PITTSBURGH, May 1, 2019 /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, 2019.
First Quarter 2019 Highlights:
- Total revenues increased 4% to $45.2
million, compared to revenues of $43.3 million in the 2018 first quarter;
- The Company's data and analytics services segment reported
revenues of $5.8 million, compared to
revenues of $6.6 million in first
quarter 2018, but exceeded fourth quarter 2018 revenues of
$5.4 million - as pipeline and
project wins increased;
- The IT staffing segment achieved organic revenue growth of 7%
during the first quarter of 2019, compared to the first quarter of
2018;
- The number of billable consultants at March 31, 2019 grew to 1,116 in the Company's IT
staffing services segment – the fifth consecutive quarter of
headcount expansion;
- GAAP diluted earnings per share were $0.09 versus $0.12
in the 2018 first quarter;
- Non-GAAP diluted earnings per share were $0.15 versus $0.18
in the 2018 first quarter.
First Quarter Results:
Revenues for the first quarter of 2019 totaled $45.2 million compared to $43.3 million during the corresponding quarter
last year. Gross profit in the first quarter of 2019 was
$10.8 million, compared to
$10.2 million in the same quarter of
2018. GAAP net income for the first quarter of 2019 totaled
$1.0 million or $0.09 per diluted share, compared to $1.4 million or $0.12 per diluted share during the same period
last year. Non-GAAP net income for the first quarter of 2019 was
$1.6 million or $0.15 per diluted share, compared to $2.0 million or $0.18 per diluted share in the first quarter of
2018.
Activity levels at the Company's data and analytics services
segment were up from the previous quarter, and revenues for the
first quarter of 2019 increased by approximately $0.4 million over revenues reported in the fourth
quarter of 2018. This 7% sequential growth reflected more
pipeline opportunities and a better project win ratio. Demand
for the Company's IT staffing services remained strong during the
quarter as we grew our consultants on billing for the fifth
consecutive quarter.
"I am happy to state that our Data and Analytics segment is once
again showing sequential growth - thanks to accelerated positive
momentum in terms of pipeline expansion and project wins,"
commented Vivek Gupta, Mastech
Digital's Chief Executive Officer. "We continue to see positive
developments in this segment, including the recent appointment of
industry veteran Paul Burton as its
Chief Executive. Our IT staffing segment continued to deliver
above industry average growth at higher gross margins, on the
strength of our focus on digital technologies," he added.
Commenting on the Company's financial position, Jack Cronin, Mastech Digital's Chief Financial
Officer, stated, "At March 31, 2019
we had bank debt, net of cash balances on hand, of $37.0 million and approximately $8 million of borrowing capacity available to us
under our revolving credit line. During the quarter, debt levels,
net of cash declined by $0.8 million,
as we continued to make progress on cash conversion issues related
to the implementation of our new Cloud-based ERP platform."
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.com, 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.
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,
2018.
MASTECH DIGITAL,
INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(Amounts in
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
March
31,
|
|
December
31,
|
|
|
2019
|
|
2018
|
|
|
|
|
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
1,548
|
|
$
1,294
|
Accounts receivable,
net
|
|
39,131
|
|
38,080
|
Prepaid and other current
assets
|
|
1,171
|
|
1,321
|
Total current assets
|
|
41,850
|
|
40,695
|
|
|
|
|
|
Equipment, enterprise
software and leasehold improvements, net
|
|
2,445
|
|
2,208
|
|
|
|
|
|
Operating lease
right-of-use assets
|
|
5,328
|
|
-
|
|
|
|
|
|
Deferred income
taxes
|
|
392
|
|
297
|
|
|
|
|
|
Non-current
deposits
|
|
531
|
|
540
|
|
|
|
|
|
Goodwill, net of
impairment
|
|
26,106
|
|
26,106
|
|
|
|
|
|
Intangible assets,
net
|
|
22,066
|
|
22,738
|
Total assets
|
|
$
98,718
|
|
$
92,584
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Current portion of long-term
debt
|
|
$
4,575
|
|
$
4,575
|
Current portion of
contingent consideration liability
