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 week periods ended September 26,
2020.
RCM Technologies reported revenue of $31.6 million
for the thirteen week period ended September 26, 2020 (the current
period), a 21.6% decrease as compared to $40.3 million for the
thirteen week period ended September 28, 2019 (the comparable prior
year period). Gross profit was $8.8 million for the current period,
a 16.9% decrease as compared to $10.6 million for the comparable
prior year period. The Company experienced a GAAP operating
loss of $0.2 million for the current period, as compared to GAAP
operating income of $0.7 million for the comparable prior year
period. The Company experienced a GAAP net loss of $0.2
million, or $0.02 per diluted share, for the current period as
compared to GAAP net income of $0.3 million, or $0.03 per diluted
share, for the comparable prior year period.
RCM Technologies reported revenue of $109.2
million for the thirty-nine week period ended September 26, 2020
(the current period), a 23.4% decrease as compared to $142.6
million for the thirty-nine week period ended September 28, 2019
(the comparable prior year period). Gross profit was $28.2 million
for the current period, a 21.6% decrease as compared to $35.9
million for the comparable prior year period. The Company
experienced a GAAP operating loss of $9.1 million for the current
period, as compared to GAAP operating income of $4.6 million for
the comparable prior year period. The Company experienced a
GAAP net loss of $7.2 million, or $0.58 per diluted share, for the
current period as compared to GAAP net income of $3.0 million, or
$0.24 per diluted share, for the comparable prior year period.
Bradley Vizi, Executive Chairman of RCM
Technologies, commented, “We continue to make progress on our COVID
plan that we outlined in May. Optimizing our SGA costs and focusing
on gross margin allowed us to achieve positive EBITDA in the third
quarter. We are looking forward to delivering sequentially better
results in the fourth quarter of 2020, and, despite obvious
headwinds, we will continue to focus on further improvement as we
head into 2021.”
Kevin Miller, Chief Financial Officer of RCM
Technologies, commented, “We generated another $6.0 million in cash
flow from operations in the third quarter of 2020 and $22.8 million
in the second and third quarters combined. Our robust cash flow has
allowed us to reduce our net debt by 62%, from $32.9 million as of
December 28, 2019, to $12.5 million as of September 26,
2020.”
Conference Call On Tuesday,
November 10, 2020, 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 (866) 578-1005.
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 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 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 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 the impact of the COVID-19
pandemic, 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 |
|
|
|
September 26, 2020 |
|
September 28, 2019 |
|
| Revenue |
$31,561 |
|
$40,250 |
|
| Cost of
services |
22,741 |
|
29,635 |
|
| Gross
profit |
8,820 |
|
10,615 |
|
| Selling,
general and administrative |
8,606 |
|
9,498 |
|
| Depreciation
and amortization of property and equipment |
292 |
|
304 |
|
| Amortization
of acquired intangible assets |
80 |
|
82 |
|
| Operating
(loss) income |
(158 |
) |
731 |
|
| Other
expense, net |
253 |
|
326 |
|
| (Loss)
income before income taxes |
(411 |
) |
405 |
|
| Income tax
(benefit) expense |
(167 |
) |
70 |
|
| Net (loss)
income |
($244 |
) |
$335 |
|
| |
|
|
|
|
| Diluted net
(loss) earnings per share data |
($0.02 |
) |
$0.03 |
|
|
|
Thirty-Nine Week Periods Ended |
|
|
|
September 26, 2020 |
|
September 28, 2019 |
|
| Revenue |
$109,246 |
|
$142,550 |
|
| Cost of
services |
81,080 |
|
106,615 |
|
| Gross
profit |
28,166 |
|
35,935 |
|
| Selling,
general and administrative |
27,837 |
|
30,165 |
|
| Depreciation
and amortization of property and equipment |
793 |
|
944 |
|
| Amortization
of acquired intangible assets |
240 |
|
247 |
|
| Write-off
of receivables and professional fees incurred related to
arbitration |
8,397 |
|
- |
|
| Operating
(loss) income |
(9,101 |
) |
4,579 |
|
| Other
expense, net |
895 |
|
1,275 |
|
| (Loss)
income before income taxes |
(9,996 |
) |
3,304 |
|
| Income tax
(benefit) expense |
(2,815 |
) |
255 |
|
| Net (loss)
income |
($7,181 |
) |
$3,049 |
|
| |
|
|
|
|
| Diluted net
(loss) earnings per share data |
($0.58 |
) |
$0.24 |
|
RCM Technologies, Inc.
