Mastech Digital(US:MHH)2023-08-02 16:51Financial Data and Key Metrics Changes - Revenues totaled $52.2 million, representing a 16% year-over-year decline [44] - GAAP net loss for Q2 2023 was $2.2 million, or a loss of $0.19 per diluted share, compared to a net income of $2.4 million, or $0.20 per diluted share in Q2 2022 [52] - Non-GAAP net income for Q2 2023 was $1.3 million, or $0.11 per diluted share, compared to $3.6 million, or $0.30 per diluted share in Q2 2022 [52] - Gross margins in Q2 2023 were 26.1%, down from 27% in Q2 2022 [50] Business Line Data and Key Metrics Changes - IT Staffing Services segment revenues were $43.4 million, down from $50.9 million in Q2 2022 [49] - Data and Analytics Services segment revenues were $8.8 million, down from $11.2 million in Q2 2022 [45] - Order bookings increased to $10.1 million in Q2 2023, compared to $8.4 million in Q1 2023 [46] Market Data and Key Metrics Changes - Day sales outstanding measurement was 56 days at quarter end, below the target range of 60 to 65 days [19] - The company executed a share repurchase program, purchasing approximately 62,000 shares at an average price of $9.15 per share [19] Company Strategy and Development Direction - The company expanded its portfolio with the entry into Engineering Staffing Services (ESS), which is seen as an adjacency to IT Staffing [23] - The focus is on maintaining gross margins in the upper 40% range regardless of revenue levels [82] - Cost control measures have been implemented, including deferring discretionary expenditures and reviewing vendor relationships [39] Management Comments on Operating Environment and Future Outlook - Management noted that economic uncertainties continue to impact client spending, particularly in financial services [21] - There are signs of modest improvement in demand from financial services clients, but it is not yet a trend [22] - The company remains confident in its financial position, with a solid balance sheet and access to ample capital [26] Other Important Information - The company recorded a pre-tax settlement reserve of $3.1 million on an outstanding employment-related claim, with no lawsuit filed to date [51] - Cash balances on June 30, 2023, were $18.6 million, with no bank debt outstanding [55] Q&A Session Summary Question: What was the billable consultant number for the quarter? - The billable consultant base was 1,041 at the end of the quarter [2] Question: Can you explain the mechanics of the $6 million liability and $2.2 million insurance recovery? - The gross claim estimate is $6 million, with an insurance claim estimate of $2.2 million, bringing the net claim to $3.1 million [9][11] Question: Should we expect revenues for both businesses to be sequentially up in Q3? - Management refrained from making projections due to ongoing economic uncertainties [14] Question: What are the current trends in bill rates? - Bill rates are trending down slightly, but gross margin content remains stable [47] Question: Can you provide an update on the engineering staffing services revenue contribution? - The engineering staffing services were just launched, and while there is interest, there is not enough data to assess its impact on overall numbers yet [64]