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 weeks ended March 30, 2024.

RCM Technologies reported revenue of $71.9 million for the thirteen weeks ended March 30, 2024 (the current quarter), an increase of 7.2% compared to $67.1 million for the thirteen weeks ended April 1, 2023 (the comparable prior quarter). Gross profit was $20.4 million for the current quarter, a 7.1% increase compared to $19.0 million for the comparable prior quarter. The Company experienced GAAP net income of $4.0 million, or $0.48 per diluted share, for the current quarter compared to $3.8 million, or $0.41 per diluted share, for the comparable prior quarter. The Company experienced adjusted EBITDA (non-GAAP) of $6.8 million for the current quarter compared to $6.1 million for the comparable prior quarter. The Company experienced $0.53 of adjusted net income per diluted share (non-GAAP) for the current quarter as compared to $0.41 for the comparable prior quarter.

Bradley Vizi, Executive Chairman of RCM Technologies, commented, “Our breadth of strategic focus is widening and deepening throughout the organization, with all teams executing on current initiatives while seeding new initiatives designed to propel growth well into the future.”

Kevin Miller, Chief Financial Officer of RCM Technologies, commented, “In the first quarter, adjusted EBITDA and adjusted EPS increased 11.1% and 30.4%, respectively. Cash conversion increased both sequentially and year over year. We anticipate continued improvement in cash flow from operations in each of the next two quarters.”

Conference Call On Thursday, May 9, 2024, RCM Technologies will host a conference call to discuss these results. The call will begin at 11:30 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, such as cash flows, 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
	March 30, 2024			April 1, 2023
Revenue	$71,939			$67,124
Cost of services		51,572			48,100
Gross profit		20,367			19,024
Selling, general and administrative		14,199			13,396
Depreciation and amortization of property and equipment		287			271
Amortization of acquired intangible assets		45			45
Gain on sale of assets		-			(395	)
Operating income		5,836			5,707
Other expense, net		426			407
Income before income taxes		5,410			5,300
Income tax expense		1,458			1,463
Net income	$3,952			$3,837
Diluted net earnings per share data	$0.48			$0.41
Diluted weighted average shares outstanding		8,170,839			9,401,867

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 ended March 30, 2024 and April 1, 2023. 

	Thirteen Weeks Ended
	March 30, 2024			April 1, 2023
GAAP operating income	$5,836			$5,707
Adjustments
Gain on sale of assets		-			(395	)
Equity compensation		635			496
Adjusted operating income (non-GAAP)	$6,471			$5,808
GAAP net income	$3,952			$3,837
Income tax expense		1,458			1,463
Interest expense, net		478			360
Depreciation of property and equipment		287			271
Amortization of acquired intangible assets		45			45
EBITDA (non-GAAP)	$6,220			$5,976
Adjustments
Gain on sale of assets		-			(395	)
(Gain) loss on foreign currency transactions		(52	)		47
Equity compensation		635			496
Adjusted EBITDA (non-GAAP)	$6,803			$6,124

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

	Thirteen Weeks Ended
	March 30, 2024			April 1, 2023
GAAP net income	$3,952			$3,837
Adjustments
Gain on sale of assets		-			(395	)
(Gain) loss on foreign currency transactions		(52	)		47
Equity compensation		635			496
Tax impact from normalized rate		(174	)		(136	)
Adjusted net income (non-GAAP)	$4,361			$3,849
GAAP diluted net earnings per share	$0.48			$0.41
Adjustments
Gain on sale of assets		-			(0.04	)
(Gain) loss on foreign currency transactions		0.00			0.00
Equity compensation		0.08			0.05
Tax impact from normalized rate		(0.03	)		(0.01	)
Adjusted diluted net earnings per share (non-GAAP)	$0.53			$0.41

RCM Technologies, Inc. Summary of Selected Income Statement Data (Unaudited) (In Thousands)

