Computer Task Group Inc (CTG) 2022 Q4 法說會逐字稿

Greetings, and welcome to the CTG Fourth Quarter Fiscal Year 2022 Financial Results Conference Call. (Operator Instructions) As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Craig Mychajluk, Investor Relations. Thank you, Craig. You may begin.

您好，歡迎來到 CTG 2022 財年第四季度財務業績電話會議。 （操作員說明）提醒一下，正在錄製此會議。現在我很高興向您介紹主持人 Craig Mychajluk，投資者關係部。謝謝你，克雷格。你可以開始了。

Yes. Thank you, and good morning, everyone. We certainly appreciate your time today and your interest in CTG. Joining me are Filip Gydé, our President and CEO; and John Laubacker, our Chief Financial Officer. We released our fourth quarter and full year 2022 financial results this morning before the market is open. You can access the release on our website at ctg.com. After Filip and John's formal discussion this morning, we will open the line for Q&A.

是的。謝謝大家，早上好。我們非常感謝您今天的時間以及您對 CTG 的關注。加入我的是我們的總裁兼首席執行官 Filip Gydé；和我們的首席財務官 John Laubacker。我們今天早上在市場開盤前發布了第四季度和 2022 年全年的財務業績。您可以在我們的網站 ctg.com 上訪問該版本。 Filip 和 John 今天上午正式討論後，我們將開通問答熱線。

Just let me first remind you that we may make some forward-looking statements during the formal discussions as well as during the Q&A session. These statements apply to future events that are subject to risks and uncertainties as well as other factors that could cause actual results to differ materially from what is stated on today's call. These risks and uncertainties and other factors are provided in the earnings release as well as with other documents filed with the Securities and Exchange Commission.

首先讓我提醒您，我們可能會在正式討論和問答環節中做出一些前瞻性陳述。這些聲明適用於受風險和不確定性以及其他可能導致實際結果與今天的電話會議中所述內容存在重大差異的其他因素影響的未來事件。這些風險和不確定性以及其他因素在收益發布以及提交給美國證券交易委員會的其他文件中提供。

These documents can be found on our website or at sec.gov. During today's call, we'll also discuss non-GAAP financial measures, which we believe are useful in evaluating our performance. You should not consider this additional information in isolation or as a substitute for results prepared in accordance with GAAP. We have provided reconciliation of non-GAAP measures with comparable GAAP measures in the tables in today's release and SEC filings.

這些文件可以在我們的網站或 sec.gov 上找到。在今天的電話會議中，我們還將討論非 GAAP 財務指標，我們認為這些指標有助於評估我們的業績。您不應孤立地考慮此附加信息或將其作為根據 GAAP 編制的結果的替代。我們在今天發布的表格和 SEC 備案文件中提供了非 GAAP 措施與可比較的 GAAP 措施的對賬。

I'll now turn the call over to Filip to begin. Filip?

我現在將電話轉給 Filip 開始。菲利普？

Thank you, Craig, and good morning, everyone. We appreciate you joining us today. The fourth quarter capped off another excellent year for CTG as we accelerated our transformation into a digital solutions and services business. You can see the results of our efforts in our IT Solutions and Services segment results, including both North America and Europe, where our fourth quarter gross margin expanded 590 basis points to 31.8%, our highest level in recent years.

謝謝你，克雷格，大家早上好。感謝您今天加入我們。隨著我們加速向數字解決方案和服務業務的轉型，第四季度為 CTG 又一個出色的一年畫上了句號。你可以看到我們在 IT 解決方案和服務部門的努力成果，包括北美和歐洲，我們第四季度的毛利率增長了 590 個基點，達到 31.8%，這是近年來的最高水平。

The performance within our North America segment, which includes the acquisition of Eleviant, highlighted the potential of our transformation as we achieved gross margins of 43.9%. Our European segment also drove higher margins from improved utilization and a greater mix of digital solutions.

我們北美分部的業績（包括收購 Eleviant）凸顯了我們轉型的潛力，因為我們實現了 43.9% 的毛利率。我們的歐洲分部還通過提高利用率和更多的數字解決方案組合提高了利潤率。

As we complete the first phase of our transformation by the end of 2023, into an IT digital solutions and services-based business, our strategy is based upon several key elements. First, we are focused on becoming a global provider of digital IT solutions by capitalizing on the compelling trends of digital transformation, leveraging the CTG brands built on the foundation of reliability, speed of delivery and results and delivering solutions primarily into the health care, finance, manufacturing, government and energy sectors.

當我們在 2023 年底之前完成轉型的第一階段，轉變為基於 IT 數字解決方案和服務的業務時，我們的戰略基於幾個關鍵要素。首先，我們專注於成為全球數字 IT 解決方案提供商，利用數字化轉型的引人注目的趨勢，利用建立在可靠性、交付速度和結果基礎上的 CTG 品牌，並主要向醫療保健、金融領域提供解決方案、製造業、政府和能源部門。

All of which are areas of strength for CTG. As part of our digital solutions strategy, we are focusing on providing software engineering service, which includes designing, testing, operating and enhancing digital products and platforms. We provided more than $100 million of these services in 2022. And the gross margin on these services was greater than 34% in the fourth quarter. We are excited by this success and look forward to increasing these results even more in the future.

