CTG Business Overview May 2017 NASDAQ: CTG

Transcription

1 CTG Business Overview May 2017 NASDAQ: CTG

2 Forward-Looking Statements This presentation contains certain forwardlooking statements concerning the Company s current expectations as to future growth and should be read in conjunction with the Company s disclosures in its reports that are filed from time to time with the Securities and Exchange Commission. These statements are based upon a review of industry reports, current business conditions in the areas where the Company does business, the availability of qualified professional staff, and other factors that involve risk and uncertainty. As such, actual results may differ materially in response to a change in such factors CTG,Inc. 2

3 Who We Are CTG is a leading provider of IT solutions and staffing in North America and Western Europe. 50 years of providing the most reliable IT services Established in 1966 (NASDAQ: CTG) 2016 revenue: $324.9 million 1Q 2017 revenue: $77.0 million Approximately 3,300 employees in the United States, Luxembourg, Belgium, the UK, and India 14 North American offices, four Western European offices, and one office inindia Solutions: Leading provider of healthcare IT Industry revenue CAGR of ~5% for ** Staffing: Annual industry revenue growth rate of ~6% * Since 2013, a top 20 Largest U.S. IT Staffing Firm by Staffing Industry Analysts 2017 CTG,Inc. * Source: Staffing Industry Analysts **Source: Gartner

4 CTG At A Glance Mission: Provide world-class IT solutions and staffing to maximize the impact of technology and provide real business value for our clients. Revenue by Service Vertical Markets IT Staffing 70% IT Solutions 30% Manufacturing 26% Healthcare 17% Financial Svcs. 8% Energy 5% Technology 33% Other 11% Vision: Remain the most reliable IT services provider with an absolute commitment to customer satisfaction CTG,Inc. (1) Pie charts reflect 1Q 2017 revenue contribution 4

5 Impressive Global Client List 52% of CTG s top 25 clients have retained our services for more than 10 years CTG,Inc. 5

6 Positioned For Growth 2016: Established a New Foundation Appointed new CEO/Board member, Bud Crumlish, in July (31 years of IT experience) Appointed three new Board members: one has 30 years of delivering technology and workforce solutions a second with an international finance background third with extensive experience in the technology industry 4 of 6 Board members new since November 2015 Strengthened leadership team with new appointments Growing the business development team for IT staffing, healthcare and energy Scaling existing solutions across the enterprise Pursuing cross-collaboration opportunities Expanded and reorganized company-wide recruiting and delivery capabilities, including 24x7 availability new Hyderabad, India, operations center reorganized U.S. recruiting function to create more scalable staffing solutions Continued focus on disciplined cost management 2017 CTG,Inc. 6

7 3-Year Financial Targets and Objectives Demonstrating improved revenue growth and profitability Revenue Operating Margin Diluted EPS $324.9 $ % - 3.5% $ $ % $0.23 7%CAGR 32% CAGR 30% CAGR 2016E 2019 MPG * (1) Goal 2016E (1) 2019 Goal 2016E (1) 2019 Goal Strategic Objectives Generate revenue growth that exceeds market rates - capture market share Diversify revenue contribution in Staffing; Renew growth in Solutions Cross-sell IT solutions and staffing offerings Focus on upgrading and optimizing sales organization Enhance operating leverage by increasing gross margin and managing fixed costs More than double earnings per share 2017 CTG,Inc. (1) Excludes goodwill impairment and severance charges. See reconciliation of GAAP to non-gaap information at Appendix 3 7

8 First Quarter 2017 Overview Financial Results & Business Highlights Revenue of $77.0M, EPS of $0.05; both at mid-point of guidance Operating Margin of 1.7% Ended quarter with cash and equivalents of $10.1M; no outstanding debt Fifth consecutive quarter of growth (local currencies) in Europe Awarded new Staffing contract with largest customer Added Staffing clients in mid-market segment Recent Strategic Developments Commenced search for Chief Operating Officer Combined positions of CFO and Treasurer Instituted performance-based equity incentive plan Repurchased 384,000 shares for ~$1.9 million 2017 CTG, Inc. 8

