PITTSBURGH, April 28, 2021 /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,
2021.
First Quarter 2021 Highlights:
- Consolidated revenues totaled $49.8
million, a 2% sequential increase over fourth quarter
2020;
- The Company's Data and Analytics Services segment reported a
strong bookings performance during the quarter, despite flat
revenues as compared to the previous quarter;
- Customer demand improved as the COVID-19 situation recovers in
North America and drives our
S,G&A investments to capture anticipated future revenues;
- The IT Staffing Services segment added a record 99
consultants-on-billing, an increase of 9% during the quarter, as
the demand for its services continued to increase;
- Consolidated gross margins increased 50-basis points on a
year-over-year basis;
- GAAP diluted earnings per share were $0.10 in the first quarter of 2021 versus
$0.16 in the first quarter of
2020;
- Non-GAAP diluted earnings per share were $0.19 in the first quarter of 2021 versus
$0.23 in the first quarter of
2020.
First Quarter Results:
Revenues for the first quarter of 2021 totaled $49.8 million, compared to $50.4 million during the corresponding quarter
last year. Gross profits in the first quarter of 2021 were
$12.8 million, compared to
$12.7 million in the same quarter of
2020. GAAP net income for the first quarter of 2021 totaled
$1.2 million or $0.10 per diluted share, compared to $1.9 million or $0.16 per diluted share during the same period
last year. Non-GAAP net income for the first quarter of 2021
was $2.2 million or $0.19 per diluted share, compared to $2.7 million or $0.23 per diluted share in the first quarter of
2020.
Activity levels at the Company's Data and Analytics Services
segment were flat during the quarter when compared to last quarter,
despite a much stronger bookings performance. Project delays
materially impacted first quarter results in terms of revenues,
gross margins and bottom-line results. Demand for the Company's IT
Staffing Services segment increased materially during the quarter,
with a 9% expansion in billable-consultants, which essentially
offset the billable headcount decline the Company experienced
during the pandemic-impacted first-half of 2020.
Vivek Gupta, the Company's
President and Chief Executive Officer stated "While customers
continued to be cautious in starting new projects in the data and
analytics space, our IT Staffing Services segment saw a material
increase in new assignment opportunities during the quarter. The
increase in D&A bookings, particularly in the latter part of
the quarter, gives us confidence that the Data and Analytics
segment is well positioned for meaningful growth for the year."
Further commenting on the data & analytics marketplace,
Paul Burton, the Chief Executive of
the Company's Data & Analytics Services segment, said, "We are
seeing encouraging signs that customers are becoming more
comfortable commencing new projects. We believe this trend,
combined with pent-up global demand, positions the segment for
strong revenue growth for the remainder of the year as compared to
2020."
Commenting on the Company's financial position, Jack Cronin, Mastech Digital's Chief Financial
Officer, stated, "At March 31, 2021
we had cash balances on hand of $7.2
million, no borrowings under our revolving credit facility,
and cash availability of approximately $25
million."
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.
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
forecasted 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, 2020.
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)
|
|
|
|
|
|
|
|
|
|
|
|
March
31,
|
|
December
31,
|
|
|
2021
|
|
2020
|
|
|
|
|
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
7,242
|
|
$
7,677
|
Accounts receivable,
net
|
|
36,206
|
|
32,134
|
Prepaid and other current
assets
|
|
1,238
|
|
1,346
|
Total current assets
|
|
44,686
|
|
41,157
|
|
|
|
|
|
Equipment, enterprise
software and leasehold improvements, net
|
|
1,895
|
|
1,971
|
|
|
|
|
|
Operating lease
right-of-use assets
|
|
3,199
|
|
3,286
|
|
|
|
|
|
Deferred income
taxes
|
|
804
|
|
796
|
|
|
|
|
|
Non-current
deposits
