MHH - Earnings call transcript Q4 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings. Welcome to the Mastech Digital Fourth Quarter 2019 Earnings Conference Call. [Operator Instructions]. Please note that this conference is being recorded. I'll now turn the conference over to your host, Jennifer Lacey, Manager of Legal Affairs for Mastech Digital. Ms.

now may you Lacey, begin. Ford

Jennifer Lacey

and Thank Quarter Mastech Fourth to Conference you, Call. operator, XXXX Digital's welcome

If not our announcement, are and it With you Jack our on Vivek can of have me Chief Chief be yet Gupta, received Cronin, Mastech obtained Executive call our from the website Digital's www.mastechdigital.com. copy at today a Officer; earnings Officer. Financial

our not These to made projections as during our that and and include operate. are in costs statements forward-looking liquidity remind statements. this the beliefs flows, forward-looking that historical which growth we everyone like are as would statements I plans, facts and about concerning financial statements strategies, markets cash call well business, our intentions

that similar These to certain these change. us, to Without words events XX-K foregoing, statements available are limiting statements filed in website Securities are annual its and the Form the obligation circumstances the on could listed www.sec.gov. risks currently Exchange are and we forward-looking Commission report and identify cause company's expressions those at materially available statements. and to from believes, update as on expects based with forward-looking including information actual plans, on no uncertainties XXXX to statements, assume intended There these and differ the anticipates,

GAAP management elected basis. a financial certain to presented non-GAAP provide results financial Additionally, on has our measures to supplement

in www.mastechdigital.com. measures which announcement, we metrics provide to financial in measures provide income which from key earnings Reconciliations our management of be at will net and share earnings will included believe GAAP obtained non-GAAP comparable operating our these data, can we transparency diluted to by website are Specifically, with non-GAAP greater their our used the respect non-GAAP business. per

in be providing As a call guidance nor meetings during guidance will subsequent we one-on-one or provide we will calls. any this reminder, not

over for review I the fourth results. year XXXX turn of will and full a our Jack now to call quarter

John Cronin

for of our in morning, on these performance, remarks. Mastech summarize and exceptional good let Vivek balance capabilities improving touch segments. XXXX operational Digital in business XXXX. was our everyone. of results year in both the overall financial our an first, me full for of terms But enhancements enhancing QX financial his prepared deleveraging Jen, year Thanks, many of will and and sheet

fourth $XX.X and quarter Addressing million the a quarter. for fourth XXXX fourth of XXXX. $XX.X Revenue the quarter in compared increase totaled of to reported million XX% represented

Data XX% and of the during Our million segment compared in QX quarter Analytics to year-over-year revenue fourth improvement. of a represented This $X.X $X.X contributed million XXXX XXXX.

average the and during of quarter the bill consultant December. level in the in outcome our from XXXX. as XXXX, fourth materially our levels opportunities of as Demand assignment experiences very the Services IT our segment strong ends a in Staffing IT of XX% Services we base Staffing year. fourth of increased both seasonal despite quarter and number pipeline that was high resulting Year-over-year revenue significant industry enter global during increased QX the wins for our rate Activity was assignment a and remained positive growth the

on last in to compared has $XX.X digital revenue million technologies profit our to XXXX. the $XX.X of driver be growth in focus totaled million fourth Our the proven same key XXXX of for period quarter Gross a year.

and Our margin XX% the was in XX.X% margins the quarter gross first to were fourth gross QX XX.X% breaking for compared revenue barrier. time of XXXX our XXXX, of

year points from Analytics of to a XXX and Data Services earlier. in of margins XXXX, XX.X% gross Our increase basis segment an QX close had

both drive on quarter. assignments percentage Services Our the new IT margins gross segment these in from helped segments QX improvements. Staffing basis fourth Higher of XX.X%, an increase had points XX of margins XXXX GM

in volume-driven GAAP compared to share $X.X or increase delivery share other variable represented fourth the diluted quarter $XXX,XXX share or per for in in sales compared net $X.X $X.X quarter $XXX,XXX diluted principally $X.XX million QX XXXX in per costs. to per This compared of were $X.X the diluted million corresponding quarter fourth was was for per XXXX. and million $X.X the for Non-GAAP in XXXX $XXX,XXX segment, or areas of upgrades Analytics million investments and in and the our income Data expenses of and our $X.XX Services expenses XXXX. $X.XX SG&A XXXX $XXX,XXX QX diluted net in $X.XX or of share of quarter income in system segment SG&A fourth to million XXXX. Staffing

year in items expense XXXX. a net for XXXX not our measures fourth our which addressing Gross our were SG&A Briefly release, website. million revenues earnings benefits quarter of $XXX.X are non-GAAP in and on tax is full of financial million. over included million represented Fourth quarter detailed compared in increase XXXX $XXX.X XXXX million X% revenues results. totaled to $XX profits $XX.X available

in percent 'XX XX% business of during And a as improvements to had XX.X% margin in were revenue Our our of full year. compared 'XX. gross both segments gross the margins

