RCMT RCM Technologies Inc

RCM Technologies, Inc. (NasdaqGM: RCMT), a premier provider of solutions designed to enhance the operational performance of its customers through the deployment of advanced engineering, specialty health care, and information technology services, today announced financial results for the thirteen and twenty-six weeks ended June 29, 2024.

RCM Technologies reported revenue of $69.2 million for the thirteen weeks ended June 29, 2024 (the current quarter), an increase of 3.2% compared to $67.0 million for the thirteen weeks ended July 1, 2023 (the comparable prior quarter). Gross profit was $20.0 million for the current quarter, a 6.6% increase compared to $18.8 million for the comparable prior quarter.  The Company experienced GAAP net income of $3.8 million, or $0.47 per diluted share, for the current quarter compared to $4.0 million, or $0.47 per diluted share, for the comparable prior quarter. The Company experienced adjusted EBITDA (non-GAAP) of $7.2 million for the current quarter, a 10.8% increase compared to $6.5 million for the comparable prior quarter. The Company experienced $0.56 of adjusted net income per diluted share (non-GAAP) for the current quarter as compared to $0.50 for the comparable prior quarter.

RCM Technologies reported revenue of $141.1 million for the twenty-six weeks ended June 29, 2024 (the current period), an increase of 5.2% compared to $134.2 million for the twenty-six weeks ended July 1, 2023 (the comparable prior-year period). Gross profit was $40.4 million for the current period, a 6.8% increase compared to $37.8 million for the comparable prior-year period.  The Company experienced GAAP net income of $7.7 million, or $0.95 per diluted share, for the current period compared to $7.8 million, or $0.87 per diluted share, for the comparable prior-year period. The Company experienced adjusted EBITDA (non-GAAP) of $14.0 million for the current period, a 10.9% increase compared to $12.6 million for the comparable prior-year period. The Company experienced $1.10 of adjusted net income per diluted share (non-GAAP) for the current period as compared to $0.92 for the comparable prior-year period.

Bradley Vizi, Executive Chairman of RCM Technologies, commented, “Second quarter growth was led by Engineering, as project activity continues to ramp building on the foundation carefully laid over the last several years.”

Kevin Miller, Chief Financial Officer of RCM Technologies, commented, “Our strong cash generating business model allows us to fund growth, while remaining opportunistic and actively managing our capital structure.”

Conference Call On Thursday, August 8, 2024, RCM Technologies will host a conference call to discuss these results. The call will begin at 1:00 p.m. Eastern Time. The dial-in number is (888) 272-8703.

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, 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.

RCM Technologies, Inc. Condensed Consolidated Statements of Operations (Unaudited) (In Thousands, Except Per Share Amounts)

	Thirteen Weeks Ended
	June 29,2024			July 1,2023
Revenue	$69,164			$67,035
Cost of services		49,163			48,275
Gross profit		20,001			18,760
Selling, general and administrative		13,545			12,723
Depreciation and amortization of property and equipment		332			242
Amortization of acquired intangible assets		46			46
Costs associated with potential stock issuance		259			-
Operating income		5,819			5,749
Other expense, net		574			418
Income before income taxes		5,245			5,331
Income tax expense		1,483			1,348
Net income	$3,762			$3,983
Diluted net earnings per share data	$0.47			$0.47
Diluted weighted average shares outstanding		7,955,943			8,558,396

	Twenty-Six Weeks Ended
	June 29,2024			July 1,2023
Revenue	$141,103			$134,159
Cost of services		100,735			96,375
Gross profit		40,368			37,784
Selling, general and administrative		27,744			26,119
Depreciation and amortization of property and equipment		619			513
Amortization of acquired intangible assets		91			91
Costs associated with potential stock issuance		259			-
Gain on sale of assets		-			(395	)
Operating income		11,655			11,456
Other expense, net		1,000			825
Income before income taxes		10,655			10,631
Income tax expense		2,941			2,811
Net income	$7,714			$7,820
Diluted net earnings per share data	$0.95			$0.87
Diluted weighted average shares outstanding		8,078,049			8,976,714

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,” “Adjusted EBITDA,” “Adjusted net income” and “Adjusted diluted net earnings per share”) 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, Adjusted EBITDA, Adjusted net income and Adjusted diluted net earnings per share should not be considered alternatives to operating income or net income, as the case may be, as an indicator of performance.  In addition, Adjusted operating income, EBITDA, Adjusted EBITDA, Adjusted net income and Adjusted diluted net earnings per share 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 operating income and GAAP net income and the corresponding adjustments used to calculate Adjusted operating income, EBITDA, Adjusted EBITDA, Adjusted net income and Adjusted diluted net earnings per share for the thirteen and twenty-six weeks ended June 29, 2024 and July 1, 2023. 

