Computer Task Group (CTG) Reports In-Line Q2 EPS, Beats on Revenues

Computer Task Group (NASDAQ: CTG) reported Q2 EPS of $0.08, in-line with the analyst estimate of $0.08. Revenue for the quarter came in at $92.7 million versus the consensus estimate of $88.05 million.

Second Quarter and Recent Business Highlights

• Completed transition of more than 350 employees in support of newly awarded service desk business at largest Staffing client
• Further extended the trend of growth in Europe, including two significant multi-year contracts with European ministries
• Health Solutions headcount increased 25% sequentially due in part to new contracts with Catholic Health Initiatives (CHI) and a prominent university medical center
• Launched new EIM AdvantageTM solution to address clients’ growing need for enterprise information management services
• Secured multiple new clients and improved conversion rate on pipeline of new business engagements in all lines of business
• Announced proposal to transition to a declassified Board of Directors
• Completed tender offer, resulting in the purchase of approximately 1.5 million shares of common stock and expanded existing share repurchase authorization by $10 million

“We continued to experience solid growth and momentum in our European operations. The performance of Soft Company has been strong and our integration efforts remain on plan as we continue to increase the collaboration across our sales and administrative teams. Our teams in Belgium and Luxembourg also delivered strong results, including the ramp up of several previous wins, and two significant multi-year contracts with the European ministries that will begin to contribute to Europe’s overall results late in 2018.

“During the quarter, we completed the transition of more than 350 additional service desk employees at our largest Staffing client, while initiating work on several recently secured Staffing contracts. In our Solutions business, we began providing services to eight new healthcare clients, which included sizable contracts with Catholic Health Initiatives (CHI) and a prominent university medical center. This growing activity with new clients, combined with expanded bookings at existing clients, represent meaningful progress on our efforts to reposition and renew growth in our Healthcare Solutions business. In further support of this initiative, during the quarter we expanded CTG’s offerings with the launch of our newest enterprise information management solution, EIM Advantage, which enables clients to utilize the value of their data to capture, manage, analyze, and transform it into actionable information.

“In keeping with our objective to deliver increasing shareholder value, we successfully completed a tender offer in April that resulted in the repurchase of approximately 1.5 million CTG shares. At the same time, our board of directors authorized an expansion of our share repurchase program by $10 million, of which $8.9 million remained available at quarter-end. In addition, to further demonstrate our commitment to best-in-class corporate governance, our shareholders will vote next week on a proposal to declassify our board of directors.”

Mr. Crumlish concluded, “As reflected by our second quarter results, we are making significant progress on our strategic growth initiatives across the organization as previous investments in business development are contributing to CTG’s increasing revenue and improved profitability. In addition to building a healthy pipeline of new business opportunities, we are focused on driving increased efficiencies, while utilizing operating leverage to drive future profitability.”

For earnings history and earnings-related data on Computer Task Group (CTG) click here.

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