CTG (Nasdaq: CTG) (“Company”), a leader in North America and
Western Europe helping companies employ digital IT solutions and
services to drive their productivity and profitability, today
reported its financial results for the fourth quarter and full year
ended December 31, 2022. Results include the first full quarter of
Eleviant Technologies (Eleviant), which was acquired by CTG on
September 29, 2022.
Filip Gydé, CTG President and CEO commented, “We are very
excited about the momentum we have underway, with strong fourth
quarter results that reflect an improved mix of digital IT
solutions in both North America and Europe. Our fourth quarter
gross margin from our IT Solutions and Services segments expanded
590 basis points to 31.8%, our highest level in recent years. Our
fourth quarter North America IT Solutions and Services segment
achieved gross margins of 43.9%, up from 29.4% a year ago,
resulting from the increasing mix of our business toward digital
solutions and driving the expansion in our adjusted EBITDA
margins.”
Mr. Gydé added, “The acquisition of Eleviant is exceeding our
expectations and accelerating our strategy. We look forward to
further leveraging our new digital IT capabilities and increased
global delivery capacity, flexibility and agility to deliver
improving results as we work to achieve our 2023 goals. We began
our journey to transform away from providing IT staffing services
and into an IT solutions provider in 2018, and later added a
digital focus in 2021. We are excited as we journey toward the
completion of the first phase of our transformation and the upside
on profitability which that represents. To date, we have made
significant progress in all segments of our business and are
finalizing our goals and objectives for the future. In the near
term, we look forward to sharing our expectations for further
improving operating results during the second phase of our
transformation.”
Consolidated Fourth Quarter 2022 Review
(Narrative compares with prior-year period unless otherwise noted)
(unaudited)
($ in thousands) |
For the Quarter Ended |
|
Change 2021-2022 |
|
Change 2020-2021 |
|
Dec. 31, 2022 |
|
Dec. 31, 2021 |
|
Dec. 31, 2020 |
|
$ |
|
% |
|
$ |
|
% |
Revenue |
$ |
77,902 |
|
|
$ |
112,389 |
|
|
$ |
101,348 |
|
|
$ |
(34,487 |
) |
|
-30.7 |
% |
|
$ |
11,041 |
|
10.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Operating Income |
$ |
2,451 |
|
|
$ |
5,141 |
|
|
$ |
3,325 |
|
|
$ |
(2,690 |
) |
|
-52.3 |
% |
|
$ |
1,816 |
|
54.6 |
% |
GAAP Operating Margin |
|
3.1 |
% |
|
|
4.6 |
% |
|
|
3.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Operating
Income* |
$ |
3,985 |
|
|
$ |
5,352 |
|
|
$ |
3,581 |
|
|
$ |
(1,367 |
) |
|
-25.5 |
% |
|
$ |
1,771 |
|
49.5 |
% |
Non-GAAP Operating
Margin* |
|
5.1 |
% |
|
|
4.8 |
% |
|
|
3.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Net Income |
$ |
1,227 |
|
|
$ |
8,717 |
|
|
$ |
1,905 |
|
|
$ |
(7,490 |
) |
|
-85.9 |
% |
|
$ |
6,812 |
|
357.6 |
% |
GAAP Net Margin |
|
1.6 |
% |
|
|
7.8 |
% |
|
|
1.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Net Income* |
$ |
2,186 |
|
|
$ |
3,774 |
|
|
$ |
2,044 |
|
|
$ |
(1,588 |
) |
|
-42.1 |
% |
|
$ |
1,730 |
|
84.6 |
% |
Non-GAAP Net Income
Margin* |
|
2.8 |
% |
|
|
3.4 |
% |
|
|
2.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA* |
$ |
4,807 |
|
|
$ |
6,513 |
|
|
$ |
4,935 |
|
|
$ |
(1,706 |
) |
|
-26.2 |
% |
|
$ |
1,578 |
|
32.0 |
% |
Adjusted EBITDA Margin* |
|
6.2 |
% |
|
|
5.8 |
% |
|
|
4.9 |
% |
|
|
|
|
|
|
|
|
* A reconciliation of GAAP to non-GAAP information is included
in the financial tables below
- The change in revenue reflects last
year’s fourth quarter benefiting more than $25 million from a major
health system engagement in North America, and $9.3 million related
to the intentional disengagement from lower-margin non-strategic
technology services business.
- Selling, general and administrative
(SG&A) expenses declined 4.1% to $19.1 million reflecting cost
discipline while continuing to invest in business development and
related resources. As a percentage of revenue, SG&A increased
680 basis points due to reduced operating leverage given the
significant prior-year project.
- Included in GAAP net income was $0.5
million of severance and $0.4 million of acquisition-related
expenses while the prior-year period included a $5.1 million
reversal of a valuation allowance against deferred tax assets in
the United States and $0.2 million of acquisition expenses.
Earnings per diluted share were $0.08 for the fourth quarter of
2022 compared with $0.58 for the fourth quarter of 2021. Excluding
the atypical expenses from both periods, non-GAAP earnings per
diluted share for the fourth quarter were $0.14 in 2022 compared
with $0.25 in 2021.
Fourth Quarter Segment
Performance(unaudited)
IT Solutions and Services
North America
($ in thousands) |
For the Quarter Ended |
|
Change 2021-2022 |
|
Change 2020-2021 |
|
Dec. 31, 2022 |
|
Dec. 31, 2021 |
|
Dec. 31, 2020 |
|
$ |
|
% |
|
$ |
|
|
% |
Revenue |
$ |
22,924 |
|
|
$ |
45,075 |
|
|
$ |
22,440 |
|
|
$ |
(22,151 |
) |
|
|
-49.1 |
% |
|
$ |
22,635 |
|
|
|
100.9 |
% |
Percent of total |
|
29.4 |
% |
|
|
40.1 |
% |
|
|
22.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
$ |
10,059 |
|
|
$ |
13,262 |
|
|
$ |
8,058 |
|
|
$ |
(3,203 |
) |
|
|
-24.2 |
% |
|
$ |
5,204 |
|
|
|
64.6 |
% |
Gross margin |
|
43.9 |
% |
|
|
29.4 |
% |
|
|
35.9 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contribution profit |
$ |
6,112 |
|
|
$ |
9,166 |
|
|
$ |
5,160 |
|
|
$ |
(3,054 |
) |
|
|
-33.3 |
% |
|
$ |
4,006 |
|
|
|
77.6 |
% |
Contribution margin |
|
26.7 |
% |
|
|
20.3 |
% |
|
|
23.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
- The 2021 fourth quarter revenue
included more than $25 million for a large training,
implementation, and support engagement for a health system in North
America that did not repeat in 2022. The 2022 fourth quarter
results for our North America segment include Eleviant, the company
we acquired at the end of the 2022 third quarter.
- Segment margins saw substantial
expansion, despite lower revenue, given the improved mix of digital
solutions and contribution from Eleviant.
Europe
($ in thousands) |
For the Quarter Ended |
|
Change 2021-2022 |
|
Change 2020-2021 |
|
Dec. 31, 2022 |
|
Dec. 31, 2021 |
|
Dec. 31, 2020 |
|
$ |
|
% |
|
$ |
|
% |
Revenue |
$ |
37,035 |
|
|
$ |
40,081 |
|
|
$ |
43,857 |
|
|
$ |
(3,046 |
) |
|
|
-7.6 |
% |
|
$ |
(3,776 |
) |
|
|
-8.6 |
% |
Percent of total |
|
47.6 |
% |
|
|
35.7 |
% |
|
|
43.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
$ |
9,009 |
|
|
$ |
8,805 |
|
|
$ |
9,699 |
|
|
$ |
204 |
|
|
|
2.3 |
% |
|
$ |
(894 |
) |
|
|
-9.2 |
% |
Gross margin |
|
24.3 |
% |
|
|
22.0 |
% |
|
|
22.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contribution profit |
$ |
4,545 |
|
|
$ |
3,262 |
|
|
$ |
4,470 |
|
|
$ |
1,283 |
|
|
|
39.3 |
% |
|
$ |
(1,208 |
) |
|
|
-27.0 |
% |
Contribution margin |
|
12.3 |
% |
|
|
8.1 |
% |
|
|
10.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
- Segment margins benefited from improved
utilization, strategic pricing and greater mix of digital
solutions.
