CTG - Earnings call transcript Q3 2018 | Computer Task Group Inc

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Operator

Ladies and gentlemen, thank you for standing by. Welcome to the CTG quarterly conference call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Jim Culligan. Please go ahead.

Jim Culligan

good and Greg you, morning everyone. Thank on and Chief me President Chief today’s Laubacker, call President CTG’s and Officer. Crumlish, Bud Financial Executive Vice are Executive With Officer John and

that based projected. the assumes we date results as forward-looking important information on statements conference Before statements. update that could company’s expectations It’s are from hopes, the company’s to management’s state want the forward-looking and XX, I to information company after those of today, The predictions These these call during call. differ no course for October actual Thursday, the on of begin, conference from the and of statements this intentions, materially this to beliefs, that statements or note XXXX. based obligation mention future are

information with SEC. well could factors made press during the actual forward-looking differ today's management’s and to with is as the company’s that the release in call statements results the earnings from contained Also, filings in the those statements press release as information. concerning include financial Additional cause non-GAAP With Bud today’s results turn call release provided both certain financial measures of his adjusted to for measures remarks. over are in and a that, non-GAAP related opening the I discussions X-K. and press GAAP and will of to reconciliation the These company’s

Bud Crumlish

business multiple operations. results in continued the of quarter due financial as us well secured to joining better million third I new Thanks than guidance year-over-year recently million clients, our with Revenue growth the for everyone primarily brief good across million. on our this $XX.X call. Jim overview as to XX% Solutions morning of and up will $XX was begin quarter. European range increased of a Health exceeding ramp the our for to and Revenue $XX the anticipated

the earlier we Soft performance further to be this of year Europe with and complemented pleased acquisition highly strategic continue trends acquisition. favorable Company in France has of based this Our the

line earnings sustainable expectations and from we Third to excluding in continue growth. with our the drive proceeds were development sales quarter gain as to in share per new business life insurance reinvest

Given several to the solutions new our start in business further of last only within revenue within In growth. clearly contribution solutions commentary consolidated achieved developments the year-over-year approximately the we our like of are addressing traction increased healthcare. quarter, business Revenue demonstrates from increasing as we staffing early expanded by positive the success quarter third represented gain notable $XX.X business. higher-margin healthcare specific a in quarter, continuing I XX% positive to followed portion broader would million objective, of the the year-ago market traction this year, from XX% XX% of our emerge revenues reflecting solutions support to to in and revenue solutions or by which trends particularly total the over during

recognition is highlight the Speaking in testament for modern one six as and in foundation renewed serves culture years. healthcare best fifth strength of a of as proud which the CTG work health important great magazine growth time and the recognized This recently I to places am healthcare, the solutions. healthcare healthcare to team, of an last for to our that

in as secured over the a for application the past offerings, previously health of accounts ramp quarter contract by our fact, highlighted well wins strong multiple business few In the quarters. solutions US advantage had up very as

based the and Epic providing or Catholic EHR extended expanded clients subsequent business services engagement contracts we July an We meaningful sizable healthcare recently implementation initiatives, the during for to we're implement a Legacy announced support expanded of growing health healthcare new scope in momentum US to in this a system end, partnership solutions to most also on existing system. advanced quarter XX Electronic also hospital or with Adding Applications. with a we Healthcare quarter, significantly to

this we contract for working solutions actively billable this account increased we new are our growing quarter total of which formalize solutions. within as anticipate experienced during completion fourth to the expanding headcount demand We cost-effective health with portfolio quarter. in Overall, the

efficiency We continue many Across information providers on position services capitalize our a data information current through for offerings have and to to and healthcare including performance. effective EHR and need value application to industry, growing enterprise prevailing based care management a of management. transition advantage, optimize improve the

the traction our over addressing acute fact, is offering we EIM gain quarters. this launched need recently need, with additional specifically at In targeted to an coming solution and expect

traction industrials. diversified healthcare We Solution for gaining are EIM outside such our also in areas

Our subsidiary for of in that for broad of a only client. secured energy recently with growing a one Alaska solution's five-year a contract pursuing EIM number new example EIM the engagements represents dollar actively market. team we existing the and outside This healthcare of are of large multimillion solutions

average area industry XX% the quarterly the from business of period last year-over-year. be European in to XX% this Europe approximately from growing by than Turning to well Europe. expanded consolidated same with revenues performance compared our revenue to continues of of with more operations year. Revenues of revenue The above XX%

