Segments and Enterprise-Wide Disclosures

12 Months Ended

Dec. 31, 2021

Segment Reporting [Abstract]

Segments and Enterprise-Wide Disclosures

13. Segments and Enterprise-Wide Disclosures

Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated on a regular basis by the chief operating decision maker, or decision making group, in deciding how to allocate resources to an individual segment and in assessing performance.

The Company provides information technology and related services to its clients. These services include digital IT Solutions and services, and Staffing Services. With digital IT Solutions and Services, the Company generally takes responsibility for the deliverables and some level of project and staff management, and these services may include high-end advisory or business-related consulting. When providing Staffing Services, including managed staffing, staff augmentation, and volume staffing, personnel are provided to clients based upon their requirements for specific skills, who then, in turn, take their direction from clients’ managers.

The Company’s strategy throughout its operations is to expand the amount of IT Solutions and Services it provides to its clients as compared with Staffing Services, and to focus on delivering digital solutions. IT Solutions and Services provide significant value to our clients, and drive higher bill rates and margins for the Company. Our existing solutions include business, technology, and operations solutions that aid our clients in digitally transforming their company, and ultimately meet the needs of their clients. The digital services the Company delivers includes the Internet of Things, Intelligent Automation, Data and Analytics, Cloud and Automated Testing.

In prior years, and in 2021 prior to the fourth quarter, the Company reported its results in one segment. This included operating segments for each of North America and Europe. The services the Company provided, regardless of geography or industry, were similar in nature and produced similar results. Additionally, the CEO, who is the Company’s chief operating decision maker, made decisions on investments and allocated resources at the North America or Europe level. Accordingly, given the consistency in the services provided and the results, the Company aggregated those results into one reporting segment.

During the 2021 fourth quarter, the Company further refined its strategy to focus on providing digital services within its IT Solutions business in both North America and in Europe. As part of this process, the Company also determined that there are certain lower margin staffing accounts within its business that are no longer part of the Company’s long-term business plan. The focus includes investing in business development, solutions, delivery, and marketing for IT Solutions, and critically evaluating each significant staffing engagement as it comes up for renewal to determine if the Company would continue to provide those services to its client. These decisions are based on, among other factors, critically evaluating the work performed, the availability of the resources, the client, the long-term opportunities for the services provided at the client, and the revenue and profit associated with the engagement.

Accordingly, the Company will now report its operations in three segments within its business: North America IT Solutions and Services, Europe IT Solutions and Services, and Non-Strategic Technology Services.

The segments are composed of the following:

IT Solutions and Services in North America and Europe

IT Solutions and Services include business, technology, and operations solutions that aid our clients in digitally transforming their company, and ultimately meet the needs of their clients. The digital services the Company delivers includes the Internet of Things, Intelligent Automation, Data and Analytics, Cloud and Automated Testing.

Non-Strategic Technology Services

The Company’s Non-Strategic Technology Services address a range of information and technology resource needs, from filling specific talent gaps to managing high-volume staffing programs. The Company recruits, retains, and manages IT talent for its clients, which are primarily large technology service providers and other companies with multiple locations and a significant need for high-volume professional IT resources. This segment consists of the lowest margin services the Company provides to its clients. This segment consists primarily of staffing services in North America, and a minor amount (less than 5% of revenue in this segment) of such services in Europe.

The Company makes decisions related to resource allocation based upon the contribution income of each of its segments. Contribution profit reflects gross profit less any operating expenses directly related to each respective segment.  Those operating expenses primarily include sales, solutions, delivery, and recruiting expenses. General and administrative expenses are not allocated to the individual segments and primarily include corporate support costs such as finance and accounting, internal IT, human resources, benefits and marketing.

