Document and Entity Information
Document and Entity Information Document - shares | 3 Months Ended | |
Apr. 01, 2022 | May 05, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Apr. 1, 2022 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | CTG | |
Entity Registrant Name | COMPUTER TASK GROUP, INCORPORATED | |
Entity Central Index Key | 0000023111 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity File Number | 1-9410 | |
Entity Tax Identification Number | 16-0912632 | |
Entity Address, Address Line One | 300 Corporate Parkway | |
Entity Address, Address Line Two | Suite 214N | |
Entity Address, City or Town | Amherst | |
Entity Address, State or Province | NY | |
Entity Incorporation, State or Country Code | NY | |
Entity Address, Postal Zip Code | 14226 | |
City Area Code | 716 | |
Local Phone Number | 882-8000 | |
Title of 12(b) Security | Common Stock, par value $0.01 per share | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 15,417,204 | |
Entity Interactive Data Current | Yes | |
Document Quarterly Report | true | |
Document Transition Report | false |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Income (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Apr. 01, 2022 | Apr. 02, 2021 | |
Income Statement [Abstract] | ||
Revenue | $ 89,417 | $ 97,129 |
Cost of services | 68,822 | 76,362 |
Gross profit | 20,595 | 20,767 |
Selling, general and administrative expenses | 17,396 | 18,669 |
Operating income | 3,199 | 2,098 |
Interest and other income | 91 | 84 |
Interest and other expense | 348 | 234 |
Income before income taxes | 2,942 | 1,948 |
Provision for income taxes | 702 | 440 |
Net income | $ 2,240 | $ 1,508 |
Net income per share: | ||
Basic | $ 0.16 | $ 0.11 |
Diluted | $ 0.15 | $ 0.10 |
Weighted average shares outstanding: | ||
Basic | 14,199 | 13,696 |
Diluted | 14,977 | 14,944 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2022 | Apr. 02, 2021 | |
Statement Of Income And Comprehensive Income [Abstract] | ||
Net income | $ 2,240 | $ 1,508 |
Foreign currency translation adjustment | (1,329) | (2,245) |
Change in pension, net of taxes of $33 and $38 in the 2022 and 2021 first quarters, respectively | (331) | (550) |
Other comprehensive loss | (998) | (1,695) |
Comprehensive income (loss) | $ 1,242 | $ (187) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2022 | Apr. 02, 2021 | |
Statement Of Income And Comprehensive Income [Abstract] | ||
Taxes attributable to change in pension loss | $ 33 | $ 38 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Apr. 01, 2022 | Dec. 31, 2021 |
Current Assets: | ||
Cash and cash equivalents | $ 38,724 | $ 35,584 |
Accounts receivable, net of allowances of $559 and $581 in 2022 and 2021, respectively | 74,674 | 84,252 |
Prepaid and other current assets | 3,065 | 2,849 |
Income taxes receivable | 80 | |
Total current assets | 116,463 | 122,765 |
Property, equipment and capitalized software, net | 4,777 | 5,242 |
Operating lease right-of-use assets | 20,762 | 22,132 |
Deferred income taxes | 4,763 | 4,946 |
Acquired intangibles, net | 6,837 | 7,280 |
Goodwill | 19,174 | 19,676 |
Cash surrender value of life insurance, net | 3,756 | 4,018 |
Other assets | 2,344 | 2,228 |
Investments | 64 | 47 |
Total assets | 178,940 | 188,334 |
Current Liabilities: | ||
Accounts payable | 12,444 | 21,150 |
Accrued compensation | 20,444 | 22,534 |
Advance billings on contracts | 5,710 | 4,762 |
Short-term operating lease liabilities | 6,199 | 6,444 |
Short-term deferred payroll taxes | 3,508 | 3,508 |
Other current liabilities | 7,621 | 6,585 |
Income taxes payable | 197 | |
Total current liabilities | 56,123 | 64,983 |
Deferred compensation benefits | 11,283 | 11,437 |
Long-term operating lease liabilities | 14,379 | 15,612 |
Deferred income taxes | 1,672 | 1,792 |
Other long-term liabilities | 75 | 73 |
Total liabilities | 83,532 | 93,897 |
Shareholders’ Equity: | ||
Common stock, par value $0.01 per share, 150,000,000 shares authorized; 27,017,824 shares issued in 2022 and 2021 | 270 | 270 |
Capital in excess of par value | 109,422 | 110,330 |
Retained earnings | 110,282 | 108,042 |
Less: Treasury stock of 11,599,124 and 11,667,719 shares at cost, in 2022 and 2021, respectively | (106,628) | (107,265) |
Accumulated other comprehensive loss | (17,938) | (16,940) |
Total shareholders’ equity | 95,408 | 94,437 |
Total liabilities and shareholders’ equity | $ 178,940 | $ 188,334 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Apr. 01, 2022 | Dec. 31, 2021 |
Statement Of Financial Position [Abstract] | ||
Accounts receivable, allowances | $ 559 | $ 581 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 150,000,000 | 150,000,000 |
Common stock, shares issued | 27,017,824 | 27,017,824 |
Treasury stock, shares | 11,599,124 | 11,667,719 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2022 | Apr. 02, 2021 | |
Cash flow from operating activities: | ||
Net income | $ 2,240 | $ 1,508 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization expense | 716 | 854 |
Equity-based compensation expense | 573 | 590 |
Deferred income taxes | 135 | (95) |
Deferred compensation benefits | 103 | 135 |
Changes in assets and liabilities that provide (use) cash, excluding the effects of acquisitions: | ||
Accounts receivable | 8,530 | 994 |
Prepaid and other current assets | (340) | (600) |
Other long-term assets | (122) | (173) |
Cash surrender value of life insurance | 262 | 172 |
Accounts payable | (8,467) | (4,139) |
Accrued compensation | (1,646) | 2,267 |
Income taxes payable / receivable | 271 | 40 |
Advance billings on contracts | 998 | 1,140 |
Other current liabilities | 1,153 | (430) |
Other long-term liabilities | 2 | (8) |
Net cash provided by operating activities | 4,408 | 2,255 |
Cash flow from investing activities: | ||
Additions to property and equipment | (61) | (891) |
Net cash used in investing activities | (61) | (891) |
Cash flow from financing activities: | ||
Proceeds from stock option plan exercises | 90 | 223 |
Taxes remitted for shares withheld from equity-based compensation transactions | (971) | (96) |
Proceeds from Employee Stock Purchase Plan | 37 | 36 |
Net cash provided by (used in) financing activities | (844) | 163 |
Effect of exchange rates on cash and cash equivalents | (363) | (868) |
Net increase in cash and cash equivalents | 3,140 | 659 |
Cash and cash equivalents at beginning of year | 35,584 | 32,865 |
Cash and cash equivalents at end of quarter | $ 38,724 | $ 33,524 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Shareholders' Equity (Unaudited) - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Retained Earnings | Treasury Stock | AOCI Attributable to Parent |
Balance at Dec. 31, 2020 | $ 79,508 | $ 270 | $ 109,407 | $ 94,312 | $ (109,114) | $ (15,367) |
Balance, shares at Dec. 31, 2020 | 27,018,000 | 11,842,000 | ||||
Employee Stock Purchase Plan share issuance | 36 | (7) | $ 43 | |||
Employee Stock Purchase Plan share issuance, shares | 5,000 | |||||
Stock Option Plan share issuance, net | 223 | (387) | $ 610 | |||
Stock Option Plan share issuance, net, shares | 82,000 | |||||
Restricted stock plan share issuance/forfeiture | (96) | (1,218) | $ 1,122 | |||
Restricted stock plan share issuance/forfeiture, shares | (119,000) | |||||
Equity-based compensation | 590 | 590 | ||||
Net income | 1,508 | 1,508 | ||||
Foreign currency adjustment | (2,245) | (2,245) | ||||
Pension loss adjustment, net of tax | 550 | 550 | ||||
Balance at Apr. 02, 2021 | 80,074 | $ 270 | 108,385 | 95,820 | $ (107,339) | (17,062) |
Balance, shares at Apr. 02, 2021 | 27,018,000 | 11,636,000 | ||||
Balance at Dec. 31, 2021 | $ 94,437 | $ 270 | 110,330 | 108,042 | $ (107,265) | (16,940) |
Balance, shares at Dec. 31, 2021 | 27,017,824 | 27,018,000 | 11,668,000 | |||
Employee Stock Purchase Plan share issuance | $ 37 | (2) | $ 39 | |||
Employee Stock Purchase Plan share issuance, shares | 4,000 | |||||
Stock Option Plan share issuance, net | 90 | (94) | $ 184 | |||
Stock Option Plan share issuance, net, shares | 20,000 | |||||
Restricted stock plan share issuance/forfeiture | (971) | (1,385) | $ 414 | |||
Restricted stock plan share issuance/forfeiture, shares | (45,000) | |||||
Equity-based compensation | 573 | 573 | ||||
Net income | 2,240 | 2,240 | ||||
Foreign currency adjustment | (1,329) | (1,329) | ||||
Pension loss adjustment, net of tax | 331 | 331 | ||||
Balance at Apr. 01, 2022 | $ 95,408 | $ 270 | $ 109,422 | $ 110,282 | $ (106,628) | $ (17,938) |
Balance, shares at Apr. 01, 2022 | 27,017,824 | 27,018,000 | 11,599,000 |
Financial Statements
Financial Statements | 3 Months Ended |
Apr. 01, 2022 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | |
Financial Statements | 1. The condensed consolidated financial statements included herein reflect, in the opinion of the management of Computer Task Group, Incorporated (“CTG” or “the Company”), all normal recurring adjustments necessary to present fairly the condensed consolidated financial position, results of operations, comprehensive income, cash flows, and shareholders’ equity for the periods presented. Certain prior period amounts were reclassified to conform to the current year’s presentation. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in the Company's latest Annual Report on Form 10 ‑ The Company's fiscal year-end is December 31. During the year, the quarters generally consist of a 13-week fiscal period where the last day of each of the first three quarters is a Friday. The 2022 first quarter began on January 1, 2022 and ended on April 1, 2022. The 2021 first quarter began on January 1, 2021 and ended on April 2, 2021. There were 65 billable days in both the 2022 and 2021 first quarters. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Apr. 01, 2022 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 2. Basis of Presentation and Consolidation These condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to the SEC rules and regulations. There are no unconsolidated entities, or off-balance sheet arrangements other than certain guarantees supporting office leases and the performance under government contracts in the Company's European operations. All inter-company accounts have been eliminated. The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles requires the Company's management to make estimates, judgments and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes, which could be impacted by existing market conditions and factors, including the COVID-19 pandemic and the unpredictability and severity of a civil unrest or outbreak of war or hostilities. Such estimates primarily relate to the recognition of revenue, leased assets and liabilities, the purchase accounting for acquisitions and the valuation of goodwill, the valuation allowance for deferred tax assets, actuarial assumptions including discount rates and expected return on assets, as applicable, for the Company’s defined benefit plans, the valuation of stock options and restricted stock for recording equity-based compensation expense, the allowance for doubtful accounts receivable, investment valuation, legal matters, other contingencies, and estimates of progress toward completion and direct profit or loss on contracts, as applicable. Management believes that the information and disclosures provided herein are adequate to present fairly the condensed consolidated financial position, results of operations, comprehensive income, cash flows, and shareholders’ equity of the Company. There were no subsequent events as of the date of this filing from the end of the fiscal first quarter on April 1, 2022 that require recognition or disclosure in these unaudited interim condensed consolidated financial statements. The Company operates in three segments within its business, North America IT Solutions and Services, Europe IT Solutions and Services, and Non-Strategic Technology Services. The Company provides information and technology-related services to its clients. CTG provides these services to all of the markets that it serves. The services provided typically encompass the IT business solution life cycle, including phases for planning, developing, implementing, managing, and ultimately maintaining the IT solution. These services ensure that our clients utilize the right information technology to meet their business needs, maximize their IT systems’ value, and operate efficiently and effectively. A typical client is an organization with large, complex technology, information, and data processing requirements . The segment revenue for the quarters ended April 1, 2022 and April 2, 2021 was as follows: For the Quarter Ended Year-over-Year (amounts in thousands) April 1, 2022 April 2, 2021 Change North America IT Solutions and Services 22.9 % $ 20,435 19.0 % $ 18,454 10.7 % Europe IT Solutions and Services 47.5 % 42,478 47.4 % 46,007 (7.7 )% Non-Strategic Technology Services 29.6 % 26,504 33.6 % 32,668 (18.9 )% Total 100.0 % $ 89,417 100.0 % $ 97,129 (7.9 )% The Company focuses a significant portion of its services through five vertical market focus areas: technology service providers, healthcare (which includes services provided to healthcare providers, health insurers (payers), and life sciences companies), financial services, manufacturing, and energy. The Company focuses on these five vertical areas as it believes that these areas are either higher growth markets than the general IT services market and the general economy, or are areas that provide greater potential for the Company’s growth due to the size of the vertical market. The remainder of CTG’s revenue is derived from general markets. The Company’s revenue by vertical market as a percentage of total revenue for the quarters ended April 1, 2022 and April 2, 2021 was as follows: For the Quarter Ended April 1, 2022 April 2, 2021 Technology service providers 23.8 % 30.8 % Healthcare 17.4 % 15.5 % Financial services 16.5 % 17.0 % Manufacturing 13.9 % 12.4 % Energy 5.3 % 5.5 % General markets 23.1 % 18.8 % Total 100.0 % 100.0 % Revenue Recognition The Company recognizes revenue when control of the promised good or service is transferred to clients, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. For time-and-material contracts, revenue is recognized as hours are incurred and costs are expended. For contracts with progress billing schedules (i.e. progress billing), primarily monthly, revenue is recognized as services are rendered to the client. Revenue for fixed-price contracts is recognized over time using an input-based approach. Revenue recognition over time best portrays the Company’s performance in transferring control of the goods or services to the client. On most fixed price contracts, revenue recognition is supported through contractual clauses that require the client to pay for work performed to date, including cost plus a reasonable profit margin, for goods or services that have no alternative use to the Company. On certain contracts, revenue recognition is supported through contractual clauses that indicate the client controls the asset, or work in process, as the Company creates or enhances the asset. On a given project, actual