9 Strategy: IT Staffing 70% of 1Q 2017 revenue Expand existing accounts while pursuing new accounts to diversify client base for revenue growth and improved profitability Longstanding Fortune 1000 client base with deep relationships Significant investment in new account executives focused on selling across all industries Capture incremental share in geographies with strong existing market presence and relationships Targeting large and medium-sized clients, resulting in higher margins 24x7 recruiting and delivery capabilities Advanced technology infrastructure Broaden service lines to include staff augmentation, managed staffing, and permanent placement Leverage relationships with large managed service providers (MSP) as a sales channel Offerings Staffing Augmentation Managed Staffing Direct/Permanent Placement IT Staffing Differentiators Highly ranked by large clients High quality technical resources Flexible methodology and processes allows competition with anyone Focused on speed, quality, and price Account Management service capability Recruiting fulfillment onshore and offshore Tenured recruiters with extensive experience Significant candidate network, national and international job search capabiiltiies 2017 CTG,Inc. *Staffing Industry Analysts April

10 Strategy: IT Solutions 30% of 1Q 2017 revenue Scale existing solutions while developing new and repeatable value-based solutions Implemented an enterprise-wide global solutions program Refined current solutions tailored to meet existing clients changing needs Develop new solutions to capitalize on market trends Key opportunities include: Mature solutions in place that are repeatable across vertical markets Transition to comprehensive service provider model by providing solutions and staffing to existing clients IT Solutions Offerings Application Management Services/ Transitional Application Management (TAM) Application Development Help Desk/Service Desk Implementation, Optimization, and Performance Improvement Testing- Execution Differentiators Highly rated provider Cost effective solution Extensive history and long client list (over 90 AMS clients company-wide, to date) Specific industry expertise Proven methodology Highly rated provider ITIL and industry best practice-based methodology Proven ROI Deep practical application expertise Formal, proven methodology Employees with extensive certifications Market recognition of proprietary tools Largest software testing capability in Belgium 2017 CTG,Inc. 10

11 Focus Area (Geography): Europe 25% of 1Q 2017 revenue Grow existing client base and capture market share in adjacent markets Longstanding relationship with European government agencies and Fortune 1000 clients Deep financial sector experience in Luxembourg One of the largest IT services firms in both Belgium and Luxembourg On-site service delivery and Development Centers Sales organization cross-sells all solutions and staffing offerings Belgium government has initiating funding for EHR implementations Capture post-brexit opportunities for IT technology modifications and enhancements Europe Offerings Delivery Center Business Operational Support Testing - Execution Application Development EHR Implementation Disclosure Management System Data Privacy Differentiators Market leader in Luxembourg financial services sector 24X7 support available in multiple languages Extensive expertise Comprehensive methodology and proprietary tools Largest software testing capability in Belgium Agile delivery models tailored to customer needs PSF certification of Development Center in Luxembourg Market leader in Belgium Leverage U.S. heathcare experience Proprietary software as a service (SaaS) application connecting law enforcement with telecommunication service providers High profile references: BT and Vodafone Combination of process skills in conjunction with technology resulting in regulatory compliance 2017 CTG, Inc. 11

12 Focus Area (Vertical Market): Healthcare* 17% of 1Q 2017 revenue Reposition and capitalize on attractive market trends Expand optimization and performance improvement solutions in hospitals Expand regulatory compliance services and staffing in life sciences space Capitalize on consolidation and integration activities in both hospital and payer spaces Leverage staffing capabilities to support large institutional managed service provider (MSP) programs Continue to execute on EHR implementations Utilize off-shore fulfillment in conjunction with on-shore capabilities Offerings Implementation, Optimization, and Performance Improvement Application Management Services/ Service Desk/ Clinical Help Desk Validation Testing Staff Augmentation Differentiators Extensive experience; more than 200 implementation and optimization clients Deep expertise with Epic/Cerner Seasoned clinical team with application and healthcare certifications Price advantage compared to Big 4 Highly ranked, year over year, by KLAS Enterprises, LLC (KLAS) Extensive history and long client list; over 50 healthcare AMS clients Exceptional references Proven healthcare methodologies Longstanding industry experience Proprietary methodologies Robust reputation as a staffing company Technical screening, diligent interviewing, and quality oversight process produces bettercandidates/results Healthcare 2017 CTG,Inc. * Includes healthcare providers, health insurers (payers), and life sciences 12

