PITTSBURGH, Oct. 27, 2021 /PRNewswire/ -- Mastech Digital,
Inc. (NYSE American: MHH), a leading provider of Digital
Transformation IT Services, announced today its financial results
for the third quarter ended September 30,
2021.
Third Quarter 2021 Highlights:
- Consolidated revenues totaled a record $59.5 million, a 26% increase over the third
quarter 2020, with sequential growth of 11% when compared to the
second quarter of 2021;
- The Company's Data and Analytics Services segment reported
record revenues of $10.5 million,
representing year-over-year organic growth of 19% and sequential
growth of 18% over second quarter 2021, reflecting healthy pipeline
activities during the first nine months of 2021;
- The IT Staffing Services segment reported record revenues of
$49 million, an increase of 22% over
third quarter of 2020 and representing sequential growth of 10%
over second quarter 2021, largely due to a 24% increase in
consultants-on-billing achieved during the first nine months of
2021;
- Consolidated gross margins increased 30 basis points on a
year-over-year basis and were 120 basis points higher than in the
second quarter of 2021;
- GAAP diluted earnings per share were $0.28 in the third quarter of 2021 versus
$0.25 in the third quarter of
2020;
- Non-GAAP diluted earnings per share were $0.38 in the third quarter of 2021 versus
$0.32 in the third quarter of 2020,
and represented an improvement of $0.09 over the second quarter of 2021.
Third Quarter Results:
Revenues for the third quarter of 2021 totaled $59.5 million, compared to $47.4 million during the corresponding quarter
last year. Gross profits in the third quarter of 2021 were
$16.6 million, compared to
$13.1 million in the third quarter of
2020. GAAP net income for the third quarter of 2021 totaled
$3.4 million or $0.28 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 third quarter of 2021
was $4.6 million or $0.38 per diluted share, compared to $3.8 million or $0.32 per diluted share in the third quarter of
2020.
Activity levels at the Company's Data and Analytics Services
segment remained strong during the quarter and are reflected in our
record revenue performance during the quarter. Demand for the
Company's IT Staffing Services segment continued to be strong,
resulting in record revenues of $49.0
million in this segment during the quarter.
Vivek Gupta, the Company's
President and Chief Executive Officer stated "The financial results
for the third quarter reflect one of the Company's strongest
quarters since going public in 2008. I am very pleased with
the performance of both of our business units. Our data and
analytics segment reported record revenues, with an expanded
pipeline and strong gross margins of 51.6%. In our IT staffing
business, we continued to grow faster than the industry average
with a billing headcount increase of 5% in the quarter and revenue
growth of 22% on a year-on-year basis. I'm confident that
both of our segments will enter 2022 with strong momentum."
Further commenting on the Data & Analytics segment,
Paul Burton, the Chief Executive of
the Company's Data & Analytics Services segment, said "I'm
excited about our record revenue performance in the third quarter
and the opportunities that we see for the business in the fourth
quarter and during 2022. In addition to strong organic
growth, having the financial capacity to execute on potential
inorganic opportunities in the marketplace is an important aspect
of our overall business strategy for the future."
Commenting on the Company's financial position, Jack Cronin, Mastech Digital's Chief Financial
Officer, stated, "At September 30,
2021, we had cash balances on hand of $5.4 million, outstanding bank debt of
approximately $14 million, no
borrowings under our revolving credit facility, and cash
availability of $30 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.
For more information, contact:
Donna Kijowski
Manager, Investor Relations
Mastech Digital, Inc.
