PITTSBURGH, July 26, 2017 /PRNewswire/ -- Mastech
Digital, Inc. (NYSE MKT: MHH), a leading provider of digital
transformation services, announced today its financial results for
the second quarter of 2017.
Second Quarter 2017 Highlights:
- Revenues totaled $35.1 million,
an increase of $1.5 million over last
year's top-line results and $2.0
million over first quarter 2017's results;
- Billable consultants at June 30,
2017 totaled 968 compared to 916-consultants at June 30, 2016; during the quarter the Company
increased its billable consultant headcount by 75-consultants or by
8.4%;
- GAAP diluted earnings per share were $0.15 versus $0.21
in the 2016 second quarter; and
- Non-GAAP diluted earnings per share were $0.23 versus $0.25
in the 2016 second quarter as the Company continued to invest for
future growth;
- On July 13, 2017, we closed the
acquisition of the services division of InfoTrellis, Inc. under the
terms and conditions as previously announced on July 7, 2017.
Second Quarter Results:
Revenues for the second quarter of 2017 totaled $35.1 million compared to $33.6 million during the corresponding quarter
last year. Gross profit in the second quarter of 2017 was
$7.1 million, compared to
$6.9 million in the second quarter of
2016. GAAP net income for the second quarter of 2017 totaled
$696,000 or $0.15 per diluted share, compared to $945,000 or $0.21
per diluted share during the same period last year. Non-GAAP
net income for the second quarter of 2017 was $1.1 million or $0.23 per diluted share, compared to $1.1 million or $0.25 per diluted share in the second quarter of
2016.
Demand for the Company's services increased during the second
quarter of 2017 from the previous quarter. Accordingly, the
Company was able to expand its billable consultant-base in the
quarter by over 8% - the Company's largest quarterly increase since
the third quarter of 2010.
Commenting on the second quarter results, Vivek Gupta, Mastech Digital's Chief Executive
Officer stated, "I am pleased to see the continuation of higher
levels of activity during the quarter and delighted with our 8%
growth in consultants-on-billing. We are clearly seeing tangible
payback from the investment in our sales and recruitment
organizations during the first half of 2017. We are excited to be
entering the third quarter with strong momentum and the InfoTrellis
acquisition completed as planned."
Commenting on the Company's financial position, Jack Cronin, Mastech Digital's Chief Financial
Officer, stated, "At June 30, 2017,
we had bank debt, net of cash balances on hand, of $9.0 million, a decline of $3.4 million during the quarter. With the
completion of our new PNC credit facility to support our recent
acquisition, we believe that we have adequate liquidity to continue
to invest in our businesses in the second half of 2017 and
beyond."
In conjunction with its second quarter earnings release, Mastech
Digital will host a conference call at 9:00
A.M. ET on July 26, 2017 to
discuss these results and to answer questions. A live webcast
of this conference call will be available on the Company's website,
www.mastechdigital.com. Simply click on the Investor section and
follow the links to the live webcast. The webcast will remain
available for replay through August 2,
2017.
About Mastech Digital, Inc.:
Mastech Digital (NYSE MKT: MHH) is a leading provider of IT
services focused on solving its customers' digital transformation
challenges. The Company's digital transformation services include
Data Management and Analytics, Salesforce.com, SAP HANA, and
Digital Learning services while its IT staffing services span
across Digital and Mainstream technologies. A minority-owned
enterprise, Mastech Digital is headquartered in Pittsburgh, PA with offices across the U.S.
and India. For more information,
visit www.mastechdigital.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:
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.
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.
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.
Acquisition related transaction expenses: We
incurred significant expenses in connection with our acquisition of
the services division of InfoTrellis, Inc. which we would not have
otherwise incurred in the periods presented as part of our
continuing operations. These transaction expenses included
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.
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 benefits to Mastech Digital from completing
the acquisition of the services division of InfoTrellis, Inc. and
the PNC credit facility and the expected performance of Mastech
Digital following completion of these transactions. 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,
2016.
For more information, contact:
Donna Kijowski
Manager, Investor Relations
Mastech Digitial, Inc.
