This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk04: 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.
spk02: 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?
spk05: 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.
spk02: John? Thank you, Philippe. And again, good morning, everyone. Thank you for joining us on today's call. As reported in our press release earlier this morning, consolidated revenue in the third quarter was $90.6 million compared with $92.2 million in the second quarter and $88.6 million in the third quarter of 2020. The sequential decrease in third quarter revenue primarily reflected seasonality in Europe and in our North American staffing business and our continued disengagement from lower margin IT staffing projects. The increase in revenue year-over-year was driven by the continued expansion of our solutions business, including new client engagements for our digital transformation offerings. Solutions revenue in the third quarter was $41.3 million or 45.6% total revenue. This compares with $41.2 million or 44.7% of total revenue in the previous quarter. Year-over-year, solutions revenue increased $4.3 million or 11.7% from $37 million were 41.7% of total revenue in the third quarter of 2020. Currency translation had a positive impact of $0.5 million on revenue in the third quarter of 2021 compared with a positive impact of $3.9 million in the second quarter and a positive impact of $1.8 million in the third quarter of 2020. Total billable days in the third quarter were 63 compared with 64 days in the second quarter in 63 days in last year's third quarter. Revenue from IBM in the third quarter was 18.9 million or 20.9% of revenue compared with 19.6 million or 21.2% of total revenue in the second quarter and 18.6 million or 21% of total revenue in the year-ago quarter. No other client represented more than 10% of revenue during the third quarter of 2021 or in recent comparable periods. Gross profit in the third quarter was $20.3 million, or 22.4% of revenue, compared with $20.4 million, or 22.1% of revenue in the second quarter of 2021, and $19.5 million, or 22.1% of revenue in the year ago third quarter. Third quarter SG&A expense of $17.6 million reflected our continued investment in IT digital transformation offerings and business development resources consistent with our solution strategies. This was essentially flat with SG&A expense in the second quarter of 2021 and compares with $17.7 million in the third quarter of 2020. GAAP operating margin in the third quarter remained steady at 3%, which was flat compared with the second quarter, and a significant increase of nearly 50% from 2.1% in the third quarter of 2020. Non-GAAP operating margin in the third quarter which excludes approximately $300,000 of acquisition-related expenses, was 3.3%, compared with 3.2% in the second quarter and an increase from 2.7% in the year-ago third quarter. The effective income tax rate for the third quarter was 22.6%, compared with 28% in the second quarter and a negative 31.2% in the third quarter of 2020. As a reminder, the negative tax rate in the year-ago quarter was due to a one-time tax benefit resulting from a change in tax legislation. GAAP net income in the third quarter is $1.7 million, or $0.11 per diluted share, and included approximately $200,000, or $0.02 per diluted share, of acquisition-related costs. Non-GAAP net income for the third quarter was $1.9 million, or $0.13 per diluted share. For comparison, GAAP net income for the second quarter of 2021 was $1.8 million or $0.12 per diluted share and included approximately $200,000 or $0.01 per diluted share of acquisition-related expenses. Non-GAAP net income for the second quarter was $2 million or $0.13 per diluted share. GAAP net income in the third quarter of 2020 was $2.8 million or $0.20 per diluted share which included a net $200,000 of income, or two cents per diluted share, comprised of acquisition-related expenses, offset by a gain from non-taxable life insurance. Non-GAAP net income was $2.6 million, or 18 cents per diluted share, in the year-ago third quarter, but this also included an eight cent per diluted share gain from the change in tax legislation. Without that change in tax legislation, non-GAAP income in the 2003rd quarter would have been 10 cents, for diluted share. Adjusted EBITDA in the third quarter of 2021 was $3.7 million, compared with $4.1 million in the second quarter and $3.3 million in the year-ago third quarter. Adjusted EBITDA for the trailing 12 months as of the end of the third quarter of 2021 was $16.5 million. CDG's total headcount at the end of the third quarter was approximately $3,600, compared with $3,650 at the end of the second quarter of 2021 and approximately $3,750 at the end of the year-ago third quarter. Slightly over 90% of our third quarter 2021 headcount was billable. Turning to our balance sheet, cash and cash equivalents at the end of the quarter were $31 million. Also at the end of the quarter, the company had no outstanding balance on its revolving line of credit facility or any other long-term debt. Capital expenditures in the third quarter were $258,000, compared with $298,000 in the second quarter and $685,000 in the third quarter of 2020. Looking forward, based upon current bookings and the significant expected work related to the large EPIC implementation go-live engagement we have discussed, the company anticipates revenue to increase in the fourth quarter and be in the range of between $110 and $115 million. additionally we expect gap earnings in the fourth quarter to be between 15 and 17 cents per diluted share and non-gap earnings are expected to be between 16 and 18 cents per diluted share taken together with our year-to-date financial results revenue for the full year of 2021 is expected to be between 300 and 395 million dollars gap earnings for the full year expected to be between 49 51 cents per diluted share and non-GAAP earnings are expected to be between $0.55 and $0.57 per alluded share. We are very pleased with the consistent progress and the continued advancement of our digital solution strategy. We will also continue to search for attractive acquisitions to accelerate the growth of our solution strategy within a disciplined capital allocation framework. We are committed to generating additional value for shareholders, built on margin expansion and EBITDA growth. including a continued investment in offshore delivery capabilities. That completes our prepared remarks. Kevin, could you please initiate and manage our question and answer session, please?
spk04: Thank you. And if you have not already done so, you may press 1 then 0 on your telephone keypad at this time to place yourself in queue for questions. You may repeat the 1 then 0 command to remove yourself from that queue. If you're using a speakerphone, please pick up your handset before pressing the numbers. And our first question is from the line of Josh Vogel of Sudoti. Please go ahead, sir.
spk01: Thank you. Good morning, John and Philippe. Thanks for taking my questions. Good morning, Josh. Thanks. I want to start, you know, you mentioned this is your third go-live engagement over the past year. I was wondering if you can talk about the pipeline for EHR-related work and Are there opportunities outside of the U.S.? And basically, just given your footing and expertise and brand name in the space, what's your average conversion rate on landing these types of projects?
spk05: Sure, Josh. We have a solid pipeline of, let's say, EHR-related work in the healthcare sector. Basically, because we see that Well, you know, the big wave of HR implementations happened before even 2015. We see that there's now some kind of a replacement starting to happen. And also, we also see that there's significant merger and acquisition activity in the healthcare sector, which when you integrate different parts of hospital systems, you want obviously to come to one EHR. So that's the activity we see. We have a solid pipeline. As we are making a solid name for ourselves in that sector in the goal line, we see that our success rate in closing these opportunities is high. So we are positive looking forward. Now, regarding your question about outside of the states, looking in Europe, we have some strong healthcare activity in Belgium, but the EHR systems that are being implemented in Belgium are not of the size and the scope of an epic. So we're talking a different level of EHR systems. Epic has only a couple of implementations in the whole of the Benelux, Cerner even less. So we're talking about more homegrown EHR systems like Primus, which is the major system from the University Hospital of Brussels in Belgium for which CTG is the prime and only integrator at this moment. But you cannot compare the Belgian hospital systems with the hospital systems in the States. Like here, we're talking about more than 10,000 end users. That's simply not the scale we see in Europe.
spk01: Sure, sure. I appreciate those insights. Maybe more for John. Can you just share some thoughts around, you know, how much is the EPIC implementation expected to contribute in Q4? I just want to get a sense of the sequential uptick we should see here from the, you know, 41 million in Q3. And then, you know, also it's good to see you providing guidance again. And I just kind of want to get a frame of mind for 2022. Is there any residual or long-term revenue coming from this engagement that will contribute next year?