|
|
6,069
|
|
-
|
Current portion of operating
lease liability
|
|
1,367
|
|
-
|
Accounts payable
|
|
3,931
|
|
4,127
|
Accrued payroll and related
costs
|
|
7,616
|
|
7,728
|
Other accrued
liabilities
|
|
1,883
|
|
1,476
|
Total current liabilities
|
|
25,441
|
|
17,906
|
|
|
|
|
|
Long-term
liabilities:
|
|
|
|
|
Long-term debt, less current portion, net
|
|
33,667
|
|
34,129
|
Contingent consideration liability
|
|
-
|
|
6,069
|
Long-term operating lease liability, less current
portion
|
|
3,961
|
|
-
|
Long-term accrued income taxes
|
|
204
|
|
204
|
Total liabilities
|
|
63,273
|
|
58,308
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
Common stock, par value
$0.01 per share
|
|
126
|
|
126
|
Additional paid-in
capital
|
|
21,065
|
|
20,829
|
Retained earnings
|
|
18,578
|
|
17,614
|
Accumulated other
comprehensive income (loss)
|
|
(150)
|
|
(119)
|
Treasury stock, at
cost
|
|
(4,174)
|
|
(4,174)
|
Total shareholders' equity
|
|
35,445
|
|
34,276
|
Total liabilities and shareholders' equity
|
|
$
98,718
|
|
$
92,584
|
|
|
|
|
|
MASTECH DIGITAL,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(Amounts in
thousands, except per share data)
|
(Unaudited)
|
|
Three Months ended
March 31,
|
|
|
2019
|
|
2018
|
|
|
|
|
|
|
Revenues
|
$
45,199
|
|
$
43,333
|
|
|
|
|
|
|
Cost of
revenues
|
34,364
|
|
33,072
|
|
|
|
|
|
|
Gross
profit
|
10,835
|
|
10,261
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
8,965
|
|
7,823
|
|
|
|
|
|
|
Income from
operations
|
1,870
|
|
2,438
|
|
|
|
|
|
|
Other
income/(expense), net
|
(554)
|
|
(512)
|
|
|
|
|
|
|
Income before income
taxes
|
1,316
|
|
1,926
|
|
|
|
|
|
|
Income tax
expense
|
352
|
|
546
|
|
Net income
|
$
964
|
|
$
1,380
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
Basic
|
$
0.09
|
|
$
0.13
|
|
Diluted
|
$
0.09
|
|
$
0.12
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
Basic
|
10,998
|
|
10,922
|
|
Diluted
|
11,218
|
|
11,058
|
|
|
|
|
|
|
MASTECH DIGITAL,
INC.
|
RECONCILIATION OF
GAAP MEASURES TO NON-GAAP MEASURES
|
(Amounts in
thousands, except per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Three Months ended
March 31,
|
|
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
GAAP Net
Income
|
$
964
|
|
$
1,380
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
Amortization of
acquired intangible assets
|
672
|
|
693
|
|
|
Stock-based
compensation
|
236
|
|
105
|
|
|
Income taxes
adjustments
|
(241)
|
|
(214)
|
|
Non-GAAP Net
Income
|
$
1,631
|
|
$
1,964
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Diluted
Earnings Per Share
|
$
0.09
|
|
$
0.12
|
|
Non-GAAP Diluted
Earnings Per Share
|
$
0.15
|
|
$
0.18
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
GAAP Diluted
Shares
|
11,218
|
|
11,058
|
|
Non-GAAP Diluted
Shares
|
11,218
|
|
11,058
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MASTECH DIGITAL,
INC.
|
SUPPLEMENTAL
FINANCIAL INFORMATION
|
(Amounts in
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months ended
March 31,
|
|
|
|
|
|
2019
|
|
2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
Data and analytics
services
|
$
5,768
|
|
$
6,572
|
|
|
|
|
|
IT staffing
services
|
39,431
|
|
36,761
|
|
|
|
|
|
|
Total
revenues
|
$
45,199
|
|
$
43,333
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross Margin
%:
|
|
|
|
|
|
|
|
|
Data and analytics
services
|
45.5%
|
|
44.3%
|
|
|
|
|
|
IT staffing
services
|
20.8%
|
|
20.0%
|
|
|
|
|
|
|
Total gross margin
%
|
24.0%
|
|
23.7%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment Operating
Income:
|
|
|
|
|
|
|
|
|
Data and analytics
services
|
1,041
|
|
$
1,775
|
|
|
|
|
|
IT staffing
services
|
$
1,501
|
|
1,356
|
|
|
|
|
|
|
Subtotal
|
2,542
|
|
3,131
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
acquired intangible assets
|
(672)
|
|
(693)
|
|
|
|
|
Interest expense and
other, net
|
(554)
|
|
(512)
|
|
|
|
|
Income before
income taxes
|
$
1,316
|
|
$
1,926
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For more information, contact:
Donna Kijowski
Manager, Investor Relations
Mastech Digital, Inc.
+1-888-330-5497
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content:http://www.prnewswire.com/news-releases/mastech-digital-reports-4-revenue-growth-in-first-quarter-2019-300841533.html
SOURCE Mastech Digital, Inc.