RCM Technologies, Inc. Announces Third Quarter Results

PENNSAUKEN, N.J., Nov. 08, 2023 (GLOBE NEWSWIRE) -- 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 thirty-nine weeks ended September 30, 2023.

RCM Technologies reported revenue of $58.0 million for the thirteen weeks ended September 30, 2023 (the current period), a decrease of 0.2% compared to $58.2 million for the thirteen weeks ended October 1, 2022 (the comparable prior-year period). Gross profit was $17.3 million for the current period, a 0.4% decrease compared to $17.4 million for the comparable prior-year period. The Company experienced GAAP operating income of $4.3 million for the current period compared to $4.8 million for the comparable prior-year period. The Company experienced GAAP net income of $3.8 million, or $0.46 per diluted share, for the current period compared to $3.5 million, or $0.33 per diluted share, for the comparable prior-year period. The Company experienced adjusted EBITDA (non-GAAP) of $4.6 million for the current period compared to $4.8 million for the comparable prior-year period.

RCM Technologies reported revenue of $192.2 million for the thirty-nine weeks ended September 30, 2023 (the current period), a decrease of 10.4% compared to $214.5 million for the thirty-nine weeks ended October 1, 2022 (the comparable prior-year period). Gross profit was $55.1 million for the current period, a 11.8% decrease compared to $62.5 million for the comparable prior-year period. The Company experienced GAAP operating income of $15.8 million for the current period compared to $22.0 million for the comparable prior-year period. The Company experienced GAAP net income of $11.6 million, or $1.33 per diluted share, for the current period compared to $16.1 million, or $1.52 per diluted share, for the comparable prior-year period. The Company experienced adjusted EBITDA (non-GAAP) of $16.3 million for the current period compared to $22.5 million for the comparable prior-year period.

Bradley Vizi, Executive Chairman of RCM Technologies, commented, "The cadence of our business continues to accelerate as we move through the year. As such, we expect the fourth quarter to be our strongest, and continue to be confident that the long-term outlook for RCM is bright."

Kevin Miller, Chief Financial Officer of RCM Technologies, commented, "With our continued focus on return on equity, the productivity of our revenue improved in the third quarter of 2023, resulting in 180 basis points of gross margin improvement over the second quarter of 2023."

Conference Call
On Thursday, November 9, 2023, 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 [phone].

About RCM
RCM Technologies, Inc. is 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 information technology and engineering services. RCM is an innovative leader in delivering these solutions to commercial and government sectors. RCM is also a provider of specialty healthcare services to major health care institutions and educational facilities. RCM's offices are located in major metropolitan centers throughout North America and Serbia. Additional information can be found at 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
	September 30, 2023			October 1, 2022
Revenue	$58,049			$58,152
Cost of services		40,768			40,794
Gross profit		17,281			17,358
Selling, general and administrative		12,662			12,551
Depreciation and amortization of property and equipment		243			266
Amortization of acquired intangible assets		45			-
Gain on sale of assets		-			(219	)
Operating income		4,331			4,760
Other expense (income), net		141			(55	)
Income before income taxes		4,190			4,815
Income tax expense		434			1,297
Net income	$3,756			$3,518
Diluted net earnings per share data	$0.46			$0.33
Diluted weighted average shares outstanding		8,196,330			10,522,158

	Thirty-Nine Weeks Ended
	September 30, 2023			October 1, 2022
Revenue	$192,209			$214,459
Cost of services		137,144			151,998
Gross profit		55,065			62,461
Selling, general and administrative		38,782			39,962
Depreciation and amortization of property and equipment		756			729
Amortization of acquired intangible assets		136			-
Gain on sale of assets		(395	)		(219	)
Operating income		15,786			21,989
Other expense (income), net		965			(31	)
Income before income taxes		14,821			22,020
Income tax expense		3,245			5,968
Net income	$11,576			$16,052
Diluted net earnings per share data	$1.33			$1.52
Diluted weighted average shares outstanding		8,730,998			10,566,816

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 thirty-nine weeks ended September 30, 2023 and October 1, 2022.

	Thirteen Weeks Ended						Thirty-Nine Weeks Ended
	September 30, 2023			October 1, 2022			September 30, 2023			October 1, 2022
GAAP net income	$3,756			$3,518			$11,576			$16,052
Income tax expense		434			1,297			3,245			5,968
Interest expense, net		185			35			970			201
Depreciation of property and equipment		243			266			756			729
Amortization of acquired intangible assets		45			-			136			-
EBITDA (non-GAAP)	$4,663			$5,116			$16,683			$22,950
Adjustments
Gain on sale of assets		-			(219	)		(395	)		(219	)
Gain on foreign currency transactions		(44	)		(90	)		(5	)		(232	)
Adjusted EBITDA (non-GAAP)	$4,619			$4,807			$16,283			$22,499

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

	Thirteen Weeks Ended September 30, 2023
	Specialty Health Care			Engineering			Life Sciences and IT			Consolidated
Revenue	$24,895			$22,452			$10,702			$58,049
Cost of services		17,438			16,846			6,484			40,768
Gross profit	$7,457			$5,606			$4,218			$17,281
Gross profit margin		30.0	%		25.0	%		39.4	%		29.8	%

	Thirteen Weeks Ended October 1, 2022
	Specialty Health Care			Engineering			Life Sciences and IT			Consolidated
Revenue	$27,997			$20,922			$9,233			$58,152
Cost of services		19,014			15,594			6,186			40,794
Gross profit	$8,983			$5,328			$3,047			$17,358
Gross profit margin		32.1	%		25.5	%		33.0	%		29.8	%