所有這些都是 CTG 的優勢領域。作為我們數字解決方案戰略的一部分，我們專注於提供軟件工程服務，包括設計、測試、運營和增強數字產品和平台。我們在 2022 年提供了超過 1 億美元的此類服務。第四季度這些服務的毛利率超過 34%。我們對這一成功感到興奮，並期待在未來進一步擴大這些成果。

The second element includes completing acquisitions that can become seeds for growth. We have 3 main criteria as we evaluate each opportunity. First, the company must be a well-established organization that is profitable. Second, the skill sets they have must accelerate our digital transformation strategy. And third, their solutions and people must be highly synergistic to our strategy. These criteria were met with the acquisition of Eleviant, which was previously a privately owned digital transformation company.

第二個要素包括完成可以成為增長種子的收購。在評估每個機會時，我們有 3 個主要標準。首先，公司必須是一個穩固的盈利組織。其次，他們擁有的技能組合必須加速我們的數字化轉型戰略。第三，他們的解決方案和人員必須與我們的戰略高度協同。這些標准通過收購 Eleviant 得到滿足，Eleviant 以前是一家私有數字化轉型公司。

As a reminder, this acquisition closed at the very end of the 2022 third quarter. And while small from a revenue contribution standpoint, Eleviant has brought significant digital expertise in areas such as AI, machine learning and intelligent automation while expanding our capabilities in cloud migration, mobile application development, and other technologies such as blockchain and best-in-class SaaS platforms.

提醒一下，此次收購於 2022 年第三季度末結束。雖然從收入貢獻的角度來看很小，但 Eleviant 在人工智能、機器學習和智能自動化等領域帶來了重要的數字專業知識，同時擴展了我們在雲遷移、移動應用程序開發和其他技術（如區塊鍊和一流技術）方面的能力SaaS 平台。

To date, the integration has gone exceptionally well and is exceeding our expectations. You can see the early benefits of their strong margin profile in our North America results during the quarter. Over time, we look forward to further driving sales synergies and delivering even greater value for our clients. The third element of our strategy is to focus on lowering our delivery costs. Eleviant also brings this element to CTG. As they increased our offshore delivery center capacity and flexibility with the addition of established teams in Chennai and Coimbatore, India.

迄今為止，整合進展得非常順利，超出了我們的預期。您可以在我們本季度的北美業績中看到他們強勁的利潤率狀況帶來的早期好處。隨著時間的推移，我們期待進一步推動銷售協同效應，並為我們的客戶提供更大的價值。我們戰略的第三個要素是專注於降低我們的交付成本。 Eleviant 也將這一元素帶到了 CTG 中。隨著他們在印度金奈和哥印拜陀建立團隊，提高了我們離岸交付中心的能力和靈活性。

Additionally, their expertise in artificial intelligence and robotic process automation will also allow us to automate a number of functions when we deliver services to our clients, further reducing our cost of delivery. Another important aspect to accelerate the execution of our overall strategy is our most important asset, our people. We continue to add highly experienced colleagues to our ranks. During the fourth quarter, we added a new global position of Chief People Officer to ensure we have consistent policies and practices worldwide and are continuously improving as an employer in the recruiting and retention of today's leading digital services and solutions (inaudible).

此外，他們在人工智能和機器人過程自動化方面的專業知識也將使我們能夠在向客戶提供服務時自動化一些功能，進一步降低我們的交付成本。加速執行我們總體戰略的另一個重要方面是我們最重要的資產，即我們的員工。我們繼續增加經驗豐富的同事到我們的隊伍中。在第四季度，我們增加了一個新的全球首席人力官職位，以確保我們在全球範圍內擁有一致的政策和做法，並作為雇主在招聘和保留當今領先的數字服務和解決方案（聽不清）方面不斷改進。

Our goal is to make CTG a destination of choice for a highly talented digital transformation. The disciplined execution of our strategy led to improved operating results. For the fourth quarter, our adjusted EBITDA margin was 6.2%, up 40 basis points over last year's period and 130 basis points higher over a 2-year period. We continue to make incremental, steady progress towards our goals as we approach the end of the first phase of our transformation. These achievements would not have been possible without the hard work and dedication of our 3,000 colleagues across the globe who responds to constantly evolving trends to create value for our clients every day.

我們的目標是使 CTG 成為高素質數字化轉型的首選目的地。我們戰略的嚴格執行導致了經營業績的改善。第四季度，我們調整後的 EBITDA 利潤率為 6.2%，比去年同期上升 40 個基點，比 2 年期間上升 130 個基點。隨著我們接近轉型第一階段的尾聲，我們將繼續朝著我們的目標取得漸進、穩步的進展。這些成就離不開我們全球 3,000 名同事的辛勤工作和奉獻精神，他們每天都響應不斷變化的趨勢，為我們的客戶創造價值。

Our clients turned to CTG as their trusted digital transformation partner and our outstanding employees are the very key to that success. We believe we are well positioned as we head into 2023, leveraging our strong foundation, breadth of key capabilities, culture of innovation and energized workforce provides confidence that we can continue to navigate underlying pressures and macro uncertainties to achieve our near-term goal of approximately 7% adjusted EBITDA margin by the end of 2023.

