Last10K.com

Mastech Digital, Inc. (MHH) SEC Filing 8-K Material Event for the period ending Wednesday, July 28, 2021

Mastech Digital, Inc.

CIK: 1437226 Ticker: MHH

Exhibit 99.1

 

LOGO

FOR IMMEDIATE RELEASE:

Mastech Digital Reports Healthy Second Quarter 2021 Results

Achieved 13% Year-over-Year Revenue growth and higher sequential Net Income compared to First Quarter 2021

PITTSBURGH, PA –July 28, 2021—Mastech Digital, Inc. (NYSE American: MHH), a leading provider of Digital Transformation IT Services, announced today its financial results for the second quarter ended June 30, 2021.

Second Quarter 2021 Highlights:

 

   

Consolidated revenues totaled $53.7 million, a 13% increase over the second quarter 2020, with sequential growth of 8% compared to the first quarter of 2021;

 

   

The Company’s Data and Analytics Services segment reported its second consecutive quarter of strong bookings as client demand increased in the second quarter of 2021;

 

   

The IT Staffing Services segment added an additional 89 consultants-on-billing, an increase of 8% during the quarter, as demand for its services remained strong;

 

   

Consolidated gross margins increased slightly during the quarter on a year-over-year basis and were 100 basis points higher than in the first quarter of 2021;

 

   

GAAP diluted earnings per share were $0.31 in the second quarter of 2021 versus $0.25 in the second quarter of 2020; the second quarter of 2021 included a $2.0 million pre-tax gain related to a reduction in a contingent consideration liability;

 

   

Non-GAAP diluted earnings per share were $0.29 in the second quarter of 2021 versus $0.33 in the second quarter of 2020, and represented an improvement of $0.10 over the first quarter of 2021.

Second Quarter Results:

Revenues for the second quarter of 2021 totaled $53.7 million, compared to $47.6 million during the corresponding quarter last year. Gross profits in the second quarter of 2021 were $14.3 million, compared to $12.7 million in the second quarter of 2020. GAAP net income for the second quarter of 2021 totaled $3.7 million or $0.31 per diluted share, compared to $3.0 million or $0.25 per diluted share during the same period last year. Non-GAAP net income for the second quarter of 2021 was $3.4 million or $0.29 per diluted share, compared to $3.9 million or $0.33 per diluted share in the second quarter of 2020.

Activity levels at the Company’s Data and Analytics Services segment improved during the quarter as bookings and pipeline opportunities were strong and sequential revenues grew by 2% during the quarter. Project delays, which impacted the segment’s first six-month 2021 results, have shown signs of abatement with a number of material orders received during the second quarter. Demand for the Company’s IT Staffing Services segment continued to be very strong, with an 8% expansion in billable-consultant headcount during the quarter. Thus far in 2021, the billable-consultant headcount has already increased by 18% from our year-end 2020 headcount, which has more than offset the billable headcount decline experienced during the pandemic-impacted 2020 fiscal year.

Vivek Gupta, the Company’s President and Chief Executive Officer stated “We continued to see further recovery in our Data and Analytics Services segment during the second quarter and our IT Staffing Services segment saw a strong increase in new engagements. Strong bookings, pipeline opportunities and “near term” workable orders secured during the second quarter bode well for our Data and Analytics business as we enter the second half of 2021.”


LOGO

 

Further commenting on the Data & Analytics segment, Paul Burton, the Chief Executive of the Company’s Data & Analytics Services segment, said “I believe we are on the verge of a meaningful recovery in the D&A marketplace. Customer conversations are becoming less cautionary and more aggressive about investing in projects that have been on the back burner for the last 12 to 18 months. As business leaders seek out projects with strong returns on investment and short payback periods, I believe D&A projects will again become a priority for many companies.”

Commenting on the Company’s financial position, Jack Cronin, Mastech Digital’s Chief Financial Officer, stated, “At June 30, 2021 we had cash balances on hand of $5.3 million, outstanding bank debt of approximately $15 million, no borrowings under our revolving credit facility, and cash availability of $26.1 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.


