8-K
COMPUTER TASK GROUP INC false 0000023111 0000023111 2020-10-20 2020-10-20

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of report (Date of earliest event reported): October 20, 2020

 

 

COMPUTER TASK GROUP, INCORPORATED

(Exact name of registrant as specified in its charter)

 

 

 

New York   1-9410   16-0912632

(State or other jurisdiction

of incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

 

800 Delaware Avenue, Buffalo, NY   14209
(Address of principal executive offices)   (Zip Code)

Registrant’s telephone number, including area code: (716) 882-8000

Not applicable

(Former name or former address, if changed since last report.)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of exchange

on which registered

Common Stock, $.01 par value   CTG   The NASDAQ Stock Market LLC

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company  

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 


Item 2.02

Results of Operations and Financial Condition.

On October 20, 2020, the Registrant issued a press release relating to its financial results for its 2020 third quarter that is furnished with this report as Exhibit 99.1.

 

Item 9.01

Financial Statements and Exhibits.

(d)     Exhibits:

 

99.1    Press release, dated October 20, 2020, issued by Computer Task Group, Incorporated relating to financial results for its 2020 third quarter.
Exhibit 104    Cover Page Interactive Data File – the cover page XBRL tags are embedded within the Inline XBRL document

 

2


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    COMPUTER TASK GROUP, INCORPORATED
Date: October 20, 2020     By:  

/s/ Peter P. Radetich

    Name:   Peter P. Radetich
    Title:   Senior Vice President & Secretary

 

3

EX-99.1

Exhibit 99.1

 

LOGO

CTG Reports 2020 Third Quarter Results

Achieved GAAP EPS of $0.20; non-GAAP EPS of $0.18

Operating Margin Increased 50 Basis Points or 31% Year-over-Year

Solutions Represented Nearly 40% of Revenue, Demonstrating Continued Execution of Strategic Initiatives

BUFFALO, N.Y., October 20, 2020 – CTG (NASDAQ: CTG), a leading provider of information technology (IT) solutions and services in North America and Western Europe, today announced its financial results for the third quarter ended September 25, 2020.

Third Quarter Financial Summary

 

   

Total revenue was $88.6 million, compared with $89.1 million in the previous quarter and $97.2 million in the third quarter of 2019

 

   

Revenue from Solutions increased to $35.1 million, or 39.6% of total revenue, compared with $33.8 million or 38.0% of revenue in the previous quarter, and $33.0 million or 33.9% of revenue last year

 

   

Solutions gross profit margin was 29.8%, an increase from 27.0% in the third quarter of 2019

 

   

GAAP operating income and margin increased $0.3 million and 50 basis points year-over-year, respectively, to $1.8 million and 2.1%, reflecting an increase in the mix of revenue from Solutions

 

   

Non-GAAP operating income and margin, excluding $0.6 million in acquisition-related expenses, increased 30 basis points year-over-year to $2.4 million and 2.7%, respectively

 

   

GAAP net income was $2.8 million, or $0.20 per diluted share, including a tax benefit of $0.08 per diluted share associated with a change in legislation and a $0.04 per share gain from life insurance, as well as acquisition-related expenses. GAAP net income in the third quarter of 2019 was $0.9 million or $0.06 per diluted share

 

   

Non-GAAP net income was $2.6 million, or $0.18 per diluted share, and included the previously mentioned tax benefit. Non-GAAP net income in the third quarter of 2019 was $1.4 million or $0.10 per diluted share

 

   

Adjusted EBITDA was $3.3 million, an increase of 7.2% compared with $3.1 million in the third quarter of 2019. Approximately 60% of adjusted EBITDA was generated from Solutions

 

   

Paid down revolving line of credit facility by 50%, reducing outstanding balance to $6.0 million

Third Quarter and Recent Business Highlights

 

   

Expanded existing contract to provide go-live implementation for a prominent healthcare system in the northeastern U.S. with the addition of value-add support services

 

   

Secured new multi-million dollar contract with a large state hospital system to provide Epic MyChart help desk services for two regional healthcare facilities in the U.S.

