Click here to close now.

Welcome!

BigDataExpo® Blog Authors: Elizabeth White, Liz McMillan, Pat Romanski, David Sprott, JP Morgenthal

News Feed Item

CTG Reports 2014 First Quarter EPS of $0.19

-- HEALTHCARE REVENUE WAS 30% OF TOTAL REVENUE

BUFFALO, N.Y., April 22, 2014 /PRNewswire/ -- CTG (NASDAQ: CTG), an information technology (IT) solutions and services company, announced its financial results for the 2014 first quarter which ended on March 28, 2014.  First quarter results reflected lower revenue in CTG's healthcare and staffing businesses in North America that was partially offset by higher revenue from European operations and decreased operating expenses. Earnings in the quarter also reflected the absence of tax credits which contributed approximately two cents to net income per diluted share in the 2013 first quarter.    

2014 First Quarter Review

Revenue, operating income, net income, and diluted net income per share for the 2014 first quarter as compared with the 2013 first quarter are as follows (dollar amounts in thousands except per share data):

 



Mar. 28,

2014



Mar. 29,

2013



$

Change



%

Change

Revenue

$

97,911


$

108,495


$

(10,584)



(10)%

Operating income 

$

5,475


$

6,182


$

(707)



(11)%

Net income

$

3,166


$

4,057


$

(891)



(22)%

Diluted net income per share

$

0.19


$

0.24


$

(0.05)



(21)%













 

The Company's operating margin was 5.6% in the 2014 first quarter compared with 5.7% in the 2013 first quarter.

"CTG's first quarter financial results were consistent with our guidance with earnings at the midpoint of the range and revenue at the low end," said CTG Chairman and Chief Executive Officer James R. Boldt. "Earnings benefited from the completion of a medical claims data analytics project originally scheduled to wrap up last year, continued cost control, and growth in Europe, which reduced the impact of a significantly higher tax rate this quarter and the lower revenue levels we expected in our U.S. health IT and staffing businesses. On a positive note, we expect a new big data analytics project and a health application management outsourcing engagement will have a favorable impact on earnings beginning in the second quarter."  

Mr. Boldt continued, "Revenue growth in our healthcare business from electronic health records (EHR) work continues to be challenged as many hospitals are holding off on large capital investments while they are still in the process of realigning cost structures to manage the effect of last year's Medicare reimbursement reductions effective April 1, 2013 tied to the federal government sequestration, other reductions in government reimbursements, and lower patient volumes.  At the same time, the need for health providers to lower operating expenses is increasing client demand for application management support and health advisory services in the areas of accountable care and meaningful use compliance.  Cost reduction and business expansion initiatives are creating new opportunities in our staffing business where we are seeing an uptick in demand from several clients that is helping to mitigate the effect of lower demand for technical resources from our largest client." 

Solutions revenue in the 2014 first quarter decreased by $4.1 million or 10% to $38.6 million, representing 39% of total revenue equivalent to 39% in the 2013 first quarter.  Staffing revenue decreased by $6.5 million or 10% to $59.3 million, or 61% of total revenue, the same percentage as the 2013 first quarter.  European revenue in the 2014 first quarter increased 7% to $20.8 million, or 21% of total revenue, from $19.4 million, or 18% of total revenue, in the 2013 first quarter.  There were 62 and 63 billing days in the first quarter of 2014 and 2013, respectively, and 65 billing days in the fourth quarter of 2013. 

Selling, general, and administrative (SG&A) expenses declined 6% in the quarter to $15.5 million from $16.4 million in the 2013 first quarter.  SG&A expenses as a percentage of revenue were 15.8% compared with 15.1% a year ago. 

Cash used in operations was $9.3 million in the 2014 first quarter, compared with cash used in operations of $7.1 million in the 2013 first quarter.  At March 28, 2013, the Company had $32.3 million in cash compared with $30.7 million at the end of the 2013 first quarter and $46.2 million at year-end 2013.  Cash balances reflect both the 2014 and 2013 first quarters ending on a payroll date while the 2013 fourth quarter did not.  The Company had no outstanding debt at the end of the 2014 or 2013 first quarters. 

The Company's effective tax rate in the 2014 first quarter was 41.1% compared with 33.2% in the 2013 first quarter.  The higher tax rate in the 2014 first quarter reflected the expiration of certain tax credits in 2013, while the lower tax rate in the 2013 first quarter reflected the extension in January 2013, retroactive to 2012, of the federal R&D tax credit that expired in 2011.   

The Company repurchased approximately 211,000 of its shares in the 2014 first quarter at an average price of $17.00 per share. In April 2014, 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 March 31, 2014, approximately 900,000 shares were available under its current repurchase authorizations.    

