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CTG revenue rises in Q4 with help from Europe acquisition

February 19, 2019

IT staffing and solutions provider CTG (NASD: CTG) reported fourth-quarter revenue rose 24.8%. The company attributed the increase to a combination of organic growth in both North America and Europe, as well as revenue from Paris-based Soft Co., which the company acquired in February 2018.

(US$ thousands) Q4 2018 Q4 2017 % change
Revenue $93,129 $74,644 24.8%
Gross margin  19.0% 20.3%  
Net loss ($5,259) ($419) nm

Revenue growth in Europe outpaced that of North America with Europe revenue up 46.4% compared to 15.0% in North America.

Net loss widened to $5.3 million; this includes $500,000 in acquisition-related costs associated with Soft Co. and this month’s acquisition of Luxembourg-based Tech-IT, as well as $700,000 in severance expenses.

The Buffalo, NY-based firm expects Tech-IT will further expand solutions offerings in Europe and add a greater mix of higher-margin solutions business. The company said both acquisitions enable further expansion of the company’s European footprint and broaden the portfolio of service offerings.

It was previously announced that CTG’s President and CEO Arthur W. “Bud” Crumlish, will retire, effective March 1, after a 28-year career with the company. He will be succeeded by Filip Gydé.

CTG also announced Friday that three managers in its European business, Bob Daelman, Guido Helsloot and Rénald Wauthier, have each been named to vice president roles.

  • Daelman will assume executive responsibility for all CTG operations in Belgium and the UK; his experience at CTG includes increasing responsibility across sales and leadership positions.
  • Helsloot will have executive responsibility for all European business-related finance, administration, quality and compliance functions and will also oversee European IT and legal functions. He will continue to manage an international team across four countries and seven business entities in Europe.
  • Wauthier will have executive responsibility for the growth strategy and all CTG operations in Luxembourg, including the Tech-IT business, as well as in France, a market CTG entered with the acquisition of Soft Co.

Quote

“Leveraging CTG’s longstanding reputation as an industry leader in IT staffing, our strategic approach in 2018 was to prioritize our business development efforts on higher-margin staffing opportunities,” Crumlish said. “Although the quality of staffing revenue did not improve as planned, we are already beginning to see the results of these efforts in the early part of 2019.”

Revenue by segment and geography

(US$ thousands) Q4 2018 Q4 2017 % change
Revenue by segment      
IT staffing $63,198 $51,179 23.5%
IT solutions $29,931 $23,465 27.6%
       
North American revenue $59,271 $51,524 15.0%
European revenue $33,858 $23,120 46.4%

Full-year results

(US$ thousands) 2018 2017 % growth
Revenue $358,769 $301,210 19.1%
Gross margin percentage 19.1% 18.6%  
Net loss/income ($2,817) $806 nm

Guidance

CTG forecast full-year 2019 revenue of between $380.0 million and $410.0 million, a year-over-year increase of between 6% and 14%.

Share price and market cap

CTG shares were down 5.9% to $4.14 at 11:38 a.m. Eastern time; the company had a market cap of $62.83 million, according to FT.com.

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