full earnings GAAP to detailed in $X.X in financial measures per totaled diluted in XXXX. or share income compared a per of or comparable share or XXXX. which included diluted Non-GAAP net available million website. or $X.XX per net diluted compared $X.X non-GAAP $X.XX totaled reconciliation $XX.X to share for their million measures Again, $X.XX GAAP XXXX $X.XX is million the $X.X income year on for release, XXXX compared our our to million is share our diluted per

balances and Addressing revolving at under line. our our December million existing capacity of borrowing hand, $XX.X XXXX, $XX we approximated financial credit million bank outstanding XX, position, our of cash net had debt, on

we Bank year our a of year payment including outstanding QX structure levels million reduced to loan XX% full total of $XX a XXXX, $X million ago. by early our on in the debt debt XX% over represents For balance now term compared capital XXXX.

I'll now turn for call his Vivek the over to comments.

Vivek Gupta

operating our financial of results Good for review for morning, the Jack, XXXX. you, everyone. Thank detailed

well year XXXX I full start am Let saying financial the results how as Mastech of the performance QX me by delighted Digital. as both with

All we growth. to while made operating financial with expansion strong our revenue investments of future gross parameters and margin soundly profits, significant our all were positive growth, higher fuel

also materially position flows. $XXX from say QX, improved debt $XX-plus of on to cash annualized With delivered basis, generated levels I'm We million happy an reducing financial are in of a revenue that by when operating for million in million CEO. by revenue than our business now Mastech $XXX X over we milestone revenue as great I performance contributed years which XXXX. a company, to less was only this Both Digital, strong units ago cash in our took

improved new leadership team, had built talented vastly operating transformational client organization. Spearheaded by from XXXX. our ratio of a of operating enhanced results Analytics sales a and Data all truly go-to-market a satisfaction, this The Paul and implemented can a Data seen and progress portfolio to by in pipeline Services offerings, in higher Our be segment aspects an results of opportunities. strategy stronger highly we led service effective improved results materially beyond Burton, year its Analytics business and strong our win exciting of our

aggressively our revenue engagements, are further on type about business have Many opportunity Another multimillion-dollar excited key the for and improvement multiyear, this we for are the of winning. plans annuity-based we the segment. to we I'm execute extremely streams. deals that growth as continue in having is size

XXXX, Staffing continued growth X% a business approximately technologies beat in digital IT its and annual focus excellent with in on segment the of Xx. X% Our Services The revenue average also growth by rate an we year. had industry

also In addition, XXXX, increased and bill we during margins average our expanded gross rate.

the great gives to in segment Operationally, capacity me terms moving which and upon joining key of digital my first Mastech focus capabilities, Digital continues in our early business in satisfaction area Staffing recruitment IT strengthen this towards was XXXX. technologies engine as my of

in noting not with our give in advance business you expectations guidance. segments Now me financial XXXX, do that general let share for my we

First, our Analytics and Services Data segment.

for said As I segment are our this we seeing Currently, huge expanded offerings potential. has globally. traction service before, excellent

to our we Asia, XXXX, reach the Europe North and geographical endeavor East. beyond America into In Middle broaden will

investments respect also delivery IT growth to enlarge segment, sales will India our XXXX. beat expect us organization fully the Services again of our once both and in rate average continue in North Staffing make segment size expand You the additional to to With America. this and see our centers I to industry

offshore this in technology key again on at be for capitalizing staffing will digital efficiency year. recruitment successes us our center and Continued drivers services gains

be both on the While to we ahead further forward dropping result, continuing you improving will plan morale a and to report tell efficiencies entire as high anticipating as to And bottom are on enter that confidence successful are looking XXXX. organization. Collectively, operational invest levels and, to focus across line. I'm we and a prosperous we curve, to the the growth extremely of lastly, new profits and our our year, happy -- more

questions. your for open now will the I session

Operator

question Vogel And Sidoti Company. Instructions]. line with [Operator & of the our from first Josh is

Joshua Vogel

Can multimillion-dollar Vivek. My give first, and about for bit multiyear, more I how contribute? when we contract you signings, think will little when guess, us color long much, I how these a on guess, those

Vivek Gupta

been you booking about we this of quarter. a talk Analytics Joshua, for alone, order $XX large I alone ago December. considering $XX deals. and all -- million only during one a And is hard this from up the in from particularly, orders. business, that your revenue the fourth month in segment, that multiyear, million Data multimillion-dollar December thank really XXXX question. coming had fantastic million, Yes, is of the and revenue that has about quarter, picking of majority we And put orders in for booked year can actually, And satisfying year. a In of during delivered $XX orders kind quantum that of just work the rewarding very the two

getting of in that the to help over coming But are typically the lead of hoping mitigate annuity We this different lumpiness these is in many have it us of close annuity-based the in we lumpiness the and kind scale, this with points something an of to is end new and these that in for in coming there will revenue run would they that and past, are revenues customers, the that. more segment. us time have X we excellence few revenue issue now would quarters, but not which and are us at stream. to engagements which call X centers only will engagements, we years, to also them coming this next the help because stream an pipeline would projects And from out

So to Data would of Analytics do. more trying the about add is talking to definitely stability business course, and, deals that I'm what scale

Joshua Vogel

the multimillion the several D&A gate months? When out about costs or are these helpful. the And upfront there what's right typical of profitable words, too? period? these are think other new take multiyear, Or it That's in contracts, we especially ones, is ramp dollar

Vivek Gupta

for pay the most happy cases, that made. to cost in is a ramp-up are fee there being Well, investments are a clients our pay to And start-up involved.

