Computer Task Group Inc. (CTGX, Financial) filed Quarterly Report for the period ended 2011-07-01.
Computer Task Group Inc. has a market cap of $237.4 million; its shares were traded at around $12.86 with a P/E ratio of 20.4 and P/S ratio of 0.7. Computer Task Group Inc. had an annual average earning growth of 35.6% over the past 10 years.
In the first two quarters of 2011, the Company recorded revenue of $194.2 million, an increase of 21.7% compared with revenue of $159.6 million recorded in the first two quarters of 2010. There were 129 billable days in the first two quarters of both 2011 and 2010. Revenue from the Companys North American operations totaled $159.8 million in the first two quarters of 2011, an increase of 24.2% when compared with revenue in the first two quarters of 2010 of $128.6 million. Revenue from the Companys European operations in the first two quarters of 2011 totaled $34.4 million, an increase of 11.1% when compared with revenue in the first two quarters of 2010 of $31.0 million. The European revenue represented 17.7% and 19.4% of 2011 and 2010 year-to-date consolidated revenue, respectively. The Companys revenue included reimbursable expenses billed to customers, which totaled $6.3 million and $4.1 million in the 2011 and 2010 year-to-date periods, respectively.
The increase in revenue in the Companys European operations in both the 2011 second quarter and first two quarters as compared with the corresponding 2010 periods was partially due to modest strength in the Companys European IT staffing business. This revenue increase was supported by the strength of the currencies of Belgium, Luxembourg, and the United Kingdom, the countries in which the Companys European subsidiaries operate. In Belgium and Luxembourg, the functional currency is the Euro, while in the United Kingdom the functional currency is the British Pound. In the 2011 second quarter as compared with the 2010 second quarter, the average value of the Euro increased 13.0% while the average value of the British Pound increased 9.4%. A significant portion of the Companys revenue from its European operations is generated in Belgium and Luxembourg. If there had been no change in these exchange rates from the 2010 second quarter to the 2011 second quarter, total European revenue would have been approximately $1.9 million lower, or $15.4 million as compared with the $17.3 million reported. In the first two quarters of 2011 as compared with the first two quarters of 2010, the average value of the Euro increased 5.6% while the average value of the British Pound increased 5.9%. If there had been no change in the exchange rates from the first two quarters of 2010 to the corresponding 2011 period, total European revenue would have been approximately $1.8 million lower, or $32.6 million as compared with the $34.4 million reported.
In the 2011 second quarter, IBM was the Companys largest customer, accounting for $29.5 million or 30.0% of consolidated revenue as compared with $25.6 million or 31.5% of revenue in the comparable 2010 period. In the first two quarters of 2011, IBM accounted for $58.1 million or 29.9% of consolidated revenue, compared with $48.2 million or 30.2% in the comparable 2010 period. During the 2011 second quarter, the Companys current National Technical Services (NTS Agreement) contract with IBM was extended for three months from June 30, 2011 to September 28, 2011. As part of the NTS Agreement, the Company provides its services as a predominant supplier to IBMs Integrated Technology Services unit and as sole provider to the Systems and Technology Group business unit. We expect the NTS agreement to be renewed in September 2011, and that the Company will continue to derive a significant portion of its revenue from IBM throughout the remainder of 2011 and in future years. However, a significant decline in or the loss of the revenue from IBM would have a significant negative effect on our operating results. The Companys accounts receivable from IBM at July 1, 2011 and July 2, 2010 totaled $15.0 million and $13.5 million, respectively. No other customer accounted for more than 10% of the Companys revenue in either the second quarter or year to date periods of 2011 or 2010.
Operating income was 4.8% of revenue in the 2011 second quarter as compared with 4.3% in the 2010 second quarter, and 4.8% in the first two quarters of 2011 as compared with 4.1% in the corresponding 2010 period. Operating income from North American operations was $7.7 million and $5.8 million in the 2011 and 2010 first two quarters, respectively, while European operations recorded operating income of $1.6 million and $0.8 million, respectively, in the corresponding 2011 and 2010 periods.
Net income for the 2011 second quarter was 2.9% of revenue or $0.17 per diluted share, compared with net income of 2.3% of revenue or $0.12 per diluted share, in the 2010 second quarter. Net income for the first two quarters of 2011 was 2.9% of revenue or $0.34 per diluted share, compared with net income of 2.3% of revenue or $0.23 per diluted share, in the comparable 2010 period. Diluted earnings per share were calculated using 16.9 million and 16.1 million weighted-average equivalent shares outstanding for the quarters ended July 1, 2011 and July 2, 2010, respectively. Diluted earnings per share were calculated using 16.8 million and 16.1 million weighted-average equivalent shares outstanding for the year-to-date periods ended July 1, 2011 and July 2, 2010, respectively. The number of equivalent shares outstanding increased year-over-year due to an increase in the Companys stock price which increased the dilutive effect of outstanding stock options, but was somewhat offset by the purchase of approximately 240,000 shares into treasury stock pursuant to the Companys share repurchase program for the twelve month period ended July 1, 2011.
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Computer Task Group Inc. has a market cap of $237.4 million; its shares were traded at around $12.86 with a P/E ratio of 20.4 and P/S ratio of 0.7. Computer Task Group Inc. had an annual average earning growth of 35.6% over the past 10 years.
