Cegeka to acquire CTG for $10.50 per share in a cash transaction valued at approximately $170 million. See the separate press release issued earlier today that announced this transaction.
Software Engineering revenue in the second quarter of more than $30 million with gross margin of 32.7%
IT Solutions and Services segments represent 86% of total revenue in the second quarter, CTG's highest level to date
IT Solutions and Services segments gross margin improved 170 basis points year-over-year
Revenue of $74.6 million reflected intentional disengagement of $15.1 million from non-strategic technology services business
Gross margin improved to 28.1%, or 420 basis points from the prior year
GAAP operating margin was 0.4% in second quarter; non-GAAP operating margin was 3.9%
Net loss was ($0.1) million, with a margin of (0.2)%; adjusted EBITDA was $3.7 million, with a margin of 4.9%

BUFFALO, N.Y., Aug. 09, 2023 (GLOBE NEWSWIRE) -- CTG (NASDAQ:CTG) ("Company"), a leader in North America and Western Europe helping companies employ digital IT solutions and services to drive their productivity and profitability, today reported its financial results for the second quarter ended June 30, 2023.

Filip Gydé, CTG President and CEO, commented, "The sale of CTG to Cegeka is a testament to the significant efforts we have undertaken to drive our transformation strategy to make CTG a pure-play digital IT solutions provider. At CTG, our mission is to drive better, faster results for our clients with high-value digital transformation solutions. In Cegeka, we have found a partner that will enable us to accelerate this important work and we are confident that this transaction with Cegeka is the best outcome for our clients, employees, and shareholders. We are also pleased to have entered into this transaction with Cegeka, which delivers immediate value to our shareholders."

"We continue to be encouraged by CTG's successes this quarter, as we execute our strategy, win new engagements and deliver critical solutions for our clients amid the difficult macroeconomic environment," Mr. Gydé continued. "We have now driven our digital solutions and services business mix to more than 85% of revenue, our highest level to date, and increased the gross margin in our IT Solutions and Services segments by 170 basis points from the prior year quarter. Our second quarter North America IT Solutions and Services segment, including the results of the Eleviant acquisition in late 2022, grew revenue nearly 28%, and achieved gross margins of 40.4%, up 560 basis points from a year ago. Overall, our gross margin in the quarter grew to 28.1%, the highest in company history."

Consolidated Second Quarter 2023 Review (Narrative compares with prior-year period unless otherwise noted) (unaudited)

($ in thousands)	For the Quarter Ended									Change 2022-2023				Change 2021-2022
	Jun. 30, 2023			Jul. 1, 2022			Jul. 2, 2021			$		%		$		%
Revenue	$74,588			$82,759			$92,164			$(8,171	)	(9.9	)%	$(9,405	)	(10.2	)%

GAAP Gross Profit	$20,995			$19,750			$20,379			$1,245		6.3	%	$(629	)	(3.1	)%
GAAP Gross Margin		28.1	%		23.9	%		22.1	%

GAAP Operating Income	$285			$3,173			$2,801			$(2,888	)	(91.0	)%	$372		13.3	%
GAAP Operating Margin		0.4	%		3.8	%		3.0	%

Non-GAAP Operating Income*	$2,923			$3,463			$2,966			$(540	)	(15.6	)%	$497		16.8	%
Non-GAAP Operating Margin*		3.9	%		4.2	%		3.2	%

GAAP Net Income (Loss)	$(130		)	$2,040			$1,833			$(2,170	)	(106.4	)%	$207		11.3	%
GAAP Net Margin		-0.2	%		2.5	%		2.0	%

Non-GAAP Net Income*	$1,923			$2,252			$1,952			$(329	)	(14.6	)%	$300		15.4	%
Non-GAAP Net Income Margin*		2.6	%		2.7	%		2.1	%

Adjusted EBITDA*	$3,692			$4,224			$4,096			$(532	)	(12.6	)%	$128		3.1	%
Adjusted EBITDA Margin*		4.9	%		5.1	%		4.4	%

* A reconciliation of GAAP to non-GAAP information is included in the financial tables below

The decrease in revenue reflects the Company's continued business mix shift to more solutions and services-based business. As compared with the second quarter of 2022, the Company disengaged from $15.1 million in its lower-margin non-strategic technology services business.
The change in business mix and focus on digital solutions has led to significant improvements in gross margin over the past two years, increasing 600 basis points over that time.
As a percentage of revenue, selling, general and administrative (SG&A) expenses were 27.8% compared with 20.0% in the prior-year period. The increase was primarily due to increases in acquisition-related expenses from the Eleviant acquisition, costs associated with the new ERP implementation, severance, and non-recurring costs related to certain strategic initiatives.
Included in the GAAP net loss was $0.5 million of acquisition-related expenses, $0.4 million of ERP system implementation costs, $0.4 million of severance, and $0.8 million of non-recurring costs related to certain strategic initiatives, while the prior-year period included $0.2 million of acquisition expenses. Loss per diluted share was ($0.01) for the second quarter of 2023 compared with $0.13 for the second quarter of 2022. Excluding these expenses from both periods, non-GAAP earnings per diluted share were $0.13 compared with $0.15.

