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It’s important to note that the company’s actual results could differ materially from those projected. Additional information concerning factors that could cause actual results to differ from those in the forward-looking statements is contained in our earnings release as well as in the company’s SEC filings. You can find these at our Website or the SEC’s Website at sec.gov. Please review our forward-looking statements in conjunction with these precautionary factors.With that, I’d like to turn it over to Jim to begin the discussion. James Boldt Thanks, Jim, and good morning, everyone. This is Jim Boldt. I want to thank you for joining us this morning for our third quarter earnings conference call. As you read in our earnings release, in the third quarter of 2011 we were above our guidance for revenue and at the high end of our guidance for earnings per share. For the full year at the midpoint of our revised guidance. We anticipate a revenue increase over 2010 of 19% and an increase in EPS of 37%. Our revenue and earnings continue to grow as demand for our services expand both as a result of the continued need in the United States for staffing services and as the healthcare industry invests in electronic medical records and other initiatives required in IT support. I’m going to talk more about our results and what we see for the 2011 fourth quarter and the full year, but first I’m going to ask Brendan to start us off with the review of our financial results. Brendan. Brendan Harrington Thanks, Jim. Good morning everyone. For the third quarter of 2011, CTG’s revenue was $101.1 million, an increase of $16.7 million or 20% compared with the third quarter of 2010. On a sequential basis compared with the trailing second quarter of 2011 revenue increased 2.8% and was 4% higher per billing day.
Solutions revenue in the third quarter of 2011 was $38.8 million an increase of $10.4 million or 36% compared with last year’s third quarter. As a percentage of total revenue, Solutions revenue was 38% compared with 34% a year ago. The improvement in our business mix was mainly driven by revenue growth from more profitable healthcare projects.Continued strong demand from our clients increased staffing revenue on a quarter by $6.3 million or 11.2% to $62.3 million. Third quarter revenue from IBM, our largest customer, was $30.8 million compared with $27.2 million in the same period last year. Although, the total revenue from IBM increased as a percent of total revenue, IBM decreased to 30.4% in the 2011 third quarter compared with 32.2% of total revenue in the third quarter of last year. Revenue from our European operations was $16 million, a 16.2% increase from the $13.8 million recorded in last year’s third quarter. The effect of foreign currency fluctuations during the third quarter of 2011 increased consolidated revenue by approximately $1.3 million or 1.3%. The recovery in Europe continues to lag out of the U.S. as indicated by the lower growth rates of our European business which was 6.6% on a local currency basis as compared with the third quarter of 2010. Direct costs as a percentage of revenue were 79.3% in the quarter compared with 79.5% in the third quarter of 2010 and 78.9% in the trailing second quarter of 2011. SG&A expenses as a percent of revenue decreased to 16.2% from 15.8% in the third quarter of 2010. This improvement reflects the operating leverage from higher revenue and continued discipline in controlling costs. Third quarter operating income expanded at a greater rate than revenue and was $4.6 million, up $1.5 million or 47% year-over-year reflecting the favorable effect of operating leverage and our higher margin Solutions work.
Compared with the trailing second quarter of 2011, third quarter operating income decreased 101,000 or 2.2%. Operating margin in the third quarter increased to 4.5% of revenue, an 80 basis point improvement from last year’s 3.7% due primarily to an increasing in the profitability of Solutions projects, cost controls and the additional operating leverage.Read the rest of this transcript for free on seekingalpha.com