PITTSBURGH, July 28, 2021 /PRNewswire/ -- Mastech Digital,
Inc. (NYSE American: MHH), a leading provider of Digital
Transformation IT Services, announced today its financial results
for the second quarter ended June 30,
2021.
Second Quarter 2021 Highlights:
- Consolidated revenues totaled $53.7
million, a 13% increase over the second quarter 2020, with
sequential growth of 8% compared to the first quarter of 2021;
- The Company's Data and Analytics Services segment reported its
second consecutive quarter of strong bookings as client demand
increased in the second quarter of 2021;
- The IT Staffing Services segment added an additional 89
consultants-on-billing, an increase of 8% during the quarter, as
demand for its services remained strong;
- Consolidated gross margins increased slightly during the
quarter on a year-over-year basis and were 100 basis points higher
than in the first quarter of 2021;
- GAAP diluted earnings per share were $0.31 in the second quarter of 2021 versus
$0.25 in the second quarter of 2020;
the second quarter of 2021 included a $2.0
million pre-tax gain related to a reduction in a contingent
consideration liability;
- Non-GAAP diluted earnings per share were $0.29 in the second quarter of 2021 versus
$0.33 in the second quarter of 2020,
and represented an improvement of $0.10 over the first quarter of 2021.
Second Quarter Results:
Revenues for the second quarter of 2021 totaled $53.7 million, compared to $47.6 million during the corresponding quarter
last year. Gross profits in the second quarter of 2021 were
$14.3 million, compared to
$12.7 million in the second quarter
of 2020. GAAP net income for the second quarter of 2021 totaled
$3.7 million or $0.31 per diluted share, compared to $3.0 million or $0.25 per diluted share during the same period
last year. Non-GAAP net income for the second quarter of 2021 was
$3.4 million or $0.29 per diluted share, compared to $3.9 million or $0.33 per diluted share in the second quarter of
2020.
Activity levels at the Company's Data and Analytics Services
segment improved during the quarter as bookings and pipeline
opportunities were strong and sequential revenues grew by 2% during
the quarter. Project delays, which impacted the segment's
first six-month 2021 results, have shown signs of abatement with a
number of material orders received during the second quarter.
Demand for the Company's IT Staffing Services segment continued to
be very strong, with an 8% expansion in billable-consultant
headcount during the quarter. Thus far in 2021, the
billable-consultant headcount has already increased by 18% from our
year-end 2020 headcount, which has more than offset the billable
headcount decline experienced during the pandemic-impacted 2020
fiscal year.
Vivek Gupta, the Company's
President and Chief Executive Officer stated, "We continued to see
further recovery in our Data and Analytics Services segment during
the second quarter and our IT Staffing Services segment saw a
strong increase in new engagements. Strong bookings, pipeline
opportunities and "near term" workable orders secured during the
second quarter bode well for our Data and Analytics business as we
enter the second half of 2021."
Further commenting on the Data & Analytics segment,
Paul Burton, the Chief Executive of
the Company's Data & Analytics Services segment, said, "I
believe we are on the verge of a meaningful recovery in the D&A
marketplace. Customer conversations are becoming less cautionary
and more aggressive about investing in projects that have been on
the back burner for the last 12 to 18 months. As business
leaders seek out projects with strong returns on investment and
short payback periods, I believe D&A projects will again become
a priority for many companies."
Commenting on the Company's financial position, Jack Cronin, Mastech Digital's Chief Financial
Officer, stated, "At June 30, 2021 we
had cash balances on hand of $5.3
million, outstanding bank debt of approximately $15 million, no borrowings under our revolving
credit facility, and cash availability of $26.1 million."
About Mastech Digital, Inc.:
Mastech Digital (NYSE American: MHH) is a leading provider of
Digital Transformation IT Services. The Company offers Data
Management and Analytics Solutions, Digital Learning, and IT
Staffing Services with a Digital First approach. A minority-owned
enterprise, Mastech Digital is headquartered in Pittsburgh, PA with offices across the U.S.,
Canada, EMEA, India and ASEAN.