salary and indirect labor costs incurred are measured and compared with the total estimate of costs of such items at the completion of the project. Revenue is recognized based upon the percentage-of-completion calculation of total incurred costs to total estimated costs. The Company infrequently works on fixed-price projects that include significant amounts of material or other non-labor related costs that could distort the percent complete within a percentage-of-completion calculation. The Company’s estimate of the total labor costs it expects to incur over the term of the contract is based on the nature of the project and our experience on similar projects, and includes management judgments and estimates that affect the amount of revenue recognized on fixed-price contracts in any accounting period. Losses on fixed-price projects are recorded when identified. The Company’s revenue from contracts accounted for under time-and-material, progress billing and percentage-of-completion methods as a percentage of conso lidate d r evenue for the quarter s ended April 1, 2022 and April 2, 2021 was as follows: For the Quarter Ended April 1, 2022 April 2, 2021 Time-and-material 77.2 % 79.1 % Progress billing 18.9 % 18.4 % Percentage-of-completion 3.9 % 2.5 % Total 100.0 % 100.0 % The Company recorded revenue in the quarters ended April 1, 2022 and April 2, 2021 as follows: For the Quarter Ended: April 1, 2022 April 2, 2021 Year-over-Year Change (amounts in thousands) North America 51.7 % $ 46,262 51.0 % $ 49,504 (6.5 )% Europe 48.3 % 43,155 49.0 % 47,625 (9.4 )% Total 100.0 % $ 89,417 100.0 % $ 97,129 (7.9 )% Significant Judgments With the exception of cost estimates on certain fixed-price projects, there are no other significant judgments used to determine the timing of the satisfaction of performance obligations or determining the transaction price and amounts allocated to performance obligations. The Company allocates the transaction price based on standalone selling prices for contracts with clients that include more than one performance obligation. We determine standalone selling price based on the expected cost of the good or service plus margin approach. Certain clients may qualify for discounts and rebates, which we account for as variable consideration. We estimate variable consideration and reduce revenue recognized based on the amount we expect to provide to clients. Contract Balances For time-and-material and progress billing contracts, the timing of the Company’s satisfaction of its performance obligations is consistent with the timing of payment. For these contracts, the Company has the right to payment in the amount that corresponds directly with the value of the Company’s performance to date. The Company uses the right to invoice practical expedient that allows the Company to recognize revenue in the amount for which it has the right to invoice for time-and-material and progress billing contracts. Bill schedules for fixed-price contracts are generally consistent with the Company’s performance in transferring control of the goods or services to the client. There are no significant financing components in our contracts with clients. Advance billings represent contract liabilities for cash payments received in advance of our performance. Unbilled receivables are reported within “accounts receivable” on the consolidated balance sheets. Accounts receivable and contract liability balances fluctuate based on the timing of the client’s billing schedule and the Company’s period-end date. There are no significant costs to obtain or fulfill contracts clients. Transaction Price Allocated to Remaining Performance Obligations As of April 1, 2022, the aggregate transaction price allocated to unsatisfied or partially unsatisfied performance obligations for fixed-price and all managed-support contracts was approximately $14.3 million and $55.2 million, respectively. Approximately $48.0 million of the transaction price allocated to unsatisfied or partially unsatisfied performance obligations is expected to be earned in 2022, and approximately $21.5 million of the transaction price allocated to unsatisfied or partially unsatisfied performance obligations is expected to be earned in 2023 and beyond Taxes Collected from Clients The Company records taxes collected from its clients for remittance to governmental authorities, primarily in its international locations, on a net basis in the condensed consolidated financial statements. Fair Value Fair value is defined as the exchange price that would be received for an asset or paid for a liability in the principal or most advantageous market for the asset or liability, in an orderly transaction between market participants. The Company utilizes a fair value hierarchy for its assets and liabilities, as applicable, based upon three levels of input, which are: Level 1—quoted prices in active markets for identical assets or liabilities (observable) Level 2—inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in inactive markets, or other inputs that are observable or can be supported by observable market data for essentially the full term of the asset or liability (observable) Level 3—unobservable inputs that are supported by little or no market activity, but are significant to determining the fair value of the asset or liability (unobservable) At April 1, 2022 and December 31, 2021, the carrying amounts of the Company’s cash of $38.7 million and $35.6 million, respectively, approximated fair value. As described in Note 3 of the condensed consolidated financial statements, the Company acquired 100% of the equity of StarDust in the 2020 first quarter. Level 3 inputs were used to estimate the fair values of the assets acquired and liabilities assumed. The valuation techniques used to assign fair values to intangible assets included the relief-from-royalty and excess earnings methods. The Company has recorded a contingent consideration liability related to the earn-out provision of which a portion will be payable in each period subject to the achievement by StarDust of consolidated direct profit targets for fiscal 2020 and 2021. There is no payout if the achievements are below the target threshold. The fair value of this contingent consideration liability is determined using level 3 inputs. The fair value assigned to the contingent consideration liability is determined using the real options method, which requires inputs such as consolidated direct profit forecasts, discount rate, and other market variables to assess the probability of StarDust achieving their revenue and EBIT targets. As of April 1, 2022, the fair value of the contingent consideration liability was determined to be zero as the consolidated direct profit targets were not met by StarDust for the fiscal year 2021. Life Insurance Policies The Company has purchased life insurance on the lives of a number of former employees who are plan participants in the non-qualified defined benefit Executive Supplemental Benefit Plan. In total, there are policies currently on 16 individuals, whose average age is 78 years old. Those policies have generated cash surrender value and the Company has taken loans against the policies. At April 1, 2022, the insurance policies that have been borrowed against have a gross cash surrender value of $28.5 million, outstanding loans and interest totaling $25.6 million, and a net cash surrender value of $2.9 million. At December 31, 2021, these insurance policies had a gross cash surrender value of $28.3 million, outstanding loans and interest totaling $25.2 million, and a net cash surrender value of $3.1 million. The net cash surrender values are included on the condensed consolidated balance sheets in “Cash surrender value of life insurance, net” under non-current assets. At both April 1, 2022 and December 31, 2021, the total death benefit for the remaining policies was approximately $36.0 million. Currently, upon the death of all of the remaining plan participants, the Company would expect to receive approximately $10.1 million after the payment of obligations, and, under current tax regulations, record a non-taxable gain of approximately $7.1 million. Cash and Cash Equivalents, and Cash Overdrafts For purposes of the statement of cash flows, cash and cash equivalents are defined as cash on hand, demand deposits, and short-term, highly liquid investments with a maturity of three months or less. The Company does not fund its bank accounts for the checks it has written until the checks are presented to the bank for payment. In the event the Company has no available cash at the bank for which it writes its checks, the "change in cash overdraft, net" line item as presented on the condensed consolidated statement of cash flows, represents the increase or decrease in outstanding checks for a given period. The cash in the Company’s U.S. banks is insured by the Federal Deposit Insurance Corporation up to the insurable limit of $250,000. As of April 1, 2022 and December 31, 2021, the Company has multiple accounts that carry balances in excess of this insurable limit. The Company’s cash in its foreign bank accounts is not insured. Accounts Receivable Factoring As part of our working capital management, the Company entered into a factoring agreement during the 2020 first quarter to sell certain trade accounts receivables associated with its largest client on a non-recourse basis to a third-party financial institution. The Company accounts for these transactions as sales of receivables and presents cash proceeds as cash provided by operating activities in the condensed consolidated statements of cash flows. Total trade accounts receivable sold under the factoring agreement was approximately $4.5 million and $15.5 million in the quarters ended April 1, 2022 and April 2, 2021, respectively. Fees for the factoring arrangement were recorded in cost of services and were less than $0.1 million in each of the quarters ended April 1, 2022 and April 2, 2021, respectively. Property, Equipment and Capitalized Software Costs Property, equipment and capitalized software at April 1, 2022 and December 31, 2021 were recorded as follows: (amounts in thousands) April 1, 2022 December 31, 2021 Property, equipment and capitalized software $ 14,431 $ 15,628 Accumulated depreciation and amortization (9,654 ) (10,386 ) Property, equipment and capitalized software, net $ 4,777 $ 5,242 The Company capitalizes software projects developed for commercial use. The change in the Company’s capitalized software cost balance during the quarters ended April 1, 2022 and April 2, 2021 was as follows: For the Quarter Ended (amounts in thousands) April 1, 2022 April 2, 2021 Capitalized software, beginning balance $ 1,607 $ 2,397 Foreign currency translation (34 ) 26 Capitalized software $ 1,573 $ 2,423 Capitalized software amortization periods range from three to five years, and are evaluated periodically for propriety. Amortization expense and accumulated amortization for these projects for the quarters ended April 1, 2022 and April 2, 2021 are as follows: For the Quarter Ended (amounts in thousands) April 1, 2022 April 2, 2021 Accumulated amortization, beginning balance $ 978 $ 1,280 Amortization expense 72 135 Accumulated amortization $ 1,050 $ 1,415 Guarantees The Company has a number of guarantees in place in its European operations that support office leases and performance under government contracts. These guarantees totaled approximately $3.1 million at both April 1, 2022 and December 31, 2021, and have expiration dates ranging from April 2022 through October 2034. Goodwill The goodwill recorded on the Company's condensed consolidated balance sheet at April 1, 2022 relates to the acquisitions of Soft Company in 2018, Tech-IT in 2019, and StarDust in 2020. In accordance with current accounting guidance for “Intangibles - Goodwill and Other,” the Company performs goodwill impairment testing at least annually (in the Company’s fourth quarter), unless indicators of impairment exist in interim periods. T here were no impairment indicators noted in the quarters ended and . The changes in the carrying amount of goodwill for the quarter ended April 1, 2022 was as follows: (amounts in thousands) Balance at December 31, 2021 $ 19,676 Foreign currency translation (502 ) Balance at April 1, 2022 $ 19,174 The Company’s goodwill at April 1, 2022 totaled $19.2 million, including $17.8 million in the Europe IT Solutions and Services segment and $1.4 million in the North America IT Solutions and Services segment. At December 31, 2021, the Company’s goodwill balance totaled $19.7 million, which included $18.3 million in the Company’s Europe IT Solutions and Services segment and $1.4 million in the North America IT Solutions and Services segment. Acquired Intangible Assets Acquired intangible assets at April 1, 2022 consist of the following: (amounts in thousands) Estimated Economic Life Gross Carrying Amount Accumulated Amortization Foreign Currency Translation Net Carrying Amount Trademarks 2 years $ 1,532 $ (1,426 ) $ (106 ) $ — Technology 10 years 591 (122 ) (5 ) 464 Customer relationships 7-13 years 10,496 (3,276 ) (847 ) 6,373 Total $ 12,619 $ (4,824 ) $ (958 ) $ 6,837 Acquired intangible assets at December 31, 2021 consist of the following: (amounts in thousands) Estimated Economic Life Gross Carrying Amount Accumulated Amortization Foreign Currency Translation Net Carrying Amount Trademarks 2 years $ 1,532 $ (1,454 ) $ (70 ) $ 8 Technology 10 years 591 (110 ) 10 491 Customer relationships 7-13 years 10,496 (3,121 ) (594 ) 6,781 Total $ 12,619 $ (4,685 ) $ (654 ) $ 7,280 Estimated amortization expense for the remainder of 2022, the five succeeding years, and thereafter is as follows: Year Annual Amortization (amounts in thousands) 2022 (remaining) $ 749 2023 999 2024 999 2025 999 2026 999 2027 584 Thereafter 1,508 Total $ 6,837 Recently Issued Accounting Standards In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform - Facilitation of the Effects of Reference Rate Reform on Financial Reporting,” which provides optional expedients and exceptions for accounting contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships and other transactions that reference the London Interbank Offering Rate (“LIBOR”) or another reference rate expected to be discontinued due to the reference rate reform. It is effective for all entities between March 12, 2020 and December 31, 2022. The Company does not expect a significant impact from the adoption of this standard as provisions have been made in our Credit and Security Agreement to use an alternate benchmark interest rate when the use of LIBOR is discontinued. In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” Among other clarifications and simplifications related to income tax accounting, the new standard simplifies the accounting for income taxes by eliminating certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, hybrid taxes and the recognition of deferred tax liabilities for outside basis differences. ASU 2019-12 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted. The Company adopted this new standard on January 1, 2021 on a prospective basis and the adoption did not have a material impact on the Company’s consolidated financial statements. |
