Mastech Digital(MHH) - 2024 Q4 - Annual Report

Revenue Performance - Total revenues for 2024 were $198.9 million, a 1.1% decline from$ 201.1 million in 2023, with Data and Analytics Services segment revenues increasing by 6.6% and IT Staffing Services segment revenues decreasing by 2.6%[209] - Mastech Digital, Inc. reported revenues of $198.943 million for the year ended December 31, 2024, a decrease of 1% from$ 201.098 million in 2023[308] - The Data and Analytics Services segment generated $36,625,000 in 2024, up 6.6% from$ 34,358,000 in 2023, but down 9.8% from $40,594,000 in 2022[389] - The IT Staffing Services segment reported revenues of$ 162,318,000 in 2024, a decrease of 2.5% from $166,740,000 in 2023 and a decrease of 19.5% from$ 201,644,000 in 2022[389] - Revenue from the United States was $195,455,000 in 2024, a slight decrease from$ 197,246,000 in 2023 and a significant decrease from $236,187,000 in 2022[391] Profitability and Margins - Gross profit for 2024 increased to$ 55.6 million, an 8.9% increase year-over-year, with total gross margin percentage rising to 27.9% from 25.4% in 2023[214] - Gross margins for Data and Analytics Services segment improved to 49.1% in 2024, up 560 basis points from 43.5% in 2023, reflecting higher utilization and improved efficiencies[215] - The company's gross profit increased to $55.597 million in 2024, up 9% from$ 51.036 million in 2023[308] - In 2023, the company's gross profit decreased to $51.0 million, a 19% decline from$ 63.2 million in 2022, with gross profit as a percentage of revenue at 25.4% compared to 26.1% in 2022[224] Expenses and Cost Management - SG&A expenses decreased to $51.8 million in 2024, representing 26.0% of total revenues, down from$ 60.3 million or 30.0% in 2023[216] - The company's SG&A expenses in 2023 totaled $60.3 million, representing 30.0% of total revenues, up from$ 51.0 million or 21.1% in 2022, with adjusted SG&A expenses at 23.2% in 2023 versus 19.2% in 2022[228] - Selling, general and administrative expenses decreased to $51.806 million in 2024, down from$ 60.311 million in 2023, reflecting improved cost management[308] Client Concentration - The top ten clients accounted for 54% of total revenues in 2024, with financial services representing approximately 49% of total revenues[213] - The Company's top ten clients accounted for approximately 54% of total revenues in 2024, compared to 53% in both 2023 and 2022[391] - The Company had two clients, CGI and Allegis, that exceeded 10% of total revenues in 2024, with CGI accounting for 14.5% and Allegis for 10.7%[389] Cash Flow and Financial Position - Cash provided by operating activities was $7.2 million in 2024, down from$ 16.0 million in 2023, with a net loss of $7.1 million in 2023[236] - The company had cash balances of$ 27.7 million as of December 31, 2024, with no bank debt outstanding and approximately $22.6 million of borrowing capacity[232] - The company’s cash and cash equivalents rose to$ 27.742 million in 2024, an increase of 31% from $21.147 million in 2023[306] - The company’s total equity as of December 31, 2024, was$ 87,434,000, an increase from $81,444,000 in 2023[315] Tax and Valuation - The effective tax rate for 2024 was 23.1%, compared to a negative rate of (21.0%) in 2023, influenced by a worthless stock deduction from the dissolution of a Singapore entity[219] - The effective tax rate for 2023 was (21.0%), compared to 30.3% in 2022, largely due to shortfalls in expected tax benefits on stock options[231] - As of December 31, 2024, the Company provided a valuation allowance of$ 452,000 related to the uncertainty of the realization of foreign net operating losses[275] - The company evaluates its deferred tax assets and records a valuation allowance when it is more likely than not that some portion will not be realized[275] Goodwill and Impairment - The company reported a goodwill impairment charge of $5.3 million in 2023, related to the Data and Analytics Services segment, compared to no impairment in 2022[225] - Goodwill remained unchanged at$ 27.210 million, with no impairment recorded in 2024, compared to an impairment of $5.300 million in 2023[301][308] - The Company performed quantitative impairment tests related to its IT Staffing Services segment and found no impairment associated with the carrying amount of goodwill for 2024, 2023, and 2022[264] Operational Highlights - Bookings for 2024 totaled$ 41 million, consistent with the full year 2023's performance, indicating stable demand[210] - The Company recognizes revenue on fixed price contracts over time as services are rendered, using a cost-based input method to measure progress[254] - Unbilled receivables represent amounts recognized as revenues based on services performed, which will be invoiced in a subsequent period[257] - The Company expanded its service offerings to include engineering staffing services in late 2023[388] Stock and Shareholder Information - The weighted average diluted shares outstanding increased to 12.014 million in 2024 from 11.613 million in 2023[308] - The company repurchased 9,222 shares of common stock at an average price of $8.70 per share in 2024, and 67,699 shares at an average price of$ 9.10 per share in 2023[371] - The company held 1.7 million shares in its treasury at a cost of approximately $4.9 million as of December 31, 2024[372]