Mastech Holdings, Inc. Reports Third Quarter 2013 Results

PR Newswire

PITTSBURGH, Oct. 23, 2013 /PRNewswire/ -- Mastech Holdings, Inc. (NYSE MKT: MHH), a national provider of Information Technology staffing services, announced today its financial results for the third quarter ended September 30, 2013.

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Highlights:

  • Record Earnings of $0.29 Per Diluted Share from Continuing Operations; Total Diluted EPS of $0.43;
                
  • 24% Year-Over-Year Revenue Growth;
                 
  • 8% Sequential Quarterly Revenue Growth;
                   
  • 95% Year-Over-Year Increase in Operating Profits from Continuing Operations.

Third Quarter Results:

Revenues from continuing operations for the third quarter of 2013 totaled $28.3 million, which represented a 24% increase over the corresponding quarter last year and an 8% improvement over second quarter 2013 results.  Gross profit from continuing operations in the third quarter of 2013 was $5.3 million compared to $4.4 million in the third quarter of 2012. Consolidated net income from continuing operations for the third quarter 2013 totaled $999,000 or $0.29 per diluted share, compared to $561,000 or $0.17 per diluted share, during the same period last year.  Net income from discontinued operations totaled $481,000 in the third quarter of 2013 or $0.14 per diluted share and included a $442,000 gain on the sale of our healthcare business.

Demand for our IT staffing services was solid in the third quarter and largely in-line with activity levels of a quarter ago.  Gross margins from continuing operations in the third quarter of 2013 were 18.9%, which were slightly below gross margins of 19.2% reported a year earlier.  The slight margin decline was due to higher bench costs and the continued shift of revenues towards our wholesale sales channel.

Kevin Horner, Mastech's Chief Executive Officer stated, "We are pleased to deliver financial results that include record earnings for the quarter, strong revenue growth and the expansion of our billable consultant-base. These impressive financial achievements reflect our continued commitment to drive operational efficiencies and enhance our value proposition to the clients that we serve.  Also during the quarter we completed the sale of our healthcare business which generated a net gain of $442,000 for the Company and more importantly allows us to focus squarely on our core competency – Information Technology Staffing Services."

Commenting on the Company's financial position, Jack Cronin, Chief Financial Officer, stated, "Our financial position at September 30, 2013 remains strong, with cash on hand of $1.6 million and over $15 million of available borrowing capacity under our existing credit facility.  During the quarter we repaid all outstanding bank debt with funds generated from continuing operations and from the sale of our healthcare business. Our debt-free balance sheet and access to sufficient capital gives us the flexibility to capitalize on future value-creation opportunities." 

In conjunction with its third quarter earnings release, Mastech will host a conference call at 9:00 A. M. ET on October 23, 2013 to discuss these results and to answer questions.  A live webcast of this conference call will be available on the Company's website, www.mastech.com.  Simply click on the Investor Relations section and follow the links to the live webcast.  The webcast will remain available for replay through October 30, 2013.

About Mastech Holdings, Inc.:

Leveraging the power of 26 years of IT experience, Mastech (NYSE MKT: MHH) provides Information Technology Staffing services in the disciplines which drive today's business operations. More information about Mastech can be found at Mastech's website: www.mastech.com.

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 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 forecast in forward-looking statements due to a variety of factors, including, without limitation, the level of market demand for its services, the highly competitive market for the types of services offered by the Company, the impact of competitive factors on profit margins, market conditions that could cause the Company's customers to reduce their spending for its services, and the Company's ability to create, acquire and build new lines of business, to attract and retain qualified personnel, reduce costs and conserve cash, 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, 2012.






MASTECH HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

(Unaudited)







September 30, 


December 31, 



2013


2012






ASSETS





Current assets:





     Cash and cash equivalents 


$                     1,614


$                      659

     Accounts receivable, net 


15,824


13,791

     Prepaid and other current assets


866


788

     Deferred income taxes


156


153

           Total current assets


18,460


15,391






Equipment, enterprise software and leasehold improvements, net


183


249






Goodwill and intangible assets, net


-


429






Deferred  financing costs, net


25


46






Non-current deposits


211


214






Deferred income taxes


178


91






           Total assets


$                 19,057


$               16,420






LIABILITIES AND SHAREHOLDERS' EQUITY





Current liabilities:





     Short-term borrowings


$                           -


$                   2,610

     Accounts payable


2,539


1,984

     Accrued payroll and related costs


6,077


4,424

     Deferred revenue and other liabilities


454


515

           Total current liabilities


9,070


9,533






           Total liabilities


9,070


9,533






Shareholders' equity:





     Common stock, par value $0.01 per share


40


39

     Additional paid-in capital


11,353


11,036

     Retained earnings


1,763


(1,081)

     Accumulated other comprehensive income


(38)


8

     Treasury stock, at cost


(3,131)


(3,115)

          Total shareholders' equity


9,987


6,887

 

           Total liabilities and shareholders' equity


$                 19,057


$               16,420






 









MASTECH HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Amounts in thousands, except per share data)

(Unaudited)


Three Months ended September 30,


Nine Months ended September 30,


2013


2012


2013


2012









Revenues

$                           28,283


$                          22,774


$                           78,418


$                         67,295









Cost of revenues

22,948


18,405


63,739


54,623









Gross profit

5,335


4,369


14,679


12,672









Selling, general and administrative expenses     

3,659


3,508


10,902


10,544









Income from  operations 

1,676


861


3,777


2,128









Other income/(expense), net

(65)


35


(73)


(21)









Income from continuing operations before income taxes

1,611


896


3,704


2,107









Income tax expense

612


335


1,396


793

Net income from continuing operations

999


561


2,308


1,314









Net income from discontinued operations

481


40


536


97









Net Income

$                             1,480


$                               601


$                             2,844


$                           1,411

















Earnings per share:








     Basic:








        Continuing  operations

$                               0.30


$                              0.18


$                               0.69


$                             0.40

        Discontinued operations

0.14


0.01


0.16


0.03

                       Total

$                               0.44


$                              0.19


$                               0.85


$                             0.43









     Diluted:








        Continuing  operations

$                               0.29


$                              0.17


$                               0.67


$                             0.39

        Discontinued operations

0.14


0.01


0.16


0.03

                       Total

$                               0.43


$                              0.18


$                               0.83


$                             0.42

















Weighted average common shares outstanding:     








Basic

3,352


3,176


3,346


3,271

Diluted

3,456


3,277


3,441


3,376










 

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