PITTSBURGH, Feb. 9, 2022 /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, 2021.
Fourth Quarter 2021 Highlights:
- Total consolidated revenues grew organically by 21% to
$59.0 million, compared to revenues
of $48.7 million in the 2020 fourth
quarter;
- The Company's Data and Analytics services segment reported
revenues of $10.1 million, an
increase of 13% over last year's $8.9
million;
- The IT Staffing segment achieved a 23% top-line growth on the
strength of gains in its consultants-on-billing headcount;
- GAAP diluted earnings per share were $0.32 in the fourth quarter of 2021 versus
$0.17 in the 2020 fourth quarter;
and
- Non-GAAP diluted earnings per share were $0.34 in the fourth quarter of 2021 versus
$0.29 in the 2020 fourth
quarter.
Full Year 2021 Highlights:
- Total consolidated revenues were $222
million, up 14% from 2020 revenues as both business segments
achieved double-digit growth;
- Consolidated gross margins grew to a record 26.8% in 2021;
- GAAP diluted earnings per share were $1.02 in 2021 compared to $0.83 in 2020; and
- Non-GAAP diluted earnings per share were $1.19 in 2021 versus $1.16 in year 2020.
Fourth Quarter Results:
Revenues for the fourth quarter of 2021 totaled $59.0 million compared to $48.7 million during the corresponding quarter of
2020. Gross profits in the fourth quarter of 2021 were
$15.7 million, compared to
$13.1 million in the same quarter of
2020. GAAP net income for the fourth quarter of 2021 totaled
$3.9 million or $0.32 per diluted share, compared to $2.0 million or $0.17 per diluted share during the same period of
2020. Non-GAAP net income for the fourth quarter of 2021 was
$4.0 million or $0.34 per diluted share, compared to $3.4 million or $0.29 per diluted share in the fourth quarter of
2020.
Activity levels at the Company's Data and Analytics Services
segment were strong, with order bookings of $14.4 million, and included two significant
healthcare customer assignments that were delayed from third
quarter 2021. Additionally, order backlog improved during the
quarter and the pipeline of opportunities continues to show promise
on a global basis. Demand for the Company's IT Staffing Services
segment remained elevated during the quarter, despite seasonal
holiday / vacation disruptions and normal year-end assignment
ends.
Full Year Results:
Revenues for the full year of 2021 totaled $222.0 million compared to $194.1 million in 2020. Gross profits for
2021 totaled $59.4 million or 26.8%
of total revenues, compared to $51.5
million or 26.6% of total revenues in 2020. GAAP net
income for 2021 was $12.2 million or
$1.02 per diluted share, compared to
$9.9 million or $0.83 per diluted share in 2020. Non-GAAP net
income for 2021 totaled $14.3 million
or $1.19 per diluted share, compared
to $13.9 million or $1.16 per diluted share in 2020.
"2021 was a very satisfying year for Mastech Digital amid
continued challenges from the global pandemic," said Vivek
Gupta, the Company's President and Chief Executive
Officer. "Despite the disruptions in economic activity from
COVID-19 variants, we were able to achieve record revenues, record
gross margins and solid earnings during the
year. Additionally, we continued to make investments in both
of our businesses to pave the way for future growth opportunities
and to improve the respective positions of these businesses in the
marketplace. These investments in 2021 included the expansion
and sizeable upgrade of our delivery center in Chennai, India; the development of cloud
services capabilities in our Data and Analytics service offerings;
as well as a number of other initiatives intended to take advantage
of the positive trends we are seeing in both of our business
segments."
Commenting on the Company's financial position, Jack Cronin, Mastech Digital's Chief Financial
Officer, stated, "During 2021, we continued to pay down debt and
improve our leverage ratios. In the fourth quarter of 2021, we
amended our credit facility with PNC Bank, extending its term
through 2026; increasing our credit capacity; and lowering our cost
of borrowings, among other things. This amended facility will
give us further flexibility to support our business needs, both on
an organic and inorganic basis."
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 AmberLeaf acquisition, the Company was required
to pay future consideration contingent upon the achievement of
specific financial objectives. As of the acquisition date, the
Company recorded a contingent consideration liability representing
the estimated fair value of the contingent consideration that was
expected to be paid. In the second quarter of 2021, this contingent
consideration liability was reduced by $2.0
million to $900,000, and in
the fourth quarter of 2021 the liability was reduced to
$0, after the Company determined that
relevant conditions for the 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: In the
fourth quarter of 2021, we incurred $140,000 of transaction expenses related to an
acquisition opportunity that was halted by the Company. These
transaction expenses consisted primarily of due diligence expenses,
including legal and accounting fees. In the fourth quarter of 2020,
we incurred a $650,000 of transaction
expenses in connection which the acquisition of AmberLeaf Partners.