我們的客戶將 CTG 作為他們值得信賴的數字化轉型合作夥伴，而我們優秀的員工是取得成功的關鍵。我們相信，在進入 2023 年之際，我們處於有利地位，利用我們堅實的基礎、廣泛的關鍵能力、創新文化和充滿活力的員工隊伍，使我們有信心繼續應對潛在壓力和宏觀不確定性，以實現我們的近期目標到 2023 年底調整後的 EBITDA 利潤率為 7%。

With that, let me turn it over to John to review our results in more detail. John?

有了這個，讓我把它交給約翰更詳細地審查我們的結果。約翰？

Thank you, Filip. And again, good morning, everyone. We thank you for joining us on today's call. Consolidated revenue in the fourth quarter was $77.9 million. The change in revenue year-over-year reflects last year's fourth quarter, benefiting from more than $25 million from a major health system engagement in North America and a $9.3 million decrease related to the intentional disengagement from lower-margin, nonstrategic business.

謝謝你，菲利普。再次，大家早上好。感謝您參加今天的電話會議。第四季度的綜合收入為 7790 萬美元。收入同比變化反映了去年第四季度，受益於北美主要衛生系統參與超過 2500 萬美元，以及與有意脫離低利潤、非戰略性業務相關的收入減少 930 萬美元。

Specifically in North America, we are generating solid leads and closing new customer engagements and we benefited from the incremental contribution of Eleviant. Europe, which has faced greater macroeconomic headwinds, including labor constraints, executed well to drive new solutions-based business and generate a slight increase in revenue year-over-year on a constant currency basis.

特別是在北美，我們正在產生穩固的潛在客戶並完成新客戶的參與，並且我們受益於 Eleviant 的增量貢獻。歐洲面臨更大的宏觀經濟逆風，包括勞動力限制，但在推動基於解決方案的新業務方面表現良好，並在固定匯率基礎上實現收入同比略有增長。

Full year consolidated revenue of $325.1 million was in line with our expectations and was also impacted by these 2 items, the significant engagement and the disengagement from low-margin, nonstrategic projects. As we highlighted today, our margin profile improved during the quarter and year as we continue to optimize our revenue mix.

全年合併收入為 3.251 億美元，符合我們的預期，也受到這兩個項目的影響，即大量參與和退出低利潤、非戰略性項目。正如我們今天強調的那樣，隨著我們繼續優化收入組合，我們的利潤率在本季度和本年度有所改善。

Consolidated gross margin was 27.6%, up 530 basis points over last year's fourth quarter and 630 basis points higher over a 2-year period. As Filip mentioned, the combined North America and Europe IT Solutions and Services segments delivered a fourth quarter gross margin of 31.8%, further highlighting our continued transformation to a digital IT solutions company. Our focus going forward will be on the combined results of our IT Solutions and Services segments as that is the core of our strategic focus and as we expect the nonstrategic segment to have less of an impact on our overall results going forward as it continues to decrease in size.

綜合毛利率為 27.6%，比去年第四季度高 530 個基點，比兩年期高 630 個基點。正如 Filip 所提到的，合併後的北美和歐洲 IT 解決方案和服務部門在第四季度實現了 31.8% 的毛利率，進一步凸顯了我們向數字 IT 解決方案公司的持續轉型。我們未來的重點將放在我們的 IT 解決方案和服務部門的綜合結果上，因為這是我們戰略重點的核心，因為我們預計非戰略部門對我們未來整體業績的影響會越來越小，因為它會繼續減少在尺寸方面。

For the full year 2022, which reflected similar results as fourth quarter, gross margin on a consolidated basis was up 260 basis points to 24.6% as each segment drove gross margin expansion. This increase was more than a 10% increase year-over-year. SG&A expense for the quarter and full year saw declines on an absolute dollar basis. But as a percentage of revenue were both up largely due to the continued investment in business development resources and the loss of operating leverage from lower revenue.

對於 2022 年全年，反映了與第四季度相似的結果，由於每個部門推動毛利率擴張，綜合毛利率上升 260 個基點至 24.6%。這一增長比去年同期增長了 10% 以上。按絕對美元計算，本季度和全年的 SG&A 費用均有所下降。但佔收入的百分比均有所上升，這主要是由於對業務發展資源的持續投資以及收入下降導致的經營槓桿損失。

For the fourth quarter, GAAP operating income was $2.5 million with a margin of 3.1%. While excluding $696,000 of acquisition-related expenses and $838,000 of severance, the non-GAAP operating income was $4 million or 5.1% of revenue, up 30 basis points. The full year had comparable results with the GAAP operating margin expanding 20 basis points to 3.4% and the non-GAAP operating margin expanding 70 basis points to 4.3%.

第四季度，GAAP 營業收入為 250 萬美元，利潤率為 3.1%。不包括 696,000 美元的收購相關費用和 838,000 美元的遣散費，非 GAAP 營業收入為 400 萬美元，佔收入的 5.1%，上升 30 個基點。全年業績可比，GAAP 營業利潤率擴大 20 個基點至 3.4%，非 GAAP 營業利潤率擴大 70 個基點至 4.3%。

We recorded net income of $1.2 million or $0.08 per diluted share in the quarter compared with $0.58 in the prior year. Non-GAAP diluted EPS, again, excluding the acquisition-related costs and severance was $0.14 compared with $0.25 in the year ago quarter. Of note, the effective tax rate was elevated in the quarter at 37.5% due to a number of nondeductible items. We expect in the long term, our tax rate to be between 30% and 35%.

