RCMT RCM Technologies Inc

RCM Technologies, Inc. (NasdaqGM: RCMT), a premier provider of business and technology solutions designed to enhance and maximize the operational performance of its customers through the adaptation and deployment of advanced engineering, specialty health care, and information technology services, today announced financial results for the thirteen and fifty-two weeks ended December 30, 2023.

RCM Technologies reported revenue of $71.0 million for the thirteen weeks ended December 30, 2023 (the current quarter), an increase of 1.1% compared to $70.2 million for the thirteen weeks ended December 31, 2022 (the comparable prior quarter). Gross profit was $21.6 million for the current quarter, a 5.7% increase compared to $20.5 million for the comparable prior quarter.  The Company experienced GAAP operating income of $7.9 million for the current quarter compared to $6.8 million for the comparable prior quarter.  The Company experienced GAAP net income of $5.3 million, or $0.65 per diluted share, for the current quarter compared to $4.8 million, or $0.48 per diluted share, for the comparable prior quarter. The Company experienced adjusted EBITDA (non-GAAP) of $8.9 million for the current quarter compared to $7.5 million for the comparable prior quarter. The Company experienced $0.71 of adjusted net income per diluted share (non-GAAP) for the current quarter as compared to $0.52 for the comparable prior quarter.

RCM Technologies reported revenue of $263.2 million for the fifty-two weeks ended December 30, 2023 (the current year), a decrease of 7.5% compared to $284.7 million for the fifty-two weeks ended December 31, 2022 (the comparable prior year). Gross profit was $76.7 million for the current year, a 7.5% decrease compared to $82.9 million for the comparable prior year.  The Company experienced GAAP operating income of $23.7 million for the current year compared to $28.8 million for the comparable prior year.  The Company experienced GAAP net income of $16.8 million, or $1.96 per diluted share, for the current year compared to $20.9 million, or $2.00 per diluted share, for the comparable prior year. The Company experienced adjusted EBITDA (non-GAAP) of $26.6 million for the current year compared to $31.1 million for the comparable prior year. The Company experienced $2.11 of adjusted net income per diluted share (non-GAAP) for the current year as compared to $2.08 for the comparable prior year.

Bradley Vizi, Executive Chairman of RCM Technologies, commented, “We finished 2023 strong with $8.9 million of adjusted EBITDA in the fourth quarter, a growth rate of 18.5%. All three business segments provided healthy contributions to growth.”

Kevin Miller, Chief Financial Officer of RCM Technologies, commented, “Improved cash collections in the first quarter have helped bolster our confidence in achieving our goal of $20 million in cash flow from operations in fiscal 2024.”

Conference Call On Thursday, March 14, 2024, RCM Technologies will host a conference call to discuss these results. The call will begin at 11:00 a.m. Eastern Time. The dial-in number is (800) 285-6670.

About RCM RCM Technologies (NasdaqGM: RCMT) is a business and technology solutions provider with world-class talent in key market segments. We help design, build, and enable the Industries of Tomorrow, Today. Operating at the intersection of resources, critical infrastructure and modernization of industries through advanced technologies, RCM is a provider of services in Health Care, Engineering, Aerospace & Defense, Process & Industrial, Life Sciences and Data & Solutions. www.rcmt.com.

The statements contained in this release that are not purely historical are forward-looking statements within the Private Securities Litigation Reform Act of 1995. They are subject to various risks, uncertainties, and other factors that could cause the Company’s actual results, performance, or achievements to differ materially from those expressed or implied by such forward-looking statements. These statements often include words such as “may,” “will,” “expect,” “anticipate,” “continue,” “estimate,” “project,” “intend,” “believe,” “plan,” “seek,” “could,” “can,” “should,” “are confident” or similar expressions. In addition, statements that are not historical should also be considered forward-looking statements. These statements are based on assumptions that we have made in light of our experience in the industry, and our perceptions of historical trends, current conditions, expected future developments, and other factors we believe are appropriate in these circumstances. Forward-looking statements include, but are not limited to, those relating to demand for the Company’s services, expectations regarding our future revenues and other financial results, our pipeline, and potential project wins, and our expectations for investment and growth in our business. Such statements are based on current expectations that involve several known and unknown risks, uncertainties, and other factors, which may cause actual events to be materially different from those expressed or implied by such forward-looking statements. Risk, uncertainties, and other factors may emerge from time to time that could cause the Company’s actual results to differ from those indicated by the forward-looking statements. Investors are directed to consider such risks, uncertainties, and other factors described in documents filed by the Company with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q. The Company assumes no obligation (and expressly disclaims any such obligation) to update any forward-looking statements contained in this release as a result of new information or future events or developments, except as may be required by law.

