MHH - Earnings call 4 2023 | Mastech Digital, Inc.

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Operator

Greetings, and welcome to the Mastech Digital, Inc. Fourth Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Jennifer Ford Lacey, Manager of Legal Affairs for Mastech Digital. Thank you.

begin. may You

Jennifer Lacey

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

events which to and are limiting operate. expects There actual that Securities statements. as at similar report call in and on include Form company's that foregoing, statements. everyone If yet our financial are annual expressions like the historical I believes, have and certain these differ update words on are and and and it With remind you Jack materially intended during costs not based on circumstances statements, no . Without to that Vivek information projections These forward-looking and can earnings of statements made change. me Chief statements uncertainties the us, beliefs Chief be forward-looking announcement, anticipates, Gupta, our Cronin, those Mastech the to flows, obtained facts Executive statements www.sec.gov. plans, could liquidity we These its available the and XXXX cause this identify forward-looking as call assume our these about our statements would plans, are obligation and posted growth with on filed Exchange are the are concerning XX-K on including from well Commission strategies, to risks statements we the website cash markets Digital's website www.mastechdigital.com. received not at in forward-looking as today a Officer; business, our copy the Officer. Financial currently available intentions to

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

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

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

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

John Cronin

good morning, Jen, and everyone. Thanks,

results this a Our quarter quarter economic decline. clients XX% and by revenue financial to our XXXX market Fourth totaled our decline. were these uncertainty year-over-year impacted $XX.X fourth business prospective and challenging representing million, revenues Both contributed responses conditions. to segments of current

as Our XXXX, QX XXXX revenues to segment the in Analytics Data albeit million to QX in reduce at million resources existing on $X.X in fourth reported customers of quarter Services of XXXX. compared and lower to when continue $X.X QX compared QX rate a and projects

which $XX segment. and the XXXX. a million sequential totaled in XXXX Also, tick we quarter a million, Services revenues fourth our Fourth one modest of we IT of achieved the QX $XX.X basis to order Analytics was bookings in since segment over on Data the third Services acquired performances in up million revenues quarter best our totaled Accordingly, compared quarter $XX.X of Staffing XXXX.

again, XXXX. complete declined, start the in the the rate to QX as base a resources and at QX of And historically industry consultant when billable our year. seek clients of are to projects norm the a consultants quarter, where the During declines count quarter to prior and slower head in compared existing new

reduction and the to XXXX, XXXX. to program. health XX.X% totaled the QX to utilizations in largely XXXX fourth to to Services improved gross in fourth reflects segment, segment, margins as in QX XXXX XX.X% XXXX. a and the XXXX. a hire compared to Services of in profits compared compared self-insured XX.X% In several assignments In materially quarter higher margins gross improvement Analytics significant our of were our Data and related year-over-year care expenses gross unusually down Staffing of high XX% claim percent in medical margins on Consolidated direct revenues in quarter QX quarter our reduced of due revenues IT to This

for or share share negative of million charge. or not $X.XX periods tax net our website. items $X.X million or $X.XX the XXXX do totaled SG&A in was compared goodwill release, GAAP profit is per fourth QX which financial of XXXX per for measures in a diluted a GAAP in detailed a These quarter million loss or QX are to share Non-GAAP diluted net of earnings of income benefits $X.X compared diluted in quarter million available XXXX. income net QX XXXX our fourth $X.X diluted $X.XX include $X.X per $X.X million share profit $X.XX impairment all expense presented, included to per XXXX. non-GAAP for on numbers

margins XX.X% were results, our year a Addressing this Gross $XXX.X on full XX% down XXXX were for year totaled million, full to XX.X% compared in the Again, revenues XXXX. both XXXX decline. business which segments contributed basis. to year-over-year

Data increased points Services our and by Staffing utilization segment XXX to lower and due Analytics direct segment higher Our gross percent IT XXX on margin points expenses. gross basis margin improved and health basis care year-over-year hire Services declined revenues by percent

Thus, another should our point sales our bad risk XXXX. challenging outstanding have our to million from day that cash days year no debt XXXX. $X.XX in in conditions, diluted of of prudently totaled share profit under despite a out no to diluted XXXX 'XX. Throughout solid. of XX in facility. under GAAP $X.XX our also credit measurement $X.XX Also, XX, XX of of December days per remains in share to on million facility. have improved a compared earlier. expense we're we in $XX.X I on with balances per XXXX, $XX.X XXXX, debt-free receivable of compared PNC earnings Non-GAAP Today, profit was our profit revolving earnings a overall 'XX a credit loss liquidity a borrowings and managed and and cash incurred position hand outstanding XXX% economic $X.XX financial we accounts availability

