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 twenty-six week periods ended June 29, 2019.
RCM Technologies reported revenue of $50.7 million for the
thirteen week period ended June 29, 2019 (the current period), a
1.9% decrease as compared to $51.7 million for the thirteen week
period ended June 30, 2018 (the comparable prior year period).
Gross profit was $12.8 million for the current period, a 0.5%
increase as compared to $12.7 million for the comparable prior year
period. The Company experienced GAAP operating income of $2.2
million for the current period, as compared to $0.9 million for the
comparable prior year period. GAAP net income was $1.3
million, or $0.10 per diluted share, for the current period as
compared to $0.4 million, or $0.03 per diluted share, for the
comparable prior year period.
RCM Technologies reported revenue of $102.3 million for the
twenty-six week period ended June 29, 2019 (the current period), a
marginal decrease as compared to $102.5 million for the twenty-six
week period ended June 30, 2018 (the comparable prior year period).
Gross profit was $25.3 million for both periods presented.
The Company experienced GAAP operating income of $3.8 million for
the current period, as compared to $2.6 million for the comparable
prior year period. GAAP net income was $2.7 million, or $0.21
per diluted share, for the current period as compared to $1.4
million, or $0.12 per diluted share, for the comparable prior year
period.
The Company experienced $1.4 million in severance, professional
fees and other charges for both the thirteen and twenty-six week
periods ended June 30, 2018. These charges include severance
accrued for the Company’s former chief executive officer and
related payroll taxes, continuation of certain benefits and
professional fees, totaling approximately $0.9 million. The
additional charges of $0.5 million incurred related to
transactional financial advisory fees, legal fees associated with
defending a frivolous lawsuit with a competitor of the Company, and
search fees associated with hiring a senior executive.
Bradley Vizi, Executive Chairman of RCM Technologies, commented,
“Allowing for third-quarter seasonality in our Healthcare segment
from summer school closings, we believe we are poised for a strong
finish to fiscal 2019 and that we have positioned RCM to
demonstrate higher earnings power in 2020.”
Kevin Miller, Chief Financial Officer of RCM Technologies,
added, “We are pleased with generating $3.1 million in cash flow
from operations in the second quarter of 2019. We expect continued
strong cash flow through the remainder of the year.”
Conference CallOn Thursday, August 8, 2019, RCM
Technologies will host a conference call to discuss these results.
The call will begin at 10:00 a.m. Eastern Time. The dial-in
number is (866) 403-9129.
About RCMRCM 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 the delivery of 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. 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 and 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, as well as 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 growth
in our business. Such statements are based on current expectations
that involve a number of 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
Income(Unaudited) (In
Thousands, Except Per Share Amounts)
|
Thirteen Week Periods Ended |
|
|
June 29, 2019 |
|
June 30, 2018 |
|
Revenue |
$50,705 |
|
$51,710 |
|
Cost of services |
37,902 |
|
38,975 |
|
Gross profit |
12,803 |
|
12,735 |
|
Selling, general and
administrative |
10,202 |
|
10,076 |
|
Depreciation and amortization
of property and equipment |
325 |
|
381 |
|
Severance, professional fees
and other charges |
- |
|
1,371 |
|
Amortization of acquired
intangible assets |
83 |
|
17 |
|
Operating income |
2,193 |
|
890 |
|
Other expense, net |
(483 |
) |
(388 |
) |
Income before income
taxes |
1,710 |
|
502 |
|
Income tax expense |
459 |
|
121 |
|
Net income |
$1,251 |
|
$381 |
|
|
|
|
|
|
Diluted net earnings per share
data |
$0.10 |
|
$0.03 |
|
|
Twenty-Six Week Periods Ended |
|
|
June 29, 2019 |
|
June 30, 2018 |
|
Revenue |
$102,300 |
|
$102,522 |
|
Cost of services |
76,980 |
|
77,232 |
|
Gross profit |
25,320 |
|
25,290 |
|
Selling, general and
administrative |
20,667 |
|
20,497 |
|
Depreciation and amortization
of property and equipment |
640 |
|
778 |
|
Severance, professional fees
and other charges |
- |
|
1,371 |
|
Amortization of acquired
intangible assets |
165 |
|
34 |
|
Operating income |
3,848 |
|
2,610 |
|
Other expense, net |
(949 |
) |
(695 |
) |
Income before income
taxes |
2,899 |
|
1,915 |
|
Income tax expense |
185 |
|
483 |
|
Net income |
$2,714 |
|
$1,432 |
|
|
|
|
|
|
Diluted net earnings per share
data |
$0.21 |
|
$0.12 |
|
RCM Technologies,
Inc.Summary Consolidated Selected Balance Sheet
Data (In Thousands)
|
March 30, 2019 |
|
December 29, 2018 |
|
(Unaudited) |
|
|
Cash and cash equivalents |
$868 |
|
$482 |
Accounts receivable, net |
$58,230 |
|
$52,335 |
Total current assets |
$63,935 |
|
$58,811 |
Total assets |
$92,099 |
|
$81,510 |
Total current liabilities |
$21,824 |
|
$23,188 |
Borrowing under line of
credit |
$30,943 |
|
$27,540 |
Net debt (borrowings less
cash) |
$30,075 |
|
$27,058 |
Total liabilities |
$61,550 |
|
$54,311 |
Stockholders’ equity |
$30,549 |
|
$27,199 |
RCM Technologies,
Inc.Supplemental Operating Results on a Non-GAAP
Basis(Unaudited)(In
Thousands)
The following non-GAAP data, which adjusts for the categories of
expenses described below, is a non-GAAP financial measure.