Tables to Follow

RCM Technologies, Inc. Condensed Consolidated Statements of Operations (Unaudited) (In Thousands, Except Per Share Amounts)
	Thirteen Weeks Ended
	December 30,2023			December 31,2022
Revenue	$	71,028		$	70,221
Cost of services		49,397			49,755
Gross profit		21,631			20,466
Selling, general and administrative		13,403			13,433
Depreciation and amortization of property and equipment		276			266
Amortization of acquired intangible assets		46			46
Remeasurement of acquisition related contingent consideration		-			(88	)
Operating income		7,906			6,809
Other expense, net		532			349
Income before income taxes		7,374			6,460
Income tax expense		2,119			1,623
Net income	$	5,255		$	4,837
Diluted net earnings per share data	$	0.65		$	0.48
Diluted weighted average shares outstanding		8,142,184			10,076,898

	Fifty-Two Weeks Ended
	December 30,2023			December 31,2022
Revenue	$	263,237		$	284,680
Cost of services		186,541			201,753
Gross profit		76,696			82,927
Selling, general and administrative		52,185			53,395
Depreciation and amortization of property and equipment		1,032			995
Amortization of acquired intangible assets		182			46
Gain on sale of assets		(395	)		(219	)
Remeasurement of acquisition related contingent consideration		-			(88	)
Operating income		23,692			28,798
Other expense, net		1,497			318
Income before income taxes		22,195			28,480
Income tax expense		5,364			7,591
Net income	$	16,831		$	20,889
Diluted net earnings per share data	$	1.96		$	2.00
Diluted weighted average shares outstanding		8,592,572			10,442,176

RCM Technologies, Inc. Supplemental Operating Results on a Non-GAAP Basis (Unaudited) (In Thousands)

The following non-GAAP measures, which adjust for the categories of expenses described below, are non-GAAP financial measures.  Our management believes that these non-GAAP financial measures (“Adjusted operating income,” “EBITDA” and “Adjusted EBITDA”) are useful information for investors, shareholders, and other stakeholders of our Company in gauging our results of operations on an ongoing basis and to enhance investors’ overall understanding of our current financial performance and period-to-period comparisons.  Adjusted operating income, EBITDA and Adjusted EBITDA should not be considered alternatives to net income as an indicator of performance.  In addition, Adjusted operating income, EBITDA and Adjusted EBITDA do not take into account changes in certain assets and liabilities and interest and income taxes that can affect cash flows.  We do not intend the presentation of these non-GAAP measures to be considered in isolation or as a substitute for results prepared in accordance with GAAP. These non-GAAP measures should be read-only in conjunction with our consolidated financial statements prepared in accordance with GAAP.

The following unaudited table presents the Company’s GAAP net income and the corresponding adjustments used to calculate Adjusted operating income, EBITDA and Adjusted EBITDA for the thirteen and fifty-two weeks ended December 30, 2023 and December 31, 2022. 

	Thirteen Weeks Ended						Fifty-Two Weeks Ended
	December 30, 2023			December 31, 2022			December 30, 2023			December 31, 2022
GAAP operating income	$	7,906		$	6,809		$	23,692		$	28,798
Adjustments
Gain on sale of assets		-			-			(395	)		(219	)
Remeasurement of acquisition related contingent consideration		-			(88	)		-			(88	)
Equity compensation		641			452			2,092			1,582
Adjusted operating income (non-GAAP)	$	8,547		$	7,173		$	25,389		$	30,073
GAAP net income	$	5,255		$	4,837		$	16,831		$	20,889
Income tax expense		2,119			1,623			5,364			7,591
Interest expense, net		429			169			1,399			370
Depreciation of property and equipment		276			266			1,032			995
Amortization of acquired intangible assets		46			46			182			46
EBITDA (non-GAAP)	$	8,125		$	6,941		$	24,808		$	29,891
Adjustments
Gain on sale of assets		-			-			(395	)		(219	)
Remeasurement of acquisition related contingent consideration		-			(88	)		-			(88	)
Loss (gain) on foreign currency transactions		103			180			98			(52	)
Equity compensation		641			452			2,092			1,582
Adjusted EBITDA (non-GAAP)	$	8,869		$	7,485		$	26,603		$	31,114

