CTG has announced its financial results for the 2010 fourth quarter and full year
CTG the international information technology solutions and services company, has announced its financial results for the 2010 fourth quarter and full year which ended on December 31, 2010. CTG's significant increase in revenue, margins, and earnings in the 2010 fourth quarter and full year primarily reflect growth in the Company's healthcare IT and managed services staffing businesses.
Strong Margin and Earnings Growth Highlight Fourth Quarter Results
Revenue, and net income, for the 2010 fourth quarter as compared with the 2009 fourth quarter were as follows: Revenue $87,313,000 up 29.1% and Net income at $2,654,000 up almost 63%.
The Company's operating margin in the 2010 fourth quarter was 4.9%, a 110 basis point increase from 3.8% in the 2009 fourth quarter. A research and development tax credit added one cent to 2010 fourth quarter net income per diluted share.
"CTG's fourth quarter performance was very strong topping off an excellent year marked by a robust return to double digit revenue and earnings growth," CTG Chairman and Chief Executive Officer James R. Boldt said. "Even with the lowest number of billing days of any quarter in 2010, fourth quarter revenue and earnings were the highest of the year coming in at the top end of our guidance. High demand for technical resources from our U.S. clients and our growing healthcare IT business were the primary contributors to our strong results in the quarter and throughout 2010."
Mr. Boldt added, "The profitability of CTG's business expanded significantly in 2010 with our operating margin in the fourth quarter 110 basis points higher than last year. The growth in healthcare solutions work, particularly EMR projects, combined with the operating leverage from revenue growth, are driving this higher level of profitability that we expect to carry over into 2011. We are currently working on 13 significant EMR engagements, and were notified in the first quarter of 2011 that we had won four additional projects."
2010 Fourth Quarter Review
Solutions revenue in the 2010 fourth quarter increased 41%, or $9.1 million, to $31.2 million, or 36% of total revenue, compared with 33% of total revenue in the 2009 fourth quarter. Staffing revenue increased 23%, or $10.6 million, to $56.1 million, or 64% of total revenue, compared with 67% in the 2009 fourth quarter. European revenue was $15.9 million, or 18% of total revenue, in the 2010 fourth quarter, compared with $15.2 million, or 23% of total revenue, in the 2009 fourth quarter. Revenue from our European operations was negatively affected by $1.3 million in the 2010 fourth quarter due to an adverse change in foreign currency exchange rates as compared with the 2009 fourth quarter. There were 62 billing days in both the 2010 and 2009 fourth quarters.
Selling, general, and administrative (SG&A) expenses were $14.9 million, or 17.1% of revenue, compared with $12.4 million, or 18.4% of revenue, in the 2009 fourth quarter. The decline in SG&A as a percent of revenue reflects operating leverage from revenue growth and continued discipline in managing costs.
The Company recorded equity-based compensation expense, net of tax, of $0.2 million in the 2010 fourth quarter compared with $0.3 million in the 2009 fourth quarter, which reduced net income per diluted share by $0.01 and $0.02 in the respective quarters.
CTG's effective tax rate was 37% and 36%, respectively, in the 2010 and 2009 fourth quarters. The Company's tax rate in the 2010 fourth quarter was favorably affected by the U.S. federal Research and Development Credit which increased net income by approximately one cent per diluted share.
Cash provided by operations in the 2010 fourth quarter increased to $6.6 million from cash provided by operations of $0.3 million in the 2009 fourth quarter, in part due to a significant increase in net income. At December 31, 2010, the Company had $14.8 million in cash compared with $10.4 million at the end of the 2009 fourth quarter. CTG had no debt at the end of the 2010 and 2009 fourth quarters. CTG finances its working capital needs through a $35 million revolving credit agreement which was extended in the 2010 fourth quarter through April 2014.
2010 Full Year Review
Results for the 2010 full year reflect the same trends seen in the fourth quarter.
Revenue was $331,407,000 up 20% and Net Income was $8,372,000 up 41%.
The Company's operating margin in 2010 expanded by 60 basis points to 4.2% from 3.6% in 2009. In 2010, CTG's solutions business increased 22% to $111.4 million, or 34% of total revenue, and its staffing business grew 20% to $220.0 million, or 66% of total revenue. European revenue decreased 3.2% in 2010 to $60.7 million and represented 18% of total revenue. Strong client demand for external technical resources in 2010 accounted for an increase in headcount of 500, or 17%, to 3,400 at year-end 2010.
Selling, general, and administrative expenses were $57.3 million, or 17.3% of revenue, compared with $52.0 million, or 18.9% of revenue, in 2009. In 2010, CTG recorded $1.7 million in depreciation and $2.0 million for capital expenditures.