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Subjects: ERN, ACC

Mastech Digital Reports 20% Increase in Revenues in the First Quarter 2022


Both the Data & Analytics and IT Staffing Segments Achieved Double-Digit YOY Revenue Growth

PITTSBURGH, April 27, 2022 /PRNewswire/ -- Mastech Digital, Inc. (NYSE American: MHH), a leading provider of Digital Transformation IT Services, announced today its financial results for the first quarter ending March 31, 2022.

Mastech_Digital_Logo

First Quarter 2022 Highlights:

First Quarter 2022 Results:

Revenues for the first quarter of 2022 totaled $59.8 million compared to $49.8 million during the corresponding quarter of 2021.  Gross profits in the first quarter of 2022 increased by 24% to $15.9 million from $12.8 million in the same quarter of 2021. GAAP net income for the first quarter of 2022 totaled $2.3 million or $0.19 per diluted share, compared to $1.2 million or $0.10 per diluted share during the same period of 2021.  Non-GAAP net income for the first quarter of 2022 was $3.3 million or $0.28 per diluted share, compared to $2.2 million or $0.19 per diluted share in the first quarter of 2021.

Activity levels at the Company's Data and Analytics Services segment were solid, with order bookings of $11.8 million. Additionally, backlog increased during the quarter.  Demand for the Company's IT Staffing Services segment remained elevated during the first quarter, as the segment achieved record revenues and gross margins.  

"2022 is off to a strong start with solid financial results in a quarter that has historically been weak", said Vivek Gupta, the Company's President and Chief Executive Officer.  "Both of our business segments had sequential revenue growth, strong year-over-year top-line growth and solid operating profits.  Additionally, we brought onboard Ganeshan Venkateshwaran, a seasoned leader with an impressive track record of successes in the digital transformation services space, as the Chief Executive Officer of our Data and Analytics Services segment.  Ganeshan joins us with a wealth of knowledge around advanced technologies and digital transformation services to lead the next phase of growth for Mastech InfoTellis."

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 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, 2021.

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,



2022


2021






ASSETS





Current assets:





     Cash and cash equivalents 


$                        7,185


$                        6,622

     Accounts receivable, net 


46,838


43,393

     Prepaid and other current assets


3,191


3,890

           Total current assets


57,214


53,905






Equipment, enterprise software and leasehold improvements, net


3,540


3,038






Operating lease right-of-use assets


5,033


4,894











Non-current deposits


511


595






Goodwill, net of impairment


32,510


32,510






Intangible assets, net of amortization


17,968


18,760

           Total  assets


$                 116,776


$                 113,702






LIABILITIES AND SHAREHOLDERS' EQUITY





Current liabilities:





     Current portion of long-term debt


$                        4,400


$                        4,400

     Current portion of operating lease liability


1,571


1,479

     Accounts payable


6,242


4,954

     Accrued payroll and related costs


13,367


14,240

     Other accrued liabilities


1,222


1,771

           Total current liabilities


26,802


26,844






Long-term liabilities:





    Long-term debt, less current portion, net


7,252


8,334

    Long-term operating lease liability, less current portion


3,677


3,706

    Long-term accrued income taxes


125


125

    Deferred income taxes


888


265

           Total liabilities


38,744


39,274






Shareholders' equity:





     Common stock, par value $0.01 per share


133


131

     Additional paid-in capital


29,667


28,250

     Retained earnings


53,173


50,841

     Accumulated other comprehensive income (loss)


(754)


(607)

     Treasury stock, at cost


(4,187)


(4,187)

          Total shareholders' equity


78,032


74,428

           Total liabilities and shareholders' equity


$                 116,776


$                 113,702






 

MASTECH DIGITAL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except per share data)

(Unaudited)









Three Months ended March 31,




2022


2021








Revenues


$                           59,755


$                          49,775








Cost of revenues


43,823


36,971








Gross profit


15,932


12,804








Selling, general and administrative expenses


12,625


10,935








Income from  operations 


3,307


1,869








Other income/(expense), net


(60)


(232)








Income before income taxes


3,247


1,637








Income tax expense 


915


443


Net income


$                             2,332


$                            1,194














Earnings per share:






Basic


$                               0.20


$                              0.10


Diluted


$                               0.19


$                              0.10








Weighted average common shares outstanding:






Basic


11,509


11,415


Diluted


12,035


11,997








 

MASTECH DIGITAL, INC.

RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES

(Amounts in thousands, except per share data)

(Unaudited)










Three Months ended March 31,




2022


2021







GAAP Net Income 


$                            2,332


$                          1,194







Adjustments:






Amortization of acquired intangible assets


792


793


Stock-based compensation


526


621


Income taxes adjustments


(340)


(365)

Non-GAAP Net Income


$                            3,310


$                          2,243













GAAP Diluted Earnings Per Share


$                              0.19


$                             0.10

Non-GAAP Diluted Earnings Per Share


$                              0.28


$                             0.19













Weighted average common shares outstanding:





GAAP Diluted Shares


12,035


11,997

Non-GAAP Diluted Shares


12,035


11,997







 

MASTECH DIGITAL, INC.

SUPPLEMENTAL FINANCIAL INFORMATION

(Amounts in thousands)

(Unaudited)










Three Months ended March 31,




2022


2021







Revenues:





Data and analytics services

$                   10,152


$                     8,794


IT staffing services

49,603


40,981



Total revenues

$                   59,755


$                   49,775







Gross Margin %:





Data and analytics services

45.2%


45.7%


IT staffing services

22.9%


21.4%



Total gross margin %

26.7%


25.7%







Segment Operating Income:





Data and analytics services

$                        972


$                        394


IT staffing services

3,127


2,268



Subtotal

4,099


2,662







Amortization of acquired intangible assets

(792)


(793)

Interest expense and other, net

(60)


(232)

Income before income taxes

$                     3,247


$                      1,637







 

 

SOURCE Mastech Digital, Inc.


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