2014 Second Quarter and Full Year Guidance

CTG is providing guidance for the 2014 second quarter and 2014 full year in the table below.  Based on its current business activity, pipeline, and trends in its business, the Company is revising 2014 annual revenue and earnings guidance from the initial guidance provided in its 2013 fourth earnings release issued on February 25, 2014.

 

 

2014 Second Quarter

(64 billing days in both 2014 and 2013)

 

Range

 

Range midpoint

Change from 2013 second 

quarter at range midpoint





Revenue

$101-103 million

$102 million

- 5%

Diluted net income per share

$0.21 - $0.23

$0.22

- 8%





 

2014 Full Year (Projected tax rate of 38% to 40%)

 

Range

 

Range midpoint

Change from 2013

at range midpoint









Revenue

$393-407 million

$400 million

- 5%

Diluted net income per share 

$0.83 - $0.91

$0.87

- 5%





 

Mr. Boldt commented, "Looking to the rest of 2014, we have lowered our guidance for our IT staffing business as we have not yet seen the expected pickup in demand from our largest staffing customer. While the recent start and ramp up of new health IT projects and growth in health advisory services will benefit 2014 earnings, we expect that the federal government's recent unexpected one-year extension of the ICD-9 to ICD-10 diagnostic code conversion deadline to October 1, 2015 will decrease our health IT revenue from initial expectations.  Accordingly, we have revised our guidance for 2014 to reflect current market conditions.  Although we are reducing our 2014 guidance, from a macro perspective, CTG is performing well relative to our competitors in the IT services market and health IT sector, who are also seeing revenue growth challenged by reductions and deferrals in client spending."    

Mr. Boldt concluded, "EHRs are here to stay and many U.S. hospitals still have significant investments to make in EHR systems implementation and optimization. That said, spending on EHR projects will likely be muted in the short term until hospitals reduce their operating cost structure, which is a major strategic initiative at virtually every large hospital system in the U.S.  However, EHRs remain a significant long-term opportunity for CTG in the U.S., as well as Europe. Under U.S. health reform, EHRs capable of exchanging patient information across a large provider network or geographic area are essential for large health providers to remain financially viable and adapt to new value-based care delivery and reimbursement models.  In Europe, where we have a large presence, the adoption of U.S. EHR systems is increasingly being seen as the route to significant reductions in healthcare costs and improvements in care delivery, though we expect it will take a few years for this emerging opportunity to gain strong momentum. Demand is growing for our health IT consulting and application management services. Our innovative medical data analytics products that use powerful business intelligence to lower healthcare costs and improve patient outcomes are gaining traction as the healthcare market looks to unlock the value of information assets through solutions that leverage 'big data.' As a leading provider of IT and business consulting services to the healthcare market, CTG has the resources and offerings to capitalize on these diverse opportunities to grow our business and profitability."      

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 2013 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, April 22, 2014 at 8:30 a.m. Eastern Daylight 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 8:10 a.m. and 8:20 a.m. and ask for the CTG conference call.  A replay of the call will be available between 10:30 a.m. Eastern Daylight Time April 22, 2014 and 11:00 p.m. Eastern Daylight Time April 25, 2014 by dialing 1-800-475-6701 and entering the conference ID number 306732.

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.

About CTG

CTG develops innovative IT solutions to address the business needs and challenges of companies in several higher-growth industries including healthcare, technology services, energy, and financial services.  As a leading provider of IT and business consulting services to the healthcare market, CTG offers healthcare institutions, physician practices, payers, and related organizations a full range of offerings to help them achieve clinical, operational, and financial goals.  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 3,700 employees and operates in North America and Western Europe.  CTG posts news and other important information on the Web at www.ctg.com.

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





March 28,


March 29,





2014


2013










Revenue



$

97,911


$

108,495

Direct costs




76,979



85,896

Selling, general and administrative expenses



15,457



16,417

Operating income




5,475



6,182

Other expense, net




(97)



(109)

Income before income taxes




5,378



6,073

Provision for income taxes




2,212



2,016

Net income



$

3,166


$

4,057










Net income per share:









Basic



$

0.21


$

0.26


Diluted



$

0.19


$

0.24










Weighted average shares outstanding:









Basic




15,153



15,430


Diluted




16,576



17,066










Cash dividend declared per share



$

0.06


$

0.05

 

COMPUTER TASK GROUP, INCORPORATED (CTG)
 Condensed Consolidated Balance Sheets
(Unaudited)
(amounts in thousands)





March 28,


December 31,


March 29,




2014


2013


2013












Current Assets:











