PART I. FINANCIAL INFORMATION [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents Mastech Digital, Inc.'s unaudited condensed consolidated financial statements, including statements of operations, balance sheets, and cash flows, for the periods ending September 30, 2021 and 2020 Consolidated Statements of Operations Highlights (Unaudited) | Metric | Three Months Ended Sep 30, 2021 (in thousands) | Three Months Ended Sep 30, 2020 (in thousands) | Nine Months Ended Sep 30, 2021 (in thousands) | Nine Months Ended Sep 30, 2020 (in thousands) | | :--- | :--- | :--- | :--- | :--- | | **Revenues** | $59,531 | $47,383 | $162,964 | $145,391 | | **Gross Profit** | $16,620 | $13,090 | $43,739 | $38,465 | | **Income from Operations** | $4,975 | $4,217 | $12,155 | $10,307 | | **Net Income** | $3,406 | $2,998 | $8,338 | $7,836 | | **Diluted EPS** | $0.28 | $0.25 | $0.69 | $0.66 | Consolidated Balance Sheet Highlights (Unaudited) | Metric | Sep 30, 2021 (in thousands) | Dec 31, 2020 (in thousands) | | :--- | :--- | :--- | | **Total Current Assets** | $54,993 | $41,157 | | **Total Assets** | $115,082 | $102,046 | | **Total Current Liabilities** | $27,846 | $21,971 | | **Long-term Debt, net** | $9,636 | $12,875 | | **Total Liabilities** | $44,911 | $42,513 | | **Total Shareholders' Equity** | $70,171 | $59,533 | Consolidated Statements of Cash Flows Highlights (Unaudited) | Metric | Nine Months Ended Sep 30, 2021 (in thousands) | Nine Months Ended Sep 30, 2020 (in thousands) | | :--- | :--- | :--- | | **Net cash from operating activities** | $1,909 | $16,938 | | **Net cash from investing activities** | $(1,042) | $(247) | | **Net cash from financing activities** | $(3,014) | $(15,460) | | **Net change in cash** | $(2,230) | $1,033 | | **Cash at end of period** | $5,447 | $4,014 | [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) - The company operates two reportable segments: Data and Analytics Services and IT Staffing Services[33](index=33&type=chunk) Revenue by Segment and Contract Type (Q3 2021 vs Q3 2020) | Segment | Contract Type | Q3 2021 Revenue (in thousands) | Q3 2020 Revenue (in thousands) | | :--- | :--- | :--- | :--- | | Data and Analytics | Time-and-material | $6,021 | $4,140 | | | Fixed-price | $4,502 | $3,036 | | **Subtotal** | | **$10,523** | **$7,176** | | IT Staffing | Time-and-material | $49,008 | $40,207 | | **Subtotal** | | **$49,008** | **$40,207** | | **Total Revenues** | | **$59,531** | **$47,383** | - On October 1, 2020, the company acquired AmberLeaf Partners, Inc. for approximately **$9.7 million** in cash at closing, with up to **$4.5 million** in contingent deferred cash payments[44](index=44&type=chunk) - During Q2 2021, the company revalued the contingent consideration liability related to the AmberLeaf acquisition, resulting in a **$2.0 million** reduction to the liability as payment conditions were deemed unlikely to be fully met[48](index=48&type=chunk)[92](index=92&type=chunk) Segment Performance (Q3 2021 vs Q3 2020) | Metric | Data and Analytics | IT Staffing | | :--- | :--- | :--- | | **Revenues (Q3 2021)** | $10,523 (in thousands) | $49,008 (in thousands) | | **Revenues (Q3 2020)** | $7,176 (in thousands) | $40,207 (in thousands) | | **Gross Margin % (Q3 2021)** | 51.6% | 22.8% | | **Gross Margin % (Q3 2020)** | 55.9% | 22.6% | | **Segment Operating Income (Q3 2021)** | $1,851 (in thousands) | $3,916 (in thousands) | | **Segment Operating Income (Q3 2020)** | $1,579 (in thousands) | $3,294 (in thousands) | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's financial performance, highlighting a 26% year-over-year revenue increase in Q3 2021, driven by growth in IT Staffing and Data and Analytics segments, covering revenue trends, gross margin, operating expenses, and liquidity [Overview](index=22&type=section&id=Overview) - Mastech Digital is a provider of Digital Transformation IT Services, operating through two segments: Data and Analytics Services (branded as Mastech InfoTrellis) and IT Staffing Services[110](index=110&type=chunk)[111](index=111&type=chunk) - The company's business outlook is highly correlated to general North American economic conditions, showing signs of economic expansion in 2021 despite 2020 COVID-19 impacts[114](index=114&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) Q3 2021 vs Q3 2020 Revenue by Segment (in millions) | Segment | Q3 2021 Revenue | Q3 2020 Revenue | % Change | | :--- | :--- | :--- | :--- | | Data and Analytics Services | $10.5 | $7.2 | +47% | | IT Staffing Services | $49.0 | $40.2 | +22% | | **Total** | **$59.5** | **$47.4** | **+26%** | - The **47%** revenue growth in Data and Analytics for Q3 2021 included **19%** organic growth, with the remainder from the AmberLeaf acquisition[119](index=119&type=chunk)[120](index=120&type=chunk) - IT Staffing revenue growth was driven by a **27%** year-over-year increase in billable consultant headcount, from **1,037** to **1,317**, reflecting strong activity in 2021[121](index=121&type=chunk) - Overall gross margin improved slightly to **27.9%** in Q3 2021 from **27.6%** in Q3 2020, mainly due to better margins in the IT Staffing segment[122](index=122&type=chunk) - Selling, General & Administrative (SG&A) expenses increased to **$11.6 million** in Q3 2021 from **$8.9 million** in Q3 2020, partly due to the unwinding of 2020 austerity measures and costs associated with the AmberLeaf acquisition[125](index=125&type=chunk) [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) - As of September 30, 2021, the company had net bank debt of **$8.8 million** and **$30 million** of available borrowing capacity under its credit facility[140](index=140&type=chunk) - Cash from operating activities for the first nine months of 2021 was **$1.9 million**, a significant decrease from **$16.9 million** in the same period of 2020, primarily due to an increase in operating working capital to support revenue growth[143](index=143&type=chunk) - Accounts receivable 'days sales outstanding' (DSOs) increased by **three days** to **66 days** from June 30, 2021, which is on the high end of management's expectations[141](index=141&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=28&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk stems from currency exchange rate variations due to global operations, with no currency hedging activities since 2015 - The company's cash flows and earnings are subject to fluctuations from currency exchange rate variations, particularly related to its global operations, with no foreign currency forward contracts used to hedge this risk since **2015**[151](index=151&type=chunk) [Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were ineffective as of September 30, 2021, due to material weaknesses in internal controls over complex accounting and IT general controls, with a remediation plan underway - Management concluded that the company's disclosure controls and procedures were **not effective** as of the end of the period covered by the report[154](index=154&type=chunk) - The ineffectiveness is due to previously disclosed **material weaknesses** in internal controls over financial reporting related to management review of complex accounting matters and IT general controls[156](index=156&type=chunk) - The company is implementing a remediation plan, including hiring new personnel, enhancing management review controls, and migrating a subsidiary to its Oracle Cloud ERP system to address the IT control weakness[157](index=157&type=chunk)[160](index=160&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=30&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ordinary course legal and administrative proceedings, with management expecting no material adverse effect on financial position, operations, or cash flows - The company is involved in ordinary course lawsuits and administrative proceedings, none of which are expected to have a **material adverse effect** on its financial condition[162](index=162&type=chunk) [Risk Factors](index=30&type=section&id=Item%201A.%20Risk%20Factors) No material changes have occurred in the risk factors since the company's 2020 Annual Report on Form 10-K - No **material changes** have occurred in the risk factors since the company's 2020 Annual Report on Form 10-K[163](index=163&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=30&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not repurchase any Common Stock during Q3 2021 and has no publicly announced share repurchase program in place - The company did not repurchase any of its shares during the third quarter of 2021 and does not have a publicly announced repurchase program[164](index=164&type=chunk) [Exhibits](index=31&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and XBRL data files - The exhibits filed with this report include CEO and CFO certifications under Sections 302 and 906 of the Sarbanes-Oxley Act, as well as XBRL interactive data files[166](index=166&type=chunk)

