Technology
Mastech Digital Reports 8% Year-over-Year Revenue Growth and 5% Sequential Revenue Growth for the Third Quarter 2024
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1 year agoon
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Consolidated Gross Margins of 28.5% Set a New Mastech Digital Record for the Quarter
PITTSBURGH, Nov. 6, 2024 /PRNewswire/ — Mastech Digital, Inc. (NYSE AMERICAN: MHH), a leading provider of Digital Transformation IT Services, announced today its financial results for the third quarter ended September 30, 2024.
Third Quarter 2024 Highlights:
Total consolidated revenues increased by $4.1 million on a year-over-year basis and by $2.3 million on a sequential quarterly basis to $51.8 million and represented our third consecutive quarter of revenue growth;The Company’s Data and Analytics Services segment reported revenues of $9.4 million, which were 17% higher than revenues in the third quarter of 2023 and 6% higher on a sequential basis from the second quarter of 2024;The IT Staffing Services segment delivered revenues of $42.4 million, achieving year-over-year growth of 7% and sequential quarterly growth of 4% when compared to revenues reported in the second quarter of 2024;Gross margins achieved during the third quarter of 2024 were a Company performance record 28.5%, surpassing our previous gross margin record from the previous quarter;GAAP diluted earnings per share was $0.16 in the third quarter of 2024, versus $0.01 in the third quarter of 2023 and $0.12 in the second quarter of 2024; andNon-GAAP diluted earnings per share was $0.23 in the third quarter of 2024, versus $0.11 in the third quarter of 2023 and $0.19 in the second quarter of 2024.
Third Quarter Results:
Revenues for the third quarter of 2024 totaled $51.8 million, compared to $47.8 million during the corresponding quarter of 2023. Gross profits in the third quarter of 2024 were $14.8 million, compared to $12.6 million in the same quarter of 2023. Gross margins improved to a Company performance record 28.5% in the 2024 third quarter, versus 26.3% in the 2023 third quarter. GAAP net income for the third quarter of 2024 totaled $1.9 million or $0.16 per diluted share, compared to $125,000 or $0.01 per diluted share, during the same period of 2023. Non-GAAP net income for the third quarter of 2024 totaled $2.8 million or $0.23 per diluted share compared to $1.3 million, or $0.11 per diluted share, in the third quarter of 2023.
Activity levels at the Company’s Data and Analytics Services segment continued to be solid in the third quarter of 2024. Order bookings totaled $11.1 million during the quarter, as the Company saw numerous existing clients increase spending due to an improved economic outlook. This bookings performance exceeded our 2023 third quarter bookings by $6 million. Our IT Staffing Services clients have also shown a willingness to start new assignments during 2024 compared to the previous year, as we grew our billable consultant base by 13% over the first nine months of 2024.
Vivek Gupta, the Company’s President and Chief Executive Officer, stated: “The third quarter of 2024 was a continuation of the positive momentum that we experienced during the first half of the year. A healthier macro-economic outlook and increased operational efficiencies within both of our business segments have elevated our demand trajectory in 2024. Additionally, our higher gross margin performance has highlighted several upgrades we made to the delivery-side of our organization during the year. In summary, I’m excited about our third quarter 2024 financial performance and the opportunities that we have in front of us.”
Commenting on the Company’s financial position, Jack Cronin, Mastech Digital’s Chief Financial Officer, stated: “On September 30, 2024, we had $23.9 million of cash balances on hand, no bank debt, and borrowing availability of approximately $25 million under our revolving credit facility. Our Days Sales Outstanding (DSO) measurement was a healthy 55 days on September 30, 2024. Our free cash flow for the first nine months of 2024 totaled $2.3 million and included $4.3 million of funding investments in operating working capital levels to support revenue growth.”
