.47      $ 0.45   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding:

        

Basic

     15,459        15,123        15,445        15,147   

Diluted

     17,098        16,747        17,082        16,810   

Cash dividend declared per share

   $ 0.05      $ —        $ 0.10      $ —     
  

 

 

   

 

 

   

 

 

   

 

 

 


COMPUTER TASK GROUP, INCORPORATED (CTG)

Condensed Consolidated Balance Sheets

(Unaudited)

(amounts in thousands)

 

     June 28,      December 31,      June 29,  
     2013      2012      2012  

Current Assets:

        

Cash and cash equivalents

   $ 33,974       $ 40,614       $ 23,624   

Accounts receivable, net

     75,763         70,459         71,928   

Other current assets

     3,570         2,595         3,336   
  

 

 

    

 

 

    

 

 

 

Total current assets

     113,307         113,668         98,888   

Property and equipment, net

     7,537         6,916         7,249   

Goodwill

     37,917         35,678         35,678   

Other assets

     10,741         9,943         12,040   
  

 

 

    

 

 

    

 

 

 

Total Assets

   $ 169,502       $ 166,205       $ 153,855   
  

 

 

    

 

 

    

 

 

 

Current Liabilities:

        

Accounts payable

   $ 10,004       $ 10,170       $ 11,768   

Accrued compensation

     30,367         32,162         30,950   

Other current liabilities

     6,093         7,869         6,428   
  

 

 

    

 

 

    

 

 

 

Total current liabilities

     46,464         50,201         49,146   

Long-term debt

     —           —           —     

Other liabilities

     13,176         13,223         10,470   

Shareholders’ equity

     109,862         102,781         94,239   
  

 

 

    

 

 

    

 

 

 

Total Liabilities and Shareholders’ Equity

   $ 169,502       $ 166,205       $ 153,855   
  

 

 

    

 

 

    

 

 

 


COMPUTER TASK GROUP, INCORPORATED (CTG)

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(amounts in thousands)

 

     For the Two  
     Quarters Ended  
     June 28,     June 29,  
     2013     2012  

Net income

   $ 8,112      $ 7,483   

Depreciation and amortization expense

     1,291        1,304   

Equity-based compensation expense

     1,219        985   

Other operating items

     (12,778     (6,177
  

 

 

   

 

 

 

Net cash provided by (used in) operating activities

     (2,156     3,595   

Net cash used in investing activities

     (4,659     (733

Net cash provided by (used in) financing activities

     442        (1,168

Effect of exchange rates on cash and cash equivalents

     (267     (484
  

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     (6,640     1,210   

Cash and cash equivalents at beginning of period

     40,614        22,414   
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 33,974      $ 23,624   
  

 

 

   

 

 

 

— END —

CTG news releases are available on the Web at www.ctg.com.