Cash and cash equivalents


$

32,309


$

46,227


$

30,745


Accounts receivable, net



72,965



67,422



74,916


Other current assets



3,505



2,770



3,242

Total current assets



108,779



116,419



108,903













Property and equipment, net



8,231



8,241



6,956


Goodwill



37,638



37,638



37,879


Other assets



12,084



12,133



10,385












Total Assets


$

166,732


$

174,431


$

164,123












Current Liabilities:











Accounts payable


$

8,166


$

9,536


$

9,264


Dividend payable



897



748



762


Accrued compensation



24,834



31,460



26,055


Other current liabilities



8,493



7,185



8,612

Total current liabilities



42,390



48,929



44,693













Long-term debt



-



-



-


Other liabilities



10,876



11,660



13,214


Shareholders' equity



113,466



113,842



106,216












Total Liabilities and Shareholders' Equity


$

166,732


$

174,431


$

164,123

 

COMPUTER TASK GROUP, INCORPORATED (CTG)
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(amounts in thousands)





For the Quarter Ended




March 28,


March 29,




2014


2013









Net income


$

3,166


$

4,057


Depreciation and amortization expense



837



631


Equity-based compensation expense



551



546


Other operating items



(13,829)



(12,307)

Net cash used in operating activities



(9,275)



(7,073)

Net cash used in investing activities



(742)



(3,465)

Net cash provided by (used in) financing activities



(3,913)



1,141

Effect of exchange rates on cash and cash equivalents



12



(472)

Net decrease in cash and cash equivalents



(13,918)



(9,869)

Cash and cash equivalents at beginning of period



46,227



40,614

Cash and cash equivalents at end of period


$

32,309


$

30,745

 

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

ctg-e

SOURCE CTG

More Stories By PR Newswire

Copyright © 2007 PR Newswire. All rights reserved. Republication or redistribution of PRNewswire content is expressly prohibited without the prior written consent of PRNewswire. PRNewswire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

