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 30, 2018.
RCM Technologies reported revenues of $51.7 million for the
thirteen week period ended June 30, 2018, a 13.6% increase as
compared to $45.5 million for the thirteen week period ended July
1, 2017 (the comparable prior year period). Gross profit was $12.7
million for the thirteen week period ended June 30, 2018, a 5.1%
increase as compared to $12.1 million for the comparable prior year
period. The Company experienced operating income of $0.9
million for the current quarter as compared to $0.8 million for the
comparable prior year period. Net income was $0.4 million, or
$0.3 per diluted share, for the current quarter as compared to net
income of $0.2 million, or $0.02 per diluted share, for the
comparable prior year period.
RCM Technologies reported revenues of $102.5 million for the
twenty-six week period ended June 30, 2018, a 11.6% increase as
compared to $91.9 million for the twenty-six week period ended July
1, 2017 (the comparable prior year period). Gross profit was $25.3
million for the twenty-six week period ended June 30, 2018, a 6.0%
increase as compared to $23.9 million for the comparable prior year
period. The Company experienced operating income of $2.6
million for the current quarter as compared to $1.9 million for the
comparable prior year period. Net income was $1.4 million, or $0.12
per diluted share, for the current quarter as compared to net
income of $0.7 million, or $0.06 per diluted share, for the
comparable prior year period.
The Company had adjusted EBITDA (non-GAAP) of $2.7 million for
the thirteen weeks ended June 30, 2018, a 30.5% increase as
compared to $2.0 million for the comparable prior year period.
The Company had adjusted EBITDA (non-GAAP) of $4.8 million
for the twenty-six weeks ended June 30, 2018, a 38.0% increase as
compared to $3.5 million for the comparable prior year period.
A reconciliation of adjusted EBITDA (non-GAAP) to EBITDA
(non-GAAP) and net income (GAAP) can be found on the fourth page of
this press release.
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. The
Company did not incur any such charges in the comparable prior year
period. The Company incurred charges of $0.8 million for increases
to contingent consideration for both the thirteen and twenty-six
week periods ended July 1, 2017. The increase can be
principally attributed to the PCI acquisition. Since the PCI
acquisition was for stock in Canada the increase in purchase price
is not tax deductible and is treated as a permanent difference.
There was no change to contingent consideration for the thirteen
and twenty-six week periods ended June 30, 2018.
Bradley Vizi, Executive Chairman of RCM Technologies, commented,
“We are pleased with our 2018 consolidated second quarter results.
We posted our third consecutive quarter with revenues
exceeding $50 million. Our second quarter revenues of $51.7 million
are the highest quarterly revenues we’ve seen in at least fifteen
years. We are confident our fiscal 2018 revenues will exceed
$200 million. We are pleased to see our adjusted EBITDA for the
thirteen and twenty-six week periods ended June 30, 2018 of $2.6
million and $4.8 million, respectively, grow by approximately 30%
and 38%, respectively, over the comparable prior year periods.”
Kevin Miller, Chief Financial Officer of RCM Technologies,
added, “We generated $3.4 million in cash flow from operations in
the second quarter of fiscal 2018, reducing our line of credit to
$29.2 million as of June 30, 2018 from $32.0 million as of March
31, 2018. We anticipate better cash flow in the third quarter
as we’ve seen strong accounts receivable collections so far in July
and August.”
Conference CallOn Wednesday, August 15, 2018,
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 (800) 285-6670.
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 Share and Per Share Amounts)
|
Thirteen Week Periods Ended |
|
|
June 30, 2018 |
|
July 1, 2017 |
|
Revenues |
$51,710 |
|
$45,512 |
|
Cost of services |
38,975 |
|
33,399 |
|
Gross profit |
12,735 |
|
12,113 |
|
Selling, general and
administrative |
10,076 |
|
10,075 |
|
Depreciation and
amortization |
398 |
|
410 |
|
Severance, professional
fees and other charges |
1,371 |
|
- |
|
Change in contingent
consideration |
- |
|
781 |
|
Operating income |
890 |
|
847 |
|
Other expense, net |
(388 |
) |
(81 |
) |
Income before income
taxes |
502 |
|
766 |
|
Income tax expense |
121 |
|
577 |
|
Net income |
$381 |
|
$189 |
|
|
|
|
|
|
Diluted net earnings
per share data |
$0.03 |
|
$0.02 |
|
|
Twenty-Six Week Periods Ended |
|
|
June 30, 2018 |
|
July 1, 2017 |
|
Revenues |
$102,522 |
|
$91,853 |
|
Cost of services |
77,232 |
|
67,988 |
|
Gross profit |
25,290 |
|
23,865 |
|
Selling, general and
administrative |
20,497 |
|
20,392 |
|
Depreciation and
amortization |
812 |
|
807 |
|
Severance, professional
fees and other charges |
1,371 |
|
- |
|
Change in contingent
consideration |
- |
|
781 |
|
Operating income |
2,610 |
|
1,885 |
|
Other expense, net |
(695 |
) |
(217 |
) |
Income before income
taxes |
1,915 |
|
1,668 |
|
Income tax expense |
483 |
|
929 |
|
Net income |
$1,432 |
|
$739 |
|
|
|
|
|
|
Diluted net earnings
per share data |
$0.12 |
|
$0.06 |
|
RCM Technologies,
Inc.Summary Consolidated Selected Balance Sheet
Data (In Thousands)
|
June 30,2018 |
|
December 30,2017 |
|
|
(Unaudited) |
|
|
|
Cash and cash
equivalents |
$431 |
|
$2,851 |
|
Accounts receivable,
net |
$51,741 |
|
$46,080 |
|
Total current
assets |
$56,455 |
|
$55,639 |
|
Total assets |
$73,813 |
|
$73,279 |
|
Total current
liabilities |
$19,221 |
|
$22,188 |
|
Borrowing under line of
credit |
$29,202 |
|
$27,279 |
|
Net debt (borrowings
less cash) |
$28,771 |
|
$24,428 |
|
Total liabilities |
$50,096 |
|
$51,248 |
|
Stockholders’
equity |
$23,717 |
|
$22,031 |
|
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 weeks and
twenty-six weeks ended June 30, 2018 and July 1, 2017.
