Computer Task Group, Incorporated revenue returned to growth in 2018: increased 19.1% vs. 7.3% decline a year earliner
02/19/2019 • About Computer Task Group, Incorporated (
$CTG) • By InTwits
Computer Task Group, Incorporated reported 2018 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EBITDA Margin is quite volatile: 1.3% in 2018, 1.8% in 2017, -9.8% in 2016, 3.4% in 2015, 5.1% in 2014
- Computer Task Group, Incorporated has low CAPEX intensity: 5 year average CAPEX/Revenue was 1.5%. At the same time it's in pair with industry average of 3.1%
- CAPEX is quite volatile: $16m in 2018, $3m in 2017, $2m in 2016, $2m in 2015, $3m in 2014
- The company has potentially unprofitable business model: ROIC is 2.7%
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue surged on 19.1%. Revenue growth showed acceleration in 18Q4 - it increased 24.8% YoY. Having declining revenue the company managed to increase EBITDA margin. EBITDA Margin surged on 10.9 pp from -15.1% to -4.2% in FY2018.
Gross Margin showed almost no change in 2018. During 2014-2018 Gross Margin bottomed in 2015 at 18.2% and was growing since that time. SG&A as a % of Revenue increased slightly on 1.2 pp from 17.3% to 18.5% in 2018. SG&A as a % of Revenue grew at 0.74 pp per annum in 2014-2018.
Net Income margin decreased slightly on 1.1 pp from 0.27% to -0.79% in 2018.
Investments (CAPEX, working capital and M&A)
The company's CAPEX/Revenue was 4.5% in 2018. Computer Task Group, Incorporated showed CAPEX/Revenue growth of 4.0 pp from 0.51% in 2015 to 4.5% in 2018. For the last three years the average CAPEX/Revenue was 2.0%. Computer Task Group, Incorporated has spent a lot to CAPEX (347% of EBITDA) to fuel its growth. During 2014-2018 CAPEX as a % of Revenue bottomed in 2015 at 0.51% and was growing since that time.
Return on investment
The company operates at low but positive ROIC (2.7%) and negative ROE (-3.9%). ROIC decreased slightly on 2.0 pp from 4.7% to 2.7% in 2018. ROE decreased on 5.0 pp from 1.0% to -3.9% in 2018.
Leverage (Debt)
Company's Net Debt / EBITDA is -1.9x and Debt / EBITDA is 0.8x. Debt dropped on 17.9% while cash jumped on 11.3%.
The company has no short term refinancing risk: short term debt is zero.
Management team
John M Laubacker is a the company's CFO. John M Laubacker has spent 2 years at the company.
Financial and operational results
FY ended 12/31/2018
Computer Task Group, Incorporated ($CTG) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 393.3 | 369.5 | 324.9 | 301.2 | 358.8 | 19.1% |
| Gross Profit | 79.3 | 67.2 | 59.2 | 56.1 | 68.5 | 22.1% |
| SG&A | 62.2 | 56.5 | 55.2 | 52.1 | 66.4 | 27.4% |
| EBITDA | 20.1 | 12.6 | -31.7 | 5.5 | 4.6 | -16.4% |
| Net Income | 10.4 | 6.5 | -34.6 | 0.8 | -2.8 | -449.5% |
Balance Sheet
|
|---|
| Cash | 40.9 | 10.8 | 9.4 | 11.2 | 12.4 | 11.3% |
| Short Term Debt | 0.0 | 0.0 | 0.0 | 0.0 | 0.0 | |
| Long Term Debt | 0.0 | 1.2 | 4.7 | 4.4 | 3.6 | -17.9% |
Cash flow
|
|---|
| Capex | 3.1 | 1.9 | 2.2 | 2.5 | 16.0 | 538.8% |
Ratios
|
|---|
| Revenue growth | -6.1% | -6.0% | -12.1% | -7.3% | 19.1% | |
| EBITDA growth | -26.9% | -37.4% | -351.6% | -117.4% | -16.4% | |
|
|---|
| Gross Margin | 20.2% | 18.2% | 18.2% | 18.6% | 19.1% | 0.5% |
| EBITDA Margin | 5.1% | 3.4% | -9.8% | 1.8% | 1.3% | -0.5% |
| SG&A, % of revenue | 15.8% | 15.3% | 17.0% | 17.3% | 18.5% | 1.2% |
| Net Income Margin | 2.6% | 1.8% | -10.7% | 0.3% | -0.8% | -1.1% |
| CAPEX, % of revenue | 0.8% | 0.5% | 0.7% | 0.8% | 4.5% | 3.6% |
|
|---|
| ROIC | 15.1% | 9.2% | -32.8% | 4.7% | 2.7% | -2.0% |
| ROE | 9.2% | 5.7% | -35.2% | 1.0% | -3.9% | -5.0% |
| Net Debt/EBITDA | -2.0x | -0.8x | | -1.2x | -1.9x | -0.7x |
Computer Task Group, Incorporated ($CTG) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 83 | 93 | 90 | 93 | | 7.4% | 22.7% | 21.9% | 24.8% |
| EBITDA | 1 | 2 | 1 | -0 | | -35.9% | 111.0% | 87.6% | -108.1% |
| Net Income | 0 | 1 | 1 | -5 | | -44.9% | 116.6% | 2,620.0% | |
