Mastech Digital, Inc

Greetings. Welcome to Mass Tech Digital Incorporated's second quarter 2022 earnings 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. Please note this conference is being recorded. It is now my pleasure to introduce your host, Jennifer Ford-Lacey, Manager of Legal Affairs for Mass Tech Digital. Thank you, Ms. Ford-Lacey. You may begin.

Thank you, Operator, and welcome to Mass Tech Digital's second quarter 2022 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, MassTech Digital's Chief Executive Officer, Jack Cronin, our Chief Financial Officer, and Ganesan Venkateshwaran, our Chief Executive Officer of the Data and Analytics Services segment. 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 believes, anticipates, 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 2021 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.maztechdigital.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 review of our second quarter 2022 results.

Thanks, Jen, and good morning, everyone. Revenues for the second quarter of 2022 totaled $62.1 million, representing an organic increase of 16% over Q2 2021 revenues. This revenue performance was a new record for our company, as both business segments showed sequential revenue improvement during the quarter. Our data and analytic services segment contributed revenues of $11.3 million, which represented organic growth of 26% over last quarter's Q2 revenues. Sequentially, revenues increased by 11% from the previous quarter. In our IT staffing services segments, revenues totaled $50.9 million and represented a year-over-year increase of 14% compared to Q2 of 2021. Activity levels continued to remain elevated during the second quarter as we increased our billable consultant headcount by 4% during the current quarter. Gross profits in the second quarter of 2022 totaled $16.7 million, or 17% higher than in the corresponding quarter of 2021. Gross profits as a percent of revenue in Q2 2022 was 27% compared to 26.7% in the 2021 second quarter. Gap net income for Q2 2022 was $2.4 million or 20 cents per diluted share compared to $3.7 million or 31 cents per diluted share in Q2 2021. It should be noted that a favorable revaluation of a contingent consideration liability was responsible for a $1.4 million benefit in net income and a 12 cent benefit in diluted earnings per share in the 2021 second quarter. Non-GAAP net income for Q2 2022 was $3.6 million or 30 cents per diluted share compared to $3.4 million or 29 cents per diluted share in Q2 2021. SG&A expense items not included in non-GAAP financial measures, net of tax benefits, are detailed in our second quarter 2022 earnings release, which is available on our website. Note that net income in the second quarter of 2022 was impacted by several conscious decisions that we made for the benefit of the second half of 2022 and beyond. Specifically, we increased billable staff by 22% during the quarter in our data and analytics services segment in anticipation of higher revenues during the second half of 2022. We invested in the cloud services space within our data and analytics services segment and we invested in offshore staffing within our IT staffing services segment. While these actions mitigated our net income during the second quarter of 2022, we believe that all of these actions will have a favorable impact in the second half of 2022 and beyond. Addressing our financial position, On June 30, 2022, we had outstanding bank debt, net of cash balances on hand, of $4.2 million. We had no borrowings under our revolving credit facility, and we had cash availability of $36.8 million, in addition to term loan capacity of $20 million under our credit facility's accordion feature. Given today's increasing interest rate environment and our elevated revolver availability, you'll likely see us early pay some of our term debt with excess cash during the balance of 2022. I now turn the call over to Vivek for his comments.