EX-99.1 2 ctg-ex99_1.htm EX-99.1 EX-99.1

Exhibit 99.1

img254417295_0.jpg  

CTG Margins Expand in Third Quarter 2022 with Continued Transformation into Digital Solutions and Services Business

•
Improved mix of business as a result of digital transformation strategy drove gross margin expansion of 190 basis points to 24.3% on revenue of $75.0 million.
•
Revenue relatively unchanged year-over-year on a constant currency basis and excluding intentional disengagement of lower margin Non-Strategic Technology Services business.
•
North America and Europe IT Solutions and Services segments revenue increased on a constant currency basis and considering the impact in the prior year of the large training, implementation, and support engagement for a health system in North America.
•
North America and Europe IT Solutions and Services segments delivered combined gross margin of 29.1%, an increase of 130 basis points from the prior year.
•
Operating margin was 3.0%; non-GAAP operating margin expanded 70 basis points to 4.0%.
•
Achieved net income of $1.1 million; Adjusted EBITDA increased 2.1% to $3.8 million with a 100 basis points improvement in margin to 5.1%.
•
Generated $9.7 million of cash from operations in the quarter and $12.5 million year-to-date; free cash flow was $6.7 million year-to-date.
•
Eleviant acquisition accelerates strategy and portfolio innovation, while adding significantly higher margins.

 

BUFFALO, N.Y., November 8, 2022 – 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 third quarter ended September 30, 2022.

Filip Gydé, CTG President and CEO commented, “We believe our results continue to validate the effectiveness of our strategy to evolve into a digital solutions and services focused business with solid margin expansion against revenue headwinds. Our strategy is delivering an improved mix of digital IT solutions while reducing lower-margin, non-core business. Our gross margin expanded 190 basis points year-over-year and 40 basis points sequentially, and gross margin for our North America and Europe IT Solutions and Services segments was a combined 29.1%. We continued to strengthen our business and disengaged from $8.8 million of non-strategic staffing business in the quarter.”

Mr. Gydé added, “We are excited to add Eleviant, which we acquired at the end of the quarter on September 29, 2022, to our solutions team. A compelling addition, Eleviant further advances our strategy of transformation into a higher value digital IT solutions provider. Eleviant provides strong offerings in AI, machine learning, and intelligent automation while complementing many of our other solutions and services. With the addition of established talent in India gained with the acquisition, we have increased capacity and added greater flexibility and agility to our global delivery network. From a financial perspective, Eleviant provides approximately $10 million of incremental annual revenue and given its industry-leading margin profile, is immediately accretive to EBITDA margin. We expect to leverage the

 

 

capabilities of our growing global team of associates to drive sales synergies and deliver even greater value for our clients.”

Consolidated Third 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

 

 

Sept. 30, 2022

 

 

Oct. 1, 2021

 

 

Sept. 25, 2020

 

 

$

 

 

%

 

 

$

 

 

%

 

Revenue

$

75,002

 

 

$

90,603

 

 

$

88,648

 

 

$

(15,601

)

 

 

-17.2

%

 

$

1,955

 

 

 

2.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Operating Income

$

2,253

 

 

$

2,702

 

 

$

1,824

 

 

$

(449

)

 

 

-16.6

%

 

$

878

 

 

 

48.1

%

GAAP Operating Margin

 

3.0

%

 

 

3.0

%

 

 

2.1

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Operating Income*

$

2,997

 

 

$

2,982

 

 

$

2,350

 

 

$

15

 

 

 

0.5

%

 

$

632

 

 

 

26.9

%

Non-GAAP Operating Margin*

 

4.0

%

 

 

3.3

%

 

 

2.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Net Income

$

1,102

 

 

$

1,672

 

 

$

2,831

 

 

$

(570

)

 

 

-34.1

%

 

$

(1,159

)

 

 

-40.9

%

GAAP Net Margin

 

1.5

%

 

 

1.8

%

 

 

3.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Net Income*

$

1,612

 

 

$

1,888

 

 

$

2,568

 

 

$

(276

)

 

 

-14.6

%

 

$

(680

)

 

 

-26.5

%

Non-GAAP Net Income Margin*

 

2.1

%

 

 

2.1

%

 

 

2.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA*

$

3,824

 

 

$

3,747

 

 

$

3,332

 

 

$

77

 

 

 

2.1

%

 

$

415

 

 

 

12.5

%

Adjusted EBITDA Margin*

 

5.1

%

 

 

4.1

%

 

 

3.8

%

 

 

 

 

 

 

 

 

 

 

 

 

* A reconciliation of GAAP to non-GAAP information is included in the financial tables below

•
Excluding the $5.7 million negative impact to revenue due to changes in foreign currency exchange rates and $8.8 million related to the disengagement from lower-margin non-strategic technology services business, revenue was down approximately 1%. Last year’s third quarter also benefited from the initial ramp up of a major engagement in North America.
•
Selling, general and administrative (SG&A) expenses declined 9.2% to $16.0 million reflecting strong cost discipline even as the Company continues to make investments in organic growth. As a percentage of sales, SG&A increased 190 basis points due to reduced operating leverage.
•
The effective tax rate was elevated in the quarter at 40.8% due to a reversal of deductions previously taken in a foreign jurisdiction.

