Welcome!

Big Data Journal Authors: Liz McMillan, Pat Romanski, Roger Strukhoff, Jason Thompson, Elizabeth White

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.

Cloud Expo Breaking News
SYS-CON Events announced today that Cloudian, Inc., the leading provider of hybrid cloud storage solutions, has been named “Bronze Sponsor” of SYS-CON's 15th International Cloud Expo®, which will take place on November 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. Cloudian is a Foster City, Calif.-based software company specializing in cloud storage. Cloudian HyperStore® is an S3-compatible cloud object storage platform that enables service providers and enterprises to build reliable, affordable and scalable hybrid cloud storage solutions. Cloudian actively partners with leading cloud computing environments including Amazon Web Services, Citrix Cloud Platform, Apache CloudStack, OpenStack and the vast ecosystem of S3 compatible tools and applications. Cloudian's customers include Vodafone, Nextel, NTT, Nifty, and LunaCloud. The company has additional offices in China and Japan.
After a couple of false starts, cloud-based desktop solutions are picking up steam, driven by trends such as BYOD and pervasive high-speed connectivity. In his session at 15th Cloud Expo, Seth Bostock, CEO of IndependenceIT, cuts through the hype and the acronyms, and discusses the emergence of full-featured cloud workspaces that do for the desktop what cloud infrastructure did for the server. He’ll discuss VDI vs DaaS, implementation strategies and evaluation criteria.
SYS-CON Events announced today that Esri has been named “Bronze Sponsor” of SYS-CON's 15th International Cloud Expo®, which will take place on November 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. Esri inspires and enables people to positively impact the future through a deeper, geographic understanding of the changing world around them. For more information, visit http://www.esri.com.
Cloud computing started a technology revolution; now DevOps is driving that revolution forward. By enabling new approaches to service delivery, cloud and DevOps together are delivering even greater speed, agility, and efficiency. No wonder leading innovators are adopting DevOps and cloud together! In his session at DevOps Summit, Andi Mann, Vice President of Strategic Solutions at CA Technologies, will explore the synergies in these two approaches, with practical tips, techniques, research data, war stories, case studies, and recommendations.
Cloud Computing is evolving into a Big Three of Amazon Web Services, Google Cloud, and Microsoft Azure. Cloud 360: Multi-Cloud Bootcamp, being held Nov 4–5, 2014, in conjunction with 15th Cloud Expo in Santa Clara, CA, delivers a real-world demonstration of how to deploy and configure a scalable and available web application on all three platforms. The Cloud 360 Bootcamp, led by Janakiram MSV, an analyst with Gigaom Research, is the first bootcamp that introduces the core concepts of Infrastructure as a Service (IaaS) based on the workings of the Big Three platforms – Amazon EC2, Google Compute Engine, and Azure VMs. Bootcamp attendees will get to see the big picture and also receive the knowledge needed to make the best cloud decisions for their business applications and entire enterprise IT organization.
“Distrix fits into the overall cloud and IoT model around software-defined networking. There’s a broad category around software-defined networking that’s focused on data center, and we focus on the WAN,” explained Jay Friedman, President of Distrix, in this SYS-CON.tv interview at the Internet of @ThingsExpo, held June 10-12, 2014, at the Javits Center in New York City. Internet of @ThingsExpo 2014 Silicon Valley, November 4–6, at the Santa Clara Convention Center in Santa Clara, CA, will feature technical sessions from a rock star conference faculty and the leading IoT industry players in the world.
The Internet of Things promises to transform businesses (and lives), but navigating the business and technical path to success can be difficult to understand. In his session at 15th Internet of @ThingsExpo, Chad Jones, Vice President, Product Strategy of LogMeIn's Xively IoT Platform, will show you how to approach creating broadly successful connected customer solutions using real world business transformation studies including New England BioLabs and more.
Scott Jenson leads a project called The Physical Web within the Chrome team at Google. Project members are working to take the scalability and openness of the web and use it to talk to the exponentially exploding range of smart devices. Nearly every company today working on the IoT comes up with the same basic solution: use my server and you'll be fine. But if we really believe there will be trillions of these devices, that just can't scale. We need a system that is open a scalable and by using the URL as a basic building block, we open this up and get the same resilience that the web enjoys.