Balance Sheet
|
|---|
| Cash | 11 | 10 | 10 | 12 | | 10.5% | -15.7% | -8.4% | 11.3% |
| Short Term Debt | 0 | 0 | 0 | 0 | | | | | |
| Long Term Debt | 9 | 6 | 3 | 4 | | | 110.3% | | -17.9% |
Ratios
|
|---|
| Gross Margin | 19.1% | 19.1% | 19.2% | 19.0% | | 0.7% | 1.0% | 1.6% | -1.3% |
| EBITDA Margin | 1.4% | 2.5% | 1.6% | -0.2% | | -0.9% | 1.0% | 0.6% | -2.8% |
| Net Income Margin | 0.5% | 1.0% | 1.2% | -5.6% | | -0.5% | 0.4% | 1.2% | -5.1% |
Peers in IT Consulting & Other Services
Below you can find Computer Task Group, Incorporated benchmarking vs. other companies in IT Consulting & Other Services industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Gopher Protocol Inc ($GOPH) | | -25.0% | 83.3% | 5,471.1% | 461.0% |
| CLPS Incorporation ($CLPS) | | | | 8.1% | 56.0% |
| EPAM Systems, Inc. ($EPAM) | | 25.2% | 26.9% | 25.0% | 27.1% |
| Gartner, Inc. ($IT) | | 7.0% | 13.0% | 35.5% | 20.1% |
| Virtusa Corporation ($VRTU) | | 20.7% | 25.3% | 43.0% | 18.9% |
| |
|---|
| Median (35 companies) | | 3.5% | 8.3% | 4.0% | 3.4% |
|---|
| Computer Task Group, Incorporated ($CTG) | | -6.0% | -12.1% | -7.3% | 19.1% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Inpixon ($INPX) | 29.8% | 28.9% | 28.1% | 68.7% | 71.4% |
| Gartner, Inc. ($IT) | 60.5% | 61.2% | 61.3% | 60.1% | 63.1% |
| InterXion Holding N.V. ($INXN) | 59.2% | 60.8% | 61.5% | 61.1% | 60.9% |
| LiveRamp Holdings, Inc. ($RAMP) | 25.1% | 38.6% | 42.5% | 45.7% | 56.2% |
| Booz Allen Hamilton Holding Corporation ($BAH) | 50.4% | 50.8% | 52.3% | 53.6% | 53.5% |
| |
|---|
| Median (37 companies) | 27.1% | 32.4% | 29.5% | 30.0% | 29.9% |
|---|
| Computer Task Group, Incorporated ($CTG) | 20.2% | 18.2% | 18.2% | 18.6% | 19.1% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| InterXion Holding N.V. ($INXN) | 41.3% | 44.9% | 43.3% | 42.2% | 42.8% |
| Switch, Inc. ($SWCH) | | 50.7% | 37.0% | 28.5% | 39.8% |
| Cognizant Technology Solutions Corporation ($CTSH) | 20.4% | 19.9% | 19.8% | 19.7% | 20.5% |
| Taoping Inc. ($TAOP) | -54.0% | -237.5% | -117.7% | 13.2% | 18.7% |
| DXC Technology Company ($DXC) | | | | 8.0% | 16.3% |
| |
|---|
| Median (36 companies) | 4.8% | 3.4% | 6.7% | 7.0% | 7.6% |
|---|
| Computer Task Group, Incorporated ($CTG) | 5.1% | 3.4% | -9.8% | 1.8% | 1.3% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| InterXion Holding N.V. ($INXN) | 62.5% | 48.1% | 57.4% | 50.5% | 78.3% |
| Switch, Inc. ($SWCH) | | 71.5% | 90.2% | 106.4% | 67.9% |
| Taoping Inc. ($TAOP) | 1.4% | 29.2% | 34.0% | 20.8% | 8.7% |
| Teradata Corporation ($TDC) | 2.0% | 2.1% | 2.3% | 3.6% | 7.1% |
| ServiceSource International, Inc. ($SREV) | 3.4% | 4.7% | 10.4% | 7.2% | 6.5% |
| |
|---|
| Median (35 companies) | 1.0% | 0.9% | 1.2% | 1.4% | 1.5% |
|---|
| Computer Task Group, Incorporated ($CTG) | 0.8% | 0.5% | 0.7% | 0.8% | 4.5% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Accenture plc ($ACN) | 80.5% | 81.0% | 81.3% | 61.7% | 66.1% |
| The Hackett Group, Inc. ($HCKT) | 11.2% | 19.5% | 31.7% | 23.8% | 24.6% |
| Cognizant Technology Solutions Corporation ($CTSH) | 24.7% | 22.0% | 21.3% | 21.9% | 23.8% |
| Booz Allen Hamilton Holding Corporation ($BAH) | 25.3% | 26.5% | 23.1% | 22.6% | 22.5% |
| EPAM Systems, Inc. ($EPAM) | 19.7% | 18.4% | 18.2% | 18.9% | 21.2% |
| |
|---|
| Median (44 companies) | 6.2% | 4.7% | 7.7% | 5.5% | 6.9% |
|---|
| Computer Task Group, Incorporated ($CTG) | 15.1% | 9.2% | -32.8% | 4.7% | 2.7% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Infinite Group Inc ($IMCI) | | | 169.6x | | 10.5x |
| InterXion Holding N.V. ($INXN) | 3.3x | 2.9x | 3.4x | 3.8x | 4.6x |
| Gartner, Inc. ($IT) | 0.1x | 1.3x | 0.6x | 11.7x | 4.1x |
| Switch, Inc. ($SWCH) | | 2.2x | 4.0x | 3.2x | 3.3x |
| Presidio, Inc. ($PSDO) | 0.0x | | 5.6x | 3.6x | 3.1x |
| |
|---|
| Median (28 companies) | -0.2x | -0.2x | 0.2x | 0.8x | 1.0x |
|---|
| Computer Task Group, Incorporated ($CTG) | -2.0x | -0.8x | | -1.2x | -1.9x |
