PITTSBURGH, Oct. 28, 2015 /PRNewswire/ -- Mastech Holdings,
Inc. (NYSE MKT: MHH), a national provider of Information Technology
staffing services, announced today its financial results for the
third quarter ended September 30,
2015.
Third Quarter 2015 Highlights:
- Revenues totaled $34.6 million,
compared to $28.6 million in the 2014
third quarter;
- Gross profit margins increased to 19.9% from 18.3% in the third
quarter of 2014;
- Non-GAAP diluted earnings per share were $0.25 versus $0.21
in the 2014 third quarter;
- GAAP diluted earnings per share were $0.20 versus $0.20
in the 2014 third quarter.
Third Quarter Results:
Revenues for the third quarter of 2015 totaled $34.6 million compared to $28.6 million during the corresponding quarter
last year. Gross profit in the third quarter of 2015 was
$6.9 million, compared to
$5.2 million in the third quarter of
2014. GAAP net income for the third quarter of 2015 totaled
$887,000, compared to $879,000 during the same period last year.
Non-GAAP net income for the third quarter of 2015 was $1.1 million, compared to $956,000 in the third quarter of 2014. GAAP
diluted earnings per share were $0.20
in the 2015 third quarter, compared to $0.20 in the third quarter of 2014.
Non-GAAP diluted earnings per share were $0.25 in the third quarter of 2015, compared to
$0.21 for the corresponding period in
2014.
Demand for the Company's staffing services was up from the
previous quarter as we worked Hudson IT client activity for the
first full quarter since our June
2015 acquisition. Gross margins in the third quarter of 2015
were 19.9%, representing a significant increase from both the
previous quarter's 18.8% gross margin results, and the 18.3% gross
margins for the corresponding period in 2014.
Commenting on the Company's third quarter 2015, Kevin Horner, Mastech's Chief Executive Officer,
stated, "Third quarter's financial performance reflected the first
full quarter of Hudson IT's operating results, an acquisition that
we completed in June 2015. In
addition to adding scale to Mastech, the merits of this business
combination can be clearly seen in our overall revenue and gross
margin performance as well as our overall
profitability."
Jack Cronin, Mastech's Chief
Financial Officer, stated, "As of September
30, 2015 we had bank debt, net of cash balances on hand, of
$15.6 million and approximately
$8.5 million of borrowing capacity
available to us under our revolving credit line. Our net bank
debt position increased by $2.2
million during the quarter and reflected an investment in
operating working capital of $3.5
million, largely related to the Hudson IT acquisition."
In conjunction with its third quarter earnings release, Mastech
will host a conference call at 9:00 A.M.
ET on October 28, 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 November 4,
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.
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, net of income tax benefits
computed at our effective income tax rate for the periods
presented:
Amortization of acquired intangible assets: We
amortize intangible assets acquired in connection with our
acquisition of Hudson IT. 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.
Acquisition related transaction expenses: We
incurred significant expenses in connection with our acquisition of
Hudson IT which we would not have otherwise incurred in the periods
presented as part our continuing operations. These
transaction expenses consisted of investment banking fees, legal
expenses, audit charges related to our acquired companies and
various advisor costs. 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 a
helpful comparison of our results with other periods.
Stock-based compensation expenses: We incur
material recurring expenses 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.
Severance charges: From time to time, we incur
severance expense related to the termination by the Company of
leadership personnel. While it is probable that these
expenses will occur in the future, we believe that providing
non-GAAP financial measures that exclude these expenses 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 projections of revenues, earnings, and cash flow.
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 Annual Report on Form 10-K for
the year ended December 31, 2014.