Second Quarter Segment Performance (unaudited)

IT Solutions and Services

North America

($ in thousands)	For the Quarter Ended									Change 2022-2023					Change 2021-2022
	Jun. 30, 2023			Jul. 1, 2022			Jul. 2, 2021			$		%			$		%
Revenue	$	25,997		$	20,339		$	16,762		$	5,658		27.8	%	$	3,577		21.3	%
Percent of total		34.8	%		24.6	%		18.2	%

Gross profit	$	10,512		$	7,079		$	6,074		$	3,433		48.5	%	$	1,005		16.5	%
Gross margin		40.4	%		34.8	%		36.2	%

Contribution profit	$	5,797		$	3,547		$	2,908		$	2,250		63.4	%	$	639		22.0	%
Contribution margin		22.3	%		17.4	%		17.3	%

The significant growth in revenue and gross margins in North America IT Solutions and Services reflects continued strong contributions from the acquisition of Eleviant, organic growth of approximately 10%, and CTG's enhanced focus on delivering digital transformation services.

Europe

($ in thousands)	For the Quarter Ended									Change 2022-2023						Change 2021-2022
	Jun. 30, 2023			Jul. 1, 2022			Jul. 2, 2021			$			%			$			%
Revenue	$	38,393		$	37,160		$	44,054		$	1,233			3.3	%	$	(6,894	)		(15.6	)%
Percent of total		51.5	%		44.9	%		47.8	%

Gross profit	$	9,243		$	9,582		$	10,748		$	(339	)		(3.5	)%	$	(1,166	)		(10.8	)%
Gross margin		24.1	%		25.8	%		24.4	%

Contribution profit	$	3,955		$	4,727		$	5,612		$	(772	)		(16.3	)%	$	(885	)		(15.8	)%
Contribution margin		10.3	%		12.7	%		12.7	%

Europe IT Solutions and Services margins continue to reflect the impact of mandated salary increases at the beginning of the year that are being passed to clients throughout the year.

Non-Strategic Technology Services

($ in thousands)	For the Quarter Ended									Change 2022-2023						Change 2021-2022
	Jun. 30, 2023			Jul. 1, 2022			Jul. 2, 2021			$			%			$			%
Revenue	$	10,198		$	25,260		$	31,348		$	(15,062	)		(59.6	)%	$	(6,088	)		(19.4	)%
Percent of total		13.7	%		30.5	%		34.0	%

Gross profit	$	1,240		$	3,089		$	3,557		$	(1,849	)		(59.9	)%	$	(468	)		(13.2	)%
Gross margin		12.2	%		12.2	%		11.3	%

Contribution profit	$	867		$	2,388		$	2,239		$	(1,521	)		(63.7	)%	$	149			6.7	%
Contribution margin		8.5	%		9.5	%		7.1	%

Continued disengagement from Non-Strategic Technology Services is consistent with the Company's long-term strategy. Revenue was also negatively impacted by challenging macroeconomic conditions.

Consolidated Year-to-Date Results

(unaudited)

($ in thousands)	For the Two Quarters Ended									Change 2022-2023					Change 2021-2022
	Jun. 30, 2023			Jul. 1, 2022			Jul. 2, 2021			$			%		$			%
Revenue	$	152,790		$	172,176		$	189,293		$	(19,386	)	(11.3	)%	$	(17,117	)	(9.0	)%

GAAP Gross Profit	$	41,130		$	40,345		$	41,146		$	785		1.9	%	$	(801	)	(1.9	)%
GAAP Gross Margin		26.9	%		23.4	%		21.7	%

GAAP Operating Income	$	992		$	6,372		$	4,899		$	(5,380	)	(84.4	)%	$	1,473		30.1	%
GAAP Operating Margin		0.6	%		3.7	%		2.6	%

Non-GAAP Operating Income*	$	5,031		$	6,924		$	5,708		$	(1,893	)	(27.3	)%	$	1,216		21.3	%
Non-GAAP Operating Margin*		3.3	%		4.0	%		3.0	%