“The Internet of Things is a wave that has arrived and it’s growing really fast. The concern at Aria Systems is making sure that people understand the ramifications of their attempts to monetize whatever it is they build on the Internet of Things," explained C Brendan O’Brien, Co-founder and Chief Architect at Aria Systems, in this SYS-CON.tv interview at the Internet of @ThingsExpo, held June 10-12, 2014, at the Javits Center in New York City. Internet of @ThingsExpo 2014 Silicon Valley, November 4–6, at the Santa Clara Convention Center in Santa Clara, CA, will feature technical sessions from a rock star conference faculty and the leading IoT industry players in the world.
The Internet of Things is a natural complement to the cloud and related technologies such as Big Data, analytics, and mobility. In his session at Internet of @ThingsExpo, Joe Weinman will lay out four generic strategies – digital disciplines – to exploit emerging digital technologies for strategic advantage. Joe Weinman has held executive leadership positions at Bell Labs, AT&T, Hewlett-Packard, and Telx, in areas such as corporate strategy, business development, product management, operations, and R&D.
SYS-CON Events announced today that DevOps.com has been named “Media Sponsor” of SYS-CON's “DevOps Summit at Cloud Expo,” which will take place on June 10–12, 2014, at the Javits Center in New York City, New York. DevOps.com is where the world meets DevOps. It is the largest collection of original content relating to DevOps on the web today Featuring up-to-the-minute news, feature stories, blogs, bylined articles and more, DevOps.com is where the thought leaders of the DevOps movement make their ideas known.
There are 182 billion emails sent every day, generating a lot of data about how recipients and ISPs respond. Many marketers take a more-is-better approach to stats, preferring to have the ability to slice and dice their email lists based numerous arbitrary stats. However, fundamentally what really matters is whether or not sending an email to a particular recipient will generate value. Data Scientists can design high-level insights such as engagement prediction models and content clusters that allow marketers to cut through the noise and design their campaigns around strong, predictive signals, rather than arbitrary statistics. SendGrid sends up to half a billion emails a day for customers such as Pinterest and GitHub. All this email adds up to more text than produced in the entire twitterverse. We track events like clicks, opens and deliveries to help improve deliverability for our customers – adding up to over 50 billion useful events every month. While SendGrid data covers only abo...
SYS-CON Events announced today that the Web Host Industry Review has been named “Media Sponsor” of SYS-CON's 15th International Cloud Expo®, which will take place on November 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. Since 2000, The Web Host Industry Review has made a name for itself as the foremost authority of the Web hosting industry providing reliable, insightful and comprehensive news, reviews and resources to the hosting community. TheWHIR Blogs provides a community of expert industry perspectives. The Web Host Industry Review Magazine also offers a business-minded, issue-driven perspective of interest to executives and decision-makers. WHIR TV offers on demand web hosting video interviews and web hosting video features of the key persons and events of the web hosting industry. WHIR Events brings together like-minded hosting industry professionals and decision-makers in local communities. TheWHIR is an iNET Interactive property.
SYS-CON Events announced today that O'Reilly Media has been named “Media Sponsor” of SYS-CON's 15th International Cloud Expo®, which will take place on November 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. 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 by amplifying "faint signals" from the alpha geeks who are creating the future. An active participant in the technology community, the company has a long history of advocacy, meme-making, and evangelism.
SYS-CON Events announced today that Verizon has been named “Gold Sponsor” of SYS-CON's 15th International Cloud Expo®, which will take place on November 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA. Verizon Enterprise Solutions creates global connections that generate growth, drive business innovation and move society forward. With industry-specific solutions and a full range of global wholesale offerings provided over the company's secure mobility, cloud, strategic networking and advanced communications platforms, Verizon Enterprise Solutions helps open new opportunities around the world for innovation, investment and business transformation. Visit verizonenterprise.com to learn more.