	Thirty-Nine Weeks Ended September 30, 2023
	Specialty Health Care			Engineering			Life Sciences and IT			Consolidated
Revenue	$99,553			$61,956			$30,700			$192,209
Cost of services		70,623			47,482			19,039			137,144
Gross profit	$28,930			$14,474			$11,661			$55,065
Gross profit margin		29.1	%		23.4	%		38.0	%		28.6	%

	Thirty-Nine Weeks Ended October 1, 2022
	Specialty Health Care			Engineering			Life Sciences and IT			Consolidated
Revenue	$123,638			$61,726			$29,095			$214,459
Cost of services		86,772			45,653			19,573			151,998
Gross profit	$36,866			$16,073			$9,522			$62,461
Gross profit margin		29.8	%		26.0	%		32.7	%		29.1	%

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

			September 30,			December 31,
			2023			2022
			(Unaudited)
Current assets:
	Cash and cash equivalents		$654			$339
	Accounts receivable, net			57,459			50,762
	Transit accounts receivable			9,550			3,280
	Prepaid expenses and other current assets			5,311			4,636
		Total current assets		72,974			59,017
Property and equipment, net				2,221			2,098
Other assets:
	Deposits			168			173
	Goodwill			22,147			22,147
	Operating right of use asset			2,976			3,665
	Intangible assets, net			728			864
		Total other assets		26,019			26,849
		Total assets	$101,214			$87,964

Current liabilities:
	Accounts payable and accrued expenses		$12,153			$14,147
	Transit accounts payable			38,421			9,767
	Accrued payroll and related costs			14,619			13,023
	Finance lease payable			348			462
	Income taxes payable			247			85
	Operating right of use liability			884			1,349
	Contingent consideration from acquisitions			300			472
	Deferred revenue			335			1,119
		Total current liabilities		67,307			40,424
Deferred income taxes, net, foreign				166			166
Deferred income taxes, net, domestic				1,652			1,495
Finance lease payable				-			232
Contingent consideration from acquisitions, net of current position				1,671			1,970
Operating right of use liability, net of current position				2,382			2,932
Borrowings under line of credit				6,657			8,783
		Total liabilities		79,835			56,002
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;
		17,660,999 shares issued and 7,900,190 shares outstanding at September 30, 2023 and 17,287,967 shares issued and 9,285,318 shares outstanding at December 31, 2022		880			863
	Additional paid-in capital			116,146			113,878
	Accumulated other comprehensive loss			(2,858	)		(2,863	)
	Accumulated deficit			(24,520	)		(36,096	)
	Treasury stock, 9,760,809 shares at September 30, 2023 and
		8,002,649 shares at December 31, 2022, at cost		(68,269	)		(43,820	)
		Total stockholders' equity		21,379			31,962
		Total liabilities and stockholders' equity	$101,214			$87,964

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

		Thirteen Weeks Ended
		September 30, 2023			October 1, 2022
Net income		$3,756			$3,518
Adjustments to reconcile net income to cash used in operating activities			1,049			364
Changes in operating assets and liabilities:
	Accounts receivable		4,143			(5,155	)
	Prepaid expenses and other current assets		(987	)		169
	Net of transit accounts receivable and payable		1,556			(788	)
	Accounts payable and accrued expenses		(785	)		2,064
	Accrued payroll and related costs		2,790			1,187
	Right of use liabilities		(333	)		(366	)
	Income taxes payable		15			(336	)
	Deferred revenue		(169	)		(621	)
	Deposits		2			(11	)
Total adjustments			7,281			(3,488	)
Net cash provided by operating activities		$11,037			$30
Net cash used in investing activities			(315	)		(44	)
Net cash used in financing activities			(11,343	)		(2,293	)
Effect of exchange rate changes on cash and cash equivalents			2			(44	)
Increase in cash and cash equivalents		($	619	)	($	2,351	)
Common stock repurchase		($	3,389	)	($	3,613	)

		Thirty-Nine Weeks Ended
		September 30, 2023			October 1, 2022
Net income		$11,576			$16,052
Adjustments to reconcile net income to cash used in operating activities			2,795			1,550
Changes in operating assets and liabilities:
	Accounts receivable		(6,696	)		(1,590	)
	Prepaid expenses and other current assets		(675	)		603
	Net of transit accounts receivable and payable		22,384			(998	)
	Accounts payable and accrued expenses		(1,798	)		1,479
	Accrued payroll and related costs		1,596			4,235
	Right of use liabilities		(1,016	)		(1,306	)
	Income taxes payable		162			2,574
	Deferred revenue		(784	)		(1,858	)
	Deposits		4			-
Total adjustments			15,972			4,689
Net cash provided by operating activities			27,548		$20,741
Net cash used in investing activities			(480	)		(453	)
Net cash used in financing activities			(26,558	)		(19,468	)
Effect of exchange rate changes on cash and cash equivalents			(195	)		(294	)
Increase in cash and cash equivalents		$315			$526
Common stock repurchase		($24,449		)	($6,394		)

RCM Technologies, Inc.	Tel: [phone]	Corporate Contacts:
2500 McClellan Avenue	Fax: [phone]	Bradley S. Vizi
Pennsauken, NJ 08109	[e-mail]	Executive Chairman
	www.rcmt.com	Kevin D. Miller
		Chief Financial Officer