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

Vivek Gupta

Good had concerns on clearly a XXXX, Thank detailed operating financial over financial review increased a impact well morning, performance, our on of you, recession, results. projects with XXXX interest possible for macroeconomic significant everyone. headwinds clients take Jack, the of high In spending initiatives. our conservative rates led respect to to as events, on posture new many as and a our new inflation, geopolitical IT

best exist in Middle in seems East. Notwithstanding high to growths data While to possible economy the demand interest are respect these concerns job segments. inflation, conflict In million, a U.S. rates business with QX of Data positive of customer escalation totaled on issues, potential one our and of $XX approximately economic and entering we in signs mode both starting see the was GDP to Services with record. our recovery be segment, a and Analytics some bookings still wider performances our expansion, which the points increased of order

over revenue in had the increase growth after Staffing sequential basis QX October and we XX billable a segment, head Services on of we consecutive our first count a In Additionally, modest months IT declines. time November for XXXX. saw positive of

did declines we count of decreases the quarter but fourth high seasonal December, with decline the at years. were we billable in Overall, prior experienced the largely than was line head they In ends the we less X project in QX year-end. experienced see the year-end

these by as encouraged indicators XXXX. we are We positive enter

the for Analytics a appointed, of as Inc. January Executive During are from Also, directly in track of service, we reporting endeavors. me. successor future deep Services as process IT the wish Officer broad and firm a heads record is functional his Primentor, quarter, number knowledge industry thank business XXXX, and clients. this Michael during of an and We strategic Michael the of strategy Until him and engaged a notable and the services is for Data his consultant. position Primentor to segment. his advisory Chief Fleishman of improvements his resigned impressive success we segment the experience

Mastech and the excited that We opportunities Digital. for are engagement about it presents this

XXXX's believe improved difficulties, XXXX. and our businesses an performance that are businesses positioning we remain both financially, despite our are that for operationally financial fundamentally we sound, we optimistic and in Finally,

And we our that prepared Operator, questions can take remarks. concludes now.

Operator

comes question Management Tim line the with Capital from of Our Instructions] Call [Operator first Corporation.

Timothy Call

Well, to great some forward-looking that hear -- indications positive. it's are the

it's the a program -- Board X and big. too year ago, You authorized not buyback share

of sheet no $XX and debt. have cash balance million on your You over

cash XX% net capitalization. stock your is the market of So position about

no-brainer $XXX,XXX buybacks positive. share it improved put modest $XX to that? buyback. status to to seems long-term million year are be a share And so a share prospects and What's it of was make very taking So the when your accretive is Board buybacks. The why to

John Cronin

we in and think value XXX% we X Tim, shares I think we think stock in program. an shares. -- us XXX% reason the this think have we in to see now the of the you is And XXXX. compared to think quarter more buyback these its that the presents back we I are some I share blackout QX. will first back, for And bought mean reason committed is we X,XXX were is bought that to buyback right undervalued around period share respect Jack. events. But we today, it are committed I only Yes, back program. Yes, I the our with corporate extended for and of purchase shares XX-some-thousand bought intrinsic to We

Timothy Call

that you a area. There maybe and periods regular stock little a need for the companies is And buying back more bigger advising are new conservative you adviser some basis. a person that maybe in are on blackout too

John Cronin

Yes.

I generally cautious be would we think side. conservative the on

Timothy Call

expecting larger -- authorization. Board if near-term a not acquisitions any should if share And the buyback authorize you're expecting

the million consider now. I but If this is you increasing want It's to your one, through If get hopefully, you stock first market cash. that the deal, stock accelerate the will can hopefully, have over XX% Board of authorization. capitalization. such understand good a $XX

John Cronin

this the one to the -- been Yes. Board buyback. immediately the could Yes. has do I ability another Board once completed, mean has

is are not all like this it's off. So once over, bets

our we and We desires. if the other other thing have is to Tim, But low. again, relatively so the be flexible do more thing that ability volume the is if the Board --

another again, of that's shares. on is we're buy, our committed we we'd shares management to but back volume, buy stock position number and I the think But based can where take of that So Board the headwind limited advantage to our like buy.