 

 

 

Third Quarter Segment Performance

(unaudited)

IT Solutions and Services

North America

 

($ in thousands)

For the Quarter Ended

 

 

Change 2021-2022

 

 

Change 2020-2021

 

 

Sept. 30, 2022

 

 

Oct. 1, 2021

 

 

Sept. 25, 2020

 

 

$

 

 

%

 

 

$

 

 

%

 

Revenue

$

20,340

 

 

$

21,215

 

 

$

16,440

 

 

$

(875

)

 

 

-4.1

%

 

$

4,775

 

 

 

29.0

%

Percent of total

 

27.1

%

 

 

23.4

%

 

 

18.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

$

7,723

 

 

$

7,273

 

 

$

6,025

 

 

$

450

 

 

 

6.2

%

 

$

1,248

 

 

 

20.7

%

Gross margin

 

38.0

%

 

 

34.3

%

 

 

36.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contribution profit

$

4,129

 

 

$

3,809

 

 

$

3,783

 

 

$

320

 

 

 

8.4

%

 

$

26

 

 

 

0.7

%

Contribution margin

 

20.3

%

 

 

18.0

%

 

 

23.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

•
North America IT Solutions and Services gross margin expanded 370 basis points, despite lower revenue, given the improved mix of digital solutions. Lower revenue was the result of the current macroeconomic climate, which has slowed clients’ decision-making process for IT solutions and services. In addition, the prior-year third quarter realized the benefits of a substantial project that began ramping up in that quarter and was completed during the fourth quarter of 2021.

Europe

($ in thousands)

For the Quarter Ended

 

 

Change 2021-2022

 

 

Change 2020-2021

 

 

Sept. 30, 2022

 

 

Oct. 1, 2021

 

 

Sept. 25, 2020

 

 

$

 

 

%

 

 

$

 

 

%

 

Revenue

$

33,258

 

 

$

39,199

 

 

$

38,506

 

 

$

(5,941

)

 

 

-15.2

%

 

$

693

 

 

 

1.8

%

Percent of total

 

44.4

%

 

 

43.3

%

 

 

43.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

$

7,870

 

 

$

9,541

 

 

$

9,877

 

 

$

(1,671

)

 

 

-17.5

%

 

$

(336

)

 

 

-3.4

%

Gross margin

 

23.7

%

 

 

24.3

%

 

 

25.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contribution profit

$

3,464

 

 

$

4,358

 

 

$

4,129

 

 

$

(894

)

 

 

-20.5

%

 

$

229

 

 

 

5.5

%

Contribution margin

 

10.4

%

 

 

11.1

%

 

 

10.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

•
On a constant currency basis, Europe IT Solutions and Services segment was relatively flat compared with the prior-year period even as macro-economic conditions presented headwinds in the European Union, particularly around labor constraints. Unfavorable foreign currency exchange rate fluctuations had a $5.7 million impact on revenue.
•
Contribution margin held relatively steady despite the revenue decline reflecting strong cost discipline.

 

 

 

Non-Strategic Technology Services

 

($ in thousands)

For the Quarter Ended

 

 

Change 2021-2022

 

 

Change 2020-2021

 

 

Sept. 30, 2022

 

 

Oct. 1, 2021

 

 

Sept. 25, 2020

 

 

$

 

 

%

 

 

$

 

 

%

 

Revenue

$

21,404

 

 

$

30,189

 

 

$

33,702

 

 

$

(8,785

)

 

 

-29.1

%

 

$

(3,513

)

 

 

-10.4

%

Percent of total

 

28.5

%

 

 

33.3

%

 

 

38.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

$

2,636

 

 

$

3,476

 

 

$

3,646

 

 

$

(840

)

 

 

-24.2

%

 

$

(170

)

 

 

-4.7

%

Gross margin

 

12.3

%

 

 

11.5

%

 

 

10.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contribution profit

$

2,061

 

 

$

2,307

 

 

$

2,156

 

 

$

(246

)

 

 

-10.7

%

 

$

151

 

 

 

7.0

%

Contribution margin

 

9.6

%

 

 

7.6

%

 

 

6.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

•
Non-Strategic Technology Services segment margins have improved as the Company selectively disengages from its lowest margin business.

Balance Sheet and Cash Flow

Cash and cash equivalents were $26.8 million, compared with $35.6 million at year-end 2021. The purchase price of Eleviant included $17.4 million in cash at closing. Net cash provided by operations was $12.5 million for the year-to-date period.

At quarter-end, the Company had no outstanding balance on its revolving line of credit facility or any other long-term debt. Days sales outstanding were 83 in the third quarter of 2022 compared with 82 in the prior-year period.

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 larger, more relevant 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.

 

 

 

2022 Outlook

John M. Laubacker, Chief Financial Officer, said, “We continue to be impacted by a range of macroeconomic headwinds as well as business-specific challenges. These include the foreign currency translation impacts resulting from the significantly devalued Euro in the first three quarters of 2022. Additionally, the recent increase in the competition for resources in Europe is creating labor constraints in meeting client demand. Finally, the macroeconomic climate in both North America and Europe has slowed our clients’ decision-making process for IT solutions and services. As we mentioned in our first quarter release, we expected quarterly performance at the outset of 2022 to be uneven due to engagement timing, and we now expect that to continue for the rest of the year. As a result, we are adjusting our revenue for 2022 to range from $320 million to $330 million which includes a reduction of approximately $30 million from the prior year as a result of the intentional disengagement from the lowest margin business in our Non-Strategic Technology Services segment, $20 million from foreign currency exchange impacts, and a significant expected reduction in fourth quarter 2022 revenue compared with the prior year due to the completion of a large project in 2021.”