13 Focus Area (Vertical Market): Energy 5% of 1Q 2017 revenue Leverage solution offerings to existing clients; expand to new clients in the industry Cross-sell additional solution and staffing offerings to existing clients Expand high-value business consulting practice, with emphasis on strategic IT planning and business requirements analysis Drive geographic diversification with new clients in same industry Offerings Application Development/ Delivery Center Information Management and Document Control Project Management Office Differentiators Developed specific solutions still in use after manyyears Extensive oil and gas knowledge and expertise Long-term client relationships Strong history of performance and references PMI certifications Energy 2017 CTG,Inc. 13

14 Strategy: ONE CTG Launched ONE CTG Company-wide framework that: Encourages and incentivizes collaboration across the organization Promotes cross-selling and expands existing solutions and staffing across multiple vertical markets Introducing new Application Advantage offering Allows for reproduction of our unique offerings in new geographies Healthcare Other Technology ONE CTG Financial Services Strategic Staffing ONE CTG Europe Manufacturing Energy Healthcare ONE CTG increases total value provided to clients, while giving CTG the benefits of greater reach, staffing utilization, and profitability CTG,Inc. 14

15 Returned $31.6 Million in Capital to Shareholders (since 2013) Total Dividends $ 2,274 $ 3,422 $ 3,624 $ 2,844 $ - $ 12,164 Share Buybacks $ 7,343 $ 7,432 $ 1,406 $ 1,374 $ 1,870 $ 19,425 Capital Returned $ 9,617 $ 10,854 $ 5,030 $ 4,218 $ 1,870 $ 31,589 Strong balance sheet; net cash of $10.1 million at 3/31/2017 $31.1 million cash surrender value of life insurance policies $40 million undrawn line of credit $10 million share repurchase authorization in place since November 2016 Purchased 754,000 shares between late November and April 24th $6.4 million remaining under current authorization 2017 CTG,Inc. 15

16 Robust Investment Rationale Why We Will Grow 50-year history of providing IT solutions and staffing Focus on: Expanding our client base Significant investment in business development Capturing market share from competitors Meeting or exceeding our published 3-year financial targets and objectives Strengthened Leadership and Business Development Teams Across the Organization Appointed new CEO and Board member, Bud Crumlish, in July 2016 Appointed three other new Board members: one with 30 years of delivering technology and workforce solutions, a second with an international finance background, and the third with extensive experience in the technology industry since November 2015 Appointed new CFO, John Laubacker, in April 2017 Strong Financial Position Solid balance sheet with ample flexibility for operating capital Implemented and maintaining disciplined cost management Positioned to benefit from meaningful operating leverage Commitment to prudent capital allocation and prioritizing shareholder value Recognized and respected partner with 50-year history of delivering reliable services and solutions to clients CTG,Inc. 16

17 Appendices 2017 CTG,Inc. 17

18 Appendix 1: Focused Leadership Team Bud Crumlish President and CEO Appointed CEO July 2016 after directing CTG s staffing business since 2001; was member of finance team between 1990 and 2001; focused on executing diversifiedgrowth. John Laubacker CFO Treasurer since 2006; interim CFO from ; joined CTG in 1996 and was worked in various finance capacities, including Director of Audit. Filip Gyde Senior Vice President and General Manager, Europe Leader of European operations since 2000; CTG career began in 1987, named MD Belgium in 1996 and MD Luxembourg in Angela Rivera Vice President, Health Solutions (North America) 23 years in healthcare, 16 with CTG; responsible for growth strategy, quality service delivery, and management of consulting base. Rick Sullivan Vice President, Strategic Staffing Services 25-year IT industry career with CTG; long-time relationships with largest clients and focused on client satisfaction. Jim Nichiporuk Vice President, Strategic Staffing Services 12-year staffing industry career; held leadership positions at Adecco, AtWork, and Peak; joined CTG in January 2016; concentrates on business development. Aaron Bunker Managing Director, Energy In second year with CTG after 12 years with Cisco; began career at IBM in 1990; focused on growing market share in energy and manufacturing. Elizabeth Martin Savino, Vice President, Human Resources Vice President of Human Resources at CTG since 2012; began career with CTG as an attorney in the General Counsel office in 1992; focuses on all aspects of employment, compliance, labor laws, and employee benefits CTG,Inc. 18

