Mastech Digital, Inc

Greetings and welcome to Mass Tech Digital Inc. Quarter 1, 2021 conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jenna Ford Lacey, Manager of Legal Affairs for Mass Tech Digital Inc. Thank you, Ms. Fordley, so you may begin.

Thank you, operator, and welcome to Mass Tech Digital's first quarter 2021 conference call. If you have not yet received a copy of our earnings announcement, it can be obtained from our website at www.MassTechDigital.com. With me on the call today are Vivek Gupta, Mass Tech Digital's Chief Executive Officer, Paul Burton, Mass Tech Info Trellis Chief Executive, and Jack Cronin, our Chief Financial Officer. I would like to remind everyone that statements made during this call that are not historical facts are forward-looking statements. These forward-looking statements include our financial, growth, and liquidity projections, as well as statements about our plans, strategies, intentions, and beliefs concerning the business, cash flows, costs, and the markets in which we operate. Without limiting the foregoing, the words believe, anticipate, plans, expects, and similar expressions are intended to identify certain forward-looking statements. These statements are based on information currently available to us, and we assume no obligation to update these statements as circumstances change. There are risks and uncertainties that could cause actual events to differ materially from these forward-looking statements, including those listed in the company's 2020 annual report on Form 10-K. filed with the Securities and Exchange Commission and available on its website at www.sec.gov. Additionally, management has elected to provide certain non-GAAP financial measures to supplement our financial results presented on a GAAP basis. Specifically, we will provide non-GAAP net income and non-GAAP diluted earnings per share data, which we believe will provide greater transparency with respect to the key metrics used by management in operating the business. Reconciliations of these non-GAAP financial measures to their comparable GAAP measures are included in our earnings announcement, which can be obtained from our website at www.masstechdigital.com. As a reminder, we will not be providing guidance during this call, nor will we provide guidance in any subsequent one-on-one meetings or calls. I will now turn the call over to Jack for a review of our first quarter 2021 results.

Thanks, Jen, and good morning, everyone. The first quarter had some strong indications that the COVID-19 pandemic is dissipating with respect to its impact on the macroeconomic environment. Activity levels generally increased during the quarter, but the rate of increase varied materially from industry to industry, and geography to geography. For instance, our IT staffing services segment had a significant uptick in activity from Q4 levels, while our data and analytics services segment didn't see appreciable market improvement until the latter half of the quarter. As I review our Q1 2021 financial results, you will see this uneven recovery from the impact of the pandemic in our two business segments. First quarter 2021 revenues totaled $49.8 million compared to $50.4 million in the first quarter of 2020. Our data and analytics services segment contributed revenues of $8.8 million, essentially flat from the fourth quarter of 2020. Project delays continue to hurt revenues during the quarter. However, bookings rallied in the second half of the quarter to finish close to $16 million, which is quite strong and an indication of solid revenue pipeline. Additionally, we saw activity improvement in Europe and parts of Asia, which are important growth markets for us. The uncertainty that still remains in the marketplace relates to when projects and pent-up demands will be released in earnest. And we believe that we're getting very close to this inflection point as we approach second quarter. In our IT staffing services segment, activity levels increased from the fourth quarter of 2020 as we grew our global consultant base by a record 9%. This performance essentially offset all of the billable headcount declines that we experienced during the pandemic impacted first half of 2020. Gross profit in Q1 of 2021 totaled $12.8 million compared to $12.7 million in the first quarter of 2020. Gross margins as a percent of revenue increased by 50 basis points over Q1 2020. During the quarter, we made additional investment in SG&A expense of approximately $1 million, largely in sales, operations, and leadership staff in efforts to capture anticipated future revenues as the COVID-19 recovery continues to gain traction globally. Our decision to invest in front of an expected revenue growth curve reflects improving demand and early customer acceptance of our broad DNA service offering, which Paul will touch on later in his prepared remarks. Gap net income for Q1 2021 was $1.2 million, or 10 cents per diluted share, compared to $1.9 million or 16 cents per diluted share in Q1 2020. Non-GAAP net income for Q1 of 2021 was $2.2 million or 19 cents per diluted share compared to $2.7 million or 23 cents per diluted share in the first quarter of 2020. SG&A expense items not included in non-GAAP financial measures, net of tax benefits, or the amortization of acquired intangible assets and stock-based compensation, and are detailed in our first quarter earnings release, which is available on our website. Lastly, addressing our financial position at March 31, 2021, we had cash balances on hand of $7.2 million, no outstanding borrowing under our revolving credit facility, and cash availability of approximately $25 million. During the quarter, we reduced our term debt by $1.1 million to $16.4 million at quarter end. I should note that this debt balance includes the $10 million that we borrowed to finance the Amberleaf acquisition in October of 2020. I'll now turn the call over to Vivek for his comments.