Timothy Call

for to next And indications business improve year. hard your great thanks Terrific. work can see that and the

John Cronin

Thanks, Tim.

Vivek Gupta

. Tim. Thanks,

Operator

from next comes Lisa Instructions] line the Research. Investment with question of Zacks [Operator Our Thompson

Lisa Thompson

a you fourth very people had Again, quarter. busy

Vivek Gupta

indeed, busy opposed Yes, Lisa.

Lisa Thompson

go for? CEO consultants of or the kind related the Are you what the events and that consultants are to the just led and resigning hiring exactly the through completely then unrelated? could you're X So hired

Vivek Gupta

Lisa. unrelated, are They

around let long-term felt first. goals it So that and pick would accepted was it once discussions me had Michael clear Board our strategies was And The first Board series goals best of Michael InfoTrellis. Michael's the and resignation. the to for align, and Mastech, a the X not of Directors design

exit. Michael's is to that So what led

Primentor in, its business the global large-scale coming Primentor services in principles drive would helped really Primentor business positively consultant have Mastech And growth. and it has organization and good deep industry engaging impact the and industry. Digital. number that's for of and experience transformational regards change As business our And our Board to help across led us felt the towards be and to technology create organizations in engage a Primentor significantly what improving to to the provide performance value strategic direction order

Lisa Thompson

Okay.

So hired you the as company. they to that and I kind Can guys, were documents, of read got turnaround thought a first that? I the little then through the concern improvement sell discuss I maybe

Vivek Gupta

impact order main I to for and direction improved that the help selling company. They the we Primentor engaged spoke make That strategic that that performance emphatically say the is growth. positive in been have have Well, the and about would objective. that to really with us organization provide not engaged I can

Lisa Thompson

Okay.

how always of is about Just checking. about banks. you little feeling bit And different in verticals worry you these about when Are you base? I talk different about Can Can I business CGI going. reactions talk a read that. your

Vivek Gupta

said I my we Last signs. are and some we business as there October time a is ago, just positive yes, the remarks that had picking prepared some are that when signs in So spoke seeing completed up. quarter that seeing we

in of positive positive net had Now exclude had and we've a -- growth. also December, months January, activity we which if quarters just ended, X X we

X So months than X what like, of It's a it's few ago. the been have X was what better look I really is a year positive direct think a that's sign, really And guarantee again, but the months positive. it volume positive rest out will months don't And encouraging. indicator. of

the side. business large everyone Staffing deals. must as the Analytics positive Data of million. caution lot the that's we the we multiyear So side I IT mentioned, and in on actually that a adding managed quantum sign bookings up And annuity to a on that of $XX to side, pretty is

that a years. it business seeing immediately in the the for result does as customers' So of it What right doesn't mean got start commitment mean jump where are kind is revenues that. of a that see we we'll we've multiple

there more and a revenue of in So be to have the like is stream kind coming to steady we business of and more going just would of.

open sort again, sign. their of So multiyear a and only very to up deals for customers sign positive are But these indicators. is early wallets

make to year. what the can to a we now that this maximize out have that sure make be XXXX turns We fullest we to and from better sure

Lisa Thompson

Okay.

given QX in have QX. will So do revenues those that higher signs, feel you

Vivek Gupta

Well, be. how be. it sequentially much say better be yes, want think yes, to I higher. should it should don't it I would But

Operator

the question comes Ross of from next Davidson Our Panatone with line Capital.

Unknown Analyst

want of ask the I to InfoTrellis, alluded of is you to already. want Jack. InfoTrellis, deciding I'm to sort the that that X if curious what of your and or goals that separation. the is to asked articulate, Actually, questions Michael third direction was to of around sort you ask But just cause that both the goal I Board's resign. could the for led

Vivek Gupta

Board to there into where a that it's a was misalignment some to get suffice bigger scale start felt looking in take we I where Michael is portfolio. path Digital did see the of much there. the were the goals become it where to discussed, clearly hoping say that were that just strategies the resign. little to. expects for organization will larger we And at think Mastech being to being led to we bit we're And when that getting between a a over clear two. I direction can and able the was and what to wants in to it conclusion think or we it size best very the quickly a portion weeds But And it --

Unknown Analyst

that far it I it maybe shrink was to -- it approach the growing say different maybe growth the that idea that accomplish how the mean, Would goals what didn't Michael weren't more just of was I'm different? approach -- sure to I'm fair be the to apart, the and Like, the quickly, sorry, to are rates about want approach

Vivek Gupta

industry to So are useful about actually some peers we will forward I we get take, it's It's doing, board, yes, the are And the to what right of now that is find getting say, the a the there. [indiscernible] what goals, both. have doing take our mix would and on we strategies means could us strategic which what the direction and there. actionable initiatives, looking

Operator

question comes Sidoti. with the next line Marc from Riddick of Our

Marc Riddick

services, and getting was us engineering reads I you there year if the the last and wondering indication, launch maybe early update some give we're far what thus an So could staffing maybe on you're what seeing from of early there.

