Mastech Holdings, Inc. Reports First Quarter 2010 Results
PITTSBURGH, April 28, 2010 /PRNewswire via COMTEX/ --Mastech Holdings, Inc. (NYSE Amex: MHH), a national provider of Information Technology and Specialized Healthcare staffing services, announced today its financial results for the first quarter ended March 31, 2010.
Revenues for the quarter were $15.7 million, compared to $20.6 million reported in the corresponding quarter last year. Gross margins in the 2010 quarter increased to 19.6% compared to 18.7% for the 2009 quarter. Consolidated net income for the first quarter 2010 totaled $63,000 or $0.02 per diluted share, compared to $495,000, or $0.14 per diluted share, in the same period last year.
In early January 2010, the Company divested of its brokerage operations business. During the first quarter of 2009, these operations generated revenues of $3.0 million and net income of $95,000, or approximately $0.03 per diluted share. In 2010, brokerage operations revenues and net income were insignificant. The divesture was in-line with the Company's stated strategy of focusing on core service offerings and selling non-performing assets.
Also during the quarter, the Company invested in the specialized healthcare staffing business through the acquisition of Arizona-based Curastat, Inc. and through the hiring of Mr. Tim Bosse, a senior executive of the healthcare staffing industry. During the first quarter of 2010, healthcare initiatives generated $1.5 million of revenue and a net loss of $75,000, or $0.02 per diluted share.
Thomas Moran, Chief Executive Officer of Mastech stated, "Our expansion into healthcare allows us to diversify our service offerings in a segment that we believe offers significant long-term growth opportunities. We are also pleased to see that investments made to improve our IT organization are starting to generate returns. During the quarter, we achieved growth in our billable IT consultant-base for the first time in over three years. Additionally, we were able to improve our gross margins both sequentially from last quarter and from the same period a year ago. With business activity continuing to show signs of improvement, we will continue to make investments to expand and improve our IT staffing capabilities in the coming quarter."
Commenting on the Company's financial position, Jack Cronin, Chief Financial Officer, stated, "Our strong balance sheet gives us the financial flexibility to invest in our businesses organically, as well as through strategic acquisitions. We ended the quarter with $6.3 million of cash, no long-term bank debt outstanding, and access to approximately $6.2 million of credit under our existing loan facility."
In conjunction with its first quarter earnings release, Mastech will host a conference call at 9:00 A. M. EDT on April 28, 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 May 5, 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)
(unaudited)
March December
31, 31,
2010 2009
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ASSETS
Current assets:
Cash and cash equivalents $6,334 $7,113
Accounts receivable, net 7,903 7,232
Prepaid and other current assets 679 401
Deferred income taxes 224 312
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Total current assets 15,140 15,058
Investment in unconsolidated affiliate 5 5
Equipment, enterprise software and leasehold
improvements, net 156 160
Goodwill and intangible assets 650 -
Deferred income taxes 77 87
--- ---
Total assets $16,028 $15,310
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Short-term debt $57 $-
Accounts payable 1,376 1,653
Accrued payroll and related costs 2,841 2,179
Deferred revenue and other liabilities 208 226
--- ---
Total current liabilities 4,482 4,058
Long-term debt 68 -
--- ---
Total liabilities 4,550 4,058
Shareholders' equity:
Common stock, par value $0.01 per share 36 36
Additional paid-in capital 9,693 9,530
Retained earnings 1,749 1,686
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Total shareholders' equity 11,478 11,252
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Total liabilities and shareholders' equity $16,028 $15,310
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MASTECH HOLDINGS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)
(unaudited)
Three Months ended
March 31,
------------------
2010 2009
---- ----
Revenues $15,717 $20,558
Cost of revenues 12,642 16,715
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Gross profit 3,075 3,843
Selling, general and administrative 2,933 2,900
Depreciation and amortization 29 85
--- ---
Income from operations 113 858
Other income/(expense), net (6) (27)
Income before income taxes 107 831
Income tax expense 44 336
--- ---
Net income $63 $495
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Earnings per share:
Basic $0.02 $0.14
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Diluted $0.02 $0.14
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Weighted average common shares
outstanding:
Basic 3,634 3,607
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Diluted 3,759 3,632
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SOURCE Mastech Holdings, Inc.