Mastech Digital Reports Sequential Revenue Growth for the First Time since the Third Quarter of 2022
Mastech Digital, Inc. reported a 15% decline in total consolidated revenues to $46.8 million for the first quarter of 2024. However, the company saw a 2% sequential increase from the fourth quarter of 2023. The Data and Analytics Services segment revenues were $8.1 million, with the IT Staffing Services segment showing a 6% increase in billing consultant headcount. GAAP diluted earnings per share were ($0.01), while non-GAAP diluted earnings per share were $0.06. The company had $19.4 million in cash balances, no bank debt, and borrowing availability of $24.2 million as of March 31, 2024.
The IT Staffing Services segment achieved a 6% increase in billing consultant headcount.
The company saw positive sequential growth in total consolidated revenues from the fourth quarter of 2023.
The company's gross margins improved to 25.9% in the first quarter of 2024 compared to 24.5% in the first quarter of 2023.
Total consolidated revenues declined by 15% to $46.8 million in the first quarter of 2024.
GAAP diluted earnings per share were ($0.01) in the first quarter of 2024, compared to $0.02 in the first quarter of 2023.
Non-GAAP diluted earnings per share decreased to $0.06 in the first quarter of 2024, from $0.12 in the first quarter of 2023.
Insights
Mastech Digital's financial announcement indicating a sequential revenue increase for the first time since Q3 2022 appears to be a positive signal of recovery, albeit with a notable year-over-year revenue decline of
The earnings information reveals a dip in Non-GAAP diluted earnings per share from
Investors should also take note of Mastech’s strong liquidity position, with
The reported increase in billable consultant headcount by
The company’s commentary on solid activity levels and increased comfort with new assignments in the Data and Analytics Services segment also paints an optimistic picture for future revenue streams. However, it’s important to remain cautious and monitor whether these booked orders translate to sustained revenue recognition over the coming year.
The IT Staffing Services Segment Increases its Billable Consultant Base by
First Quarter 2024 Highlights:
- Total consolidated revenues declined by
15% to$46.8 million $55.1 million 2% higher sequentially from the fourth quarter of 2023; - The Company's Data and Analytics Services segment reported revenues of
$8.1 million $9.4 million - The IT Staffing Services segment achieved a
6% increase in its billing consultant headcount during the first quarter of 2024 and reported positive sequential growth when compared to the fourth quarter of 2023; - GAAP diluted earnings (loss) per share was (
$0.01 $0.02 - Non-GAAP diluted earnings per share was
$0.06 $0.12 - On March 31, 2024, the Company had
$19.4 million $24.2 million
First Quarter Results:
Revenues for the first quarter of 2023 totaled
Activity levels at the Company's Data and Analytics Services segment were solid in the first quarter of 2024, with order bookings totaling
Vivek Gupta, the Company's President and Chief Executive Officer stated: "The first quarter of 2024 showed encouraging signs of market improvements in both of our business segments. This quarter was the first quarter since the third quarter of 2022 where both of our segments' clients shifted their spending patterns in a positive direction. Additionally, gross margins improved during the quarter by 140-basis points when compared to a year ago, and we successfully reduced S,G&A expenses by
Commenting on the Company's financial position, Jack Cronin, Mastech Digital's Chief Financial Officer stated: "On March 31, 2024, we had
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
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 expenses 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 or any other pandemics or outbreaks disrupting day-to-day activities 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, 2023.