So from with month. contracts the that very basis. the most right profitable place, billing first And a is these on become in of monthly

that a itself. So the yes, from will of having into not the down life you further breakeven the start up it's beginning contract, virtually end you

Joshua Vogel

Great.

Okay.

So up sales strong And your the for looking from revenue we're about Today, and curious, industry maybe at commentary XXXX, was I quarter. putting results clearly to benefited We those for capabilities. and more quarter the growing segment one saw put undertaken Staffing you've this thank results. and for triple about your is Jack. improvement XXXX. you at delivery just very progressive initiatives Analytics, average. strong up from Data seeing IT

directional and Given commentary, think Any Data in Analytics, we should the how XXXX? trends? outsized gross about XXXX versus growth margin

John Cronin

we quarter, fourth our gross is XX.X% for which D&A margins, us. in Well, record at for were a in Yes.

Vivek Gupta

XX.X%.

John Cronin

would us. a XXXX, XX.X%, year be XXXX Are at since full is I we the a I wouldn't ourselves be but acquired year we do XXXX, company. of to entire I should think year record gross for margin -- to us suggest for when XX.X% compare we which improving that. for the going the

Joshua Vogel

to Great. of early pay loan decide that portion And availability Jack, revolver? under that the term Would why last a did your quarter. cash not hurt you

John Cronin

cash about will loan term points about paying the savings interest the XXX We down by revolver, it that's under that availability. down have reason per enough basis revolver. And annum. $X on the that we or more because be the we on got availability lower is our from than $XX,XXX Yes. paid $X did million our And get is we the cash the but higher million. loan interest the did it And we would than term

XXXX. We term, So on had more than the early satisfy cash And in for ones we some we availability surprised capitalized wouldn't XXXX. needs made to enough had frankly, on some additional felt opportunity we that. I savings, payments and if in that our we an be some cost

Joshua Vogel

I obviously, something if Asia, organically? loan. strategy looking to completely down And could I'm the should mentioned helpful. think Europe, But and more Vivek, broaden Or we will your is about geographically? talk assuming to how sneak you acquisition, specialty paying in analytics And maybe, of it would if plan That's But that appetite East. be your allocation focused? you would an term more one both? you related, acquisitions? curious a How what's that's an there mix be more. appetite for for expand today, Middle or capital do if geographically, to it could you geographic And data

Vivek Gupta

are The So happening and tried going We have let's to a is been started the tested. entirely brought have time, and one that for pick on space. lot salespeople business they already and on is of geographical already expansion, We them organically. are long process. building experienced in who be first. And that that in the first pipeline board board brought a who done we and

acquisitions there won't that so And be in any area.

be won't focus a that there's have more geographical the at be be on the to looking that feel at But the of we will within next -- Digital few the the And the stage step, are Analytics spread, coming couple life next focus And Data the could we that looking other analytics that Mastech -- I have piece, the But capabilities, quarters. in areas acquisition. reached next business in focus we specifically the the area. be we acquisitions will over we identified. on we of that

Operator

is the question from Corporation. Tim line of Capital Call Management with next Our

Timothy Call

and with Congratulations wondering on is accounts rising, receivable system the a efficiencies? your revenues are because of quarter. I falling of use was great new when that the ERP

John Cronin

challenges we through we worked inefficiencies right in to was to definitely receivable of prior we new ERP When the last related now, our we implementation, had that did and of and XXXX. cash our levels. half levels And the our it returned of way of conversion on some Maybe transitioned the the because system, aspect implementation have out business, that.

Timothy Call

falling is expense your we until acquisition? find interest to you Should rather And continue fast. expect that next

John Cronin

an do. again, something there's and We us, route our going go that's in do. overhaul the attractive we And if find to acquisition down be We debt probably to facility.

if why do acquisition. And to look one an So highly gee, our the and to credit -- if doing you say, you're for you're going at is we're can paying are us look likely acquisition, well, answer term, that paying do, you're it's an going that early redo we the that to essentially facility.

Operator

at back are [Operator Instructions]. time. I'll additional the questions for hand There management no to comments. this floor further

Vivek Gupta

you. to are our I'd further look thank XXXX our to call in we like quarter April. you results and If Okay. with there for you today, questions, late forward sharing no Thank joining first

Operator

for This your will conclude Thank today's you participation. conference.

You may at this now disconnect your time. lines

Mastech Digital (MHH) 5 Feb 202019 Q4 Earnings call transcript