MHH - Earnings call transcript Q3 2024

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Operator

Greetings, and welcome to the Mastech Digital Third Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

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

You may begin.

Jennifer Lacey

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

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

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

identify words anticipates, statements similar foregoing, These as expects to currently the are based the limiting on statements these Without obligation to circumstances assume believes, no forward-looking change. we certain us, information update and statements. intended plans, to available and expressions are

differ are Securities risks website these Form Commission uncertainties cause www.sec.gov. including that filed forward-looking report could There available on events and and Exchange at listed the the with annual company's materially XX-K statements, on XXXX from and those in its to actual

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

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

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

the will a to XXXX call results. review of I for our third quarter turn Jack now over

John Cronin

everyone. morning, and Jen, good Thanks,

financial included half our the reflected for that the economic record XXXX segments, growth. SG&A higher Our strong QX consolidated results experienced XXXX. a XXXX third of and business balance momentum to containment that first our efforts, we demand quarter debt-free of both around positive in strong Factors cost results during improved effective job gross services our outlook an inflation margins, and sheet contributed

With XXXX a Revenues million the $XX.X XXXX an address $XX.X sequential our compared financial basis, QX million of me revenue on for X% the over backdrop, quarter growth specifics third third quarter quarterly totaled results. in performance to XXXX of This that let X% represented year-over-year XXXX. quarter. of increase and second the of

quarter million Services and in million the of XXXX of $X.X X% we segment third XX% than XXXX. Our the basis, year-over-year second the increase. a revenues QX On in revenues Data or $X.X higher to were reported million in that compared reported quarterly a $X Analytics quarter XXXX sequential

X% was compared Third dollars year-over-year million in company totaled million, exceeded of XXXX when Gross quarter established quarter a exceeding XXXX the 'XX, which in last that previous our as IT improvement. $XX.X growth totaled growth Staffing previous XX% million, X% an XXXX $XX.X achieving in a Consolidated quarter. $X.X to of segment corresponding revenues was XX.X%, Services our and by revenue gross profit percent of record the record quarter. of QX profit QX

of of margins quarter equaled XX.X%, Analytics record as achieved corresponding XXXX to company was QX our XX.X%, gross in the Data increased segment, that segment, 'XX. significantly Services higher our which was last and Staffing than Services In margin IT quarter a and record well. In

third per million compared to per XXXX diluted $X.XX share was in income in was diluted quarter $X.XX diluted or the third net QX share to XXXX. or quarter million share share per of the for million compared per or XXXX $X.XX or $XXX,XXX of the Non-GAAP net diluted 'XX. third $X.X for $X.X GAAP of income $X.X $X.XX quarter

non-GAAP in and with intangible measures, included website. presented stock-based amortization and financial the benefits compensation available expense assets XXXX XXXX, of SG&A as of which release, is XXXX detailed expense our were both on are tax net as not periods quarter our third earnings acquired well for items, in

position, $XX.X million XX, had September $XX of outstanding hand, approximately XXXX, availability million facility. our and on Addressing our borrowing cash debt financial credit under we revolving of on no balances bank

days which of days. days favorable XX sales targeted Our end, XX soundly our range outstanding quarter to measurement at was XX is to

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

Vivek Gupta

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

the its how me to efforts by the am every is quarter I Let of family of in Mastech and segments testament put of to with in achieve third XXXX. start you It performance. this tireless by performance member business of happy telling a level Digital both of the Mastech the

Sure, improvements in the we our experienced somewhat, performance. we in macroeconomic confidence role overall XXXX in a with it but company the market operational the subsided showing more future, is played about XXXX that participants headwinds have key have believe the made

state-of-the-art delivery services segment, teams risen our the quarter on XX% of XXXX for revenue clients to and from on organization crafting as over Services to margin revenues and cohesive our structured both gross Today, our margin basis months. clients one introducing activity corresponding effective the in QX over In basis needs several of clients. to have the down sales finally, Analytics are from solutions increased levels XX are growth indeed last XXX and gross sequential of to to increase and commitments Drilling seamless Data of our quarters impressive. function points last a delivering and the and year-over-year XXXX,

consultant a to year-to-date head count grow our our billable over the billable we increase XX% count XXXX. on consecutive December XX, third head for achieving quarter, In IT Staffing segment, Services continue our

of corresponding by increased Additionally, the X basis over XXXX during XXXX. margin our gross first months we of the XXX points quarter