About Mastech Digital, Inc.:
Mastech Digital (NYSE American: MHH) is a leading provider of Digital Transformation IT Services. The Company offers Data Management and Analytics Solutions, Digital Learning, and IT Staffing Services with a Digital First approach. A minority-owned enterprise, Mastech Digital is headquartered in Pittsburgh, PA, with offices across the U.S., Canada, Europe, and India.
Use of Non-GAAP Measures:
This press release contains non-GAAP financial measures to supplement our financial results presented on a GAAP basis. The presentation of these financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. Reconciliations of these non-GAAP measures to their comparable GAAP measures are included in the attached financial tables.
We believe that providing non-GAAP net income and non-GAAP diluted earnings per share offers investors useful supplemental information about the financial performance of our business, enables comparison of financial results between periods where certain items may vary independent of business performance, and allows for greater transparency with respect to key metrics used by management in operating our business. Additionally, management uses these non-GAAP financial measures in evaluating the Company’s performance.
Specifically, the non-GAAP financial measures contained herein exclude the following expense items:
Amortization of acquired intangible assets: We amortize intangible assets acquired in connection with our June 2015 acquisition of Hudson IT, our July 2017 acquisition of the services division of InfoTrellis, Inc. and our October 2020 acquisition of AmberLeaf Partners. We exclude these amortization expenses in our non-GAAP financial measures because we believe it allows investors to make more meaningful comparisons between our operating results and those of other companies within our industry and facilitates a helpful comparison of our results with other periods.
Stock-based compensation expenses: We incur material recurring expenses related to non-cash, stock-based compensation. We exclude these expenses in our non-GAAP financial measures because we believe that it provides investors with meaningful supplemental information regarding operational performance. In particular, because of varying available valuation methodologies, subjective assumptions, and the variety of award types that companies can use under ASC 718, we believe that providing non-GAAP financial measures that exclude these expenses allows investors to make more meaningful comparisons between our operating results and those of other companies within our industry and facilitates comparison of our results with other periods.
Settlement reserve on employment-related claim, net of recoveries: In the second quarter of 2023, we recognized a pre-tax reserve of $3.1 million related to an employment claim asserted by a former employee who alleged various employment-related claims against the Company, including a claim of wrongful termination. During the third quarter of 2023, we formally settled this claim in accordance with the economic terms and conditions that were reflected in our second quarter 2023 financial statements. We have excluded this reserve in our non-GAAP financial measures because we believe it is not indicative of our ongoing operating performance and thus its exclusion allows investors to make more meaningful comparison between our operating results and those of other companies within our industry and facilitates a helpful comparison of our results with other periods.
Forward-Looking Statements:
Certain statements contained in this release are forward-looking statements based on management’s expectations, estimates, projections, and assumptions. Words such as “expects,” “anticipates,” “plans,” “believes,” “scheduled,” “estimates” and variations of these words and similar expressions are intended to identify forward-looking statements, which include but are not limited to projections of and statements regarding the Company’s ability to generate revenues, earnings, and cash flow. These statements are based on information currently available to the Company and it assumes no obligation to update the forward-looking statements as circumstances change. These statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Therefore, actual future results and trends may differ materially from what is forecasted in forward-looking statements due to a variety of factors, including, without limitation, the level of market demand for the Company’s services, the highly competitive market for the types of services offered by the Company, the impact of competitive factors on profit margins, market and general economic conditions that could cause the Company’s customers to reduce their spending for its services, the Company’s ability to create, acquire and build new lines of business, to attract and retain qualified personnel, reduce costs and conserve cash, the extent to which the Company’s business is adversely affected by the impacts of the COVID-19 pandemic or any other pandemics or outbreaks disrupting day-to-day activities and other risks that are described in more detail in the Company’s filings with the Securities and Exchange Commission, including its Form 10-K for the year ended December 31, 2023.