19 Appendix 2: Annual Results and Guidance EHR peak in 2012, trough in 1H 17 Revenue (millions) $331.4 $43.7 $396.3 $59.4 $424.4 $419.0 $71.0 $62.7 $393.3 $369.5 $41.7 $25.4 $324.9 $322.0 $14.00 $7.00 Operating Margin 4.2% 4.9% 5.8% 5.9% 4.4% 2.9% 1.7% 1.9% MPG* EPS $0.52 $0.71 $0.88 $0.92 $0.64 $0.41 $0.23 $0.24 (1) (2) (3) (4) MPG* * Reflects midpoint of company s guidance as provided on April 25, CTG, Inc. (2) (3) (5) MPG* Revenue reflects impact of macroeconomic headwinds on large Staffing clients and trail-off of EMR business Operating margin and EPS reflect change in mix to lower margin Staffing business and investments in business development and recruiting resources (1) Excludes $0.075 per diluted share of non-operational gain from insurance proceeds (2) Includes effect of 4Q14 charges of $0.07 per diluted share associated with the death of a former CEO, and $0.06 per diluted share to write off the net book value of the Company s medical fraud, waste, and abuse software solution (3) Includes the effect of charges in 2Q15 of $0.04 per diluted share for the write-off of the Company s IT medical management software and $0.04 per diluted share related to a workforce reduction in Europe (4) Adjusted: excludes $2.39 per diluted share for a goodwill impairment charge related to the Company s healthcare business and $0.06per diluted share in severance charges related to two former executives (5) Adjusted operating margin excludes a $37.3 million goodwill impairment charge related to the Company s healthcare business and $1.5 million in severance changes related to two former executives. See reconciliation of GAAP to non-gaap information in the appendix. 19

20 Appendix 3: GAAP to non-gaap Reconciliation Year ended December 31, 2016 Operating Income Operating Margin Net Income Diluted EPS GAAP Results $(33,347) (10.3%) $(34,638) $(2.22) Goodwill Impairment Charge $37, % $37,329 $2.39 Severance Charges $1, % $989 $0.06 Non-GAAP Results $5, % $3,680 $ CTG,Inc. 20

21 Appendix 4: Six-Year Financial Summary (amounts in millions, except per-share data) (1) (2) (3) (4) Operating Data Revenue $ $ $ $ $ $ Operating Income $ 5.5 $ 10.6 $ 17.2 $ 24.7 $ 24.5 $ 19.3 Net Income $ 3.7 $ 6.5 $ 10.4 $ 15.7 $ 16.2 $ 11.9 Basic Net Income per Share $ 0.23 $ 0.42 $ 0.68 $ 1.02 $ 1.07 $ 0.80 Diluted Net Income per Share $ 0.23 $ 0.41 $ 0.64 $ 0.92 $ 0.96 $ 0.71 Cash Dividend per Share $ 0.18 $ 0.24 $ 0.24 $ 0.20 $ $ Financial Position Working Capital $ 53.7 $ 53.0 $ 69.2 $ 67.5 $ 63.5 $ 45.4 Total Assets $ $ $ $ $ $ Long-term Debt $ 4.7 $ 1.2 $ $ $ $ Shareholders Equity $ 78.8 $ $ $ $ $ 88.8 (1)Excludes goodwill impairment and severance charges totaling $38.8 million or $2.45 per share (2)Includes the effect of charges in 2Q 15 of $0.04 per diluted share for the write-off of the Company s IT medical management software and $0.04 per diluted share related to a workforce reduction in Europe (3)Includes effect of 4Q 14 charges of $0.07 per diluted share associated with the death of a former CEO, and $0.06 per diluted share to write off the net book value of the Company s medical fraud, waste, and abuse software solution (4)Excludes $0.075 non-operational gain from insurance proceeds 2017 CTG,Inc. 21

22 Thank You Company Contacts: 50 years of providing the most reliable IT services Arthur (Bud) W. Crumlish President and Chief Executive Officer John Laubacker Senior VP and Chief Financial Officer Jim Culligan Director, Investor Relations and Financial Services E: / P: Published by Computer Task Group, Inc. In no event shall all or any portion of this presentation be disseminated without the express written permission of CTG. The CTG logo is a registered trademark of CTG Computer Task Group, Inc. All Rights Reserved.