我們在本季度記錄的淨收入為 120 萬美元或每股攤薄收益 0.08 美元，而去年同期為 0.58 美元。不計收購相關成本和遣散費的非 GAAP 攤薄每股收益為 0.14 美元，而去年同期為 0.25 美元。值得注意的是，由於一些不可扣除的項目，本季度的有效稅率提高到 37.5%。我們預計從長遠來看，我們的稅率將在 30% 到 35% 之間。

For the full year 2022, net income was $6.6 million or $0.44 per diluted share, and on a non-GAAP basis, was $0.56 per diluted share, slightly exceeding the midpoint of our expectations. Lastly, our net income margin was 1.6% in the quarter and 2.0% for the full year. Our adjusted EBITDA margin improved to 6.2% in the fourth quarter, which was up 40 basis points from the year ago quarter and was 5.3% for the full year, up 70 basis points from the prior year.

2022 年全年淨收入為 660 萬美元或攤薄後每股收益 0.44 美元，按非公認會計原則計算，攤薄後每股收益為 0.56 美元，略高於我們預期的中點。最後，我們本季度的淨利潤率為 1.6%，全年為 2.0%。我們調整後的 EBITDA 利潤率在第四季度提高至 6.2%，比去年同期增長 40 個基點，全年為 5.3%，比去年同期增長 70 個基點。

Approximately 86% of our total head count in the fourth quarter was billable compared with 90% in the prior year period. We continue to maintain a strong and flexible balance sheet that can be leveraged to accelerate our pace of growth in the future. We generated cash from operations during the year of $11.9 million. Cash and cash equivalents were $25.1 million at year-end compared with $35.6 million at year-end 2021, reflecting the cash used to acquire Eleviant. Also at the end of the year, we had no outstanding balance on our revolving line of credit facility or any other long-term debt.

與去年同期的 90% 相比，第四季度我們總人數的大約 86% 是可計費的。我們繼續保持強大而靈活的資產負債表，可以利用它來加快我們未來的增長步伐。我們在這一年的運營中產生了 1190 萬美元的現金。年底現金及現金等價物為 2510 萬美元，而 2021 年底為 3560 萬美元，反映了用於收購 Eleviant 的現金。同樣在年底，我們的循環信貸額度或任何其他長期債務都沒有未償餘額。

We provided our initial top and bottom line guidance for fiscal 2023. Our revenue range of $300 million to $350 million includes a reduction of $35 million to $40 million from the prior year as a result of the intentional disengagement from the lowest margin business in our nonstrategic technology services segment, slightly offset by a full year of revenue from our acquisition of Eleviant which only had 1 quarter of revenue in 2022 as the acquisition was completed at the end of the third quarter and high single-digit growth for the rest of the business.

我們提供了 2023 財年的初步頂線和底線指導。我們的收入範圍為 3 億至 3.5 億美元，其中包括由於我們有意脫離我們非戰略性業務中利潤率最低的業務而比上一年減少 3500 萬至 4000 萬美元技術服務部門，略微被我們收購 Eleviant 的全年收入所抵消，由於收購在第三季度末完成，Eleviant 在 2022 年只有 1 個季度的收入，其餘業務的高個位數增長.

We also provided guidance for our IT Solutions and Services revenue, ranging from $245 million to $295 million or about 83% of our total revenue at the midpoint. We expect 2023 GAAP diluted earnings per share to range from $0.34 to $0.46 and non-GAAP diluted earnings per share to range from $0.56 to $0.68. As also noted in today's earnings release, we are kicking off an ERP system implementation to enhance our core operating systems in order to create additional efficiencies, capabilities and flexibility.

我們還為我們的 IT 解決方案和服務收入提供了指導，從 2.45 億美元到 2.95 億美元不等，約占我們中點總收入的 83%。我們預計 2023 年 GAAP 攤薄每股收益在 0.34 美元至 0.46 美元之間，非 GAAP 攤薄每股收益在 0.56 美元至 0.68 美元之間。正如今天的收益報告所述，我們正在啟動 ERP 系統實施，以增強我們的核心操作系統，從而提高效率、能力和靈活性。

The total project cost is estimated at $8 million to $10 million, and we largely spread out over a 2-year period, with a completion date targeted around the end of 2024. A significant portion of these costs will be expensed over the course of the project. Our GAAP EPS estimates for 2023 take this project into consideration, though we plan to add back those costs as part of our non-GAAP EPS disclosures. The difference in our GAAP and non-GAAP EPS will be larger in 2023 as compared with prior years as we account for the amortization of the intangible assets created by the acquisition of Eleviant and this ERP implementation.

項目總成本估計為 800 萬至 1000 萬美元，我們主要分攤在 2 年期間，目標完成日期為 2024 年底左右。這些成本的很大一部分將在項目。我們對 2023 年的 GAAP EPS 估計將這個項目考慮在內，儘管我們計劃將這些成本作為我們非 GAAP EPS 披露的一部分。與往年相比，我們的 GAAP 和非 GAAP 每股收益在 2023 年的差異將更大，因為我們考慮了收購 Eleviant 和此 ERP 實施所產生的無形資產的攤銷。

Ultimately, we continue to expect our strategy to drive improved margins and are on track to reach our adjusted EBITDA margin goal of a run rate of approximately 7% by the end of 2023. This completes our prepared remarks. Paul, could you please open the call for questions?