“Despite the top-line decrease and challenging macroeconomic headwinds, we expect our operating margins for the year to improve over the prior year given the positive ongoing changes to our business mix, and the lower revenue will be offset in part by these improving operating margins. We now expect 2022 GAAP diluted earnings per share to range from $0.42 to $0.48, and non-GAAP diluted earnings per share to range from $0.52 to $0.58. Our long-range goal remains unchanged as we drive our adjusted EBITDA margins to approximately 7%* by the end of 2023.”

* 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 September 30, 2022.

Conference Call and Webcast

CTG will hold a conference call today, November 8, 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 Tuesday,
November 15, 2022, by dialing +1 844 512 2921 and entering the access code 13733214. 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 2022 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 current conflict between Russia and the Ukraine, 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.

Contacts:

John M. Laubacker

Investor Relations:

Chief Financial Officer

Deborah K. Pawlowski

Tel: +1 716 887 7368

Kei Advisors LLC

 

dpawlowski@keiadvisors.com

 

Tel: +1 716 843 3908

 

 

 

 

COMPUTER TASK GROUP, INCORPORATED (CTG)

Condensed Consolidated Statements of Income

(Unaudited)

(amounts in thousands except per share data)

 

 

 

For the Quarter Ended

 

 

For the Three Quarters Ended

 

 

September 30,

 

 

October 1,

 

 

September 25,

 

 

September 30,

 

 

October 1,

 

 

September 25,

 

 

2022

 

 

2021

 

 

2020

 

 

2022

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

$

75,002

 

 

$

90,603

 

 

$

88,648

 

 

$

247,178

 

 

$

279,896

 

 

$

264,743

 

Cost of services

 

56,773

 

 

 

70,313

 

 

 

69,101

 

 

 

188,604

 

 

 

218,460

 

 

 

209,412

 

Gross profit

 

18,229

 

 

 

20,290

 

 

 

19,547

 

 

 

58,574

 

 

 

61,436

 

 

 

55,331

 

Selling, general and admin. expenses

 

15,976

 

 

 

17,588

 

 

 

17,723

 

 

 

49,949

 

 

 

53,835

 

 

 

49,526

 

Operating income

 

2,253

 

 

 

2,702

 

 

 

1,824

 

 

 

8,625

 

 

 

7,601

 

 

 

5,805

 

Non-taxable life insurance gain

 

-

 

 

 

-

 

 

 

574

 

 

 

-

 

 

 

-

 

 

 

963

 

Gain on sale of building

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

824

 

Other expense, net

 

(392

)

 

 

(542

)

 

 

(240

)

 

 

(1,034

)

 

 

(948

)

 

 

(436

)

Income before income taxes

 

1,861

 

 

 

2,160

 

 

 

2,158

 

 

 

7,591

 

 

 

6,653

 

 

 

7,156

 

Provision (benefit) for income taxes

 

759

 

 

 

488

 

 

 

(673

)

 

 

2,209

 

 

 

1,640

 

 

 

1,422

 

Net income

$

1,102

 

 

$

1,672

 

 

$

2,831

 

 

$

5,382

 

 

$

5,013

 

 

$

5,734

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

$

0.08

 

 

$

0.12

 

 

$

0.21

 

 

$

0.37

 

 

$

0.36

 

 

$

0.42

 

Diluted

$

0.07

 

 

$

0.11

 

 

$

0.20

 

 

$

0.36

 

 

$

0.34

 

 

$

0.40

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

14,480

 

 

 

14,011

 

 

 

13,655

 

 

 

14,366

 

 

 

13,850

 

 

 

13,603

 

Diluted

 

15,157

 

 

 

14,939

 

 

 

14,401

 

 

 

15,086

 

 

 

14,951

 

 

 

14,334

 

 

 

 

COMPUTER TASK GROUP, INCORPORATED (CTG)

Condensed Consolidated Balance Sheets

(Unaudited)

(amounts in thousands)

 

 

September 30,

 

 

December 31,

 

 

October 1,

 

 

2022

 

 

2021

 

 

2021

 

Current Assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

$

26,753

 

 

$

35,584

 

 

$

31,028

 

Accounts receivable, net

 

68,415

 

 

 

84,252

 

 

 

81,588

 

Other current assets

 

3,412

 

 

 

2,929

 

 

 

4,372

 

Total current assets

 

98,580

 

 

 

122,765

 

 

 

116,988

 

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

4,888

 

 

 

5,242

 

 

 

5,253

 

Operating lease right-of-use assets

 

17,101

 

 

 

22,132

 

 

 

23,131

 

Cash surrender value

 

4,087

 

 

 

4,018

 

 

 

3,988

 

Acquired intangibles, net

 

5,618

 

 

 

7,280

 

 

 

7,713

 

Goodwill

 

38,914

 

 

 

19,676

 

 

 

20,101

 

Other assets

 

7,318

 

 

 

7,221

 

 

 

2,813

 

Total Assets

$

176,506

 

 

$

188,334

 

 

$

179,987

 

 

 

 

 

 

 

 

 

 

Current Liabilities:

 

 

 

 

 

 

 

 

Accounts payable

$

11,765

 

 

$

21,150

 

