Higher demand for information technology staffing combined with a smattering of new health care solutions projects to boost Computer Task Group's first-quarter profits by 58 percent.
The Buffalo information technology company's profits and revenues were slightly better than analysts forecast, and CTG hiked its earnings forecast for the entire year by 3 percent, while raising its revenue projection by 4 percent.
"All indications are that 2011 will be another very good year," said James R. Boldt, CTG's chairman and chief executive officer.
CTG said the big jump in profits was due to a stronger-than-expected increase in demand for its staffing services, along with continued strength in its health care solutions business, which grew by 30 percent.
That caused CTG's revenues to rise by 22 percent, and the increased sales base made the company's overall operations more profitable because its overall selling and general expenses grew by just 9 percent during the quarter.
CTG's profits rose to $2.8 million, or 17 cents per share, from $1.8 million, or 11 cents per share, a year ago. The earnings were a penny better than analysts were expecting.
CTG's sales rose to $95.9 million from $78.5 million, fueled by a 34 percent jump in solutions revenues and a 17 percent increase in sales from its staffing business. The company's European revenues grew by 3 percent.
Much of the increase in the solutions business came from CTG's steadily expanding push into the health care sector, which now accounts for 35 percent of the company's total revenues. Sales from electronic medical records projects jumped by 61 percent over last year and provided 15 percent of CTG's revenues during the quarter.
Boldt said CTG was hiking its sales and earnings guidance for the year because of the unexpectely strong growth in its staffing business and an unspecified number of new health care projects that the company won during the quarter. Health care and electronic medical records work tends to be more profitable than the company's staffing business.
CTG said it now expects profits during the current year to range between 65 cents and 75 cents per share, up 2 cents from its previous forecast and 35 percent higher than last year. The company predicted that its sales would reach $380 million to $400 million, up $15 million from its previous forecast and 18 percent higher than last year.
Profits during the second quarter are expected to be between 16 cents and 18 cents per share, which is in line with current analyst forecasts of 17 cents per share. Sales are expected to rise by about 21 percent to between $97 million and $99 million.