PITTSBURGH, April 26, 2018 /PRNewswire/ --
Mastech Digital, Inc. (NYSE American: MHH), a leading provider
of Digital Transformation IT Services, announced today its
financial results for the first quarter ended March 31,
2018.
First Quarter 2018 Highlights:
- Revenues increased 31% to a total of $43.3 million, compared to revenues of
$33.1 million in the 2017 first
quarter; sequentially, revenues increased by 7% over fourth quarter
2017
- Organic revenues in the Company's IT staffing services segment
increased by 11% compared to the first quarter of 2017
- The Company's data and analytics services segment, acquired on
July 13, 2017, experienced 28%
revenue growth over the fourth quarter 2017 and contributed
$6.6 million of revenues during the
quarter
- The number of billable consultants at March 31, 2018 in the Company's IT staffing
services segment grew by 3% during the quarter and sequential
revenues increased by 4% over the previous quarter
- GAAP diluted earnings per share were $0.25 versus $0.04
in the 2017 first quarter
- Non-GAAP diluted earnings per share were $0.36 versus $0.09
in the 2017 first quarter
First Quarter Results:
Revenues for the first quarter of 2018 totaled $43.3 million, compared to $33.1 million during the corresponding quarter
last year. Gross profit in the first quarter of 2018 was
$10.3 million, compared to
$6.2 million in the first quarter of
2017. GAAP net income for the first quarter of 2018 totaled
$1.4 million or $0.25 per diluted share, compared to $201,000 or $0.04
per diluted share during the same period last year. Non-GAAP
net income for the first quarter of 2018 was $2.0 million or $0.36 per diluted share, compared to $394,000 or $0.09
per diluted share in the first quarter of 2017.
Activity levels at the Company's data and analytics services
segment continued at elevated levels, as revenues for the first
quarter 2018 increased by 28% as compared to the fourth quarter of
2017. Demand for the Company's IT staffing services remained robust
during the quarter and our billable consultant-base expanded by 30
consultants during the quarter. Additionally, gross margins in
the IT staffing services segment increased by 120 basis points in
the 2018 quarter, when compared to the same period last year.
"I am pleased with the way we have started the year," commented
Vivek Gupta, President and CEO,
Mastech Digital. "Our data and analytics segment, in particular,
has performed well, backed by increased customer demand. This is
the second consecutive quarter where we are seeing a sequential
revenue growth of nearly 30% in this unit. We kicked off several
exciting project-based engagements during the quarter and our
pipeline continues to remain healthy. Revenues in our IT staffing
services segment grew by 11% and gross margins expanded by 120
basis points as compared to the same quarter in 2017."
Commenting on the Company's financial position, Jack Cronin, Mastech Digital's Chief Financial
Officer, stated, "At March 31, 2018,
we had bank debt, net of cash balances on hand, of $37.9 million and approximately $13.5 million of borrowing capacity available to
us under our revolving credit line. The increase in bank debt
from the prior year reflects our July
2017 acquisition, which was largely funded with debt."
In conjunction with its first quarter earnings release, Mastech
Digital will host a conference call at 9:00
A.M. ET on April 26, 2018 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 Relations
section and follow the links to the live webcast. The webcast
will remain available for replay through May
3, 2018.
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 services; other digital transformation
services that include Salesforce, SAP HANA, and Digital Learning
services; and IT staffing services. A minority-owned enterprise,
Mastech Digital is headquartered in Pittsburgh, PA with offices across the U.S.,
Canada, 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 and our
July 2017 acquisition of the services
division of InfoTrellis, Inc. 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.
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,
2017.