Non-Strategic Technology Services
($ in thousands) |
For the Quarter Ended |
|
Change 2021-2022 |
|
Change 2020-2021 |
|
Dec. 31, 2022 |
|
Dec. 31, 2021 |
|
Dec. 31, 2020 |
|
$ |
|
% |
|
$ |
|
% |
Revenue |
$ |
17,943 |
|
|
$ |
27,233 |
|
|
$ |
35,051 |
|
|
$ |
(9,290 |
) |
|
|
-34.1 |
% |
|
$ |
(7,818 |
) |
|
|
-22.3 |
% |
Percent of total |
|
23.0 |
% |
|
|
24.2 |
% |
|
|
34.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
$ |
2,435 |
|
|
$ |
2,947 |
|
|
$ |
3,870 |
|
|
$ |
(512 |
) |
|
|
-17.4 |
% |
|
$ |
(923 |
) |
|
|
-23.9 |
% |
Gross margin |
|
13.6 |
% |
|
|
10.8 |
% |
|
|
11.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contribution profit |
$ |
1,889 |
|
|
$ |
1,845 |
|
|
$ |
2,276 |
|
|
$ |
44 |
|
|
|
2.4 |
% |
|
$ |
(431 |
) |
|
|
-18.9 |
% |
Contribution margin |
|
10.5 |
% |
|
|
6.8 |
% |
|
|
6.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
- Non-Strategic Technology Services
segment margins improved as the Company selectively disengages from
its lowest margin business.
Consolidated Full Year 2022 Results (Narrative
compares with prior-year period unless otherwise noted)
($ in thousands) |
For the Year Ended |
|
Change 2021-2022 |
|
Change 2020-2021 |
|
Dec. 31, 2022 |
|
Dec. 31, 2021 |
|
Dec. 31, 2020 |
|
$ |
|
% |
|
$ |
|
% |
Revenue |
$ |
325,080 |
|
|
$ |
392,285 |
|
|
$ |
366,091 |
|
|
$ |
(67,205 |
) |
|
-17.1 |
% |
|
$ |
26,194 |
|
7.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Operating Income |
$ |
11,076 |
|
|
$ |
12,742 |
|
|
$ |
9,130 |
|
|
$ |
(1,666 |
) |
|
-13.1 |
% |
|
$ |
3,612 |
|
39.6 |
% |
GAAP Operating Margin |
|
3.4 |
% |
|
|
3.2 |
% |
|
|
2.5 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Operating
Income* |
$ |
13,906 |
|
|
$ |
14,042 |
|
|
$ |
11,329 |
|
|
$ |
(136 |
) |
|
-1.0 |
% |
|
$ |
2,713 |
|
23.9 |
% |
Non-GAAP Operating
Margin* |
|
4.3 |
% |
|
|
3.6 |
% |
|
|
3.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Net Income |
$ |
6,609 |
|
|
$ |
13,730 |
|
|
$ |
7,639 |
|
|
$ |
(7,121 |
) |
|
-51.9 |
% |
|
$ |
6,091 |
|
79.7 |
% |
GAAP Net Margin |
|
2.0 |
% |
|
|
3.5 |
% |
|
|
2.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Net Income* |
$ |
8,489 |
|
|
$ |
9,620 |
|
|
$ |
6,317 |
|
|
$ |
(1,131 |
) |
|
-11.8 |
% |
|
$ |
3,303 |
|
52.3 |
% |
Non-GAAP Net Income
Margin* |
|
2.6 |
% |
|
|
2.5 |
% |
|
|
1.7 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA* |
$ |
17,186 |
|
|
$ |
18,081 |
|
|
$ |
15,692 |
|
|
$ |
(895 |
) |
|
-4.9 |
% |
|
$ |
2,389 |
|
15.2 |
% |
Adjusted EBITDA Margin* |
|
5.3 |
% |
|
|
4.6 |
% |
|
|
4.3 |
% |
|
|
|
|
|
|
|
|
* A reconciliation of GAAP to non-GAAP information is included
in the financial tables below
- The full year results reflect similar
impacts in the fourth quarter as the Company continued to shift its
revenue mix to more solutions and services-based business. In 2022,
the Company intentionally disengaged from $30.3 million from its
lower-margin non-strategic technology services business, while the
Company intentionally disengaged from $21.9 million in 2021.
- SG&A expense as a percentage of
revenue was 21.2% in 2022 compared with 18.8% in 2021. Included was
$2.0 million of acquisition-related expenses and $0.8 million in
severance, compared with $1.1 million of acquisition-related
expenses and $0.2 million of rebranding expenses in 2021.
Full Year Segment Performance (unaudited)
North America IT Solutions and Services
($ in thousands) |
For the Year Ended |
|
Change 2021-2022 |
|
Change 2020-2021 |
|
Dec. 31, 2022 |
|
Dec. 31, 2021 |
|
Dec. 31, 2020 |
|
$ |
|
% |
|
$ |
|
% |
Revenue |
$ |
84,038 |
|
|
$ |
101,506 |
|
|
$ |
67,948 |
|
|
$ |
(17,468 |
) |
|
-17.2 |
% |
|
$ |
33,558 |
|
49.4 |
% |
Percent of total |
|
25.9 |
% |
|
|
25.9 |
% |
|
|
18.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
$ |
31,723 |
|
|
$ |
32,621 |
|
|
$ |
23,995 |
|
|
$ |
(898 |
) |
|
-2.8 |
% |
|
$ |
8,626 |
|
35.9 |
% |
Gross margin |
|
37.7 |
% |
|
|
32.1 |
% |
|
|
35.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contribution profit |
$ |
17,520 |
|
|
$ |
18,738 |
|
|
$ |
14,627 |
|
|
$ |
(1,218 |
) |
|
-6.5 |
% |
|
$ |
4,111 |
|
28.1 |
% |
Contribution margin |
|
20.8 |
% |
|
|
18.5 |
% |
|
|
21.5 |
% |
|
|
|
|
|
|
|
|
Europe IT Solutions and Services
($ in thousands) |
For the Year Ended |
|
Change 2021-2022 |
|
Change 2020-2021 |
|
Dec. 31, 2022 |
|
Dec. 31, 2021 |
|
Dec. 31, 2020 |
|
$ |
|
% |
|
$ |
|
% |
Revenue |
$ |
149,931 |
|
|
$ |
169,341 |
|
|
$ |
154,847 |
|
|
$ |
(19,410 |
) |
|
-11.5 |
% |
|
$ |
14,494 |
|
9.4 |
% |
Percent of total |
|
46.1 |
% |
|
|
43.2 |
% |
|
|
42.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
$ |
36,941 |
|
|
$ |
40,311 |
|
|
$ |
37,818 |
|
|
$ |
(3,370 |
) |
|
-8.4 |
% |
|
$ |
2,493 |
|
6.6 |
% |
Gross margin |
|
24.6 |
% |
|
|
23.8 |
% |
|
|
24.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contribution profit |
$ |
17,987 |
|
|
$ |
18,966 |
|
|
$ |
17,452 |
|
|
$ |
(979 |
) |
|
-5.2 |
% |
|
$ |
1,514 |
|
8.7 |
% |
Contribution margin |
|
12.0 |
% |
|
|
11.2 |
% |
|
|
11.3 |
% |
|
|
|
|
|
|
|
|
Non-Strategic Technology Services
($ in thousands) |
For the Year Ended |
|
Change 2021-2022 |
|
Change 2020-2021 |
|
Dec. 31, 2022 |
|
Dec. 31, 2021 |
|
Dec. 31, 2020 |
|
$ |
|
% |
|
$ |
|
% |
Revenue |
$ |
91,111 |
|
|
$ |
121,438 |
|
|
$ |
143,296 |
|
|
$ |
(30,327 |
) |
|
-25.0 |
% |
|
$ |
(21,858 |
) |
|
-15.3 |
% |
Percent of total |
|
28.0 |
% |
|
|
30.9 |
% |
|
|
39.1 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit |
$ |
11,413 |
|
|
$ |
13,518 |
|
|
$ |
15,145 |
|
|
$ |
(2,105 |
) |
|
-15.6 |
% |
|
$ |
(1,627 |
) |
|
-10.7 |
% |
Gross margin |
|
12.5 |
% |
|
|
11.1 |
% |
|
|
10.6 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contribution profit |
$ |
8,781 |
|
|
$ |
8,614 |
|
|
$ |
8,153 |
|
|
$ |
167 |
|
|
1.9 |
% |
|
$ |
461 |
|
|
5.7 |
% |
Contribution margin |
|
9.6 |
% |
|
|
7.1 |
% |
|
|
5.7 |
% |
|
|
|
|
|
|
|
|
Balance Sheet and Cash Flow
Cash and cash equivalents were $25.1 million compared with $35.6
million at year-end 2021. The Company used $17.4 million of cash
for the acquisition of Eleviant at the end of the third quarter.