 

   

Hired Phaedra Divras, an accomplished executive with experience delivering cloud transformation consulting and managed services, as part of CTG’s expanding Solutions team

CEO Comments on Results

“Our solid third quarter results demonstrate the continued success of our initiatives to improve operating performance and profitability, with operating and net income increasing year-over-year despite lower revenue,” said Filip Gydé, CTG President and CEO. “We are encouraged by this performance and believe our steady improvement reflects our relentless focus on advancing the rapid and ongoing evolution in our Solutions business, the decision to transition away from selective lower margin staffing engagements, and our high utilization of billable resources.”


“While client demand continued to be impacted by the COVID-19 pandemic, our team demonstrated consistent progress on our strategic initiatives involving digital Solutions. We remain committed to increasing our existing capabilities and making investments in new business development to support a healthy pipeline of future opportunities. During the quarter, we successfully secured several sizeable contracts, including new multi-million dollar engagements to provide service desk solutions for two West Coast hospitals. Additionally, in response to the increased activity, we meaningfully advanced our pipeline for our recently launched Testing Solutions offerings in North America.”

Gydé concluded, “While we acknowledge that the overall business environment is likely to remain challenging in the near-term, we expect to continue driving incremental progress and growth in CTG’s digital Solutions business and offerings, resulting in increased profitability and yielding significant long-term value for our shareholders.”

Consolidated Third Quarter Results

Revenue in the third quarter of 2020 was $88.6 million, compared with $89.1 million in the second quarter of 2020, and $97.2 million in the third quarter of 2019. The decrease in third quarter revenue as compared with the second quarter primarily reflected a continued transition away from select lower margin staffing business, combined with the typical seasonality the Company experiences during the third quarter. The decrease in revenue as compared with the third quarter of 2019 was in part due to the impact from the COVID-19 pandemic and the transition away from select lower margin staffing business. Currency translation had a positive impact of $1.8 million on revenue in the third quarter, compared with a negative $0.8 million impact in the second quarter of 2020 and a negative $1.6 million impact in the third quarter of 2019.

Cost of services in the third quarter of 2020 were $69.1 million, or 77.9% of revenue, compared with $70.4 million, or 79.0% of revenue, in the second quarter of 2020, and $78.5 million, or 80.7% of revenue, in the third quarter of 2019. SG&A expense in the third quarter of 2020 was $17.7 million, which included $0.6 million in acquisition-related expenses associated with previously acquired businesses. This compared with SG&A expense in the second quarter of 2020 of $16.8 million, which included $0.6 million in severance and $0.4 million in acquisition-related expenses associated with previously acquired businesses. SG&A expense in the third quarter of 2019 was $17.2 million, which included $0.8 million in acquisition-related expenses.

GAAP operating income in the third quarter of 2020 was $1.8 million, or 2.1% of revenue, and included the previously referenced acquisition-related expenses. Non-GAAP operating income in the third quarter of 2020 was $2.4 million, or 2.7% of revenue. GAAP operating income in the second quarter of 2020 was $1.9 million, or 2.1% of revenue, and included the previously referenced severance and acquisition-related expenses totaling $1.0 million. Non-GAAP operating income in the second quarter of 2020 was $2.9 million, or 3.2% of revenue. GAAP operating income in the third quarter of 2019 was $1.5 million, or 1.6% of revenue, and included the previously referenced acquisition-related expenses. Non-GAAP operating income in the third quarter of 2019 was $2.3 million, or 2.4% of revenue. CTG’s operations outside of the U.S. are conducted in local currencies. Accordingly, fluctuations in currency valuation for the countries in which the Company operates generally have minimal impact on operating results; these fluctuations increased operating income by less than $0.1 million in the third quarter of 2020.

GAAP net income in the third quarter of 2020 was $2.8 million, or $0.20 per diluted share, which included a net $0.2 million of non-operating income, or $0.02 per diluted share, comprised of a gain from non-taxable life insurance offset by acquisition-related expenses. Non-GAAP net income was $2.6 million, or $0.18 per diluted share. Additionally, both GAAP and non-GAAP net income in the third quarter of 2020 included a tax benefit of $0.08 per diluted share associated with a change in legislation during the quarter. Net income in the second quarter of 2020 was $1.8 million, or $0.12 per diluted share, which included a net $0.4 million of non-operating income, or $0.02 per diluted share, comprised of gains from non-taxable life insurance and the sale of a building offset by severance and acquisition-related expenses. Excluding these items, non-GAAP net income in the second quarter of 2020 was $1.4 million, or $0.10 per diluted share. GAAP net income in the third quarter of 2019 was $0.9 million, or $0.06 per diluted share, which included $0.5 million, or $0.04 per diluted share in acquisition-related expenses, and non-GAAP net income was $1.4 million or $0.10 per diluted share.