 

$

11,869

 

Accrued compensation

 

20,036

 

 

 

22,534

 

 

 

28,678

 

Operating lease liabilities

 

5,287

 

 

 

6,444

 

 

 

6,637

 

Other current liabilities

 

17,007

 

 

 

14,855

 

 

 

13,165

 

Total current liabilities

 

54,095

 

 

 

64,983

 

 

 

60,349

 

 

 

 

 

 

 

 

 

 

Operating lease liabilities

 

11,713

 

 

 

15,612

 

 

 

16,408

 

Other liabilities

 

14,680

 

 

 

13,302

 

 

 

18,772

 

Shareholders' equity

 

96,018

 

 

 

94,437

 

 

 

84,458

 

Total Liabilities and Shareholders' Equity

$

176,506

 

 

$

188,334

 

 

$

179,987

 

 

 

 

 

COMPUTER TASK GROUP, INCORPORATED (CTG)

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(amounts in thousands)

 

 

For the Three Quarters Ended

 

 

September 30,

 

 

October 1,

 

 

September 25,

 

 

2022

 

 

2021

 

 

2020

 

 

 

 

 

 

 

 

 

 

Net income

$

5,382

 

 

$

5,013

 

 

$

5,734

 

Depreciation and amortization expense

 

2,051

 

 

 

2,451

 

 

 

2,576

 

Equity-based compensation expense

 

1,869

 

 

 

1,974

 

 

 

1,805

 

Other operating items

 

3,207

 

 

 

(7,205

)

 

 

15,344

 

Net cash provided by operating activities

 

12,509

 

 

 

2,233

 

 

 

25,459

 

Net cash used in investing activities

 

(17,917

)

 

 

(1,978

)

 

 

(3,959

)

Net cash provided by (used in) financing activities

 

(884

)

 

 

(1,175

)

 

 

282

 

Effect of exchange rates on cash and cash equivalents

 

(2,539

)

 

 

(917

)

 

 

849

 

Net increase (decrease) in cash and cash equivalents

 

(8,831

)

 

 

(1,837

)

 

 

22,631

 

Cash and cash equivalents at beginning of period

 

35,584

 

 

 

32,865

 

 

 

10,781

 

Cash and cash equivalents at end of period

$

26,753

 

 

$

31,028

 

 

$

33,412

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COMPUTER TASK GROUP, INCORPORATED (CTG)

Year-to-date Consolidated and Segment Performance

(unaudited)

 

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.

 

Consolidated Year-to-Date Results

 

($ in thousands)

For the Three Quarters Ended

 

Change 2021-2022

 

Change 2020-2021

 

Sept. 30, 2022

 

Oct. 1, 2021

 

Sept. 25, 2020

 

$

 

%

 

$

 

%

Revenue

$247,178

 

$279,896

 

$264,743

 

$(32,718)

 

-11.7%

 

$15,153

 

5.7%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Operating Income

$8,625

 

$7,601

 

$5,805

 

$1,024

 

13.5%

 

$1,796

 

30.9%

GAAP Operating Margin

3.5%

 

2.7%

 

2.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Operating Income*

$9,920

 

$8,690

 

$7,747

 

$1,230

 

14.2%

 

$943

 

12.2%

Non-GAAP Operating Margin*

4.0%

 

3.1%

 

2.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Net Income

$5,382

 

$5,013

 

$5,734

 

$369

 

7.4%

 

$(721)

 

-12.6%

GAAP Net Margin

2.2%

 

1.8%

 

2.2%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Net Income*

$6,303

 

$5,846

 

$4,297

 

$457

 

7.8%

 

$1,549

 

36.0%

Non-GAAP Net Income Margin*

2.5%

 

2.1%

 

1.6%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA*

$12,379

 

$11,568

 

$10,757

 

$811

 

7.0%

 

$811

 

7.5%

Adjusted EBITDA Margin*

5.0%

 

4.1%

 

4.1%

 

 

 

 

 

 

 

 

* A reconciliation of GAAP to non-GAAP information is included in the financial tables below

IT Solutions and Services

North America

($ in thousands)

For the Three Quarters Ended

 

 

Change 2021-2022

 

 

Change 2020-2021

 

 

Sept. 30, 2022

 

 

Oct. 1, 2021

 

 

Sept. 25, 2020

 

 

$

 

 

%

 

 

$

 

 

%

 

Revenue

$

61,114

 

 

$

56,431

 

 

$

45,508

 

 

$

4,683

 

 

 

8.3

%

 

$

10,923

 

 

 

24.0

%

Percent of total

 

24.7

%

 

 

20.2

%

 

 

17.2

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

$

21,664

 

 

$

19,359

 

 

$

15,937

 

 

$

2,305

 

 

 

11.9

%

 

$

3,422

 

 

 

21.5

%

Gross margin

 

35.4

%

 

 

34.3

%

 

 

35.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contribution profit

$

11,408

 

 

$

9,572

 

 

$

9,467

 

 

$

1,836

 

 

 

19.2

%

 

$

105

 

 

 

1.1

%

Contribution margin

 

18.7

%

 

 

17.0

%

 

 

20.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Year-to-Date Segment Performance (continued)

(unaudited)

Europe

($ in thousands)

For the Three Quarters Ended

 

 

Change 2021-2022

 

 

Change 2020-2021

 

 

Sept. 30, 2022

 

 