Use of Non-GAAP Measures:
This press release contains non-GAAP financial measures to
supplement our financial results presented on a GAAP basis. The
presentation of these financial measures is not intended to be
considered in isolation or as a substitute for, or superior to,
financial information prepared and presented in accordance with
GAAP. Investors are cautioned that there are material limitations
associated with the use of non-GAAP financial measures as an
analytical tool. Reconciliations of these non-GAAP measures to
their comparable GAAP measures are included in the attached
financial tables.
We believe that providing non-GAAP net income and non-GAAP
diluted earnings per share offers investors useful supplemental
information about the financial performance of our business,
enables comparison of financial results between periods where
certain items may vary independent of business performance, and
allows for greater transparency with respect to key metrics used by
management in operating our business. Additionally, management uses
these non-GAAP financial measures in evaluating the Company's
performance.
Specifically, the non-GAAP financial measures contained herein
exclude the following expense items:
Amortization of acquired intangible assets: We amortize
intangible assets acquired in connection with our June 2015 acquisition of Hudson IT, our
July 2017 acquisition of the services
division of InfoTrellis, Inc. and our October 2020 acquisition of AmberLeaf Partners.
We exclude these amortization expenses in our non-GAAP financial
measures because we believe it allows investors to make more
meaningful comparisons between our operating results and those of
other companies within our industry and facilitates a helpful
comparison of our results with other periods.
Stock-based compensation expenses: We incur material
recurring expense related to non-cash, stock-based compensation. We
exclude these expenses in our non-GAAP financial measures because
we believe that it provides investors with meaningful supplemental
information regarding operational performance. In particular,
because of varying available valuation methodologies, subjective
assumptions and the variety of award types that companies can use
under ASC 718, we believe that providing non-GAAP financial
measures that exclude these expenses allows investors to make more
meaningful comparisons between our operating results and those of
other companies within our industry and facilitates comparison of
our results with other periods.
Contingent consideration liability revaluation: In
connection with the AmberLeaf acquisition, the Company may be
required to pay future consideration that is contingent upon the
achievement of specific financial objectives. As of the acquisition
date, the Company recorded a contingent consideration liability
representing the estimated fair value of such contingent
consideration that was expected to be paid. In the second quarter
of 2021, this contingent consideration liability was reduced by
$2.0 million to $900,000, after the Company determined that
relevant conditions for the payment of such liability were unlikely
to be fully satisfied. We believe that providing non-GAAP financial
measures that exclude these adjustments to expense are useful for
investors to understand the effects of these items on our total
operating expenses and facilitate comparison of our results with
other periods.
Forward-Looking Statements:
Certain statements contained in this release are forward-looking
statements based on management's expectations, estimates,
projections and assumptions. Words such as "expects,"
"anticipates," "plans," "believes," "scheduled," "estimates" and
variations of these words and similar expressions are intended to
identify forward-looking statements, which include but are not
limited to (i) projections of revenues, earnings, and cash flow,
and (ii) statements regarding the expected benefits to the Company
from the completion of the AmberLeaf acquisition and the expected
performance of Mastech Digital following completion of this
transaction. These statements are based on information
currently available to the Company and it assumes no obligation to
update the forward-looking statements as circumstances
change. These statements are not guarantees of future
performance and involve certain risks and uncertainties, which are
difficult to predict. Therefore, actual future results and
trends may differ materially from what is forecasted in
forward-looking statements due to a variety of factors, including,
without limitation, the level of market demand for the Company's
services, the highly competitive market for the types of services
offered by the Company, the impact of competitive factors on profit
margins, market conditions that could cause the Company's customers
to reduce their spending for its services, the Company's ability to
create, acquire and build new lines of business, to attract and
retain qualified personnel, reduce costs and conserve cash, the
extent to which the Company's business is adversely affected by the
impacts of the COVID-19 pandemic and governmental responses to
limit the further spread of COVID-19 and other risks that are
described in more detail in the Company's filings with the
Securities and Exchange Commission, including its Form 10-K for the
year ended December 31, 2020.
