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Before we begin, I want to mention that statements in the course of this conference call that state the company’s or management’s intentions, hopes, beliefs, expectations and predictions for the future are forward-looking statements.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 at 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 first quarter earnings conference call. As you saw in our news release, we had a solid first quarter with revenue and earnings per share both at the midpoint of our guidance. Revenue in 2012 increased over 2011 by 8%, the operating margin expanded by 60 basis points and earnings per share increased 18%. As we expected, our higher margin Solutions business grew by 22% in the first quarter of 2012 while our lower margin Staffing business was approximately the same as it was in the first quarter of 2011. I’m going to talk more about our results and what we see for 2012’s second 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 first quarter of 2012, CTG’s revenue was $103.4 million, an increase of $7.5 million or 8% compared with the first quarter of 2011. First quarter 2012 had 64 billing days, one less day than the first quarter 2011. On a per billing day basis, revenue increased by 9.5%.
Solutions revenue in the first quarter of 2012 was $41.2 million, an increase of $7.5 million or 22% compared with the first quarter of 2011. As a percentage of total revenue, Solutions revenue was 40% compared with 35% a year ago. The improvement in our business mix was mainly driven by revenue from more profitable healthcare projects. Staffing revenue in the quarter remained flat at $62.2 million.First quarter revenue from IBM, our largest customer, was $28.4 million compared with $28.7 million in the first quarter 2011. As a percent of total revenue, it decreased to 27.4% in the 2012 first quarter compared with 29.9% of total revenue in the 2011 first quarter. Revenue from our European operations was $17.2 million, a 1% increase from the $17.1 million recorded in last year’s first quarter. The effect of foreign currency fluctuations during the first quarter of 2012 decreased consolidated revenue by approximately $728,000 or 0.7%. On a local currency basis, our European revenue increased by 4.9% compared with the first quarter 2011. Direct costs as a percentage of revenue were 78.9% in the first quarter compared with 79.4% in the first quarter of 2011. SG&A expenses as a percent of revenue decreased slightly to 15.7% from 15.8% in the first quarter 2011. First quarter operating income grew to $5.6 million, an increase of $1 million or 22% year-over-year reflecting the favorable effect of operating leverage and our higher margin Solutions work. Compared with the trailing fourth quarter of 2011, first quarter operating income increased $141,000 or 2.6%. Operating margin in the first quarter increased to 5.4% of revenue, a 60 basis point improvement from last year’s 4.8% and the same as the 5.4% operating margin in fourth quarter 2011. The year-over-year increase was primarily due to the increase in the Solutions business in our sales mix and the additional operating leverage. Read the rest of this transcript for free on seekingalpha.com