GAAP Net Income	$	185		$	4,280		$	3,341		$	(4,095	)	(95.7	)%	$	939		28.1	%
GAAP Net Margin		0.1	%		2.5	%		1.8	%

Non-GAAP Net Income*	$	3,163		$	4,691		$	3,958		$	(1,528	)	(32.6	)%	$	733		18.5	%
Non-GAAP Net Income Margin*		2.1	%		2.7	%		2.1	%

Adjusted EBITDA*	$	6,457		$	8,555		$	7,821		$	(2,098	)	(24.5	)%	$	734		9.4	%
Adjusted EBITDA Margin*		4.2	%		5.0	%		4.1	%

* A reconciliation of GAAP to non-GAAP information is included in the financial tables below

Year-to-date Segment Performance (unaudited)

IT Solutions and Services

North America

($ in thousands)	For the Two Quarters Ended									Change 2022-2023					Change 2021-2022
	Jun. 30, 2023			Jul. 1, 2022			Jul. 2, 2021			$		%			$		%
Revenue	$	49,193		$	40,773		$	35,216		$	8,420		20.7	%	$	5,557		15.8	%
Percent of total		32.2	%		23.7	%		18.6	%

Gross profit	$	19,496		$	13,941		$	12,086		$	5,555		39.8	%	$	1,855		15.3	%
Gross margin		39.6	%		34.2	%		34.3	%

Contribution profit	$	9,984		$	7,278		$	5,763		$	2,706		37.2	%	$	1,515		26.3	%
Contribution margin		20.3	%		17.9	%		16.4	%

Europe

($ in thousands)	For the Two Quarters Ended									Change 2022-2023						Change 2021-2022
	Jun. 30, 2023			Jul. 1, 2022			Jul. 2, 2021			$			%			$			%
Revenue	$	78,486		$	79,638		$	90,061		$	(1,152	)		(1.4	)%	$	(10,423	)		-11.6	%
Percent of total		51.4	%		46.3	%		47.6	%

Gross profit	$	18,567		$	20,061		$	21,965		$	(1,494	)		(7.4	)%	$	(1,904	)		-8.7	%
Gross margin		23.7	%		25.2	%		24.4	%

Contribution profit	$	8,227		$	9,978		$	11,346		$	(1,751	)		(17.5	)%	$	(1,368	)		-12.1	%
Contribution margin		10.5	%		12.5	%		12.6	%

Year-to-date Segment Performance (continued)

Non-Strategic Technology Services

($ in thousands)	For the Two Quarters Ended									Change 2022-2023						Change 2021-2022
	Jun. 30, 2023			Jul. 1, 2022			Jul. 2, 2021			$			%			$			%
Revenue	$	25,111		$	51,765		$	64,016		$	(26,654	)		(51.5	)%	$	(12,251	)		(19.1	)%
Percent of total		16.4	%		30.0	%		33.8	%

Gross profit	$	3,067		$	6,343		$	7,095		$	(3,276	)		(51.6	)%	$	(752	)		(10.6	)%
Gross margin		12.2	%		12.3	%		11.1	%

Contribution profit	$	2,331		$	4,831		$	4,462		$	(2,500	)		-51.7	%	$	369			8.3	%
Contribution margin		9.3	%		9.3	%		7.0	%

Balance Sheet and Cash Flow

Cash and cash equivalents were $19.1 million compared with $25.1 million at year-end 2022. Net cash used in operations was $4.6 million.

At the end of the second quarter of 2023, the Company had no amount outstanding on its revolving line of credit facility or any other long-term debt. Days sales outstanding were 86 in the second quarter of 2023 compared with 84 in the prior-year period.

Successfully Executing Strategy

CTG is a catalyst for digital transformation, helping IT and business leaders accelerate integration of digital technology into all areas of their operations to improve productivity, strengthen business processes, elevate internal controls, and increase value delivery to their customers. CTG's strategy for growth is its transformation into a higher-performing, digital solutions-based business. The three key elements of its strategy are:

Becoming a global provider of digital IT solutions by capitalizing on the compelling digital transformation trend, leveraging the CTG brand built on reliability and results, and delivering solutions primarily to the energy, healthcare, finance, and manufacturing sectors.
Growing the team organically by adding highly qualified and experienced associates, employing innovative tools and methodologies, and making selective acquisitions.
Strengthening the Company's margin profile by reducing delivery costs and changing the mix of business by disengaging from low margin IT staffing service support in its Non-Strategic Technology Services segment.

Fiscal 2023 Outlook

"Due to the rapid pace of change and continued uncertainty in the macroenvironment, we are withdrawing our full year 2023 guidance," said John M. Laubacker, Chief Financial Officer. "We continue to execute our long-term strategy, including driving digital transformation with a software engineering focus for our clients, which we are confident will position CTG to enhance shareholder value."

