PITTSBURGH, Feb. 10, 2021 /PRNewswire/ -- Mastech Digital,
Inc. (NYSE American: MHH), a leading provider of Digital
Transformation IT Services, announced today its financial results
for the fourth quarter and full year ended December 31, 2020.
Fourth Quarter 2020 Highlights:
- Total consolidated revenues declined by 3% to $48.7 million, compared to revenues of
$50.4 million in the 2019 fourth
quarter;
- The Company's Data and Analytics Services segment reported
record revenues of $8.9 million on
the strength of its AmberLeaf acquisition;
- The IT Staffing Services segment had a $3.4 million decline in revenues during the
fourth quarter of 2020 compared to the fourth of quarter 2019.
However, the segment achieved a 3% increase in
consultants-on-billing during the quarter, its second consecutive
quarter of increasing billable consultant headcount after material
declines in the first half of 2020;
- GAAP diluted earnings per share were $0.17 in the fourth quarter of 2020 versus
$0.20 in the 2019 fourth quarter. The
fourth quarter of 2020 was impacted by transaction expenses related
to the AmberLeaf acquisition;
- Non-GAAP diluted earnings per share were $0.29 in the fourth quarter of 2020 versus
$0.26 in the 2019 fourth
quarter.
Full Year 2020 Highlights:
- Total consolidated revenues of $194.1
million were up slightly from 2019 revenues of $193.6 million. Our Data and Analytics Services
segment revenues increased year-over-year by 13% (or by 6%
excluding the October 2020 AmberLeaf
acquisition), while our IT Staffing Services segment's revenues
declined by 2%.
- Consolidated gross margins grew to a record 26.6% in 2020, an
increase of 180-basis points from 2019.
- GAAP diluted earnings per share were $0.83 in 2020, compared to $0.99 in 2019. Full year 2019 included a
favorable $6.1 million pretax benefit
from the revaluation of a contingent consideration liability, which
revaluation had the effect of increasing 2019 diluted earnings per
share by approximately $0.40 per
diluted share;
- Non-GAAP diluted earnings per share were $1.16 in 2020 versus $0.82 in 2019, representing a 41% improvement on
a year-over-year basis.
Fourth Quarter Results:
Revenues for the fourth quarter of 2020 totaled $48.7 million, compared to $50.4 million during the corresponding quarter
last year. Gross profits in the fourth quarter of 2020 were
$13.1 million, compared to
$12.8 million in the same quarter of
2019. GAAP net income for the fourth quarter of 2020 totaled
$2.0 million or $0.17 per diluted share, compared to $2.3 million or $0.20 per diluted share during the same period
last year. Non-GAAP net income for the fourth quarter of 2020
was $3.4 million or $0.29 per diluted share, compared to $2.9 million or $0.26 per diluted share in the fourth quarter of
2019.
Activity levels at the Company's Data and Analytics Services
segment showed improvement during the quarter in terms of bookings,
backlog and pipeline opportunities. Demand for the Company's
IT Staffing Services segment increased during the quarter,
expanding its billable-consultant base by three percent.
Full Year Results:
Revenues for the full year of 2020 totaled $194.1 million, compared to $193.6 million in 2019. Gross profits for
2020 totaled $51.5 million or 26.6%
of total revenues, compared to $48.0
million or 24.8% of total revenues in 2019. GAAP net
income for 2020 was $9.9 million or
$0.83 per diluted share, compared to
$11.1 million or $0.99 per diluted share in 2019. Non-GAAP
net income for 2020 totaled $13.9
million or $1.16 per diluted
share, compared to $9.3 million or
$0.82 per diluted share in
2019.
"The 2020 calendar year was notable for our Company amid the
many challenges of the global pandemic," said Vivek Gupta, the Company's President and Chief
Executive Officer. "Despite major disruptions in economic
activity during most of 2020, we were able to expand gross margins,
increase profitability and, in our view minimize the extent of the
impact of the pandemic on our consolidated
revenues. Aggressive austerity measures helped drive record
non-GAAP net income in 2020. With COVID-19 vaccination programs
rolling out globally, we are seeing early signs of an economic
expansion in a number of markets that we serve, which gives me
confidence that we are well positioned for 2021 and beyond."
Paul Burton, the Chief Executive
of the Company's Data & Analytics segment, stated, "2020
revenue growth in the midst of a global pandemic shows just how
resilient our Data and Analytics revenues can be. Our
ability to grow revenues, achieve record gross margins and deliver
strong operating results in this segment during such a difficult
macro-economic environment is a testament to the strength of our
business model. Given the strength of our performance in
2020, I'm confident about our near-term prospects and
opportunities."
Commenting on the Company's financial position, Jack Cronin, Mastech Digital's Chief Financial
Officer, stated, "During the quarter, we increased our cash
balances on hand by $4 million. For
the full year 2020, we lowered bank debt by $8 million, despite securing a $10 million term loan to support our AmberLeaf
acquisition. Additionally, cash availability under our revolving
loan facility totaled approximately $22
million at December 31,
2020."
