Earnings Transcript for CTG - Q3 Fiscal Year 2021

Operator: Ladies and gentlemen, thank you for standing by, welcome to the CTG Third Quarter 2021 Investor Conference Call. [Operator Instructions]. As a reminder, today's call is being recorded. I will now turn the call over to your host, John Laubacker. Please go ahead, sir.

John Laubacker: Thank you, Kevin. Good morning, everyone, on the call. Joining me on today's call is Filip Gyde, CTG'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 9, 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's 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 8-K. With that, it's now my pleasure to turn the call over to Filip for his opening remarks. Filip?

Filip Gydé: 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 9 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 service. 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 accelerating. According to a leading third-party research firm, 75% of companies expect to expedite their digital business transformation plan over the next 4 to 5 years. In fact, a majority of our 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 requires 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 CTG for a broad range of IT services and support for nearly 2 decades. This client approached us for an expanded engagement to migrate their aging and expenses 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 involve the migration of their data centers located in Luxembourg as well as 40 business-critical applications. CTG completed the seamless migration of the clients' 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 plus. 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 clients' digital assets. Today, we are continuing to provide this clients 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 as a potential to redefine healthcare by promoting economics that are determined by the quality of care, as opposed to the quantity and types of care provider. However, such a model is only possible with substantial improvements in how the industry captures, manages and ultimately utilizes information. While many of the 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 Record or EHR. CTG has a long history and extensive expertise in this area with many EHR projects successfully completed in the last 5 years, including a growing number of go-live implementation projects. In late October, we announced CTG have commenced work on a company-wide go-live implementation of Epic's Enterprise Electronic Health Record system for a large regional healthcare system clients. This significant multimillion-dollar contract, which will largely be fulfilled during the fourth quarter encompasses both management of the go-live, as well as their 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 spanned advisory and planning, management and execution, as well as end-to-end logistics strategy the complexity and breadth of our 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 clients' principal IT focus can remain on the Epic implementation. Consistent with all of our digital solutions offerings, the end results 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 fourth quarter financial results. The 2 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 to accelerate the digital transformation and the achievement of performance objectives. These are only 2 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 solutions 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 offerings, 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 to-date has been the result of tremendous and disciplined execution of our strategy by a highly capable team. While I'm 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 by 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. John?

John Laubacker: Thank you, Filip, 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% of 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% and from $37 million or 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 and 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 strategy. 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% and 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 was $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 $0.02 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 $0.18 per diluted share in the year ago third quarter, but this also included an $0.08 per diluted share gain from the change in tax legislation. Without that change in tax legislation non-GAAP income in the $2,000 third quarter would have been $0.10 per 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. CTG'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 $37.5 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 GAAP earnings in the fourth quarter to be between $0.15 and $0.17 per diluted share, and non-GAAP earnings are expected to be between $0.16 and $0.18 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. GAAP earnings for the full year are expected to be between $0.49 to $0.51 per diluted share, and non-GAAP earnings are expected to be between $0.55 and $0.57 per diluted share. We are very pleased with the consistent progress and the continued advancement of our digital solutions 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.

Operator: [Operator Instructions]. And our first question is from the line of Josh Vogel of Sidoti.

Joshua Vogel: Hi, I want to start -- 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?

Filip Gydé: Sure, Josh. We have a solid pipeline of, let's say, EHR related work in the healthcare sector. And basically, because we see that, well, the big wave of EHR 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 a 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 go-live, 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 Belgium 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 what we see in Europe.

Joshua Vogel: Sure. Sure. I appreciate those insights. And maybe more for John. Can you just share some thoughts around 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 $41 million in Q3. And then 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?

John Laubacker: Thanks, Josh. A couple of good questions there. Relatively speaking, when you look at the non -- the revenue outside of this engagement, we think, as Filip had just said, we think our pipeline has been very good. I think our transition to that pipeline has been good. Although continue -- but 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, it has been good. So I think we're winning a fair number of deals. Offsetting all of that, as we've said, really a continued focus around -- from an engagement perspective of stepping away from some of the 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 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 and we'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 is very significant impact to the revenue. And I don't -- a large part of that increase from the revenue this quarter to where we expect to be at $112.5 million 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 flooded all of their organizations with people to make sure that they can get information in 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 not -- certainly not significant compared to the overall size of the engagement. Your second question on -- was on guidance, I think.

