PITTSBURGH, Pennsylvania,
April 29, 2020 /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, 2020.
First Quarter 2020 Highlights:
- Total revenues increased 12% to $50.4
million, compared to revenues of $45.2 million in the 2019 first quarter;
- The Company's Data and Analytics Services segment reported
record revenues for the fourth consecutive quarter;
- The IT Staffing Services segment achieved revenue of
$43.1 million, which represented
growth of 9% compared to the first quarter of 2019;
- GAAP diluted earnings per share were $0.16 in the first quarter of 2020 versus
$0.09 in the 2019 first quarter;
and
- Non-GAAP diluted earnings per share were $0.23 in the first quarter of 2020 versus
$0.15 in the 2019 first quarter.
Mastech's Response to COVID-19:
Vivek Gupta, the Company's
President and Chief Executive Officer, stated, "As you are aware
the current COVID-19 pandemic and the public health responses to
contain it have resulted in global recessionary conditions. I am
pleased to say that Mastech Digital responded to these
ever-changing developments and challenges in a very proactive
manner. We were quick to mobilize our workforce, in both of our
business segments, to a remote work-from-home model to mitigate the
health risks to our employees and to continue to provide
uninterrupted service to our customers. Our entire organization is
working incredibly hard to service our customers during these
difficult times. We are also prudently adjusting our cost structure
in ways that will allow us to maintain our top-notch talent that we
have so artfully secured over the years. And we are laser-focused
on the business elements that are within our control, and can help
mitigate the impact of these recessionary conditions on our
financial results. With that said, we did see some impact of
COVID-19 during the month of March and we continue to see our
businesses being impacted thus far in the second quarter. The
ultimate impact on the second quarter and full year 2020 will
depend heavily on the duration of social distancing and
shelter-in-place mandates, as well as the substance and pace of
macroeconomic recovery, all of which are uncertain and difficult to
predict considering the rapidly evolving landscape of the COVID-19
pandemic and the public health responses to contain it."
First Quarter Results:
Revenues for the first quarter of 2020 totaled $50.4 million compared to $45.2 million during the corresponding quarter
last year. Gross profits in the first quarter of 2020 were
$12.7 million, a 17.4% increase as
compared to $10.8 million in the same
quarter of 2019. Gross margins in the 2020 quarter were 25.2% or
120-basis points higher than first quarter 2019. GAAP net
income for the first quarter of 2020 totaled $1.9 million or $0.16 per diluted share, compared to $1.0 million or $0.09 per diluted share during the same period
last year. Non-GAAP net income for the first quarter of 2020
was $2.7 million or $0.23 per diluted share, compared to $1.6 million or $0.15 per diluted share in the first quarter of
2019.
Activity levels at the Company's Data and Analytics Services
segment held up well given the state of the global economy, and we
were able to sign a significant multi-year, multi-million-dollar
order with a blue-chip customer in the financial services vertical
in March. Demand for the Company's IT Staffing Services segment
started to taper-off during the second half of the first quarter,
particularly with clients in hard hit industries such as
transportation, energy and manufacturing.
Commenting on the Company's financial position, Jack Cronin, Mastech Digital's Chief Financial
Officer, stated, "During the first quarter, we reduced bank debt by
$3.4 million, improved our leverage
ratios and increased our cash availability under our credit
facility to $15.2 million from
$13 million at year-end
2019. Continuing our strong liquidity position will be a top
priority during these uncertain times."
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 Solutions, Digital Learning, and IT
Staffing Services with a Digital First approach. A
minority-owned enterprise, Mastech Digital is headquartered in
Pittsburgh, PA with offices across
the U.S., Canada, EMEA,
India and ASEAN.
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 effects of the COVID-19 pandemic
and the regulatory, social and business responses thereto. 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,
2019.
For more information, contact:
Donna Kijowski
Manager, Investor Relations
Mastech Digital, Inc.