最終，我們繼續期望我們的戰略能夠提高利潤率，並有望在 2023 年底之前實現我們調整後的 EBITDA 利潤率目標，即運行率約為 7%。這就是我們準備好的評論。保羅，你能打開電話提問嗎？

(Operator Instructions) Our first question is from Kevin Liu with K Liu & Company.

（操作員說明）我們的第一個問題來自 K Liu & Company 的 Kevin Liu。

Very nice finish to '22 here. First question I have was just what are you seeing in general in terms of the pipeline and conversion rates? It seems like the commentary there in terms of the business activity was more positive coming out of the year. And obviously, your guidance on IT Solutions kind of implies mid-teens growth at the midpoint, even with some of that coming from the acquisition, of course. But in general, it seems like a very positive outlook when a lot of other folks out there are a little bit more conservative in terms of some of the growth aspirations for this year. So what have you guys seen in terms of overall improvements in the pipeline conversion rates, that sort of stuff? And what's kind of built into your guidance for this year?

在這裡完成 '22 非常好。我的第一個問題是您在渠道和轉化率方面總體上看到了什麼？從今年的商業活動來看，那裡的評論似乎更加積極。顯然，您對 IT 解決方案的指導有點暗示中點的青少年增長，當然，即使其中一些來自收購。但總的來說，當很多其他人對今年的一些增長抱負更加保守時，這似乎是一個非常積極的前景。那麼你們在管道轉換率的整體改進方面看到了什麼？您今年的指導方針中包含哪些內容？

All right. Well, Kevin, we are extremely encouraged, I must say, with the progress we're making on executing our strategy despite those macroeconomic headwinds. And we acknowledge that they are there. But we are looking at our pipeline, and we see a large number of opportunities. We see win rates that are solid. Renewals, extensions continue at a high pace. We actually even see throughput on the pipeline improving, where it's, as you remember, had lagged for some time during the pandemic.

好的。好吧，凱文，我必須說，儘管存在這些宏觀經濟逆風，但我們在執行戰略方面取得的進展讓我們感到非常鼓舞。我們承認他們在那裡。但我們正在審視我們的管道，我們看到了大量的機會。我們看到穩固的贏率。續訂、延期繼續高速進行。實際上，我們甚至看到管道的吞吐量有所改善，正如您所記得的那樣，在大流行期間它已經滯後了一段時間。

And of course, with Eleviant, we also expect to drive sales synergies and deliver even greater value for our clients, the things that Eleviant is adding to our mix, trying to make our puzzle more complete or almost complete. So I think we have made a really good decision in the acquisition of Eleviant, and that is the expectation there is that we'll see that during the remainder of the year in an increasing pipeline. John, would you like to comment on the guidance?

當然，與 Eleviant 一起，我們還期望推動銷售協同效應並為我們的客戶提供更大的價值，Eleviant 正在為我們的組合添加這些東西，試圖使我們的難題更加完整或接近完整。所以我認為我們在收購 Eleviant 方面做出了一個非常好的決定，這是我們期望在今年餘下的時間裡看到越來越多的管道。約翰，你想對指南發表評論嗎？

Yes. Thanks, Filip. Kevin, the guidance itself, we really feel good about the guidance. And just to interpret right at the end there, you had said -- you talked about mid-teens increase in revenue, including the acquisition. And so when we think about Eleviant and the $10 million run rate and sort of a normal natural increase or high-level increase actually is the expectation for that business, the rest of the business would increase, we think, at high single digits, around 8% at the midpoint of the guidance. And so from our perspective, I'm feeling really good that that's about -- in most markets, that's about 2x what the market is growing at this time. And so I feel really good about that.

是的。謝謝，菲利普。凱文，指導本身，我們真的對指導感覺很好。只是為了在最後解釋，你說過——你談到了收入的中等增長，包括收購。因此，當我們考慮 Eleviant 和 1000 萬美元的運行率以及正常的自然增長或高水平增長實際上是對該業務的期望時，我們認為其餘業務將以高個位數增長，大約8% 在指導的中點。因此，從我們的角度來看，我感覺非常好——在大多數市場中，這大約是目前市場增長的兩倍。所以我對此感覺非常好。

Great. Appreciate that. And just with respect to Europe, obviously, nice sequential rebound there. It seemed like utilization was better. Can you just talk about the overall environment. Have some of the labor issues you've cited in the past few quarters abated here? Have win rates started to improve on new projects? Just wondering how positive you are on continuing that sequential improvement as we move into '23.

偉大的。感謝。就歐洲而言，顯然，那裡出現了不錯的連續反彈。似乎利用率更好。能不能簡單說一下整體環境。你在過去幾個季度提到的一些勞工問題在這裡有所緩解嗎？新項目的中標率是否開始提高？只是想知道隨著我們進入 23 世紀，您對繼續進行連續改進有多積極。

Yes, we had an excellent fourth quarter in Europe. Our team did a fantastic job in driving the revenue and the profits in the quarter. There are some headwinds going into 2023. The government requires automatic indexation to compensation for our employees in Belgium and Luxembourg. And that happens automatically in Belgium on January 1. Luxembourg is February, April and maybe even the third time in '23 and also for the employees of our clients.