spk02: Thanks, Josh. A couple good questions there. Relatively speaking, when you look at the revenue outside of this engagement, we think, as Philippe had just said, we think our pipeline has been very good. I think our transition through that pipeline has been good, although Philippe and I continue to believe not at the pace now pre-COVID 18 months ago, but still very good. And our conversion rate, which was part of your question, has been good. So I think we're winning a fair number of deals. Offsetting all of that is, as we've said, really a continued focus around, from an engagement perspective, of stepping away from some of this lowest margin staffing business. And so you've got some movements up and you've got some movements down. And I think another movement up in Q4 is we've got, we expect our utilization to return to a little bit normal. We did have fairly robust over the summer months, as we suspected, as we expected, people taking the advantage after not doing it last summer, but doing it this summer, taking some holiday time in the third quarter, both in Europe and in our North American business. And so you've got stepping away from some low margin staffing. You've got people utilization going up a little bit as they come back. And I think a very good throughput on the pipeline. Having said that, This project, this Epic Go Live implementation, has very significant impact to the revenue. And a large part of that increase from the revenue this quarter to where we expect to be at $112,500 is related to this project. Now, as you may know, with these types of projects, typically what you do is you do training in advance. And so you've been working with your client for some time now to do training ahead of time. And that's something that we've been working on during this quarter and will continue throughout the project. Then you have a go-live period around the specific go-live date before and after the system goes live to make sure that you've flooded all of their organizations with people to make sure that they can get information out of and into the new system. So the go-live itself tends to be fairly concise over a defined period of time, and most of that will be in this quarter. We do expect some residual business from this project to go into Q1, but certainly not significant compared to the overall size of the engagement.
spk01: That's really helpful. Thank you.
spk02: Your second question was on guidance, I think?
spk01: Yes. Thank you.
spk02: Yeah. We felt it was very, very important for us to give guidance this quarter on given the significant change in the revenue and what we believe will be the profits in Q4. And it's something that we're looking at going forward. I think as markets have calmed down a little bit from where they were over the past couple quarters and last year, it gives us a little bit better visibility into where we're going. So I won't say that we will definitively give guidance going forward, but it's something we're thinking very strongly about and leaning towards.
spk01: That's understandable. The Switching gears a little bit, you extended that managed services agreement. Was that for a multi-year engagement? And I'm just curious, are there any other notable projects or engagements that are up for renewal in Q4?
spk05: Well, yes, this has been an extension of an engagement that has already been going on for a number of years. It's a long-term client where we've done digital transformation, redesign, redevelopment of most of their systems. And now we're continuing. Like we see that development in the digital world is not so much a project start and finish way of working anymore. It's more a managed service as well. additional new releases come out where additional functionalities are being developed and that's exactly what's happening here so managed services in development in testing basically in the whole automation framework so that being said is that we see many of those initial project now moving into kind of a cycle of repeatable business and managed services extensions. So we see more and more of our business spread over the year, not necessarily in Q4, but spread over the year responding to this pattern.
spk01: I appreciate those insights. And one last one, I'll let others jump in. More from a macro level, you know, obviously a very well-documented labor shortage, especially when we get into the IT ranks. Can you talk about where you may be seeing the most pressure or difficulty filling in an assignment or project? And on the flip side, where you may be or where you may have a leg up on peers because you have such a strong bench or a pool of labor to tap?
spk05: Okay. Well, obviously, yes, labor shortage is an item in our markets. And though that's not new, if we remember pre-COVID, we were talking already about the war for talent that started out in Europe that then started to move to the States. So we've been used to this war for talent and have put systems in place to make sure that we can keep our retention to the higher levels that we have been used to. Being a certified great place to work in all of the countries where we operate is definitely a big support. Where do we see labor shortage? Well, obviously where everybody sees it, digital skill sets are in demand. I think the reason why we don't have at this moment the really strong difficulties that we see that the market is having is partly our culture and management style and being a great place to work, but also our focus on developing skills and developing people who come right from school. So we're hiring a lot of juniors, training them in the different areas from automated testing to cloud to artificial intelligence and intelligent automation. And also looking at a more global workforce where we can add talent now from India and Colombia, where we have two pools of talent that we can also involve in our global projects. So I think, yes, labor shortage is definitely an item. At this moment, I don't think CTG is really hurting because of it.
spk01: Gotcha, gotcha. Well, Philippe and John, thank you for taking all my questions.