These transaction expenses consisted of investment banking fees,
legal expenses, audit charges related to our acquired companies and
various advisory costs. 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 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 projections of and statements regarding the Company's
ability to generate revenues, earnings, and cash flow. 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)
|
|
|
|
|
|
|
December
31,
|
|
December
31,
|
|
|
2021
|
|
2020
|
|
|
|
|
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
6,622
|
|
$
7,677
|
Accounts receivable,
net
|
|
43,393
|
|
32,134
|
Prepaid and other current
assets
|
|
3,890
|
|
1,346
|
Total current assets
|
|
53,905
|
|
41,157
|
|
|
|
|
|
Equipment, enterprise
software and leasehold improvements, net
|
|
3,038
|
|
1,971
|
|
|
|
|
|
Operating lease
right-of-use assets
|
|
4,894
|
|
3,286
|
|
|
|
|
|
|
|
|
|
|
Non-current
deposits
|
|
595
|
|
396
|
Deferred income
taxes
|
|
-
|
|
796
|
|
|
|
|
|
Goodwill, net of
impairment
|
|
32,510
|
|
32,510
|
|
|
|
|
|
Intangible assets,
net
|
|
18,760
|
|
21,930
|
Total assets
|
|
$
113,702
|
|
$
102,046
|
|
|
|
|
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Current portion of long-term
debt
|
|
$
4,400
|
|
$
4,400
|
Current portion of operating
lease liability
|
|
1,479
|
|
1,079
|
Accounts payable
|
|
4,954
|
|
2,589
|
Accrued payroll and related
costs
|
|
14,240
|
|
12,374
|
Other accrued
liabilities
|
|
1,771
|
|
1,529
|
Total current liabilities
|
|
26,844
|
|
21,971
|
|
|
|
|
|
Long-term
liabilities:
|
|
|
|
|
Long-term debt, less current portion, net
|
|
8,334
|
|
12,875
|
Contingent consideration liability
|
|
-
|
|
2,882
|
Long-term operating lease liability, less current
portion
|
|
3,706
|
|
2,325
|
Long-term accrued income taxes
|
|
125
|
|
165
|
Long-term payroll tax liability
|
|
-
|
|
2,295
|
Deferred income taxes
|
|
265
|
|
-
|
Total liabilities
|
|
39,274
|
|
42,513
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
Common stock, par value
$0.01 per share
|
|
131
|
|
130
|
Additional paid-in
capital
|
|
28,250
|
|
25,509
|
Retained earnings
|
|
50,841
|
|
38,620
|
Accumulated other
comprehensive income (loss)
|
|
(607)
|
|
(539)
|
Treasury stock, at
cost
|
|
(4,187)
|
|
(4,187)
|
Total shareholders' equity
|
|
74,428
|
|
59,533
|
Total liabilities and shareholders' equity
|
|
$
113,702
|
|
$
102,046
|
|
|
|
|
|
|
|
|
|
|
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,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
Revenues
|
$
59,048
|
|
$
48,710
|
|
$
222,012
|
|
$
194,101
|
|
|
|
|
|
|
|
|
Cost of
revenues
|
43,343
|
|
35,636
|
|
162,568
|
|
142,562
|
|
|
|
|
|
|
|
|
Gross
profit
|
15,705
|
|
13,074
|
|
59,444
|
|
51,539
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses:
|
|
|
|
|
|
|
|
Operating expenses
|
11,150
|
|
9,978
|
|
44,716
|
|
38,136
|
Revaluation of contingent consideration liability
|
(900)
|
|
-
|
|
(2,882)
|
|
-
|
Total selling,
general and administrative expenses
|
10,250
|
|
9,978
|
|
41,834
|
|
38,136
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
5,455
|
|
3,096
|
|
17,610
|
|
13,403
|
|
|
|
|
|
|
|
|
Other
income/(expense), net
|
(113)
|
|
(196)
|
|
(724)
|
|
(770)
|
|
|
|
|
|
|
|
|
Income before income
taxes
|
5,342
|
|