Net cash provided by operations was $11.9 million for 2022.
At year-end, the Company had no outstanding balance on its
revolving line of credit facility or any other long-term debt. Days
sales outstanding were 84 in the fourth quarter of 2022 compared
with 67 in the prior-year period, which benefited from the large
North America project.
Successfully Executing on Strategy
CTG is a catalyst for digital transformation, helping IT and
business leaders accelerate their effort to integrate digital
technology into all areas of their operations to improve
productivity, strengthen business processes, elevate internal
controls, and deliver a higher value proposition to their
customers. CTG’s strategy for growth is to transform into a higher
performing, digital solutions based business. The three key
elements of its strategy are to:
- Become a global provider of digital IT
solutions by capitalizing on the compelling trend of digital
transformation, leverage the CTG brand built on reliability and
results, and deliver solutions primarily to the energy, healthcare,
finance, and manufacturing sectors.
- Expand the team organically by adding
highly qualified and experienced associates and employing
innovative tools and methodologies, and by making selective
acquisitions.
- Strengthen its margin profile both by
the mix of business and by reducing delivery costs including the
disengagement from low margin IT staffing service support in its
Non-Strategic Technology Services segment.
Fiscal 2023 Outlook
John M. Laubacker, Chief Financial Officer, said, “As
demonstrated this past year, we are making strong progress
executing our strategy and we expect it to continue in 2023. Our
revenue outlook for 2023 includes a reduction of $35 million to $40
million from the prior year as a result of the intentional
disengagement from the lowest margin business in our Non-Strategic
Technology Services segment, slightly offset by a full year of
revenue from Eleviant, which only contributed one quarter of
revenue in 2022 as the acquisition was completed at the end of
September. Ultimately, notwithstanding macroeconomic challenges and
top-line pressure, we continue to expect to expand our margins and
reach our adjusted EBITDA margin* goal of approximately 7% by the
end of 2023. Looking ahead, we expect our prudent investment in
business development resources will yield additional revenue and
operating profits in the future.”
Mr. Laubacker added, “We are kicking off an Enterprise Resource
Planning (ERP) system implementation which we expect to enhance our
core operating systems in order to create additional efficiencies,
capabilities and flexibility. The total project cost is estimated
at $8 million to $10 million and will be largely spread out over a
two-year period, with a completion date targeted around the end of
2024. A significant portion of these costs will be expensed
throughout the project. Our GAAP EPS estimates for 2023 take this
project into consideration, though we plan to back those costs out
as part of our non-GAAP EPS disclosures. The difference in our GAAP
and non-GAAP EPS will also be larger in 2023 as compared with prior
years as we account for the amortization of the intangible assets
created by the acquisition of Eleviant. Finally, the ranges below
are larger than we normally provide given the uncertainty of the
macroeconomic environment and the rate at which we may disengage
from non-strategic business during 2023.”
Our guidance for 2023 is as follows:
Revenue |
$300 million to $350 million |
Revenue - IT Solutions and Services |
$245 million to $295 million |
GAAP diluted EPS |
$0.34 to $0.46 |
Non-GAAP diluted EPS |
$0.56 to $0.68 |
*The corresponding GAAP measure to adjusted EBITDA is net
income. The Company is not providing forward looking net income
guidance given the significant effort and assumptions involved in
measuring net income. The GAAP to non-GAAP tables below include net
income to adjusted EBITDA displayed on historical results for the
past five quarters and the trailing twelve months ended December
31, 2022.
Conference Call and Webcast
CTG will hold a conference call today, February 23, at 11:00
a.m. Eastern Time to discuss the Company’s financial results and
business outlook. To access the live call, dial +1 877 704 4453.
The conference call will also be available via webcast in the
Investors section of CTG’s website at www.ctg.com.
A telephonic replay will be available from 2:00 p.m. ET on the
day of the call through Thursday, March 2, 2023, by dialing +1 844
512 2921 and entering the access code 13735068. The webcast will
also be archived on CTG’s website in the Events & Presentations
section for at least 90 days following completion of the live
conference call. A transcript will also be posted to the website
once available.
About CTG
CTG is a leading provider of digital transformation solutions
and services that accelerate clients’ project momentum and
achievement of their desired IT and business outcomes. We have
earned a reputation as a faster and more reliable, results-driven
partner focused on the integration of digital technology into all
areas of its clients to improve their operations and increase their
value proposition. CTG’s engagement in the digital transformation
process drives improved data-driven decision making, meaningful
business performance improvements, new and enhanced customer
experiences, and continuous innovation. CTG has operations in North
America, South America, Western Europe, and India. The Company
regularly posts news and other important information at
www.ctg.com.
Reconciliation of GAAP to non-GAAP
Information
The Company has referenced non-GAAP information in this news
release. The Company believes that the use of non-GAAP financial
information provides useful information to investors and management
to gain an overall understanding of its current financial
performance and prospects. In addition, management uses non-GAAP
financial measures for forecasting, facilitating ongoing operating
decisions, and measuring the Company’s overall performance. The
Company believes that these non-GAAP measures align closely with
its internal measurement processes and are reflective of the
Company’s core operating results.
A reconciliation of GAAP to non-GAAP information is included in
the financial tables below. The non-GAAP financial information is
presented using a consistent methodology from quarter-to-quarter
and year-to-year. These measures should be considered in addition
to results prepared in accordance with GAAP. Also, these non-GAAP
financial measures are not based on any comprehensive set of
accounting rules or principles. The Company believes that non-GAAP
financial measures have limitations in that they do not reflect all
amounts associated with the Company's results of operations as
determined in accordance with GAAP and that these measures should
only be used to evaluate the Company's results of operations in
conjunction with the corresponding GAAP financial measures. As
such, the non-GAAP financial measures disclosed by the Company
should not be considered a substitute for or superior to financial
measures calculated in accordance with GAAP, and reconciliations
between GAAP and non-GAAP financial measures included in this
earnings release should be carefully evaluated.
Forward-Looking Statements
This document contains certain forward-looking statements
concerning the Company's current expectations as to future growth,
financial outlook, business strategy and performance expectations
for 2023 and beyond and statements related to cost control, new
business opportunities, financial performance, market demand, and
other attributes of the Company, which are protected as
forward-looking statements under the Private Securities Litigation
Reform Act of 1995. Generally, the words “anticipates,” “believes,”
“expects,” “plans,” “may,” “will,” “might,” “would,” “should,”
“could,” “seeks,” “estimates,” “project,” “predict,” “potential,”
“currently,” “continue,” “intends,” “outlook,” “forecasts,”
“target,” and other similar words identify forward-looking
statements. These statements are based upon the Company's current
expectations and assumptions, a review of industry reports, current
business conditions in the areas where the Company does business,
feedback from existing and potential new clients, a review of
current and proposed legislation and governmental regulations that
may affect the Company and/or its clients, and other future events
or circumstances. Actual results could differ materially from the
outlook guidance, expectations, and other forward-looking
statements as a result of a number of factors and risks, including
among others, any new or continuing regulatory, social and business
responses to the COVID-19 pandemic, or the potential impacts of any
similar items on the Company’s business, operations, employees,
contractors and clients, and the potential impacts of any similar
future public health crisis, pandemic, or epidemic, the
availability to the Company of qualified professional staff,
currency exchange risks, domestic and foreign industry competition
for clients and talent, increased bargaining power of large
clients, the Company's ability to protect confidential client data,
the partial or complete loss of the revenue the Company generates
from International Business Machines Corporation (IBM), the ability
to integrate businesses when acquired and retain their clients
while achieving cost reduction targets, the uncertainty of clients'
implementations of cost reduction projects, the effect of
healthcare reform and initiatives, the mix of work between
solutions and services and non-strategic technology services, risks
associated with operating in foreign jurisdictions, renegotiations,
nullification, or breaches of contracts with clients, vendors,
subcontractors or other parties, current macroeconomic conditions
such as inflation, the change in valuation of capitalized software
balances, the impact of current and future laws and government
regulation, as well as repeal or modification of such, affecting
the information technology (IT) solutions and services and staffing
industry, taxes and the Company's operations in particular,
industry, economic and political conditions, including fluctuations
in demand for IT services, consolidation among the Company's
competitors or clients, the need to supplement or change our IT
services in response to new offerings in the industry or changes in
client requirements for IT products and solutions, actions of
activist shareholders, and other risks with domestic and foreign
operations including uncertainty and business interruptions
resulting from political changes and actions in the U.S. and
abroad, such as the conflict between Russia and the Ukraine and
developments in China, and volatility in the global credit and
financial markets and economy, and other factors that involve risk
and uncertainty including those listed in the Company's reports
filed with the Securities and Exchange Commission. Such
forward-looking statements should be read in conjunction with the
Company's disclosures set forth in the Company's Form 10-K for the
year ended December 31, 2021, including the uncertainties described
in the "Risk Factors" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" sections and other
reports, including but not limited to subsequent quarterly reports
on Form 10-Q, that may be filed from time to time with the
Securities and Exchange Commission and may be obtained through the
Securities and Exchange Commission's Electronic Data Gathering and
Analysis Retrieval System ("EDGAR") at www.sec.gov.The Company
assumes no obligation to update the forward-looking information
contained in this release.