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,
our July 2017 acquisition of the
services division of InfoTrellis, Inc. and our October 2020 acquisition of AmberLeaf Partners.
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.
Contingent consideration liability revaluation: In
connection with the InfoTrellis acquisition, the Company may have
been required to pay future consideration that was contingent upon
the achievement of specific earnings before interest and tax
objectives ("EBIT"). As of the acquisition date, the Company
recorded a contingent consideration liability representing the
estimated fair value of such contingent consideration that was
expected to be paid. In the second quarter of 2019 this contingent
consideration liability was reduced by $6.1
million to zero, after a determination was made that the
relevant conditions for payment of such liability were unlikely to
be satisfied. We believe that providing non-GAAP financial measures
that exclude these adjustments to expense 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 $650,000 of transaction
expenses during the fourth quarter of 2020 in connection with the
acquisition of AmberLeaf Partners. These transaction expenses
included investment banking fees, legal expenses, audit charges
related to our acquired companies and various advisory costs. In
the 2019 period, we recorded a reduction in acquisition-related
transaction expense related to our acquisition of InfoTrellis due
to revised estimates of investment banking fees associated with
contingent consideration payments. These expenses would not
have otherwise been incurred in such periods presented as part of
our continuing operations, absent M&A activities.
Accordingly, we believe that providing non-GAAP financial measures
that exclude these expenses / credits 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) statements regarding the expected benefits to the
Company from the completion of the AmberLeaf acquisition.
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 the Company's 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, the Company's ability to
create, acquire and build new lines of business, to attract and
retain qualified personnel, reduce costs and conserve cash, the
extent to which the Company's business is adversely affected by the
impacts of the COVID-19 pandemic and governmental
responses to limit the further spread of COVID-19 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.
888.330.5497
MASTECH DIGITAL,
INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(Amounts in
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
December
31,
|
|
December
31,
|
|
|
2020
|
|
2019
|
|
|
|
|
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
7,677
|
|
$
2,981
|
Accounts receivable,
net
|
|
32,134
|
|
32,352
|
Prepaid and other current
assets
|
|
1,346
|
|
1,597
|
Total current assets
|
|
41,157
|
|
36,930
|
|
|
|
|
|
Equipment, enterprise
software and leasehold improvements, net
|
|
1,971
|
|
2,476
|
|
|
|
|
|
Operating lease
right-of-use assets
|
|
3,286
|
|
4,617
|
|
|
|
|
|
|
|
|
|
|
Non-current
deposits
|
|
396
|
|
405
|
Deferred income
taxes
|
|
796
|
|
-
|
|
|
|
|
|
Goodwill, net of
impairment
|
|
32,510
|
|
26,106
|
|
|
|
|
|
Intangible assets,
net
|
|
21,930
|
|
20,050
|
Total assets
|
|
$
102,046
|
|
$
90,584
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Current portion of long-term
debt
|
|
$
4,400
|
|
$
4,575
|
Current portion of operating
lease liability
|
|
1,079
|
|
1,396
|
Accounts payable
|
|
2,589
|
|
4,027
|
Accrued payroll and related
costs
|
|
12,374
|
|
7,902
|
Other accrued
liabilities
|
|
1,529
|
|
1,191
|
Total current liabilities
|
|
21,971
|
|
19,091
|
|
|
|
|
|
Long-term
liabilities:
|
|
|
|
|
Long-term debt, less current portion, net
|
|
12,875
|
|
20,682
|
Long-term operating lease liability, less current
portion
|
|
2,325
|
|
3,321
|
Contingent consideration
|
|
2,882
|
|
-
|
Long-term accrued income taxes
|
|
165
|
|
185
|
Long-term payroll tax liability
|
|
2,295
|
|
-
|
Long-term deferred income taxes
|
|
-
|
|
1,025
|
Total liabilities
|
|
42,513
|
|
44,304
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
Common stock, par value
$0.01 per share
|
|
130
|
|
127
|
Additional paid-in
capital
|
|
25,509
|
|
21,939
|
Retained earnings
|
|
38,620
|
|
28,759
|
Accumulated other
comprehensive income (loss)
|
|
(539)
|
|
(358)
|
Treasury stock, at
cost
|
|
(4,187)
|
|
(4,187)
|
Total shareholders' equity
|
|
59,533
|
|
46,280
|
Total liabilities and shareholders' equity
|
|
$
102,046
|
|
$
90,584
|
MASTECH DIGITAL,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(Amounts in
thousands, except per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months ended
December 31,
|
|
Year ended
December 31,
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
Revenues
|
$
48,710
|
|
$
50,360
|
|
$
194,101
|
|
$
193,574
|
|
|
|
|
|
|
|
|
Cost of
revenues
|
35,636
|
|
37,597
|
|
142,562
|
|
145,593
|
|
|
|
|
|
|
|
|
Gross
profit
|
13,074
|
|
12,763
|
|
51,539
|
|
47,981
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses:
|
|
|
|
|
|
|
|
Operating expenses
|
9,978
|
|
9,295
|
|
38,136
|
|
37,063
|
Revaluation of contingent consideration liability
|
-
|
|
-
|
|
-
|
|
(6,069)
|
Total selling,
general and administrative expenses
|
9,978
|
|
9,295
|
|
38,136
|
|
30,994
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
3,096
|
|
3,468
|
|
13,403
|
|
16,987
|
|
|
|
|
|
|
|
|
Other
income/(expense), net
|
(196)
|
|
(327)
|
|
(770)
|
|
(1,768)
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
2,900
|
|
3,141
|
|
12,633
|
|
15,219
|
|
|
|
|
|
|
|
|
Income tax
expense
|
875
|
|
867
|
|
2,772
|
|
4,074
|
Net income
|
$
2,025
|
|
$
2,274
|
|
$
9,861
|
|
$
11,145
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
|
|
Basic
|
$
0.18
|
|
$
0.21
|
|
$
0.87
|
|
$
1.01
|
Diluted
|
$
0.17
|
|
$
0.20
|
|
$
0.83
|
|
$
0.99
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
11,387
|
|
11,049
|
|
11,292
|
|
11,029
|
Diluted
|
12,011
|
|
11,314
|
|
11,950
|
|
11,232
|
MASTECH DIGITAL,
INC.