Joshua Vogel: Yes.

John Laubacker: We felt it was very, very important for us to give guidance this quarter 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 come down a little bit from where they were over the past couple of 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.

Joshua Vogel: Switching gears a little bit. You extended that managed services agreement. Was that for a multiyear engagement? And I'm just curious, are there any other notable projects or engagements that are up for renewal in Q4?

Filip Gydé: 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 of 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 services where additional new releases come out where additional functionalities are being developed. And that's exactly what's happening here. So managed services in development and testing basically in the whole automation framework. So that being said, is that we see many of those initial projects 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, that's spread over the year responding to this pattern.

Joshua Vogel: I appreciate those insights. And one last one, I'll let others jump in. More from a macro level, 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 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?

Filip Gydé: Well, obviously, the labor shortage is an item in our markets and though that's not new. If you -- 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 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, a 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 from -- 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 2 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.

Operator: And our next question from the line of Kevin Liu of K. Liu & Company.

Kevin Liu: First 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, 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?

Filip Gydé: 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, and we are committed to continue to invest in the fourth quarter and also next year. And like we said, in our digital solutions capabilities, in our team, in our solutions and basically very -- more specifically in business development and solutions. And regarding the pricing of the project and the margins of this project of this kind of size of massive size of our go-live, while the pricing associated with those sizes of projects are generally lower than that of smaller projects. John, you want to add?

John Laubacker: I think, Kevin, that about sums it up. I really -- we are absolutely committed. As we've said, we've sort of consistently say from quarter-to-quarter and all of the discussion that we have we're very -- 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 very good consistent start to 2022. So it's really a combination of, as Filip 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.

Kevin Liu: 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 there that will keep the growth a little bit more depressed for Europe?

Filip Gydé: 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 are still looking at COVID, and we're still not back to pre-COVID terms, but we see market 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 very limited so people have taken a lot of holidays in Q3 and are catching up, but there's still some holidays to come in Q4. But I think quarter-by-quarter, we're coming back to a more normalized way of business, which is, frankly, very encouraging for us in the future.

Kevin Liu: That's definitely good to hear. I think you guys talked about in the pipeline, you're seeing some existing customers have opportunities to expand their work. I was wondering if that's across 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?

Filip Gydé: Yes, we see that in both Europe and North America. And frankly, that is also a very good evolution. Because 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 having strong long-term clients that are moving together with us that are looking at our offerings in 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 periods 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. Could you repeat the second part of your question, Kevin?

Kevin Liu: 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?

Filip Gydé: 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 -- the 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.

Kevin Liu: Great. And then maybe just kind of along the lines of some of the earlier questions from Josh on the staffing shortages. 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 how do you feel about your ability to offset any potential wage inflation, as we go into next year?

Filip Gydé: 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 our -- to position us stronger, as opposed to that inflation. The 2 areas that I 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 in 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.

Kevin Liu: 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 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 fall off going into Q1 next year? Or should we think about it more -- there's a baseline here ex that project that we should kind of keep the revenue level at until more of the business starts converting?

Filip Gydé: Well, looking at next year, 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 a very positive sign going forward. Obviously, like we said, this is a huge John used the dramatic size of a project and that shows a big increase in Q4. Like we said, we're not giving guidance to -- 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?

John Laubacker: Yes. I think that's a very well put, Filip. Kevin, I think that the -- 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 in the quarter there will be a baseline that's more consistent with where we've previously been, but I'd also agree Filip that there's very nice opportunities in both the pipeline and signed business to have good progress starting out next year.

Operator: No further questions in queue. And back over to management for closing remarks.

Filip Gydé: Thank you, Kevin. In closing, the third quarter marked another quarter of continued progress and execution on CTG's digital solutions 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.

Operator: Ladies and gentlemen, that does conclude your conference. We do thank you for joining. You may now disconnect. Have a good day.