888.330.5497
MASTECH DIGITAL,
INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(Amounts in
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
September
30,
|
|
December
31,
|
|
|
2021
|
|
2020
|
|
|
|
|
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
5,447
|
|
$
7,677
|
Accounts receivable,
net
|
|
45,375
|
|
32,134
|
Prepaid and other current
assets
|
|
4,171
|
|
1,346
|
Total current assets
|
|
54,993
|
|
41,157
|
|
|
|
|
|
Equipment, enterprise
software and leasehold improvements, net
|
|
2,201
|
|
1,971
|
Operating lease
right-of-use assets
|
|
5,229
|
|
3,286
|
Non-current
deposits
|
|
597
|
|
396
|
Deferred income
taxes
|
|
-
|
|
796
|
Goodwill, net of
impairment
|
|
32,510
|
|
32,510
|
Intangible assets,
net
|
|
19,552
|
|
21,930
|
Total assets
|
|
$
115,082
|
|
$
102,046
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Current portion of long-term
debt
|
|
$
4,400
|
|
$
4,400
|
Current portion of operating
lease liability
|
|
1,494
|
|
1,079
|
Accounts payable
|
|
4,942
|
|
2,589
|
Accrued payroll and related
costs
|
|
15,552
|
|
12,374
|
Other accrued
liabilities
|
|
1,458
|
|
1,529
|
Total current liabilities
|
|
27,846
|
|
21,971
|
|
|
|
|
|
Long-term
liabilities:
|
|
|
|
|
Long-term debt, less current portion, net
|
|
9,636
|
|
12,875
|
Contingent consideration liability
|
|
900
|
|
2,882
|
Long-term operating lease liability, less current
portion
|
|
4,052
|
|
2,325
|
Long-term accrued income taxes
|
|
165
|
|
165
|
Long-term payroll tax liability
|
|
2,295
|
|
2,295
|
Deferred income taxes
|
|
17
|
|
-
|
Total liabilities
|
|
44,911
|
|
42,513
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
Common stock, par value
$0.01 per share
|
|
131
|
|
130
|
Additional paid-in
capital
|
|
27,865
|
|
25,509
|
Retained earnings
|
|
46,958
|
|
38,620
|
Accumulated other
comprehensive (loss)
|
|
(596)
|
|
(539)
|
Treasury stock, at
cost
|
|
(4,187)
|
|
(4,187)
|
Total shareholders' equity
|
|
70,171
|
|
59,533
|
Total liabilities and shareholders' equity
|
|
$
115,082
|
|
$
102,046
|
|
|
|
|
|
MASTECH DIGITAL,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(Amounts in
thousands, except per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months ended
September 30,
|
|
Nine Months ended
September 30,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
Revenues
|
$
59,531
|
|
$
47,383
|
|
$
162,964
|
|
$
145,391
|
|
|
|
|
|
|
|
|
Cost of
revenues
|
42,911
|
|
34,293
|
|
119,225
|
|
106,926
|
|
|
|
|
|
|
|
|
Gross
profit
|
16,620
|
|
13,090
|
|
43,739
|
|
38,465
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses:
|
|
|
|
|
|
|
|
Operating expenses
|
11,645
|
|
8,873
|
|
33,566
|
|
28,158
|
Revaluation of contingent consideration liability
|
-
|
|
-
|
|
(1,982)
|
|
-
|
Total selling,
general and administrative expenses
|
11,645
|
|
8,873
|
|
31,584
|
|
28,158
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
4,975
|
|
4,217
|
|
12,155
|
|
10,307
|
|
|
|
|
|
|
|
|
Other
income/(expense), net
|
(235)
|
|
(191)
|
|
(611)
|
|
(574)
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
4,740
|
|
4,026
|
|
11,544
|
|
9,733
|
|
|
|
|
|
|
|
|
Income tax
expense
|
1,334
|
|
1,028
|
|
3,206
|
|
1,897
|
Net income
|
$
3,406
|
|
$
2,998
|
|
$
8,338
|
|
$
7,836
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
|
|
Basic
|
$
0.30
|
|
$
0.26
|
|
$
0.73
|
|
$
0.70
|
Diluted
|
$
0.28
|
|
$
0.25
|
|
$
0.69
|
|
$
0.66
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
11,441
|
|
11,381
|
|
11,430
|
|
11,260
|
Diluted
|
12,025
|
|
12,042
|
|
12,007
|
|
11,911
|
|
|
|
|
|
|
|
|
MASTECH DIGITAL,
INC.