|
|
459
|
|
396
|
|
|
|
|
|
Goodwill, net of
impairment
|
|
32,510
|
|
32,510
|
|
|
|
|
|
Intangible assets,
net
|
|
21,137
|
|
21,930
|
Total assets
|
|
$
104,690
|
|
$
102,046
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Current portion of long-term
debt
|
|
$
4,400
|
|
$
4,400
|
Current portion of operating
lease liability
|
|
1,056
|
|
1,079
|
Accounts payable
|
|
3,915
|
|
2,589
|
Accrued payroll and related
costs
|
|
12,882
|
|
12,374
|
Other accrued
liabilities
|
|
1,571
|
|
1,529
|
Total current liabilities
|
|
23,824
|
|
21,971
|
|
|
|
|
|
Long-term
liabilities:
|
|
|
|
|
Long-term debt, less current portion, net
|
|
11,795
|
|
12,875
|
Contingent consideration liability
|
|
2,882
|
|
2,882
|
Long-term operating lease liability, less current
portion
|
|
2,273
|
|
2,325
|
Long-term accrued income taxes
|
|
165
|
|
165
|
Long-term payroll tax liabilities
|
|
2,295
|
|
2,295
|
Total liabilities
|
|
43,234
|
|
42,513
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
Common stock, par value
$0.01 per share
|
|
130
|
|
130
|
Additional paid-in
capital
|
|
26,231
|
|
25,509
|
Retained earnings
|
|
39,814
|
|
38,620
|
Accumulated other
comprehensive income (loss)
|
|
(532)
|
|
(539)
|
Treasury stock, at
cost
|
|
(4,187)
|
|
(4,187)
|
Total shareholders' equity
|
|
61,456
|
|
59,533
|
Total liabilities and shareholders' equity
|
|
$
104,690
|
|
$
102,046
|
|
|
|
|
|
MASTECH DIGITAL,
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(Amounts in
thousands, except per share data)
|
(Unaudited)
|
|
|
|
|
|
|
Three Months ended
March 31,
|
|
|
2021
|
|
2020
|
|
|
|
|
|
|
Revenues
|
$
49,775
|
|
$
50,425
|
|
|
|
|
|
|
Cost of
revenues
|
36,971
|
|
37,706
|
|
|
|
|
|
|
Gross
profit
|
12,804
|
|
12,719
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
10,935
|
|
10,243
|
|
|
|
|
|
|
Income from
operations
|
1,869
|
|
2,476
|
|
|
|
|
|
|
Other
income/(expense), net
|
(232)
|
|
(226)
|
|
|
|
|
|
|
Income before income
taxes
|
1,637
|
|
2,250
|
|
|
|
|
|
|
Income tax
expense
|
443
|
|
381
|
|
Net income
|
$
1,194
|
|
$
1,869
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
Basic
|
$
0.10
|
|
$
0.17
|
|
Diluted
|
$
0.10
|
|
$
0.16
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
Basic
|
11,415
|
|
11,127
|
|
Diluted
|
11,997
|
|
11,675
|
|
|
|
|
|
|
MASTECH DIGITAL,
INC.
|
RECONCILIATION OF
GAAP MEASURES TO NON-GAAP MEASURES
|
(Amounts in
thousands, except per share data)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
Three Months ended
March 31,
|
|
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
GAAP Net
Income
|
$
1,194
|
|
$
1,869
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
Amortization of
acquired intangible assets
|
793
|
|
673
|
|
|
Stock-based
compensation
|
621
|
|
456
|
|
|
Income taxes
adjustments
|
(365)
|
|
(296)
|
|
Non-GAAP Net
Income
|
$
2,243
|
|
$
2,702
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Diluted
Earnings Per Share
|
$
0.10
|
|
$
0.16
|
|
Non-GAAP Diluted
Earnings Per Share
|
$
0.19
|
|
$
0.23
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
GAAP Diluted
Shares
|
11,997
|
|
11,675
|
|
Non-GAAP Diluted
Shares
|
11,997
|
|
11,675
|
|
|
|
|
|
|
|
MASTECH DIGITAL,
INC.
|
SUPPLEMENTAL
FINANCIAL INFORMATION
|
(Amounts in
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months ended
March 31,
|
|
|
|
2021
|
|
2020
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
Data and analytics
services
|
$
8,794
|
|
$
7,360
|
|
IT staffing
services
|
40,981
|
|
43,065
|
|
|
Total
revenues
|
$
49,775
|
|
$
50,425
|
|
|
|
|
|
|
Gross Margin
%:
|
|
|
|
|
Data and analytics
services
|
45.7%
|
|
47.1%
|
|
IT staffing
services
|
21.4%
|
|
21.5%
|
|
|
Total gross margin
%
|
25.7%
|
|
25.2%
|
|
|
|
|
|
|
Segment Operating
Income:
|
|
|
|
|
Data and analytics
services
|
394
|
|
909
|
|
IT staffing
services
|
$
2,268
|
|
$
2,240
|
|
|
Subtotal
|
2,662
|
|
3,149
|
|
|
|
|
|
|
Amortization of
acquired intangible assets
|
(793)
|
|
(673)
|
Interest expense and
other, net
|
(232)
|
|
(226)
|
Income before
income taxes
|
$
1,637
|
|
$
2,250
|
|
|
|
|
|
|
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SOURCE Mastech Digital, Inc.