CIBER Inc. (CBR)
Q2 2010 Earnings Call Transcript
August 05, 2010 11:00 am
Gary Kohn - VP, IR
Dave Peterschmidt - CEO
Peter Cheesbrough - Interim President and CEO EVP and CFO
Karl Keirstead - Kaufman Bros.
Good day, ladies and gentlemen and welcome to the Second Quarter 2010 CIBER Incorporated earnings conference call. At this time all our participants are in a listen-only mode. We will be facilitating a question-and-answer session towards the end of this conference. (Operator Instructions) As a reminder this conference is being recorded for replay purposes.
I would now like to turn the presentation over to host for today’s call, to Gary Kohn, Vice President of Investor Relations, you may proceed.
Thank you, Francis and good morning everyone. My name is Gary Kohn, Vice President of Investor Relations here at CIBER. I would like to welcome you to our second quarter 2010 conference call. With me on the call today are David Peterschmidt, who joins CIBER on July 1 as our President and CEO and Executive Vice President and CFO Peter Cheesbrough.
Dave and Peter will discuss our results for the second quarter, our outlook for the remainder of the year and as always take your questions. Before turning the call over to Dave, I will remind you some of our prepared comments and responses to your questions will constitute forward-looking statements.
You should keep in mind that these forward-looking statements are subject to risk and uncertainties that could cause actual results to differ materially from those expressed or implied by such statements. Such risks and uncertainties include, but are not limited to those factors set out in today’s news release and discussed under the Risk Factors section in our Annual Report on Form 10-K and other SEC filings.
Also during the call, we will reference certain non-GAAP financial measures, which we believe provide useful information for investors. We have included reconciliations of those measures to GAAP measures in our news release and on Investor Relations section of our website at ciber.com. On the last note you will see several SEC fillings from us today. We have filed the second 10-Q this morning and two 8-Ks. One 8-K contains the revised bank covenant under the routine filing of this morning’s earnings press release. The other 8-K contains the executive transition agreement relating to the former CEO.
With that, it is my pleasure to turn the call over to our CEO, Dave Peterschmidt.
Good morning everyone and thank you for joining us today. Since I was not on Board during the second quarter I’m going to let Peter handle the bulk of the Q2 performance. However, I do want to take a few minutes to share with you my observations of my first 30 days which is spent visiting customers, our employees and analysts.
And I also want to give you some insight as to my plan for the future. This is a compelling industry. There is tremendous opportunity in front of us. The IT industry in which we compete is huge and growing. Experts size this market at over $500 billion and the industry has been showing encouraging signs of growth recently. The industry is also supported by a very favorable trend towards outsourcing with experts predicting that nearly two-thirds of IT spending will be outsourced by 2020.
Furthermore, my experience suggests that the trend of companies looking to smaller more nimble organizations like CIBER will want to partner and accelerate their relationships with us.
So why did I come to CIBER? Simply put, because I’m a highly confident that we have the tools in place to capture the opportunity. CIBER has a rich history spanning more than 30 years. We have a global footprint with assets worldwide. We have long term dedicated employees and we have an outstanding track record with our customers a number of whom I’ve visited over the last few weeks and I can tell you they are deeply committed to long-term relationship with CIBER and we excel at cultivating the very type of relationships that customers desire. One that is based on intimate, deep knowledge combined with a flexible approach to the larger player, which larger players just cannot duplicate.
During my first 30 days, I have spent time visiting with our customers, our Board of Directors, our employees, shareholders and analyst. My objective was to get a clear understanding that what each of these important constituents expect from me and from CIBER. What I understood to be true was confirmed in these discussions. There is much work to be done and it starts with us switching from a defensive position to an offensive position.
In essence, we must start attacking this growing market. We are now entering a new era and must learn to go from hunkering down to catching the growth wave that is forming up.
Clearly, the recent financial performance has been less than what it should be? We need to capture more of the market opportunity. We must pursue higher quality engagements. We need to accelerate revenue growth and more importantly we need to deliver higher margins, cash flow and return to our shareholders.
Let me be very frank. We are fundamentally dead last in the industry on profitability. There is no reason for us to be there and we are not going to stay in that position. To that end, my top priority is to develop a highly focused strategic plan. I will hold my senior leaders and everyone in the organization accountable to ensure that we are concentrating on our resources and aiming at the most target rich opportunities with increased focus and sales discipline. We will win more high quality engagements and penetrate deeper into new and existing clients. I will continue to drive the organization to be more efficient, particularly when it comes to sales and to our delivery resources.