MASTECH DIGITAL, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)
(Unaudited)
September 30,
December 31,
2024
2023
ASSETS
Current assets:
Cash and cash equivalents
$ 23,885
$ 21,147
Accounts receivable, net
34,054
29,815
Prepaid and other current assets
7,876
5,501
Total current assets
65,815
56,463
Equipment, enterprise software and leasehold improvements, net
2,083
1,913
Operating lease right-of-use assets, net
4,147
5,106
Deferred income taxes
607
793
Deferred financing costs, net
213
284
Non-current deposits
452
457
Goodwill, net of impairment
27,210
27,210
Intangible assets, net of amortization
10,958
13,001
Total assets
$ 1,11,485
$ 1,05,227
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable
$ 4,636
$ 4,659
Current portion of operating lease liability
1,257
1,236
Accrued payroll and related costs
14,717
12,354
Other accrued liabilities
1,491
1,622
Total current liabilities
22,101
19,871
Long-term liabilities:
Long-term operating lease liability, less current portion
2,857
3,843
Long-term accrued income taxes
–
69
Total liabilities
24,958
23,783
Shareholders’ equity:
Common stock, par value $0.01 per share
134
133
Additional paid-in capital
37,473
35,345
Retained earnings
55,520
52,415
Accumulated other comprehensive income (loss)
(1,715)
(1,644)
Treasury stock, at cost
(4,885)
(4,805)
Total shareholders’ equity
86,527
81,444
Total liabilities and shareholders’ equity
$ 1,11,485
$ 1,05,227
MASTECH DIGITAL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
(Unaudited)
Three Months ended September 30,
Nine Months ended September 30,
2024
2023
2024
2023
Revenues
$ 51,839
$ 47,779
$ 1,48,196
$ 1,55,046
Cost of revenues
37,068
35,213
1,07,314
1,15,354
Gross profit
14,771
12,566
40,882
39,692
Selling, general and administrative expenses:
Operating expenses
12,332
12,615
37,156
38,937
Employment-related claim, net of recoveries
–
–
–
3,100
Total selling, general and administrative expenses
12,332
12,615
37,156
42,037
Income (loss) from operations
2,439
(49)
3,726
#
(2,345)
Other income/(expense), net
133
203
373
200
Income (loss) before income taxes
2,572
154
4,099
(2,145)
Income tax expense (benefit)
697
29
994
(358)
Net income (loss)
$ 1,875
$ 125
$ 3,105
$ (1,787)
Earnings (loss) per share:
Basic
$ 0.16
$ 0.01
$ 0.27
$ (0.15)
Diluted
$ 0.16
$ 0.01
$ 0.26
$ (0.15)
Weighted average common shares outstanding:
Basic
11,695
11,597
11,654
11,618
Diluted
12,011
11,968
11,949
11,618
MASTECH DIGITAL, INC.
RECONCILIATION OF GAAP MEASURES TO NON-GAAP MEASURES
(Amounts in thousands, except per share data)
(Unaudited)
Three Months ended September 30,
Nine Months ended September 30,
2024
2023
2024
2023
GAAP Net Income (Loss)
$ 1,875
$ 125
$ 3,105
#
$ (1,787)
Adjustments:
Amortization of acquired intangible assets
657
693
2,043
2,079
Stock-based compensation
542
824
1,553
2,501
Employment-related claim, net of recoveries
–
–
–
3,100
Income tax adjustments
(305)
(385)
(920)
(1,944)
Non-GAAP Net Income
$ 2,769
$ 1,257
$ 5,781
$ 3,949
GAAP Diluted Earnings (Loss) Per Share
$ 0.16
$ 0.01
$ 0.26
$ (0.15)
Non-GAAP Diluted Earnings Per Share
$ 0.23
$ 0.11
$ 0.48
$ 0.33
Weighted average common shares outstanding:
GAAP Diluted Shares
12,011
11,968
11,949
11,618
Non-GAAP Diluted Shares
12,011
11,968
11,949
#
11,998
MASTECH DIGITAL, INC.