Vivek Gupta

hasn't seen well. we not Good are lot initiatives the And looking not and very Marc. for that month-on-month large are as with the focus for? should It we've services. that or investment what's rather even count head growth of happened. one showing conversations traction. increase But engineering really the very It's on word virtually what yet become our good emphasis some initiated in of the a question, That's a giving we've I'm -- has staffing customers I quite quarter-on-quarter

have we our there are in X opportunities. Marc, groups buckets which essentially, or So

staffing already The us. who first bit of are bucket contains with doing engineering customers a

much how So we that the than wrap question do over far. make there done to have so up is we more what it

party and third And any course, that we IT invited or where staffing go we bucket staffing are customers making with logos, there. now, that done past staffing have. they us one, worked needs engineering and look services, staffing may never have for of new to is we The staffing message but get for haven't sure getting to engineering yet is across the even new right focus on and who IT services engineering customers the doing our the second in

our a sure to as and ourselves. we picking that, that and see, our is get the have to on focusing we other be will all now, should able year is of And understood, to result the up customers. set engine right requirement goals X volume the heard as So the buckets making start hope unfolds, sales by message we for

Marc Riddick

kind new to that wondering the multiyear too opportunities to a point to you the million. and the to frames talk without specific, wondering or time was in did I the catalyst if talk like. Okay. the order led about if in bit way to shifting that I was months. maybe X of any continue little the you could those and $XX getting that about have maybe there's I because could was particular would wins And you coming wondering a legs

Vivek Gupta

establish mix our data stream Marc, rolling stellar new it's we has of multiyear led our seeing that quarter-on-quarter. extensions And the than deals, deals kind customer or a doing the up basically client they with. that, we customers of team the come accounts, couple out all up that under is will signing of rather the it's contracts, which of commit relationship new felt know revenue, accounts, to had into customers' years, feeling the to where modernization able comfortable quarter-after-quarter to there to of to enough all keep comfortable which of sign we've been been that for the that enough steady coming a that of have for offerings with needs delivery has next individual

I of all can't them. any It's finger So of them. actually on really put X a

Marc Riddick

That's I'm sorry, ahead. go helpful.

John Cronin

is said, new from Vivek year order months far other some Yes. encouraging a a then not of to existing clients, that X with And And bookings major were that's thing combination very encouraging. like clients the longer-term it And and orders. clients. was as from there a major was as orders short-term

Marc Riddick

are then you're sort of as if in increases on of And pricing as I environment little what there's currently? bill you what what last maybe you're far of the if seeing the maybe on and me. rate like, update could the it then seeing much can far give us we one as pushback overall as -- or Great. way the a give an wondering for bit would was maybe us rates

Vivek Gupta

as So price costs that Marc, customers come good to projects question did and see trying the it's the asked. it's project. each a also In very pressures were XXXX, on interesting, we and you down on constant

we head result the made. time. rates pricing as a lose lot were we been been that of did having but of our so increase a And that, -- have that, pressures relationships which actually says count have, the so the that quality over able all we we've about of said there deliveries also But year to the bill quality

that So able we that would even value the higher ways, But pricing rates. providing, continue, bill in increase, year, I for that compensate able we are pressure XXXX. this to not some if services and think, still and maintain would in the are to, be

Operator

[Operator the would turn I Gupta, Instructions] further back floor like comments. this closing to have at you appears time. no we Mr. it questions over for to

Vivek Gupta

you, Thank operator.

So if thank early XXXX first to sharing I quarter like would no joining May. very today, you for we you our forward with look questions, in Thank call results and to much. further there are you our

Operator

teleconference. Ladies and conclude gentlemen, does this today's

wonderful have you this your for a You and your Thank day. may participation, lines disconnect time. at

Mastech Digital (MHH) 7 Feb 242023 Q4 Earnings call transcript