Our management believes that this non-GAAP financial measure
is useful information for investors, shareholders and other
stakeholders of our Company in gauging our results of operations on
an ongoing basis. We believe that EBITDA and Adjusted EBITDA
are performance measures and have provided a reconciliation between
net income and EBITDA and Adjusted EBITDA. Neither EBITDA nor
Adjusted EBITDA should be considered as an alternative to net
income as an indicator of performance. In addition, neither
EBITDA nor Adjusted EBITDA takes into account changes in certain
assets and liabilities as well as 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 measure and the corresponding adjustments used to calculate
“EBITDA” and “Adjusted EBITDA” for the thirteen and twenty-six week
periods ended June 29, 2019 and June 30, 2018.
|
Thirteen Week Periods
Ended |
|
Twenty-SixWeek Periods Ended |
|
June 29, 2019 |
|
June 30, 2018 |
|
June 29, 2019 |
|
June 30, 2018 |
GAAP net income |
$1,251 |
|
$381 |
|
$2,714 |
|
$1,432 |
Income tax expense |
|
459 |
|
|
121 |
|
|
185 |
|
|
483 |
Interest expense |
|
458 |
|
|
400 |
|
|
887 |
|
|
666 |
Imputed interest on contingent
consideration |
|
48 |
|
|
- |
|
|
96 |
|
|
- |
Depreciation of property and
equipment |
|
325 |
|
|
381 |
|
|
640 |
|
|
778 |
Amortization of acquired intangible assets |
|
83 |
|
|
17 |
|
|
165 |
|
|
34 |
EBITDA
(non-GAAP) |
$2,624 |
|
$1,300 |
|
$4,687 |
|
$3,393 |
|
|
|
|
|
|
|
|
Adjustments |
|
|
|
|
|
|
|
Severance, professional fees and other charges |
|
- |
|
|
1,371 |
|
|
- |
|
|
1,371 |
(Gain) loss on foreign currency transactions |
|
(23 |
) |
|
(12 |
) |
|
(34 |
) |
|
29 |
Adjusted EBITDA (non-GAAP) |
$2,601 |
|
$2,659 |
|
$4,653 |
|
$4,793 |
RCM Technologies,
Inc. Condensed Consolidated
Statements of Cash
Flows (Unaudited) (In
Thousands)
|
Thirteen Week Periods Ended |
|
|
June 29,2019 |
|
|
June 30,2018 |
|
Net income |
$1,251 |
|
|
$381 |
|
Adjustments to reconcile net income to cash used in operating
activities |
761 |
|
|
623 |
|
Changes in operating assets
and liabilities: |
|
|
|
|
|
Accounts receivable |
353 |
|
|
(82 |
) |
Prepaid expenses and other current assets |
548 |
|
|
276 |
|
Net of transit accounts receivable and payable |
917 |
|
|
149 |
|
Accounts payable and accrued expenses |
(639 |
) |
|
(213 |
) |
Accrued payroll and related costs |
(345 |
) |
|
1,735 |
|
Right of use assets and liabilities |
(7 |
) |
|
- |
|
Income taxes payable |
239 |
|
|
565 |
|
Total adjustments |
1,827 |
|
|
3,053 |
|
Cash provided by operating
activities |
$3,078 |
|
|
$3,434 |
|
|
|
|
|
|
|
Net cash used in investing
activities |
(136 |
) |
|
(313 |
) |
Net cash used in financing
activities |
(3,743 |
) |
|
(3,111 |
) |
Effect of exchange rate
changes |
(24 |
) |
|
(31 |
) |
Decrease in cash and cash
equivalents |
($825 |
) |
|
($21 |
) |
|
Twenty-Six Week Periods Ended |
|
|
June 29,2019 |
|
June 30,2018 |
|
Net income |
$2,714 |
|
$1,432 |
|