Acquisitions
Acquisitions | 3 Months Ended |
Apr. 01, 2022 | |
Business Combinations [Abstract] | |
Acquisitions | 3. StarDust SAS (“StarDust”) On March 3, 2020, the Company acquired 100% of the equity of StarDust, for approximately $6.1 million (€5.5 million based on a EUR into USD exchange rate of 1.1145). The acquisition was funded using cash on hand and borrowings under the Credit and Security Agreement. The France-based StarDust, is a leading provider of testing and quality assurance for digital services with offices in Marseille, France, and Montreal, Canada. StarDust offers a complete range of testing services, including functional, multilingual, operational, environmental, regression, and application benchmarking, covering digital services and website, software, mobile applications, and Internet of Things connected objects. The acquisition expanded the Company’s global testing capabilities. The results of operations of StarDust have been included in the Company’s consolidated financial results since the date of acquisition. As the Company has determined that the acquisition is not material to its existing operations, certain disclosures, including pro forma financial information, have not been included in this quarterly report on Form 10-Q. An earn-out of up to $1.1 million (€1.0 million based on a EUR into USD exchange rate of 1.1145) can be earned, a portion of which will be payable in each period subject to the achievement of consolidated direct profit targets for fiscal 2020 and 2021. Additionally, for each €10,000 of consolidated direct profit achieved above the target, an additional €1,000 can be earned, with no maximum limit. There is no payout if the achievement is below the target threshold. The fair value as of the March 3, 2020 acquisition date was determined to be $0.1 million. The fair value as of April 1, 2022 was determined to be zero as the consolidated direct profit targets were not met by StarDust for the fiscal year 2021. The Company incurred amortization of intangible assets related to this acquisition of less than $0.1 million and $0.1 million in the 2022 and 2021 first quarters, respectively, |
Net Income Per Share
Net Income Per Share | 3 Months Ended |
Apr. 01, 2022 | |
Earnings Per Share [Abstract] | |
Net Income Per Share | 4. Basic and diluted earnings per share (EPS) for the quarters ended April 1, 2022 and April 2, 2021 were as follows: For the Quarter Ended (amounts in thousands, except per-share data) April 1, 2022 April 2, 2021 Weighted-average number of shares outstanding during period 14,199 13,696 Common stock equivalents from incremental shares under equity-based compensation plans 778 1,248 Number of shares on which diluted earnings per share is based 14,977 14,944 Net income $ 2,240 $ 1,508 Net income per share Basic $ 0.16 $ 0.11 Diluted $ 0.15 $ 0.10 Weighted-average shares represent the average number of issued shares less treasury shares, and for the basic EPS calculations, unvested restricted stock. Certain options representing 0.5 million and 0.6 million shares of common stock were outstanding at April 1, 2022 and April 2, 2021, respectively, but were not included in the computation of diluted earnings per share as their effect on the computation would have been anti-dilutive. |
Lease Commitments
Lease Commitments | 3 Months Ended |
Apr. 01, 2022 | |
Leases [Abstract] | |
Lease Commitments | 5. The Company records a right-of-use asset and liability for substantially all leases for which it is a lessee, in accordance with Topic 842 “Leases”. The Company is obligated under a number of long-term operating leases for office space and office equipment, and for automobiles leased in Europe. Most leases contain both lease components (fixed payments for rent) and non-lease components (common-area maintenance and other services). The Company has elected the practical expedient to separate lease and non-lease components for its office leases and has elected to group lease and non-lease components for its vehicle leases. Some leases contain renewal options with escalation clauses commensurate with local market fluctuations, however, generally limiting an annual increase to no more than 5.0% of the existing lease payment. The exercise of lease renewal options is at the Company’s sole discretion. The Company has excluded renewal options in the measurement of right-of-use assets and lease liabilities if they are not reasonably certain of exercise. Operating leases are included in the right-of-use lease assets, short-term lease liabilities, and long-term lease liabilities on the condensed consolidated balance sheets. The Company measures the operating lease liabilities at lease commencement date based on the present value of remaining lease payments using the rate implicit in the lease when readily determinable, or the Company’s secured incremental borrowing rate. The Company has made an accounting policy election not to recognize a lease liability or right-of-use asset for leases with a lease term of twelve months or less and do not include an option to purchase the underlying asset. The Company recognizes lease expense on a straight-line basis over the lease term and variable lease expense in the period incurred. Variable lease cost consists primarily of common-area maintenance, insurance, and taxes, which are paid based on actual costs incurred by the lessor. Operating lease cost for both the 2022 and 2021 first quarters was $1.8 million. In both the 2022 and 2021 first quarters, the Company incurred variable lease cost of $0.1 million, and also incurred short-term lease costs of $0.1 million. Maturities for the Company’s lease liabilities for all operating leases as of April 1, 2022 are as follows: Total Year Operating Leases (amounts in thousands) 2022 (remaining) $ 4,838 2023 5,001 2024 3,442 2025 2,312 2026 1,711 2027 & thereafter 4,493 Total undiscounted operating lease payments 21,797 Less: Interest (1,219 ) Total present value of operating lease liabilities $ 20,578 The weighted average remaining lease terms and discount rates for all operating leases as of April 1, 2022 and April 2, 2021 were as follows: April 1, 2022 April 2, 2021 Weighted average remaining lease term (years) 5.89 6.40 Weighted average remaining discount rate 2.12 % 2.00 % Supplemental cash flow information related to the Company’s operating leases for the first quarter of 2022 is as follows: (amounts in thousands) April 1, 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflow from operating leases $ 1,821 Right-of-use assets obtained in exchange for new operating lease liabilities 513 |
Debt
Debt | 3 Months Ended |
Apr. 01, 2022 | |
Debt Disclosure [Abstract] | |
Debt | 6. The Company entered into a new asset-based lending revolving credit agreement (Credit Agreement) during the 2021 second quarter, which has a five-year At both April 1, 2022 and December 31, 2021, there were no amounts outstanding under the Credit Agreement. The Company borrows or repays its debts as needed based upon its working capital obligations, including the timing of the U.S. bi-weekly payroll. There were no borrowings during the 2022 and 2021 first quarters. Under the Credit Agreement, the Company is required to meet one financial covenant in order to maintain borrowings under its revolving credit line, pay dividends, and make acquisitions. The covenant is measured quarterly, and at April 1, 2022 represented a fixed charge coverage ratio, where for the trailing twelve months the consolidated earnings before interest, taxes, depreciation, and amortization (EBITDA) adjusted for, amongst other items, equity-based compensation and severance expenses, must be greater than 1.0 times the consolidated interest expense paid in cash and any scheduled principal payments. The fixed charge coverage ratio is only tested if availability, subject to a maximum of the commitment of $50.0 million, on the measurement date is less than the greater of 12.5% of the total loan availability or $5.0 million. Actual borrowings by CTG under the Credit Agreement are subject to a borrowing base, which is a formula based on certain eligible receivables and reserves for each country included in the Credit Agreement (the United States, Belgium, and Luxembourg). Receivable balances from our largest client, IBM, have been removed from the Credit Agreement as collateral , as the Company had entered into a factoring arrangement for those receivables. Total availability as of April 1, 2022 was approximately $ 36.2 million. The Comp any’s compliance with its financial covenant was not required to be tested at April 1, 2022 as the availability under the Credit A greement was in excess of 12.5 % of the total loan availability . The Company wa s in compliance with its applicable covenants under the previous Credit and Security A greement at April 2, 2021 . |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 3 Months Ended |
Apr. 01, 2022 | |
Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract] | |
Accumulated Other Comprehensive Loss | 7. The components that make up accumulated other comprehensive loss on the condensed consolidated balance sheets at April 1, 2022 and December 31, 2021 are as follows: (amounts in thousands) April 1, 2022 December 31, 2021 Foreign currency translation adjustment $ (9,026 ) $ (7,697 ) Pension loss, net of tax of $786 in 2022 and $819 in 2021 (8,912 ) (9,243 ) Accumulated other comprehensive loss $ (17,938 ) $ (16,940 ) During the 2022 and 2021 first quarters, actuarial losses were amortized to expense as follows: For the Quarter Ended (amounts in thousands) April 1, 2022 April 2, 2021 Amortization of actuarial losses $ 130 $ 124 Income tax (21 ) (10 ) Net of tax $ 109 $ 114 The amortization of both prior service cost and actuarial losses, with the exception of the actuarial gains related to the post retirement benefit plan, are included in determining net periodic pension cost. See note 9, "Deferred Compensation and Other Benefits" for additional information. |
Income Taxes
Income Taxes | 3 Months Ended |
Apr. 01, 2022 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 8. The Company’s effective tax rate (“ETR”) is calculated quarterly based upon current assumptions relating to the full year’s estimated operating results and various tax-related items. The 2022 and 2021 first quarter ETR was 23.9% and 22.6%, respectively. The Company has not recorded a U.S. deferred tax liability for the excess book basis over the tax basis of its investments in foreign subsidiaries as these amounts continue to be indefinitely reinvested in foreign operations. |
Deferred Compensation and Other
Deferred Compensation and Other Benefits | 3 Months Ended |
Apr. 01, 2022 | |
Compensation And Retirement Disclosure [Abstract] | |
Deferred Compensation and Other Benefits | 9. The Company maintains a non-qualified defined benefit Executive Supplemental Benefit Plan (ESBP) that provides certain former key executives with deferred compensation benefits, based on years of service and base compensation, payable during retirement. The plan was amended as of November 30, 1994, to freeze benefits for the participants in the plan at that time. The Company also retained certain potential obligations related to a contributory defined-benefit plan for its previous employees located in the Netherlands (NDBP) when the Company disposed of its subsidiary, CTG Nederland, B.V. Benefits paid are a function of a percentage of career average pay. This plan was curtailed for additional contributions in January 2003. The Company also maintains a fully funded pension plan related to CTG Belgium and CTG Health Solutions (Belgium) employees (BDBP). This is a plan with active employees and the Company expects to make future contributions. The Company maintains an unfunded pension plan related to the current Soft Company employees (FDBP). The Company does not anticipate making contributions to the plan. No benefit payments were made in 2021 and less than $0.1 million are expected to be paid in 2022. The Company also maintains an unfunded pension plan related to the current StarDust employees (SDBP). The Company does not anticipate making contributions to this plan. No benefit payments were made in 2021 and none are expected to be paid in 2022. Net periodic pension cost for the quarters ended April 1, 2022 and April 2, 2021 for the plans is as follows: For the Quarter Ended (amounts in thousands) April 1, 2022 April 2, 2021 Service cost $ 109 $ 127 Interest cost 89 51 Expected return on assets (170 ) (179 ) Amortization of actuarial loss 131 125 Net periodic pension cost $ 159 $ 124 The ESBP is deemed to be unfunded as the Company has not specifically identified assets to be used to discharge the deferred compensation benefit liabilities. The Company has purchased insurance on the lives of certain plan participants in amounts deemed to be sufficient to reimburse the Company for the costs associated with the plan for those participants (see Note 2 for “Life Insurance Policies”). The Company does not anticipate contributing to the plan other than for benefit payments as required in 2022 and future years. In both the 2022 and 2021 first quarters, the Company made benefit payments totaling approximately $0.1 million, and expects to make payments in 2022 totaling approximately $0.5 million. As the NDBP was curtailed for additional contributions in January 2003, no contributions were made in 2021 and none are expected to be made in 2022. The assets for the NDBP are held by Aegon, a financial services firm located in the Netherlands. The Company maintains a contract with Aegon to insure future benefit payments of the NDBP; however, due to certain terms of the agreement and potential obligations to the Company, the NDBP has not been settled. The benefit payments to be made in 2022 are expected to be paid by Aegon from plan assets. The assets for the plan are included in a general portfolio of government bonds, a portion of which is allocated to the NDBP based upon the estimated pension liability associated with the plan. The fair market value of the plan’s assets equals the contractual value of the NDBP at any point in time. The fair value of the assets is determined using a Level 3 methodology (see Note 2 for “Fair Value”). In 2022, the plan investments have a targeted minimum return to the Company of 4.0%, which is consistent with historical returns and the 4.0% return guaranteed to the participants of the plan. The Company, in conjunction with Aegon, intends to maintain the current investment strategy of investing plan assets solely in government bonds throughout 2022. The BDBP is considered fully funded. The Company made contributions of $0.2 million in both the 2022 and 2021 first quarters. The Company made benefit payments totaling less than $0.1 million in both the 2022 and 2021 first quarters, and expects to make payments in 2022 totaling $0.1 million. The assets for the BDBP are