COMPUTER TASK GROUP, INCORPORATED
(CTG)Condensed Consolidated Statements of
Income(Unaudited) (amounts in thousands except per share data)
|
For the Quarter Ended |
|
December 31, |
|
December 31, |
|
December 31, |
|
2022 |
|
2021 |
|
2020 |
|
|
|
|
|
|
Revenue |
$ |
77,902 |
|
|
$ |
112,389 |
|
|
$ |
101,348 |
Cost of services |
|
56,399 |
|
|
|
87,375 |
|
|
|
79,721 |
Gross profit |
|
21,503 |
|
|
|
25,014 |
|
|
|
21,627 |
Selling, general and admin.
expenses |
|
19,052 |
|
|
|
19,873 |
|
|
|
18,302 |
Operating income |
|
2,451 |
|
|
|
5,141 |
|
|
|
3,325 |
Non-taxable life insurance
gain |
|
- |
|
|
|
- |
|
|
|
24 |
Other income (expense),
net |
|
(488 |
) |
|
|
(57 |
) |
|
|
156 |
Income before income
taxes |
|
1,963 |
|
|
|
5,084 |
|
|
|
3,505 |
Provision (benefit) for income
taxes |
|
736 |
|
|
|
(3,633 |
) |
|
|
1,600 |
Net income |
$ |
1,227 |
|
|
$ |
8,717 |
|
|
$ |
1,905 |
|
|
|
|
|
|
Net income per share: |
|
|
|
|
|
Basic |
$ |
0.08 |
|
|
$ |
0.62 |
|
|
$ |
0.14 |
Diluted |
$ |
0.08 |
|
|
$ |
0.58 |
|
|
$ |
0.13 |
|
|
|
|
|
|
Weighted average shares
outstanding: |
|
|
|
|
|
Basic |
|
14,658 |
|
|
|
14,153 |
|
|
|
13,670 |
Diluted |
|
15,365 |
|
|
|
15,101 |
|
|
|
14,702 |
COMPUTER TASK GROUP, INCORPORATED
(CTG)Condensed Consolidated Statements of
Income(Unaudited) (amounts in thousands except per share data)
|
For the Year Ended |
|
December 31, |
|
December 31, |
|
December 31, |
|
2022 |
|
2021 |
|
2020 |
|
|
|
|
|
|
Revenue |
$ |
325,080 |
|
|
$ |
392,285 |
|
|
$ |
366,091 |
|
Cost of services |
|
245,003 |
|
|
|
305,835 |
|
|
|
289,133 |
|
Gross profit |
|
80,077 |
|
|
|
86,450 |
|
|
|
76,958 |
|
Selling, general and admin.
expenses |
|
69,001 |
|
|
|
73,708 |
|
|
|
67,828 |
|
Operating income |
|
11,076 |
|
|
|
12,742 |
|
|
|
9,130 |
|
Non-taxable life insurance
gain |
|
- |
|
|
|
- |
|
|
|
987 |
|
Gain on sale of building |
|
- |
|
|
|
- |
|
|
|
824 |
|
Other expense, net |
|
(1,522 |
) |
|
|
(1,005 |
) |
|
|
(280 |
) |
Income before income
taxes |
|
9,554 |
|
|
|
11,737 |
|
|
|
10,661 |
|
Provision for income
taxes |
|
2,945 |
|
|
|
(1,993 |
) |
|
|
3,022 |
|
Net income |
$ |
6,609 |
|
|
$ |
13,730 |
|
|
$ |
7,639 |
|
|
|
|
|
|
|
Net income per share: |
|
|
|
|
|
Basic |
$ |
0.46 |
|
|
$ |
0.99 |
|
|
$ |
0.56 |
|
Diluted |
$ |
0.44 |
|
|
$ |
0.92 |
|
|
$ |
0.53 |
|
|
|
|
|
|
|
Weighted average shares
outstanding: |
|
|
|
|
|
Basic |
|
14,440 |
|
|
|
13,926 |
|
|
|
13,621 |
|
Diluted |
|
15,156 |
|
|
|
14,971 |
|
|
|
14,427 |
|
COMPUTER TASK GROUP, INCORPORATED
(CTG)Condensed Consolidated Balance
Sheets(Unaudited)(amounts in thousands)
|
December 31, |
|
|
December 31, |
|
|
2022 |
|
|
2021 |
|
Current Assets: |
|
|
|
|
|
Cash and cash equivalents |
$ |
25,140 |
|
|
$ |
35,584 |
|
Accounts receivable, net |
|
70,979 |
|
|
|
84,252 |
|
Other current assets |
|
3,769 |
|
|
|
2,929 |
|
Total current assets |
|
99,888 |
|
|
|
122,765 |
|
|
|
|
|
|
|
Property and equipment, net |
|
5,061 |
|
|
|
5,242 |
|
Operating lease right-of-use assets |
|
18,506 |
|
|
|
22,132 |
|
Cash surrender value |
|
4,120 |
|
|
|
4,018 |
|
Acquired intangibles, net |
|
12,943 |
|
|
|
7,280 |
|
Goodwill |
|
35,998 |
|
|
|
19,676 |
|
Other assets |
|
5,103 |
|
|
|
7,221 |
|
Total Assets |
$ |
181,619 |
|
|
$ |
188,334 |
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
Accounts payable |
$ |
14,254 |
|
|
$ |
21,150 |
|
Accrued compensation |
|
19,016 |
|
|
|
22,534 |
|
Operating lease liabilities |
|
5,905 |
|
|
|
6,444 |
|
Other current liabilities |
|
12,758 |
|
|
|
14,855 |
|
Total current liabilities |
|
51,933 |
|
|
|
64,983 |
|
|
|
|
|
|
|
Operating lease liabilities |
|
12,466 |
|
|
|
15,612 |
|
Other liabilities |
|
11,241 |
|
|
|
13,302 |
|
Shareholders' equity |
|
105,979 |
|
|
|
94,437 |
|
Total Liabilities and
Shareholders' Equity |
$ |
181,619 |
|
|
$ |
188,334 |
|
COMPUTER TASK GROUP, INCORPORATED
(CTG)Condensed Consolidated Statements of Cash
Flows(Unaudited)(amounts in thousands)
|
For the Year Ended |
|
|
December 31, |
|
|
December 31, |
|
|
December 31, |
|
|
2022 |
|
|
2021 |
|
|
2020 |
|
|
|
|
|
|
|
|
|
|
Net income |
$ |
6,609 |
|
|
$ |
13,730 |
|
|
$ |
7,639 |
|
Depreciation and amortization expense |
|
2,999 |
|
|
|
3,172 |
|
|
|
3,309 |
|
Equity-based compensation expense |
|
2,563 |
|
|
|
2,640 |
|
|
|
2,483 |
|
Other operating items |
|
(285 |
) |
|
|
(12,131 |
) |
|
|
17,307 |
|
Net cash provided by operating
activities |
|
11,886 |
|
|
|
7,411 |
|
|
|
30,738 |
|
Net cash used in investing
activities |
|
(20,266 |
) |
|
|
(2,471 |
) |
|
|
(4,983 |
) |
Net cash used in financing
activities |
|
(1,021 |
) |
|
|
(1,074 |
) |
|
|
(5,685 |
) |
Effect of exchange rates on
cash and cash equivalents |
|
(1,043 |
) |
|
|
(1,147 |
) |
|
|
2,014 |
|
Net increase (decrease) in
cash and cash equivalents |
|
(10,444 |
) |
|
|
2,719 |
|
|
|
22,084 |
|
Cash and cash equivalents at
beginning of period |
|
35,584 |
|
|
|
32,865 |
|
|
|
10,781 |
|
Cash and cash equivalents at
end of period |
$ |
25,140 |
|
|
$ |
35,584 |
|
|
$ |
32,865 |
|
|
|
|
|
|
|
|
|
|
COMPUTER TASK GROUP, INCORPORATED
(CTG)Segment
Information(Unaudited)(amounts in thousands)
For reporting purposes, the Company discloses three segments,
including IT Solutions and Services in each of North America and
Europe, and Non-Strategic Technology Services, primarily in North
America. The Company continues to invest in business development,
including solutions, sales, delivery, and recruiting to drive its
digital transformation strategy in both the North America and
Europe IT Solutions and Services segments. The Company is not
making any investment in its Non-Strategic Technology Services
segment that includes lower margin staffing services. Contribution
profit represents operational profit after consideration of
expenses such as sales, solutions, delivery, recruiting and
administrative expenses.