是的，我們在歐洲的第四季度表現出色。我們的團隊在推動本季度的收入和利潤方面做得非常出色。進入 2023 年會遇到一些不利因素。政府要求對我們在比利時和盧森堡的員工的薪酬進行自動指數化。這在 1 月 1 日在比利時自動發生。盧森堡是 2 月、4 月，甚至可能是 23 年的第三次，對我們客戶的員工來說也是如此。

So it means that it's a sudden increase of our costs on January 1 in Belgium, but it also means that our clients have the same increase of cost and obviously have less spending possibility. We are able to pass part of these costs onto the clients through higher bill rates at the beginning of the year. But it will take -- probably will take the first half of the year to pass along most of those costs. The level of labor constraints is still there.

所以這意味著我們的成本在 1 月 1 日在比利時突然增加，但這也意味著我們的客戶有同樣的成本增加並且顯然有更少的支出可能性。我們能夠在年初通過更高的賬單費率將這些成本的一部分轉嫁給客戶。但它需要 - 可能需要今年上半年才能轉嫁大部分成本。勞動力限制水平仍然存在。

The resources that are needed to fill client opportunities are scarce, are difficult to recruit. We are looking -- not only looking but also hiring people fresh from school and training them through our CTG Academy to make them -- bring them to the level that they can participate in client projects. And we also, of course, count on our global delivery centers where we now have more capacity and flexibility to add to this or to help solve this problem of labor constraints. But all in all, an excellent fourth quarter and we're hoping we're going to continue with the same pace.

填補客戶機會所需的資源稀缺，難以招募。我們正在尋找 - 不僅是尋找，而且還聘請剛從學校畢業的人，並通過我們的 CTG 學院培訓他們，使他們成為 - 使他們達到可以參與客戶項目的水平。當然，我們也依靠我們的全球交付中心，我們現在有更多的能力和靈活性來增加這一點或幫助解決勞動力限制問題。但總而言之，第四節表現出色，我們希望我們能以同樣的速度繼續下去。

That's great to hear. And then just lastly for me. I don't know if you can quantify the impact Eleviant had on your North America IT Solutions gross margin in this quarter. And maybe just speak qualitatively to how much of the improvement there has come just from the acquisition versus also just the improving mix of solutions work on the organic side. I mean as we look forward to '23, is it your expectation that you can kind of sustain North America margins north of 40% here?

聽到這個消息我很高興。最後對我來說。我不知道您是否可以量化 Eleviant 本季度對北美 IT 解決方案毛利率的影響。也許只是定性地說明有多少改進來自收購，而不是僅僅改進解決方案組合在有機方面的工作。我的意思是，當我們期待 23 年時，您是否期望您可以在這里維持北美 40% 以上的利潤率？

John, would you like to take that question?

約翰，你願意回答這個問題嗎？

Sure. Thanks, Filip. Great question, Kevin. Eleviant was outstanding in the fourth quarter. We have not specifically quantified the gross margin contribution, but we have said and indicated that their gross is over 50%. It's really been a fantastic addition to the CTG portfolio of companies. And we just feel great about understanding their business and expanding it as we cross-sell into the CTG's clients.

當然。謝謝，菲利普。好問題，凱文。 Eleviant在第四節表現出色。我們沒有具體量化毛利率貢獻，但我們已經說過並表明他們的毛利率超過 50%。這真的是對 CTG 公司組合的一個了不起的補充。當我們向 CTG 的客戶進行交叉銷售時，我們對了解他們的業務並將其擴展感到非常高興。

Having said that, we had a really, really good quarter from gross margin perspective throughout our North American organization as well, really fantastic job by the teams executing as well as they could to drive margins to a very high level. From that perspective, I would not expect us to continue almost a 44% gross margin in North America. But certainly, you mentioned 40%. I would have a very high expectation that we would be -- we have a high expectation that we would be in the high 30s or approaching 40% pretty consistently as a gross margin in North America. So I think Q4 was a little higher than normal. But we have expectations that it will be high 30s to 40-ish percent going forward.

話雖如此，從整個北美組織的毛利率角度來看，我們也有一個非常非常好的季度，團隊執行的工作非常出色，他們可以將利潤率提高到一個非常高的水平。從這個角度來看，我不希望我們在北美繼續保持近 44% 的毛利率。但當然，你提到了 40%。我對我們會有很高的期望——我們對北美的毛利率一直保持在 30% 左右或接近 40% 抱有很高的期望。所以我認為第四季度略高於正常水平。但我們預計未來會高達 30% 至 40%。

All right. Well, that all sounds good. Congrats again on the results for the quarter, and good luck here in '23.

好的。嗯，這一切聽起來不錯。再次祝賀本季度的結果，並祝你在 23 年好運。

(Operator Instructions) Our next question is from Marc Riddick with Sidoti.

（操作員說明）我們的下一個問題來自 Marc Riddick 和 Sidoti。

So I was wondering if you could talk a little bit about the ERP upcoming and maybe what we should be thinking about from a timing perspective and sort of maybe the geographic flow perspective, maybe we should sort of be thinking about that -- what we're going to be seeing this year? .