In contract institutions. contributing Luxembourg growing European Europe, competitive. new European notably operations generate of skilled growth our wins, from which are combination professionals to for also addition market remains environment of expanded Results through most to and with the our in extremely Soft and teams the region, Company current continue to in in a reflective our momentum the organic Belgium

we attract in of technical retention secured recruiting worked Company, continued during business above-average testament team ramp-up efforts expectations. is in our the quarter our Specific the the to and highly to and Our and aggressively preparation our of acquired further our of integration Soft resources the multiple dedication Europe, perform talent of made a skilled quality to organization with progress in to well recently contracts. on line

increasingly To we out in together remarks conduct early, to to emphasize on a organization. has want teams the still that our which a in realize I been operations it's already proceeds and our the they key strategic two Solutions, of Europe Although as on of work have as my past The also not evident synergies Solutions to quarters. engagements momentum business close as sales pipeline area are respective only we begun initial increasingly years. further over generate our over expect we our efforts growth, expanding are future invested business continue new coming have for in positive the positioning execute results, to CTG in we these contract, combined

to the business. turning Now Staffing

with broadly, and environment as XX% including seemingly many giving spend $XX.X growth economic grew staffing more the from modest macro This in during the associated the typically XX% CTG's softness companies revenues approximately of months, the performed increase summer quarter consolidated economic area or additional million, to representing largely of resilient year-over-year our expected seasonal quarter business of degree revenue. opportunities. key the staffing resulting their is confidence Third

expanded new the of our During progress divisions clients, existing at in CTG's to also staffing XX objectives on the client. quarter, and four marking expand we clients services new portfolio staffing secured continued diversify and

Additionally, our the increase the the though more placements. directly in US cultivating for unemployment assembled low trend, we direct this dedicated are small, prevailing contribution current recently Even definite already have clients. effort. relatively team a permanent result a seen demand have growing specific In recently address as permanent to is implemented of market placements the we still recruiting in pace of revenue rates record this order to

previous sales our and development leveling in mentioned I of our the increasing organization we effectiveness activities. call, are our up business As

teams in of key recruiting alignment ongoing strategic part our As quarters executives further of hired enhancements in we new the two delivery and and these efforts, accounts the made areas. third to

We also total several recruit our quarter. made additions during net the to headcounts

our supporting and increased in further objectives, larger to growth business will strategic initiatives continue drive our staffing addition In streamlining the to organizations efficiencies.

pleased during quarter by I I multiple of like the within tangible as remarks detailed to and continued health of areas for by conclude operations. my performance the the are of a CTG's making the notable we traction I across financials, progress organization. Before European as to demonstrated would over the the turn emphasizing am well John solutions, we consistent more review strong opening especially

has the the enabled to the results, opportunities producing incremental to engagements. plan and performing revenue. As evidenced a reinvesting of is growth conversion highest new pipeline us establish business existing growing and We also accelerate continue into to execution new our of in of areas by meaningful our

from our overall enhancing improving are revenue services, quality we the to efficiencies of generate staffing which our together we Additionally, profitability. contribute with will increased

I'll Now, financial a quarter over to call John and results more for turn our of the detailed third guidance. future review

John Laubacker

call. Thank We Good Bud. us on you everyone. conference the joining you, today appreciate morning,

consolidated the quarter. in report in impact the The XXXX in with $XX compared days press of second was quarter XXXX, third XX and this in of and in third quarter days quarter the $XX.X third the we with million release, million were of quarter revenue increased negligible. in days the revenue second XXXX. to XX compared morning's in on million the $XX.X the in As of third quarter currency year-ago third quarter XX Billable translation XX.X%

with diluted per and quarter insurance related per of in with third third diluted quarter income net up the expenses. revenue GAAP million XX% during seasonality medical momentum other in revenue XXXX. increased year's was as XXXX, in This total revenue or per share from several third in effectively XX.X% XX.X% of Solutions excluding was largest net related well of $X.X $XX,XXX share third during in our the $X.XX were ramp from the XX.X% diluted quarter months. per of $X.XX and X% on GAAP revenue $XX.X $X.XX costs last were non-GAAP per $X.XX of per of driven $XXX,XXX our $XX.X the sequential XX% solutions' increased share from reflecting of and costs. in during the $X.XX generating included related of of $XXX,XXX engagements of income million of company's XXXX the third in into self-insured which which quarter acquisition second per revenue third quarter the per GAAP in second largely year-ago million, net life million, revenue new than in XXXX, Revenue of summer Year-over-year, gain unusually in which share or by or life compared the quarter the revenue quarter XX.X% on quarter days' the total percentage revenue share quarter of a year-ago diluted associated $XX.X $X.XX income of XX.X% and quarter compares the continued second diluted quarter. the revenue as $X.XX net a $X.X the reflecting from IBM represented in in new third or the client quarter share costs acquisition the $X.XX income billable US which the solutions included the in million, European the million was share second clients of a staffing high the XX% income diluted quarter expenses flat XXXX with $XX.X was XXXX, with which with accounts. No or a with costs revenue or was included the as quarter and per insurance. basis. acquisition XX.X% second non-taxable more and third compared a share operations, non-taxable compared or quarter. quarter. health $XX.X of of related plan. Direct or compared million, decline expenses Staffing net gain $X.XX with quarter the excluded a of XXXX, Staffing engagements was in unusual XXXX the continued Non-GAAP associated medical or acquisition third excluding conversion in $XXX,XXX year-over-year share