|
For the Quarter Ended December 31, 2022 |
|
North |
|
|
|
|
|
|
|
|
|
|
|
America |
|
Europe |
|
Non-Strategic |
|
|
|
|
|
Non- |
|
IT Solutions |
|
IT Solutions |
|
Technology |
|
GAAP |
|
Non- |
|
GAAP |
|
and Services |
|
and Services |
|
Services |
|
Totals |
|
GAAP* |
|
Totals |
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
$ |
22,924 |
|
|
$ |
37,035 |
|
|
$ |
17,943 |
|
|
$ |
77,902 |
|
|
|
|
$ |
77,902 |
|
Cost of services |
|
12,865 |
|
|
|
28,026 |
|
|
|
15,508 |
|
|
|
56,399 |
|
|
|
|
|
56,399 |
|
Gross profit |
|
10,059 |
|
|
|
9,009 |
|
|
|
2,435 |
|
|
|
21,503 |
|
|
|
|
|
21,503 |
|
Gross margin |
|
43.9 |
% |
|
|
24.3 |
% |
|
|
13.6 |
% |
|
|
27.6 |
% |
|
|
|
|
27.6 |
% |
Operating expenses |
|
3,947 |
|
|
|
4,464 |
|
|
|
546 |
|
|
|
8,957 |
|
|
|
|
|
8,957 |
|
Contribution profit |
$ |
6,112 |
|
|
$ |
4,545 |
|
|
$ |
1,889 |
|
|
|
12,546 |
|
|
|
|
|
12,546 |
|
Contribution margin |
|
26.7 |
% |
|
|
12.3 |
% |
|
|
10.5 |
% |
|
|
16.1 |
% |
|
|
|
|
16.1 |
% |
General and admin.
expense |
|
|
|
|
|
|
|
10,095 |
|
|
|
(1,534 |
) |
|
|
8,561 |
|
Operating income |
|
|
|
|
|
|
$ |
2,451 |
|
|
$ |
1,534 |
|
|
$ |
3,985 |
|
Operating margin |
|
|
|
|
|
|
|
3.1 |
% |
|
|
|
|
5.1 |
% |
* Non-GAAP costs represent certain acquisition-related expenses
and costs associated with severance
|
For the Quarter Ended December 31, 2021 |
|
North |
|
|
|
|
|
|
|
|
|
|
|
America |
|
Europe |
|
Non-Strategic |
|
|
|
|
|
Non- |
|
IT Solutions |
|
IT Solutions |
|
Technology |
|
GAAP |
|
Non- |
|
GAAP |
|
and Services |
|
and Services |
|
Services |
|
Totals |
|
GAAP* |
|
Totals |
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
$ |
45,075 |
|
|
$ |
40,081 |
|
|
$ |
27,233 |
|
|
$ |
112,389 |
|
|
|
|
$ |
112,389 |
|
Cost of services |
|
31,813 |
|
|
|
31,276 |
|
|
|
24,286 |
|
|
|
87,375 |
|
|
|
|
|
87,375 |
|
Gross profit |
|
13,262 |
|
|
|
8,805 |
|
|
|
2,947 |
|
|
|
25,014 |
|
|
|
|
|
25,014 |
|
Gross margin |
|
29.4 |
% |
|
|
22.0 |
% |
|
|
10.8 |
% |
|
|
22.3 |
% |
|
|
|
|
22.3 |
% |
Operating expenses |
|
4,096 |
|
|
|
5,543 |
|
|
|
1,102 |
|
|
|
10,741 |
|
|
|
|
|
10,741 |
|
Contribution profit |
$ |
9,166 |
|
|
$ |
3,262 |
|
|
$ |
1,845 |
|
|
|
14,273 |
|
|
|
|
|
14,273 |
|
Contribution margin |
|
20.3 |
% |
|
|
8.1 |
% |
|
|
6.8 |
% |
|
|
12.7 |
% |
|
|
|
|
12.7 |
% |
General and admin.
expense |
|
|
|
|
|
|
|
9,132 |
|
|
|
(211 |
) |
|
|
8,921 |
|
Operating income |
|
|
|
|
|
|
$ |
5,141 |
|
|
$ |
211 |
|
|
$ |
5,352 |
|
Operating margin |
|
|
|
|
|
|
|
4.6 |
% |
|
|
|
|
4.8 |
% |
* Non-GAAP costs represent certain acquisition-related
expenses
COMPUTER TASK GROUP, INCORPORATED
(CTG)Segment Information
(continued)(Unaudited)(amounts in thousands)
|
For the Quarter Ended December 31, 2020 |
|
North |
|
|
|
|
|
|
|
|
|
|
|
America |
|
Europe |
|
Non-Strategic |
|
|
|
|
|
Non- |
|
IT Solutions |
|
IT Solutions |
|
Technology |
|
GAAP |
|
Non- |
|
GAAP |
|
and Services |
|
and Services |
|
Services |
|
Totals |
|
GAAP* |
|
Totals |
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
$ |
22,440 |
|
|
$ |
43,857 |
|
|
$ |
35,051 |
|
|
$ |
101,348 |
|
|
|
|
$ |
101,348 |
|
Cost of services |
|
14,382 |
|
|
|
34,158 |
|
|
|
31,181 |
|
|
|
79,721 |
|
|
|
|
|
79,721 |
|
Gross profit |
|
8,058 |
|
|
|
9,699 |
|
|
|
3,870 |
|
|
|
21,627 |
|
|
|
|
|
21,627 |
|
Gross margin |
|
35.9 |
% |
|
|
22.1 |
% |
|
|
11.0 |
% |
|
|
21.3 |
% |
|
|
|
|
21.3 |
% |
Operating expenses |
|
2,898 |
|
|
|
5,229 |
|
|
|
1,594 |
|
|
|
9,721 |
|
|
|
|
|
9,721 |
|
Contribution profit |
$ |
5,160 |
|
|
$ |
4,470 |
|
|
$ |
2,276 |
|
|
|
11,906 |
|
|
|
|
|
11,906 |
|
Contribution margin |
|
23.0 |
% |
|
|
10.2 |
% |
|
|
6.5 |
% |
|
|
11.7 |
% |
|
|
|
|
11.7 |
% |
General and admin.