We our by count our QX, by increased in Furthermore, consultant grew billable revenues X%. X%. year-over-year head

higher stood rate X% approximately at by average a gross of XXXX than bill high record Our in XX.X%. and company was margin

X% line both Operationally, and in in gains our to compared the productivity is analysts staffing exceed industry to for growth of XXXX. by rate sales have published growth generated recruitment XXXX. currently revenue when rate Our negative XXXX organizations industry

as to XXXX. decreased to manage well SG&A in our a to continue expenses, in XX.X% revenues which closely Overall, XX.X% QX the below during also quarter last were of XXXX, of the QX and XX.X% compared reported percentage XXXX of we

closing, quarter In increased million would million. the $X.X our cash like to has mention balances believe I XXXX strength We during sheet of third balance as $XX.X by our to position. the financial improved of

our businesses We continue operate to debt-free.

flexibility facility under the million, gives which, of resources view, our be our to borrowing In bullish our future, in availability access growth and P&C Mastech summary, strategy. receivables, our future to sheet quite the asset, a Our component financial continues the key balance Digital. capitalize accounts roughly in and is believe largest about on M&A is to strong. We $XX credit us of our opportunities I'm

Operator, this remarks. concludes questions take our prepared now. We can

Operator

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

Lisa Thompson

welcome and Very exciting. to revenue morning, Good back growth.

Vivek Gupta

Thank you, Lisa.

Lisa Thompson

have press One your that Is Okay. track? couple out in release. is, that free you flow a questions. I a that measurement the of cash I noticed pointed you

John Cronin

the use, for a We a like track like some that it, of is key industries like key but type industry. not it's measurement key which a It's of not measurement capital-intense very measurement.

in X versus of I note decline wanted X had a our the distorting And because like going our press reason in that, And cash release we statement that's flow XXXX in XXXX. is in months cash to operating of quarter that is the be just flows We our track it's working mentioned what's look to XX-Q, major it. it the months make capital. it, the they and of third that

our In business, XXXX, we're investing cash growing working in our by we business were and generating were And capital. capital. unwinding working we and we're degrowing in XXXX,

It's So cash capital, in of is I between the cash 'XX, delta use a scenario, a big is $X number. of like delta make to the just that on versus that a wanted in the in degrowth increase working that the which point generator million.

this put but we that's do it. we So measure why quarter, in it

Lisa Thompson

Okay. look I have you cash a That in notice sense. no you about you debt. How help share and do makes ROI at can't Is that? track? now $X something And but that

John Cronin

the methodology and it The equity, use how we do that's We quarter, and it. we then that make just shareholders' every do it take is calculation income annualize divide do it on a and we net we -- by track return by we obviously, equity. and

not sort equity is. on a like not And don't have debt-free. but knocking but remember us thing leverage ball moving it's it's whatsoever, XX-month return financial at XX%. it's isn't for financial it's the have right? average, just gives any a park, of We're the QX, no run that we it -- And And We got our the you rate one leverage. what which XX%, is out to of look

sheet, and company up be an accretive and if the with for cash mean XX% was I the acquisition we sense -- you So and would acquisition our finance go there on balance would debt made that that if materially.

it So approach XX%. could even

return don't of the to equity. outside cognizant we're on the just So publish We world. it

Lisa Thompson

Great. question forward. Okay. what I think to about guess just going about And one

gotten I flat holidays. push thinking fourth now? of sequentially? obviously the and typically something sequentially the you is know you Does the is about? Or bookings are starting to that to of some again. consider You've Do -- and growth bookings to grow better What not kind things quarter that because right are

Vivek Gupta

Lisa, to we give case, know. And don't you any give precise answer. in So a as it's hard guidance,

Lisa Thompson

Right.