Oct. 1, 2021

 

 

Sept. 25, 2020

 

 

$

 

 

%

 

 

$

 

 

%

 

Revenue

$

112,896

 

 

$

129,260

 

 

$

110,990

 

 

$

(16,364

)

 

 

-12.7

%

 

$

18,270

 

 

 

16.5

%

Percent of total

 

45.7

%

 

 

46.2

%

 

 

41.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

$

27,932

 

 

$

31,506

 

 

$

28,119

 

 

$

(3,574

)

 

 

-11.3

%

 

$

3,387

 

 

 

12.0

%

Gross margin

 

24.7

%

 

 

24.4

%

 

 

25.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contribution profit

$

13,442

 

 

$

15,704

 

 

$

12,982

 

 

$

(2,262

)

 

 

-14.4

%

 

$

2,722

 

 

 

21.0

%

Contribution margin

 

11.9

%

 

 

12.1

%

 

 

11.7

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-Strategic Technology Services

($ in thousands)

For the Three Quarters Ended

 

 

Change 2021-2022

 

 

Change 2020-2021

 

 

Sept. 30, 2022

 

 

Oct. 1, 2021

 

 

Sept. 25, 2020

 

 

$

 

 

%

 

 

$

 

 

%

 

Revenue

$

73,168

 

 

$

94,205

 

 

$

108,245

 

 

$

(21,037

)

 

 

-22.3

%

 

$

(14,040

)

 

 

-13.0

%

Percent of total

 

29.6

%

 

 

33.6

%

 

 

40.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross profit

$

8,978

 

 

$

10,571

 

 

$

11,275

 

 

$

(1,593

)

 

 

-15.1

%

 

$

(704

)

 

 

-6.2

%

Gross margin

 

12.3

%

 

 

11.2

%

 

 

10.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Contribution profit

$

6,892

 

 

$

6,769

 

 

$

5,877

 

 

$

123

 

 

 

1.8

%

 

$

892

 

 

 

15.2

%

Contribution margin

 

9.4

%

 

 

7.2

%

 

 

5.4

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

COMPUTER TASK GROUP, INCORPORATED (CTG)

Segment Information

(Unaudited)

(amounts in thousands)

 

 

For the Quarter Ended September 30, 2022

 

North

 

 

 

 

 

 

 

 

 

 

 

America

 

Europe

 

Non-Strategic

 

 

 

 

 

Non-

 

IT Solutions

 

IT Solutions

 

Technology

 

GAAP

 

Non-

 

GAAP

 

and Services

 

and Services

 

Services

 

Totals

 

GAAP*

 

Totals

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

$20,340

 

$33,258

 

$21,404

 

$75,002

 

 

 

$75,002

Cost of services

           12,617

 

           25,388

 

            18,768

 

      56,773

 

 

 

      56,773

Gross profit

             7,723

 

             7,870

 

              2,636

 

      18,229

 

 

 

      18,229

Gross margin

38.0%

 

23.7%

 

12.3%

 

24.3%

 

 

 

24.3%

Operating expenses

             3,594

 

             4,406

 

                  575

 

         8,575

 

 

 

         8,575

Contribution profit

$4,129

 

$3,464

 

$2,061

 

         9,654

 

 

 

         9,654

Contribution margin

20.3%

 

10.4%

 

9.6%

 

12.9%

 

 

 

12.9%

General and admin. expense

 

 

 

 

 

 

         7,401

 

            (744)

 

         6,657

Operating income

 

 

 

 

 

 

$2,253

 

$744

 

$2,997

Operating margin

 

 

 

 

 

 

3.0%

 

 

 

4.0%

 

* Non-GAAP costs represent certain acquisition-related expenses

 

For the Quarter Ended October 1, 2021

 

North

 

 

 

 

 

 

 

 

 

 

 

America

 

Europe

 

Non-Strategic

 

 

 

 

 

Non-

 

IT Solutions

 

IT Solutions

 

Technology

 

GAAP

 

Non-

 

GAAP

 

and Services

 

and Services

 

Services

 

Totals

 

GAAP*

 

Totals

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

$21,215

 

$39,199

 

$30,189

 

$90,603

 

 

 

$90,603

Cost of services

           13,942

 

           29,658

 

            26,713

 

      70,313

 

 

 

      70,313

Gross profit

             7,273

 

             9,541

 

              3,476

 

      20,290

 

 

 

      20,290

Gross margin

34.3%

 

24.3%

 

11.5%

 

22.4%

 

 

 

22.4%

Operating expenses

             3,464

 

             5,183

 

              1,169

 

         9,816

 

 

 

         9,816

Contribution profit

$3,809

 

$4,358

 

$2,307

 

      10,474

 

 

 

      10,474

Contribution margin

18.0%

 

11.1%

 

7.6%

 

11.6%

 

 

 

11.6%

General and admin. expense

 

 

 

 

 

 

         7,772

 

            (280)

 

         7,492

Operating income

 

 

 

 

 

 

$2,702

 

$280

 

$2,982

Operating margin

 

 

 

 

 

 

3.0%

 

 

 

3.3%

 

* Non-GAAP costs represent certain acquisition-related expenses

 

 

 

 

COMPUTER TASK GROUP, INCORPORATED (CTG)

Segment Information (continued)

(Unaudited)

(amounts in thousands)

 

 

For the Quarter Ended September 25, 2020

 

North

 