RCM Technologies, Inc. Supplemental Operating Results on a Non-GAAP Basis (Continued) (Unaudited) (In Thousands)
	Thirteen Weeks Ended						Fifty-Two Weeks Ended
	December 30, 2023			December 31, 2022			December 30, 2023			December 31, 2022
GAAP net income	$	5,255		$	4,837		$	16,831		$	20,889
Adjustments
Gain on sale of assets		-			-			(395	)		(219	)
Remeasurement of acquisition related contingent consideration		-			(88	)		-			(88	)
Loss (gain) on foreign currency transactions		103			180			98			(52	)
Equity compensation		641			452			2,092			1,582
Tax impact from normalized rate		(186	)		(147	)		(467	)		(356	)
Adjusted net income (non-GAAP)	$	5,813		$	5,234		$	18,159		$	21,756
GAAP diluted net earnings per share	$	0.65		$	0.48		$	1.96		$	2.00
Adjustments
Gain on sale of assets		-			-		($	0.05	)	($	0.02	)
Remeasurement of acquisition related contingent consideration		-			(0.01	)		-		($	0.01	)
Loss (gain) on foreign currency transactions		0.01			0.02		$	0.01		($	0.01	)
Equity compensation		0.07			0.05		$	0.24		$	0.15
Tax impact from normalized rate		(0.02	)		(0.02	)	($	0.05	)	($	0.03	)
Adjusted diluted net earnings per share (non-GAAP)	$	0.71		$	0.52		$	2.11		$	2.08

RCM Technologies, Inc. Summary of Selected Income Statement Data (Unaudited) (In Thousands)
	Thirteen Weeks Ended December 30, 2023
	Specialty Health Care			Engineering			Life Sciences and IT			Consolidated
Revenue	$	36,688		$	22,719		$	11,621		$	71,028
Cost of services		25,686			16,589			7,122			49,397
Gross profit		11,002			6,130			4,499			21,631
Gross profit margin		30.0	%		27.0	%		38.7	%		30.5	%

	Thirteen Weeks Ended December 31, 2022
	Specialty Health Care			Engineering			Life Sciences and IT			Consolidated
Revenue	$	35,810		$	24,211		$	10,200		$	70,221
Cost of services		24,771			18,565			6,419			49,755
Gross profit	$	11,039		$	5,646		$	3,781		$	20,466
Gross profit margin		30.8	%		23.3	%		37.1	%		29.15	%

	Fifty-Two Weeks Ended December 30, 2023
	Specialty Health Care			Engineering			Life Sciences and IT			Consolidated
Revenue	$	136,241		$	84,675		$	42,321		$	263,237
Cost of services		96,309			64,071			26,161			186,541
Gross profit		39,932			20,604			16,160			76,696
Gross profit margin		29.3	%		24.3	%		38.2	%		29.1	%

	Fifty-Two Weeks Ended December 31, 2022
	Specialty Health Care			Engineering			Life Sciences and IT			Consolidated
Revenue	$	159,448		$	85,937		$	39,295		$	284,680
Cost of services		111,543			64,218			25,992			201,753
Gross profit	$	47,905		$	21,719		$	13,303		$	82,927
Gross profit margin		30.0	%		25.3	%		33.9	%		29.1	%

RCM Technologies, Inc. Condensed Consolidated Balance Sheets (Unaudited) (In Thousands, Except Share Amounts)
			December 30,			December 31,
			2023			2022
Current assets:
	Cash and cash equivalents		$	6,284		$	339
	Accounts receivable, net			70,690			50,762
	Contract assets			8,891			3,280
	Prepaid expenses and other current assets			4,637			4,636
		Total current assets		90,502			59,017
Property and equipment, net				4,005			2,098
Other assets:
	Deposits			313			173
	Deferred tax assets, net, domestic			-			-
	Deferred tax assets, foreign			55			-
	Goodwill			22,147			22,147
	Operating right of use asset			2,779			3,665
	Intangible assets, net			683			864
		Total other assets		25,977			26,849
		Total assets	$	120,484		$	87,964