MASTECH DIGITAL, INC. | ||||
CONDENSED CONSOLIDATED BALANCE SHEETS | ||||
(Amounts in thousands) | ||||
(Unaudited) | ||||
March 31, | December 31, | |||
2024 | 2023 | |||
ASSETS | ||||
Current assets: | ||||
Cash and cash equivalents | $ 19,424 | $ 21,147 | ||
Accounts receivable, net | 32,015 | 29,815 | ||
Prepaid and other current assets | 6,887 | 5,501 | ||
Total current assets | 58,326 | 56,463 | ||
Equipment, enterprise software and leasehold improvements, net | 1,983 | 1,913 | ||
Operating lease right-of-use assets, net | 4,790 | 5,106 | ||
Deferred income taxes | 738 | 793 | ||
Deferred financing costs, net | 260 | 284 | ||
Non-current deposits | 455 | 457 | ||
Goodwill, net of impairment | 27,210 | 27,210 | ||
Intangible assets, net of amortization | 12,308 | 13,001 | ||
Total assets | $ 1,06,070 | $ 1,05,227 | ||
LIABILITIES AND SHAREHOLDERS' EQUITY | ||||
Current liabilities: | ||||
Accounts payable | $ 5,473 | $ 4,659 | ||
Current portion of operating lease liability | 1,242 | 1,236 | ||
Accrued payroll and related costs | 11,978 | 12,354 | ||
Other accrued liabilities | 2,066 | 1,622 | ||
Total current liabilities | 20,759 | 19,871 | ||
Long-term liabilities: | ||||
Long-term operating lease liability, less current portion | 3,517 | 3,843 | ||
Long-term accrued income taxes | 69 | 69 | ||
Total liabilities | 24,345 | 23,783 | ||
Shareholders' equity: | ||||
Common stock, par value | 133 | 133 | ||
Additional paid-in capital | 35,895 | 35,345 | ||
Retained earnings | 52,254 | 52,415 | ||
Accumulated other comprehensive income (loss) | (1,672) | (1,644) | ||
Treasury stock, at cost | (4,885) | (4,805) | ||
Total shareholders' equity | 81,725 | 81,444 | ||
Total liabilities and shareholders' equity | $ 1,06,070 | $ 1,05,227 | ||
MASTECH DIGITAL, INC. | ||||
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
(Amounts in thousands, except per share data) | ||||
(Unaudited) | ||||
Three Months ended March 31, | ||||
2024 | 2023 | |||
Revenues | $ 46,823 | $ 55,063 | ||
Cost of revenues | 34,692 | 41,581 | ||
Gross profit | 12,131 | 13,482 | ||
Selling, general and administrative expenses | 12,537 | 12,950 | ||
Income (loss) from operations | (406) | 532 | ||
Other income/(expense), net | 124 | (53) | ||
Income (loss) before income taxes | (282) | 479 | ||
Income tax expense (benefit) | (121) | 218 | ||
Net income (loss) | $ (161) | $ 261 | ||
Earnings (loss) per share: | ||||
Basic | $ (0.01) | $ 0.02 | ||
Diluted | $ (0.01) | $ 0.02 | ||
Weighted average common shares outstanding: | ||||
Basic | 11,615 | 11,638 | ||
Diluted | 11,615 | 12,054 | ||
MASTECH DIGITAL, INC. | ||||
RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES | ||||
(Amounts in thousands, except per share data) | ||||
(Unaudited) | ||||
Three Months ended March 31, | ||||
2024 | 2023 | |||
GAAP Net Income (loss) | $ (161) | $ 261 | ||
Adjustments: | ||||
Amortization of acquired intangible assets | 693 | 693 | ||
Stock-based compensation | 550 | 835 | ||
Income taxes adjustments | (319) | (388) | ||
Non-GAAP Net Income | $ 763 | $ 1,401 | ||
GAAP Diluted Earnings (Loss) Per Share | $ (0.01) | $ 0.02 | ||
Non-GAAP Diluted Earnings Per Share | $ 0.06 | $ 0.12 | ||
Weighted average common shares outstanding: | ||||
GAAP Diluted Shares | 11,615 | 12,054 | ||
Non-GAAP Diluted Shares | 11,909 | 12,054 | ||
MASTECH DIGITAL, INC. | |||||
SUPPLEMENTAL FINANCIAL INFORMATION | |||||
(Amounts in thousands) | |||||
(Unaudited) | |||||
Three Months ended March 31, | |||||
2024 | 2023 | ||||
Revenues: | |||||
Data and analytics services | $ 8,067 | $ 9,395 | |||
IT staffing services | 38,756 | 45,668 | |||
Total revenues | $ 46,823 | $ 55,063 | |||
Gross Margin %: | |||||
Data and analytics services | 46.4 % | 38.5 % | |||
IT staffing services | 21.6 % | 21.6 % | |||
Total gross margin % | 25.9 % | 24.5 % | |||
Segment Operating Income (Loss): | |||||
Data and analytics services | $ (454) | $ (680) | |||
IT staffing services | 741 | 1,905 | |||
Subtotal | 287 | 1,225 | |||
Amortization of acquired intangible assets | (693) | (693) | |||
Interest expense and other, net | 124 | (53) | |||
Income (loss) before income taxes | $ (282) | $ 479 | |||
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SOURCE Mastech Digital, Inc.
FAQ
What was the total consolidated revenues for Mastech Digital in the first quarter of 2024?
Mastech Digital reported total consolidated revenues of $46.8 million for the first quarter of 2024.
What was the GAAP diluted earnings per share in the first quarter of 2024?
The GAAP diluted earnings per share for Mastech Digital were ($0.01) in the first quarter of 2024.
What was the cash balance of Mastech Digital as of March 31, 2024?
Mastech Digital had $19.4 million in cash balances as of March 31, 2024.
