RCM Technologies, Inc. Announces Third Quarter Results

PENNSAUKEN, N.J., Nov. 07, 2024 (GLOBE NEWSWIRE) -- 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 thirty-nine weeks ended September 28, 2024.

RCM Technologies reported revenue of $60.4 million for the thirteen weeks ended September 28, 2024 (the current quarter), an increase of 4.0% compared to $58.0 million for the thirteen weeks ended September 30, 2023 (the comparable prior quarter). Gross profit was $17.8 million for the current quarter, a 3.2% increase compared to $17.3 million for the comparable prior quarter. The Company experienced GAAP net income of $2.7 million, or $0.35 per diluted share, for the current quarter compared to $3.8 million, or $0.46 per diluted share, for the comparable prior quarter. The Company experienced adjusted EBITDA (non-GAAP) of $5.6 million for the current quarter, a 9.5% increase compared to $5.1 million for the comparable prior quarter. The Company experienced $0.44 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 $201.5 million for the thirty-nine weeks ended September 28, 2024 (the current period), an increase of 4.8% compared to $192.2 million for the thirty-nine weeks ended September 30, 2023 (the comparable prior-year period). Gross profit was $58.2 million for the current period, a 5.7% increase compared to $55.1 million for the comparable prior-year period. The Company experienced GAAP net income of $10.5 million, or $1.31 per diluted share, for the current period compared to $11.6 million, or $1.33 per diluted share, for the comparable prior-year period. The Company experienced adjusted EBITDA (non-GAAP) of $19.6 million for the current period, a 10.5% increase compared to $17.7 million for the comparable prior-year period. The Company experienced $1.54 of adjusted net income per diluted share (non-GAAP) for the current period as compared to $1.41 for the comparable prior-year period.

Bradley Vizi, Executive Chairman of RCM Technologies, commented, "Third-quarter growth was led by Healthcare and Engineering, as both businesses continue to ramp in their respective end markets."

Kevin Miller, Chief Financial Officer of RCM Technologies, commented, "Growth remains consistent, while we anticipate enhanced cash conversion in coming quarters."

Conference Call
On Friday, November 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 [phone].

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.

Tables to Follow
RCM Technologies, Inc. Condensed Consolidated Statements of Operations (Unaudited) (In Thousands, Except Per Share Amounts)
	Thirteen Weeks Ended
	September 28, 2024			September 30, 2023
Revenue		$60,365			$58,049
Cost of services		42,524			40,768
Gross profit		17,841			17,281
Selling, general and administrative		13,018			12,662
Depreciation and amortization of property and equipment		393			243
Amortization of acquired intangible assets		45			45
Operating income		4,385			4,331
Other expense, net		619			141
Income before income taxes		3,766			4,190
Income tax expense		1,020			434
Net income		$2,746			$3,756
Diluted net earnings per share data		$0.35			$0.46
Diluted weighted average shares outstanding		7,789,446			8,196,330

	Thirty-Nine Weeks Ended
	September 28, 2024			September 30, 2023
Revenue		$201,468			$192,209
Cost of services		143,259			137,144
Gross profit		58,209			55,065
Selling, general and administrative		40,762			38,782
Depreciation and amortization of property and equipment		1,012			756
Amortization of acquired intangible assets		136			136
Costs associated with potential stock issuance		259			-
Gain on sale of assets		-			(395	)
Operating income		16,040			15,786
Other expense, net		1,619			965
Income before income taxes		14,421			14,821
Income tax expense		3,961			3,245
Net income		$10,460			$11,576
Diluted net earnings per share data		$1.31			$1.33
Diluted weighted average shares outstanding		7,990,238			8,730,998
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 thirty-nine weeks ended September 28, 2024 and September 30, 2023.

