Please standby, we are about to begin. Good day. And welcome to the Information Services Group Third Quarter Results Conference Call. Today's conference is being recorded and a replay will be available on ISG's website within 24 hours. At this time for opening remarks and introduction, I would like to turn the conference over to Mr. Barry Holt. Please go ahead, sir.

Thank you, Operator. Hello and good morning. My name is Barry Holt. I'm a Communications Executive at ISG. I'd like to welcome everyone to ISG's 2013 third quarter results conference call. I'm joined today by Michael Connors, Chairman and Chief Executive Officer; and David Berger, Executive Vice President and Chief Financial Officer. Before we begin, I'd like to read the forward-looking statement. It is important to note that this communication may contain forward-looking statements which represent the current expectations and beliefs of the management of ISG concerning future events and their potential effects. These statements are not guarantees of future results and are subject to certain risks and uncertainties that could cause actual results to differ materially from those anticipated. For a more detailed listing of the risks and other factors that could affect future results, please refer to the forward-looking statement contained in our Form 8-K that was furnished yesterday to the SEC and the Risk Factor section in ISG's Form 10-K covering full year results. You should also read ISG's annual report on Form 10-K for the fiscal year ending December 31, 2012 and any other relevant documents, including any amendments or supplements to these documents filed with the SEC when they become available. You'll be able to obtain free copies of any of ISG's SEC filings on either ISG website at www.isg-one.com or the SEC's website at www.sec.gov. ISG undertakes no obligation to update or revise any forward-looking statement to reflect subsequent events or circumstances. Non-GAAP measures are provided as additional information and should not be considered in isolation or as a substitute for financial results prepared in accordance with GAAP. For the reconciliation of all non-GAAP measures presented to the most closely applicable GAAP measure, please refer to our current report on Form 8-K, which was submitted yesterday. And now I’d like to turn the call over to Michael Connors, who will be followed by David Berger. Mike?

Thank you, Barry, and good morning, everyone. Today David and I will review our record third quarter and September year-to-date results and financial highlights, update you on some of our business highlights and conclude with our full year guidance for both revenues and adjusted EBITDA for 2013. Our momentum continues, despite a mixed global economic environment we continue to see robust demand which illustrates both the value we provide to our clients and the market opportunity for our services. We are pleased to report another solid quarter with record revenues for the third quarter and record revenues for the September year-to-date results. Revenues for the quarter totaled $51.4 million up 11% versus the prior year. Year-to-date revenues through September totaled $157.5 million up 10% versus the prior year. In addition, we generated almost $7 million in free cash flow during the quarter, strengthening the balance sheet and lowering our leverage ratio further below three times EBITDA. We continue to witness broad-based demand extending the favorable revenue trends recorded during the first half of the year. The record revenue results were driven by another strong quarter in Europe up 19% year-on-year. Our return to growth in Asia-Pacific which was up 10% and 6% growth in the Americas which was the 10th straight quarter of growth there. Our recurring revenue streams of managed services, research in our U.S. public sector grew 34% over prior year to $11 million in the third quarter and $31 million year-to-date, up 28%. Additionally, recurring revenue streams now account for almost 20% of ISG’s total revenues, well on our way toward our target of 25% in 2015. The continued strong growth in Europe was driven by the energy in the U.K. public sector verticals. In the U.K. public sector, in addition to our previously announced contract win…

Thanks, Mike and good morning everyone. Before I discuss our financial results, I would like to reiterate that ISG has presented GAAP financial results as well as certain non-GAAP financial information in our earning release. During this call, I will discuss certain non-GAAP financial measures, which ISG believes improves the comparability of the company's financial results between periods, and provides for greater transparency of key measures used to evaluate the company’s performance. Non-GAAP measures, which I will touch on today, include adjusted EBITDA, adjusted net earnings and the presentation of selected financial data on a constant currency basis. A complete reconciliation of non-GAAP financial measures is included in our earnings release, which was furnished to the SEC on Form 8-K yesterday. Non-GAAP measures are provided as additional information and should not be considered in isolation, or as a substitute for financial results prepared in accordance with GAAP. As Mike stated, ISG recorded record revenues in the quarter and record revenues on a year-to-date basis. Third quarter revenues totaled $51.4 million, up 11% versus the prior year in constant currency and on a reported basis. Revenues increased by 19% in Europe to $17.6 million, 10% in Asia-Pacific to $5.3 million and 6% in the Americas to $28.5 million, growth rates are in constant currency. Operating income totaled $1.8 million for the third quarter of 2013 versus $2.4 million in the prior year period. The third quarter results included $2.1 million in stock-based compensation, which was recorded to selling, general and administrative expense on the P&L versus $700,000 in the prior year, driven by the vesting of performance-based restricted stock units, which was triggered by ISG share price, which was up 115% for the quarter. Fully diluted earnings per share for the quarter was $0.01, compared to $0.01 for the same period…

Thank you, David. We are pleased -- very pleased with our nine month results and remain optimistic about our outlook for the full year. In summary, the third quarter was a record revenue quarter, up 11% versus the prior year and contributed to our record nine-month revenues. Our strategy is paying off. With our recurring revenue streams of research, managed services in the U.S. public sector of $31 million for the first nine months is up 28%. September year-to-date revenue for our top 50 clients, up over 20%; Europe revenue through nine months, up 16%; year-to-date EBITDA, up 25%. We continue to pay down debt and de-lever our company. As such, our leverage ratio remains below three x EBITDA with our interest rate declining as David mentioned. And finally, the market has begun to recognize our efforts with ISG shares up nearly 300% for the year. And even with this improvement, we feel our shares are undervalued. Thanks very much for calling in this morning. And now let me turn the session over to our operator for questions.

