CTG sees revenue drop $11.2m YoY in Q2 2016
Computer Task Group (CTG) yesterday confirmed an 11.2m drop in revenue YoY as it announced financial results for its second quarter ended 1st July 2016.
The IT recruitment specialist reported its revenue was $83.5m, compared with $94.7m in the second quarter of 2015. It saw a drop of $2.4m from $85.9m in the first quarter of 2016.
CTG said the year-over-year decline primarily reflects a decrease in staffing revenue at significant staffing customers and the continued trail-off of legacy electronic medical records (EMR) account business. It added that positive currency translation increased revenue in the second quarter by $0.3m.
Operating margin was 2.3%, compared with 1.2% in the second quarter of 2015, which included $2.3m in charges. Operating income in the second quarter was $1.9m, or 2.3% of revenue, compared with $1.1m, or 1.2% of revenue, in the second quarter of 2015.
Operating income in the current quarter included the foreign payroll tax credits, while the second quarter of 2015 included $2.3m in charges. CTG stated operating margin, excluding the payroll tax credits, continues to reflect a shift toward lower margin staffing business.
Net income in the second quarter of 2016 was $1.3m, or $0.08 per diluted share, compared with net income of $554,000, or $0.03 per diluted share, in the second quarter of 2015.
Second quarter 2016 earnings included the benefit of $0.03 per diluted share related to foreign payroll tax credits, while last year’s second quarter included $0.08 per diluted share in charges.
Bud Crumlish, CTG’s president and chief executive, who was appointed on 21st July, stated, “Second quarter earnings exceeded our guidance, due primarily to a $0.03 foreign payroll tax credit; quarterly earnings excluding the credit were at the high-end of guidance. However, revenue in the quarter was below our expectations, largely reflecting weakness at significant staffing customers.
“Despite these headwinds, we continued to gain new business traction during the quarter by securing new clients in each of our four vertical markets. In addition to new client accounts, we’ve been successful at expanding business at existing accounts. Collectively, these wins demonstrate the early results from the investments in our sales team and market expansion, as well as targeted efforts to diversify CTG’s customer base and future growth opportunities.
“Also notable during the quarter, we established a staffing subsidiary in Hyderabad, India to provide offshore recruiting and sourcing solutions to customers in the U.S. and U.K. CTG’s India subsidiary expands our capabilities and offerings for both new and existing clients. As part of launching this new fulfillment center and also in support of servicing new business, we further increased recruiter and account manager headcount in both the United States and India.”