Welcome!

Big Data Journal Authors: Jayaram Krishnaswamy, Elizabeth White, Liz McMillan, Nikita Ivanov, Carmen Gonzalez

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
The security devil is always in the details of the attack: the ones you've endured, the ones you prepare yourself to fend off, and the ones that, you fear, will catch you completely unaware and defenseless. The Internet of Things (IoT) is nothing if not an endless proliferation of details. It's the vision of a world in which continuous Internet connectivity and addressability is embedded into a growing range of human artifacts, into the natural world, and even into our smartphones, appliances, a...
DevOps Summit 2015 New York, co-located with the 16th International Cloud Expo - to be held June 9-11, 2015, at the Javits Center in New York City, NY - announces that it is now accepting Keynote Proposals. The widespread success of cloud computing is driving the DevOps revolution in enterprise IT. Now as never before, development teams must communicate and collaborate in a dynamic, 24/7/365 environment. There is no time to wait for long development cycles that produce software that is obsolete...
The 3rd International Internet of @ThingsExpo, co-located with the 16th International Cloud Expo - to be held June 9-11, 2015, at the Javits Center in New York City, NY - announces that its Call for Papers is now open. The Internet of Things (IoT) is the biggest idea since the creation of the Worldwide Web more than 20 years ago.
The definition of IoT is not new, in fact it’s been around for over a decade. What has changed is the public's awareness that the technology we use on a daily basis has caught up on the vision of an always on, always connected world. If you look into the details of what comprises the IoT, you’ll see that it includes everything from cloud computing, Big Data analytics, “Things,” Web communication, applications, network, storage, etc. It is essentially including everything connected online from ha...
How do APIs and IoT relate? The answer is not as simple as merely adding an API on top of a dumb device, but rather about understanding the architectural patterns for implementing an IoT fabric. There are typically two or three trends: Exposing the device to a management framework Exposing that management framework to a business centric logic Exposing that business layer and data to end users. This last trend is the IoT stack, which involves a new shift in the separation of what stuff happe...
"SAP had made a big transition into the cloud as we believe it has significant value for our customers, drives innovation and is easy to consume. When you look at the SAP portfolio, SAP HANA is the underlying platform and it powers all of our platforms and all of our analytics," explained Thorsten Leiduck, VP ISVs & Digital Commerce at SAP, in this SYS-CON.tv interview at 15th Cloud Expo, held Nov 4-6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
SAP is delivering break-through innovation combined with fantastic user experience powered by the market-leading in-memory technology, SAP HANA. In his General Session at 15th Cloud Expo, Thorsten Leiduck, VP ISVs & Digital Commerce, SAP, discussed how SAP and partners provide cloud and hybrid cloud solutions as well as real-time Big Data offerings that help companies of all sizes and industries run better. SAP launched an application challenge to award the most innovative SAP HANA and SAP HANA...
An entirely new security model is needed for the Internet of Things, or is it? Can we save some old and tested controls for this new and different environment? In his session at @ThingsExpo, New York's at the Javits Center, Davi Ottenheimer, EMC Senior Director of Trust, reviewed hands-on lessons with IoT devices and reveal a new risk balance you might not expect. Davi Ottenheimer, EMC Senior Director of Trust, has more than nineteen years' experience managing global security operations and asse...
SYS-CON Events announced today that Gridstore™, the leader in hyper-converged infrastructure purpose-built to optimize Microsoft workloads, 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. Gridstore™ is the leader in hyper-converged infrastructure purpose-built for Microsoft workloads and designed to accelerate applications in virtualized environments. Gridstore’s hyper-converged infrastructure is the ...
SYS-CON Events announced today that Cloudian, Inc., the leading provider of hybrid cloud storage solutions, 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. Cloudian, Inc., is a Foster City, California - based software company specializing in cloud storage software. The main product is Cloudian, an Amazon S3-compliant cloud object storage platform, the bedrock of cloud computing systems, that enables c...
The 3rd International Internet of @ThingsExpo, co-located with the 16th International Cloud Expo - to be held June 9-11, 2015, at the Javits Center in New York City, NY - announces that its Call for Papers is now open. The Internet of Things (IoT) is the biggest idea since the creation of the Worldwide Web more than 20 years ago.
The 4th International DevOps Summit, co-located with16th International Cloud Expo – being held June 9-11, 2015, at the Javits Center in New York City, NY – announces that its Call for Papers is now open. Born out of proven success in agile development, cloud computing, and process automation, DevOps is a macro trend you cannot afford to miss. From showcase success stories from early adopters and web-scale businesses, DevOps is expanding to organizations of all sizes, including the world's large...
Explosive growth in connected devices. Enormous amounts of data for collection and analysis. Critical use of data for split-second decision making and actionable information. All three are factors in making the Internet of Things a reality. Yet, any one factor would have an IT organization pondering its infrastructure strategy. How should your organization enhance its IT framework to enable an Internet of Things implementation? In his session at Internet of @ThingsExpo, James Kirkland, Chief Ar...
The 3rd International @ThingsExpo, co-located with the 16th International Cloud Expo - to be held June 9-11, 2015, at the Javits Center in New York City, NY - announces that it is now accepting Keynote Proposals. The Internet of Things (IoT) is the most profound change in personal and enterprise IT since the creation of the Worldwide Web more than 20 years ago. All major researchers estimate there will be tens of billions devices - computers, smartphones, tablets, and sensors - connected to th...
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!
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 @ThingsExpo, Sean Lorenz, Technical Product Manager for Xively at LogMeIn, demonstrated how to approach creating broadly successful connected customer solutions using real world business transformation studies including New England BioLabs and more.
There's Big Data, then there's really Big Data from the Internet of Things. IoT is evolving to include many data possibilities like new types of event, log and network data. The volumes are enormous, generating tens of billions of logs per day, which raise data challenges. Early IoT deployments are relying heavily on both the cloud and managed service providers to navigate these challenges. In her session at Big Data Expo®, Hannah Smalltree, Director at Treasure Data, discussed how IoT, Big D...
The Internet of Things is tied together with a thin strand that is known as time. Coincidentally, at the core of nearly all data analytics is a timestamp. When working with time series data there are a few core principles that everyone should consider, especially across datasets where time is the common boundary. In his session at Internet of @ThingsExpo, Jim Scott, Director of Enterprise Strategy & Architecture at MapR Technologies, discussed single-value, geo-spatial, and log time series dat...
Comparing cloud providers is complicated. With constant price drops and the frequent introduction of new instance types, no matter what answer you come up with today it is sure to change in three months. Taking into account differences in performance, it gets even more confusing when you realize that applications run differently on different clouds. One thing is certain though: price in a vacuum doesn’t tell you the whole story. In fact, it’s a lot like selecting a car based on sticker price an...
The very name is kind of ridiculous, don’t you think? The word “ephemeral” means it can go away. It’s temporary. Fleeting, even. So why would I want to depend on storing something in a medium that can disappear without warning? And why am I forced to buy more of it when all I want is more CPUs or RAM? Welcome to the paradox of ephemeral storage from cloud computing providers. Ephemeral storage exists only because of how first-generation cloud providers chunk up servers. The business model is ...