expense |
|
|
|
|
|
|
|
8,581 |
|
|
|
(256 |
) |
|
|
8,325 |
|
Operating income |
|
|
|
|
|
|
$ |
3,325 |
|
|
$ |
256 |
|
|
$ |
3,581 |
|
Operating margin |
|
|
|
|
|
|
|
3.3 |
% |
|
|
|
|
3.5 |
% |
* Non-GAAP costs represent certain acquisition-related
expenses
|
For the Year Ended December 31, 2022 |
|
North |
|
|
|
|
|
|
|
|
|
|
|
America |
|
Europe |
|
Non-Strategic |
|
|
|
|
|
Non- |
|
IT Solutions |
|
IT Solutions |
|
Technology |
|
GAAP |
|
Non- |
|
GAAP |
|
and Services |
|
and Services |
|
Services |
|
Totals |
|
GAAP* |
|
Totals |
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
$ |
84,038 |
|
|
$ |
149,931 |
|
|
$ |
91,111 |
|
|
$ |
325,080 |
|
|
|
|
$ |
325,080 |
|
Cost of services |
|
52,315 |
|
|
|
112,990 |
|
|
|
79,698 |
|
|
|
245,003 |
|
|
|
|
|
245,003 |
|
Gross profit |
|
31,723 |
|
|
|
36,941 |
|
|
|
11,413 |
|
|
|
80,077 |
|
|
|
|
|
80,077 |
|
Gross margin |
|
37.7 |
% |
|
|
24.6 |
% |
|
|
12.5 |
% |
|
|
24.6 |
% |
|
|
|
|
24.6 |
% |
Operating expenses |
|
14,203 |
|
|
|
18,954 |
|
|
|
2,632 |
|
|
|
35,789 |
|
|
|
|
|
35,789 |
|
Contribution profit |
$ |
17,520 |
|
|
$ |
17,987 |
|
|
$ |
8,781 |
|
|
|
44,288 |
|
|
|
|
|
44,288 |
|
Contribution margin |
|
20.8 |
% |
|
|
12.0 |
% |
|
|
9.6 |
% |
|
|
13.6 |
% |
|
|
|
|
13.6 |
% |
General and admin.
expense |
|
|
|
|
|
|
|
33,212 |
|
|
|
(2,830 |
) |
|
|
30,382 |
|
Operating income |
|
|
|
|
|
|
$ |
11,076 |
|
|
$ |
2,830 |
|
|
$ |
13,906 |
|
Operating margin |
|
|
|
|
|
|
|
3.4 |
% |
|
|
|
|
4.3 |
% |
* Non-GAAP costs represent certain acquisition-related expenses
and costs associated with severance
COMPUTER TASK GROUP, INCORPORATED
(CTG)Segment Information
(continued)(Unaudited)(amounts in thousands)
|
For the Year Ended December 31, 2021 |
|
North |
|
|
|
|
|
|
|
|
|
|
|
America |
|
Europe |
|
Non-Strategic |
|
|
|
|
|
Non- |
|
IT Solutions |
|
IT Solutions |
|
Technology |
|
GAAP |
|
Non- |
|
GAAP |
|
and Services |
|
and Services |
|
Services |
|
Totals |
|
GAAP* |
|
Totals |
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
$ |
101,506 |
|
|
$ |
169,341 |
|
|
$ |
121,438 |
|
|
$ |
392,285 |
|
|
|
|
$ |
392,285 |
|
Cost of services |
|
68,885 |
|
|
|
129,030 |
|
|
|
107,920 |
|
|
|
305,835 |
|
|
|
|
|
305,835 |
|
Gross profit |
|
32,621 |
|
|
|
40,311 |
|
|
|
13,518 |
|
|
|
86,450 |
|
|
|
|
|
86,450 |
|
Gross margin |
|
32.1 |
% |
|
|
23.8 |
% |
|
|
11.1 |
% |
|
|
22.0 |
% |
|
|
|
|
22.0 |
% |
Operating expenses |
|
13,883 |
|
|
|
21,345 |
|
|
|
4,904 |
|
|
|
40,132 |
|
|
|
|
|
40,132 |
|
Contribution profit |
$ |
18,738 |
|
|
$ |
18,966 |
|
|
$ |
8,614 |
|
|
|
46,318 |
|
|
|
|
|
46,318 |
|
Contribution margin |
|
18.5 |
% |
|
|
11.2 |
% |
|
|
7.1 |
% |
|
|
11.8 |
% |
|
|
|
|
11.8 |
% |
General and admin.
expense |
|
|
|
|
|
|
|
33,576 |
|
|
|
(1,300 |
) |
|
|
32,276 |
|
Operating income |
|
|
|
|
|
|
$ |
12,742 |
|
|
$ |
1,300 |
|
|
$ |
14,042 |
|
Operating margin |
|
|
|
|
|
|
|
3.2 |
% |
|
|
|
|
3.6 |
% |
* Non-GAAP costs represent certain acquisition-related expenses
and rebranding costs
|
For the Year Ended December 31, 2020 |
|
North |
|
|
|
|
|
|
|
|
|
|
|
America |
|
Europe |
|
Non-Strategic |
|
|
|
|
|
Non- |
|
IT Solutions |
|
IT Solutions |
|
Technology |
|
GAAP |
|
Non- |
|
GAAP |
|
and Services |
|
and Services |
|
Services |
|
Totals |
|
GAAP* |
|
Totals |
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
$ |
67,948 |
|
|
$ |
154,847 |
|
|
$ |
143,296 |
|
|
$ |
366,091 |
|
|
|
|
$ |
366,091 |
|
Cost of services |
|
43,953 |
|
|
|
117,029 |
|
|
|
128,151 |
|
|
|
289,133 |
|
|
|
|
|
289,133 |
|
Gross profit |
|
23,995 |
|
|
|
37,818 |
|
|
|
15,145 |
|
|
|
76,958 |
|
|
|
|
|
76,958 |
|
Gross margin |
|
35.3 |
% |
|
|
24.4 |
% |
|
|
10.6 |
% |
|
|
21.0 |
% |
|
|
|
|
21.0 |
% |
Operating expenses |
|
9,368 |
|
|
|
20,366 |
|
|
|
6,992 |
|
|
|
36,726 |
|
|
|
|
|
36,726 |
|
Contribution profit |
$ |
14,627 |
|
|
$ |
17,452 |
|
|
$ |
8,153 |
|
|
|
40,232 |
|
|
|
|
|
40,232 |
|
Contribution margin |
|
21.5 |
% |
|
|
11.3 |
% |
|
|
5.7 |
% |
|
|
11.0 |
% |
|
|
|
|
11.0 |
% |
General and admin.