MASTECH DIGITAL,
INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(Amounts in
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
June
30,
|
|
December
31,
|
|
|
2021
|
|
2020
|
|
|
|
|
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
5,302
|
|
$
7,677
|
Accounts receivable,
net
|
|
38,584
|
|
32,134
|
Prepaid and other current
assets
|
|
3,416
|
|
1,346
|
Total current assets
|
|
47,302
|
|
41,157
|
|
|
|
|
|
Equipment, enterprise
software and leasehold improvements, net
|
|
1,887
|
|
1,971
|
Operating lease
right-of-use assets
|
|
5,595
|
|
3,286
|
Non-current
deposits
|
|
595
|
|
396
|
Deferred income
taxes
|
|
463
|
|
796
|
Goodwill, net of
impairment
|
|
32,510
|
|
32,510
|
Intangible assets,
net
|
|
20,344
|
|
21,930
|
Total assets
|
|
$
108,696
|
|
$
102,046
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Current portion of long-term
debt
|
|
$
4,400
|
|
$
4,400
|
Current portion of operating
lease liability
|
|
1,435
|
|
1,079
|
Accounts payable
|
|
4,638
|
|
2,589
|
Accrued payroll and related
costs
|
|
12,461
|
|
12,374
|
Other accrued
liabilities
|
|
1,226
|
|
1,529
|
Total current liabilities
|
|
24,160
|
|
21,971
|
|
|
|
|
|
Long-term
liabilities:
|
|
|
|
|
Long-term debt, less current portion, net
|
|
10,716
|
|
12,875
|
Contingent consideration liability
|
|
900
|
|
2,882
|
Long-term operating lease liability, less current
portion
|
|
4,419
|
|
2,325
|
Long-term accrued income taxes
|
|
165
|
|
165
|
Long-term payroll tax liability
|
|
2,295
|
|
2,295
|
Total liabilities
|
|
42,655
|
|
42,513
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
Common stock, par value
$0.01 per share
|
|
131
|
|
130
|
Additional paid-in
capital
|
|
27,172
|
|
25,509
|
Retained earnings
|
|
43,552
|
|
38,620
|
Accumulated other
comprehensive (loss)
|
|
(627)
|
|
(539)
|
Treasury stock, at
cost
|
|
(4,187)
|
|
(4,187)
|
Total shareholders' equity
|
|
66,041
|
|
59,533
|
Total liabilities and shareholders' equity
|
|
$
108,696
|
|
$
102,046
|
|
|
|
|
|
|
|
|
|
|
MASTECH DIGITAL,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(Amounts in
thousands, except per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months ended
June 30,
|
|
Six Months ended
June 30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
Revenues
|
$
53,658
|
|
$
47,583
|
|
$
103,433
|
|
$
98,008
|
|
|
|
|
|
|
|
|
Cost of
revenues
|
39,343
|
|
34,927
|
|
76,314
|
|
72,633
|
|
|
|
|
|
|
|
|
Gross
profit
|
14,315
|
|
12,656
|
|
27,119
|
|
25,375
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses:
|
|
|
|
|
|
|
|
Operating expenses
|
10,986
|
|
9,042
|
|
21,921
|
|
19,285
|
Revaluation of contingent consideration liability
|
(1,982)
|
|
-
|
|
(1,982)
|
|
-
|
Total selling,
general and administrative expenses
|
9,004
|
|
9,042
|
|
19,939
|
|
19,285
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
5,311
|
|
3,614
|
|
7,180
|
|
6,090
|
|
|
|
|
|
|
|
|
Other
income/(expense), net
|
(144)
|
|
(157)
|
|
(376)
|
|
(383)
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
5,167
|
|
3,457
|
|
6,804
|
|
5,707
|
|
|
|
|
|
|
|
|
Income tax
expense
|
1,429
|
|
488
|
|
1,872
|
|
869
|
Net income
|
$
3,738
|
|
$
2,969
|
|
$
4,932
|
|
$
4,838
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
|
|
Basic
|
$
0.33
|
|
$
0.26
|
|
$
0.43
|
|
$
0.43
|
Diluted
|
$
0.31
|
|
$
0.25
|
|
$
0.41
|
|
$
0.41
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
11,442
|
|
11,271
|
|
11,425
|
|
11,199
|
Diluted
|
12,002
|
|
11,948
|
|
11,999
|
|
11,849
|
MASTECH DIGITAL,
INC.