spk04: Thanks, Josh. Pleasure, Josh. And our next question, one moment, please, is from the line of Kevin Liu of K. Liu & Company. Please go ahead.
spk03: Hi. Good morning, guys. Nice quarter, and congrats on a strong outlook here. Thanks, Kevin. Thanks, Kevin. Good morning. There's this question here. Just as it relates to the guidance, obviously, for Q4, it's a fairly significant step up on the revenue line. In terms of your EPS guidance, you know, it kind of suggests that not all of that flows through to the bottom line. So I was wondering if you could talk a little bit about how much of that is attributable to maybe just kind of the margin profile of the engagements for Q4 versus any plans you have to invest more significantly in the business ahead of fiscal 22.
spk05: Sure, Kevin. I'll start and give you the high-level picture, and then John can add some color to it. We see, if you look at our Q4 earnings, that we have a very strong improvement in operating results from both recent quarters and last year. We are committed to continue to invest in the fourth quarter and also next year in, like we said, in our digital solutions capabilities, in our team, in our solutions, and basically very more specifically in business development and salute. Regarding the pricing of the project and the margins of this project of this kind of size, of a massive size of our goal life, while the pricing associated with those sizes of projects are generally lower than that of smaller projects. John, you want to add?
spk02: I think that, I think Kevin, that about sums it up. I really, we're absolutely committed. As we've said, we've sort of consistently say from quarter to quarter and all the discussions that we have, we're committed to making sure that we have the right people to expand our solution strategy over time as we move forward. And so this is a great time to take some of those dollars and make those investments so that we can drive a, a very good, consistent start to 2022. So it's really a combination of, as Philippe said, lower margins from a project of this dramatic size, coupled with the continued investments that we want to make to drive the business in the future.
spk03: Yep, understood. And then just turning to your European business, the revenue growth was fairly flattish in Q3. How much of that was just purely tied to vacations this year versus maybe folks not taking any last year? And more importantly, as you look to your Q4 guidance, are we assuming that goes back to kind of the double-digit growth rate we've seen in the past, or are there other impacts that'll keep the growth a little bit more depressed for Europe?
spk05: I think your analysis, Kevin, is spot on. What we've seen in Europe is now more a typical European year, which kind of is encouraging And like John said, we're still looking at COVID and we're still not back to pre-COVID terms, but we see markets stabilizing here and there and coming back to normal. So yes, in Q3, vacations were for Europe almost back to normal again, and that shows in the pattern of the revenue. we expect in Q4 that also there will come back to normal with that slight caveat that, well, the Q1 and Q2 holidays have still been, uh, very limited. So people have, uh, have taken a lot of holidays in Q3 and are catching up, but there's still some holidays to come in, in Q4. But I think, uh, quarter by quarter we're coming back to a more normalized way of business, which is frankly very encouraging for us in the future.
spk03: Yep. That's definitely good to hear. I think you guys talked about, you know, in the pipeline you're seeing some existing customers have opportunities to expand their work. I was wondering if that's across, you know, both Europe and North America, And then also, if you could just touch on how broad-based that is across various industries as you look at the opportunities going into Q4 and for next year.
spk05: Sure. Yes, we see that in both Europe and North America. Frankly, that is also a very good evolution because, you know, since we've been well working more remotely and since that hasn't come back totally in person meetings with clients and with new clients are typically very useful in building a starting up relationship so we're still a little bit away from normal ways of working with clients and I think maybe the in-person meetings are not going to come totally back when we see business normalizing. But, yeah, having strong long-term clients that are moving together with us, that are looking at our offerings and digital solutions and that are moving together with us in that area is a very strong signal of trust and they really like our reliability and the fact that we deliver. But mostly in the period where making new clients is more difficult than pre-COVID, being able to rely on growth with our current client base is frankly fantastic. And that is, like you asked, it is definitely something we see in Europe and North America.
spk03: Could you repeat the second part of your question, Kevin? It was related to that, just trying to get a sense for if it's also broad-based across industries or if it's concentrated in any specific areas.