the head of X,XXX was second X,XXX third the quarter. is the headcount of quarter number XXXX the at reminder, billable a to how the of compared Approximately at following the and consultants. calculate the Soft CTG's a third quarter consistent Company, total order was count billable utilize with quarter reflect with large our year levels. end we XX% Accordingly, end XXXX previous of which X,XXX third the of approximately headcount subcontractors of total at where As define in revised acquisition we and better we of end ago

million to of and XXXX third the $XXX,XXX the quarter $X.X Turning debt. cash quarter. of outstanding second our had with in third the compared sheet; $XXX,XXX cash equivalents long-term were were Capital balance the $XX.X expenditures at quarter million end we of and in

price we the the company end, repurchase XXX,XXX share. CTG's to quarter $X third had $X.X of stock under authorization. the million of At an During approximately average existing shares common per repurchase used million $X.XX at remaining quarter

to be to is our quarter $XX revenue to $XX the range Turning million Total from expected guidance. million. fourth in of for a XXXX

Additionally, are we related the expect fourth-quarter per XX%. XXXX, expected is we $X.XX and from Non-GAAP quarter excluding assets approximately an range acquisition of There range amortization days share. to from to billable $X.XX effective expenses net XX diluted of income to GAAP intangible net and income $X.XX of per tax $X.XX diluted to fourth anticipate in rate share.

For anticipated from expected non-GAAP $XXX track the the to range range to growth XX% of $X.XX year. per of diluted with midpoint to to to year XXXX goals share. $XXX to our $X.XX full the is on XXXX, fourth-quarter net income million is is $X.XX revenue guidance, the net share million. $X.XX income revenue diluted expected XXXX per from our top-line achieve for we At are for GAAP full from full and year for range to strong

highest of which our to we earlier, the short-term performing indicated having results. Bud is make impact a areas in on focused business investments our bottom-line As continue

in work and more certain the increasing materializing pace also of margin do in order have bottom which within mix business by to staffing the line improve the to results. We investments the while higher productivity are

our you improved remain profitability for our as on the XXXX please deliver forward, three-year call in strategic plan can quarters priority our that, intent With the investments will Q&A in Greg, session. manage to return financial achieving we is maximize open targets. on and questions. Looking now the our we coming

Operator

Vince [Operator Please the line first Research. Instructions] question from from ahead. Your Barrington comes of go Colicchio

Vince Colicchio

Any balance will of be you Could the Challenges year? us terms the Bud. for understand margin? guidance Yes, color of the helpful? help staffing in impacting

Bud Crumlish

diligent is impact with the one you at mean, larger entire really working when the you larger activities mid staffing the more thing to -- know that's and about Vince, we've fourth thing we're as growing volume can on that. mix, as grown it's pushing quarter with and volume that's we are that I that and lower But guide, the the we you margins, look our of business accounts. that that most dramatic higher market causing the have probably we margin, the

Vince Colicchio

it focus anything -- in think more and is force issue? sales else? you a that it Do vertical needed Is place

Bud Crumlish

especially the On I relationship and and in to ramp mean take up, the we're when salespeople time account, to lot going market of based. they force, the sales mid you're a adding larger out

that right it's going and staffing business, just We probably a it's and have a still just direct takes services But of time, direction. communication going smaller that of with certainly right portion the and the our we longer it's taking it's in want, in buyers direction. but the and than of course,

Vince Colicchio

IBM I then And or going I of in higher expectations? number How a a expecting being did what I was too IBM-- bit And was your like it higher, I does forward? bit think maybe come look versus optimistic. a was expecting

Bud Crumlish

terms-- mean we're and with IBM in-- we're certainly other got I came them. They growing-- growing other we opportunities

dealing only money. them not very we've really And level with as been long and we So them know work And, with the the getting. about know, relationship we're you positive a business to make time. how of I feel but for

other it business. was different had of may is group, a Some the do a we chip considered revenue sold a of with that IBM impact and a-- division that is some bit little they had had that the they off things to had It account. that as before in a

Vince Colicchio

Okay.

that if chance Is that there to they'd past, Soft sense think the is future? you have the mentioned know existing happening you in accounts of help at? some you Company, in I near any for the share able had that-- you I remember that gain correctly, be

Bud Crumlish

different some synergy Yes, a that's couple got working. of clients. with We actually

out part more contact, got we larger helped wouldn't close actually we're this and on we us that have. a we because and helped really otherwise were group; their working Company proposal of of Soft fact that actually a capabilities that In deal

start. Now, compete against and then a so that's

some have actually. We for to Belgian brought them do work the We from some Soft work there into area us. Company

in really it different and the do so we're both in out other pushing countries, together So the connecting are different and market because we our sales to ways services clients. teams rolling have

So well. going very it's

Operator

go Zach Cummins FBR. the Riley next comes Please of B. from from Your question line ahead.

