PITTSBURGH, April 27, 2016 /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,
2016.
First Quarter 2016 Highlights:
- Revenues totaled $31.7 million
compared to $27.1 million in the 2015
first quarter – an increase of 17% year over year;
- Gross profit margins increased to 19.3% from 17.3% in the first
quarter of 2015;
- GAAP diluted earnings per share were $0.00 versus $0.04
in the 2015 first quarter;
- Non-GAAP diluted earnings per share were $0.16 versus $0.11
in the 2015 first quarter – an increase of 45% year over year;
and
- Consultants-on-Billing increased modestly, after two quarters
of sequential declines.
First Quarter Results:
Revenues for the first quarter of 2016 totaled $31.7 million compared to $27.1 million during the corresponding quarter
last year. This increase in revenues reflected our Hudson IT
acquisition that occurred on June 15,
2015. Gross profit in the first quarter of 2016 was
$6.1 million compared to $4.7 million in the first quarter of 2015. GAAP
net income for the first quarter of 2016 totaled $11,000 or $0.00
per diluted share, compared to $195,000 or $0.04
per diluted share during the same period last year. Non-GAAP
net income for the first quarter of 2016 was $692,000 or $0.16
per diluted share, compared to $477,000 or $0.11
per diluted share in the first quarter of 2015.
Demand for the Company's staffing services was solid in the
first quarter of 2016, as new assignments improved by 21% over the
fourth quarter of 2015. During the first quarter of 2016, our
consultants-on-billing headcount increased by approximately
one-percent to 854 consultants.
Commenting on the Company's first quarter 2016 performance,
Vivek Gupta, Mastech's Chief
Executive Officer, stated, "While it's encouraging to see an
expansion in our consultant-base during the first quarter of 2016
after several quarters of decline, we will work to strengthen our
organization by seeking to add talent in all facets of our
business. Additionally, we will continue to assess cost savings
opportunities in areas where we are not achieving the desired
paybacks. I'm confident that we can return the Company to a growth
trajectory, without materially altering our "industry advantaged"
operating cost structure."
Jack Cronin, Mastech's Chief
Financial Officer, stated, "Our financial position at March 31, 2016 remains strong with $14.6 million of outstanding debt, net of cash
balances on hand, and access to $9.1
million of borrowing capacity. Outstanding debt increased
during the quarter and reflected higher operating working capital
levels to support our business."
In conjunction with its first quarter earnings release, Mastech
will host a conference call at 9:00 A.M.
ET on April 27, 2016 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
4, 2016.
About Mastech Holdings, Inc.:
Leveraging the power of 30 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 June 2015 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 of 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,
to 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, 2015.
MASTECH HOLDINGS,
INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(Amounts in
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
March
31,
|
|
|
December
31,
|
|
|
|
2016
|
|
|
2015
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
830
|
|
$
|
848
|
Accounts receivable,
net
|
|
|
20,860
|
|
|
19,190
|
Prepaid and other current
assets
|
|
|
737
|
|
|
587
|
Deferred income
taxes
|
|
|
466
|
|
|
217
|
Total current assets
|
|
|
22,893
|
|
|
20,842
|
|
|
|
|
|
|
|
Equipment, enterprise
software and leasehold improvements, net
|
|
|
604
|
|
|
656
|
|
|
|
|
|
|
|
Deferred income
taxes
|
|
|
118
|
|
|
92
|
|
|
|
|
|
|
|
Deferred
financing costs, net
|
|
|
87
|
|
|
97
|
|
|
|
|
|
|
|
Non-current
deposits
|
|
|
237
|
|
|
237
|
|
|
|
|
|
|
|
Goodwill
|
|
|
8,427
|
|
|
8,427
|
|
|
|
|
|
|
|
Intangible assets,
net
|
|
|
7,923
|
|
|
8,126
|
Total assets
|
|
$
|
40,289
|
|
$
|
38,477
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
Current portion of long-term
debt
|
|
$
|
1,800
|
|
$
|
1,800
|
Accounts payable
|
|
|
2,373
|
|
|
2,213
|
Accrued payroll and related
costs
|
|
|
5,282
|
|
|
5,965
|
Deferred revenue and other
liabilities
|
|
|
1,330
|
|
|
1,958
|
Total current liabilities
|
|
|
10,785
|
|
|
11,936
|
|
|
|
|
|
|
|
Long-term
liabilities:
|
|
|
|
|
|
|
Long-term debt, less current
portion
|
|
|
13,593
|
|
|
10,738
|
Total liabilities
|
|
|
24,378
|
|
|
22,674
|
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
|
|
Common stock, par value
$0.01 per share
|
|
|
52
|
|
|
52
|
Additional paid-in
capital
|
|
|
13,229
|
|
|
13,114
|
Retained earnings
|
|
|
6,788
|
|
|
6,777
|
Accumulated other
comprehensive (loss)
|
|
|
(37)
|
|
|
(19)
|
Treasury stock, at
cost
|
|
|
(4,121)
|
|
|
(4,121)
|
Total shareholders' equity
|
|
|
15,911
|
|
|
15,803
|
Total liabilities and shareholders' equity
|
|
$
|
40,289
|
|
$
|
38,477
|
|
MASTECH HOLDINGS,
INC.
|
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
(Amounts in
thousands, except per share data)
|
|
(Unaudited)
|
|
|
Three Months ended
March 31,
|
|
|
2016
|
|
2015
|
|
|
|
|
|
|
Revenues
|
$
31,714
|
|
$
27,060
|
|
|
|
|
|
|
Cost of
revenues
|
25,601
|
|
22,373
|
|
|
|
|
|
|
Gross
profit
|
6,113
|
|
4,687
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
5,978
|
|
4,359
|
|
|
|
|
|
|
Income from
operations
|
135
|
|
328
|
|
|
|
|
|
|
Other
income/(expense), net
|
(118)
|
|
(17)
|
|
|
|
|
|
|
Income before
income taxes
|
17
|
|
311
|
|
|
|
|
|
|
Income tax
expense
|
6
|
|
116
|
|
Net
income
|
$
11
|
|
$
195
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
Basic
|
$
0.00
|
|
$
0.05
|
|
Diluted
|
$
0.00
|
|
$
0.04
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
Basic
|
4,353
|
|
4,328
|
|
Diluted
|
4,450
|
|
4,441
|
|
MASTECH HOLDINGS,
INC.
|
|
RECONCILIATION OF
GAAP MEASURES TO NON-GAAP MEASURES
|
|
(Amounts in
thousands, except per share data)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
Three Months ended
March 31,
|
|
|
2016
|
|
2015
|
|
|
|
|
|
|
GAAP Net
Income
|
$
11
|
|
$
195
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
Acquisition
transaction costs
|
-
|
|
50
|
|
Amortization
of acquired intangible assets
|
203
|
|
-
|
|
Stock-based compensation
|
115
|
|
95
|
|
Severance expenses
|
780
|
|
305
|
|
Income
taxes adjustments
|
(417)
|
|
(168)
|
|
Non-GAAP Net
Income
|
$
692
|
|
$
477
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Diluted
Earnings Per Share
|
$
0.00
|
|
$
0.04
|
|
Non-GAAP Diluted
Earnings Per Share
|
$
0.16
|
|
$
0.11
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
GAAP Diluted
Shares
|
4,450
|
|
4,441
|
|
Non-GAAP Diluted
Shares
|
4,450
|
|
4,441
|
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SOURCE Mastech Holdings, Inc.