Conference Call and Webcast

Due to the pending purchase of CTG by Cegeka, CTG will not host its earnings call previously scheduled for today, August 9, 2023, at 11:00 am Eastern time.

About CTG

CTG is a leading provider of digital transformation solutions and services that accelerate clients' project momentum and achievement of their desired IT and business outcomes. We have earned a reputation as a faster and more reliable, results-driven partner focused on integrating digital technology into all areas of its clients to improve their operations and increase their value proposition. CTG's engagement in the digital transformation process drives improved data-driven decision-making, meaningful business performance improvements, new and enhanced customer experiences, and continuous innovation. CTG operates in North America, South America, Western Europe, and India. The Company regularly posts news and other important information at www.ctg.com.

Reconciliation of GAAP to non-GAAP Information

The Company has referenced non-GAAP information in this news release. The Company believes that the use of non-GAAP financial information provides useful information to investors and management to gain an overall understanding of its current financial performance and prospects. In addition, management uses non-GAAP financial measures for forecasting, facilitating ongoing operating decisions, and measuring the Company's overall performance. The Company believes that these non-GAAP measures align closely with its internal measurement processes and reflect the Company's core operating results.

A reconciliation of GAAP to non-GAAP information is included in the financial tables below. The non-GAAP financial information is presented using a consistent methodology from quarter-to-quarter and year-to-year. These measures should be considered in addition to results prepared in accordance with GAAP. Also, these non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles. The Company believes that non-GAAP financial measures have limitations in that they do not reflect all amounts associated with the Company's results of operations as determined in accordance with GAAP and that these measures should only be used to evaluate the Company's results of operations in conjunction with the corresponding GAAP financial measures. As such, the non-GAAP financial measures disclosed by the Company should not be considered a substitute for or superior to financial measures calculated in accordance with GAAP, and reconciliations between GAAP and non-GAAP financial measures included in this earnings release should be carefully evaluated.

Forward-Looking Statements

This press release contains statements that constitute "forward looking statements," including statements that express the opinions, expectations, beliefs, plans, objectives, assumptions, or projections regarding future events or future results, including statements regarding the proposed acquisition of CTG by Cegeka (the "Proposed Acquisition"), in contrast with statements that reflect historical facts. In some cases, you can identify such forward-looking statements by terminology such as "anticipate," "intend," "believe," "estimate," "plan," "seek," "project," or "expect," "may," "will," "would," "could," "potential," "intend," or "should," the negative of these terms or similar expressions. Forward-looking statements are based on management's current beliefs and assumptions and on information currently available to Cegeka and CTG. However, these forward-looking statements are not a guarantee of performance, and you should not place undue reliance on such statements.

Forward-looking statements are subject to many risks, uncertainties and other variable circumstances, including, but not limited to, the ability of the parties to satisfy the closing conditions for the Proposed Acquisition on a timely basis or at all, including the possibility that a governmental agency may prohibit, delay, or refuse to grant approval for the consummation of the Proposed Acquisition; statements about the expected timetable for completing the Proposed Acquisition; uncertainties as to how many of CTG's shareholders will tender their shares in the offer; the possibility that competing offers will be made; the occurrence of events that may give rise to a right of one or both of Cegeka and CTG to terminate the merger agreement; negative effects of the announcement of the Proposed Acquisition on the market price of CTG's common stock and/or on it business, financial condition, results of operations, and financial performance (including the ability of CTG to maintain relationships with its customers, suppliers, and others with whom it does business); the effects of the Proposed Acquisition (or the announcement thereof) on CTG's ability to retain and hire qualified professional staff and talent, including technical, sales and management personnel; competition for clients; the increased bargaining power of CTG's large clients; the occurrence of cyber incidents and CTG's ability to protect confidential client data; the partial or complete loss of the revenue CTG generates from its largest client, International Business Machines Corporation (IBM); the uncertainty of CTG's clients' implementations of cost reduction projects; the mix of work at CTG between IT Solutions and Services and Non-Strategic Technology Services, and the risk of disengaging from Non-Strategic Technology Services; currency exchange risks; risks associated with CTG's domestic and foreign operations, including uncertainty and business interruptions resulting from political changes and actions in the U.S. and abroad, such as the conflict between Russian and Ukraine and recent developments in China, and volatility in the global credit and financial markets and economy; renegotiations, nullification, or breaches of contracts with clients, vendors, subcontractors or other parties; the impact of current and future laws and government regulations, as well as repeal or modification of such, affecting the IT solutions and services industry, taxes and CTG's operations in particular; industry, economic, and political conditions, including fluctuations in demand for IT services; and consolidation among CTG's competitors or clients. Such risks and uncertainties may cause the statements to be inaccurate and readers are cautioned not to place undue reliance on such statements. Many of these risks are outside of the control of Cegeka and CTG and could cause actual results to differ materially. The forward-looking statements included in this press release are made only as of the date hereof. Cegeka and CTG do not undertake, and specifically decline, any obligation to update any such statements or to publicly announce the results of any revisions to any such statements to reflect future events or developments, except as required by law.