+1-888-330-5497
MASTECH DIGITAL,
INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(Amounts in
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
March
31,
|
|
December
31,
|
|
|
2020
|
|
2019
|
|
|
|
|
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
2,575
|
|
$
2,981
|
Accounts receivable,
net
|
|
33,596
|
|
32,352
|
Prepaid and other current
assets
|
|
1,036
|
|
1,597
|
Total current assets
|
|
37,207
|
|
36,930
|
|
|
|
|
|
Equipment, enterprise
software and leasehold improvements, net
|
|
2,393
|
|
2,476
|
|
|
|
|
|
Operating lease
right-of-use assets
|
|
4,348
|
|
4,617
|
|
|
|
|
|
Non-current
deposits
|
|
388
|
|
405
|
|
|
|
|
|
Goodwill, net of
impairment
|
|
26,106
|
|
26,106
|
|
|
|
|
|
Intangible assets,
net
|
|
19,377
|
|
20,050
|
Total assets
|
|
$
89,819
|
|
$
90,584
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Current portion of long-term
debt
|
|
$
8,537
|
|
$
4,575
|
Current portion of operating
lease liability
|
|
1,392
|
|
1,396
|
Accounts payable
|
|
3,440
|
|
4,027
|
Accrued payroll and related
costs
|
|
9,456
|
|
7,902
|
Other accrued
liabilities
|
|
764
|
|
1,191
|
Total current liabilities
|
|
23,589
|
|
19,091
|
|
|
|
|
|
Long-term
liabilities:
|
|
|
|
|
Long-term debt, less current portion, net
|
|
13,358
|
|
20,682
|
Long-term operating lease liability, less current
portion
|
|
3,019
|
|
3,321
|
Long-term accrued income taxes
|
|
185
|
|
185
|
Deferred income
taxes
|
|
843
|
|
1,025
|
Total liabilities
|
|
40,994
|
|
44,304
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
Common stock, par value
$0.01 per share
|
|
128
|
|
127
|
Additional paid-in
capital
|
|
22,950
|
|
21,939
|
Retained earnings
|
|
30,628
|
|
28,759
|
Accumulated other
comprehensive income (loss)
|
|
(694)
|
|
(358)
|
Treasury stock, at
cost
|
|
(4,187)
|
|
(4,187)
|
Total shareholders' equity
|
|
48,825
|
|
46,280
|
Total liabilities and shareholders' equity
|
|
$
89,819
|
|
$
90,584
|
MASTECH DIGITAL,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(Amounts in
thousands, except per share data)
|
(Unaudited)
|
|
|
|
|
|
|
Three Months ended
March 31,
|
|
|
2020
|
|
2019
|
|
|
|
|
|
|
Revenues
|
$
50,425
|
|
$
45,199
|
|
Cost of
revenues
|
37,706
|
|
34,364
|
|
Gross
profit
|
12,719
|
|
10,835
|
|
Selling, general and
administrative expenses
|
10,243
|
|
8,965
|
|
Income from
operations
|
2,476
|
|
1,870
|
|
Other
income/(expense), net
|
(226)
|
|
(554)
|
|
|
|
|
|
|
Income before income
taxes
|
2,250
|
|
1,316
|
|
Income tax
expense
|
381
|
|
352
|
|
Net income
|
$
1,869
|
|
$
964
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
Basic
|
$
0.17
|
|
$
0.09
|
|
Diluted
|
$
0.16
|
|
$
0.09
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
Basic
|
11,127
|
|
10,998
|
|
Diluted
|
11,675
|
|
11,218
|
|
MASTECH DIGITAL,
INC.
|
RECONCILIATION OF
GAAP MEASURES TO NON-GAAP MEASURES
|
(Amounts in
thousands, except per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Three Months ended
March 31,
|
|
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
GAAP Net
Income
|
$
1,869
|
|
$
964
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
Amortization of
acquired intangible assets
|
673
|
|
672
|
|
|
Stock-based
compensation
|
456
|
|
236
|
|
|
Income taxes
adjustments
|
(296)
|
|
(241)
|
|
Non-GAAP Net
Income
|
$
2,702
|
|
$
1,631
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Diluted
Earnings Per Share
|
$
0.16
|
|
$
0.09
|
|
Non-GAAP Diluted
Earnings Per Share
|
$
0.23
|
|
$
0.15
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
GAAP Diluted
Shares
|
11,675
|
|
11,218
|
|
Non-GAAP Diluted
Shares
|
11,675
|
|
11,218
|
|
MASTECH DIGITAL,
INC.
|
SUPPLEMENTAL
FINANCIAL INFORMATION
|
(Amounts in
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months ended
March 31,
|
|
|
|
2020
|
|
2019
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
Data and analytics
services
|
$
7,360
|
|
$
5,768
|
|
IT staffing
services
|
43,065
|
|
39,431
|
|
|
Total
revenues
|
$
50,425
|
|
$
45,199
|
|
|
|
|
|
|
Gross Margin
%:
|
|
|
|
|
Data and analytics
services
|
47.1%
|
|
45.5%
|
|
IT staffing
services
|
21.5%
|
|
20.8%
|
|
|
Total gross margin
%
|
25.2%
|
|
24.0%
|
|
|
|
|
|
|
Segment Operating
Income:
|
|
|
|
|
Data and analytics
services
|
909
|
|
1,041
|
|
IT staffing
services
|
$
2,240
|
|
$
1,501
|
|
|
Subtotal
|
3,149
|
|
2,542
|
|
|
|
|
|
|
Amortization of
acquired intangible assets
|
(673)
|
|
(672)
|
Interest expense and
other, net
|
(226)
|
|
(554)
|
Income before
income taxes
|
$
2,250
|
|
$
1,316
|
View original
content:http://www.prnewswire.com/news-releases/mastech-digital-reports-12-organic-revenue-growth-in-first-quarter-2020-301049169.html
SOURCE Mastech Digital, Inc.