|
RECONCILIATION OF
GAAP MEASURES TO NON-GAAP MEASURES
|
(Amounts in
thousands, except per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months ended
December 31,
|
|
Year ended
December 31,
|
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Net
Income
|
$
2,025
|
|
$
2,274
|
|
$
9,861
|
|
$
11,145
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
Amortization of
acquired intangible assets
|
792
|
|
671
|
|
2,790
|
|
2,688
|
|
|
|
Stock-based
compensation
|
491
|
|
170
|
|
2,021
|
|
936
|
|
|
|
Acquisition
transaction expenses
|
650
|
|
-
|
|
650
|
|
(110)
|
|
|
|
Revaluation of
contingent consideration liability
|
-
|
|
-
|
|
-
|
|
(6,069)
|
|
|
|
Income tax
adjustments
|
(511)
|
|
(224)
|
|
(1,418)
|
|
661
|
|
|
Non-GAAP Net
Income
|
$
3,447
|
|
$
2,891
|
|
$
13,904
|
|
$
9,251
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Diluted
Earnings Per Share
|
$
0.17
|
|
$
0.20
|
|
$
0.83
|
|
$
0.99
|
|
|
Non-GAAP Diluted
Earnings Per Share
|
$
0.29
|
|
$
0.26
|
|
$
1.16
|
|
$
0.82
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
GAAP Diluted
Shares
|
12,011
|
|
11,314
|
|
11,950
|
|
11,232
|
|
|
Non-GAAP Diluted
Shares
|
12,011
|
|
11,314
|
|
11,950
|
|
11,232
|
|
MASTECH DIGITAL,
INC.
|
SUPPLEMENTAL
FINANCIAL INFORMATION
|
(Amounts in
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months ended
December 31,
|
|
Year ended
December 31,
|
|
|
|
2020
|
|
2019
|
|
2020
|
|
2019
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
Data and analytics
services
|
$
8,918
|
|
$
7,161
|
|
$
30,226
|
|
$
26,663
|
|
IT staffing
services
|
39,792
|
|
43,199
|
|
163,875
|
|
166,911
|
|
|
Total
revenues
|
$
48,710
|
|
$
50,360
|
|
$
194,101
|
|
$
193,574
|
|
|
|
|
|
|
|
|
|
|
Gross Margin
%:
|
|
|
|
|
|
|
|
|
Data and analytics
services
|
47.6%
|
|
49.1%
|
|
50.5%
|
|
46.7%
|
|
IT staffing
services
|
22.2%
|
|
21.4%
|
|
22.1%
|
|
21.3%
|
|
|
Total gross margin
%
|
26.8%
|
|
25.3%
|
|
26.6%
|
|
24.8%
|
|
|
|
|
|
|
|
|
|
|
Segment Operating
Income:
|
|
|
|
|
|
|
|
|
Data and analytics
services
|
$
1,794
|
|
$
1,639
|
|
$
5,455
|
|
$
5,495
|
|
IT staffing
services
|
2,744
|
|
2,500
|
|
11,388
|
|
8,001
|
|
|
Subtotal
|
4,538
|
|
4,139
|
|
16,843
|
|
13,496
|
|
|
|
|
|
|
|
|
|
|
Amortization of
acquired intangible assets
|
(792)
|
|
(671)
|
|
(2,790)
|
|
(2,688)
|
Revaluation of
contingent consideration liability
|
-
|
|
-
|
|
-
|
|
6,069
|
Acquisition
transaction expenses
|
(650)
|
|
-
|
|
(650)
|
|
110
|
Interest expense and
other, net
|
(196)
|
|
(327)
|
|
(770)
|
|
(1,768)
|
Income before
income taxes
|
$
2,900
|
|
$
3,141
|
|
$
12,633
|
|
$
15,219
|
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content:http://www.prnewswire.com/news-releases/mastech-digital-reports-fourth-quarter-and-full-year-2020-results-301225775.html
SOURCE Mastech Digital, Inc.