Mastech Digital(MHH) - 2024 Q2 - Quarterly Results

Financial Highlights Mastech Digital achieved its second consecutive quarter of revenue growth, reaching $49.5 million, alongside a record 28.2% gross profit margin and a return to GAAP profitability Q2 2024 Key Performance Indicators | Metric | Q2 2024 | Q1 2024 | Q2 2023 | | :--- | :--- | :--- | :--- | | Consolidated Revenues ($ millions) | $49.5 | $46.8 | $52.2 | | Gross Profit Margin | 28.2% | - | 26.1% | | GAAP Diluted EPS | $0.12 | ($0.01) | ($0.19) | | Non-GAAP Diluted EPS | $0.19 | $0.06 | $0.11 | - Both business segments demonstrated sequential growth: Data and Analytics Services revenues grew by approximately 10%, and IT Staffing Services revenues grew by 5% compared to Q1 2024[2] Overall Financial Performance Mastech Digital's Q2 2024 revenues reached $49.5 million, with gross profit and margins improving, leading to a return to GAAP net income Q2 Financial Performance Comparison (2024 vs. 2023) | Metric | Q2 2024 | Q2 2023 | Change | | :--- | :--- | :--- | :--- | | Revenues ($ millions) | $49.5 | $52.2 | (5.1%) | | Gross Profit ($ millions) | $14.0 | $13.6 | +2.9% | | Gross Margin | 28.2% | 26.1% | +210 bps | | GAAP Net Income (Loss) ($ millions) | $1.4 | ($2.2) | Turnaround to Profit | | Non-GAAP Net Income ($ millions) | $2.2 | $1.3 | +69.2% | Segment Performance Both Data and Analytics and IT Staffing segments improved gross margins in Q2 2024, contributing to the company's record consolidated margin Segment Financials for Q2 2024 vs Q2 2023 | Segment | Revenue (Q2'24, $ millions) | Revenue (Q2'23, $ millions) | Gross Margin (Q2'24) | Gross Margin (Q2'23) | | :--- | :--- | :--- | :--- | :--- | | Data and Analytics | $8.9 | $8.8 | 49.2% | 45.6% | | IT Staffing | $40.7 | $43.4 | 23.6% | 22.2% | - The Data and Analytics segment had solid activity with order bookings totaling $9.2 million, as legacy clients increased their spending[4] - The IT Staffing Services segment grew its billable consultant base by nearly 10% during the first six months of 2024, indicating increased client willingness to start new assignments[4] Management Commentary & Financial Position Management expressed optimism on market improvements, highlighting record gross profit margins and a robust financial position with strong cash and improved DSO - CEO Vivek Gupta noted that clients appear to have shifted their spending patterns in a positive direction, leading to improvements in both top-line revenues and bottom-line operating profits[5] - CFO Jack Cronin highlighted the company's strong balance sheet as of June 30, 2024, which included $20.6 million in cash, no bank debt, and $23.8 million available under its revolving credit facility[5] - Days Sales Outstanding (DSO) improved to a healthy 53 days, a 3-day improvement compared to the previous year[5] Financial Statements This section presents Mastech Digital's unaudited condensed consolidated financial statements for Q2 2024, covering key financial reports and reconciliations Condensed Consolidated Statements of Operations Mastech Digital reported Q2 2024 revenues of $49.5 million and net income of $1.4 million ($0.12 diluted EPS), marking a turnaround from a prior-year net loss Statement of Operations Summary (Three Months Ended June 30, $ thousands) | Metric | 2024 | 2023 | | :--- | :--- | :--- | | Revenues | $49,534 | $52,204 | | Gross Profit | $13,980 | $13,644 | | Income (Loss) from Operations | $1,693 | ($2,828) | | Net Income (Loss) | $1,391 | ($2,173) | | Diluted EPS | $0.12 | ($0.19) | Condensed Consolidated Balance Sheets As of June 30, 2024, Mastech Digital's balance sheet shows total assets of $107.5 million, with $20.6 million in cash and $84.0 million in shareholders' equity Balance Sheet Summary ($ thousands) | Account | June 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Cash and cash equivalents | $20,587 | $21,147 | | Total current assets | $60,615 | $56,463 | | Total assets | $107,503 | $105,227 | | Total current liabilities | $20,276 | $19,871 | | Total liabilities | $23,467 | $23,783 | | Total shareholders' equity | $84,036 | $81,444 | Reconciliation of GAAP to Non-GAAP Measures Non-GAAP metrics are provided to exclude non-cash or non-recurring items, with Q2 2024 Non-GAAP Net Income at $2.2 million and Diluted EPS at $0.19 - Key adjustments to reconcile GAAP to Non-GAAP net income include excluding amortization of acquired intangible assets, stock-based compensation expenses, and, in 2023, a reserve for an employment-related claim[8][9][10] GAAP to Non-GAAP Reconciliation (Q2 2024 vs Q2 2023) | Metric | Q2 2024 | Q2 2023 | | :--- | :--- | :--- | | GAAP Net Income (Loss) ($ millions) | $1.4 | ($2.2) | | Adjustments ($ millions) | +$0.8 | +$3.5 | | Non-GAAP Net Income ($ millions) | $2.2 | $1.3 | | GAAP Diluted EPS | $0.12 | ($0.19) | | Non-GAAP Diluted EPS | $0.19 | $0.11 | Disclosures This section outlines the company's rationale for non-GAAP financial measures and includes a forward-looking statements disclaimer - The company uses non-GAAP measures to supplement GAAP results, believing they provide greater transparency and enable better comparison of financial performance across periods by excluding items like amortization and stock-based compensation[7][8] - The Forward-Looking Statements section warns that projections and statements about future performance are not guarantees and are subject to risks, including market demand, competition, and general economic conditions[11]