MASTECH HOLDINGS,
INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(Amounts in
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
September
30,
|
|
December
31,
|
|
|
2015
|
|
2014
|
|
|
|
|
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
698
|
|
$
2,568
|
Accounts receivable,
net
|
|
20,129
|
|
15,226
|
Prepaid and other current
assets
|
|
851
|
|
926
|
Deferred income
taxes
|
|
157
|
|
120
|
Total current assets
|
|
21,835
|
|
18,840
|
|
|
|
|
|
Equipment, enterprise
software and leasehold improvements, net
|
|
674
|
|
701
|
|
|
|
|
|
Deferred income
taxes
|
|
162
|
|
188
|
|
|
|
|
|
Deferred
financing costs, net
|
|
106
|
|
51
|
|
|
|
|
|
Non-current
deposits
|
|
231
|
|
264
|
|
|
|
|
|
Goodwill
|
|
8,427
|
|
-
|
|
|
|
|
|
Intangible assets,
net
|
|
8,330
|
|
-
|
Total assets
|
|
$
39,765
|
|
$
20,044
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Current portion of long-term
debt
|
|
$
1,800
|
|
$
-
|
Accounts payable
|
|
2,948
|
|
1,514
|
Accrued payroll and related
costs
|
|
5,054
|
|
5,012
|
Deferred revenue and other
liabilities
|
|
901
|
|
650
|
Total current liabilities
|
|
10,703
|
|
7,176
|
|
|
|
|
|
Long-term
liabilities:
|
|
|
|
|
Long-term debt, less current
portion
|
|
14,531
|
|
-
|
|
|
|
|
|
Total liabilities
|
|
25,234
|
|
7,176
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
Common stock, par value
$0.01 per share
|
|
52
|
|
51
|
Additional paid-in
capital
|
|
13,163
|
|
12,733
|
Retained earnings
|
|
5,488
|
|
4,024
|
Accumulated other
comprehensive (loss)
|
|
(56)
|
|
(25)
|
Treasury stock, at
cost
|
|
(4,116)
|
|
(3,915)
|
Total shareholders' equity
|
|
14,531
|
|
12,868
|
Total liabilities and shareholders' equity
|
|
$
39,765
|
|
$
20,044
|
MASTECH HOLDINGS,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(Amounts in
thousands, except per share data)
|
(Unaudited)
|
|
Three Months ended
September 30,
|
|
Nine Months ended
September 30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
Revenues
|
$
34,565
|
|
$
28,634
|
|
$
90,930
|
|
$
84,974
|
|
|
|
|
|
|
|
|
Cost of
revenues
|
27,686
|
|
23,407
|
|
73,849
|
|
69,416
|
|
|
|
|
|
|
|
|
Gross
profit
|
6,879
|
|
5,227
|
|
17,081
|
|
15,558
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
5,356
|
|
3,788
|
|
14,611
|
|
11,306
|
|
|
|
|
|
|
|
|
Income from
operations
|
1,523
|
|
1,439
|
|
2,470
|
|
4,252
|
|
|
|
|
|
|
|
|
Other
income/(expense), net
|
(124)
|
|
(33)
|
|
(139)
|
|
(11)
|
|
|
|
|
|
|
|
|
Income before
income taxes
|
1,399
|
|
1,406
|
|
2,331
|
|
4,241
|
|
|
|
|
|
|
|
|
Income tax
expense
|
512
|
|
527
|
|
867
|
|
1,600
|
Net
income
|
$
887
|
|
$
879
|
|
$
1,464
|
|
$
2,641
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
|
|
Basic
|
$
0.20
|
|
$
0.20
|
|
$
0.34
|
|
$
0.61
|
Diluted
|
$
0.20
|
|
$
0.20
|
|
$
0.33
|
|
$
0.59
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
4,341
|
|
4,330
|
|
4,334
|
|
4,319
|
Diluted
|
4,438
|
|
4,464
|
|
4,438
|
|
4,461
|
MASTECH HOLDINGS,
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,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
GAAP Net
Income
|
$
887
|
|
$
879
|
|
$
1,464
|
|
$
2,641
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
Amortization of
acquired intangible assets
|
202
|
|
-
|
|
237
|
|
-
|
Stock-based compensation
|
106
|
|
123
|
|
299
|
|
295
|
Acquisition transaction
expenses
|
25
|
|
-
|
|
624
|
|
-
|
Severance expenses
|
-
|
|
-
|
|
305
|
|
-
|
Income
taxes adjustments
|
(122)
|
|
(46)
|
|
(553)
|
|
(111)
|
Non-GAAP Net
Income
|
$
1,098
|
|
$
956
|
|
$
2,376
|
|
$
2,825
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Diluted
Earnings Per Share
|
$
0.20
|
|
$
0.20
|
|
$
0.33
|
|
$
0.59
|
Non-GAAP Diluted
Earnings Per Share
|
$
0.25
|
|
$
0.21
|
|
$
0.54
|
|
$
0.63
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
GAAP Diluted
Shares
|
4,438
|
|
4,464
|
|
4,438
|
|
4,461
|
Non-GAAP Diluted
Shares
|
4,438
|
|
4,464
|
|
4,438
|
|
4,461
|
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SOURCE Mastech Holdings, Inc.