The operating results for the Company’s segments for 2021, 2020, and 2019 were as follows:

2021	North America IT		Europe IT		Non-Strategic
(amounts in thousands)	Solutions & Services		Solutions & Services		Technology Services		Total
Revenue	$	101,506	$	169,341	$	121,438	$	392,285
Direct costs		68,885		129,030		107,920		305,835
Gross profit		32,621		40,311		13,518		86,450
Operating expenses		13,883		21,345		4,904		40,132
Contribution profit	$	18,738	$	18,966	$	8,614		46,318
General and administrative expenses								33,576
Operating income							$	12,742

2020	North America IT		Europe IT		Non-Strategic
(amounts in thousands)	Solutions & Services		Solutions & Services		Technology Services		Total
Revenue	$	67,948	$	154,847	$	143,296	$	366,091
Direct costs		43,953		117,029		128,151		289,133
Gross profit		23,995		37,818		15,145		76,958
Operating expenses		9,368		20,366		6,992		36,726
Contribution profit	$	14,627	$	17,452	$	8,153		40,232
General and administrative expenses								31,102
Operating income							$	9,130

2019	North America IT		Europe IT		Non-Strategic
(amounts in thousands)	Solutions & Services		Solutions & Services		Technology Services		Total
Revenue	$	74,123	$	148,108	$	171,939	$	394,170
Direct costs		50,457		114,839		153,839		319,135
Gross profit		23,666		33,269		18,100		75,035
Operating expenses		8,998		19,825		10,519		39,342
Contribution profit	$	14,668	$	13,444	$	7,581		35,693
General and administrative expenses								28,781
Operating income							$	6,912

Depreciation allocated to Europe IT Solutions and Services totaled $0.3 million in the year ended December 31, 2021 and $0.2 million in each of the years ended December 31, 2020 and 2019. Depreciation allocated to North America IT Solutions and Services totaled $0.8 million, $0.7 million, and $0.6 million in the years ended December 31, 2021, 2020 and 2019, respectively. Depreciation allocated to Non-Strategic Technology Services was less than $0.1 million in each of the years ended December 31, 2021, 2020 and 2019.

The Company has not provided any other expense or asset information for each of its segments as the Company’s CEO, who is the chief operating decision maker, does not use this information in any way to make resource decisions or to manage the segments. The Company does not prepare balance sheet or statement of cash flow information for its segments.

The Company’s goodwill at December 31, 2021, totaled $19.7 million, including $18.3 million in the Europe IT Solutions and Services segment, and $1.4 million in the North America IT Solutions and Services segment. At December 31, 2020, the Company’s goodwill balance totaled $21.3 million and was wholly included in the Company’s Europe IT Solutions and Services segment.

CTG’s reportable information is based on geographical areas. The accounting policies of the individual geographical areas are the same as those described in Note 1, “Summary of Significant Accounting Policies.”

Financial Information About Geographic Areas	2021		2020		2019
(amounts in thousands)
Revenue from External Customers:
United States	$	215,637	$	203,495	$	241,038
Luxembourg (3)		72,699		66,411		64,852
Belgium (1)		68,109		59,851		52,468
Other countries		35,840		36,334		35,812
Total foreign revenue		176,648		162,596		153,132
Total revenue	$	392,285	$	366,091	$	394,170
Long-lived Assets*:
United States	$	2,081	$	1,710	$	3,534
France (2)		5,663		6,841		5,124
Luxembourg (3)		3,125		3,879		3,965
Other countries		1,653		2,182		2,195
Total long-lived assets*	$	12,522	$	14,612	$	14,818
Deferred Tax Assets, Net of Valuation Allowance:
United States	$	4,612	$	—	$	78
Europe		334		393		375
Total deferred tax assets, net	$	4,946	$	393	$	453
*Long-lived Assets exclude goodwill

(1) Revenue for our Belgium operations has been disclosed separately as it exceeds 10% of consolidated revenue in at least one of the years presented.

(2) Long-lived assets for our France operations have been disclosed separately as they exceed 10% of consolidated long-lived assets in at least one of the years presented.

(3) Revenue and long-lived assets for our Luxembourg operations have been disclosed separately as they exceed 10% of the consolidated balances in at least one of the years presented.