held by Allianz, a financial services firm located in Belgium. The Company maintains a contract with Allianz to insure future benefit payments of the BDBP. Contributions made by the Company to Allianz are based on employees’ current salaries. The benefit payments to be made in 2022 are expected to be paid by Allianz from plan assets. The assets for the plan are included in the overall portfolio of assets held by Allianz. The fair market value of the plan’s assets equals the contractual value of the BDBP in any given year (which is the mathematical reserve held by Allianz). The fair value of the assets is determined using a Level 3 methodology (see Note 2 “Fair Value”). Allianz does not guarantee a minimum return on the plan investments, whereas Belgian law sets a minimum return to be guaranteed to the participants of the plan. The Company maintains various other defined contribution retirement plans covering European employees. Company contributions charged to operations were $0.1 million in both the 2022 and 2021 first quarters. The change in the fair value of plan assets for the plans for the quarters ended April 1, 2022 and April 2, 2021 was as follows: For the Quarter Ended (amounts in thousands) April 1, 2022 April 2, 2021 Fair value of plan assets at beginning of period $ 19,956 $ 20,654 Return on plan assets 170 179 Contributions 295 298 Benefits paid (258 ) (225 ) Effect of exchange rate changes (486 ) (840 ) Fair value of plan assets at end of quarter $ 19,677 $ 20,066 The Company maintains the Key Employee Non-Qualified Deferred Compensation Plan for certain key executives. Company contributions to this plan, if any, are based on annually defined financial performance objectives. The Company made no cash contributions in either the 2022 or 2021 first quarters for amounts earned in the previous year. Participants in the plan have the ability to purchase stock units from the Company at current market prices using their available investment balances within the plan. In exchange for the cash received, the Company releases shares out of treasury stock equivalent to the number of share units purchased by the participants. These shares of common stock are not entitled to any voting rights, but will receive dividends in the event any are paid. The shares are being held by the Company, and will be released to the participants as prescribed by their payment elections under the plan. There were no stock units purchased during the 2022 or 2021 first quarters. The Company maintains the Non-Employee Director Deferred Compensation Plan for its non-employee directors. The Company made cash contributions of less than $0.1 million during the 2022 first quarter and made no cash contributions in the 2021 first quarter. The remaining contributions deposited in the director’s accounts in the 2022 and 2021 first quarters consisted of equity grants from the 2020 Equity Award Plan. These shares of common stock are not entitled to any voting rights, but will receive dividends in the event any are paid. The shares are being held by the Company, and will be released to the participants as prescribed by their payment elections under the plan. |
Equity-based Compensation
Equity-based Compensation | 3 Months Ended |
Apr. 01, 2022 | |
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |
Equity-based Compensation | 10. Equity-based Compensation During the 2022 and 2021 first quarters, the Company granted restricted stock totaling 151,556 and 134,592 shares. All grants in 2022 and 2021 were funded out of treasury stock. Director Board fees are paid in part with quarterly grants of stock units. Of the total shares granted during the 2022 first quarter, 12,335 shares represented restricted stock units that were granted to Board members. The shares vest over the quarter in which they were granted and the Company is expensing these grants as such. Grants of similar units to the Board members totaled 14,718 restricted stock units in the 2021 first quarter. Of the shares granted in the 2022 first quarter, 139,221 shares were granted to senior management, of which 92,815 shares included a performance condition. The shares will only vest, in part, to senior management if at least 80% of a three-year three-year There were no other shares granted during the 2022 and 2021 first quarters. The restricted shares granted are considered outstanding, can be voted, and are eligible to receive dividends in the event any are paid. However, these shares do not include a non-forfeitable right for the holder to receive dividends and none will be paid in the event the awards do not vest. Accordingly, only vested shares of outstanding restricted stock are included in the basic earnings per share calculation. The shares and share units granted in 2022 and 2021 were from the 2020 Equity Award Plan. A total of 134,790 stock options were granted during the 2022 first quarter on March 18, 2022 from the 2020 Equity Award Plan. The options have a fair value of $3.14 per share using the Black-Scholes valuation model. The assumptions used to calculate the fair value include the price on the date of grant of $9.12 per option, an expected life of 3.4 years, expected volatility of 44.6%, an expected dividend yield of zero, and a risk free rate of 2.1%. The options vest ratably over three years, and are being expensed over that period. A total of 105,906 options were granted during the 2021 first quarter on March 24, 2021 from the 2020 Equity Award Plan. The options have a fair value of $3.46 per share using the Black-Scholes valuation model. The assumptions used to calculate the fair value include the price on the date of grant of $9.17 per option, an expected life of 5.1 years, expected volatility of 41.9%, an expected dividend yield of zero, and a risk free rate of 0.8%. |
Treasury Stock
Treasury Stock | 3 Months Ended |
Apr. 01, 2022 | |
Class Of Stock Disclosures [Abstract] | |
Treasury Stock | 11. The Company’s Board of Directors has previously authorized the repurchase of up to $30.0 million of the Company’s stock. The Company did not purchase shares for treasury during the 2022 or 2021 first quarters. As of April 1, 2022 and April 2, 2021, the Company had approximately $7.7 million left in its current stock repurchase authorization. The Company issued 171,556 shares during the 2022 first quarter to fulfill the requirements from the grant of restricted shares or units and the exercise of stock options. The Company issued 244,988 shares during the 2021 first quarter to fulfill the share requirements from purchases of stock in the Non-Employee Director Deferred Compensation Plan, the grant of restricted shares or units, or the exercise of stock options. |
Significant Clients
Significant Clients | 3 Months Ended |
Apr. 01, 2022 | |
Risks And Uncertainties [Abstract] | |
Significant Clients | 12. In the 2022 first quarter, International Business Machines Corporation (IBM) was the Company’s largest client and accounted for $16.5 million or 18.5% of consolidated revenue compared with $19.6 million or 20.2% of consolidated revenue in the comparable 2021 period. The National Technical Services Agreement with IBM expires on October 27, 2023. The Company’s accounts receivable from IBM at April 1, 2022 and December 31, 2021 totaled $18.6 million and $8.9 million, respectively. No other client accounted for 10% or more of the Company's revenue during the 2022 or 2021 first quarters. |
Segment Information
Segment Information | 3 Months Ended |
Apr. 01, 2022 | |
Segment Reporting [Abstract] | |
Segment Information | 13. Segment Information Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated on a regular basis by the chief operating decision maker, or decision making group, in deciding how to allocate resources to an individual segment and in assessing performance. The Company provides information technology and related services to its clients. These services include digital IT solutions and services, and staffing services. With digital IT solutions and services, the Company generally takes responsibility for the deliverables and some level of project and staff management, and these services may include high-end advisory or business-related consulting. When providing staffing services, including managed staffing, staff augmentation, and volume staffing, personnel are provided to clients based upon their requirements for specific skills, who then, in turn, take their direction from clients’ managers. The Company’s strategy throughout its operations is to expand the amount of IT solutions and services it provides to its clients as compared with staffing services, and to focus on delivering digital solutions. IT solutions and services provide significant value to our clients, and drive higher bill rates and margins for the Company. Our existing solutions include business, technology, and operations solutions that aid our clients in digitally transforming their company, and ultimately meet the needs of their clients. The digital services the Company delivers includes the Internet of Things, Intelligent Automation, Data and Analytics, Cloud and Automated Testing. In prior years, and in 2021 prior to the fourth quarter, the Company reported its results in one segment. This included operating segments for each of North America and Europe. The services the Company provided, regardless of geography or industry, were similar in nature and produced similar results. Additionally, the CEO, who is the Company’s chief operating decision maker, made decisions on investments and allocated resources at the North America or Europe level. Accordingly, given the consistency in the services provided and the results, the Company aggregated those results into one reporting segment. During the 2021 fourth quarter, the Company further refined its strategy to focus on providing digital services within its IT Solutions business in both North America and in Europe. As part of this process, the Company also determined that there are certain lower margin staffing accounts within its business that are no longer part of the Company’s long-term business plan. The focus includes investing in business development, solutions, delivery, and marketing for IT Solutions, and critically evaluating each significant staffing engagement as it comes up for renewal to determine if the Company would continue to provide those services to its client. These decisions are based on, among other factors, critically evaluating the work performed, the availability of the resources, the client, the long-term opportunities for the services provided at the client, and the revenue and profit associated with the engagement. Accordingly, the Company now reports its operations in three segments within its business: North America IT Solutions and Services, Europe IT Solutions and Services, and Non-Strategic Technology Services. The segments are composed of the following: IT Solutions and Services in North America and Europe IT Solutions and Services include business, technology, and operations solutions that aid our clients in digitally transforming their company, and ultimately meet the needs of their clients. The digital services the Company delivers includes the Internet of Things, Intelligent Automation, Data and Analytics, Cloud and Automated Testing. Non-Strategic Technology Services The Company’s Non-Strategic Technology Services address a range of information and technology resource needs, from filling specific talent gaps to managing high-volume staffing programs. The Company recruits, retains, and manages IT talent for its clients, which are primarily large technology service providers and other companies with multiple locations and a significant need for high-volume professional IT resources. This segment consists of the lowest margin services the Company provides to its clients. This segment consists primarily of staffing services in North America, and a minor amount (less than 5% of revenue in this segment) of such services in Europe. The Company makes decisions related to resource allocation based upon the contribution income of each of its segments. Contribution profit reflects gross profit less any operating expenses directly related to each respective segment. Those operating expenses primarily include sales, solutions, delivery, and recruiting expenses. General and administrative expenses are not allocated to the individual segments and primarily include corporate support costs such as finance and accounting, internal IT, human resources, benefits and marketing. The operating results for the Company’s segments for the quarters ended April 1, 2022 and April 2, 2021 were as follows: Quarter Ended April 1, 2022 North America IT Europe IT Non-Strategic (amounts in thousands) Solutions & Services Solutions & Services Technology Services Total Revenue $ 20,435 $ 42,478 $ 26,504 $ 89,417 Direct costs 13,573 31,998 23,251 68,822 Gross profit 6,862 10,480 3,253 20,595 Operating expenses 3,130 5,229 810 9,169 Contribution profit $ 3,732 $ 5,251 $ 2,443 11,426 General and administrative expenses 8,227 Operating income $ 3,199 Quarter Ended April 2, 2021 North America IT Europe IT Non-Strategic (amounts in thousands) Solutions & Services Solutions & Services Technology Services Total Revenue $ 18,454 $ 46,007 $ 32,668 $ 97,129 Direct costs 12,442 34,790 29,130 76,362 Gross profit 6,012 11,217 3,538 20,767 Operating expenses 3,157 5,483 1,315 9,955 Contribution profit $ 2,855 $ 5,734 $ 2,223 10,812 General and administrative expenses 8,714 Operating income $ 2,098 Depreciation allocated to Europe IT Solutions and Services totaled $0.2 million in each of the quarters ended April 1, 2022 and April 2, 2021. Depreciation allocated to North America IT Solutions and Services totaled $0.1 million in each of the quarters ended April 1, 2022 and April 2, 2021. Depreciation allocated to Non-Strategic Technology Services was less than $0.1 million in each of the quarters ended April 1, 2022 and April 2, 2021. The Company has not provided any other expense or asset information for each of its segments as the Company’s CEO, who is the chief operating decision maker, does not use this information in any way to make resource decisions or to manage the segments. The Company does not prepare balance sheet or statement of cash flow information for its segments. The Company’s goodwill at April 1, 2022 totaled $19.2 million, including $17.8 million in the Europe IT Solutions and Services segment and $1.4 million in the North America IT Solutions and Services segment. At December 31, 2021, the Company’s goodwill balance totaled $19.7 million, which included $18.3 million in the Company’s Europe IT Solutions and Services segment and $1.4 million in the North America IT Solutions and Services segment. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Apr. 01, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation and Consolidation | These condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles have been condensed or omitted pursuant to the SEC rules and regulations. There are no unconsolidated entities, or off-balance sheet arrangements other than certain guarantees supporting office leases and the performance under government contracts in the Company's European operations. All inter-company accounts have been eliminated. The preparation of financial statements and related disclosures in conformity with U.S. generally accepted accounting principles requires the Company's management to make estimates, judgments and assumptions that affect the amounts reported in the condensed consolidated financial statements and accompanying notes, which could be impacted by existing market conditions and factors, including the COVID-19 pandemic and the unpredictability and severity of a civil unrest or outbreak of war or hostilities. Such estimates primarily relate to the recognition of revenue, leased assets and liabilities, the purchase accounting for acquisitions and the valuation of goodwill, the valuation allowance for deferred tax assets, actuarial assumptions including discount rates and expected return on assets, as applicable, for the Company’s defined benefit plans, the valuation of stock options and restricted stock for recording equity-based compensation expense, the allowance for doubtful accounts receivable, investment valuation, legal matters, other contingencies, and estimates of progress toward completion and direct profit or loss on contracts, as applicable. Management believes that the information and disclosures provided herein are adequate to present fairly the condensed consolidated financial position, results of operations, comprehensive income, cash flows, and shareholders’ equity of the Company. There were no subsequent events as of the date of this filing from the end of the fiscal first quarter on April 1, 2022 that require recognition or disclosure in these unaudited interim condensed consolidated financial statements. |