A further description of risks and uncertainties relating to CTG can be found in CTG's Annual Report on Form 10-K for the fiscal year ended December 31, 2022, as filed with the SEC, and in other documents filed from time to time with the SEC by CTG and available at www.sec.gov and www.ctg.com.

COMPUTER TASK GROUP, INCORPORATED (CTG) Condensed Consolidated Statements of Income (Loss) (Unaudited) (amounts in thousands except per share data)
	For the Quarter Ended
	June 30,			July 1,			July 2,
	2023			2022			2021

Revenue	$	74,588		$	82,759		$	92,164
Cost of services		53,593			63,009			71,785
Gross profit		20,995			19,750			20,379
Selling, general and admin. expenses		20,710			16,577			17,578
Operating income		285			3,173			2,801
Other expense, net		(364	)		(385	)		(256	)
Income (loss) before income taxes		(79	)		2,788			2,545
Provision for income taxes		51			748			712
Net income (loss)	$	(130	)	$	2,040		$	1,833

Net income (loss) per share:
Basic	$	(0.01	)	$	0.14		$	0.13
Diluted	$	(0.01	)	$	0.13		$	0.12

Weighted average shares outstanding:
Basic		14,832			14,419			13,845
Diluted		14,832			15,122			14,972

COMPUTER TASK GROUP, INCORPORATED (CTG) Condensed Consolidated Statements of Income (Unaudited) (amounts in thousands except per share data)
	For the Two Quarters Ended
	June 30,			July 1,			July 2,
	2023			2022			2021

Revenue	$	152,790		$	172,176		$	189,293
Cost of services		111,660			131,831			148,147
Gross profit		41,130			40,345			41,146
Selling, general and admin. expenses		40,138			33,973			36,247
Operating income		992			6,372			4,899
Other expense, net		(594	)		(642	)		(406	)
Income before income taxes		398			5,730			4,493
Provision for income taxes		213			1,450			1,152
Net income	$	185		$	4,280		$	3,341

Net income per share:
Basic	$	0.01		$	0.30		$	0.24
Diluted	$	0.01		$	0.28		$	0.22

Weighted average shares outstanding:
Basic		14,768			14,309			13,770
Diluted		15,399			15,050			14,958

COMPUTER TASK GROUP, INCORPORATED (CTG) Condensed Consolidated Balance Sheets (Unaudited) (amounts in thousands)
	June 30,		December 31,		July 1,
	2023		2022		2022
Current Assets:
Cash and cash equivalents	$	19,137	$	25,140	$	35,479
Accounts receivable, net		70,457		70,979		76,622
Other current assets		4,992		3,769		3,146
Total current assets		94,586		99,888		115,247

Property and equipment, net		5,725		5,061		4,376
Operating lease right-of-use assets		19,398		18,506		19,005
Cash surrender value		4,202		4,120		4,039
Acquired intangibles, net		12,210		12,943		6,219
Goodwill		36,245		35,998		18,104
Other assets		6,290		5,103		7,031
Total Assets	$	178,656	$	181,619	$	174,021

Current Liabilities:
Accounts payable	$	14,389	$	14,254	$	13,544
Accrued compensation		14,859		19,016		18,071
Operating lease liabilities		5,584		5,905		5,838
Other current liabilities		11,962		12,758		15,992
Total current liabilities		46,794		51,933		53,445

Long-term debt		-		-		-
Operating lease liabilities		13,686		12,466		13,030
Other liabilities		10,423		11,241		12,239
Shareholders' equity		107,753		105,979		95,307
Total Liabilities and Shareholders' Equity	$	178,656	$	181,619	$	174,021

COMPUTER TASK GROUP, INCORPORATED (CTG) Condensed Consolidated Statements of Cash Flows (Unaudited) (amounts in thousands)
	For the Two Quarters Ended
	June 30,			July 1,			July 2,
	2023			2022			2021