Current liabilities:
	Accounts payable and accrued expenses			$12,454			$14,147
	Contract liabilities				31,102			9,767
	Accrued payroll and related costs				11,203			13,023
	Finance lease payable				233			462
	Income taxes payable				330			85
	Operating right of use liability				693			1,349
	Contingent consideration from acquisitions				300			472
	Deferred revenue				1,881			1,119
			Total current liabilities		58,196			40,424
Deferred income taxes, net, foreign					187			166
Deferred income taxes, net, domestic					1,568			1,495
Finance lease payable					-			232
Contingent consideration from acquisitions, net of current portion					1,671			1,970
Operating right of use liability, net of current portion					2,268			2,932
Borrowings under line of credit					30,804			8,783
		Total liabilities			94,694			56,002
Contingencies (note 16) and Commitments (note 18)
Stockholders’ equity:
	Preferred stock, $1.00 par value; 5,000,000 shares authorized;
			no shares issued or outstanding		-			-
	Common stock, $0.05 par value; 40,000,000 shares authorized;
			17,673,427 shares issued and 7,844,821 shares outstanding at December 30, 2023, 17,287,967 shares issued and 9,285,318 shares outstanding at December 31, 2022 and 16,903,157 shares issued and 10,290,935 shares outstanding at January 1, 2022		882			863
	Additional paid-in capital				116,579			113,878
	Accumulated other comprehensive loss				(2,813	)		(2,863	)
	Accumulated deficit				(19,265	)		(36,096	)
	Treasury stock, 9,828,606 shares at December 30, 2023, 8,002,649 shares at December 31, 2022 and 6,612,222 shares at January 1, 2022				(69,593	)		(43,820	)
			Stockholders’ equity		25,790			31,962
			Total liabilities and stockholders’ equity	$120,484			$87,964

RCM Technologies, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) (In Thousands)
		Thirteen Weeks Ended
		December 30, 2023			December 31, 2022
Net income		$5,255			$4,837
Adjustments to reconcile net income to cash used in operating activities			1,526			2,989
Changes in operating assets and liabilities:
	Accounts receivable		(13,880	)		81
	Prepaid expenses and other current assets		678			(2,953	)
	Net of transit accounts receivable and payable		(6,660	)		6,431
	Accounts payable and accrued expenses		292			3,440
	Accrued payroll and related costs		(3,421	)		(4,211	)
	Right of use liabilities		(337	)		(336	)
	Income taxes payable		80			(2,298	)
	Deferred revenue		1,546			(441	)
	Deposits		(145	)		3
Total adjustments			(20,321	)		2,705
Net cash (used in) provided by operating activities		($15,066		)	$7,542
Net cash used in investing activities			(2,056	)		(4,367	)
Net cash provided by (used in) financing activities			22,706			(3,659	)
Effect of exchange rate changes on cash and cash equivalents			46			62
Increase in cash and cash equivalents		$5,630			($422		)
Common stock repurchase			(1,324	)		(11,166	)

		Fifty-Two Weeks Ended
		December 30, 2023			December 31, 2022
Net income		$16,831			$20,889
Adjustments to reconcile net income to cash used in operating activities			4,321			4,539
Changes in operating assets and liabilities:
	Accounts receivable		(20,576	)		(1,509	)
	Prepaid expenses and other current assets		3			(2,350	)
	Net of transit accounts receivable and payable		15,724			5,433
	Accounts payable and accrued expenses		(1,506	)		4,919
	Accrued payroll and related costs		(1,825	)		24
	Right of use liabilities		(1,353	)		(1,642	)
	Income taxes payable		242			276
	Deferred revenue		762			(2,299	)
	Deposits		(141	)		3
Total adjustments			(4,349	)		7,394
Net cash provided by operating activities			12,482			28,283
Net cash used in investing activities			(2,536	)		(4,820	)
Net cash used in financing activities			(3,852	)		(23,127	)
Effect of exchange rate changes on cash and cash equivalents			(149	)		(232	)
Increase in cash and cash equivalents			5,945		$104
Common stock repurchase			(25,773	)		(17,560	)

RCM Technologies, Inc.	Tel: 856.356.4500	Corporate Contacts:
2500 McClellan Avenue	info@rcmt.com	Bradley S. Vizi
Pennsauken, NJ 08109	www.rcmt.com	Executive Chairman
		Kevin D. Miller
		Chief Financial Officer