+1-888-330-5497
|
MASTECH DIGITAL,
INC.
|
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
(Amounts in
thousands)
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
June
30,
|
|
December
31,
|
|
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
633
|
|
$
829
|
|
Accounts receivable,
net
|
|
22,536
|
|
21,102
|
|
Prepaid and other current
assets
|
|
1,504
|
|
753
|
|
Total current assets
|
|
24,673
|
|
22,684
|
|
|
|
|
|
|
|
Equipment, enterprise
software and
leasehold improvements, net
|
|
852
|
|
558
|
|
|
|
|
|
|
|
Deferred income
taxes
|
|
226
|
|
254
|
|
|
|
|
|
|
|
Deferred
financing costs, net
|
|
40
|
|
59
|
|
|
|
|
|
|
|
Non-current
deposits
|
|
185
|
|
170
|
|
|
|
|
|
|
|
Goodwill
|
|
8,427
|
|
8,427
|
|
|
|
|
|
|
|
Intangible assets,
net
|
|
6,906
|
|
7,313
|
|
Total assets
|
|
$
41,309
|
|
$
39,465
|
|
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Current portion of long-term
debt
|
|
$
1,800
|
|
$
1,800
|
|
Accounts payable
|
|
3,240
|
|
1,963
|
|
Accrued payroll and related
costs
|
|
7,726
|
|
7,645
|
|
Deferred revenue and other
liabilities
|
|
497
|
|
849
|
|
Total current liabilities
|
|
13,263
|
|
12,257
|
|
|
|
|
|
|
|
Long-term
liabilities:
|
|
|
|
|
|
Long-term debt, less current
portion
|
|
7,793
|
|
8,136
|
|
Total liabilities
|
|
21,056
|
|
20,393
|
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
|
Common stock, par value
$0.01 per share
|
|
54
|
|
53
|
|
Additional paid-in
capital
|
|
14,146
|
|
13,863
|
|
Retained earnings
|
|
10,194
|
|
9,297
|
|
Accumulated other
comprehensive (loss)
|
|
-
|
|
(7)
|
|
Treasury stock, at
cost
|
|
(4,141)
|
|
(4,134)
|
|
Total shareholders' equity
|
|
20,253
|
|
19,072
|
|
Total liabilities and shareholders' equity
|
|
$
41,309
|
|
$
39,465
|
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,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
Revenues
|
$
35,086
|
|
$
33,629
|
|
$
68,186
|
|
$
65,343
|
|
|
|
|
|
|
|
|
Cost of
revenues
|
28,009
|
|
26,740
|
|
54,900
|
|
52,341
|
|
|
|
|
|
|
|
|
Gross
profit
|
7,077
|
|
6,889
|
|
13,286
|
|
13,002
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
6,095
|
|
5,225
|
|
11,901
|
|
11,203
|
|
|
|
|
|
|
|
|
Income from
operations
|
982
|
|
1,664
|
|
1,385
|
|
1,799
|
|
|
|
|
|
|
|
|
Other
income/(expense), net
|
(106)
|
|
(139)
|
|
(187)
|
|
(257)
|
|
|
|
|
|
|
|
|
Income before
income taxes
|
876
|
|
1,525
|
|
1,198
|
|
1,542
|
|
|
|
|
|
|
|
|
Income tax
expense
|
180
|
|
580
|
|
301
|
|
586
|
Net
income
|
$
696
|
|
$
945
|
|
$
897
|
|
$
956
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
|
|
Basic
|
$
0.15
|
|
$
0.22
|
|
$
0.20
|
|
$
0.22
|
Diluted
|
$
0.15
|
|
$
0.21
|
|
$
0.20
|
|
$
0.21
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
4,536
|
|
4,354
|
|
4,517
|
|
4,353
|
Diluted
|
4,576
|
|
4,451
|
|
4,563
|
|
4,450
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
|
|
|
|
|
|
|
GAAP Net
Income
|
$
696
|
|
$
945
|
|
$
897
|
|
$
956
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
Amortization
of acquired intangible assets
|
204
|
|
203
|
|
407
|
|
406
|
Stock-based compensation
|
108
|
|
70
|
|
215
|
|
185
|
Acquisition
transaction expenses
|
265
|
|
-
|
|
265
|
|
-
|
Severance
expenses
|
-
|
|
-
|
|
-
|
|
780
|
Income taxes
adjustments
|
(220)
|
|
(104)
|
|
(337)
|
|
(521)
|
Non-GAAP Net
Income
|
$
1,053
|
|
$
1,114
|
|
$
1,447
|
|
$
1,806
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Diluted
Earnings Per Share
|
$
0.15
|
|
$
0.21
|
|
$
0.20
|
|
$
0.21
|
Non-GAAP Diluted
Earnings Per Share
|
$
0.23
|
|
$
0.25
|
|
$
0.32
|
|
$
0.41
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
GAAP Diluted
Shares
|
4,576
|
|
4,451
|
|
4,563
|
|
4,450
|
Non-GAAP Diluted
Shares
|
4,576
|
|
4,451
|
|
4,563
|
|
4,450
|
View original
content:http://www.prnewswire.com/news-releases/mastech-digital-inc-reports-second-quarter-2017-results--revenues-grow-by-43-year-over-year-and-60-sequentially-300494339.html
SOURCE Mastech Digital, Inc.