Net income	$	185		$	4,280		$	3,341
Depreciation and amortization expense		1,755			1,400			1,685
Equity-based compensation expense		867			1,176			1,272
Other operating items		(7,412	)		(4,022	)		(6,349	)
Net cash provided by (used in) operating activities		(4,605	)		2,834			(51	)
Net cash used in investing activities		(1,784	)		(721	)		(1,618	)
Net cash provided by (used in) financing activities		8			(707	)		(1,281	)
Effect of exchange rates on cash and cash equivalents		378			(1,511	)		(706	)
Net decrease in cash and cash equivalents		(6,003	)		(105	)		(3,656	)
Cash and cash equivalents at beginning of period		25,140			35,584			32,865
Cash and cash equivalents at end of period	$	19,137		$	35,479		$	29,209

COMPUTER TASK GROUP, INCORPORATED (CTG)

Segment Information

(Unaudited)

(amounts in thousands)

For reporting purposes, the Company discloses three segments, including IT Solutions and Services in each of North America and Europe, and Non-Strategic Technology Services, primarily in North America. The Company continues investing in business development, including solutions, sales, delivery, and recruiting to drive its digital transformation strategy in the North America and Europe IT Solutions and Services segments. The Company is not investing in its Non-Strategic Technology Services segment which includes lower margin staffing services. Contribution profit represents operational profit after consideration of expenses such as sales, solutions, delivery, and recruiting expenses.

	For the Quarter Ended June 30, 2023
	North
	America			Europe			Non-Strategic
	IT Solutions			IT Solutions			Technology
	and Services			and Services			Services

Revenue	$	25,997		$	38,393		$	10,198
Cost of services		15,485			29,150			8,958
Gross profit		10,512			9,243			1,240
Gross margin		40.4	%		24.1	%		12.2	%
Selling, solutions, delivery, and recruiting expenses		4,715			5,288			373
Contribution profit	$	5,797		$	3,955		$	867
Contribution margin		22.3	%		10.3	%		8.5	%

	For the Quarter Ended July 1, 2022
	North
	America			Europe			Non-Strategic
	IT Solutions			IT Solutions			Technology
	and Services			and Services			Services

Revenue	$	20,339		$	37,160		$	25,260
Cost of services		13,260			27,578			22,171
Gross profit		7,079			9,582			3,089
Gross margin		34.8	%		25.8	%		12.2	%
Selling, solutions, delivery, and recruiting expenses		3,532			4,855			701
Contribution profit	$	3,547		$	4,727		$	2,388
Contribution margin		17.4	%		12.7	%		9.5	%

	For the Quarter Ended July 2, 2021
	North
	America			Europe			Non-Strategic
	IT Solutions			IT Solutions			Technology
	and Services			and Services			Services

Revenue	$	16,762		$	44,054		$	31,348
Cost of services		10,688			33,306			27,791
Gross profit		6,074			10,748			3,557
Gross margin		36.2	%		24.4	%		11.3	%
Selling, solutions, delivery, and recruiting expenses		3,166			5,136			1,318
Contribution profit	$	2,908		$	5,612		$	2,239
Contribution margin		17.3	%		12.7	%		7.1	%

COMPUTER TASK GROUP, INCORPORATED (CTG) Segment Information (continued) (Unaudited) (amounts in thousands)
	For the Two Quarters Ended June 30, 2023
	North
	America			Europe			Non-Strategic
	IT Solutions			IT Solutions			Technology
	and Services			and Services			Services

Revenue	$	49,193		$	78,486		$	25,111
Cost of services		29,697			59,919			22,044
Gross profit		19,496			18,567			3,067
Gross margin		39.6	%		23.7	%		12.2	%
Selling, solutions, delivery, and recruiting expenses		9,512			10,340			736
Contribution profit	$	9,984		$	8,227		$	2,331
Contribution margin		20.3	%		10.5	%		9.3	%

	For the Two Quarters Ended July 1, 2022
	North
	America			Europe			Non-Strategic
	IT Solutions			IT Solutions			Technology
	and Services			and Services			Services

Revenue	$	40,773		$	79,638		$	51,765
Cost of services		26,832			59,577			45,422
Gross profit		13,941			20,061			6,343
Gross margin		34.2	%		25.2	%		12.3	%
Selling, solutions, delivery, and recruiting expenses		6,663			10,083			1,512
Contribution profit	$	7,278		$	9,978		$	4,831
Contribution margin		17.9	%		12.5	%		9.3	%

	For the Two Quarters Ended July 2, 2021
	North
	America			Europe			Non-Strategic
	IT Solutions			IT Solutions			Technology
	and Services			and Services			Services