 

 

 

 

 

 

 

 

 

 

America

 

Europe

 

Non-Strategic

 

 

 

 

 

Non-

 

IT Solutions

 

IT Solutions

 

Technology

 

GAAP

 

Non-

 

GAAP

 

and Services

 

and Services

 

Services

 

Totals

 

GAAP*

 

Totals

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

$16,440

 

$38,506

 

$33,702

 

$88,648

 

 

 

$88,648

Cost of services

           10,415

 

           28,629

 

            30,056

 

      69,100

 

 

 

      69,100

Gross profit

             6,025

 

             9,877

 

              3,646

 

      19,548

 

 

 

      19,548

Gross margin

36.6%

 

25.7%

 

10.8%

 

22.1%

 

 

 

22.1%

Operating expenses

             2,242

 

             5,748

 

              1,490

 

         9,480

 

 

 

         9,480

Contribution profit

$3,783

 

$4,129

 

$2,156

 

      10,068

 

 

 

      10,068

Contribution margin

23.0%

 

10.7%

 

6.4%

 

11.4%

 

 

 

11.4%

General and admin. expense

 

 

 

 

 

 

         8,244

 

            (526)

 

         7,718

Operating income

 

 

 

 

 

 

$1,824

 

$526

 

$2,350

Operating margin

 

 

 

 

 

 

2.1%

 

 

 

2.7%

* Non-GAAP costs represent certain acquisition-related expenses

 

 

For the Three Quarters Ended September 30, 2022

 

North

 

 

 

 

 

 

 

 

 

 

 

America

 

Europe

 

Non-Strategic

 

 

 

 

 

Non-

 

IT Solutions

 

IT Solutions

 

Technology

 

GAAP

 

Non-

 

GAAP

 

and Services

 

and Services

 

Services

 

Totals

 

GAAP*

 

Totals

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

$61,114

 

$112,896

 

$73,168

 

$247,178

 

 

 

$247,178

Cost of services

           39,450

 

           84,964

 

            64,190

 

    188,604

 

 

 

    188,604

Gross profit

           21,664

 

           27,932

 

              8,978

 

      58,574

 

 

 

      58,574

Gross margin

35.4%

 

24.7%

 

12.3%

 

23.7%

 

 

 

23.7%

Operating expenses

           10,256

 

           14,490

 

              2,086

 

      26,832

 

 

 

      26,832

Contribution profit

$11,408

 

$13,442

 

$6,892

 

      31,742

 

 

 

      31,742

Contribution margin

18.7%

 

11.9%

 

9.4%

 

12.8%

 

 

 

12.8%

General and admin. expense

 

 

 

 

 

 

      23,117

 

        (1,295)

 

      21,822

Operating income

 

 

 

 

 

 

$8,625

 

$1,295

 

$9,920

Operating margin

 

 

 

 

 

 

3.5%

 

 

 

4.0%

* Non-GAAP costs represent certain acquisition-related expenses

 

 

 

COMPUTER TASK GROUP, INCORPORATED (CTG)

Segment Information (continued)

(Unaudited)

(amounts in thousands)

 

 

For the Three Quarters Ended October 1, 2021

 

North

 

 

 

 

 

 

 

 

 

 

 

America

 

Europe

 

Non-Strategic

 

 

 

 

 

Non-

 

IT Solutions

 

IT Solutions

 

Technology

 

GAAP

 

Non-

 

GAAP

 

and Services

 

and Services

 

Services

 

Totals

 

GAAP*

 

Totals

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

$56,431

 

$129,260

 

$94,205

 

$279,896

 

 

 

$279,896

Cost of services

           37,072

 

           97,754

 

            83,634

 

    218,460

 

 

 

    218,460

Gross profit

           19,359

 

           31,506

 

            10,571

 

      61,436

 

 

 

      61,436

Gross margin

34.3%

 

24.4%

 

11.2%

 

21.9%

 

 

 

21.9%

Operating expenses

             9,787

 

           15,802

 

              3,802

 

      29,391

 

 

 

      29,391

Contribution profit

$9,572

 

$15,704

 

$6,769

 

      32,045

 

 

 

      32,045

Contribution margin

17.0%

 

12.1%

 

7.2%

 

11.4%

 

 

 

11.4%

General and admin. expense

 

 

 

 

 

 

      24,444

 

        (1,089)

 

      23,355

Operating income

 

 

 

 

 

 

$7,601

 

$1,089

 

$8,690

Operating margin

 

 

 

 

 

 

2.7%

 

 

 

3.1%

* Non-GAAP costs represent certain acquisition-related expenses and rebranding costs

 

For the Three Quarters Ended September 25, 2020

 

North

 

 

 

 

 

 

 

 

 

 

 

America

 

Europe

 

Non-Strategic

 

 

 

 

 

Non-

 

IT Solutions

 

IT Solutions

 

Technology

 

GAAP

 

Non-

 

GAAP

 

and Services

 

and Services

 

Services

 

Totals

 

GAAP*

 

Totals

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

$45,508

 

$110,990

 

$108,245

 

$264,743

 

 

 

$264,743

Cost of services

           29,571

 

           82,871

 

            96,970

 

    209,412

 

 

 

    209,412

Gross profit

           15,937

 

           28,119

 

            11,275

 

      55,331

 

 

 

      55,331

Gross margin

35.0%

 

25.3%

 

10.4%

 