(Operator Instructions) We will take our first question from Vincent Colicchio with Noble Financial.

Yes, good morning guys and congratulations for the nice quarter.

Good morning, Vincent.

Good morning. So in Europe, could you give us little more color in terms of, I know, there is a lot of stress in the U.K., are there any other geographies you are feeling good about and you named bunch of the agencies you’re doing work with, in the U.K. Are any of those that you mentioned new and what does the pipelines looks like for next year, if it is not too early?

Yes, Vincent okay, first of all in terms of Europe, I would say there are probably three key contributing factors to our kind of turbo-charged growth there. One, we have very strong leadership in Europe. We have people that have been in the business, in the industry, understand it and understand what our client needs has been changing and emerging, so that’s one. Two, we invested in the business you will recall last year to begin a new channel in the public sector in the U.K. I don’t have that list back in front of me but roughly half of those clients that I rattled off for the public sector are new, either towards the end of second quarter or end of third quarter. So that is also driving new revenue growth. Also, our German and French market, our French market in particular has picked up dramatically during 2013, so our three, kind of, four major hubs, U.K., France, Germany, are all growing. Our Nordics market, we are investing in the market there and we will see that growth towards the end of this year and end of 2014. We’ve expanded in Denmark, Finland and in Sweden during the last three or four months. So our presence there has more than doubled, so we anticipate that being a growth engine sometime in 2014 and 2015. So those are the reasons we think Europe is growing. We’ve got good set of product and services now for our client base. They believe in our strategy and we are getting a larger share of their spending.

Your top 50 continues to perform well. Anyhow, there’s obvious reasons, right, managed services is coming online and doing well. You’ve got more and you are cross-selling. Starting from the obvious, is there any new insight you may have on that because it looks like it’s actually improving versus the last quarter?

Yeah, good point. I think, what we’re able to do now is just recall. We integrated all of our businesses under the ISG brand and that has enabled us to have a much broader discussion, not only with the CIO and the CFO, but we are also now penetrating into the Chief Marketing Officer, if you will to see suite in these organizations. So, our four recall, ISG products and services wheel is working, everything from our benchmarking and analytics to our strategy work, to our transaction, to our managed services work. So it’s giving a larger share of their spending coming to ISG. Their spending is not increasing in totality of that much, so we’re taking some of the spending and share away from others that they may have provided in the past, so those are the real key reasons, Vince.

And then, David looks that utilization or utilization rate dropped a bit sequentially, was that surprise and how do you see trending going forward?

Yeah, that’s not a surprise. It was pretty consistent with the prior year and you have the impact of the holidays, particularly in France and in Europe during that period. Mike did mentioned that in fourth quarter, we do have some because we are in a combination of clients taking holidays at the end of the year and some build up of holidays in the Americas that will impact that but overall the utilization is 70% through nine months.

Okay. That sounds a good healthy number. And then just one more and I will go back in the queue, Asia Pacific, so it wasn’t really Australia, could you give us more color on what was driving the growth?

Yeah, in the quarter, they said I think Asia Pacific in terms of its year-over-year for the full year is not going to be that robust until the government comes back and we expect that next year. But third quarter, we had great penetration in Asia in places like Thailand, the Philippines and in Hong Kong. And in addition, we had a commercial client in China also expand our business with us. So, of the Asia component of our Asia Pacific had a strong quarter and that’s really what drove that growth.

Okay. I will go back in the queue. Thanks, guys.

Okay. Thank you, Vince.

(Operator Instructions) We’ll go next to Justin Ruiss of Sidoti.

Good morning, Mike. Good morning, David.

Good morning, Justin.

I just had a quick question on the managed services side, I know, you have been adding to that team overseas. What's kind of the scope or is there any kind of guidance on how much are we building out that team or is there kind of level them out you’re looking for?

So right now managed services, we have about -- between 150 and 200 people in India that around our managed services team. It depends on the size and complexity. So Marriot as an example we have two to three people on the ground everyday in Bethesda, Maryland and then we have another 20 somewhat people in India that’s managing that account. So, you saw the headcount increase not much during the quarter but almost all of that increase was for our managed services business and the Marriott account in India. As we think about managed services over the next two or three years, I couldn’t vision that number increasing significantly because of our growth ambitions on the managed services side. So it matches up to the contract. Once we know we’re going to have a contract. We began our hiring process, training process and that usually is two, three, four months ahead of when we get the revenue generated. That’s why our first year margins in that business are lower, but after year one once we have a normalized, it is margins that are much greater than the average in the firm. So that’s where we are today and our expectations over the next two to three years, is that Indian operation would grow significantly as result.

Got you. And then maybe I might have missed it. I don’t know you had said it. But can you breakout how much percentage managed services of revenue?

We only breakout our recurring revenue and our recurring revenue is managed services, research and public sector. David what…

Yeah. We’ve recorded, my comment and in the script $11 million for the quarter, $31 million year-to-date.

Okay. Perfect.

Yeah. Up 34% for the quarter and 28% year-to-date.

Perfect. Thank you very much.

Thank you, Justin.

And now we’ll conclude our question-and-answer session for today. I’d like to turn the conference back to our speakers for any additional or closing remarks.

Well, thank you, above all, I want to thank all of our ISG’s over 800 professionals worldwide for your continued passion and dedication to our clients for your strong performance for the first nine months. We are seeing the first of your efforts and leading the way as we continue to build our market leadership in the years ahead. And I want to thank all of you on the call today for your continued support and confidence in our firm. Thanks very much and have a terrific weekend.

This does conclude the conference. We thank you for your participation.