Vivek Gupta

by in in forced in are in tends of to towards couple required are customers. -- have which end furloughs because we some has to a less days a are also, December, tends it holidays. mind. which keep a the be the are of there Because staffing furloughs, one of be there quarter that which some that quarter things there to QX working And

and there that So head of into because if course, all put should count then, of be of increase. growth -- play you

assignment may out, quarter typically will, predict they obviously, point look time this guess the every will at it's I which but be So themselves ends, what hard staffing December. in like. happen balance to There

will those in. kick also So

a yes, answer precise now. right can't more So give I

Lisa Thompson

due customers not off? is guess been do factor in and will be question, -- that the last just I election, you they've timing that making the think thinking? call, past of now decisions a their Okay. earnings to we're your that my putting Or that

Vivek Gupta

could for now to that's last macroeconomic the were businesses Actually, a environment conversation behind few were last weeks, The only the waiting that don't been in customers we And they And is few election No. -- will drop. the think that us, of I see weeks. in shoe beginning the improve. the sort uncertainty. we've like having

hearing in industry of call, saying some and the I've the overall start other should get some the tailwinds industry CEOs should have what our And earnings speed. been this in we -- also been picking up that

Operator

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

Marc Riddick

count a end consultant the for the -- where far with with start we start to we -- of wanted consultant I as for couple I'm quarter? do sorry, the could as Maybe at if of -- So the end things. up

Vivek Gupta

head overall the added we in count, The consultant XX quarter.

you do Jack, the -- So staffing number have end-of-quarter for the the final side?

John Cronin

X,XXX, staffing consultant the head consultant. For billable the was for billable the count side,

Marc Riddick

can you rate? Okay. Great. as -- so And we where bill then as end do far up

John Cronin

is quarter last bill comparable -- The our It's year rate $XX. less was rate was The than again, staffing. -- bill little $XX.XX. this a

So it's slightly. improving

Marc Riddick

And there? of -- sort certainly, way client are then threads share maybe you up. activity the picking maybe the to that to signs -- there's that the and see of leading verticals positive are being as any of Okay. projects it's that prioritized you there types could industry Is

Vivek Gupta

the we've second others? They new Actually, because industries any are health it or are let in and your in over. of in me a music first. They manufacturing. which care. publishing. are than couple touch They retail bunch space. all one Is of customers in are QX, industry they're a doing are in Actually, acquired no, one better They on

various been So in they've places.

of of the are kind doing say and and mean we The more data that intelligent analytics foundation. I work I doing think more when data on you side, -- are projects, we

are some stuff. all with this new work GenAI. and And is doing exciting We

seems a marketing definitely And good our doing XXXX, pretty portfolio this to customers. and guys services And resonating And sales exciting sharpened. of a actually little the side as these job in and projects maybe of well. offerings. be the are beyond of got the year, And data has are analytics articulating our it with interesting that are that -- and the and coming

Marc Riddick

was guess was particular could if not I me. for then you sort was maybe thinking there about sort bit the I'm quarter. were as but And one through little to monthly about as the cadence I very -- numbers Great. I a cadence look the again, last curious like. of we any sure talk that what positive. Okay. catalyst, Certainly, maybe of maybe maybe

Vivek Gupta

we talking What there? sorry, you elaborate? What -- me help cadence can about? you monthly -- The Marc, are can

Marc Riddick

as Well, sort Or as through built consistent that each you wondering, that quarter, was that quarter? the far jus I the of revenue have through something month? the that was growth was

Vivek Gupta

it the It's or tail-ended, Okay. businesses. months the front-ended was over even the actually growth actually it steady both X QX. in that No, -- was was wasn't spread fairly fairly it in

Operator

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

Vivek Gupta

no Thank forward today, our you to in call would I fourth Thank further you, we there for early questions, operator. to joining look February. If are with sharing quarter XXXX results you thank and you, all. our like

Operator

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

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

Mastech Digital (MHH) 6 Nov 242024 Q3 Earnings call transcript