	Thirteen Weeks Ended						Thirty-Nine Weeks Ended
	September 28, 2024			September 30, 2023			September 28, 2024			September 30, 2023
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
GAAP operating income		$4,385			$4,331			$16,040			$15,786
Adjustments
Gain on sale of assets		-			-			-			(395	)
Costs associated with potential stock issuance		-			-			259			-
Equity compensation		767			484			2,154			1,451
Adjusted operating income (non-GAAP)		$5,152			$4,815			$18,453			$16,842
GAAP net income		$2,746			$3,756			$10,460			$11,576
Income tax expense		1,020			434			3,961			3,245
Interest expense, net		492			185			1,551			970
Depreciation of property and equipment		393			243			1,012			756
Amortization of acquired intangible assets		45			45			136			136
EBITDA (non-GAAP)		$4,696			$4,663			$17,120			$16,683
Adjustments
Gain on sale of assets		-			-			-			(395	)
Costs associated with potential stock issuance		-			-			259			-
Loss (gain) on foreign currency transactions		127			(44	)		68			(5	)
Equity compensation		767			484			2,154			1,451
Adjusted EBITDA (non-GAAP)		$5,590			$5,103			$19,601			$17,734

RCM Technologies, Inc. Supplemental Operating Results on a Non-GAAP Basis (Continued) (Unaudited) (In Thousands)
	Thirteen Weeks Ended						Thirty-Nine Weeks Ended
	September 28, 2024			September 30, 2023			September 28, 2024			September 30, 2023
	(Unaudited)			(Unaudited)			(Unaudited)			(Unaudited)
GAAP net income		$2,746			$3,756			$10,460			$11,576
Adjustments
Gain on sale of assets		-			-			-			(395	)
Costs associated with potential stock issuance		-			-			259			-
Loss (gain) on foreign currency transactions		127			(44	)		68			(5	)
Equity compensation		767			484			2,154			1,451
Tax impact from normalized rate		(190	)		(138	)		(674	)		(295	)
Adjusted net income (non-GAAP)		$3,450			$4,058			$12,267			$12,332
GAAP diluted net earnings per share		$0.35			$0.46			$1.31			$1.33
Adjustments
Gain on sale of assets											($0.04	)
Costs associated with potential stock issuance		-			-			$0.03			-
Loss (gain) on foreign currency transactions		$0.01			-			$0.01			-
Equity compensation		$0.10			$0.06			$0.27			$0.16
Tax impact from normalized rate		($0.02	)		($0.02	)		($0.08	)		($0.04	)
Adjusted diluted net earnings per share (non-GAAP)		$0.44			$0.50			$1.54			$1.41

RCM Technologies, Inc. Summary of Selected Income Statement Data (Unaudited) (In Thousands)
	Thirteen Weeks Ended September 28, 2024
	Specialty Health Care			Engineering			Life Sciences and IT			Consolidated
Revenue		$26,554			$24,167			$9,644			$60,365
Cost of services		18,271			18,273			5,980			42,524
Gross profit		8,283			5,894			3,664			17,841
Gross profit margin		31.2	%		24.4	%		38.0	%		29.6	%

	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	%

	Thirty-Nine Weeks Ended September 28, 2024
	Specialty Health Care			Engineering			Life Sciences and IT			Consolidated
Revenue		$101,668			$70,180			$29,620			$201,468
Cost of services		71,672			52,818			18,769			143,259
Gross profit		29,996			17,362			10,851			58,209
Gross profit margin		29.5	%		24.7	%		36.6	%		28.9	%

	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	%

RCM Technologies, Inc. Condensed Consolidated Balance Sheets (Unaudited) (In Thousands, Except Share Amounts)
	September 28,			December 30,
	2024			2023
	(Unaudited)
Current assets:
Cash and cash equivalents		$3,156			$6,284
Accounts receivable, net of provision for credit losses of $1,600 at September 28, 2024 and December 30, 2023		75,913			70,690
Transit accounts receivable		6,315			8,891
Prepaid expenses and other current assets		5,112			4,637
Total current assets		90,496			90,502
Property and equipment, net		6,793			4,005
Deposits		215			313
Deferred income taxes, foreign		55			55
Goodwill		22,147			22,147
Operating right of use asset		5,292			2,779
Intangible assets, net		547			683
Total other assets		28,256			25,977
Total assets		$125,545			$120,484