Mastech Digital, Inc. (NYSE:MHH) Q3 2021 Earnings Conference Call October 27, 2021 9:00 AM ET Company Participants Jennifer Ford Lacey - Manager of Legal Affairs Jack Cronin - Chief Financial Officer Vivek Gupta - Chief Executive Officer Paul Burton - Chief Executive Officer of Mastech InfoTrellis Conference Call Participants Josh Vogel - Sidoti & Company Lisa Thompson - Zacks Investment Research Tim Call - The Capital Management Corporation Disclaimer*: This transcript is designed to be used alongside the ...

Revenue Performance - For the three months ended June 30, 2021, total revenues were $53.7 million, an increase of 12.0% compared to $47.6 million for the same period in 2020[44] - The Data and Analytics Services segment generated $8.95 million in revenue for the three months ended June 30, 2021, up 32.2% from $6.77 million in the same period of 2020[44] - The IT Staffing Services segment reported revenues of $44.7 million for the three months ended June 30, 2021, an increase of 9.3% from $40.8 million in the same period of 2020[44] - Revenues from AmberLeaf operations contributed $1.9 million and $3.8 million to the Company’s total revenues for the three and six months ended June 30, 2021, respectively[52] - Data and Analytics Services revenue increased to $8,950,000 in Q2 2021 from $6,772,000 in Q2 2020, representing a growth of 32.2%[102] - IT Staffing Services revenue rose to $44,708,000 in Q2 2021 compared to $40,811,000 in Q2 2020, marking an increase of 7.0%[102] - Total revenues for the company reached $53,658,000 in Q2 2021, up from $47,583,000 in Q2 2020, reflecting a growth of 12.0%[102] Client Concentration - The top ten clients accounted for approximately 48% of total revenues for the three months ended June 30, 2021, consistent with 49% for the same period in 2020[45] Acquisition Details - The Company acquired AmberLeaf Partners, Inc. for approximately $9.7 million in cash, with potential deferred payments of up to $4.5 million based on revenue growth and EBITDA margin targets[46] - The fair value of the consideration for the AmberLeaf acquisition totaled $12.5 million, including a cash purchase price of $9.7 million and estimated contingent consideration of $2.9 million[50] - The company acquired AmberLeaf in October 2020, enhancing its customer experience strategy and managed services capabilities[100] Financial Performance - The Company’s net income for the three months ended June 30, 2021, was $3.7 million, compared to $3.2 million for the same period in 2020[54] - The Company’s diluted earnings per share for the three months ended June 30, 2021, was $0.31, an increase from $0.27 for the same period in 2020[54] - Income before income taxes for the three months ended June 30, 2021 was $5.167 million, an increase of 49.4% from $3.457 million in the same period of 2020[82] - The total provision for income taxes for the six months ended June 30, 2021 was $1.872 million, representing an increase of 115.8% from $869,000 for the same period in 2020[84] Goodwill and Intangible Assets - Goodwill related to the acquisition of AmberLeaf totaled $6.4 million, contributing to the overall goodwill of $8.4 million from the Hudson Global acquisition and $27.4 million from the InfoTrellis acquisition[55] - As of June 30, 2021, total identifiable intangible assets amounted to $33,099,000, with a net carrying value of $20,344,000 after $12,755,000 in accumulated amortization[56] - Amortization expense for the three and six months ended June 30, 2021 was $793,000 and $1.6 million, respectively, compared to $669,000 and $1.3 million for the same periods in 2020, reflecting an increase of approximately 18.6% and 23.1%[57] - Estimated aggregate amortization expense for intangible assets from 2021 to 2025 is projected to decrease from $3,168,000 in 2021 to $2,553,000 in 2025, indicating a declining trend[58] - Amortization of acquired intangible assets was $793,000 in Q2 2021, compared to $669,000 in Q2 2020[103] Lease and Debt Obligations - As of June 30, 2021, the Company had long-term operating lease right-of-use assets valued at $5,595,000, up from $3,286,000 as of December 31, 2020[60] - Total liabilities related to operating leases increased to $5,854,000 as of June 30, 2021, compared to $3,404,000 at the end of 2020[60] - New leases entered into during the three and six months ended June 30, 2021 totaled $2.8 million and $3.1 million, respectively, compared to $0 and $0.2 million in the same periods of 2020[64] - The Company has a total aggregate commitment of $47.5 million under its Credit Agreement, which includes a revolving credit facility of up to $30 million and a term loan facility of $17.5 million[74] - As of June 30, 2021, the Company was in compliance with all provisions under its Credit Agreement, which includes standard financial covenants[78] - As of June 30, 2021, the Company had no outstanding borrowings under the Revolver with unused borrowing capacity of approximately $26.1 million, compared to $22.0 million as of December 31, 2020[80] - The Company had outstanding borrowings under the term loan of $15.3 million as of June 30, 2021, down from $17.5 million as of December 31, 2020[80] Stock and Compensation - Stock-based compensation expense for the three months ended June 30, 2021 was $757,000, an increase of 23.7% from $612,000 in 2020[69] - The Company issued 30,239 shares related to the vesting of restricted shares and the exercising of stock options during the three months ended June 30, 2021, compared to 317,774 shares in the same period of 2020[70] - The Company did not purchase any shares during the six months ended June 30, 2021 and 2020 to satisfy employee tax obligations related to its Stock Incentive Plan[96] Tax and Deferred Financing - The Company revalued the contingent consideration liability related to the AmberLeaf acquisition, resulting in a $2.0 million reduction, bringing the ending balance to $900,000 as of June 30, 2021[92] - The Company incurred deferred financing costs totaling $752,000, which are being amortized as interest expense over the life of the facility[79] - The fair value of interest-rate swap contracts was $0 as of June 30, 2021, down from a liability of $35,000 as of December 31, 2020[89] - The Company reported a current provision for federal income taxes of $1.259 million for the six months ended June 30, 2021, compared to $514,000 for the same period in 2020[83] - The valuation allowance for deferred tax assets was $248,000 as of June 30, 2021, reflecting net operating losses that may not be realizable in the future[84] Asset Growth - Total assets increased to $108,696,000 as of June 30, 2021, compared to $102,046,000 as of December 31, 2020[103] - Geographic revenue distribution showed the United States contributing $51,532,000 in Q2 2021, an increase from $46,777,000 in Q2 2020[103] - The company has not engaged in currency hedging activities since 2016, exposing it to foreign currency risk[153]

