Computer Task Group, Incorporated

Ladies and gentlemen, thank you for standing by. Welcome to the CTG third quarter 2021 investor conference call. At this time, all participants are on listen-only mode. If you wish to place yourself in queue at any time, you may press 1 then 0 on your telephone keypad. To remove yourself from queue, you may repeat the 1 then 0 command. If you're using a speakerphone, please pick up your handset before pressing the numbers. As a reminder, today's call has been recorded. I will now turn the call over to your host, John Lawbecker. Please go ahead, sir.

Thank you, Kevin. Good morning, everyone on the call. Joining me on today's call is Philippe Bidet, CCG's President and Chief Executive Officer. Before we begin, I want to remind listeners that statements made during the course of this conference call to 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, November 9th, 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. Philippe?

Thank you, John, and good morning to all of those listening on the phone and webcast. we appreciate you joining us on today's quarterly conference call. The third quarter was another very productive quarter for CTG. As we continue to build on the momentum generated from the ongoing strategic repositioning of our operations and the rebranding initiatives undertaking during the first nine months of the year. For the fourth consecutive quarter, revenue increased year over year in both our solutions business and for the company as a whole. Solutions grew by 12% to nearly 46% of total revenue, compared with 42% in the year-ago quarter, resulting in an increased mix of higher margin business and driving toward our 2023 vision of 50% or more solutions revenue. Additionally, we drove margin improvement within our staffing business as we continued our stated objective of gradually disengaging from less profitable staffing services. As a result of successfully executing our strategy, consolidated operating profit increased 48% year-over-year, demonstrating the significant progress we have made to increase profitability. supporting the consistent improvement in our financial results is our focus on the expansion of solutions business including our most recent actions to position ctg as a leading enabler of digital transformation technology innovation remains one of the most disruptive market trends driving reshaped business models across nearly all companies and industries As a result, the market opportunity for digital solutions is not only large and growing, but also accelerated. According to a leading third-party research firm, 75% of companies expect to expedite their digital business transformation plans over the next four to five years. In fact, a majority of organizations recognize the need to embrace digital transformation in order to effectively compete. Yet many companies have only scratched the surface of their long-term plans. This is primarily because comprehensive transformation initiatives are often complex and require significant coordination of resources in order to effectively implement change. Even after implementation, companies frequently encounter additional challenges with scaling new digital solutions across their organization, or they fall short of realizing the anticipated performance improvements. Our digital solutions strategy positions CTG to capitalize on this growing need and opportunity. Leveraging our deep and diverse domain expertise, Together with an expanding portfolio of solutions, we serve as a catalyst for clients to accelerate their digital transformation while also ensuring achievement of their desired performance objectives. To provide a recent example, we have an existing client that has utilized TTG for a broad range of IT services and support for nearly two decades. This client approached us for an expanded engagement to migrate their aging and expensive to maintain data centers to a more efficient cloud-based solution. As a leading provider of telecom-related services, the transition required no interruption in business continuity and involved the migration of their data centers located in Luxembourg, as well as 40 business-critical applications. CTG completed the seamless migration of the client's data and applications, including a complete redesign of software to retrofit a key financial application to scalable and optimized pay-as-you-go AWS cloud platforms. In addition to creating more than $1 million of annualized cost savings, the completed migration resulted in improved data backup and recovery, as well as enhanced security and monitoring of the client's digital assets. Today, we are continuing to provide this client with digitally enabled IT support for its cloud-based platforms, including Amazon AWS, Microsoft Azure and 365, and ServiceNow. As previously mentioned, Digital transformation is taking place across every industry, and some of these transformations are reshaping the future of certain industries. Today, this is clearly demonstrated within healthcare, which continues to be an important target market and driver of growth for CTG. Value-based care has the potential to redefine healthcare by promoting economics that are determined by the quality of care as opposed to the quantity and types of care provided. However, such a model is only possible with substantial improvements in how the industry captures, manages, and ultimately utilizes information. While many other variables will also determine the longer-term success of value-based care, one of the first fundamental building blocks is broad adoption of effective electronic health care. or EHR. CTG has a long history and extensive expertise in this area with many EHR projects successfully completed in the last five years, including a growing number of go-live implementation projects. In late October, we announced CTG had commenced work on a company-wide go-live implementation of Epic's enterprise electronic health record system for a large regional healthcare system client. This significant multi-million dollar contract, which will largely be fulfilled during the fourth quarter, encompasses both management of the go-live as well as the associated on-site and remote Epic Classroom training in support of more than 10,000 estimated end users including thousands of providers. With responsibilities that span advisory and planning, management and execution, as well as end-to-end logistics strategy, the complexity and breadth of a go-live project this size is immense. As part of delivering a comprehensive solution, we are leveraging a broad combination of proven methodologies together with coordinated internal and external expertise and multiple proprietary ctg digital tools in addition we are simultaneously providing 24 7 legacy application management and support managed services for various applications and systems so that the client's principal i.t focus can remain on the epic implementation Consistent with all of our digital solutions offerings, the end result for this client will be an accelerated business transformation that achieves desired performance improvements and maximizes their return on a significant investment in EHR. As reflected in our revenue guidance, this project will also be a significant contributor to our four quarter financial results. The two digital solutions engagements that I've outlined, one, the cloud migration for a telecom services provider, and the second for go-live EHR implementation for a regional healthcare system. Each demonstrates how CTG solutions enable clients accelerated digital transformation and the achievement of performance objectives. These are only two prominent examples that they represent the type of client engagements and solutions that are becoming an increasing portion of our overall business. More broadly, the launch and branding of our digital solution strategy continues to be well received, and more importantly, resonates well with both prospective and existing clients. We currently have a solid and growing pipeline of new business engagements that span our core portfolio of digital transformation, including application development, intelligent automation, cloud platforms, data analytics, and automated testing. Notably, This includes an increasing number of opportunities for expanded relationships with existing long-served clients for planned business transformations. Our success today has been the result of tremendous and disciplined execution of our strategy by a highly capable team. While I am pleased with what we've accomplished in a relatively short period of time, I would emphasize that both the opportunity for digital transformation solutions and CTG's penetration of the market are still in its early development. Therefore, we remain committed to making continued investments targeted at further expansion of our team, capabilities, and our portfolio of scalable digital transformation solutions in support of further capitalizing on what we believe is significant growth potential in the coming years. I will now turn the call over to John for a detailed review of our third quarter results and financial guidance for the fourth quarter.