 

2


CTG’s effective income tax rate in the third quarter of 2020 was a negative 31.2% compared with 43.7% in the second quarter of 2020 and 33.5% in the third quarter of 2019. The negative effective tax rate in the third quarter of 2020 reflected the implementation of newly enacted legislation that allows the exclusion of certain high-taxed income resulting from the Global Intangible Low Taxed Income (GILTI) regulations. This change in legislation resulted in a tax benefit of $1.1 million, or $0.08 per diluted share, during the quarter.

Balance Sheet

Cash and short-term investments at September 25, 2020 were $33.4 million. Net cash was $27.4 million, net of long-term debt of $6.0 million. Days sales outstanding were 77 in the third quarter of 2020 compared with 81 days in the third quarter of 2019.

Guidance and Outlook

CTG Executive Vice President and Chief Financial Officer John M. Laubacker commented, “Given the ongoing impact of the COVID-19 pandemic on CTG’s end markets, the Company will continue to not provide guidance for the fourth quarter and full year 2020. We are, however, very encouraged by the success of our Solutions initiatives, which resulted in a significant increase in the Company’s gross profit margins in the third quarter of 2020. We remain committed to our strategy of making appropriate, focused investments in Solutions for the remainder of 2020 that will enhance the long-term value of CTG.”

Conference Call and Webcast

CTG will hold a conference call today at 11:00 a.m. Eastern Time to discuss its financial results and business outlook. To access CTG’s conference call via telephone, participants should dial 1-844-767-5679 and enter the access code 7028804. The conference call will also be available via webcast in the Investors section of CTG’s website at www.ctg.com.

A replay of the call will be available between 3:00 p.m. Eastern Time on October 20, 2020 and 12:00 a.m. Eastern Time on October 23, 2020 by dialing 1-866-207-1041 and entering the access code 6094127. The webcast will also be archived on CTG’s website in the Events & Presentations section for at least 90 days following completion of the conference call.

About CTG

CTG has established a reputation for responsiveness and reliability—traits that our clients say set us apart—since our founding in 1966. Today, we provide comprehensive information, technology, and business solutions that address critical challenges for clients in high-growth industries in North America and Western Europe. Backed by a proven track record of reliable delivery, CTG fosters long-term client relationships and trust, which allows us to develop strategic insights that maximize client investments in solutions and competitive advantage. CTG has operations in North America, South America, Western Europe, and India. The Company regularly posts news and other important information online 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, non-GAAP financial measures are used by management 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.

 

3


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. In addition, 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.

Safe Harbor Statement

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 2020 and statements related to cost control, new business opportunities, financial performance, market demand, and other attributes of the Company. These statements are based upon the Company’s 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, including among others, the effects of the COVID-19 pandemic and the regulatory, social and business responses thereto on the Company’s business, operations, employees, contractors and clients, the availability to the Company of qualified professional staff, 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 staffing and solutions, currency exchange risks, risks associated with operating in foreign jurisdictions, renegotiations, nullification, or breaches of contracts with clients, vendors, subcontractors or other parties, 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 staffing industry, taxes and the Company’s operations in particular, industry and economic 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 factors that involve risk and uncertainty including those listed in the Company’s reports filed with the Securities and Exchange Commission as of the date of this document. 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, 2019, which is incorporated by reference, and other reports that may be filed from time to time with the Securities and Exchange Commission. The Company assumes no obligation to update the forward-looking information contained in this release.