|
RECONCILIATION OF
GAAP MEASURES TO NON-GAAP MEASURES
|
(Amounts in
thousands, except per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months ended
June 30,
|
|
Six Months ended
June 30,
|
|
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Net
Income
|
$
3,738
|
|
$
2,969
|
|
$
4,932
|
|
$
4,838
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
Amortization of
acquired intangible assets
|
793
|
|
669
|
|
1,586
|
|
1,342
|
|
|
|
Stock-based
compensation
|
757
|
|
612
|
|
1,378
|
|
1,068
|
|
|
|
Revaluation of
contingent consideration liability
|
(1,982)
|
|
-
|
|
(1,982)
|
|
-
|
|
|
|
Income tax
adjustments
|
121
|
|
(341)
|
|
(244)
|
|
(637)
|
|
|
Non-GAAP Net
Income
|
$
3,427
|
|
$
3,909
|
|
$
5,670
|
|
$
6,611
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Diluted
Earnings Per Share
|
$
0.31
|
|
$
0.25
|
|
$
0.41
|
|
$
0.41
|
|
|
Non-GAAP Diluted
Earnings Per Share
|
$
0.29
|
|
$
0.33
|
|
$
0.47
|
|
$
0.56
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
GAAP Diluted
Shares
|
12,002
|
|
11,948
|
|
11,999
|
|
11,849
|
|
|
Non-GAAP Diluted
Shares
|
12,002
|
|
11,948
|
|
11,999
|
|
11,849
|
|
|
|
|
|
|
|
|
|
|
|
|
MASTECH DIGITAL,
INC.
|
SUPPLEMENTAL
FINANCIAL INFORMATION
|
(Amounts in
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months ended
June 30,
|
|
Six Months ended
June 30,
|
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
Data and analytics
services
|
$
8,950
|
|
$
6,772
|
|
$
17,744
|
|
$
14,132
|
|
IT staffing
services
|
44,708
|
|
40,811
|
|
85,689
|
|
83,876
|
|
|
Total
revenues
|
$
53,658
|
|
$
47,583
|
|
$
103,433
|
|
$
98,008
|
|
|
|
|
|
|
|
|
|
|
Gross Margin
%:
|
|
|
|
|
|
|
|
|
Data and analytics
services
|
46.7%
|
|
52.2%
|
|
46.2%
|
|
49.5%
|
|
IT staffing
services
|
22.7%
|
|
22.4%
|
|
22.1%
|
|
21.9%
|
|
|
Total gross margin
%
|
26.7%
|
|
26.6%
|
|
26.2%
|
|
25.9%
|
|
|
|
|
|
|
|
|
|
|
Segment Operating
Income:
|
|
|
|
|
|
|
|
|
Data and analytics
services
|
$
769
|
|
$
1,173
|
|
$
1,163
|
|
$
2,082
|
|
IT staffing
services
|
3,353
|
|
3,110
|
|
5,621
|
|
5,350
|
|
|
Subtotal
|
4,122
|
|
4,283
|
|
6,784
|
|
7,432
|
|
|
|
|
|
|
|
|
|
|
Amortization of
acquired intangible assets
|
(793)
|
|
(669)
|
|
(1,586)
|
|
(1,342)
|
Revaluation of
contingent consideration liability
|
1,982
|
|
-
|
|
1,982
|
|
-
|
Interest expense and
other, net
|
(144)
|
|
(157)
|
|
(376)
|
|
(383)
|
Income before
income taxes
|
$
5,167
|
|
$
3,457
|
|
$
6,804
|
|
$
5,707
|
View original
content:https://www.prnewswire.com/news-releases/mastech-digital-reports-healthy-second-quarter-2021-results-301342964.html
SOURCE Mastech Digital, Inc.