SUPPLEMENTAL FINANCIAL INFORMATION
(Amounts in thousands)
(Unaudited)
Three Months ended September 30,
Nine Months ended September 30,
2024
2023
2024
2023
Revenues:
Data and analytics services
$ 9,398
$ 8,038
$ 26,341
$ 26,206
IT staffing services
42,441
39,741
1,21,855
1,28,840
Total revenues
$ 51,839
$ 47,779
$ 1,48,196
$ 1,55,046
Gross Margin %:
Data and analytics services
50.7 %
45.8 %
48.9 %
43.1 %
IT staffing services
23.6 %
22.4 %
23.0 %
22.0 %
Total gross margin %
28.5 %
26.3 %
27.6 %
25.6 %
Segment Operating Income:
Data and analytics services
$ 1,145
$ (832)
$ 1,435
$ (2,393)
IT staffing services
1,951
1,476
4,334
5,227
Subtotal
3,096
644
5,769
2,834
Amortization of acquired intangible assets
(657)
(693)
(2,043)
(2,079)
Employment-related claim, net of recoveries
–
–
–
(3,100)
Interest income (expense) and other, net
133
203
373
200
Income before income taxes
$ 2,572
$ 154
$ 4,099
$ (2,145)
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SOURCE Mastech Digital, Inc.
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Toronto firm fined $5,000 for unauthorized use of professional engineer’s seal
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For EF Go Ahead Tours, please visit: https://www.goaheadtours.com/about/referrals
For EF Ultimate Break, please visit: https://www.efultimatebreak.com/traveling-with-us/refer-a-friend
For EF Adventures, please visit: https://www.efadventures.com/about/referrals-program
About EF World Journeys
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This partnership represents a strategic expansion into a higher command level within the ROK Army, operating directly under the Army Headquarters with significant decision-making and procurement authority. The Agreement builds on NEO’s momentum in its Korean Defense Integration Strategy (see previously announced partnerships with the 12th Infantry Division dated April 1, 2026, and the Capital Mechanized Infantry Division dated April 22, 2026), and serves as a critical milestone due to the CDC’s ability to advocate for the prompt implementation of non-Chinese battery solutions that meet stringent security clearance and performance requirements.
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Lieutenant General Changjoon Eo, Commander of the Capital Defense Command, expressed, “The CDC was highly impressed with the drone flight time performance exhibited by NEO’s high-performance batteries compared to commercial Chinese products. As the ROK Army and its units initiate the transition towards a Korea-made supply chain, NEO Battery will act as an integral partner for the CDC and its sub-units to ensure traceability and performance for defense batteries in our drone and robotics platforms.”
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About the ROK Army’s Capital Defense Command
Operating under the name “Shield Unit” or Chungjeongdae, the ROK Army’s Capital Defense Command is one of the highest-ranking, corps-level military organizations within the Republic of Korea’s Armed Forces and Operations Command. The CDC is primarily responsible for defending the Presidential Office, the capital, the Ministry of National Defense facilities, major government buildings, and key national infrastructure. The Command exercises several subordinate units, including the 1st Security Group, the 1st Air Defense Brigade, the CDC Military Police Group, and the 52nd and 56th Infantry Divisions.
About NEO Battery Materials Ltd.
NEO Battery Materials is a Canadian-South Korean battery technology company focused on developing and producing silicon-enhanced lithium-ion batteries in drones, robotics, physical AI, electric vehicles, and energy storage systems. With a patent-protected, low-cost silicon manufacturing process, NEO Battery enables longer-running and ultra-fast charging properties and provides end-to-end battery solutions from materials selection, cell architecture, and process optimization. The Company aims to be a globally-leading producer of high-performance lithium-ion batteries and materials, building a secure, robust battery supply chain for Western manufacturers. For more information, please visit the Company’s website at: https://www.neobatterymaterials.com/.