Investors and Media:

John M. Laubacker, Chief Financial Officer

(716) 887-7368

 

4


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  
     Sept. 25,     Sept. 27,     Sept. 25,     Sept. 27,  
     2020     2019     2020     2019  

Revenue

   $ 88,648     $ 97,204     $ 264,743     $ 294,850  

Cost of services

     69,101       78,462       209,412       240,056  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     19,547       18,742       55,331       54,794  

Selling, general and administrative expenses

     17,723       17,218       49,526       50,290  
  

 

 

   

 

 

   

 

 

   

 

 

 

Operating income

     1,824       1,524       5,805       4,504  

Non-taxable life insurance gain

     574       —         963       —    

Gain on sale of building

     —         —         824       —    

Other expense, net

     (240     (202     (436     (748
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     2,158       1,322       7,156       3,756  

Provision (benefit) for income taxes

     (673     443       1,422       1,302  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 2,831     $ 879     $ 5,734     $ 2,454  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income per share:

        

Basic

   $ 0.21     $ 0.07     $ 0.42     $ 0.18  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.20     $ 0.06     $ 0.40     $ 0.18  
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares outstanding:

        

Basic

     13,655       13,470       13,603       13,429  

Diluted

     14,401       14,045       14,334       13,916  

 

5


COMPUTER TASK GROUP, INCORPORATED (CTG)

Condensed Consolidated Balance Sheets

(Unaudited)

(amounts in thousands)

 

     Sept. 25,      Dec. 31,      Sept. 27,  
     2020      2019      2019  

Current Assets:

        

Cash and cash equivalents

   $ 33,412      $ 10,781      $ 10,693  

Accounts receivable, net

     74,907        88,772        86,868  

Other current assets

     3,264        2,295        4,465  
  

 

 

    

 

 

    

 

 

 

Total current assets

     111,583        101,848        102,026  

Property and equipment, net

     5,573        6,379        5,533  

Operating lease right-of-use assets

     20,616        21,253        14,303  

Cash Surrender Value

     3,533        3,133        3,354  

Acquired intangibles, net

     9,001        8,439        8,601  

Goodwill

     20,200        16,681        17,196  

Other assets

     1,162        973        1,350  
  

 

 

    

 

 

    

 

 

 

Total Assets

   $ 171,668      $ 158,706      $ 152,363  
  

 

 

    

 

 

    

 

 

 

Current Liabilities:

        

Accounts payable

   $ 15,045      $ 18,612      $ 10,958  

Accrued compensation

     24,279        23,538        30,809  

Operating lease liabilities

     6,030        5,904        5,406  

Other current liabilities

     10,285        8,800        9,320  
  

 

 

    

 

 

    

 

 

 

Total current liabilities

     55,639        56,854        56,493  

Long-term debt

     6,000        5,290        8,603  

Operating lease liabilities

     14,527        15,349        8,897  

Other liabilities

     19,798        14,977        12,142  

Shareholders’ equity

     75,704        66,236        66,228  
  

 

 

    

 

 

    

 

 

 

Total Liabilities and Shareholders’ Equity

   $ 171,668      $ 158,706      $ 152,363  
  

 

 

    

 

 

    

 

 

 

 

6


COMPUTER TASK GROUP, INCORPORATED (CTG)

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(amounts in thousands)

 

     For the Three Quarters Ended  
     Sept. 25,     Sept. 27,  
     2020     2019  

Net income

   $ 5,734     $ 2,454  

Depreciation and amortization expense

     2,576       2,422  

Equity-based compensation expense

     1,805       1,161  

Other operating items

     15,344       (1,808
  

 

 

   

 

 

 

Net cash provided by operating activities

     25,459       4,229  

Net cash used in investing activities

     (3,959     (10,289

Net cash provided by financing activities

     282       5,003  

Effect of exchange rates on cash and cash equivalents

     849       (681
  

 

 

   

 

 

 

Net increase (decrease) in cash and cash equivalents

     22,631       (1,738

Cash and cash equivalents at beginning of period

     10,781       12,431  
  

 

 

   

 

 

 

Cash and cash equivalents at end of period

   $ 33,412     $ 10,693  
  

 

 

   

 

 

 

 

7


COMPUTER TASK GROUP, INCORPORATED (CTG)

Supplemental Financial Information

(Unaudited)

 

                                   Twelve Months  
     For the Quarter Ended     Ended  
     Sept.     Dec.     Mar.     Jun.     Sept.     Sept.  
     2019     2019     2020     2020     2020     2020  

Revenue (in millions)

            

