Computer Task Group (CTG) has reported 29.43 percent fall in profit for the quarter ended Sep. 26, 2014. The company has earned $2.73 million, or $0.17 a share in the quarter, compared with $3.86 million, or $0.23 a share for the same period last year.         

Revenue during the quarter dropped 3.90 percent to $96.76 million from $100.69 million in the previous year period. Total expenses were 95.28 percent of quarterly revenues, up from 93.99 percent for the same period last year. That has resulted in a contraction of 129 basis points in operating margin to 4.72 percent.  

Operating income for the quarter was $4.57 million, compared with $6.05 million in the previous year period.  

"CTG's third quarter financial results were consistent with the guidance provided in our second quarter earnings release," said CTG Interim Chief Executive Officer Brendan M. Harrington. "The reduction in our operating margin reflects the changing mix of our business due to current conditions in the healthcare markets that we serve. We continue to be challenged in our healthcare business by the continuing reduction in hospital spending for electronic medical records (EMR) implementation support. At the same time, demand from healthcare organizations for application management outsourcing services is increasing. For example, CTG won a large healthcare application management engagement in the second quarter that began to ramp up in the third quarter. Faced with lower reimbursement rates and the impact of healthcare reform mandates, large hospitals are seeking more business and IT consulting assistance in the areas of revenue cycle and EMR optimization. We are adjusting to the changing environment by continuing to expand our advisory services team and our offerings to support the shift in healthcare client needs."

Harrington continued, "Growth in our staffing business improved as reflected in the 100 person increase in headcount in the quarter. We are also seeing a continuation of the modest growth trend in our European operations as business from our government and financial services clients there is solid. We remain disciplined in managing costs as reflected in decreased operating expenses in the quarter. These actions are helping to partially reduce the impact on earnings from lower EMR implementation revenue while we fine tune and expand our offerings in response to changes in the U.S. healthcare market, including the need for providers to consolidate EMR information."

Cash Flow

Computer Task Group has spent $8.96 million cash to meet operating activities during the nine month period as against cash inflow of $0.82 million in the last year period. 

The company has spent $2.30 million cash to meet investing activities during the nine month period as against cash outgo of $5.61 million in the last year period. 

The company has spent $5.90 million cash to carry out financing activities during the nine month period as against cash outgo of $4.43 million in the last year period. 

Cash and cash equivalents stood at $28.26 million as on Sep. 26, 2014, down 10.39 percent or $3.28 million from $31.53 million on Sep. 27, 2013.   

Working Capital