2,900
|
|
16,886
|
|
12,633
|
|
|
|
|
|
|
|
|
Income tax
expense
|
1,459
|
|
875
|
|
4,665
|
|
2,772
|
Net income
|
$
3,883
|
|
$
2,025
|
|
$
12,221
|
|
$
9,861
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per
share:
|
|
|
|
|
|
|
|
Basic
|
$
0.34
|
|
$
0.18
|
|
$
1.07
|
|
$
0.87
|
Diluted
|
$
0.32
|
|
$
0.17
|
|
$
1.02
|
|
$
0.83
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
11,453
|
|
11,387
|
|
11,436
|
|
11,292
|
Diluted
|
12,039
|
|
12,011
|
|
12,007
|
|
11,950
|
|
|
|
|
|
|
|
|
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,
|
|
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Net
Income
|
$
3,883
|
|
$
2,025
|
|
$
12,221
|
|
$
9,861
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
Amortization of
acquired intangible assets
|
792
|
|
792
|
|
3,170
|
|
2,790
|
|
|
|
Stock-based
compensation
|
141
|
|
491
|
|
2,212
|
|
2,021
|
|
|
|
Acquisition
transaction expenses
|
140
|
|
650
|
|
140
|
|
650
|
|
|
|
Revaluation of
contingent consideration liability
|
(900)
|
|
-
|
|
(2,882)
|
|
-
|
|
|
|
Income tax
adjustments
|
(21)
|
|
(511)
|
|
(588)
|
|
(1,418)
|
|
|
Non-GAAP Net
Income
|
$
4,035
|
|
$
3,447
|
|
$
14,273
|
|
$
13,904
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP Diluted
Earnings Per Share
|
$
0.32
|
|
$
0.17
|
|
$
1.02
|
|
$
0.83
|
|
|
Non-GAAP Diluted
Earnings Per Share
|
$
0.34
|
|
$
0.29
|
|
$
1.19
|
|
$
1.16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
|
|
GAAP Diluted
Shares
|
12,039
|
|
12,011
|
|
12,007
|
|
11,950
|
|
|
Non-GAAP Diluted
Shares
|
12,039
|
|
12,011
|
|
12,007
|
|
11,950
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MASTECH DIGITAL,
INC.
|
SUPPLEMENTAL
FINANCIAL INFORMATION
|
(Amounts in
thousands)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months ended
December 31,
|
|
Year ended
December 31,
|
|
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
|
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
|
Data and analytics
services
|
$
10,072
|
|
$
8,918
|
|
$
38,339
|
|
$
30,226
|
|
IT staffing
services
|
48,976
|
|
39,792
|
|
183,673
|
|
163,875
|
|
|
Total
revenues
|
$
59,048
|
|
$
48,710
|
|
$
222,012
|
|
$
194,101
|
|
|
|
|
|
|
|
|
|
|
Gross Margin
%:
|
|
|
|
|
|
|
|
|
Data and analytics
services
|
48.9%
|
|
47.6%
|
|
48.4%
|
|
50.5%
|
|
IT staffing
services
|
22.0%
|
|
22.2%
|
|
22.3%
|
|
22.1%
|
|
|
Total gross margin
%
|
26.6%
|
|
26.8%
|
|
26.8%
|
|
26.6%
|
|
|
|
|
|
|
|
|
|
|
Segment Operating
Income:
|
|
|
|
|
|
|
|
|
Data and analytics
services
|
$
2,296
|
|
$
1,794
|
|
$
5,310
|
|
$
5,455
|
|
IT staffing
services
|
3,191
|
|
2,744
|
|
12,728
|
|
11,388
|
|
|
Subtotal
|
5,487
|
|
4,538
|
|
18,038
|
|
16,843
|
|
|
|
|
|
|
|
|
|
|
Amortization of
acquired intangible assets
|
(792)
|
|
(792)
|
|
(3,170)
|
|
(2,790)
|
Revaluation of
contingent consideration liability
|
900
|
|
-
|
|
2,882
|
|
-
|
Acquisition
transaction expenses
|
(140)
|
|
(650)
|
|
(140)
|
|
(650)
|
Interest expense and
other, net
|
(113)
|
|
(196)
|
|
(724)
|
|
(770)
|
Income before
income taxes
|
$
5,342
|
|
$
2,900
|
|
$
16,886
|
|
$
12,633
|
|
|
|
|
|
|
|
|
|
|
View original
content:https://www.prnewswire.com/news-releases/mastech-digital-reports-solid-fourth-quarter-and-record-full-year-2021-results-301478478.html
SOURCE Mastech Digital, Inc.