Adjustments to reconcile net income to cash used in operating
activities |
1,494 |
|
1,402 |
|
Changes in operating assets
and liabilities: |
|
|
|
|
Accounts receivable |
(5,911 |
) |
(6,160 |
) |
Prepaid expenses and other current assets |
658 |
|
274 |
|
Net of transit accounts receivable and payable |
962 |
|
(1,094 |
) |
Accounts payable and accrued expenses |
(1,465 |
) |
(1,425 |
) |
Accrued payroll and related costs |
(1,217 |
) |
1,665 |
|
Right of use assets and liabilities |
259 |
|
- |
|
Income taxes payable |
29 |
|
296 |
|
Total adjustments |
(5,191 |
) |
(5,042 |
) |
Cash used in operating
activities |
($2,477 |
) |
($3,610 |
) |
|
|
|
|
|
Net cash used in investing
activities |
(238 |
) |
(613 |
) |
Net cash provided by financing
activities |
3,140 |
|
1,817 |
|
Effect of exchange rate
changes |
(39 |
) |
(14 |
) |
Increase (decrease) in cash
and cash equivalents |
$386 |
|
($2,420 |
) |
RCM Technologies,
Inc. Summary of Selected Income
Statement
Data (Unaudited) (In
Thousands)
|
Thirteen Week Period Ended June 29, 2019 |
|
|
Engineering |
|
SpecialtyHealth Care |
|
InformationTechnology |
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
Revenue |
$18,583 |
|
$23,370 |
|
$8,752 |
|
$50,705 |
|
Cost of services |
13,324 |
|
18,057 |
|
6,521 |
|
37,902 |
|
Gross Profit |
$5,259 |
|
$5,313 |
|
$2,231 |
|
$12,803 |
|
Gross Profit Margin |
28.3 |
% |
22.7 |
% |
25.5 |
% |
25.3 |
% |
|
Thirteen Week Period Ended June 30, 2018 |
|
|
Engineering |
|
SpecialtyHealth Care |
|
InformationTechnology |
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
Revenue |
$21,571 |
|
$22,858 |
|
$7,281 |
|
$51,170 |
|
Cost of services |
15,934 |
|
17,771 |
|
5,270 |
|
38,975 |
|
Gross Profit |
$5,637 |
|
$5,087 |
|
$2,011 |
|
$12,735 |
|
Gross Profit Margin |
26.1 |
% |
22.3 |
% |
27.6 |
% |
24.9 |
% |
|
Twenty-Six Week Period Ended June 29, 2019 |
|
|
Engineering |
|
SpecialtyHealth Care |
|
InformationTechnology |
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
Revenue |
$37,638 |
|
$47,540 |
|
$17,122 |
|
$102,300 |
|
Cost of services |
27,682 |
|
36,593 |
|
12,705 |
|
76,980 |
|
Gross Profit |
$9,956 |
|
$10,947 |
|
$4,417 |
|
$25,320 |
|
Gross Profit Margin |
26.5 |
% |
23.0 |
% |
25.8 |
% |
24.8 |
% |
|
Twenty-Six Week Period Ended June 30, 2018 |
|
|
Engineering |
|
SpecialtyHealth Care |
|
InformationTechnology |
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
Revenue |
$42,988 |
|
$45,492 |
|
$14,042 |
|
$102,522 |
|
Cost of services |
31,658 |
|
35,156 |
|
10,418 |
|
77,232 |
|
Gross Profit |
$11,330 |
|
$10,336 |
|
$3,624 |
|
$25,290 |
|
Gross Profit Margin |
26.4 |
% |
22.7 |
% |
25.8 |
% |
24.7 |
% |
RCM Technologies,
Inc. |
Tel: 856.356.4500 |
Corporate
Contacts: |
2500 McClellan Avenue |
Fax: 856.356.4600 |
Bradley S.
Vizi |
Pennsauken, NJ 08109 |
info@rcmt.com |
Executive Chairman |
|
www.rcmt.com |
Kevin D.
Miller |
|
|
Chief Financial Officer |
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