Revenue

   $ 97.204     $ 99.320     $ 86.949     $ 89.146     $ 88.648     $ 364.063  

Foreign Currency Impact

   $ (1.614   $ (1.264   $ (1.076   $ (0.834   $ 1.849     $ (1.325

Billable Days

     63       65       62       64       63       254  

Revenue By Geography

            

North America

     63.6     58.7     57.9     55.4     54.9     56.7

Europe

     36.4     41.3     42.1     44.6     45.1     43.3
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     100.0     100.0     100.0     100.0     100.0     100.0
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Revenue by Service

            

Solutions

     33.9     38.2     33.4     38.0     39.6     37.5

Staffing

     66.1     61.8     66.6     62.0     60.4     62.5
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     100.0     100.0     100.0     100.0     100.0     100.0
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Revenue by Vertical Market

            

Technology Service Providers

     33     32     35     32     33     33

Financial Services

     13     14     14     15     15     15

Manufacturing

     18     16     15     14     14     14

Healthcare

     17     16     14     14     14     14

Energy

     5     5     6     7     6     6

General Markets

     14     17     16     18     18     18
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

     100     100     100     100     100     100
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross Profit Margins

            

Gross Profit

     19.3     20.4     19.6     21.0     22.1     20.8

Gross Profit - Solutions

     27.0     26.6     27.5     28.5     29.8     28.0

Operating Margins

            

Operating Margin

     1.6     2.4     2.4     2.1     2.1     2.3

Non-GAAP Operating Margin

     2.4     3.0     2.9     3.2     2.7     2.9

Net Income Information (in millions except EPS)

 

         

Net Income

   $ 0.9     $ 1.7     $ 1.1     $ 1.8     $ 2.8     $ 7.4  

GAAP Diluted EPS*

   $ 0.06     $ 0.12     $ 0.08     $ 0.12     $ 0.20     $ 0.52  

Non-GAAP Diluted EPS*

   $ 0.10     $ 0.14     $ 0.10     $ 0.10     $ 0.18     $ 0.52  

Adjusted EBITDA

   $ 3.1     $ 4.2     $ 3.4     $ 4.0     $ 3.3     $ 14.9  

*  Third quarter of 2020 GAAP and Non-GAAP Diluted EPS includes $0.08 tax benefit from a change in legislation

   

Balance Sheet Information (in millions except DSO)

 

         

Cash less Debt, Net

   $ 2.1     $ 5.5     $ 19.5     $ 22.3     $ 27.4    

Working Capital

   $ 45.5     $ 45.0     $ 51.4     $ 57.0     $ 55.9    

DSO

     81       85       71       81       77    

 

8


COMPUTER TASK GROUP, INCORPORATED (CTG)

(Unaudited)

The non-GAAP information below excludes gains from non-taxable life insurance and on the sale of a building, and costs associated with severance and certain acquisition-related expenses. 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)

   2019      2019      2020      2020      2020      2020  

GAAP Operating Income

   $ 1.5      $ 2.4      $ 2.1      $ 1.9      $ 1.8      $ 8.2  

Acquisition-related expenses

     0.8        0.6        0.4        0.4        0.6        2.0  

Severance

     —          —          —          0.6        —          0.6  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Non-GAAP Operating Income

   $ 2.3      $ 3.0      $ 2.5      $ 2.9      $ 2.4      $ 10.8  
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Reconciliation of GAAP to non-GAAP Operating Margin

 

                                   Twelve Months  
     For the Quarter Ended     Ended  
     Sept.     Dec.     Mar.     Jun.     Sept.     Sept.  
     2019     2019     2020     2020     2020     2020  

GAAP Operating Margin

     1.6     2.4     2.4     2.1     2.1     2.3

Acquisition-related expenses

     0.8     0.6     0.5     0.4     0.6     0.4

Severance

     —         —         —         0.7     —         0.2
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Operating Margin

     2.4     3.0     2.9     3.2     2.7     2.9
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of GAAP to non-GAAP Net Income

 

                                      Twelve Months  
     For the Quarter Ended     Ended  
     Sept.      Dec.      Mar.      Jun.     Sept.     Sept.  

