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CTG revenue up 7%, solutions outpaces staffing

February 19 2013

Computer Task Group (NASD: CTGX) reported revenue rose 6.9 percent on a year-over-year basis to $107.9 million in the fourth quarter with growth in solutions revenue outpacing growth in staffing revenue. The fourth quarter of 2012 had one more business day than the fourth quarter of 2011. However, analysts had estimated revenue of $109.0 million, according to Yahoo.

Year-over-year revenue growth in the fourth quarter is also down compared to the previous year, at the Buffalo, N.Y.-based firm. Revenue in the fourth quarter of 2011 had risen 15.6 percent on a year-over-year basis.

CTG breaks out revenue by IT solutions and staffing.

  • CTG’s solutions revenue rose 12.3 percent in the fourth quarter of 2012 to $45.3 million. Healthcare IT revenue was the primary driver of the increase, according to the company.
  • Staffing revenue rose by 3.4 percent to $62.6 million in the fourth quarter. CTG Chairman and CEO James Boldt said client concerns about domestic and global economic uncertainty muted growth.

CTG reported European revenue was $18.3 million, up 10.9 percent from the same quarter last year. The company said it is optimistic about prospects in Western Europe where several countries are considering the adoption of electronic medical records similar to the U.S. And earlier this month, CTG acquired etrinity, a Belgium-based provider of healthcare IT services. Terms of the transaction were not announced, but etrinity had revenue of $3 million in 2012.

Fourth-quarter gross margin narrowed to 21.7 percent from 22.6 percent in the year-ago quarter.

Net income rose 48.0 percent to $4.9 million from $3.3 million in the same quarter year prior. CTG said the fourth quarter of 2012 included proceeds of $800,000 from life insurance benefits paid to the company upon the death of a former senior executive.

CTG estimates first-quarter 2013 revenue of between $107 million and $109 million, an increase of 4 percent at the midpoint of the range.

The company reported it expects growth in 2013 to come primarily from its healthcare IT business. The ongoing implementation of electronic medical records will be a major contributor to that business, it said.

Computer Task Group Inc. (NASD: CTGX)
 For the fourth quarter ended Dec. 31, 2012, compared with the same period in the previous year.
 Revenue: $107.9 million, +6.9 percent
 Net income: $4.9 million, +48.0 percent

For the 2012 fiscal year ended Dec. 31, 2012, compared with the previous year.
Revenue: $424.4 million, +7.1 percent
Net income: $16.2 million, +35.4 percent


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