Revenue	$	35,216		$	90,061		$	64,016
Cost of services		23,130			68,096			56,921
Gross profit		12,086			21,965			7,095
Gross margin		34.3	%		24.4	%		11.1	%
Selling, solutions, delivery, and recruiting expenses		6,323			10,619			2,633
Contribution profit	$	5,763		$	11,346		$	4,462
Contribution margin		16.4	%		12.6	%		7.0	%

COMPUTER TASK GROUP, INCORPORATED (CTG) Segment and Vertical Market Trends (Unaudited) Supplemental Financial Information
																Twelve Months
	For the Quarter Ended															Ended
	Jun.			Sept.			Dec.			Mar.			Jun.			Jun.
		2022			2022			2022			2023			2023			2023
Revenue (in millions)
North America IT Solutions and Services	$20.339			$20.340			$22.924			$23.196			$25.997			$92.457
Europe IT Solutions and Services		37.160			33.258			37.035			40.093			38.393			148.779
Non-Strategic Technology Services		25.260			21.404			17.943			14.913			10.198			64.458
Total Revenue	$82.759			$75.002			$77.902			$78.202			$74.588			$305.694

Revenue in North America
Constant Currency (in millions)*
North America	$45.042			$41.501			$40.604			$37.859			$35.970			$155.934
Foreign Currency Impact		(0.028	)		(0.016	)		0.005			0.003			-
Total Revenue in Constant Currency (non-GAAP)	$45.014			$41.485			$40.609			$37.862			$35.970

Revenue in Europe
Constant Currency (in millions)*
Europe	$37.717			$33.501			$37.298			$40.343			$38.618			$149.760
Foreign Currency Impact		0.805			2.701			2.528			0.607			-
Total Revenue in Constant Currency (non-GAAP)	$38.522			$36.202			$39.826			$40.950			$38.618

Revenue By Geography
North America		54.4	%		55.3	%		52.1	%		48.4	%		48.2	%		51.0	%
Europe		45.6	%		44.7	%		47.9	%		51.6	%		51.8	%		49.0	%
Total		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%		100.0	%

Revenue by Vertical Market
Healthcare		18	%		19	%		18	%		19	%		23	%		20	%
Financial Services		15	%		15	%		17	%		18	%		17	%		16	%
Manufacturing		15	%		17	%		16	%		16	%		14	%		16	%
Technology Service Providers		24	%		22	%		19	%		16	%		15	%		18	%
Energy		7	%		6	%		6	%		6	%		6	%		6	%
General Markets		21	%		21	%		24	%		25	%		25	%		24	%
Total		100	%		100	%		100	%		100	%		100	%		100	%

Operating Margins
GAAP Operating Margin		3.8	%		3.0	%		3.1	%		0.9	%		0.4	%		1.9	%
Non-GAAP Operating Margin		4.2	%		4.0	%		5.1	%		2.7	%		3.9	%		3.9	%

Other Information (in millions except Billable Days and EPS)
Billable Days		64		63		63		64		64			254
Net Income (Loss)	$2.040		$1.102		$1.227		$0.315		$(0.130		)	$2.514
GAAP Diluted EPS	$0.13		$0.07		$0.08		$0.02		$(0.01		)	$0.16
Non-GAAP Diluted EPS	$0.15		$0.11		$0.14		$0.08		$0.13			$0.46
Adjusted EBITDA (non-GAAP)	$4.2		$3.8		$4.8		$2.8		$3.7			$15.1

Balance Sheet Information (in millions except DSO)
Cash less Debt, Net	$35.5		$26.8		$25.1		$21.9		$19.1
Working Capital	$61.8		$44.5		$48.0		$49.0		$47.8
DSO		84		83		84		83		86

* Constant Currency is measured by applying the current fiscal period's average exchange rate to each of the prior periods

COMPUTER TASK GROUP, INCORPORATED (CTG)

(Unaudited)

The non-GAAP information below excludes certain acquisition-related expenses, ERP system implementation costs, costs associated with severance and the evaluation of strategic alternatives. The acquisition-related expenses consist of due diligence costs, amortization of intangible assets, and changes in the value of earn-out payments upon achievement of certain financial targets from the Company's recent acquisitions.