20.9%

 

 

 

20.9%

Operating expenses

             6,470

 

           15,137

 

              5,398

 

      27,005

 

 

 

      27,005

Contribution profit

$9,467

 

$12,982

 

$5,877

 

      28,326

 

 

 

      28,326

Contribution margin

20.8%

 

11.7%

 

5.4%

 

10.7%

 

 

 

10.7%

General and admin. expense

 

 

 

 

 

 

      22,521

 

        (1,942)

 

      20,579

Operating income

 

 

 

 

 

 

$5,805

 

$1,942

 

$7,747

Operating margin

 

 

 

 

 

 

2.2%

 

 

 

2.9%

* 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

 

 

 

 

 

 

 

 

 

 

 

 

 

Twelve Months

 

 

For the Quarter Ended

 

Ended

 

 

Sept.

 

Dec.

 

Mar.

 

Jun.

 

Sept.

 

Sept.

 

 

2021

 

2021

 

2022

 

2022

 

2022

 

2022

Revenue (in millions)

 

 

 

 

 

 

 

 

 

 

 

 

North America IT Solutions and Services

 

$21.215

 

$45.075

 

$20.435

 

$20.339

 

$20.340

 

$106.189

Europe IT Solutions and Services

 

          39.199

 

          40.081

 

          42.478

 

          37.160

 

          33.258

 

                  152.977

Non-Strategic Technology Services

 

          30.189

 

          27.233

 

          26.504

 

          25.260

 

          21.404

 

                  100.401

Total Revenue

 

$90.603

 

$112.389

 

$89.417

 

$82.759

 

$75.002

 

$359.567

 

 

 

 

 

 

 

 

 

 

 

 

 

Foreign Currency Impact

 

$0.453

 

$(1.520)

 

$(3.106)

 

$(4.943)

 

$(5.727)

 

$(15.296)

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue By Geography

 

 

 

 

 

 

 

 

 

 

 

 

North America

 

55.5%

 

63.4%

 

51.7%

 

54.4%

 

55.3%

 

56.7%

Europe

 

44.5%

 

36.6%

 

48.3%

 

45.6%

 

44.7%

 

43.3%

Total

 

100.0%

 

100.0%

 

100.0%

 

100.0%

 

100.0%

 

100.0%

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue by Vertical Market

 

 

 

 

 

 

 

 

 

 

 

 

Technology Service Providers

 

28%

 

20%

 

24%

 

24%

 

22%

 

23%

Healthcare

 

18%

 

36%

 

17%

 

18%

 

19%

 

23%

Financial Services

 

18%

 

13%

 

17%

 

15%

 

15%

 

15%

Manufacturing

 

12%

 

10%

 

14%

 

15%

 

17%

 

14%

Energy

 

5%

 

4%

 

5%

 

7%

 

6%

 

5%

General Markets

 

19%

 

17%

 

23%

 

21%

 

21%

 

20%

Total

 

100%

 

100%

 

100%

 

100%

 

100%

 

100%

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Margins

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Operating Margin

 

3.0%

 

4.6%

 

3.6%

 

3.8%

 

3.0%

 

3.8%

Non-GAAP Operating Margin

 

3.3%

 

4.8%

 

3.9%

 

4.2%

 

4.0%

 

4.2%

 

Other Information (in millions except Billable Days and EPS)

Billable Days

 

 

63

 

 

 

63

 

 

 

65

 

 

 

64

 

 

 

63

 

 

 

255

 

Net Income

 

$

1.672

 

 

$

8.717

 

 

$

2.240

 

 

$

2.040

 

 

$

1.102

 

 

$

14.099

 

GAAP Diluted EPS*

 

$

0.11

 

 

$

0.58

 

 

$

0.15

 

 

$

0.13

 

 

$

0.07

 

 

$

0.93

 

Non-GAAP Diluted EPS*

 

$

0.13

 

 

$

0.25

 

 

$

0.16

 

 

$

0.15

 

 

$

0.11

 

 

$

0.67

 

Adjusted EBITDA (non-GAAP)

 

$

3.8

 

 

$

6.5

 

 

$

4.3

 

 

$

4.2

 

 

$

3.8

 

 

$

18.9

 

 

Balance Sheet Information (in millions except DSO)

Cash less Debt, Net

 

$

31.0

 

 

$

35.6

 

 

$

38.7

 

 

$

35.5

 

 

$

26.8

 

 

 

Working Capital

 

$

56.6

 

 

$

57.8

 

 

$

60.3

 

 

$

61.8

 

 

$

44.5

 

 

 

DSO

 

 

82

 

 

 

67

 

 

 

76

 

 

 

84

 

 

 

83

 

 

 

 

* GAAP Diluted EPS for the 2021 fourth quarter and Twelve Months Ended September 2022 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 balances for the 2021 fourth quarter and Twelve Months Ended September 2022 excludes that benefit.

 

 

 

 

COMPUTER TASK GROUP, INCORPORATED (CTG)

(Unaudited)

 

The non-GAAP information below excludes expenses associated with 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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Twelve

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Months

 

 

 

For the Quarter Ended

 

 

Ended

 

 

 

Sept.

 

 

Dec.

 

 

Mar.

 

 

Jun.

 

 

Sept.

 

 

Sept.