Concentration Risk, Credit Risk | The Company operates in three segments within its business, North America IT Solutions and Services, Europe IT Solutions and Services, and Non-Strategic Technology Services. The Company provides information and technology-related services to its clients. CTG provides these services to all of the markets that it serves. The services provided typically encompass the IT business solution life cycle, including phases for planning, developing, implementing, managing, and ultimately maintaining the IT solution. These services ensure that our clients utilize the right information technology to meet their business needs, maximize their IT systems’ value, and operate efficiently and effectively. A typical client is an organization with large, complex technology, information, and data processing requirements . The segment revenue for the quarters ended April 1, 2022 and April 2, 2021 was as follows: For the Quarter Ended Year-over-Year (amounts in thousands) April 1, 2022 April 2, 2021 Change North America IT Solutions and Services 22.9 % $ 20,435 19.0 % $ 18,454 10.7 % Europe IT Solutions and Services 47.5 % 42,478 47.4 % 46,007 (7.7 )% Non-Strategic Technology Services 29.6 % 26,504 33.6 % 32,668 (18.9 )% Total 100.0 % $ 89,417 100.0 % $ 97,129 (7.9 )% The Company focuses a significant portion of its services through five vertical market focus areas: technology service providers, healthcare (which includes services provided to healthcare providers, health insurers (payers), and life sciences companies), financial services, manufacturing, and energy. The Company focuses on these five vertical areas as it believes that these areas are either higher growth markets than the general IT services market and the general economy, or are areas that provide greater potential for the Company’s growth due to the size of the vertical market. The remainder of CTG’s revenue is derived from general markets. The Company’s revenue by vertical market as a percentage of total revenue for the quarters ended April 1, 2022 and April 2, 2021 was as follows: For the Quarter Ended April 1, 2022 April 2, 2021 Technology service providers 23.8 % 30.8 % Healthcare 17.4 % 15.5 % Financial services 16.5 % 17.0 % Manufacturing 13.9 % 12.4 % Energy 5.3 % 5.5 % General markets 23.1 % 18.8 % Total 100.0 % 100.0 % |
Revenue Recognition | Revenue Recognition The Company recognizes revenue when control of the promised good or service is transferred to clients, in an amount that reflects the consideration the Company expects to be entitled to in exchange for those goods or services. For time-and-material contracts, revenue is recognized as hours are incurred and costs are expended. For contracts with progress billing schedules (i.e. progress billing), primarily monthly, revenue is recognized as services are rendered to the client. Revenue for fixed-price contracts is recognized over time using an input-based approach. Revenue recognition over time best portrays the Company’s performance in transferring control of the goods or services to the client. On most fixed price contracts, revenue recognition is supported through contractual clauses that require the client to pay for work performed to date, including cost plus a reasonable profit margin, for goods or services that have no alternative use to the Company. On certain contracts, revenue recognition is supported through contractual clauses that indicate the client controls the asset, or work in process, as the Company creates or enhances the asset. On a given project, actual salary and indirect labor costs incurred are measured and compared with the total estimate of costs of such items at the completion of the project. Revenue is recognized based upon the percentage-of-completion calculation of total incurred costs to total estimated costs. The Company infrequently works on fixed-price projects that include significant amounts of material or other non-labor related costs that could distort the percent complete within a percentage-of-completion calculation. The Company’s estimate of the total labor costs it expects to incur over the term of the contract is based on the nature of the project and our experience on similar projects, and includes management judgments and estimates that affect the amount of revenue recognized on fixed-price contracts in any accounting period. Losses on fixed-price projects are recorded when identified. The Company’s revenue from contracts accounted for under time-and-material, progress billing and percentage-of-completion methods as a percentage of conso lidate d r evenue for the quarter s ended April 1, 2022 and April 2, 2021 was as follows: For the Quarter Ended April 1, 2022 April 2, 2021 Time-and-material 77.2 % 79.1 % Progress billing 18.9 % 18.4 % Percentage-of-completion 3.9 % 2.5 % Total 100.0 % 100.0 % The Company recorded revenue in the quarters ended April 1, 2022 and April 2, 2021 as follows: For the Quarter Ended: April 1, 2022 April 2, 2021 Year-over-Year Change (amounts in thousands) North America 51.7 % $ 46,262 51.0 % $ 49,504 (6.5 )% Europe 48.3 % 43,155 49.0 % 47,625 (9.4 )% Total 100.0 % $ 89,417 100.0 % $ 97,129 (7.9 )% |
Significant Judgments | Significant Judgments With the exception of cost estimates on certain fixed-price projects, there are no other significant judgments used to determine the timing of the satisfaction of performance obligations or determining the transaction price and amounts allocated to performance obligations. The Company allocates the transaction price based on standalone selling prices for contracts with clients that include more than one performance obligation. We determine standalone selling price based on the expected cost of the good or service plus margin approach. Certain clients may qualify for discounts and rebates, which we account for as variable consideration. We estimate variable consideration and reduce revenue recognized based on the amount we expect to provide to clients. |
Contract Balances | Contract Balances For time-and-material and progress billing contracts, the timing of the Company’s satisfaction of its performance obligations is consistent with the timing of payment. For these contracts, the Company has the right to payment in the amount that corresponds directly with the value of the Company’s performance to date. The Company uses the right to invoice practical expedient that allows the Company to recognize revenue in the amount for which it has the right to invoice for time-and-material and progress billing contracts. Bill schedules for fixed-price contracts are generally consistent with the Company’s performance in transferring control of the goods or services to the client. There are no significant financing components in our contracts with clients. Advance billings represent contract liabilities for cash payments received in advance of our performance. Unbilled receivables are reported within “accounts receivable” on the consolidated balance sheets. Accounts receivable and contract liability balances fluctuate based on the timing of the client’s billing schedule and the Company’s period-end date. There are no significant costs to obtain or fulfill contracts clients. |
Transaction Price Allocated to Remaining Performance Obligations | Transaction Price Allocated to Remaining Performance Obligations As of April 1, 2022, the aggregate transaction price allocated to unsatisfied or partially unsatisfied performance obligations for fixed-price and all managed-support contracts was approximately $14.3 million and $55.2 million, respectively. Approximately $48.0 million of the transaction price allocated to unsatisfied or partially unsatisfied performance obligations is expected to be earned in 2022, and approximately $21.5 million of the transaction price allocated to unsatisfied or partially unsatisfied performance obligations is expected to be earned in 2023 and beyond |
Taxes Collected from Clients | Taxes Collected from Clients The Company records taxes collected from its clients for remittance to governmental authorities, primarily in its international locations, on a net basis in the condensed consolidated financial statements. |
Fair Value | Fair value is defined as the exchange price that would be received for an asset or paid for a liability in the principal or most advantageous market for the asset or liability, in an orderly transaction between market participants. The Company utilizes a fair value hierarchy for its assets and liabilities, as applicable, based upon three levels of input, which are: Level 1—quoted prices in active markets for identical assets or liabilities (observable) Level 2—inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities, quoted prices in inactive markets, or other inputs that are observable or can be supported by observable market data for essentially the full term of the asset or liability (observable) Level 3—unobservable inputs that are supported by little or no market activity, but are significant to determining the fair value of the asset or liability (unobservable) At April 1, 2022 and December 31, 2021, the carrying amounts of the Company’s cash of $38.7 million and $35.6 million, respectively, approximated fair value. As described in Note 3 of the condensed consolidated financial statements, the Company acquired 100% of the equity of StarDust in the 2020 first quarter. Level 3 inputs were used to estimate the fair values of the assets acquired and liabilities assumed. The valuation techniques used to assign fair values to intangible assets included the relief-from-royalty and excess earnings methods. The Company has recorded a contingent consideration liability related to the earn-out provision of which a portion will be payable in each period subject to the achievement by StarDust of consolidated direct profit targets for fiscal 2020 and 2021. There is no payout if the achievements are below the target threshold. The fair value of this contingent consideration liability is determined using level 3 inputs. The fair value assigned to the contingent consideration liability is determined using the real options method, which requires inputs such as consolidated direct profit forecasts, discount rate, and other market variables to assess the probability of StarDust achieving their revenue and EBIT targets. As of April 1, 2022, the fair value of the contingent consideration liability was determined to be zero as the consolidated direct profit targets were not met by StarDust for the fiscal year 2021. |
Life Insurance Policies | Life Insurance Policies The Company has purchased life insurance on the lives of a number of former employees who are plan participants in the non-qualified defined benefit Executive Supplemental Benefit Plan. In total, there are policies currently on 16 individuals, whose average age is 78 years old. Those policies have generated cash surrender value and the Company has taken loans against the policies. At April 1, 2022, the insurance policies that have been borrowed against have a gross cash surrender value of $28.5 million, outstanding loans and interest totaling $25.6 million, and a net cash surrender value of $2.9 million. At December 31, 2021, these insurance policies had a gross cash surrender value of $28.3 million, outstanding loans and interest totaling $25.2 million, and a net cash surrender value of $3.1 million. The net cash surrender values are included on the condensed consolidated balance sheets in “Cash surrender value of life insurance, net” under non-current assets. At both April 1, 2022 and December 31, 2021, the total death benefit for the remaining policies was approximately $36.0 million. Currently, upon the death of all of the remaining plan participants, the Company would expect to receive approximately $10.1 million after the payment of obligations, and, under current tax regulations, record a non-taxable gain of approximately $7.1 million. |
Cash and Cash Equivalents, and Cash Overdrafts | Cash and Cash Equivalents, and Cash Overdrafts For purposes of the statement of cash flows, cash and cash equivalents are defined as cash on hand, demand deposits, and short-term, highly liquid investments with a maturity of three months or less. The Company does not fund its bank accounts for the checks it has written until the checks are presented to the bank for payment. In the event the Company has no available cash at the bank for which it writes its checks, the "change in cash overdraft, net" line item as presented on the condensed consolidated statement of cash flows, represents the increase or decrease in outstanding checks for a given period. The cash in the Company’s U.S. banks is insured by the Federal Deposit Insurance Corporation up to the insurable limit of $250,000. As of April 1, 2022 and December 31, 2021, the Company has multiple accounts that carry balances in excess of this insurable limit. The Company’s cash in its foreign bank accounts is not insured. |