On Behalf of the Board of Directors
Spencer Huh
Director, President, and CEO
This news release includes certain forward-looking statements as well as management’s objectives, strategies, beliefs and intentions. All information contained herein that is not clearly historical in nature may constitute forward-looking information. Generally, such forward-looking information can be identified notably by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking information, including but not limited to: volatile stock prices; the general global markets and economic conditions; the possibility of write-downs and impairments; the risk associated with the research and development of battery-related technologies; the risk associated with the effectiveness and feasibility of battery material, electrode, and cell technologies that have not yet been tested or proven on commercial scale or under real-world operating conditions; the risks associated with battery-related manufacturing process scale-up, including maintaining consistent material, component, and cell quality, production yields, and process reproducibility at a pilot, semi-commercial, or commercial scale; the risks associated with compatibility of existing battery chemistries, formulations, components, or designs; unforeseen risks associated with entering into and maintaining collaborations, joint ventures, partnerships, or commercial contracts with battery cell manufacturers, original equipment manufacturers, and various companies in the global battery and downstream end-user supply chain; the risks associated with the failure to develop and produce commercially viable battery-related products or that technical goals may not be achieved within expected timelines or budgets under a joint development or collaboration; the risks associated with the Company’s technologies and products not meeting performance requirements or customer specifications; the risks that prototype and pilot-scale products do not advance into commercially produced products or translate into commercial orders; the risk associated with battery components and cell purchase orders and offtake supply that may not be fulfilled in full, on time, or at all as actual revenue realization depends on delivery schedules, achievement of technical milestones, and customer acceptance and validation; the risk associated with losing official vendor registration or status with existing customers; counterparty risk upon delivery of prototype and commercial products; the risks associated with constructing, completing, securing, and financing pilot, semi-commercial, and commercial battery materials, components, and cell manufacturing facilities including the Canadian and South Korean facilities; the risks associated with potential delays or increased costs with site preparation, equipment procurement and installation, and facility commissioning; the risks associated with integrating silicon anode material production, electrode manufacturing, and cell assembly within a single operational cluster or the Company’s business portfolio; the risks associated with supply chain disruptions or cost fluctuations in raw materials, processing chemicals, and additive prices, impacting production costs and commercial viability; the risks associated with uninsurable risks arising during the course of research, development and production; competition faced by the Company in securing experienced personnel, contracts and sales, and financing; access to adequate infrastructure and resources to support battery materials, components, and cell research and development activities; the risks associated with changes in the technology regulatory regime governing the Company; the risks associated with the timely execution of the Company’s strategies and business plans; the risks associated with the lithium-ion battery industry and end-users’ demand and adoption of the Company’s silicon anode technology and battery products; market adoption and integration challenges, including the difficulty of incorporating silicon anodes and silicon battery products within battery manufacturers and OEMs’ systems; the risks associated with the various environmental and political regulations the Company is subject to; risks related to regulatory and permitting delays; the reliance on key personnel; liquidity risks; the risk of litigation; risk management; and other risk factors as identified in the Company’s recent Financial Statements and MD&A and in recent securities filings for the Company which are available on www.sedarplus.ca. Forward-looking information is based on assumptions management believes to be reasonable at the time such statements are made, including but not limited to, continued R&D and commercialization activities, no material adverse change in precursor, raw material, equipment, and relevant cost prices, development and commercialization plans to proceed in accordance with plans and such plans to achieve their stated expected outcomes, receipt of required regulatory approvals, and such other assumptions and factors as set out herein. Although the Company has attempted to identify important factors that could cause actual results to differ materially from those contained in the forward-looking information, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such forward-looking information will prove to be accurate, as actual results and future events could differ materially from those anticipated in such forward-looking information. Such forward-looking information has been provided for the purpose of assisting investors in understanding the Company’s business, operations, research and development, and commercialization plans and may not be appropriate for other purposes. Accordingly, readers should not place undue reliance on forward-looking information. Forward-looking information is made as of the date of this presentation, and the Company does not undertake to update such forward-looking information except in accordance with applicable securities laws.
Neither TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.
SOURCE NEO Battery Materials Ltd.
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