Mastech Digital, Inc. (NYSE:MHH) Q2 2021 Earnings Conference Call July 28, 2021 4:00 AM ET Company Participants Jennifer Ford Lacey - Manager of Legal Affairs Vivek Gupta - Chief Executive Officer Jack Cronin - Chief Financial Officer Paul Burton - Chief Executive Officer of Mastech InfoTrellis Conference Call Participants Josh Vogel - Sidoti & Company Yaron Naymark - 1 Main Capital Lisa Thompson - Zacks Investment Research Operator Greetings, and welcome to Mastech Digital Inc. Q2 2021 Conference Call. At ...

Table of Contents Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2021 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-34099 MASTECH DIGITAL, INC. (Exact name of registrant as specified in its charter) PENNSYLVANIA 26-2753540 (State or other jurisd ...

Mastech Digital, Inc. (NYSE:MHH) Q1 2021 Results Earnings Conference Call April 28, 2021 9:00 AM ET Company Participants Jennifer Ford Lacey - Manager, Legal Affairs Vivek Gupta - CEO Jack Cronin - CFO Paul Burton - Chief Executive, Mastech InfoTrellis Conference Call Participants Josh Vogel - Sidoti and Company Lisa Thompson - Zacks Investment Research Brian Kinstlinger - Alliance Global Partners Operator Greetings, and welcome to the Mastech Digital Inc. Quarter One 2021 Conference Call. At this time, all ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2020 ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission File Number 001-34099 MASTECH DIGITAL, INC. (Exact name of registrant as specified in its charter) PENNSYLVANIA 26-2753540 (State or other jurisdiction of incorporation ...

Mastech Digital, Inc. (NYSE:MHH) Q4 2020 Earnings Conference Call February 10, 2021 9:00 AM ET Company Participants Jennifer Ford Lacey - Manager, Legal Affairs Vivek Gupta - CEO Jack Cronin - CFO Paul Burton - Chief Executive, Mastech InfoTrellis Conference Call Participants Josh Vogel - Sidoti and Company Lisa Thompson - Zacks Investment Research Operator Greetings, and welcome to the Mastech Digital Inc. Fourth Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. A questi ...

Table of Contents For the quarterly period ended September 30, 2020 UNITED STATES SECURITIES AND EXCHANGE COMMISSION ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Washington, D.C. 20549 Commission File Number 001-34099 FORM 10-Q MASTECH DIGITAL, INC. (MarkOne) (Exact name of registrant as specified in its charter) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 PENNSYLVANIA 26-2753540 (State or other jurisdiction of incor ...

Mastech Digital, Inc. (NYSE:MHH) Q3 2020 Earnings Conference Call October 28, 2020 9:00 AM ET Company Participants Jennifer Ford Lacey - Manager, Legal Affairs Vivek Gupta - CEO Jack Cronin - CFO Paul Burton - Chief Executive, Data & Analytics Conference Call Participants Josh Vogel - Sidoti Lisa Thompson - Zacks Investment Research Brian Kinstlinger - Alliance Global Partners Operator Good morning ladies and gentlemen, and thank you for standing by. Welcome to Mastech Digital Incorporated Third Quarter Ear ...