Accounts Receivable Factoring | Accounts Receivable Factoring As part of our working capital management, the Company entered into a factoring agreement during the 2020 first quarter to sell certain trade accounts receivables associated with its largest client on a non-recourse basis to a third-party financial institution. The Company accounts for these transactions as sales of receivables and presents cash proceeds as cash provided by operating activities in the condensed consolidated statements of cash flows. Total trade accounts receivable sold under the factoring agreement was approximately $4.5 million and $15.5 million in the quarters ended April 1, 2022 and April 2, 2021, respectively. Fees for the factoring arrangement were recorded in cost of services and were less than $0.1 million in each of the quarters ended April 1, 2022 and April 2, 2021, respectively. |
Property, Equipment and Capitalized Software Costs | Property, Equipment and Capitalized Software Costs Property, equipment and capitalized software at April 1, 2022 and December 31, 2021 were recorded as follows: (amounts in thousands) April 1, 2022 December 31, 2021 Property, equipment and capitalized software $ 14,431 $ 15,628 Accumulated depreciation and amortization (9,654 ) (10,386 ) Property, equipment and capitalized software, net $ 4,777 $ 5,242 The Company capitalizes software projects developed for commercial use. The change in the Company’s capitalized software cost balance during the quarters ended April 1, 2022 and April 2, 2021 was as follows: For the Quarter Ended (amounts in thousands) April 1, 2022 April 2, 2021 Capitalized software, beginning balance $ 1,607 $ 2,397 Foreign currency translation (34 ) 26 Capitalized software $ 1,573 $ 2,423 Capitalized software amortization periods range from three to five years, and are evaluated periodically for propriety. Amortization expense and accumulated amortization for these projects for the quarters ended April 1, 2022 and April 2, 2021 are as follows: For the Quarter Ended (amounts in thousands) April 1, 2022 April 2, 2021 Accumulated amortization, beginning balance $ 978 $ 1,280 Amortization expense 72 135 Accumulated amortization $ 1,050 $ 1,415 |
Guarantees | Guarantees The Company has a number of guarantees in place in its European operations that support office leases and performance under government contracts. These guarantees totaled approximately $3.1 million at both April 1, 2022 and December 31, 2021, and have expiration dates ranging from April 2022 through October 2034. |
Goodwill | Goodwill The goodwill recorded on the Company's condensed consolidated balance sheet at April 1, 2022 relates to the acquisitions of Soft Company in 2018, Tech-IT in 2019, and StarDust in 2020. In accordance with current accounting guidance for “Intangibles - Goodwill and Other,” the Company performs goodwill impairment testing at least annually (in the Company’s fourth quarter), unless indicators of impairment exist in interim periods. T here were no impairment indicators noted in the quarters ended and . The changes in the carrying amount of goodwill for the quarter ended April 1, 2022 was as follows: (amounts in thousands) Balance at December 31, 2021 $ 19,676 Foreign currency translation (502 ) Balance at April 1, 2022 $ 19,174 The Company’s goodwill at April 1, 2022 totaled $19.2 million, including $17.8 million in the Europe IT Solutions and Services segment and $1.4 million in the North America IT Solutions and Services segment. At December 31, 2021, the Company’s goodwill balance totaled $19.7 million, which included $18.3 million in the Company’s Europe IT Solutions and Services segment and $1.4 million in the North America IT Solutions and Services segment. |
Acquired Intangible Assets | Acquired Intangible Assets Acquired intangible assets at April 1, 2022 consist of the following: (amounts in thousands) Estimated Economic Life Gross Carrying Amount Accumulated Amortization Foreign Currency Translation Net Carrying Amount Trademarks 2 years $ 1,532 $ (1,426 ) $ (106 ) $ — Technology 10 years 591 (122 ) (5 ) 464 Customer relationships 7-13 years 10,496 (3,276 ) (847 ) 6,373 Total $ 12,619 $ (4,824 ) $ (958 ) $ 6,837 Acquired intangible assets at December 31, 2021 consist of the following: (amounts in thousands) Estimated Economic Life Gross Carrying Amount Accumulated Amortization Foreign Currency Translation Net Carrying Amount Trademarks 2 years $ 1,532 $ (1,454 ) $ (70 ) $ 8 Technology 10 years 591 (110 ) 10 491 Customer relationships 7-13 years 10,496 (3,121 ) (594 ) 6,781 Total $ 12,619 $ (4,685 ) $ (654 ) $ 7,280 Estimated amortization expense for the remainder of 2022, the five succeeding years, and thereafter is as follows: Year Annual Amortization (amounts in thousands) 2022 (remaining) $ 749 2023 999 2024 999 2025 999 2026 999 2027 584 Thereafter 1,508 Total $ 6,837 |
Recently Issued Accounting Standards | Recently Issued Accounting Standards In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform - Facilitation of the Effects of Reference Rate Reform on Financial Reporting,” which provides optional expedients and exceptions for accounting contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met. The amendments apply only to contracts, hedging relationships and other transactions that reference the London Interbank Offering Rate (“LIBOR”) or another reference rate expected to be discontinued due to the reference rate reform. It is effective for all entities between March 12, 2020 and December 31, 2022. The Company does not expect a significant impact from the adoption of this standard as provisions have been made in our Credit and Security Agreement to use an alternate benchmark interest rate when the use of LIBOR is discontinued. In December 2019, the FASB issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” Among other clarifications and simplifications related to income tax accounting, the new standard simplifies the accounting for income taxes by eliminating certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period, hybrid taxes and the recognition of deferred tax liabilities for outside basis differences. ASU 2019-12 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Early adoption is permitted. The Company adopted this new standard on January 1, 2021 on a prospective basis and the adoption did not have a material impact on the Company’s consolidated financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Apr. 01, 2022 | |
Accounting Policies [Abstract] | |
Summary of IT Solutions and Services and Non-Strategic Technology Services as Percentage of Total Revenue | The segment revenue for the quarters ended April 1, 2022 and April 2, 2021 was as follows: For the Quarter Ended Year-over-Year (amounts in thousands) April 1, 2022 April 2, 2021 Change North America IT Solutions and Services 22.9 % $ 20,435 19.0 % $ 18,454 10.7 % Europe IT Solutions and Services 47.5 % 42,478 47.4 % 46,007 (7.7 )% Non-Strategic Technology Services 29.6 % 26,504 33.6 % 32,668 (18.9 )% Total 100.0 % $ 89,417 100.0 % $ 97,129 (7.9 )% |
Revenue by Vertical Market as Percentage of Total Revenue | The Company’s revenue by vertical market as a percentage of total revenue for the quarters ended April 1, 2022 and April 2, 2021 was as follows: For the Quarter Ended April 1, 2022 April 2, 2021 Technology service providers 23.8 % 30.8 % Healthcare 17.4 % 15.5 % Financial services 16.5 % 17.0 % Manufacturing 13.9 % 12.4 % Energy 5.3 % 5.5 % General markets 23.1 % 18.8 % Total 100.0 % 100.0 % |
Revenue by Contract Type | The Company’s revenue from contracts accounted for under time-and-material, progress billing and percentage-of-completion methods as a percentage of conso lidate d r evenue for the quarter s ended April 1, 2022 and April 2, 2021 was as follows: For the Quarter Ended April 1, 2022 April 2, 2021 Time-and-material 77.2 % 79.1 % Progress billing 18.9 % 18.4 % Percentage-of-completion 3.9 % 2.5 % Total 100.0 % 100.0 % |
Schedule of Revenue by Geographic Location | The Company recorded revenue in the quarters ended April 1, 2022 and April 2, 2021 as follows: For the Quarter Ended: April 1, 2022 April 2, 2021 Year-over-Year Change (amounts in thousands) North America 51.7 % $ 46,262 51.0 % $ 49,504 (6.5 )% Europe 48.3 % 43,155 49.0 % 47,625 (9.4 )% Total 100.0 % $ 89,417 100.0 % $ 97,129 (7.9 )% |
Schedule of Property, Equipment and Capitalized Software | Property, equipment and capitalized software at April 1, 2022 and December 31, 2021 were recorded as follows: (amounts in thousands) April 1, 2022 December 31, 2021 Property, equipment and capitalized software $ 14,431 $ 15,628 Accumulated depreciation and amortization (9,654 ) (10,386 ) Property, equipment and capitalized software, net $ 4,777 $ 5,242 |
Schedule of Capitalized Software Costs | The Company capitalizes software projects developed for commercial use. The change in the Company’s capitalized software cost balance during the quarters ended April 1, 2022 and April 2, 2021 was as follows: For the Quarter Ended (amounts in thousands) April 1, 2022 April 2, 2021 Capitalized software, beginning balance $ 1,607 $ 2,397 Foreign currency translation (34 ) 26 Capitalized software $ 1,573 $ 2,423 |
Schedule of Amortization Expense and Accumulated Amortization | Amortization expense and accumulated amortization for these projects for the quarters ended April 1, 2022 and April 2, 2021 are as follows: For the Quarter Ended (amounts in thousands) April 1, 2022 April 2, 2021 Accumulated amortization, beginning balance $ 978 $ 1,280 Amortization expense 72 135 Accumulated amortization $ 1,050 $ 1,415 |
Summary of Changes in Carrying Amount of Goodwill | The changes in the carrying amount of goodwill for the quarter ended April 1, 2022 was as follows: (amounts in thousands) Balance at December 31, 2021 $ 19,676 Foreign currency translation (502 ) Balance at April 1, 2022 $ 19,174 |
Summary of Acquired Intangible Assets | Acquired intangible assets at April 1, 2022 consist of the following: (amounts in thousands) Estimated Economic Life Gross Carrying Amount Accumulated Amortization Foreign Currency Translation Net Carrying Amount Trademarks 2 years $ 1,532 $ (1,426 ) $ (106 ) $ — Technology 10 years 591 (122 ) (5 ) 464 Customer relationships 7-13 years 10,496 (3,276 ) (847 ) 6,373 Total $ 12,619 $ (4,824 ) $ (958 ) $ 6,837 Acquired intangible assets at December 31, 2021 consist of the following: (amounts in thousands) Estimated Economic Life Gross Carrying Amount Accumulated Amortization Foreign Currency Translation Net Carrying Amount Trademarks 2 years $ 1,532 $ (1,454 ) $ (70 ) $ 8 Technology 10 years 591 (110 ) 10 491 Customer relationships 7-13 years 10,496 (3,121 ) (594 ) 6,781 Total $ 12,619 $ (4,685 ) $ (654 ) $ 7,280 |
Summary of Estimated Amortization Expense | Estimated amortization expense for the remainder of 2022, the five succeeding years, and thereafter is as follows: Year Annual Amortization (amounts in thousands) 2022 (remaining) $ 749 2023 999 2024 999 2025 999 2026 999 2027 584 Thereafter 1,508 Total $ 6,837 |
Net Income Per Share (Tables)
Net Income Per Share (Tables) | 3 Months Ended |
Apr. 01, 2022 | |
Earnings Per Share [Abstract] | |
Basic and Diluted Earning Per Share (EPS) | Basic and diluted earnings per share (EPS) for the quarters ended April 1, 2022 and April 2, 2021 were as follows: For the Quarter Ended (amounts in thousands, except per-share data) April 1, 2022 April 2, 2021 Weighted-average number of shares outstanding during period 14,199 13,696 Common stock equivalents from incremental shares under equity-based compensation plans 778 1,248 Number of shares on which diluted earnings per share is based 14,977 14,944 Net income $ 2,240 $ 1,508 Net income per share Basic $ 0.16 $ 0.11 Diluted $ 0.15 $ 0.10 |
Lease Commitments (Tables)
Lease Commitments (Tables) | 3 Months Ended |
Apr. 01, 2022 | |
Leases [Abstract] | |
Summary of Maturities of Lease Liabilities for Operating Liabilities | Maturities for the Company’s lease liabilities for all operating leases as of April 1, 2022 are as follows: Total Year Operating Leases (amounts in thousands) 2022 (remaining) $ 4,838 2023 5,001 2024 3,442 2025 2,312 2026 1,711 2027 & thereafter 4,493 Total undiscounted operating lease payments 21,797 Less: Interest (1,219 ) Total present value of operating lease liabilities $ 20,578 |
Summary of Weighted Average Remaining Lease Term, Discount Rate and Supplemental Cash Flow Information for All Operating Leases | The weighted average remaining lease terms and discount rates for all operating leases as of April 1, 2022 and April 2, 2021 were as follows: April 1, 2022 April 2, 2021 Weighted average remaining lease term (years) 5.89 6.40 Weighted average remaining discount rate 2.12 % 2.00 % Supplemental cash flow information related to the Company’s operating leases for the first quarter of 2022 is as follows: (amounts in thousands) April 1, 2022 Cash paid for amounts included in the measurement of lease liabilities: Operating cash outflow from operating leases $ 1,821 Right-of-use assets obtained in exchange for new operating lease liabilities 513 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 3 Months Ended |
Apr. 01, 2022 | |
Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract] | |
Schedule of Accumulated Other Comprehensive Loss | The components that make up accumulated other comprehensive loss on the condensed consolidated balance sheets at April 1, 2022 and December 31, 2021 are as follows: (amounts in thousands) April 1, 2022 December 31, 2021 Foreign currency translation adjustment $ (9,026 ) $ (7,697 ) Pension loss, net of tax of $786 in 2022 and $819 in 2021 (8,912 ) (9,243 ) Accumulated other comprehensive loss $ (17,938 ) $ (16,940 ) |
Schedule of Actuarial Losses Amortized to Expense | During the 2022 and 2021 first quarters, actuarial losses were amortized to expense as follows: For the Quarter Ended (amounts in thousands) April 1, 2022 April 2, 2021 Amortization of actuarial losses $ 130 $ 124 Income tax (21 ) (10 ) Net of tax $ 109 $ 114 |
Deferred Compensation and Oth_2
Deferred Compensation and Other Benefits (Tables) | 3 Months Ended |
Apr. 01, 2022 | |
Compensation And Retirement Disclosure [Abstract] | |
Schedule of Net Periodic Pension Cost | Net periodic pension cost for the quarters ended April 1, 2022 and April 2, 2021 for the plans is as follows: For the Quarter Ended (amounts in thousands) April 1, 2022 April 2, 2021 Service cost $ 109 $ 127 Interest cost 89 51 Expected return on assets (170 ) (179 ) Amortization of actuarial loss 131 125 Net periodic pension cost $ 159 $ 124 |
Schedule of Change in Fair Value of Plan Assets | The change in the fair value of plan assets for the plans for the quarters ended April 1, 2022 and April 2, 2021 was as follows: For the Quarter Ended (amounts in thousands) April 1, 2022 April 2, 2021 Fair value of plan assets at beginning of period $ 19,956 $ 20,654 Return on plan assets 170 179 Contributions 295 298 Benefits paid (258 ) (225 ) Effect of exchange rate changes (486 ) (840 ) Fair value of plan assets at end of quarter $ 19,677 $ 20,066 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Apr. 01, 2022 | |
Segment Reporting [Abstract] | |
