CTG stock jumped by 8 percent on Tuesday after new CEO Bud Crumlish indicated the Buffalo information technology company may be poised to stop a four-year skid in sales after posting better-than-expected fourth-quarter earnings.
Continued softness in its health care solutions business caused CTG's fourth-quarter profits to fall by more than half and its revenues to drop by 8 percent, but the earnings were better than analysts expected.
At the same time, CTG executives said Tuesday that they expect the company's business to stabilize this year as it begins to launch a new three-year strategic plan under Crumlish, who took over as CEO last year.
That plan calls for CTG to focus on more profitable services and to broaden its offerings to win more business from existing clients. It also plans to target mid-sized companies for new business – a significant shift in strategy for a company that largely has concentrated on gaining work from the nation's biggest companies. The company also moved to reduce its costs as its business shrunk and opened a recruiting and sourcing center in India.
"We had anticipated many of the headwinds and proactively took a number of actions to position CTG for renewed growth," Crumlish said.
CTG's profits fell to $1.1 million, or 7 cents per share, compared with $2.6 million, or 16 cents per share, a year ago, but the earnings were better than the 5 cents per share that analysts had expected.
The company's sales fell to $77.5 million from $84.2 million as revenues from its solutions business dropped by 16 percent because of the continued decline in health care work, especially in electronic medical records. Revenues from CTG's staffing business fell by 4 percent.
For this year, CTG said it expects its sales to range between $312 and $332 million, which at the midpoint of that range would be fairly close to the $325 million in revenues it had in 2016. CTG predicted that its earnings would be between 19 cents and 29 cents per share, which would be in line with the 23 cents per share it earned last year, excluding one-time items.
CTG's stock rose by 39 cents to $5.34 in morning trading on Tuesday.