Computer Task Group, Incorporated

Ladies and gentlemen, thank you for standing by and welcome to CTG's fourth quarter 2020 results conference call. At this time, all participants are in a listen-only mode. Following management's prepared remarks, we will conduct a question and answer session and instructions will be given at that time. As a reminder, today's conference call is being recorded for replay purposes. I would now like to turn the conference call over to CTG's Executive Vice President and Chief Financial Officer, John Laubacher. Please go ahead.

Thank you, Kara. Good morning, everyone. Joining me on today's call is Philippe Day, TTG's President and Chief Executive Officer. Before we begin, I want to remind listeners that statements made during the course of this conference call state the company's or management's intentions, hopes, beliefs, expectations, and predictions for the future are forward-looking statements. It is important to note that the company's actual results could differ materially from those projected. These forward-looking statements are based upon information as of today, Tuesday, February 23, 2021. The company assumes no obligation to update these statements based upon information from and after the date of today's conference call. Additional information concerning factors that could cause actual results to differ from those made in the forward-looking statements is contained in today's earnings press release as well as in the company's SEC filings. In addition, the company's press release and management statements during the call include discussions of certain adjusted non-GAAP measures and financial information. These financial measures and reconciliations of GAAP to non-GAAP results are provided in both today's press release and the related Form 8K. With that, it is now my pleasure to turn the call over to Philippe for his opening remarks.

Thank you, John. Good morning to all of you joining us on the phone and participating via webcast. It's a pleasure to be speaking with you today and report on our continued success. The team's consistent commitment to disciplined execution on our strategic plan resulted in a strong finish to a year of exceptional financial performance. Fourth quarter revenue was up more than 14% sequentially, driven by growth from our solutions business. including increased demand for our portfolio of digital solutions offerings. Revenue from solutions grew 22% sequential, expanding to 42% of total revenue. Contributing to our strong sequential growth was a larger than anticipated increase in health solutions business. During the quarter, we benefited from further expansion and the completion of an extensive engagement for a previously announced go-live implementation and training services project with a large existing healthcare system in the U.S. Another notable area of strength was our IT infrastructure and implementation business in Luxembourg, where year-end spending by existing clients contributed to meaningfully higher sales in the fourth quarter. Additionally, we maintained robust utilization of our billable resources across the organization, including lower levels of unallocated bench resources within our European operations. Combined with our gradual disengagement from lower margin staffing business, we closed out 2020 with our highest operating margin in five years. For the full year, we significantly improved overall profitability with both operating and net income, as well as adjusted EBITDA, increasing year over year to represent new multi-year highs. When considering the challenging environment and a lower consolidated revenue base, our strong operating and bottom-line results for the year serve as important validations that our existing solution strategy is working and yielding the anticipated outcomes. We have continued to demonstrate growing momentum in our solutions business, coupled with a focused expansion of CTG's digital solutions offerings. Our emphasis on solutions and the ability to deliver them remotely allowed us to capitalize on increased demand for digital solutions. as clients adapted to the prolonged impact of the global pandemic and the remote working environment. For example, we experienced strong demand for our Microsoft 365 and Teams implementation and consulting services, which are expanded offerings that we launched in the second half of the year to complement our broader cloud conversion and integration solution. Additionally, we were awarded the first in series of potential engagements to rapidly deploy and manage COVID-related help desk solutions for healthcare provider clients. In conjunction with the sustained shifts toward remote working and online collaboration that were brought about by the COVID-19 pandemic, there are also a number of megatrends emerging as meaningful market disruptors. Most applicable to CTG and our clients are new technological breakthroughs, which produce fast and constantly moving market trends that have effectively forced all businesses to embrace digital transformation as one of their top priorities. At the core of CTG's solution strategy, we provide the technologies and methodologies to meet the evolving needs of clients as they increasingly seek to integrate digitalization into their business decisions and day-to-day operations. Today, our existing portfolio of digital transformation solutions addresses clients' needs in numerous high-demand areas, including artificial intelligence, machine learning, Internet of Things, and cloud computing platforms. Notably, according to market research, a majority of the technology projects, the digital technology projects initiated by companies, ultimately fail to deliver the intended value. We believe this translates to an opportunity for CTG, given our proven track record of reliably delivering repeatable digital transformation solutions through our established network of global delivery centers. Our centralized and scalable delivery approach ensures a unique combination of higher reliability and minimized overall delivery costs for our clients. Over the past year, we have continued to expand our capabilities and expertise through investments in our sales and business development organizations, development of new innovative digital solutions offerings, and broader global delivery center capabilities. Today, we have a well-defined solution strategy and dedicated leadership team in place that together has been the fundamental driver of our substantial progress and strong operating performance over the past year. With a solid foundation in place, we are now looking to take the next step to meaningfully advance our digital solution strategy as a catalyst and accelerator of digital transformations. Over the past several months, we have been working diligently on a major new initiative aimed at empowering a growing client base with the digital solutions they need for their businesses to succeed. We are extremely excited about this initiative, which accelerates the expansion of our digital capabilities and expertise, while positioning CTG to capitalize on a substantial and growing market opportunity. In advance of our planned launch in the coming days, I want to take this opportunity to preview four of the key elements and areas in which we are making focused investments as part of this initiative. Industry-leading talent. CTG is actively assembling a world-class global solutions organization comprised of talented industry leaders and multidisciplinary professionals that are focused on developing expanded digital solutions and service offerings that can readily be scaled to meet clients' needs. Following a series of key new hires and appointments over the past year, we have eight solutions leaders, which includes Olivier Saussure, a proven digital strategist and transformation expert who we promoted to vice president CTG Global Solutions in January. Breakthrough digital transformation offerings. We are working aggressively to expand CTG's portfolio of digital transformation solutions with a focus on specific areas that leverage technologies which enable the accelerated achievement of business outcomes. Innovative tools and methodologies. We are also making ongoing investments in tools, training programs, and methodologies which help clients increase their speed to market maximize innovation, and support high performance. Global delivery network. We've implemented initiatives to further leverage CTG's existing delivery centers in North America, Western Europe, India, and South America. Expansion of our delivery center platform will enable us to provide the broader spectrum of scalable IT systems including process automation, application development and maintenance, testing, infrastructure and cloud solutions management and maintenance, and service best. Each of these four key elements and areas of investment are in direct support of our larger solution strategy, enhancing our ability to accelerate project momentum and enable clients' successful digital transformations. More specifically, we are focused on empowering clients to innovate faster, make more informed data-driven decisions, create better experiences for end customers, and ultimately, realize tangible business performance improvements. In addition to our focus on leveraging this new initiative to drive transformative growth, we will continue to pursue synergistic acquisitions that are accretive to earnings, complement our existing offerings, and further accelerate the introduction of new digital solutions capabilities across new geographies and an expanded client base. Importantly, I also want to emphasize that the primary objectives underlying our solution strategy and plan remain unchanged. These include our continued commitment to immediately improve margins and earnings, generating longer-term growth above that of our served markets, targeting higher margin digital solutions, and optimally allocate capital in support of continued operating performance and strategic acquisitions that accelerate the expansion of our digital solutions portfolio. These objectives, along with our solution strategy and our new digital transformation initiative, all go hand in hand. Collectively, they are the driving force behind CTG being premier global solutions provider that is widely recognized for enabling client successful digital transformations. As we make incremental progress toward this goal through the execution of our strategic plan, we are confident that we will continue to achieve sustained improvement in our operating performance and profitability. I will now turn the call over to John for a detailed review of our fourth quarter results, as well as commentary related to our outlook for the current quarter and year.