Mastech Digital(US:MHH)2021-08-06 11:01Revenue 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]