所以我想知道你是否可以談談即將推出的 ERP，也許我們應該從時間的角度和地理流量的角度考慮什麼，也許我們應該考慮一下 - 我們'今年要去看嗎？ .

John, would you want to comment on that?

約翰，你想對此發表評論嗎？

Sure. Marc, the ERP implementation is going to be a global project. So this is a worldwide consolidated all parts of CTG improvement in all of our core systems globally. We've done an amazing amount of planning up until this point in time. So much of the planning for the go forward in '23 has been done in late '21 and all throughout 2022.

當然。 Marc，ERP 實施將成為一個全球項目。因此，這是全球範圍內我們所有核心系統中 CTG 改進的所有部分的全球整合。到目前為止，我們已經做了大量的計劃。 23 年的許多前進計劃都是在 21 年末和整個 2022 年完成的。

And so we're ready to hit the ground this -- running here in '23, we've started the project. And so all of the planning phase up to this point is pretty much out of the way. And you always do some planning as you get into it as you revise your course and your method. But most of that's behind us. We are starting to implement now. We do think that as a global company, it will take 2 years, it'll take all of '23 and '24 to sort of get to end game on each individual piece of the implementation itself.

所以我們已經準備好開始這個——23 年在這裡運行，我們已經開始了這個項目。因此，到目前為止，所有的規劃階段都非常順利。當你修改你的課程和方法時，你總是會做一些計劃。但大部分都在我們身後。我們現在開始實施。我們確實認為，作為一家全球性公司，這將需要 2 年的時間，需要 23 年和 24 年的全部時間才能在實施本身的每個單獨部分上結束遊戲。

So think ERPs and core accounting systems, think recruiting, think resource management and development, along with some ancillary type systems. And then think globally around a North American organization and a European organization where we've got operations in a number of different countries as well. So I think it will be very consistent throughout '23 and '24. But I do think it's a full 2-year project at this point in time.

所以想想 ERP 和核心會計系統，想想招聘，想想資源管理和開發，以及一些輔助類型的系統。然後在全球範圍內圍繞北美組織和歐洲組織進行思考，我們也在許多不同的國家/地區開展業務。所以我認為它在整個 23 年和 24 年都會非常一致。但我確實認為這是一個完整的 2 年項目。

Okay. Great. That's very helpful. And then I was wondering if you could talk a little bit about the -- and I really appreciate in the press release sort of the inclusion of the sort of what you're seeing in some of those industry verticals. Maybe you can take a little bit of time as far as some of the thoughts that you have as to how you're looking at those industry verticals and maybe what you're seeing now and then sort of how that played into the setting of guidance?

好的。偉大的。這很有幫助。然後我想知道你是否可以談談 - 我真的很感激在新聞稿中包含你在某些垂直行業中看到的那種內容。也許你可以花一點時間來談談你對如何看待這些垂直行業的一些想法，也許你現在看到的是什麼，然後是如何影響指導的設置？

Sure. Marc. Well, let me start first by saying our focus on digital transformation services and more specifically on software engineering is not a focus on 1 or 2 industries. It's focused on a number of verticals. And like we said, health care, finance, manufacturing, government, energy. We know, for instance, that health care sector is under pressure. There's not a lot of financial room for especially the providers.

當然。馬克。好吧，首先讓我說我們對數字化轉型服務的關注，更具體地說是對軟件工程的關注，並不是關註一兩個行業。它專注於許多垂直領域。正如我們所說，醫療保健、金融、製造、政府、能源。例如，我們知道醫療保健行業正面臨壓力。尤其是供應商，沒有太多的財務空間。

The health insurers are in a better shape. But we also see that as an opportunity because health care providers set for a long time being very reluctant to look at offshore delivery centers. And we think with this situation, it will probably change their attitudes, and we will be able to capitalize on what we're doing with Eleviant also in that sector, which, as you know, is very important to us.

健康保險公司的狀況更好。但我們也認為這是一個機會，因為醫療保健提供者長期以來非常不願意考慮離岸交付中心。我們認為在這種情況下，它可能會改變他們的態度，我們將能夠利用我們在該領域與 Eleviant 所做的事情，正如你所知，這對我們非常重要。

The financial sector is focusing on digital transformation, even more on the insurance side than on the banking side, but we see good opportunities there, too. Government in Europe is solid. We have presence both in national governments and then in the European institutions. We see solid contracts there, we see good opportunities. And our energy sector is growing. We are investing also more in sales and in solution architects that are focused on our energy sector. And we see that our pipeline in that area has grown. So all in all, I'd say a positive view on how we see our industries.

金融部門正在關注數字化轉型，保險方面比銀行方面更重要，但我們也看到了那裡的好機會。歐洲的政府很穩固。我們在國家政府和歐洲機構都有存在。我們在那裡看到了可靠的合同，我們看到了很好的機會。我們的能源部門正在增長。我們還加大了對專注於能源領域的銷售和解決方案架構師的投資。我們看到我們在該領域的管道已經增長。所以總而言之，我會對我們如何看待我們的行業持積極看法。

Okay. Great. And then I wanted to just circle back. I want to make sure that I heard correctly and interpret this properly. I think, John, you had a commentary as far as the tax rate being in the, I think, you said 30% to 35%. If I misheard that, please correct me. And then I was wondering if you could talk a little bit about, is that a function of sort of kind of where we are now with geographic footprint and the like?