expense |
|
|
|
|
|
|
|
31,102 |
|
|
|
(2,199 |
) |
|
|
28,903 |
|
Operating income |
|
|
|
|
|
|
$ |
9,130 |
|
|
$ |
2,199 |
|
|
$ |
11,329 |
|
Operating margin |
|
|
|
|
|
|
|
2.5 |
% |
|
|
|
|
3.1 |
% |
* Non-GAAP costs represent certain acquisition-related expenses
and costs associated with severance
COMPUTER TASK GROUP, INCORPORATED
(CTG)Segment and Vertical Market Trends
(Unaudited)Supplemental Financial Information
|
|
|
|
|
|
|
|
|
|
|
|
Year |
|
Year |
|
|
For the Quarter Ended |
|
Ended |
|
Ended |
|
|
Dec. |
|
Mar. |
|
Jun. |
|
Sept. |
|
Dec. |
|
Dec. |
|
Dec. |
|
|
|
2021 |
|
|
|
2022 |
|
|
|
2022 |
|
|
|
2022 |
|
|
|
2022 |
|
|
|
2022 |
|
|
|
2021 |
|
Revenue (in
millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America IT Solutions and
Services |
|
$ |
45.075 |
|
|
$ |
20.435 |
|
|
$ |
20.339 |
|
|
$ |
20.340 |
|
|
$ |
22.924 |
|
|
$ |
84.038 |
|
|
$ |
101.506 |
|
Europe IT Solutions and
Services |
|
|
40.081 |
|
|
|
42.478 |
|
|
|
37.160 |
|
|
|
33.258 |
|
|
|
37.035 |
|
|
|
149.931 |
|
|
|
169.341 |
|
Non-Strategic Technology
Services |
|
|
27.233 |
|
|
|
26.504 |
|
|
|
25.260 |
|
|
|
21.404 |
|
|
|
17.943 |
|
|
|
91.111 |
|
|
|
121.438 |
|
Total Revenue |
|
$ |
112.389 |
|
|
$ |
89.417 |
|
|
$ |
82.759 |
|
|
$ |
75.002 |
|
|
$ |
77.902 |
|
|
$ |
325.080 |
|
|
$ |
392.285 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue in North
America |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Constant Currency (in
millions)** |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America |
|
$ |
71.064 |
|
|
$ |
46.262 |
|
|
$ |
45.042 |
|
|
$ |
41.501 |
|
|
$ |
40.604 |
|
|
$ |
173.409 |
|
|
$ |
218.360 |
|
Foreign Currency Impact |
|
|
(0.035 |
) |
|
|
(0.042 |
) |
|
|
(0.033 |
) |
|
|
(0.021 |
) |
|
|
- |
|
|
|
- |
|
|
|
(0.117 |
) |
Total Revenue in Constant
Currency |
|
$ |
71.029 |
|
|
$ |
46.220 |
|
|
$ |
45.009 |
|
|
$ |
41.480 |
|
|
$ |
40.604 |
|
|
$ |
173.409 |
|
|
$ |
218.243 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue in
Europe |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Constant Currency (in
millions)** |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe |
|
$ |
41.325 |
|
|
$ |
43.155 |
|
|
$ |
37.717 |
|
|
$ |
33.501 |
|
|
$ |
37.298 |
|
|
$ |
151.671 |
|
|
$ |
173.925 |
|
Foreign Currency Impact |
|
|
(4.535 |
) |
|
|
(4.010 |
) |
|
|
(1.640 |
) |
|
|
0.403 |
|
|
|
- |
|
|
|
- |
|
|
|
(18.872 |
) |
Total Revenue in Constant
Currency |
|
$ |
36.790 |
|
|
$ |
39.145 |
|
|
$ |
36.077 |
|
|
$ |
33.904 |
|
|
$ |
37.298 |
|
|
$ |
151.671 |
|
|
$ |
155.053 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue By
Geography |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America |
|
|
63.2 |
% |
|
|
51.7 |
% |
|
|
54.4 |
% |
|
|
55.3 |
% |
|
|
52.1 |
% |
|
|
53.3 |
% |
|
|
55.7 |
% |
Europe |
|
|
36.8 |
% |
|
|
48.3 |
% |
|
|
45.6 |
% |
|
|
44.7 |
% |
|
|
47.9 |
% |
|
|
46.7 |
% |
|
|
44.3 |
% |
Total |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
100.0 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue by Vertical
Market |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Technology Service
Providers |
|
|
20 |
% |
|
|
24 |
% |
|
|
24 |
% |
|
|
22 |
% |
|
|
19 |
% |
|
|
23 |
% |
|
|
27 |
% |
Healthcare |
|
|
36 |
% |
|
|
17 |
% |
|
|
18 |
% |
|
|
19 |
% |
|
|
18 |
% |
|
|
18 |
% |
|
|
21 |
% |
Financial Services |
|
|
13 |
% |
|
|
17 |
% |
|
|
15 |
% |
|
|
15 |
% |
|
|
17 |
% |
|
|
16 |
% |
|
|
16 |
% |
Manufacturing |
|
|
10 |
% |
|
|
14 |
% |
|
|
15 |
% |
|
|
17 |
% |
|
|
16 |
% |
|
|
15 |
% |
|
|
12 |
% |
Energy |
|
|
4 |
% |
|
|
5 |
% |
|
|
7 |
% |
|
|
6 |
% |
|
|
6 |
% |
|
|
6 |
% |
|
|
5 |
% |
General Markets |
|
|
17 |
% |
|
|
23 |
% |
|
|
21 |
% |
|
|
21 |
% |
|
|
24 |
% |
|
|
22 |
% |
|
|
19 |
% |
Total |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
100 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
Margins |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Operating Margin |
|
|
4.6 |
% |
|
|
3.6 |
% |
|
|
3.8 |
% |
|
|
3.0 |
% |
|
|
3.1 |
% |
|
|
3.4 |
% |
|
|
3.2 |
% |
Non-GAAP Operating Margin |
|
|
4.8 |
% |
|
|
3.9 |
% |
|
|
4.2 |
% |
|
|
4.0 |
% |
|
|
5.1 |
% |
|
|
4.3 |
% |
|
|
3.6 |
% |
Other Information (in millions except Billable Days and
EPS)
Billable Days |
|
|
63 |
|
|
65 |
|
|
64 |
|
|
63 |
|
|
63 |
|
|
255 |
|
|
255 |
Net Income |
|
$ |
8.717 |
|
$ |
2.240 |
|
$ |
2.040 |
|
$ |
1.102 |
|
$ |
1.227 |
|
$ |
6.609 |
|
$ |
13.730 |
GAAP Diluted EPS* |
|
$ |
0.58 |
|
$ |
0.15 |
|
$ |
0.13 |
|
$ |
0.07 |
|
$ |
0.08 |
|
$ |
0.44 |
|
$ |
0.92 |
Non-GAAP Diluted EPS* |
|
$ |
0.25 |
|
$ |
0.16 |
|
$ |
0.15 |
|
$ |
0.11 |
|
$ |
0.14 |
|
$ |
0.56 |
|
$ |
0.64 |
Adjusted EBITDA
(non-GAAP) |
|
$ |
6.5 |
|
$ |
4.3 |
|
$ |
4.2 |
|
$ |
3.8 |
|
$ |
4.8 |
|
$ |
17.2 |
|
$ |
18.1 |
Balance Sheet Information (in millions except
DSO)
Cash less Debt, Net |
|
$ |
35.6 |
|
$ |
38.7 |
|
$ |
35.5 |
|
$ |
26.8 |
|
$ |
25.1 |
|
|
|
|
Working Capital |
|
$ |
57.8 |
|
$ |
60.3 |
|
$ |
61.8 |
|
$ |
44.5 |
|
$ |
48.7 |
|
|
|
|
DSO |
|
|
67 |
|
|
76 |
|
|
84 |
|
|
83 |
|
|
84 |
|
|
|
|
* GAAP Diluted EPS for the 2021 fourth quarter includes a $0.34
benefit from the reversal of a valuation allowance against deferred
tax assets, while the corresponding amounts in the non-GAAP Diluted
EPS balance for the 2021 fourth quarter excludes that benefit.**
Constant Currency is measured by applying the current fiscal
period's average exchange rate to each of the prior periods
COMPUTER TASK GROUP, INCORPORATED
(CTG)(Unaudited)
The non-GAAP information below excludes gains from non-taxable
life insurance and from the sale of a building, and expenses
associated with rebranding, severance, certain acquisition-related
expenses, and the reversal of a tax valuation allowance. The
acquisition-related expenses consist of due diligence costs,
amortization of intangible assets, and changes in the value of
earn-out payments upon the achievement of certain financial targets
from the Company’s recent acquisitions.