Zachary Cummins

Can morning, of a Good results talk John. your business? of potential going health on in Yes, the Bud strength more factors congrats bit kind specifically Hi. in the you QX. opportunities little some the are driving And pipeline that of care in strong about the and see that you America? some North forward,

Bud Crumlish

in with want Zach. electronic the -- healthcare to acquisitions-- In is mergers and Sure, they the healthcare consolidation standardize what their applications. health there industry, the

So, as and at Health working to that multi-- fold Initiatives; what like want doing And have that's these that's And the larger are on they hospitals they going a consistency out. more and under come that. so we're hospitals are a have organization, more standardization. of Catholic in multiple

least of last So put lot a trend putting-- some of bit like, to some a that driver. they whole that's at ten They're been is of put application, also going system. a a an have and in complete There's do complicated in you were RFP it's actually now so certainly these timeframe a it's new typically for and almost a were they these XXXX-XXXX refresh. were-- putting years; out

an and over good critical we're to just of take piece. at information then, with some are well. So think complex physician's Advantage, it the health really affordability clinical us looking these activity And Application it, at times. also our systems. doing Clinical they're kind really at at Desk driving like the really is very And And to hospitals-- it that's answer , of that. part good as And Service seems thing calls it's for the I XXxX they're also to

there's business, continue handle some to is radiologist had to trying certain calls. been or grow we actually the example, a get really of get get nice surgery we going information, trying to and seeing our that it. And something a on; for where can't MRI a a that's So portion growing

of people. would they And so call our one

highly not walk they people, skilled people just that on need and through so it's actually implementations, procedure. did the help get the system the So are skilled can information a them they these and very highly a move with them they

based are complement either indirectly. So all to our conversion also care of the those whole areas. then And the value solutions directly or of And value-based couple a there's care.

outpatient was with out and So lot more that's well. efficiencies things of as type and drive working going gain to to we're lot health that population of our clients on services a cost something a on, are

Zachary Cummins

That's And EPS more of It sounds can or helpful. investments the business really need make QX changes to your in some like that you about of to talk terms Great. you mix related forward? going headwinds improve your staffing then in volume the the business are guidance. but there staffing margins really of higher to

Bud Crumlish

looks we're business of that significant and the direct targeted account portion to smaller much to it's going really -- already of and build can hiring we it's Well, but just smaller takes like amount -- I time mentioned it presence. ones a And matter up we it's to after those executives our a before, a have higher of a that a taking towards it's it's really it's as taken-- smaller-- really impact, it markets volume is as margins. after And that the we're have time. a go get to said-- I relationship staffing

marketplace. we continue amount there's these absorption so while rate a certain it forward to can that we quickly, very and as the solidified call maintain and we that so more many doing an push our takes add now. profitability we of And people, account that happen get we to time we're add that, to everything want executives, you can-- So so it more

-- And diligence. that possible taking it's taking that's want, it's what the we direction. with increase moving to but guess of than I a as as much we're right trying probably longer in So lot

Operator

the at there are questions. for the further to no And closing this time to now turn back I'd like management remarks. call

Bud Crumlish

Greg. Thanks,

I enhanced to as ability want in express well my to closing growth, confidence CTG's as Before today's well-founded achieve call, profitability. continued both on

all operations a areas and As continue this experience growing consistently of demonstrating enhanced In we to measured outperform are strategic earlier Solutions, our top-line also acquisition of execution, growth our deliberate year. further our business. and momentum European across Soft result by significant of Company progress

the my to new of profitability. and continue in expanding are determined are remarks, As offerings. traction we solutions revenue I meaningful to in order health quality overall gaining highlighted in we business win to And incremental earlier enhance Staffing, new for improve

in quarter. and for driving continued forward, We goals and continued progress your our the reporting we growth as for today's support support achieving as look for next Looking investments focused XXXX. on CTG. and efficiencies, well top-line remain With joining maximizing of you increased return again call thank that our objectives in of on forward financial

Operator

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Computer Task (CTG) 18 Oct 182018 Q3 Earnings call transcript