	Thirteen Weeks Ended						Twenty-Six Weeks Ended
	June 29,2024			July 1,2023			June 29,2024			July 1,2023
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
GAAP operating income	$5,819			$5,749			$11,655			$11,456
Adjustments
Gain on sale of assets		-			-			-			(395	)
Costs associated with potential stock issuance		259			-			259			-
Equity compensation		752			471			1,387			967
Adjusted operating income (non-GAAP)	$6,830			$6,220			$13,301			$12,028
GAAP net income	$3,762			$3,983			$7,714			$7,820
Income tax expense		1,483			1,348			2,941			2,811
Interest expense, net		581			425			1,059			785
Depreciation of property and equipment		332			242			619			513
Amortization of acquired intangible assets		46			46			91			91
EBITDA (non-GAAP)	$6,204			$6,044			$12,424			$12,020
Adjustments
Gain on sale of assets		-			-			-			(395	)
Costs associated with potential stock issuance		259			-			259			-
(Gain) loss on foreign currency transactions		(7	)		(7	)		(59	)		40
Equity compensation		752			471			1,387			967
Adjusted EBITDA (non-GAAP)	$7,208			$6,508			$14,011			$12,632

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

	Thirteen Weeks Ended						Twenty-Six Weeks Ended
	June 29,2024			July 1,2023			June 29,2024			July 1,2023
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
GAAP net income	$3,762			$3,983			$7,714			$7,820
Adjustments
Gain on sale of assets		-			-			-			(395	)
Costs associated with potential stock issuance		259			-			259			-
(Gain) loss on foreign currency transactions		(7	)		(7	)		(59	)		40
Equity compensation		752			471			1,387			967
Tax impact from normalized rate		(276	)		(128	)		(444	)		(168	)
Adjusted net income (non-GAAP)	$4,490			$4,319			$8,857			$8,264
GAAP diluted net earnings per share	$0.47			$0.47			$0.95			$0.87
Adjustments
Gain on sale of assets		-			-			-		($0.04		)
Costs associated with potential stock issuance	$0.03				-		$0.03				-
(Gain) loss on foreign currency transactions		-			-			-		$0.01
Equity compensation	$0.09			$0.05			$0.17			$0.10
Tax impact from normalized rate	($0.03		)	($0.02		)	($0.05		)	($0.02		)
Adjusted diluted net earnings per share (non-GAAP)	$0.56			$0.50			$1.10			$0.92

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

	Thirteen Weeks Ended June 29, 2024
	SpecialtyHealth Care			Engineering			Life Sciencesand IT			Consolidated
Revenue	$36,932			$22,508			$9,724			$69,164
Cost of services		26,293			16,542			6,328			49,163
Gross profit	$10,639			$5,966			$3,396			$20,001
Gross profit margin		28.8	%		26.5	%		34.9	%		28.9	%

	Thirteen Weeks Ended July 1, 2023
	SpecialtyHealth Care			Engineering			Life Sciencesand IT			Consolidated
Revenue	$35,528			$21,014			$10,493			$67,035
Cost of services		25,727			16,192			6,356			48,275
Gross profit	$9,801			$4,822			$4,137			$18,760
Gross profit margin		27.6	%		22.9	%		39.4	%		28.0	%

	Twenty-Six Weeks Ended June 29, 2024
	SpecialtyHealth Care			Engineering			Life Sciencesand IT			Consolidated
Revenue	$75,114			$46,013			$19,976			$141,103
Cost of services		53,409			34,540			12,786			100,735
Gross profit	$21,705			$11,473			$7,190			$40,368
Gross profit margin		28.9	%		24.9	%		36.0	%		28.6	%

	Twenty-Six Weeks Ended July 1, 2023
	SpecialtyHealth Care			Engineering			Life Sciencesand IT			Consolidated
Revenue	$74,658			$39,504			$19,997			$134,159
Cost of services		53,185			30,365			12,555			96,375
Gross profit	$21,473			$8,869			$7,442			$37,784
Gross profit margin		28.8	%		22.5	%		37.2	%		28.2	%