	Thirteen Weeks Ended March 30, 2024
	Specialty Health Care			Engineering			Life Sciences and IT			Consolidated
Revenue	$38,182			$23,505			$10,252			$71,939
Cost of services		27,108			18,003			6,461			51,572
Gross profit	$11,074			$5,502			$3,791			$20,367
Gross profit margin		29.0	%		23.4	%		37.0	%		28.3	%

	Thirteen Weeks Ended April 1, 2023
	Specialty Health Care			Engineering			Life Sciences and IT			Consolidated
Revenue	$39,130			$18,490			$9,504			$67,124
Cost of services		27,458			14,444			6,198			48,100
Gross profit	$11,672			$4,046			$3,306			$19,024
Gross profit margin		29.8	%		21.9	%		34.8	%		28.3	%

RCM Technologies, Inc. Condensed Consolidated Balance Sheets (Unaudited) (In Thousands, Except Share Amounts)

			March 30,			December 30,
				2024			2023
			(Unaudited)
Current assets:
	Cash and cash equivalents		$2,099			$6,284
	Accounts receivable, net			73,486			70,690
	Transit accounts receivable			9,722			8,891
	Prepaid expenses and other current assets			4,515			4,637
		Total current assets		89,822			90,502
Property and equipment, net				4,386			4,005
Deposits				290			313
Deferred income taxes, foreign				53			55
Goodwill				22,147			22,147
Operating right of use asset				3,147			2,779
Intangible assets, net				638			683
		Total other assets		26,275			25,977
		Total assets	$120,483			$120,484

Current liabilities:
	Accounts payable and accrued expenses		$13,596			$12,454
	Transit accounts payable			31,715			31,102
	Accrued payroll and related costs			12,174			11,203
	Finance lease payable			116			233
	Income taxes payable			778			330
	Operating right of use liability			615			693
	Contingent consideration from acquisitions			300			300
	Deferred revenue			3,514			1,881
		Total current liabilities		62,808			58,196
Deferred income taxes, net, foreign				185			187
Deferred income taxes, net, domestic				1,619			1,568
Contingent consideration from acquisitions, net of current position				1,671			1,671
Operating right of use liability, net of current position				2,644			2,268
Borrowings under line of credit				22,159			30,804
		Total liabilities		91,086			94,694
Contingencies (note 15)				-			-
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;
		17,775,693 shares issued and 7,947,087 shares outstanding at March 30, 2024 and 17,673,427 shares issued and 7,844,821 shares outstanding at December 30, 2023		887			882
	Additional paid-in capital			116,256			116,579
	Accumulated other comprehensive loss			(2,840	)		(2,813	)
	Accumulated deficit			(15,313	)		(19,265	)
	Treasury stock, 9,828,606 shares at March 30, 2024 and
	December 30, 2023, at cost			(69,593	)		(69,593	)
		Total stockholders’ equity		29,397			25,790
		Total liabilities and stockholders’ equity	$120,483			$120,484

RCM Technologies, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) (In Thousands)

		Thirteen Weeks Ended
		March 30, 2024			April 1, 2023
Net income		$3,952			$3,837
Adjustments to reconcile net income to cash used in operating activities			1,250			703
Changes in operating assets and liabilities:
	Accounts receivable		(2,802	)		(8,035	)
	Prepaid expenses and other current assets		120			960
	Net of transit accounts receivable and payable		(219	)		1,472
	Accounts payable and accrued expenses		1,345			(1,667	)
	Accrued payroll and related costs		976			2,404
	Right of use liabilities		(304	)		(348	)
	Income taxes payable		451			141
	Deferred revenue		1,633			(310	)
	Deposits		24			11
Total adjustments			2,474			(4,669	)
Net cash provided by (used in) operating activities			6,426			(832	)
Net cash used in investing activities			(669	)		(332	)
Net cash (used in) provided by financing activities			(9,714	)		2,416
Effect of exchange rate changes on cash and cash equivalents			(228	)		234
(Decrease) increase in cash and cash equivalents		($	4,185	)	$1,486

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