Schedule of Operating Segments | The operating results for the Company’s segments for the quarters ended April 1, 2022 and April 2, 2021 were as follows: Quarter Ended April 1, 2022 North America IT Europe IT Non-Strategic (amounts in thousands) Solutions & Services Solutions & Services Technology Services Total Revenue $ 20,435 $ 42,478 $ 26,504 $ 89,417 Direct costs 13,573 31,998 23,251 68,822 Gross profit 6,862 10,480 3,253 20,595 Operating expenses 3,130 5,229 810 9,169 Contribution profit $ 3,732 $ 5,251 $ 2,443 11,426 General and administrative expenses 8,227 Operating income $ 3,199 Quarter Ended April 2, 2021 North America IT Europe IT Non-Strategic (amounts in thousands) Solutions & Services Solutions & Services Technology Services Total Revenue $ 18,454 $ 46,007 $ 32,668 $ 97,129 Direct costs 12,442 34,790 29,130 76,362 Gross profit 6,012 11,217 3,538 20,767 Operating expenses 3,157 5,483 1,315 9,955 Contribution profit $ 2,855 $ 5,734 $ 2,223 10,812 General and administrative expenses 8,714 Operating income $ 2,098 |
Financial Statements - Addition
Financial Statements - Additional Information (Details) | 3 Months Ended | |
Apr. 01, 2022 | Apr. 02, 2021 | |
Organization Consolidation And Presentation Of Financial Statements [Abstract] | ||
Billable days | 65 days | 65 days |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Basis of Presentation and Consolidation (Details) | 3 Months Ended |
Apr. 01, 2022segmentMarket | |
Accounting Policies [Abstract] | |
Number of operating segments | segment | 3 |
Number of vertical market focus areas | Market | 5 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Summary of Segment Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2022 | Apr. 02, 2021 | |
Product Information [Line Items] | ||
Revenue | $ 89,417 | $ 97,129 |
Product Concentration Risk [Member] | Sales Revenue, Services, Net [Member] | ||
Product Information [Line Items] | ||
Revenue, percent | 100.00% | 100.00% |
Revenue | $ 89,417 | $ 97,129 |
Year-over-Year Change | (7.90%) | |
Product Concentration Risk [Member] | North America IT Solutions and Services [Member] | Sales Revenue, Services, Net [Member] | ||
Product Information [Line Items] | ||
Revenue, percent | 22.90% | 19.00% |
Revenue | $ 20,435 | $ 18,454 |
Year-over-Year Change | 10.70% | |
Product Concentration Risk [Member] | Europe IT Solutions and Services [Member] | Sales Revenue, Services, Net [Member] | ||
Product Information [Line Items] | ||
Revenue, percent | 47.50% | 47.40% |
Revenue | $ 42,478 | $ 46,007 |
Year-over-Year Change | (7.70%) | |
Product Concentration Risk [Member] | Non-Strategic Technology Services [Member] | Sales Revenue, Services, Net [Member] | ||
Product Information [Line Items] | ||
Revenue, percent | 29.60% | 33.60% |
Revenue | $ 26,504 | $ 32,668 |
Year-over-Year Change | (18.90%) |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Revenue by Vertical Market as Percentage of Total Revenue (Details) - Customer Concentration Risk [Member] - Sales Revenue, Services, Net [Member] | 3 Months Ended | |
Apr. 01, 2022 | Apr. 02, 2021 | |
Concentration Risk [Line Items] | ||
Total revenue | 100.00% | 100.00% |
Technology Service Providers [Member] | ||
Concentration Risk [Line Items] | ||
Total revenue | 23.80% | 30.80% |
Manufacturing [Member] | ||
Concentration Risk [Line Items] | ||
Total revenue | 13.90% | 12.40% |
Financial Services [Member] | ||
Concentration Risk [Line Items] | ||
Total revenue | 16.50% | 17.00% |
Energy [Member] | ||
Concentration Risk [Line Items] | ||
Total revenue | 5.30% | 5.50% |
General Markets [Member] | ||
Concentration Risk [Line Items] | ||
Total revenue | 23.10% | 18.80% |
Healthcare [Member] | ||
Concentration Risk [Line Items] | ||
Total revenue | 17.40% | 15.50% |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Revenue by Contract Type (Details) | 3 Months Ended | |
Apr. 01, 2022 | Apr. 02, 2021 | |
Schedule Of Revenue By Contract Type [Line Items] | ||
Revenue percent | 100.00% | 100.00% |
Time-and-material [Member] | ||
Schedule Of Revenue By Contract Type [Line Items] | ||
Revenue percent | 77.20% | 79.10% |
Progress Billing [Member] | ||
Schedule Of Revenue By Contract Type [Line Items] | ||
Revenue percent | 18.90% | 18.40% |
Percentage-of-completion [Member] | ||
Schedule Of Revenue By Contract Type [Line Items] | ||
Revenue percent | 3.90% | 2.50% |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Schedule of Revenue by Geographic Location (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2022 | Apr. 02, 2021 | |
Revenues [Line Items] | ||
Revenue | $ 89,417 | $ 97,129 |
Sales Revenue, Services, Net [Member] | Geographic Concentration Risk | ||
Revenues [Line Items] | ||
Revenue, percent | 100.00% | 100.00% |
Revenue | $ 89,417 | $ 97,129 |
Year-over-Year Change | (7.90%) | |
North America [Member] | Sales Revenue, Services, Net [Member] | Geographic Concentration Risk | ||
Revenues [Line Items] | ||
Revenue, percent | 51.70% | 51.00% |
Revenue | $ 46,262 | $ 49,504 |
Year-over-Year Change | (6.50%) | |
Europe [Member] | Sales Revenue, Services, Net [Member] | Geographic Concentration Risk | ||
Revenues [Line Items] | ||
Revenue, percent | 48.30% | 49.00% |
Revenue | $ 43,155 | $ 47,625 |
Year-over-Year Change | (9.40%) |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Transaction Price Allocated to Remaining Performance Obligations (Details 1) $ in Millions | Apr. 01, 2022USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2022-04-02 | |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items] | |
Revenue, remaining performance obligation | $ 48 |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 9 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2023-01-01 | |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items] | |
Revenue, remaining performance obligation | $ 21.5 |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date: 2024-01-01 | |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items] | |
Revenue, remaining performance obligation | $ 21.5 |
Revenue, remaining performance obligation, expected timing of satisfaction, period |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Transaction Price Allocated to Remaining Performance Obligations (Details) $ in Millions | Apr. 01, 2022USD ($) |
Fixed-price [Member] | |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items] | |
Revenue, remaining performance obligation | $ 14.3 |
Managed-support Contracts [Member] | |
Revenue Remaining Performance Obligation Expected Timing Of Satisfaction [Line Items] | |
Revenue, remaining performance obligation | $ 55.2 |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - Fair Value (Details) - USD ($) | Apr. 01, 2022 | Dec. 31, 2021 | Mar. 27, 2020 | Mar. 03, 2020 |
Business Acquisition [Line Items] | ||||
Cash and cash equivalents | $ 38,724,000 | $ 35,584,000 | ||
Fair value of the remaining contingent consideration liability | 0 | |||
Stardust SAS (StarDust) [Member] | ||||
Business Acquisition [Line Items] | ||||
Business acquisition, percentage acquired | 100.00% | 100.00% | ||
Fair value of the remaining contingent consideration liability | $ 0 |
Summary of Significant Accou_12
Summary of Significant Accounting Policies - Life Insurance Policies (Details) $ in Thousands | 3 Months Ended | |
Apr. 01, 2022USD ($)Individual | Dec. 31, 2021USD ($) | |
Supplementary Information For Corporate Owned Life Insurance [Line Items] | ||
Number of former employees covered under insurance policies | Individual | 16 | |
Average age of former employees covered under insurance policies | 78 years | |
Gross cash surrender values of life insurance | $ 28,500 | $ 28,300 |
Loans on cash surrender value | 25,600 | 25,200 |
Net cash surrender values of life insurance | 3,756 | 4,018 |
Gross death benefit of life insurance contracts | 36,000 | 36,000 |
Life insurance proceeds to be received upon the death of participants | 10,100 | |
Casualty Events [Member] | ||
Supplementary Information For Corporate Owned Life Insurance [Line Items] | ||
Non-taxable life insurance gain | 7,100 | |
Non-Qualified Defined Benefit Executive Supplemental Benefit Plan [Member] | ||
Supplementary Information For Corporate Owned Life Insurance [Line Items] | ||
Net cash surrender values of life insurance | $ 2,900 | $ 3,100 |
Summary of Significant Accou_13
Summary of Significant Accounting Policies - Cash and Cash Equivalents, and Cash Overdrafts (Details) - USD ($) | Apr. 01, 2022 | Dec. 31, 2021 |
Maximum [Member] | ||
Cash, FDIC insurable limit | $ 250,000 | $ 250,000 |
Summary of Significant Accou_14
Summary of Significant Accounting Policies - Accounts Receivable Factoring (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2022 | Apr. 02, 2021 | |
Accounts Notes And Loans Receivable [Line Items] | ||
Cost of services | $ 68,822 | $ 76,362 |
Trade Accounts Receivable [Member] | Maximum [Member] | ||
Accounts Notes And Loans Receivable [Line Items] | ||
Cost of services | 100 | 100 |
Trade Accounts Receivable [Member] | Factoring Agreement [Member] | ||
Accounts Notes And Loans Receivable [Line Items] | ||
Accounts Receivable, Sold | $ 4,500 | $ 15,500 |
Summary of Significant Accou_15
Summary of Significant Accounting Policies - Schedule of Property, Equipment and Capitalized Software (Details) - USD ($) $ in Thousands | Apr. 01, 2022 | Dec. 31, 2021 |
Property Plant And Equipment Net By Type [Abstract] | ||
Property, equipment, and capitalized software | $ 14,431 | $ 15,628 |
Accumulated depreciation and amortization | (9,654) | (10,386) |
Property, equipment and capitalized software, net | $ 4,777 | $ 5,242 |
Summary of Significant Accou_16
Summary of Significant Accounting Policies - Schedule of Capitalized Software Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2022 | Apr. 02, 2021 | |
Capitalized Software Cost [Abstract] | ||
Capitalized software, beginning balance | $ 1,607 | $ 2,397 |
Foreign currency translation | (34) | 26 |
Capitalized software, ending balance | $ 1,573 | $ 2,423 |
Summary of Significant Accou_17
Summary of Significant Accounting Policies - Property, Equipment and Capitalized Software Costs - Additional Information (Details) - Software Development | 3 Months Ended |
Apr. 01, 2022 | |
Minimum [Member] | |
Property Plant And Equipment [Line Items] | |
Property, equipment and capitalized software, useful life | 3 years |
Maximum [Member] | |
Property Plant And Equipment [Line Items] | |
Property, equipment and capitalized software, useful life | 5 years |
Summary of Significant Accou_18
Summary of Significant Accounting Policies - Schedule of Amortization Expense and Accumulated Amortization (Details) - Software Development - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2022 | Apr. 02, 2021 | |
Property Plant And Equipment [Line Items] | ||
Accumulated amortization, beginning balance | $ 978 | $ 1,280 |
Amortization expense | 72 | 135 |
Accumulated amortization, ending balance | $ 1,050 | $ 1,415 |
Summary of Significant Accou_19
Summary of Significant Accounting Policies - Guarantees (Details) - USD ($) $ in Millions | Dec. 31, 2021 | Apr. 01, 2022 |
Accounting Policies [Abstract] | ||
Current carrying value of guarantees | $ 3.1 | $ 3.1 |
Guarantor obligations, term | April 2022 through October 2034 | April 2022 through October 2034 |
Summary of Significant Accou_20
Summary of Significant Accounting Policies - Goodwill (Details) $ in Thousands | 3 Months Ended | ||
Apr. 01, 2022USD ($)Indicator | Apr. 02, 2021Indicator | Dec. 31, 2021USD ($) | |
Goodwill [Line Items] | |||
Goodwill impairment indicators | Indicator | 0 | 0 | |
Goodwill | $ 19,174 | $ 19,676 | |
Europe IT Solutions and Services Segment [Member] | |||
Goodwill [Line Items] | |||
Goodwill | 17,800 | 18,300 | |
North America IT Solutions and Services Segment [Member] | |||
Goodwill [Line Items] | |||
Goodwill | $ 1,400 | $ 1,400 |
Summary of Significant Accou_21
Summary of Significant Accounting Policies - Summary of Changes in Carrying Amount of Goodwill (Details) $ in Thousands | 3 Months Ended |
Apr. 01, 2022USD ($) | |
Goodwill And Intangible Assets Disclosure [Abstract] | |
Balance at December 31, 2021 | $ 19,676 |
Foreign currency translation | (502) |
Balance at April 1, 2022 | $ 19,174 |
Summary of Significant Accou_22
Summary of Significant Accounting Policies - Summary of Acquired Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Apr. 01, 2022 | Dec. 31, 2021 | |
Acquired Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 12,619 | $ 12,619 |
Accumulated Amortization | (4,824) | (4,685) |
Foreign Currency Translation | (958) | (654) |
Net Carrying Amount | $ 6,837 | $ 7,280 |
Trademarks [Member] | ||
Acquired Finite Lived Intangible Assets [Line Items] | ||
Estimated Economic Life | 2 years | 2 years |
Gross Carrying Amount | $ 1,532 | $ 1,532 |
Accumulated Amortization | (1,426) | (1,454) |
Foreign Currency Translation | $ (106) | (70) |
Net Carrying Amount | $ 8 | |
Technology [Member] | ||
Acquired Finite Lived Intangible Assets [Line Items] | ||
Estimated Economic Life | 10 years | 10 years |
Gross Carrying Amount | $ 591 | $ 591 |
Accumulated Amortization | (122) | (110) |
Foreign Currency Translation | (5) | 10 |
Net Carrying Amount | 464 | 491 |
Customer Relationships [Member] | ||
Acquired Finite Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 10,496 | 10,496 |
Accumulated Amortization | (3,276) | (3,121) |
Foreign Currency Translation | (847) | (594) |
Net Carrying Amount | $ 6,373 | $ 6,781 |
Customer Relationships [Member] | Minimum [Member] | ||
Acquired Finite Lived Intangible Assets [Line Items] | ||
Estimated Economic Life | 7 years | 7 years |
Customer Relationships [Member] | Maximum [Member] | ||
Acquired Finite Lived Intangible Assets [Line Items] | ||
Estimated Economic Life | 13 years | 13 years |
Summary of Significant Accou_23
Summary of Significant Accounting Policies - Summary of Estimated Amortization Expense (Details) - USD ($) $ in Thousands | Apr. 01, 2022 | Dec. 31, 2021 |
Finite Lived Intangible Assets Future Amortization Expense [Abstract] | ||
2022 (remaining) | $ 749 | |
2023 | 999 | |
2024 | 999 | |
2025 | 999 | |
2026 | 999 | |
2027 | 584 | |
Thereafter | 1,508 | |
Total | $ 6,837 | $ 7,280 |
Acquisitions - Additional Infor
Acquisitions - Additional Information (Details) | Mar. 03, 2020USD ($) | Mar. 03, 2020EUR (€) | Apr. 01, 2022USD ($) | Apr. 02, 2021USD ($) | Dec. 31, 2021USD ($) | Mar. 27, 2020 | Mar. 03, 2020EUR (€) |
Business Acquisition [Line Items] | |||||||
Fair value of the remaining contingent consideration liability | $ 0 | ||||||
Stardust SAS (StarDust) [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Business acquisition, percentage acquired | 100.00% | 100.00% | 100.00% | ||||
Payments to acquire business | $ 6,100,000 | € 5,500,000 | |||||
Foreign currency exchange rate | 1.1145 | 1.1145 | |||||
Earn-out contingency liability, basis for amount | An earn-out of up to $1.1 million (€1.0 million based on a EUR into USD exchange rate of 1.1145) can be earned, a portion of which will be payable in each period subject to the achievement of consolidated direct profit targets for fiscal 2020 and 2021. Additionally, for each €10,000 of consolidated direct profit achieved above the target, an additional €1,000 can be earned, with no maximum limit. There is no payout if the achievement is below the target threshold. | ||||||