|
Thirteen Week Periods Ended |
|
Twenty-Six Week Periods Ended |
|
|
June 30,2018 |
|
July 1,2017 |
|
June 30,2018 |
|
July 1,2017 |
|
GAAP net income |
$381 |
|
$189 |
|
$1,432 |
|
$739 |
|
Income tax expense |
121 |
|
577 |
|
483 |
|
929 |
|
Interest expense |
400 |
|
134 |
|
666 |
|
272 |
|
Depreciation and amortization |
398 |
|
410 |
|
812 |
|
807 |
|
EBITDA
(non-GAAP) |
$1,300 |
|
$1,310 |
|
$3,393 |
|
$2,747 |
|
|
|
|
|
|
|
|
|
|
Adjustments |
|
|
|
|
|
|
|
|
Severance, professional fees and other charges |
1,371 |
|
- |
|
1,371 |
|
- |
|
Change in
contingent consideration |
- |
|
781 |
|
0 |
|
781 |
|
(Gain) loss on foreign currency transactions |
(12 |
) |
(53 |
) |
29 |
|
(55 |
) |
Adjusted
EBITDA (non-GAAP) |
$2,659 |
|
$2,038 |
|
$4,793 |
|
$3,473 |
|
RCM Technologies,
Inc.Condensed Consolidated Statements of
Cash Flows(Unaudited)(In
Thousands)
|
Thirteen Week Periods Ended |
|
|
June 30, 2018 |
|
July 1, 2017 |
|
Net
income |
$381 |
|
$189 |
|
Adjustments
to reconcile net income to cash (used in) provided by
operating activities |
623 |
|
1,805 |
|
Changes in
operating assets and liabilities: |
|
|
|
|
|
Accounts
receivable |
(82 |
) |
887 |
|
|
Prepaid expenses and
other current assets |
276 |
|
272 |
|
|
Net of transit accounts
receivable and payable |
149 |
|
(489 |
) |
|
Accounts payable and
accrued expenses |
(213 |
) |
71 |
|
|
Accrued payroll and
related costs |
1,735 |
|
417 |
|
|
Income taxes
payable |
565 |
|
309 |
|
Total
adjustments |
3,053 |
|
3,272 |
|
Cash
provided by operating activities |
3,434 |
|
$3,461 |
|
|
|
|
|
|
Net cash
used in investing activities |
(313 |
) |
(459 |
) |
Net cash
used in financing activities |
(3,111 |
) |
(2,882 |
) |
Effect of
exchange rate changes |
(31 |
) |
(22 |
) |
Increase in
cash and cash equivalents |
($21 |
) |
$98 |
|
|
Twenty-Six Week Periods Ended |
|
|
June 30, 2018 |
|
July 1, 2017 |
|
Net
income |
$1,432 |
|
$739 |
|
Adjustments
to reconcile net income to cash (used in) provided by
operating activities |
1,402 |
|
2,607 |
|
Changes in
operating assets and liabilities: |
|
|
|
|
|
Accounts
receivable |
(6,160 |
) |
1,607 |
|
|
Prepaid expenses and
other current assets |
274 |
|
251 |
|
|
Net of transit accounts
receivable and payable |
(1,094 |
) |
(272 |
) |
|
Accounts payable and
accrued expenses |
(1,425 |
) |
(536 |
) |
|
Accrued payroll and
related costs |
1,665 |
|
468 |
|
|
Income taxes
payable |
296 |
|
466 |
|
Total
adjustments |
(5,042 |
) |
4,591 |
|
Cash (used
in) provided by operating activities |
($3,610 |
) |
$5,330 |
|
|
|
|
|
|
Net cash
used in investing activities |
(613 |
) |
(551 |
) |
Net cash
provided by (used in) financing activities |
1,817 |
|
(4,649 |
) |
Effect of
exchange rate changes |
(14 |
) |
(18 |
) |
(Decrease)
increase in cash and cash equivalents |
($2,420 |
) |
$112 |
|
RCM Technologies,
Inc.Summary of Selected Income Statement
Data(Unaudited)(In
Thousands)
|
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 |
% |
|
Thirteen Week Period Ended July 1,
2017 |
|
|
Engineering |
|
SpecialtyHealth Care |
|
InformationTechnology |
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
Revenue |
$20,586 |
|
$ |
$16,369 |
|
$8,557 |
|
$45,512 |
|
Cost of services |
14,889 |
|
|
12,310 |
|
6,200 |
|
33,399 |
|
Gross Profit |
5,697 |
|
|
4,059 |
|
2,357 |
|
12,113 |
|
Gross Profit
Margin |
27.7 |
% |
|
24.8 |
% |
27.5 |
% |
26.6 |
% |
|
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 |
% |
|
Twenty-Six Week Period Ended July 1,
2017 |
|
|
Engineering |
|
SpecialtyHealth Care |
|
InformationTechnology |
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
Revenue |
$39,810 |
|
$34,876 |
|
$17,167 |
|
$91,853 |
|
Cost of services |
29,076 |
|
26,255 |
|
12,657 |
|
67,988 |
|
Gross Profit |
10,734 |
|
8,621 |
|
4,510 |
|
23,865 |
|
Gross Profit
Margin |
27.0 |
% |
24.7 |
% |
26.3 |
% |
26.0 |
% |
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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