 

(in millions)

 

 

2021

 

 

 

2021

 

 

 

2022

 

 

 

2022

 

 

 

2022

 

 

 

2022

 

GAAP Operating Income

 

$

2.702

 

 

$

5.141

 

 

$

3.199

 

 

$

3.173

 

 

$

2.253

 

 

$

13.766

 

Acquisition-related expenses

 

 

0.280

 

 

 

0.211

 

 

 

0.262

 

 

 

0.290

 

 

 

0.744

 

 

 

1.507

 

Non-GAAP Operating Income

 

$

2.982

 

 

$

5.352

 

 

$

3.461

 

 

$

3.463

 

 

$

2.997

 

 

$

15.273

 

 

 

Reconciliation of GAAP to non-GAAP Operating Margin

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Twelve

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Months

 

 

 

For the Quarter Ended

 

 

Ended

 

 

 

Sept.

 

 

Dec.

 

 

Mar.

 

 

Jun.

 

 

Sept.

 

 

Sept.

 

 

 

 

2021

 

 

 

2021

 

 

 

2022

 

 

 

2022

 

 

 

2022

 

 

 

2022

 

GAAP Operating Margin

 

 

3.0

%

 

 

4.6

%

 

 

3.6

%

 

 

3.8

%

 

 

3.0

%

 

 

3.8

%

Acquisition-related expenses

 

 

0.3

%

 

 

0.2

%

 

 

0.3

%

 

 

0.4

%

 

 

1.0

%

 

 

0.4

%

Non-GAAP Operating Margin

 

 

3.3

%

 

 

4.8

%

 

 

3.9

%

 

 

4.2

%

 

 

4.0

%

 

 

4.2

%

 

 

Reconciliation of GAAP to non-GAAP Net Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Twelve

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Months

 

 

 

For the Quarter Ended

 

 

Ended

 

 

 

Sept.

 

 

Dec.

 

 

Mar.

 

 

Jun.

 

 

Sept.

 

 

Sept.

 

(in millions)

 

 

2021

 

 

 

2021

 

 

 

2022

 

 

 

2022

 

 

 

2022

 

 

 

2022

 

GAAP Net Income

 

$

1.672

 

 

$

8.717

 

 

$

2.240

 

 

$

2.040

 

 

$

1.102

 

 

$

14.099

 

Acquisition-related expenses

 

 

0.216

 

 

 

0.151

 

 

 

0.199

 

 

 

0.212

 

 

 

0.510

 

 

 

1.072

 

Reversal of tax valuation allowance

 

 

-

 

 

 

(5.094

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(5.094

)

Non-GAAP Net Income

 

$

1.888

 

 

$

3.774

 

 

$

2.439

 

 

$

2.252

 

 

$

1.612

 

 

$

10.077

 

 

 

 

COMPUTER TASK GROUP, INCORPORATED (CTG)

(Unaudited)

 

Reconciliation of GAAP to non-GAAP Diluted Earnings per Share (EPS)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Twelve

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Months

 

 

 

For the Quarter Ended

 

 

Ended

 

 

 

Sept.

 

 

Dec.

 

 

Mar.

 

 

Jun.

 

 

Sept.

 

 

Sept.

 

 

 

 

2021

 

 

 

2021

 

 

 

2022

 

 

 

2022

 

 

 

2022

 

 

 

2022

 

GAAP Diluted EPS

 

$

0.11

 

 

$

0.58

 

 

$

0.15

 

 

$

0.13

 

 

$

0.07

 

 

$

0.93

 

Acquisition-related expenses

 

 

0.02

 

 

 

0.01

 

 

 

0.01

 

 

 

0.02

 

 

 

0.04

 

 

 

0.08

 

Reversal of tax valuation allowance

 

 

-

 

 

 

(0.34

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(0.34

)

Non-GAAP Diluted EPS

 

$

0.13

 

 

$

0.25

 

 

$

0.16

 

 

$

0.15

 

 

$

0.11

 

 

$

0.67

 

 

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, and acquisition-related expenses.

 

 

 

 

 

 

 

 

 

 

 

 

 

Twelve

 

 

 

 

 

 

 

 

 

 

 

 

Months

 

 

For the Quarter Ended

 

Ended

 

 

Sept.

 

Dec.

 

Mar.

 

Jun.

 

Sept.

 

Sept.

(in millions)

 

2021

 

2021

 

2022

 

2022

 

2022

 

2022

Net Income

 

$1.672

 

$8.717

 

$2.240

 

$2.040

 

$1.102

 

$14.099

Taxes

 

     0.488

 

    (3.633)

 

     0.702

 

     0.748

 

     0.759

 

    (1.424)

Interest

 

     0.112

 

     0.100

 

     0.100

 

     0.100

 

     0.103

 

     0.403

Depreciation and amortization

 

     0.766

 

     0.721

 

     0.716

 

     0.684

 

     0.651

 

     2.772

Equity-based compensation expense

 

     0.702

 

     0.666

 

     0.573

 

     0.603

 

     0.693

 

     2.535

Other

 

     0.007

 

    (0.058)

 

         -

 

     0.049

 

     0.516

 

     0.507

Adjusted EBITDA

 

$3.747

 

$6.513

 

$4.331

 

$4.224

 

$3.824

 

$18.892

Adjusted EBITDA Margin

 

4.1%

 

5.8%

 

4.8%

 

5.1%

 

5.1%

 

5.3%

 

 

 

- END -

CTG news releases are available at www.ctg.com.