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

			June 29,			December 30,
			2024			2023
			(Unaudited)
Current assets:
	Cash and cash equivalents		$3,480			$6,284
	Accounts receivable, net of provision for credit losses of $1,600on June 29, 2024 and December 30, 2023			66,915			70,690
	Transit accounts receivable			9,460			8,891
	Prepaid expenses and other current assets			5,432			4,637
		Total current assets		85,287			90,502
Property and equipment, net				4,451			4,005
Deposits				203			313
Deferred income taxes, foreign				53			55
Goodwill				22,147			22,147
Operating right of use asset				5,545			2,779
Intangible assets, net				592			683
		Total other assets		28,540			25,977
		Total assets	$118,278			$120,484

Current liabilities:
	Accounts payable and accrued expenses		$12,917			$12,454
	Transit accounts payable			30,925			31,102
	Accrued payroll and related costs			9,710			11,203
	Finance lease payable			-			233
	Income taxes payable			136			330
	Operating right of use liability			983			693
	Contingent consideration from acquisitions			300			300
	Deferred revenue			2,678			1,881
		Total current liabilities		57,649			58,196
Deferred income taxes, net, foreign				183			187
Deferred income taxes, net, domestic				1,669			1,568
Contingent consideration from acquisitions, net of current position				1,671			1,671
Operating right of use liability, net of current position				4,784			2,268
Borrowings under line of credit				23,870			30,804
		Total liabilities		89,826			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 7,666,709 shares outstanding atJune 29, 2024 and 17,673,427 shares issued and 7,844,821 sharesoutstanding at December 30, 2023		887			882
	Additional paid-in capital			117,008			116,579
	Accumulated other comprehensive loss			(2,908	)		(2,813	)
	Accumulated deficit			(11,551	)		(19,265	)
	Treasury stock, 10,108,984 shares at June 29, 2024 and
		9,828,606 shares at December 30, 2023, at cost		(74,984	)		(69,593	)
		Total stockholders’ equity		28,452			25,790
		Total liabilities and stockholders’ equity	$118,278			$120,484

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

		Thirteen Weeks Ended
		June 29, 2024			July 1, 2023
Net income		$3,762			$3,983
Adjustments to reconcile net income to cash used in operating activities			1,442			1,043
Changes in operating assets and liabilities:
	Accounts receivable		6,628			(2,804	)
	Prepaid expenses and other current assets		(916	)		(648	)
	Net of transit accounts receivable and payable		(527	)		19,356
	Accounts payable and accrued expenses		(660	)		654
	Accrued payroll and related costs		(2,462	)		(3,598	)
	Right of use liabilities		(154	)		(335	)
	Income taxes payable		(638	)		6
	Deferred revenue		(836	)		(305	)
	Deposits		86			(9	)
Total adjustments			1,963			13,360
Net cash provided by (used in) operating activities		$5,725			$17,343
Net cash used in investing activities			(398	)		(227	)
Net cash used in financing activities			(3,796	)		(17,631	)
Effect of exchange rate changes on cash and cash equivalents			(150	)		(37	)
Increase (decrease) in cash and cash equivalents		$1,381			($552		)

		Twenty-Six Weeks Ended
		June 29,2024			July 1,2023
Net income		$7,714			$7,820
Adjustments to reconcile net income to cashused in operating activities			2,692			1,746
Changes in operating assets and liabilities:
	Accounts receivable		3,826			(10,839	)
	Prepaid expenses and other current assets		(796	)		312
	Net of transit accounts receivable and payable		(746	)		20,828
	Accounts payable and accrued expenses		685			(1,013	)
	Accrued payroll and related costs		(1,486	)		(1,194	)
	Right of use liabilities		(458	)		(683	)
	Income taxes payable		(187	)		147
	Deferred revenue		797			(615	)
	Deposits		110			2
Total adjustments			4,437			8,691
Net cash provided by operating activities		$12,151			$16,511
Net cash used in investing activities			(1,067	)		(559	)
Net cash used in financing activities			(13,510	)		(15,215	)
Effect of exchange rate changes on cash and cash equivalents			(378	)		197
(Decrease) increase in cash and cash equivalents		($2,804		)	$934

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