Reconciliation of GAAP to non-GAAP Operating Income
|
|
|
|
|
|
|
|
|
|
|
|
Year |
|
Year |
|
|
For the Quarter Ended |
|
Ended |
|
Ended |
|
|
Dec. |
|
Mar. |
|
Jun. |
|
Sept. |
|
Dec. |
|
Dec. |
|
Dec. |
(in
millions) |
|
2021 |
|
2022 |
|
2022 |
|
2022 |
|
2022 |
|
2022 |
|
2021 |
GAAP Operating
Income |
|
$ |
5.141 |
|
$ |
3.199 |
|
$ |
3.173 |
|
$ |
2.253 |
|
$ |
2.451 |
|
$ |
11.076 |
|
$ |
12.742 |
Acquisition-related
expenses |
|
|
0.211 |
|
|
0.262 |
|
|
0.290 |
|
|
0.744 |
|
|
0.696 |
|
|
1.992 |
|
|
1.051 |
Rebranding expenses |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
0.249 |
Severance |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
0.838 |
|
|
0.838 |
|
|
- |
Non-GAAP Operating
Income |
|
$ |
5.352 |
|
$ |
3.461 |
|
$ |
3.463 |
|
$ |
2.997 |
|
$ |
3.985 |
|
$ |
13.906 |
|
$ |
14.042 |
Reconciliation of GAAP to non-GAAP Operating Margin
|
|
|
|
|
|
|
|
|
|
|
|
Year |
|
Year |
|
|
For the Quarter Ended |
|
Ended |
|
Ended |
|
|
Dec. |
|
Mar. |
|
Jun. |
|
Sept. |
|
Dec. |
|
Dec. |
|
Dec. |
|
|
2021 |
|
2022 |
|
2022 |
|
2022 |
|
2022 |
|
2022 |
|
2021 |
GAAP Operating
Margin |
|
4.6 |
% |
|
3.6 |
% |
|
3.8 |
% |
|
3.0 |
% |
|
3.1 |
% |
|
3.4 |
% |
|
3.2 |
% |
Acquisition-related
expenses |
|
0.2 |
% |
|
0.3 |
% |
|
0.4 |
% |
|
1.0 |
% |
|
0.9 |
% |
|
0.6 |
% |
|
0.3 |
% |
Rebranding expenses |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
0.1 |
% |
Severance |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
1.1 |
% |
|
0.3 |
% |
|
- |
|
Non-GAAP Operating
Margin |
|
4.8 |
% |
|
3.9 |
% |
|
4.2 |
% |
|
4.0 |
% |
|
5.1 |
% |
|
4.3 |
% |
|
3.6 |
% |
Reconciliation of GAAP to non-GAAP Net Income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarter Ended |
|
For the Year Ended |
|
|
Dec. |
|
Dec. |
|
Mar. |
|
Jun. |
|
Sept. |
|
Dec. |
|
Dec. |
|
Dec. |
|
Dec. |
(in
millions) |
|
2020 |
|
2021 |
|
2022 |
|
2022 |
|
2022 |
|
2022 |
|
2022 |
|
2021 |
|
2020 |
GAAP Net
Income |
|
$ |
1.905 |
|
$ |
8.717 |
|
|
$ |
2.240 |
|
$ |
2.040 |
|
$ |
1.102 |
|
$ |
1.227 |
|
$ |
6.609 |
|
$ |
13.730 |
|
|
$ |
7.639 |
|
Acquisition-related
expenses |
|
|
0.139 |
|
|
0.151 |
|
|
|
0.199 |
|
|
0.212 |
|
|
0.510 |
|
|
0.435 |
|
|
1.356 |
|
|
0.792 |
|
|
|
0.945 |
|
Reversal of tax valuation
allowance |
|
|
- |
|
|
(5.094 |
) |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
(5.094 |
) |
|
|
- |
|
Rebranding expenses |
|
|
- |
|
|
- |
|
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
0.192 |
|
|
|
- |
|
Non-taxable life insurance
gain |
|
|
- |
|
|
- |
|
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
(0.987 |
) |
Gain on sale of building |
|
|
- |
|
|
- |
|
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
(0.464 |
) |
Change in tax legislation |
|
|
- |
|
|
- |
|
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
(1.141 |
) |
Severance |
|
|
- |
|
|
- |
|
|
|
- |
|
|
- |
|
|
- |
|
|
0.524 |
|
|
0.524 |
|
|
- |
|
|
|
0.325 |
|
Non-GAAP Net
Income |
|
$ |
2.044 |
|
$ |
3.774 |
|
|
$ |
2.439 |
|
$ |
2.252 |
|
$ |
1.612 |
|
$ |
2.186 |
|
$ |
8.489 |
|
$ |
9.620 |
|
|
$ |
6.317 |
|
COMPUTER TASK GROUP, INCORPORATED
(CTG) (Unaudited)
Reconciliation of GAAP to non-GAAP Diluted Earnings per Share
(EPS)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year |
|
|
Year |
|
|
|
For the Quarter Ended |
|
|
Ended |
|
|
Ended |
|
|
|
Dec. |
|
|
Mar. |
|
|
Jun. |
|
|
Sept. |
|
|
Dec. |
|
|
Dec. |
|
|
Dec. |
|
|
|
2021 |
|
|
2022 |
|
|
2022 |
|
|
2022 |
|
|
2022 |
|
|
2022 |
|
|
2021 |
|
GAAP Diluted
EPS |
|
$ |
0.58 |
|
|
$ |
0.15 |
|
|
$ |
0.13 |
|
|
$ |
0.07 |
|
|
$ |
0.08 |
|
|
$ |
0.44 |
|
|
$ |
0.92 |
|
Acquisition-related
expenses |
|
|
0.01 |
|
|
|
0.01 |
|
|
|
0.02 |
|
|
|
0.04 |
|
|
|
0.03 |
|
|
|
0.09 |
|
|
|
0.05 |
|
Reversal of tax valuation
allowance |
|
|
(0.34 |
) |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(0.34 |
) |
Rebranding expenses |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
0.01 |
|
Severance |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
0.03 |
|
|
|
0.03 |
|
|
|
- |
|
Non-GAAP Diluted
EPS |
|
$ |
0.25 |
|
|
$ |
0.16 |
|
|
$ |
0.15 |
|
|
$ |
0.11 |
|
|
$ |
0.14 |
|
|
$ |
0.56 |
|
|
$ |
0.64 |
|
Reconciliation of Net Income to Adjusted EBITDA (non-GAAP),
which includes earnings before interest (including amortization of
deferred debt financing costs), taxes, depreciation and
amortization, equity-based compensation, non-taxable life insurance
gain, severance, and acquisition-related expenses.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the Quarter Ended |
|
For the Year Ended |
|
|
Dec. |
|
Mar. |
|
Jun. |
|
Sept. |
|
Dec. |
|
Dec. |
|
Dec. |
|
Dec. |
(in
millions) |
|
|
2021 |
|
|
|
2022 |
|
|
|
2022 |
|
|
|
2022 |
|
|
|
2022 |
|
|
|
2022 |
|
|
|
2021 |
|
|
|
2020 |
|
Net
Income |
|
$ |
8.717 |
|
|
$ |
2.240 |
|
|
$ |
2.040 |
|
|
$ |
1.102 |
|
|
$ |
1.227 |
|
|
$ |
6.609 |
|
|
$ |
13.730 |
|
|
$ |
7.639 |
|
Taxes |
|
|
(3.633 |
) |
|
|
0.702 |
|
|
|
0.748 |
|
|
|
0.759 |
|
|
|
0.736 |
|
|
|
2.945 |
|
|
|
(1.993 |
) |
|
|
3.022 |
|
Interest |
|
|
0.100 |
|
|
|
0.100 |
|
|
|
0.100 |
|
|
|
0.103 |
|
|
|
0.100 |
|
|
|
0.403 |
|
|
|
0.409 |
|
|
|
0.274 |
|
Depreciation and
amortization |
|
|
0.721 |
|
|
|
0.716 |
|
|
|
0.684 |
|
|
|
0.651 |
|
|
|
0.948 |
|
|
|
2.999 |
|
|
|
3.172 |
|
|
|
3.309 |
|
Equity-based compensation
expense |
|
|
0.666 |
|
|
|
0.573 |
|
|
|
0.603 |
|
|
|
0.693 |
|
|
|
0.694 |
|
|
|
2.563 |
|
|
|
2.640 |
|
|
|
2.483 |
|
Non-taxable life insurance
gain |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(0.987 |
) |
Other |
|
|
(0.058 |
) |
|
|
- |
|
|
|
0.049 |
|
|
|
0.516 |
|
|
|
1.102 |
|
|
|
1.667 |
|
|
|
0.123 |
|
|
|
(0.048 |
) |
Adjusted
EBITDA |
|
$ |
6.513 |
|
|
$ |
4.331 |
|
|
$ |
4.224 |
|
|
$ |
3.824 |
|
|
$ |
4.807 |
|
|
$ |
17.186 |
|
|
$ |
18.081 |
|
|
$ |
15.692 |
|
Adjusted EBITDA Margin |
|
|
5.8 |
% |
|
|
4.8 |
% |
|
|
5.1 |
% |
|
|
5.1 |
% |
|
|
6.2 |
% |
|
|
5.3 |
% |
|
|
4.6 |
% |
|
|
4.3 |
% |
CTG news releases are available at
www.ctg.com.
Contacts:
John M. Laubacker
Chief Financial Officer
Tel: +1 716 887 7368
Investor Relations:
Deborah K. Pawlowski
Kei Advisors LLC
dpawlowski@keiadvisors.com
Tel: +1 716 843 3908
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