Mastech Holdings, Inc. Reports Third Quarter 2010 Results

Oct 27, 2010, 07:00 ET from Mastech Holdings, Inc.

PITTSBURGH, Oct. 27 /PRNewswire-FirstCall/ -- Mastech Holdings, Inc. (NYSE Amex: MHH), a national provider of Information Technology and Specialized Healthcare staffing services, announced today its financial results for the third quarter ended September 30, 2010.

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Revenues for the quarter were $18.9 million, or a 9.4% increase over the $17.2 million reported in the corresponding quarter last year.  Gross margins in the 2010 quarter totaled 19.3% compared to 18.4% for the 2009 quarter. Operating expenses increased to $3.3 million during the quarter, from $2.5 million a year earlier.  Consolidated net income for the third quarter 2010 totaled $187,000 or $0.05 per diluted share, compared to $427,000, or $0.11 per diluted share, in the same period last year.  

Demand for our IT staffing services improved during the third quarter and we increased our billable consultant-base for the third consecutive quarter.  We continued to invest in our sales and recruitment organizations during the quarter to help drive future growth.  Market conditions in healthcare remain challenging; however, activity levels are showing some signs of stabilization and we were able to achieve sequential revenue growth during the quarter.  

Thomas Moran, Chief Executive Officer of Mastech stated, "During the quarter, we achieved sequential organic revenue growth of 11.5% and increased our IT billable consultant-base by over 16%.  Additionally, we continue to grow earnings per share, while at the same time making investments in our sales and recruitment organizations aimed at accelerating future growth.  This approach of systematic investment to expand and enhance our business model has enabled us to achieve a 25% increase in our IT billable consultant-base during the first nine months of 2010."

Commenting on the Company's financial position, Jack Cronin, Chief Financial Officer, stated, "At September 30, 2010, we had $5.9 million of cash on hand, no outstanding bank debt and access to $7.5 million of credit under our existing revolving credit facility.  As we organically expand our business, much of our free cash flow is required to support increasing working capital levels.  Thus, while our cash balances have declined somewhat over the past two quarters, our credit capacity continues to increase, along with our accounts receivable balances."

In conjunction with its third quarter earnings release, Mastech will host a conference call at 9:00 A.M. EDT on October 27, 2010 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 November 3, 2010.

About Mastech Holdings, Inc.:

Leveraging the power of 20 years of IT experience, Mastech (NYSE Amex: MHH) provides Information Technology Staffing services in the disciplines which drive today's business operations and Specialized Healthcare Staffing services to hospitals and other healthcare facilities.  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, 2009.

MASTECH HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Amounts in thousands)

September 30,

December 31,

2010

2009

(unaudited)

ASSETS

Current assets:

    Cash and cash equivalents

$              5,930

$            7,113

    Accounts receivable, net

9,646

7,232

    Prepaid and other current assets

968

401

    Deferred income taxes

223

312

          Total current assets

16,767

15,058

Equipment, enterprise software and leasehold improvements, net

155

160

Goodwill and intangible assets, net

619

-

Investment in unconsolidated affiliate

5

5

Deferred income taxes

52

87

          Total  assets

$            17,598

$          15,310

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities:

    Short-term debt

$                   57

$                  -

    Accounts payable

1,771

1,653

    Accrued payroll and related costs

3,481

2,179

    Deferred revenue and other liabilities

223

226

          Total current liabilities

5,532

4,058

Long-term debt

68

-

          Total liabilities

5,600

4,058

Shareholders' equity:

    Common stock, par value $0.01 per share

37

36

    Additional paid-in capital

9,916

9,530

    Retained earnings

2,045

1,686

         Total shareholders' equity

11,998

11,252

          Total liabilities and shareholders' equity

$            17,598

$          15,310

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,

2010

2009

2010

2009

Revenues

$ 18,869

$ 17,249

$ 51,506

$ 55,482

Cost of revenues

15,230

14,067

41,428

45,053

Gross profit

3,639

3,182

10,078

10,429

Selling, general and administrative

3,269

2,432

9,327

8,220

Depreciation and amortization

41

29

120

196

Income from operations

329

721

631

2,013

Other income/(expense), net

(4)

(8)

(18)

(38)

Income before income taxes

325

713

613

1,975

Income tax expense

138

286

254

797

Net income

$      187

$      427

$      359

$   1,178

Earnings per share:

Basic

$     0.05

$     0.12

$     0.10

$     0.33

Diluted

$     0.05

$     0.11

$     0.10

$     0.32

Weighted average common shares outstanding:

Basic

3,691

3,607

3,667

3,607

Diluted

3,752

3,716

3,742

3,669

SOURCE Mastech Holdings, Inc.



RELATED LINKS

http://www.mastech.com