好的。偉大的。然後我想繞回來。我想確保我沒有聽錯並正確解釋。我想，約翰，你對稅率的評論是在 30% 到 35% 之間。如果我聽錯了，請糾正我。然後我想知道你是否可以談談，這是我們現在所處地理足蹟等的一種功能嗎？

Yes. Marc, I'm not sure in the first part of the question, specifically...

是的。馬克，我不確定問題的第一部分，特別是......

I just want to make sure I heard the tax rate commentary correctly.

我只是想確保我正確地聽到了稅率評論。

Okay. Tax rate, 30% to 35%. It has been a little bit higher in the last 2 quarters as there's been a number of nondeductible items that we've worked our way through. But I don't expect that to happen in the future. I really do think it will be between 30% and 35% going forward from that perspective. Relative to globally in the pieces of the business when you sort of look at it overall, we expect good growth from our European organization this year.

好的。稅率，30% 至 35%。在過去的兩個季度中，它略高了一點，因為我們已經解決了許多不可扣除的項目。但我不希望將來會發生這種情況。從這個角度來看，我確實認為未來會在 30% 到 35% 之間。相對於全球範圍內的業務，當你從整體上看時，我們預計今年我們的歐洲組織將實現良好的增長。

They had a really, really fantastic fourth quarter, great performance from the teams, great focus, expect good things from them throughout 2023. We do expect our North American IT Solutions and Services segment to grow as well during the year. And we've got Eleviant working closely with that team. And so we've included Eleviant, the acquisition we did included in that bucket, so we think it will grow well. But from a geographical standpoint, we had talked about, well, from a segment standpoint, the nonstrategic will have, we think, a very significant decrease in -- throughout $23 million, $35 million to $40 million is what we're estimating as part of our guidance, most of that to North America.

他們在第四季度的表現非常非常棒，團隊表現出色，非常專注，期待他們在整個 2023 年都能取得好成績。我們確實希望我們的北美 IT 解決方案和服務部門在這一年也能增長。我們讓 Eleviant 與該團隊密切合作。因此，我們將 Eleviant 包括在內，我們確實將其納入該桶中，因此我們認為它會增長良好。但是從地域的角度來看，我們已經討論過，嗯，從細分市場的角度來看，我們認為，非戰略性業務將有非常顯著的減少——總計 2300 萬美元，3500 萬至 4000 萬美元是我們估計的一部分我們的指導，大部分是針對北美的。

So I really expect at the end of the year that Europe will be over -- it will kind of flip from just under 50% to over 50% of the business going forward. And then it will be a friendly competition then within the organization to see we can grow the fastest to maintain that lead in total revenue.

所以我真的預計到今年年底歐洲將會結束——未來它將從略低於 50% 的業務增長到超過 50% 的業務。然後這將是組織內部的一場友好競爭，看我們能否以最快的速度增長以保持總收入的領先地位。

Excellent. And then the last one for me, a little bit housekeeping, I suppose. Where did we finish on CapEx this year? And what are we expecting for '23?

出色的。然後是我的最後一個，我想是一點家務。我們今年的資本支出在哪裡完成？我們對 23 年有什麼期待？

Yes. Let me just get that for you. CapEx was -- yes, here it is. Total CapEx was only $1.5 million for the year, which included additions to the capitalized software. I would expect it to be a little bit higher in 2023. As we grow the business, we do have some real opportunities from the great products that Eleviant brings to the table to capitalize some cost there. So I think it will be a little bit higher. But I don't expect it to be more than, say, $2 million, $2.5 million in 2023.

是的。讓我為你拿來。資本支出是——是的，就是這樣。這一年的資本支出總額僅為 150 萬美元，其中包括對資本化軟件的補充。我預計到 2023 年會更高一些。隨著我們業務的發展，我們確實有一些真正的機會，可以從 Eleviant 帶來的優質產品中利用一些成本。所以我認為它會高一點。但我預計到 2023 年不會超過 200 萬、250 萬美元。

There are no further questions at this time. I'd like to turn the floor back over to management for any closing comments.

目前沒有其他問題。我想將發言權交還給管理層以徵求任何結束意見。

Thanks, Paul. As demonstrated this past year, we are making excellent progress executing our digital solutions transformation strategy. And we expect that to continue in 2023 as we complete the first phase of our transformation. We look forward to reporting on our success throughout the coming years and sharing our improved operating results expectations for our second phase in the near term. Thank you for participating in our teleconference today. And as always, please feel free to reach out to us at any time.

謝謝，保羅。正如去年所證明的那樣，我們在執行我們的數字解決方案轉型戰略方面取得了出色的進展。我們預計，隨著我們完成轉型的第一階段，這種情況將在 2023 年繼續。我們期待在未來幾年報告我們的成功，並分享我們對近期第二階段的改進經營業績預期。感謝您參加我們今天的電話會議。一如既往，請隨時與我們聯繫。

And we look forward to talking with all of you again after our first quarter 2023 results. We hope you have a great day. Paul, you may now disconnect the call.

我們期待在 2023 年第一季度業績公佈後再次與大家交談。我們希望你有一個美好的一天。保羅，你現在可以掛斷電話了。

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

今天的會議到此結束。此時您可以斷開線路。感謝您的參與。