Reconciliation of GAAP to non-GAAP Operating Income

											Twelve
											Months
	For the Quarter Ended										Ended
	Jun.		Sept.		Dec.		Mar.		Jun.		Jun.
(in millions)	2022		2022		2022		2023		2023		2023
GAAP Operating Income	$3.173		$2.253		$2.451		$0.707		$0.285		$5.696
Acquisition-related expenses		0.290		0.744		0.696		0.634		0.623		2.697
ERP system implementation costs		-		-		-		0.481		0.536		1.017
Severance		-		-		0.838		0.286		0.497		1.621
Non-recurring costs related to certain strategic initiatives		-		-		-		-		0.982		0.982
Non-GAAP Operating Income	$3.463		$2.997		$3.985		$2.108		$2.923		$12.013

Reconciliation of GAAP to non-GAAP Operating Margin

											Twelve
											Months
	For the Quarter Ended										Ended
	Jun.		Sept.		Dec.		Mar.		Jun.		Jun.
	2022		2022		2022		2023		2023		2023
GAAP Operating Margin	3.8	%	3.0	%	3.1	%	0.9	%	0.4	%	1.9	%
Acquisition-related expenses	0.4	%	1.0	%	0.9	%	0.8	%	0.8	%	0.9	%
ERP system implementation costs	-		-		-		0.6	%	0.7	%	0.3	%
Severance	-		-		1.1	%	0.4	%	0.7	%	0.5	%
Non-recurring costs related to certain strategic initiatives	-		-		-		-		1.3	%	0.3	%
Non-GAAP Operating Margin	4.2	%	4.0	%	5.1	%	2.7	%	3.9	%	3.9	%

Reconciliation of GAAP to non-GAAP Net Income (Loss)

													Twelve
													Months
	For the Quarter Ended												Ended
		Jun.		Sept.		Dec.		Mar.		Jun.			Jun.
(in millions)		2022		2022		2022		2023		2023			2023
GAAP Net Income (Loss)		$2.040		$1.102		$1.227		$0.315		$(0.130		)	$2.514
Acquisition-related expenses			0.212		0.510		0.435		0.419		0.485			1.849
ERP system implementation costs			-		-		-		0.317		0.417			0.734
Severance			-		-		0.524		0.189		0.387			1.100
Non-recurring costs related to certain strategic initiatives			-		-		-		-		0.764			0.764
Non-GAAP Net Income		$2.252		$1.612		$2.186		$1.240		$1.923			$6.961

COMPUTER TASK GROUP, INCORPORATED (CTG)

(Unaudited)

Reconciliation of GAAP to non-GAAP Diluted Earnings (Loss) per Share (EPS)

												Twelve
												Months
	For the Quarter Ended											Ended
	Jun.		Sept.		Dec.		Mar.		Jun.			Jun.
	2022		2022		2022		2023		2023			2023
GAAP Diluted EPS	$0.13		$0.07		$0.08		$0.02		$(0.01		)	$0.16
Acquisition-related expenses		0.02		0.04		0.03		0.03		0.03			0.13
ERP system implementation costs		-		-		-		0.02		0.03			0.05
Severance		-		-		0.03		0.01		0.03			0.07
Non-recurring costs related to certain strategic initiatives		-		-		-		-		0.05			0.05
Non-GAAP Diluted EPS	$0.15		$0.11		$0.14		$0.08		$0.13			$0.46

Reconciliation of Net Income (Loss) to Adjusted EBITDA (non-GAAP) includes earnings before interest (including amortization of deferred debt financing costs), taxes, depreciation and amortization, equity-based compensation, and other, which includes severance, ERP system implementation costs, acquisition-related expenses, and non-recurring costs related to certain strategic initiatives.

																Twelve
																Months
	For the Quarter Ended															Ended
	Jun.			Sept.			Dec.			Mar.			Jun.			Jun.
(in millions)		2022			2022			2022			2023			2023			2023
Net Income (Loss)	$2.040			$1.102			$1.227			$0.315			$(0.130		)	$2.514
Taxes		0.748			0.759			0.736			0.162			0.051			1.708
Interest		0.100			0.103			0.100			0.109			0.121			0.433
Depreciation and amortization		0.684			0.651			0.948			0.837			0.918			3.354
Equity-based compensation expense		0.603			0.693			0.694			0.345			0.522			2.254
Other		0.049			0.516			1.102			0.997			2.210			4.825
Adjusted EBITDA	$4.224			$3.824			$4.807			$2.765			$3.692			$15.088
Adjusted EBITDA Margin		5.1	%		5.1	%		6.2	%		3.5	%		4.9	%		4.9	%

CTG news releases are available at www.ctg.com.

Contacts:

John M. Laubacker
Chief Financial Officer 
Tel: +1 716 887 7368

Investor Relations:
Deborah K. Pawlowski
Kei Advisors LLC
dpawlowski@keiadvisors.com 
Tel: +1 716 843 3908

Craig P. Mychajluk             
Kei Advisors LLC
cmychajluk@keiadvisors.com
Tel: +1 716 843 3832

CTG IT Solutions and Services Segments Gross Margin Improved 170 Basis Points to 30.7% in Second Quarter 2023, Cegeka to Acquire CTG for $10.50 Per Share