MASTECH DIGITAL,
INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(Amounts in
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
March
31,
|
|
December
31,
|
|
|
2018
|
|
2017
|
|
|
|
|
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
1,267
|
|
$
2,478
|
Accounts receivable,
net
|
|
33,561
|
|
30,662
|
Prepaid and other current
assets
|
|
868
|
|
1,533
|
Total current assets
|
|
35,696
|
|
34,673
|
|
|
|
|
|
Equipment, enterprise
software and leasehold improvements, net
|
|
1,974
|
|
1,899
|
|
|
|
|
|
Deferred income
taxes
|
|
475
|
|
468
|
|
|
|
|
|
Non-current
deposits
|
|
294
|
|
255
|
|
|
|
|
|
Goodwill
|
|
35,844
|
|
35,844
|
|
|
|
|
|
Intangible assets,
net
|
|
24,772
|
|
25,465
|
Total assets
|
|
$
99,055
|
|
$
98,604
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Current portion of long-term
debt
|
|
$
4,194
|
|
$
4,003
|
Current portion of
contingent consideration liability
|
|
6,125
|
|
-
|
Accounts payable
|
|
4,395
|
|
5,028
|
Accrued payroll and related
costs
|
|
7,129
|
|
8,969
|
Other accrued
liabilities
|
|
2,487
|
|
2,109
|
Total current liabilities
|
|
24,330
|
|
20,109
|
|
|
|
|
|
Long-term
liabilities:
|
|
|
|
|
Long-term debt, less current portion, net
|
|
34,968
|
|
34,149
|
Contingent consideration liability, less current portion
|
|
11,000
|
|
17,125
|
Long-term accrued income taxes
|
|
68
|
|
68
|
Total liabilities
|
|
70,366
|
|
71,451
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
Common stock, par value
$0.01 per share
|
|
63
|
|
63
|
Additional paid-in
capital
|
|
20,411
|
|
20,304
|
Retained earnings
|
|
12,303
|
|
10,923
|
Accumulated other
comprehensive income
|
|
66
|
|
17
|
Treasury stock, at
cost
|
|
(4,154)
|
|
(4,154)
|
Total shareholders' equity
|
|
28,689
|
|
27,153
|
Total liabilities and shareholders' equity
|
|
$
99,055
|
|
$
98,604
|
MASTECH DIGITAL,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(Amounts in
thousands, except per share data)
|
(Unaudited)
|
|
Three Months ended
March 31,
|
|
|
2018
|
|
2017
|
|
|
|
|
|
|
Revenues
|
$
43,333
|
|
$
33,100
|
|
|
|
|
|
|
Cost of
revenues
|
33,072
|
|
26,891
|
|
|
|
|
|
|
Gross
profit
|
10,261
|
|
6,209
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
7,823
|
|
5,806
|
|
|
|
|
|
|
Income from
operations
|
2,438
|
|
403
|
|
|
|
|
|
|
Other
income/(expense), net
|
(512)
|
|
(81)
|
|
|
|
|
|
|
Income before income
taxes
|
1,926
|
|
322
|
|
|
|
|
|
|
Income tax
expense
|
546
|
|
121
|
|
Net income
|
$
1,380
|
|
$
201
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
Basic
|
$
0.25
|
|
$
0.04
|
|
Diluted
|
$
0.25
|
|
$
0.04
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
Basic
|
5,461
|
|
4,499
|
|
Diluted
|
5,529
|
|
4,561
|
|
MASTECH DIGITAL,
INC.
|
RECONCILIATION OF
GAAP MEASURES TO NON-GAAP MEASURES
|
(Amounts in
thousands, except per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Three Months ended
March 31,
|
|
|
|
2018
|
|
2017
|
|
|
|
|
|
|
|
GAAP Net
Income
|
$
1,380
|
|
$
201
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
Amortization of
acquired intangible assets
|
693
|
|
203
|
|
|
Stock-based
compensation
|
105
|
|
107
|
|
|
Income taxes
adjustments
|
(214)
|
|
(117)
|
|
Non-GAAP Net
Income
|
$
1,964
|
|
$
394
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Diluted
Earnings Per Share
|
$
0.25
|
|
$
0.04
|
|
Non-GAAP Diluted
Earnings Per Share
|
$
0.36
|
|
$
0.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
GAAP Diluted
Shares
|
5,529
|
|
4,561
|
|
Non-GAAP Diluted
Shares
|
5,529
|
|
4,561
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2018 Non-GAAP
Income Tax Adjustments:
|
Staffing
|
|
D&A
|
D&A
|
|
|
USA
|
|
CAD
|
CAD
|
|
123R
|
105
|
|
-
|
-
|
|
Amortization of
acquired intangibles
|
203
|
|
483
|
7
|
|
Total Non-GAAP
Items
|
308
|
|
483
|
7
|
|
Tax Rates
|
27.3%
|
|
26.5%
|
25.0%
|
|
Non-GAAP tax adjustment
|
$
84
|
|
$
128
|
$
2
|
MASTECH DIGITAL,
INC.
|
SUPPLEMENTAL
FINANCIAL INFORMATION
|
(Amounts in
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months ended
March 31,
|
|
|
|
2018
|
|
2017
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
IT staffing
services
|
$
36,761
|
|
$
33,100
|
|
Data and analytics
services
|
6,572
|
|
-
|
|
|
Total
revenues
|
$
43,333
|
|
$
33,100
|
|
|
|
|
|
|
Gross Margin
%:
|
|
|
|
|
IT staffing
services
|
20.0%
|
|
18.8%
|
|
Data and analytics
services
|
44.3%
|
|
-
|
|
|
Total gross margin
%
|
23.7%
|
|
18.8%
|
|
|
|
|
|
|
Segment Operating
Income:
|
|
|
|
|
IT staffing
services
|
$
1,356
|
|
$
606
|
|
Data and analytics
services
|
1,775
|
|
-
|
|
|
Subtotal
|
3,131
|
|
606
|
|
|
|
|
|
|
Amortization of
acquired intangible assets
|
(693)
|
|
(203)
|
Interest expense and
other, net
|
(512)
|
|
(81)
|
Income before
income taxes
|
$
1,926
|
|
$
322
|
For more information, contact:
Donna Kijowski
Manager, Investor Relations
Mastech Digital, Inc.
+1-888-330-5497
View original
content:http://www.prnewswire.com/news-releases/mastech-digital-reports-31-revenue-growth-in-first-quarter-2018-300637093.html
SOURCE Mastech Digital, Inc.