LOGO

 

Contingent consideration liability revaluation: In connection with the AmberLeaf acquisition, the Company may be required to pay future consideration that is 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 such 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, after the Company determined that relevant conditions for the payment of such liability were unlikely to be fully 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.

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 and the expected performance of Mastech Digital following completion of this transaction. 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)

 

     June 30,
2021
    December 31,
2020
 

ASSETS

    

Current assets:

    

Cash and cash equivalents

   $ 5,302     $ 7,677  

Accounts receivable, net

     38,584       32,134  

Prepaid and other current assets

     3,416       1,346  
  

 

 

   

 

 

 

Total current assets

     47,302       41,157  

Equipment, enterprise software and leasehold improvements, net

     1,887       1,971  

Operating lease right-of-use assets

     5,595       3,286  

Non-current deposits

     595       396  

Deferred income taxes

     463       796  

Goodwill, net of impairment

     32,510       32,510  

Intangible assets, net

     20,344       21,930  
  

 

 

   

 

 

 

Total assets

   $ 108,696     $ 102,046  
  

 

 

   

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

    

Current liabilities:

    

Current portion of long-term debt

   $ 4,400     $ 4,400  

Current portion of operating lease liability

     1,435       1,079  

Accounts payable

     4,638       2,589  

Accrued payroll and related costs

     12,461       12,374  

Other accrued liabilities

     1,226       1,529  
  

 

 

   

 

 

 

Total current liabilities

     24,160       21,971  

Long-term liabilities:

    

Long-term debt, less current portion, net

     10,716       12,875  

Contingent consideration liability

     900       2,882  

Long-term operating lease liability, less current portion

     4,419       2,325  

Long-term accrued income taxes

     165       165  

Long-term payroll tax liability

     2,295       2,295  
  

 

 

   

 

 

 

Total liabilities

     42,655       42,513  

Shareholders’ equity:

    

Common stock, par value $0.01 per share

     131       130  

Additional paid-in capital

     27,172       25,509  

Retained earnings

     43,552       38,620  

Accumulated other comprehensive (loss)

     (627     (539

Treasury stock, at cost

     (4,187     (4,187
  

 

 

   

 

 

 

Total shareholders’ equity

     66,041       59,533  
  

 

 

   

 

 

 

Total liabilities and shareholders’ equity

   $ 108,696     $ 102,046  
  

 

 

   

 

 

 


MASTECH DIGITAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except per share data)

(Unaudited)

 

     Three Months ended June 30,     Six Months ended June 30,  
     2021     2020     2021     2020  

Revenues

   $ 53,658     $ 47,583     $ 103,433     $ 98,008  

Cost of revenues

     39,343       34,927       76,314       72,633  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     14,315       12,656       27,119       25,375  

Selling, general and administrative expenses:

        

Operating expenses

     10,986       9,042       21,921       19,285  

Revaluation of contingent consideration liability

     (1,982     —         (1,982     —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Total selling, general and administrative expenses

     9,004       9,042       19,939       19,285  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

     5,311       3,614       7,180       6,090  

Other income/(expense), net

     (144     (157     (376     (383
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

     5,167       3,457       6,804       5,707  

Income tax expense

     1,429       488       1,872       869  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 3,738     $ 2,969     $ 4,932     $ 4,838  
  

 

 

   

 

 

   

 

 

   

 

 

 

Earnings per share:

        

Basic

   $ 0.33     $ 0.26     $ 0.43     $ 0.43  

Diluted

   $ 0.31     $ 0.25     $ 0.41     $ 0.41  

Weighted average common shares outstanding:

        

Basic

     11,442       11,271       11,425       11,199  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     12,002       11,948       11,999       11,849  
  

 

 

   

 

 

   

 

 

   

 

 

 


MASTECH DIGITAL, INC.

RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES

(Amounts in thousands, except per share data)

(Unaudited)

 

     Three Months ended June 30,     Six Months ended June 30,  
     2021     2020     2021     2020  

GAAP Net Income

   $ 3,738     $ 2,969     $ 4,932     $ 4,838  

Adjustments:

        

Amortization of acquired intangible assets

     793       669       1,586       1,342  

Stock-based compensation

     757       612       1,378       1,068  

Revaluation of contingent consideration liability

     (1,982     —         (1,982     —    

Income tax adjustments

     121       (341     (244     (637
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Net Income

   $ 3,427     $ 3,909     $ 5,670     $ 6,611  
  

 

 

   

 

 

   

 

 

   

 

 

 

GAAP Diluted Earnings Per Share

   $ 0.31     $ 0.25     $ 0.41     $ 0.41  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Diluted Earnings Per Share

   $ 0.29     $ 0.33     $ 0.47     $ 0.56  
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average common shares outstanding:

        

GAAP Diluted Shares

     12,002       11,948       11,999       11,849  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP Diluted Shares

     12,002       11,948       11,999       11,849  
  

 

 

   

 

 

   

 

 

   

 

 

 


MASTECH DIGITAL, INC.

SUPPLEMENTAL FINANCIAL INFORMATION

(Amounts in thousands)

(Unaudited)

 

     Three Months ended June 30,     Six Months ended June 30,  
     2021     2020     2021     2020  

Revenues:

        

Data and analytics services

   $ 8,950     $ 6,772     $ 17,744     $ 14,132  

IT staffing services

     44,708       40,811       85,689       83,876  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

   $ 53,658     $ 47,583     $ 103,433     $ 98,008  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross Margin %:

        

Data and analytics services

     46.7     52.2     46.2     49.5

IT staffing services

     22.7     22.4     22.1     21.9
  

 

 

   

 

 

   

 

 

   

 

 

 

Total gross margin %

     26.7     26.6     26.2     25.9
  

 

 

   

 

 

   

 

 

   

 

 

 

Segment Operating Income:

        

Data and analytics services

   $ 769     $ 1,173     $ 1,163     $ 2,082  

IT staffing services

     3,353       3,110       5,621       5,350  
  

 

 

   

 

 

   

 

 

   

 

 

 

Subtotal

     4,122       4,283       6,784       7,432  

Amortization of acquired intangible assets

     (793     (669     (1,586     (1,342

Revaluation of contingent consideration liability

     1,982       —         1,982       —    

Interest expense and other, net

     (144     (157     (376     (383
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before income taxes

   $ 5,167     $ 3,457     $ 6,804     $ 5,707  
  

 

 

   

 

 

   

 

 

   

 

 

 

View differences made from one to another to evaluate Mastech Digital, Inc.'s financial trajectory

Compare SEC Filings Year-over-Year (YoY) and Quarter-over-Quarter (QoQ)
Sample 10-K Year-over-Year (YoY) Comparison

Compare this 8-K Corporate News to its predecessor by reading our highlights to see what text and tables were  removed  ,   added    and   changed   by Mastech Digital, Inc..

Continue

Assess how Mastech Digital, Inc.'s management team is paid from their Annual Proxy

Definitive Proxy Statement (Form DEF 14A)
Screenshot example of actual Proxy Statement

Mastech Digital, Inc.'s Definitive Proxy Statement (Form DEF 14A) filed after their 2021 10-K Annual Report includes:

  • Voting Procedures
  • Board Members
  • Executive Team
  • Salaries, Bonuses, Perks
  • Peers / Competitors

Continue

SEC Filing Tools

Material Contracts, Statements, Certifications & more

Mastech Digital, Inc. provided additional information to their SEC Filing as exhibits

Ticker: MHH
CIK: 1437226
Form Type: 8-K Corporate News
Accession Number: 0001193125-21-226601
Submitted to the SEC: Wed Jul 28 2021 8:00:52 AM EST
Accepted by the SEC: Wed Jul 28 2021
Period: Wednesday, July 28, 2021
Industry: Management Consulting Services
Events:
  1. Earnings Release
  2. Financial Exhibit

External Resources:
Stock Quote
Social Media

Bookmark the Permalink:
https://last10k.com/sec-filings/mhh/0001193125-21-226601.htm