@BigDataExpo Stories
As enterprises look to take advantage of the cloud, they need to understand the importance of safeguarding their confidential and sensitive data in cloud environments. Enterprises must protect their data from (i) system administrators who don't need to see the data in the clear and (ii) adversaries who become system administrators from stolen credentials. In short, enterprises must take control of their data: The best way to do this is by using advanced encryption, centralized key management and...
Cultural, regulatory, environmental, political and economic (CREPE) conditions over the past decade are creating cross-industry solution spaces that require processes and technologies from both the Internet of Things (IoT), and Data Management and Analytics (DMA). These solution spaces are evolving into Sensor Analytics Ecosystems (SAE) that represent significant new opportunities for organizations of all types. Public Utilities throughout the world, providing electricity, natural gas and water,...
The true value of the Internet of Things (IoT) lies not just in the data, but through the services that protect the data, perform the analysis and present findings in a usable way. With many IoT elements rooted in traditional IT components, Big Data and IoT isn’t just a play for enterprise. In fact, the IoT presents SMBs with the prospect of launching entirely new activities and exploring innovative areas. CompTIA research identifies several areas where IoT is expected to have the greatest impac...
There is little doubt that Big Data solutions will have an increasing role in the Enterprise IT mainstream over time. 8th International Big Data Expo, co-located with 17th International Cloud Expo - to be held November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA - has announced its Call for Papers is open. As advanced data storage, access and analytics technologies aimed at handling high-volume and/or fast moving data all move center stage, aided by the cloud computing bo...
The Internet of Things will greatly expand the opportunities for data collection and new business models driven off of that data. In her session at @ThingsExpo, Esmeralda Swartz, CMO of MetraTech, discussed how for this to be effective you not only need to have infrastructure and operational models capable of utilizing this new phenomenon, but increasingly service providers will need to convince a skeptical public to participate. Get ready to show them the money!
SYS-CON Events announced today that MetraTech, now part of Ericsson, has been named “Silver Sponsor” of SYS-CON's 16th International Cloud Expo®, which will take place on June 9–11, 2015, at the Javits Center in New York, NY. Ericsson is the driving force behind the Networked Society- a world leader in communications infrastructure, software and services. Some 40% of the world’s mobile traffic runs through networks Ericsson has supplied, serving more than 2.5 billion subscribers.
The Internet of Things is not only adding billions of sensors and billions of terabytes to the Internet. It is also forcing a fundamental change in the way we envision Information Technology. For the first time, more data is being created by devices at the edge of the Internet rather than from centralized systems. What does this mean for today's IT professional? In this Power Panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, panelists will addresses this very serious issue o...
SYS-CON Events announced today that BMC will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. BMC delivers software solutions that help IT transform digital enterprises for the ultimate competitive business advantage. BMC has worked with thousands of leading companies to create and deliver powerful IT management services. From mainframe to cloud to mobile, BMC pairs high-speed digital innovation with robust...
As cloud gives an opportunity to businesses to buy services externally – how is cloud impacting your customers? In his General Session at 15th Cloud Expo, Fabio Gori, Director of Worldwide Cloud Marketing at Cisco, provided answers to big questions: Do you see hybrid cloud as where the world is going? What benefits does it bring? And how does Cisco connect all of these clouds? He also discussed Intercloud and Cisco’s investment on it.
In their general session at 16th Cloud Expo, Michael Piccininni, Global Account Manager – Cloud SP at EMC Corporation, and Mike Dietze, Regional Director at Windstream Hosted Solutions, will review next generation cloud services, including the Windstream-EMC Tier Storage solutions, and discuss how to increase efficiencies, improve service delivery and enhance corporate cloud solution development. Speaker Bios Michael Piccininni is Global Account Manager – Cloud SP at EMC Corporation. He has b...
SYS-CON Events announced today that O'Reilly Media has been named “Media Sponsor” of SYS-CON's 16th International Cloud Expo®, which will take place on June 9–11, 2015, at the Javits Center in New York City, NY. O'Reilly Media spreads the knowledge of innovators through its books, online services, magazines, and conferences. Since 1978, O'Reilly Media has been a chronicler and catalyst of cutting-edge development, homing in on the technology trends that really matter and spurring their adoption...
The OpenStack cloud operating system includes Trove, a database abstraction layer. Rather than applications connecting directly to a specific type of database, they connect to Trove, which in turn connects to one or more specific databases. One target database is Postgres Plus Cloud Database, which includes its own RESTful API. Trove was originally developed around MySQL, whose interfaces are significantly less complicated than those of the Postgres cloud database. In his session at 16th Cloud...
Software is eating the world. Companies that were not previously in the technology space now find themselves competing with Google and Amazon on speed of innovation. As the innovation cycle accelerates, companies must embrace rapid and constant change to both applications and their infrastructure, and find a way to deliver speed and agility of development without sacrificing reliability or efficiency of operations. In her Day 2 Keynote DevOps Summit, Victoria Livschitz, CEO of Qubell, discussed...
Discussions about cloud computing are evolving into discussions about enterprise IT in general. As enterprises increasingly migrate toward their own unique clouds, new issues such as the use of containers and microservices emerge to keep things interesting. In this Power Panel at 16th Cloud Expo, moderated by Conference Chair Roger Strukhoff, panelists will address the state of cloud computing today, and what enterprise IT professionals need to know about how the latest topics and trends affec...
Move from reactive to proactive cloud management in a heterogeneous cloud infrastructure. In his session at 16th Cloud Expo, Manoj Khabe, Innovative Solution-Focused Transformation Leader at Vicom Computer Services, Inc., will show how to replace a help desk-centric approach with an ITIL-based service model and service-centric CMDB that’s tightly integrated with an event and incident management platform. Learn how to expand the scope of operations management to service management. He will al...
Working with Big Data is challenging, especially when decision makers depend on market insights and intelligence from your data but don't have quick access to it or find it unusable. In their session at 6th Big Data Expo, Ian Khan, Global Strategic Positioning & Brand Manager at Solgenia; Zel Bianco, President, CEO and Co-Founder of Interactive Edge of Solgenia; and Ermanno Bonifazi, CEO & Founder at Solgenia, discussed how a revolutionary cloud-based BI along with mobile analytics is already c...
The world is at a tipping point where the technology, the device and global adoption are converging to such a point that we will see an explosion of a world where smartphone devices not only allow us to talk to each other, but allow for communication between everything – serving as a central hub from which we control our world – MediaTek is at the heart of both driving this and allowing the markets to drive this reality forward themselves. The next wave of consumer gadgets is here – smart, con...
Hardware will never be more valuable than on the day it hits your loading dock. Each day new servers are not deployed to production the business is losing money. While Moore's Law is typically cited to explain the exponential density growth of chips, a critical consequence of this is rapid depreciation of servers. The hardware for clustered systems (e.g., Hadoop, OpenStack) tends to be significant capital expenses. In his session at Big Data Expo, Mason Katz, CTO and co-founder of StackIQ, disc...
The 4th International Internet of @ThingsExpo, co-located with the 17th International Cloud Expo - to be held November 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA - announces that its Call for Papers is open. The Internet of Things (IoT) is the biggest idea since the creation of the Worldwide Web more than 20 years ago.
SYS-CON Events announced today that DragonGlass, an enterprise search platform, will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. After eleven years of designing and building custom applications, OpenCrowd has launched DragonGlass, a cloud-based platform that enables the development of search-based applications. These are a new breed of applications that utilize a search index as their backbone for data...