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View All NewsQ1 revenue falls 12% at CTG, takes impairment charge
First-quarter revenue fell 11.9% year over year to $85.9 million at Computer Task Group Inc. (NASD: CTG). Revenue at the Buffalo, NY-based IT staffing provider primarily reflects a decrease in staffing revenue at a large customer and the run-off of legacy electronic medical records account business.
IT and other staffing revenue fell 8.0% while IT solutions revenue fell 20.0%.
CTG reported a net loss of $20.4 million compared to net income of $1.3 million in last year’s first quarter. The company recorded a non-cash impairment charge of $21.5 million in the quarter for the write-down of goodwill related to its healthcare business. The charge was incurred after a review of the carrying value of goodwill triggered by a sustained decrease in the company’s market capitalization below the carrying value of its net assets.
| (US$ thousands) | Q1 2016 | Q1 2015 | % growth |
| Revenue | $85,850 | $97,477 | -11.9% |
| Gross margin percentage | 16.9% | 17.8% | |
| Net loss/income | -$20,373 | $1,267 | nm |
Quote
“During the first quarter, we continued to execute on our business initiatives designed to expand CTG’s customer base and drive long-term growth,” CEO Cliff Bleustein said. “We are pleased to report non-GAAP earnings at the middle of our guidance range despite selective headwinds in the staffing, diversified industrials and healthcare markets. First quarter revenue grew sequentially as a result of three additional billing days in the quarter and early contribution from our new business efforts, but was slightly below our expectations due to weaker demand at one of our larger staffing customers. We added nine new staffing accounts in the quarter and continued to expand our new account pipeline through prior investments in sales hires. We increased recruiter headcount and are accelerating investments in additional recruiters and account executives to manage new and anticipated business. We expect to continue to hire recruiters and account executives during 2016 as we onboard new clients.”
Revenue by segment and geography
| (US$ thousands) | Q1 2016 | Q1 2015 | % growth |
| Revenue by segment | |||
| IT and other staffing | $60,067 | $65,260 | -8.0% |
| IT Solutions | $25,783 | $32,217 | -20.0% |
| North American revenue | $68,065 | $79,694 | -14.6% |
| European revenue | $17,785 | $17,783 | 0.0% |
Guidance
CTG expects second-quarter revenue to range between $85 million and $87 million, and full-year 2016 revenue to range between $338 million and $350 million.
Share price and market cap
Shares in CTG fell 2.64% in early afternoon trading to $5.17 and the firm had a market cap of $96.86 million, according to Yahoo!