spk05: Okay. No, it really is across industries. And that's, well, that's the opportunity of digital transformation. It is happening across all industries. Everybody is looking at accelerating. Everybody is really focusing on getting the desired business outcomes. And you can see it in government. You can see it in telco. Like we've talked about different sectors, healthcare is still a very strong sector for us in the States and in Belgium. But we see it in all of our industries.
spk03: Great. And then maybe just kind of along the lines of some of the earlier questions from Josh on the staffing shortages, you know, wage inflation is another one that kind of comes up frequently. Are you guys seeing any impact of that kind of on the margin profile of your business or kind of what you might have to price for some of the opportunities in the pipeline? And just, you know, how do you feel about your ability to offset any potential wage inflation as we go into next year? Sure.
spk05: Yes, wage inflation is definitely a point. We see in Europe inflation coming back, getting to a couple of percentages on an annual basis. But if you look to our policy with HR, you see a couple of things that we're doing that also help are uh to to position us stronger as opposed to that inflation the two areas that i've talked about just recently one finding young graduates junior people and then training them ourselves makes that we really have people that are exactly trained in the methodologies in the approaches with the skill sets that we really need and that are still junior and still have a strong progression ahead of them. But at this moment being at the right place in compensation package and also for wage inflation not immediately an issue. And then secondly, moving more to a really global workforce with our colleagues in India and in Colombia. That also helps managing our cost of delivery and keeping that under control.
spk03: Great. And just lastly, for me, I know you guys probably aren't ready to provide any sort of guidance for 22 today. But as we think about, you know, the early part of next year and you guys finishing up the work on this large project, is it your expectation that you have enough kind of contracted business and opportunity in the pipeline where it may not be a dramatic falloff going into Q1 next year. Or should we think about it more of, you know, there's a baseline here, X, that project, you know, that we should kind of keep the revenue level at until more of the business starts converting?
spk05: Well, looking at next year, I think I can safely say that both John and I are optimistic. Like we said, we have a growing pipeline. We're very proud of the conversion we see happening in that pipeline in all places, North America, Europe, different industries, businesses stabilizing. We're not going to be overly optimistic because COVID isn't leaving us and may never leave us in total, but we see businesses normalizing, stabilizing, which is it. a very positive sign going forward. Obviously, like we said, this is a huge, John used the word dramatic, size of a project. And that shows a big increase in Q4. Like we said, we're not giving guidance for 22. There will be Maybe a short tail of that project moving into Q1, but most of it is being done in Q4. John, anything you would like to add to that?
spk02: Yeah, I think that's very well put, Philippe. Kevin, I think that we should not consider this sort of the baseline going forward, that given the size of the project and the fact that it's contained within the quarter, there will be a baseline that's more consistent with where we've previously been. But I'd also agree with Philippe that there's very nice opportunities in both the pipeline and signed business to have good progress starting out next year.
spk03: All right. That's real helpful. I appreciate the time, and thanks for taking the question.
spk04: Thanks, Kevin. No problem. Thanks. Okay. No further questions in queue. I'm back over to management for closing remarks.
spk05: Thank you, Kevin. In closing, the third quarter marked another quarter of continued progress and execution on CTG's digital solution strategy. Our achievement of year-over-year growth, both within our solutions business and for the total overall business, continues to validate that we have an effective strategy and the right team in place to deliver on business objectives. Coupled with this growth, we are realizing sustained improvement in the company's operating metrics and generating increased profitability. Moreover, we are confident that our previous repositioning of CTG as a catalyst for clients to achieve accelerated digital transformation will lead to realizing our longer term vision and financial targets for 2023. Near-term, as discussed on today's call, we are well positioned and expect to finish out the year with very strong top-line growth in the fourth quarter. Consistent with our progress year-to-date, we also expect to deliver increased operating profits and bottom-line results, further demonstrating the success of our strategy and the ongoing commitment to building long-term value for all CTG shareholders. Thank you again for joining us today and your continued support of CTG. Kevin, you may now disconnect the call.
spk04: Thank you. Ladies and gentlemen, that does conclude the conference. We do thank you for joining. You may now disconnect. Have a good day.
Disclaimer