Current liabilities:
Accounts payable and accrued expenses		$11,525			$12,454
Transit accounts payable		28,215			31,102
Accrued payroll and related costs		11,634			11,203
Finance lease payable		689			233
Income taxes payable		220			330
Operating right of use liability		1,019			693
Contingent consideration from acquisitions		300			300
Deferred revenue		2,042			1,881
Total current liabilities		55,644			58,196
Deferred income taxes, net, foreign		185			187
Deferred income taxes, net, domestic		1,719			1,568
Finance lease payable, net of current position		1,290			-
Contingent consideration from acquisitions, net of current position		1,671			1,671
Operating right of use liability, net of current position		4,519			2,268
Borrowings under line of credit		30,477			30,804
Total liabilities		95,505			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; 17,833,287 shares issued and 7,597,028 shares outstanding at September 28, 2024 and 17,673,427 shares issued and 7,844,821 shares outstanding at December 30, 2023		890			882
Additional paid-in capital		118,136			116,579
Accumulated other comprehensive loss		(2,787	)		(2,813	)
Accumulated deficit		(8,805	)		(19,265	)
Treasury stock, 10,236,259 shares at September 28, 2024 and 9,828,606 shares at December 30, 2023, at cost		(77,394	)		(69,593	)
Total stockholders' equity		30,040			25,790
Total liabilities and stockholders' equity		$125,545			$120,484

RCM Technologies, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) (In Thousands)
	Thirteen Weeks Ended
	September 28, 2024			September 30, 2023
Net income		$2,746			$3,756
Adjustments to reconcile net income to cash used in operating activities		1,508			1,049
Changes in operating assets and liabilities:
Accounts receivable		(9,033	)		4,143
Prepaid expenses and other current assets		321			(987	)
Net of transit accounts receivable and payable		435			1,556
Accounts payable and accrued expenses		(1,445	)		(785	)
Accrued payroll and related costs		1,919			2,790
Right of use liabilities		(228	)		(333	)
Income taxes payable		81			15
Deferred revenue		(636	)		(169	)
Deposits		(12	)		2
Total adjustments		(7,090	)		7,281
Net cash (used in) provided by operating activities		($4,344	)		$11,037
Net cash (used in) provided by investing activities		(522	)		79
Net cash provided by (used in) financing activities		4,375			(11,343	)
Effect of exchange rate changes on cash and cash equivalents		167			(392	)
Decrease in cash and cash equivalents		($324	)		($619	)
Common stock repurchase		($2,410	)		($3,389	)

	Thirty-Nine Weeks Ended
	September 28, 2024			September 30, 2023
Net income		$10,460			$11,576
Adjustments to reconcile net income to cash used in operating activities		4,200			2,795
Changes in operating assets and liabilities:
Accounts receivable		(5,207	)		(6,696	)
Prepaid expenses and other current assets		(475	)		(675	)
Net of transit accounts receivable and payable		(311	)		22,384
Accounts payable and accrued expenses		(760	)		(1,798	)
Accrued payroll and related costs		433			1,596
Right of use liabilities		(686	)		(1,016	)
Income taxes payable		(106	)		162
Deferred revenue		161			(784	)
Deposits		98			4
Total adjustments		(2,653	)		15,972
Net cash provided by operating activities		7,807			27,548
Net cash used in investing activities		(1,589	)		(480	)
Net cash used in financing activities		(9,135	)		(26,558	)
Effect of exchange rate changes on cash and cash equivalents		(211	)		(195	)
(Decrease) increase in cash and cash equivalents		($3,128	)		$315
Common stock repurchase		($7,801	)		($24,449	)

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