Threshold limit of consolidated direct profit achieved above target | € | 10,000 | ||||||
Earn-out contingency liability | € | € 1,000 | ||||||
Fair value of the remaining contingent consideration liability | $ 100,000 | ||||||
Fair value of the remaining contingent consideration liability | $ 0 | ||||||
Stardust SAS (StarDust) [Member] | Maximum [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Earn-out contingency liability | $ 1,100,000 | € 1,000,000 | |||||
Stardust SAS (StarDust) [Member] | Maximum [Member] | Selling, General and Administrative Expenses [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Business combination acquisition related costs including fair value adjustment of earn out liability and amortization of intangible assets | $ 100,000 | $ 100,000 |
Net Income Per Share - Schedule
Net Income Per Share - Schedule of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Apr. 01, 2022 | Apr. 02, 2021 | |
Earnings Per Share [Abstract] | ||
Weighted-average number of shares outstanding during period | 14,199 | 13,696 |
Common stock equivalents from incremental shares under equity-based compensation plans | 778 | 1,248 |
Number of shares on which diluted earnings per share is based | 14,977 | 14,944 |
Net income | $ 2,240 | $ 1,508 |
Net income per share, basic | $ 0.16 | $ 0.11 |
Net income per share, diluted | $ 0.15 | $ 0.10 |
Net Income Per Share - Addition
Net Income Per Share - Additional Information (Details) - shares shares in Millions | 3 Months Ended | |
Apr. 01, 2022 | Apr. 02, 2021 | |
Employee Stock Option [Member] | ||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||
Antidilutive securities not included in the computation of earnings per share | 0.5 | 0.6 |
Lease Commitments - Additional
Lease Commitments - Additional Information (Details) - USD ($) $ in Millions | 3 Months Ended | |
Apr. 01, 2022 | Apr. 02, 2021 | |
Leases [Abstract] | ||
Maximum potential payment increase | 5.00% | |
Operating lease cost | $ 1.8 | $ 1.8 |
Short-term lease cost | 0.1 | 0.1 |
Variable lease cost | $ 0.1 | $ 0.1 |
Lease Commitments - Summary of
Lease Commitments - Summary of Maturities of Lease Liabilities for Operating Liabilities (Details) $ in Thousands | Apr. 01, 2022USD ($) |
Operating Lease Liabilities Payments Due [Abstract] | |
2022 (remaining) | $ 4,838 |
2023 | 5,001 |
2024 | 3,442 |
2025 | 2,312 |
2026 | 1,711 |
2027 & thereafter | 4,493 |
Total undiscounted operating lease payments | 21,797 |
Less: Interest | (1,219) |
Total present value of operating lease liabilities | $ 20,578 |
Lease Commitments - Summary o_2
Lease Commitments - Summary of Weighted Average Remaining Lease Term, Discount Rate and Supplemental Cash Flow Information for All Operating Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2022 | Apr. 02, 2021 | |
Lease Cost [Abstract] | ||
Weighted average remaining lease term (years) | 5 years 10 months 20 days | 6 years 4 months 24 days |
Weighted average remaining discount rate | 2.12% | 2.00% |
Cash paid for amounts included in the measurement of lease liabilities: | ||
Operating cash outflow from operating leases | $ 1,821 | |
Right-of-use assets obtained in exchange for new operating lease liabilities | $ 513 |
Debt - Additional Information (
Debt - Additional Information (Details) - USD ($) | 3 Months Ended | ||
Apr. 01, 2022 | Apr. 02, 2021 | Dec. 31, 2021 | |
Line of Credit Facility [Line Items] | |||
Long-term debt | $ 0 | $ 0 | |
Maximum amount outstanding | $ 0 | $ 0 | |
Debt covenants, Maximum leverage ratio | 1.00% | ||
Debt covenants threshold limit to test fixed charge coverage ratio | $ 5,000,000 | ||
Total available borrowings | $ 36,200,000 | ||
Excess percentage available for total available borrowings | 12.50% | ||
Minimum [Member] | London Interbank Offered Rate (LIBOR) | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | 0.015% | ||
Minimum [Member] | Adjusted London Interbank Offered Rate L I B O R | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | 0.005% | ||
Maximum [Member] | |||
Line of Credit Facility [Line Items] | |||
Commitment fees | $ 50,000,000 | ||
Fixed Charge Coverage Ratio | 0.125 | ||
Maximum [Member] | London Interbank Offered Rate (LIBOR) | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | 0.02% | ||
Maximum [Member] | Adjusted London Interbank Offered Rate L I B O R | |||
Line of Credit Facility [Line Items] | |||
Basis spread on variable rate | 0.01% | ||
Credit and Security Agreement [Member] | |||
Line of Credit Facility [Line Items] | |||
Revolving credit facility, term | 5 years | ||
Line of Credit Facility, Maximum Borrowing Capacity | $ 50,000,000 | ||
Line of credit facility, expiration date | 2026-05 |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss - Schedule of Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | Apr. 01, 2022 | Dec. 31, 2021 |
Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract] | ||
Foreign currency translation adjustment | $ (9,026) | $ (7,697) |
Pension loss, net of tax of $786 in 2022 and $819 in 2021 | (8,912) | (9,243) |
Accumulated other comprehensive loss | $ (17,938) | $ (16,940) |
Accumulated Other Comprehensi_4
Accumulated Other Comprehensive Loss - Schedule of Accumulated Other Comprehensive Loss (Parenthetical) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended |
Apr. 01, 2022 | Dec. 31, 2021 | |
Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract] | ||
Tax on pension loss | $ 786 | $ 819 |
Accumulated Other Comprehensi_5
Accumulated Other Comprehensive Loss - Schedule of Actuarial Losses Amortized to Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2022 | Apr. 02, 2021 | |
Postemployment Benefits [Abstract] | ||
Amortization of actuarial losses | $ 130 | $ 124 |
Income tax | (21) | (10) |
Net of tax | $ 109 | $ 114 |
Income Taxes - Additional Infor
Income Taxes - Additional Information (Details) | 3 Months Ended | |
Apr. 01, 2022 | Apr. 02, 2021 | |
Income Tax Disclosure [Abstract] | ||
Effective income tax rate | 23.90% | 22.60% |
Deferred Compensation and Oth_3
Deferred Compensation and Other Benefits - Additional Information (Details) - USD ($) | 3 Months Ended | |
Apr. 01, 2022 | Apr. 02, 2021 | |
Deferred Compensation Text Details [Line Items] | ||
Defined contribution plan, cost | $ 100,000 | $ 100,000 |
Employer contributions | 295,000 | 298,000 |
SDBP [Member] | ||
Deferred Compensation Text Details [Line Items] | ||
Benefit payments | 0 | |
SDBP [Member] | Maximum [Member] | ||
Deferred Compensation Text Details [Line Items] | ||
Estimated future employer contributions, next year | 100,000 | |
FDBP [Member] | ||
Deferred Compensation Text Details [Line Items] | ||
Benefit payments | 0 | |
ESBP [Member] | ||
Deferred Compensation Text Details [Line Items] | ||
Benefit payments | 100,000 | 100,000 |
Estimated future employer contributions, next year | $ 500,000 | |
NDBP [Member] | ||
Deferred Compensation Text Details [Line Items] | ||
Targeted minimum return | 4.00% | |
Guaranteed return | 4.00% | |
BDBP [Member] | ||
Deferred Compensation Text Details [Line Items] | ||
Estimated future employer contributions, next year | $ 100,000 | |
Benefit plan, employer contributions | 200,000 | 200,000 |
BDBP [Member] | Maximum [Member] | ||
Deferred Compensation Text Details [Line Items] | ||
Benefit payments | 100,000 | 100,000 |
Key Employee Non Qualified Deferred Compensation Plan [Member] | ||
Deferred Compensation Text Details [Line Items] | ||
Employer contributions | $ 0 | $ 0 |
Number of stock units purchased | 0 | 0 |
Non Employee Director Deferred Compensation Plan [Member] | ||
Deferred Compensation Text Details [Line Items] | ||
Employer contributions | $ 0 | |
Non Employee Director Deferred Compensation Plan [Member] | Maximum [Member] | ||
Deferred Compensation Text Details [Line Items] | ||
Employer contributions | $ 100,000 |
Deferred Compensation and Oth_4
Deferred Compensation and Other Benefits - Schedule of Net Periodic Pension Cost (Details) - Deferred Compensation and Other Benefits [Member] - Executive Officer [Member] - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2022 | Apr. 02, 2021 | |
Defined Benefit Plan Disclosure [Line Items] | ||
Service cost | $ 109 | $ 127 |
Interest cost | 89 | 51 |
Expected return on assets | (170) | (179) |
Amortization of actuarial loss | 131 | 125 |
Net periodic pension cost | $ 159 | $ 124 |
Deferred Compensation and Oth_5
Deferred Compensation and Other Benefits - Schedule of Change in Fair Value of Plan Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2022 | Apr. 02, 2021 | |
Reconciliation of Fair Value of Plan Assets | ||
Fair value of plan assets at beginning of period | $ 19,956 | $ 20,654 |
Return on plan assets | 170 | 179 |
Employer contributions | 295 | 298 |
Benefits paid | (258) | (225) |
Effect of exchange rate changes | (486) | (840) |
Fair value of plan assets at end of quarter | $ 19,677 | $ 20,066 |
Equity-based Compensation - Add
Equity-based Compensation - Additional Information (Details) - $ / shares | Mar. 18, 2022 | Mar. 24, 2021 | Apr. 01, 2022 | Apr. 02, 2021 |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Restricted stock and stock units, granted | 151,556 | 134,592 | ||
Employee Stock Option [Member] | 2020 Equity Award plan [Member] | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Award vesting period | 3 years | |||
Stock options granted | 134,790 | 105,906 | ||
Stock options granted, fair value | $ 3.14 | $ 3.46 | ||
Stock option vest, fair value | $ 9.12 | $ 9.17 | ||
Expected term | 3 years 4 months 24 days | 5 years 1 month 6 days | ||
Expected volatility | 44.60% | 41.90% | ||
Expected dividend yield | 0.00% | 0.00% | ||
Risk-free rate of return | 2.10% | 0.80% | ||
Performance Shares [Member] | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Restricted stock and stock units, granted | 92,815 | 79,917 | ||
Percentage of performance conditions need to be met in order for the shares to vest | 80.00% | 80.00% | ||
Award vesting period | 3 years | 3 years | ||
Award vesting period expiration date | Dec. 31, 2024 | Dec. 31, 2023 | ||
Performance Conditions | The shares will only vest, in part, to senior management if at least 80% of a three-year cumulative target for diluted earnings per share is met for the three-year period ended December 31, 2024. If at least 80% of the three-year EPS target is not met, the grants will expire. | Of the shares granted during 2021 first quarter, 119,874 were granted to senior management, of which 79,917 shares included a performance condition. The shares will only vest in part, to senior management if at least 80% of a three-year cumulative target for diluted earnings per share is met for the three-year period ended December 31, 2023. If at least 80% of the three-year EPS target is not met, the grants will expire. | ||
Other Shares [Member] | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Restricted stock and stock units, granted | 0 | 0 | ||
Director Members [Member] | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Restricted stock and stock units, granted | 12,335 | 14,718 | ||
Vesting period description | The shares vest over the quarter in which they were granted | |||
Senior Management [Member] | ||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||||
Restricted stock and stock units, granted | 139,221 | 119,874 |
Treasury Stock - Additional Inf
Treasury Stock - Additional Information (Details) - USD ($) | 3 Months Ended | |
Apr. 01, 2022 | Apr. 02, 2021 | |
Equity Class Of Treasury Stock [Line Items] | ||
Treasury stock purchase, shares | 0 | 0 |
Shares authorized to repurchase, remaining amount | $ 7,700,000 | $ 7,700,000 |
Issued treasury stock, shares | 244,988 | |
Maximum [Member] | ||
Equity Class Of Treasury Stock [Line Items] | ||
Stock repurchase program, authorized amount | $ 30,000,000 | |
Restricted Stock [Member] | ||
Equity Class Of Treasury Stock [Line Items] | ||
Issued treasury stock, shares | 171,556 |
Significant Clients - Additiona
Significant Clients - Additional Information (Details) $ in Thousands | 3 Months Ended | ||
Apr. 01, 2022USD ($)Client | Apr. 02, 2021USD ($)Client | Dec. 31, 2021USD ($) | |
Segment Reporting Information [Line Items] | |||
Accounts receivable, net | $ 74,674 | $ 84,252 | |
Number of major client | Client | 1 | 1 | |
Number of other major client | Client | 0 | 0 | |
IBM [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenue | $ 16,500 | $ 19,600 | |
Services agreement expiration date | Oct. 27, 2023 | ||
Accounts receivable, net | $ 18,600 | $ 8,900 | |
IBM [Member] | Customer Concentration Risk [Member] | Sales Revenue, Services, Net [Member] | |||
Segment Reporting Information [Line Items] | |||
Revenue, percent | 18.50% | 20.20% |
Segment Information - Additiona
Segment Information - Additional Information (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Apr. 01, 2022USD ($)segment | Apr. 02, 2021USD ($) | Sep. 30, 2021segment | Dec. 31, 2021USD ($) | |
Segment Reporting Information [Line Items] | ||||
Number of operating segments | segment | 3 | |||
Number of reportable segments | segment | 1 | |||
Goodwill | $ 19,174 | $ 19,676 | ||
Europe IT Solutions and Services Segment [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Depreciation | 200 | $ 200 | ||
Goodwill | 17,800 | 18,300 | ||
North America IT Solutions and Services Segment [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Depreciation | 100 | 100 | ||
Goodwill | $ 1,400 | $ 1,400 | ||
Minimum [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Percentage of revenue | 5.00% | |||
Maximum [Member] | Non Strategic Technology Services [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Depreciation | $ 100 | $ 100 | ||
Operating Segments [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Number of operating segments | segment | 1 |
Segment Information - Schedule
Segment Information - Schedule of Operating Segments (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 01, 2022 | Apr. 02, 2021 | |
Segment Reporting Information [Line Items] | ||
Revenue | $ 89,417 | $ 97,129 |
Direct costs | 68,822 | 76,362 |
Gross profit | 20,595 | 20,767 |
Operating expenses | 9,169 | 9,955 |
Contribution profit | 11,426 | 10,812 |
General and administrative expenses | 8,227 | 8,714 |
Operating income | 3,199 | 2,098 |
North America IT Solutions and Services Segment [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenue | 20,435 | 18,454 |
Direct costs | 13,573 | 12,442 |
Gross profit | 6,862 | 6,012 |
Operating expenses | 3,130 | 3,157 |
Contribution profit | 3,732 | 2,855 |
Europe IT Solutions and Services Segment [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenue | 42,478 | 46,007 |
Direct costs | 31,998 | 34,790 |
Gross profit | 10,480 | 11,217 |
Operating expenses | 5,229 | 5,483 |
Contribution profit | 5,251 | 5,734 |
Non Strategic Technology Services [Member] | ||
Segment Reporting Information [Line Items] | ||
Revenue | 26,504 | 32,668 |
Direct costs | 23,251 | 29,130 |
Gross profit | 3,253 | 3,538 |
Operating expenses | 810 | 1,315 |
Contribution profit | $ 2,443 | $ 2,223 |