(in millions)

   2019      2019      2020      2020     2020     2020  

GAAP Net Income*

   $ 0.9      $ 1.7      $ 1.1      $ 1.8     $ 2.8     $ 7.4  

Non-taxable life insurance gain

     —          —          —          (0.4     (0.6     (1.0

Gain on sale of building

     —          —          —          (0.5     —         (0.5

Acquisition-related expenses

     0.5        0.3        0.3        0.2       0.4       1.2  

Severance

     —          —          —          0.3       —         0.3  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Non-GAAP Net Income*

   $ 1.4      $ 2.0      $ 1.4      $ 1.4     $ 2.6     $ 7.4  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

 

*

GAAP and Non-GAAP Net Income in the 2020 third quarter includes a $1.1 million tax benefit from a change in legislation

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

 

                                      Twelve Months  
     For the Quarter Ended     Ended  
     Sept.      Dec.      Mar.      Jun.     Sept.     Sept.  
     2019      2019      2020      2020     2020     2020  

GAAP Diluted EPS**

   $ 0.06      $ 0.12      $ 0.08      $ 0.12     $ 0.20     $ 0.52  

Acquisition-related expenses

     0.04        0.02        0.02        0.02       0.02       0.08  

Severance

     —          —          —          0.02       —         0.02  

Gain on sale of building

     —          —          —          (0.03     —         (0.03

Non-taxable life insurance gain

     —          —          —          (0.03     (0.04     (0.07
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Non-GAAP Diluted EPS**

   $ 0.10      $ 0.14      $ 0.10      $ 0.10     $ 0.18     $ 0.52  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

 

**

GAAP and Non-GAAP Diluted EPS in the 2020 third quarter includes a $0.08 tax benefit from a change in legislation

 

9


COMPUTER TASK GROUP, INCORPORATED (CTG)

(Unaudited)

Reconciliation of Net income to Earnings before Interest, Taxes and Depreciation and Amortization (EBITDA) and adjusted EBITDA

 

                                      Twelve Months  
     For the Quarter Ended     Ended  
     Sept.      Dec.      Mar.      Jun.     Sept.     Sept.  

(in millions)

   2019      2019      2020      2020     2020     2020  

Net income***

   $ 0.9      $ 1.7      $ 1.1      $ 1.8     $ 2.8     $ 7.4  

Taxes

     0.4        0.8        0.7        1.4       (0.6     2.3  

Interest

     0.1        0.1        0.1        —         —         0.2  

Depreciation and amortization

     1.0        0.8        0.8        0.8       1.0       3.4  

Equity-Based compensation expense

     0.5        0.6        0.5        0.6       0.7       2.4  

Severance

     —          —          —          0.6       —         0.6  

Non-taxable life insurance gain

     —          —          —          (0.4     (0.6     (1.0

Gain on sale of building

     —          —          —          (0.8     —         (0.8
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

EBITDA

   $ 2.9      $ 4.0      $ 3.2      $ 4.0     $ 3.3     $ 14.5  

Acquisition-related expenses

     0.2        0.2        0.2        —         —         0.4  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

   $ 3.1      $ 4.2      $ 3.4      $ 4.0     $ 3.3     $ 14.9  
  

 

 

    

 

 

    

 

 

    

 

 

   

 

 

   

 

 

 

 

***

Net Income in the 2020 third quarter includes a $1.1 million tax benefit from a change in legislation

END-

CTG news releases are available on the Web at www.ctg.com.

 

10

v3.20.2
Document and Entity Information
Oct. 20, 2020
Cover [Abstract]  
Entity Registrant Name COMPUTER TASK GROUP INC
Amendment Flag false
Entity Central Index Key 0000023111
Document Type 8-K
Document Period End Date Oct. 20, 2020
Entity Incorporation State Country Code NY
Entity File Number 1-9410
Entity Tax Identification Number 16-0912632
Entity Address, Address Line One 800 Delaware Avenue
Entity Address, City or Town Buffalo
Entity Address, State or Province NY
Entity Address, Postal Zip Code 14209
City Area Code (716)
Local Phone Number 882-8000
Written Communications false
Soliciting Material false
Pre Commencement Tender Offer false
Pre Commencement Issuer Tender Offer false
Security 12b Title Common Stock, $.01 par value
Trading Symbol CTG
Security Exchange Name NASDAQ
Entity Emerging Growth Company false