PITTSBURGH, May 11, 2015 /PRNewswire/ -- Mastech
Holdings, Inc. (NYSE MKT: MHH), a national provider of Information
Technology staffing services, announced today its financial results
for the first quarter ended March 31,
2015 and provided commentary on its recently announced
agreement to purchase the U.S. IT staffing business of Hudson
Global.
First Quarter 2015 Highlights:
- Revenues totaled $27.1 million
compared to $28.7 million in the 2014
first quarter;
- $0.09 diluted earnings per share
(excluding severance costs) versus $0.20 per diluted share in the 2014 first
quarter;
- Consultants-on-Billing essentially flat during the first
quarter of 2015;
- Leadership changes / organizational realignments completed
during the first quarter of 2015.
First Quarter Results:
Revenues for the first quarter of 2015 totaled $27.1 million compared to $28.7 million during the corresponding quarter
last year. Gross profit in the first quarter of 2015 was
$4.7 million compared to $5.2 million in the first quarter of 2014.
Consolidated net income for the first quarter of 2015 totaled
$195,000 or $0.04 per diluted share, compared to $869,000 or $0.20
per diluted share, during the same period last year.
Consolidated net income in the 2015 first quarter included
$305,000 of pre-tax severance
costs related to a change in sales leadership, which impacted
diluted earnings per share by $0.05.
Demand for the Company's staffing services was solid for much of
the quarter after some weakness in the first half of January.
Gross margins in the first quarter of 2015 were 17.3% compared to
18.2% in the first quarter of 2014. Higher bench costs
related to the start-up of our technology practice group and higher
benefit costs related to the Affordable Care Act contributed to the
lower margin performance in the first quarter of 2015.
Commenting on the Company's first quarter 2015 performance,
Kevin Horner, Mastech's Chief
Executive Officer, stated, "As we discussed in our Fourth Quarter
2014 earnings call, we expected our financial results for the
first half of 2015 to be down as compared to 2014.
Nonetheless, consultant on billing (COB) growth in the last two
months of the quarter was an encouraging sign. With our
leadership changes and organizational realignments in place, I am
starting to see clear improvements in the business as we enter the
second quarter."
Jack Cronin, Mastech's Chief
Financial Officer, stated, "Our financial position at March 31, 2015 remains strong with no outstanding
debt, $2.9 million of cash balances
on hand and $16.4 million of
borrowing capacity available to us. During the quarter, we
repurchased 20,891 shares of common stock at an average price of
$9.59. At March 31, 2015 we had approximately 472,000
shares available for purchase under our existing stock repurchase
program."
Comments on the Proposed Acquisition of Hudson Global's U.S
IT Staffing Business:
Earlier today, Mastech announced that it signed a definitive
asset purchase agreement to acquire Hudson Global's U.S. IT
staffing business. Commenting on the proposed acquisition,
Kevin Horner stated, "This
acquisition will provide Mastech with an impressive list of direct
retail client relationships. We plan to maintain this
relationship-focused business and all of its sales and recruiting
staff. Additionally, we believe that there will be
opportunities to leverage the advantages of Mastech's high-volume,
low cost recruiting engine to enhance client value. I am very
excited about this opportunity, which is expected to be immediately
accretive to earnings and is estimated to increase Mastech's
revenue run-rate by close to 30 percent." Subject to the
completion of customary closing conditions, the acquisition is
expected to close in the second quarter of 2015.
In conjunction with its first quarter earnings release, Mastech
will host a conference call at 9:00 A.M. ET on May 12, 2015 to discuss these results and to
answer questions. A live webcast of this conference call will
be available on the Company's website, www.mastech.com.
Simply click on the Investor Relations section and follow the links
to the live webcast. The webcast will remain available for
replay through May 19, 2015.
About Mastech Holdings, Inc.:
Leveraging the power of 29 years of
IT experience, Mastech (NYSE MKT:
MHH) provides Information Technology Staffing services in
the disciplines which drive today's business operations.
More information about Mastech can be found at Mastech's website:
www.mastech.com.
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) the expected completion of the acquisition, the time frame
in which this will occur, the expected benefits to Mastech from
completing the acquisition and the expected performance of Mastech
following completion of the acquisition. 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 forecast in
forward-looking statements due to a variety of factors, including,
without limitation, the level of market demand for its 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, and the Company's ability
to create, acquire and build new lines of business, to attract and
retain qualified personnel, reduce costs and conserve cash, 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, 2014.
MASTECH HOLDINGS,
INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(Amounts in
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
March
31,
|
|
December
31,
|
|
|
2015
|
|
2014
|
|
|
|
|
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
2,853
|
|
$
2,568
|
Accounts receivable,
net
|
|
15,348
|
|
15,226
|
Prepaid and other current
assets
|
|
949
|
|
926
|
Deferred income
taxes
|
|
210
|
|
120
|
Total current assets
|
|
19,360
|
|
18,840
|
|
|
|
|
|
Equipment, enterprise
software and leasehold improvements, net
|
|
703
|
|
701
|
|
|
|
|
|
Deferred income
taxes
|
|
177
|
|
188
|
|
|
|
|
|
Deferred
financing costs, net
|
|
46
|
|
51
|
|
|
|
|
|
Non-current
deposits
|
|
232
|
|
264
|
|
|
|
|
|
Total assets
|
|
$
20,518
|
|
$
20,044
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts payable
|
|
$
1,918
|
|
$
1,514
|
Accrued payroll and related
costs
|
|
4,944
|
|
5,012
|
Deferred revenue and other
liabilities
|
|
542
|
|
650
|
Total current liabilities
|
|
7,404
|
|
7,176
|
|
|
|
|
|
Total liabilities
|
|
7,404
|
|
7,176
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
Common stock, par value
$0.01 per share
|
|
51
|
|
51
|
Additional paid-in
capital
|
|
12,967
|
|
12,733
|
Retained earnings
|
|
4,219
|
|
4,024
|
Accumulated other
comprehensive loss
|
|
(7)
|
|
(25)
|
Treasury stock, at
cost
|
|
(4,116)
|
|
(3,915)
|
Total shareholders' equity
|
|
13,114
|
|
12,868
|
Total liabilities and shareholders' equity
|
|
$
20,518
|
|
$
20,044
|
MASTECH HOLDINGS,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(Amounts in
thousands, except per share data)
|
(Unaudited)
|
|
|
Three Months ended
March 31,
|
|
2015
|
|
2014
|
|
|
|
|
Revenues
|
$
27,060
|
|
$
28,684
|
|
|
|
|
Cost of
revenues
|
22,373
|
|
23,459
|
|
|
|
|
Gross
profit
|
4,687
|
|
5,225
|
|
|
|
|
Selling, general and
administrative expenses
|
4,359
|
|
3,831
|
|
|
|
|
Income from
operations
|
328
|
|
1,394
|
|
|
|
|
Other
income/(expense), net
|
(17)
|
|
8
|
|
|
|
|
Income before income
taxes
|
311
|
|
1,402
|
|
|
|
|
Income tax
expense
|
116
|
|
533
|
|
|
|
|
Net Income
|
$
195
|
|
$
869
|
|
|
|
|
Earnings per
share:
|
|
|
|
Basic
|
$
0.05
|
|
$
0.20
|
Diluted
|
$
0.04
|
|
$
0.20
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
Basic
|
4,328
|
|
4,310
|
Diluted
|
4,441
|
|
4,440
|
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SOURCE Mastech Holdings, Inc.