Highlight of Business Operations:
In the 2011 second quarter, the Company recorded revenue of $98.3 million, an increase of 21.2% compared with revenue of $81.1 million recorded in the 2010 second quarter. There were 64 billable days in both the 2011 and 2010 second quarters. Revenue from the Companys North American operations totaled $81.0 million in the 2011 second quarter, an increase of 21.4% when compared with revenue in the 2010 second quarter of $66.7 million. Revenue from the Companys European operations in the 2011 second quarter totaled $17.3 million, an increase of 20.3% when compared with revenue in the 2010 second quarter of $14.4 million. The European revenue represented 17.6% and 17.8% of 2011 and 2010 second quarter consolidated revenue, respectively. The Companys revenue included reimbursable expenses billed to customers, which totaled $3.1 million and $2.2 million in the 2011 and 2010 second quarters, respectively.In the first two quarters of 2011, the Company recorded revenue of $194.2 million, an increase of 21.7% compared with revenue of $159.6 million recorded in the first two quarters of 2010. There were 129 billable days in the first two quarters of both 2011 and 2010. Revenue from the Companys North American operations totaled $159.8 million in the first two quarters of 2011, an increase of 24.2% when compared with revenue in the first two quarters of 2010 of $128.6 million. Revenue from the Companys European operations in the first two quarters of 2011 totaled $34.4 million, an increase of 11.1% when compared with revenue in the first two quarters of 2010 of $31.0 million. The European revenue represented 17.7% and 19.4% of 2011 and 2010 year-to-date consolidated revenue, respectively. The Companys revenue included reimbursable expenses billed to customers, which totaled $6.3 million and $4.1 million in the 2011 and 2010 year-to-date periods, respectively.
The increase in revenue in the Companys European operations in both the 2011 second quarter and first two quarters as compared with the corresponding 2010 periods was partially due to modest strength in the Companys European IT staffing business. This revenue increase was supported by the strength of the currencies of Belgium, Luxembourg, and the United Kingdom, the countries in which the Companys European subsidiaries operate. In Belgium and Luxembourg, the functional currency is the Euro, while in the United Kingdom the functional currency is the British Pound. In the 2011 second quarter as compared with the 2010 second quarter, the average value of the Euro increased 13.0% while the average value of the British Pound increased 9.4%. A significant portion of the Companys revenue from its European operations is generated in Belgium and Luxembourg. If there had been no change in these exchange rates from the 2010 second quarter to the 2011 second quarter, total European revenue would have been approximately $1.9 million lower, or $15.4 million as compared with the $17.3 million reported. In the first two quarters of 2011 as compared with the first two quarters of 2010, the average value of the Euro increased 5.6% while the average value of the British Pound increased 5.9%. If there had been no change in the exchange rates from the first two quarters of 2010 to the corresponding 2011 period, total European revenue would have been approximately $1.8 million lower, or $32.6 million as compared with the $34.4 million reported.
In the 2011 second quarter, IBM was the Companys largest customer, accounting for $29.5 million or 30.0% of consolidated revenue as compared with $25.6 million or 31.5% of revenue in the comparable 2010 period. In the first two quarters of 2011, IBM accounted for $58.1 million or 29.9% of consolidated revenue, compared with $48.2 million or 30.2% in the comparable 2010 period. During the 2011 second quarter, the Companys current National Technical Services (NTS Agreement) contract with IBM was extended for three months from June 30, 2011 to September 28, 2011. As part of the NTS Agreement, the Company provides its services as a predominant supplier to IBMs Integrated Technology Services unit and as sole provider to the Systems and Technology Group business unit. We expect the NTS agreement to be renewed in September 2011, and that the Company will continue to derive a significant portion of its revenue from IBM throughout the remainder of 2011 and in future years. However, a significant decline in or the loss of the revenue from IBM would have a significant negative effect on our operating results. The Companys accounts receivable from IBM at July 1, 2011 and July 2, 2010 totaled $15.0 million and $13.5 million, respectively. No other customer accounted for more than 10% of the Companys revenue in either the second quarter or year to date periods of 2011 or 2010.
Operating income was 4.8% of revenue in the 2011 second quarter as compared with 4.3% in the 2010 second quarter, and 4.8% in the first two quarters of 2011 as compared with 4.1% in the corresponding 2010 period. Operating income from North American operations was $7.7 million and $5.8 million in the 2011 and 2010 first two quarters, respectively, while European operations recorded operating income of $1.6 million and $0.8 million, respectively, in the corresponding 2011 and 2010 periods.
Net income for the 2011 second quarter was 2.9% of revenue or $0.17 per diluted share, compared with net income of 2.3% of revenue or $0.12 per diluted share, in the 2010 second quarter. Net income for the first two quarters of 2011 was 2.9% of revenue or $0.34 per diluted share, compared with net income of 2.3% of revenue or $0.23 per diluted share, in the comparable 2010 period. Diluted earnings per share were calculated using 16.9 million and 16.1 million weighted-average equivalent shares outstanding for the quarters ended July 1, 2011 and July 2, 2010, respectively. Diluted earnings per share were calculated using 16.8 million and 16.1 million weighted-average equivalent shares outstanding for the year-to-date periods ended July 1, 2011 and July 2, 2010, respectively. The number of equivalent shares outstanding increased year-over-year due to an increase in the Companys stock price which increased the dilutive effect of outstanding stock options, but was somewhat offset by the purchase of approximately 240,000 shares into treasury stock pursuant to the Companys share repurchase program for the twelve month period ended July 1, 2011.
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