|
RECONCILIATION OF
GAAP MEASURES TO NON-GAAP MEASURES
|
(Amounts in
thousands, except per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months ended
September 30,
|
|
Nine Months ended
September 30,
|
|
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Net
Income
|
$
3,406
|
|
$
2,998
|
|
$
8,338
|
|
$
7,836
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
Amortization of
acquired intangible assets
|
792
|
|
656
|
|
2,378
|
|
1,998
|
|
|
|
Stock-based
compensation
|
693
|
|
462
|
|
2,071
|
|
1,530
|
|
|
|
Revaluation of
contingent consideration liability
|
-
|
|
-
|
|
(1,982)
|
|
-
|
|
|
|
Income tax
adjustments
|
(323)
|
|
(270)
|
|
(567)
|
|
(907)
|
|
|
Non-GAAP Net
Income
|
$
4,568
|
|
$
3,846
|
|
$
10,238
|
|
$
10,457
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Diluted
Earnings Per Share
|
$
0.28
|
|
$
0.25
|
|
$
0.69
|
|
$
0.66
|
|
|
Non-GAAP Diluted
Earnings Per Share
|
$
0.38
|
|
$
0.32
|
|
$
0.853
|
|
$
0.88
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
GAAP Diluted
Shares
|
12,025
|
|
12,042
|
|
12,007
|
|
11,911
|
|
|
Non-GAAP Diluted
Shares
|
12,025
|
|
12,042
|
|
12,007
|
|
11,911
|
|
|
|
|
|
|
|
|
|
|
|
|
MASTECH DIGITAL,
INC.
|
SUPPLEMENTAL
FINANCIAL INFORMATION
|
(Amounts in
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months ended
September 30,
|
|
Nine Months ended
September 30,
|
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
Data and analytics
services
|
$
10,523
|
|
$
7,176
|
|
$
28,267
|
|
$
21,308
|
|
IT staffing
services
|
49,008
|
|
40,207
|
|
134,697
|
|
124,083
|
|
|
Total
revenues
|
$
59,531
|
|
$
47,383
|
|
$
162,964
|
|
$
145,391
|
|
|
|
|
|
|
|
|
|
|
Gross Margin
%:
|
|
|
|
|
|
|
|
|
Data and analytics
services
|
51.6%
|
|
55.9%
|
|
48.2%
|
|
51.7%
|
|
IT staffing
services
|
22.8%
|
|
22.6%
|
|
22.4%
|
|
22.1%
|
|
|
Total gross margin
%
|
27.9%
|
|
27.6%
|
|
26.8%
|
|
26.5%
|
|
|
|
|
|
|
|
|
|
|
Segment Operating
Income:
|
|
|
|
|
|
|
|
|
Data and analytics
services
|
$
1,851
|
|
$
1,579
|
|
$
3,014
|
|
$
3,661
|
|
IT staffing
services
|
3,916
|
|
3,294
|
|
9,537
|
|
8,644
|
|
|
Subtotal
|
5,767
|
|
4,873
|
|
12,551
|
|
12,305
|
|
|
|
|
|
|
|
|
|
|
Amortization of
acquired intangible assets
|
(792)
|
|
(656)
|
|
(2,378)
|
|
(1,998)
|
Revaluation of
contingent consideration liability
|
-
|
|
-
|
|
1,982
|
|
-
|
Interest expense and
other, net
|
(235)
|
|
(191)
|
|
(611)
|
|
(574)
|
Income before
income taxes
|
$
4,740
|
|
$
4,026
|
|
$
11,544
|
|
$
9,733
|
|
|
|
|
|
|
|
|
|
|
View original
content:https://www.prnewswire.com/news-releases/mastech-digital-reports-record-third-quarter-2021-results-301409593.html
SOURCE Mastech Digital, Inc.