Mastech Digital(US:MHH)2024-03-15 12:01Financial Performance - Total revenues for 2023 were $201.1 million, a 17% decline from $242.2 million in 2022, with a 15% decrease in Data and Analytics Services and a 17% decrease in IT Staffing Services[197]. - The company reported a net loss of $7.1 million for 2023, compared to a net income of $8.7 million in 2022[294]. - Total revenues for the year ended December 31, 2023, were $201.1 million, a decrease of 16.9% compared to $242.2 million in 2022[294]. - Gross profit decreased to $51.0 million in 2023, a 19% decline year-over-year, with a gross margin of 25.4% compared to 26.1% in 2022[202]. - Gross profit for 2023 was $51.0 million, down from $63.2 million in 2022, reflecting a gross margin of 25.4%[294]. - The company reported a comprehensive loss of $1,644,000 in 2023, compared to a loss of $1,555,000 in 2022[300]. Revenue Breakdown - Bookings in 2023 totaled $42 million, with $19 million secured in Q4, compared to approximately $36 million in 2022[198]. - The Data and Analytics Services segment generated $34,358,000 in 2023, down from $40,594,000 in 2022, while the IT Staffing Services segment generated $166,740,000, also down from $201,644,000[376]. - The largest client, CGI, represented 22.5% of total revenues in 2023, with accounts receivable from CGI representing 27.0% of the total balance[376]. - Approximately 53% of total revenues in 2023 came from the top ten clients, with the financial services sector contributing about 50% of total revenues[378]. - Revenue from the United States was $197,246,000 in 2023, a decline from $236,187,000 in 2022[379]. Expenses and Liabilities - SG&A expenses totaled $60.3 million in 2023, representing 30.0% of total revenues, compared to $51.0 million or 21.1% in 2022[204]. - Operating expenses for 2023 were $60.3 million, an increase from $51.0 million in 2022, largely due to the goodwill impairment and employment-related claims[294]. - Total liabilities rose to $23.8 million in 2023, compared to $22.9 million in 2022, with current liabilities remaining stable[291]. Goodwill and Impairment - A goodwill impairment charge of $5.3 million was recorded in 2023, compared to no impairment in 2022[205]. - Goodwill impairment expense totaled $5.3 million for the year ended December 31, 2023, with the goodwill balance at $27.2 million[286]. - The company recorded a goodwill impairment charge of $5.3 million as of December 31, 2023, due to declining revenue trends and lower future revenue projections[333]. Cash Flow and Liquidity - Cash provided by operating activities was $16.0 million in 2023, up from $12.6 million in 2022 and $5.2 million in 2021[220]. - The company had a cash balance of $21.1 million as of December 31, 2023, with no bank debt outstanding and $22.5 million of borrowing capacity[215]. - The company had cash and cash equivalents of $21.1 million as of December 31, 2023, compared to $7.1 million in 2022, indicating improved liquidity[291]. - The company repaid $1,100,000 on its term loan facility in 2023, a significant reduction from $12,000,000 in 2022[303]. Tax and Valuation - The effective tax rate for 2023 was (21.0%), compared to 30.3% in 2022, largely due to shortfalls in expected tax benefits[207]. - As of December 31, 2023, the company provided a valuation allowance of $628,000 related to the uncertainty of the realization of foreign net operating losses (NOL)[256]. - As of December 31, 2023, the company provided a valuation allowance of $628,000 for deferred tax assets related to foreign net operating losses, an increase from $559,000 in 2022 and $311,000 in 2021[339]. Operational Changes and Future Outlook - The company expects operating working capital levels to increase with revenue growth in 2024, which may reduce cash generated from operating activities[221]. - The company plans to continue evaluating its operational strategies and market expansion opportunities to improve financial performance in the upcoming year[286]. - The company expanded its service offerings to include engineering staffing services in late 2023[375]. Stock and Shareholder Information - The company repurchased 67,699 shares of common stock at an average price of $9.10 per share in 2023, as part of a share repurchase program authorized for up to 500,000 shares[355]. - At December 31, 2023, the company held 1.7 million shares in treasury at a cost of approximately $4.8 million, compared to 1.6 million shares at a cost of approximately $4.2 million in 2022[356]. - Total shareholders' equity decreased to $81.4 million in 2023 from $86.0 million in 2022, primarily due to the net loss incurred[291].