Summary Consolidated Selected Balance Sheet Data
(In Thousands)
|
|
September 26, 2020 |
|
December 28, 2019 |
|
|
(Unaudited) |
|
|
| Cash and
cash equivalents |
$757 |
|
$1,847 |
| Accounts
receivable, net |
$32,986 |
|
$59,760 |
| Total
current assets |
$36,121 |
|
$70,657 |
| Total
assets |
$62,553 |
|
$96,173 |
| Total
current liabilities |
$19,930 |
|
$21,408 |
| Borrowing
under line of credit |
$13,258 |
|
$34,761 |
| Net debt
(line of credit less cash) |
$12,501 |
|
$32,914 |
| Total
liabilities |
$38,926 |
|
$63,770 |
|
Stockholders’ equity |
$23,627 |
|
$32,403 |
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 thirty-nine week periods ended September 26, 2020 and September
28, 2019.
|
|
Thirteen Week Periods Ended |
|
Thirty-Nine Week Periods
Ended |
|
|
|
September 26, 2020 |
|
September 28, 2019 |
|
September 26, 2020 |
|
September 28, 2019 |
|
|
GAAP net (loss) income |
($244 |
) |
$335 |
|
($7,181 |
) |
$3,049 |
|
| Income tax
(benefit) expense |
(167 |
) |
70 |
|
(2,815 |
) |
255 |
|
| Interest
expense |
126 |
|
390 |
|
650 |
|
1,276 |
|
| Imputed
interest on contingent consideration |
36 |
|
(56 |
) |
108 |
|
40 |
|
| Depreciation
of property and equipment |
292 |
|
304 |
|
793 |
|
944 |
|
|
Amortization of acquired intangible assets |
80 |
|
82 |
|
240 |
|
247 |
|
|
EBITDA (non-GAAP) |
$123 |
|
$1,125 |
|
($8,205 |
) |
$5,811 |
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments |
|
|
|
|
|
|
|
|
|
Write-off of receivables and professional fees incurred related to
arbitration |
- |
|
- |
|
8,397 |
|
- |
|
|
Loss (gain) on foreign currency transactions |
91 |
|
(8 |
) |
137 |
|
(41 |
) |
|
Adjusted EBITDA (non-GAAP) |
$214 |
|
$1,117 |
|
$329 |
|
$5,770 |
|
RCM Technologies, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited) (In Thousands)
| |
Thirteen Week Periods Ended |
|
| |
September 26, 2020 |
|
September 28, 2019 |
|
|
Net (loss) income |
($244 |
) |
$335 |
|
|
Adjustments to reconcile net income to cash used in operating
activities |
316 |
|
442 |
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Accounts receivable |
6,664 |
|
727 |
|
| |
Prepaid
expenses and other current assets |
484 |
|
(175 |
) |
| |
Net of
transit accounts receivable and payable |
149 |
|
(39 |
) |
| |
Accounts
payable and accrued expenses |
(1,231 |
) |
(1,901 |
) |
| |
Accrued
payroll and related costs |
(125 |
) |
(769 |
) |
| |
Right of use
assets and liabilities |
(19 |
) |
(14 |
) |
| |
Income taxes
payable |
(37 |
) |
1 |
|
|
Total adjustments |
6,201 |
|
(1,728 |
) |
|
Cash provided by (used in) operating activities |
$5,957 |
|
($1,393 |
) |
|
|
|
|
|
|
|
Net cash used in investing activities |
(249 |
) |
(58 |
) |
|
Net cash (used in) provided by financing activities |
(6,427 |
) |
1,020 |
|
|
Effect of exchange rate changes |
(156 |
) |
(44 |
) |
|
Decrease in cash and cash equivalents |
($875 |
) |
($475 |
) |
| |
Thirty-Nine Week Periods Ended |
|
| |
September 26, 2020 |
|
September 28, 2019 |
|
|
Net (loss) income |
($7,181 |
) |
$3,049 |
|
|
Adjustments to reconcile net income to cash used in operating
activities |
6,293 |
|
1,936 |
|
|
Changes in operating assets and liabilities: |
|
|
|
|
|
|
Accounts receivable |
18,891 |
|
(5,184 |
) |
| |
Prepaid
expenses and other current assets |
2,270 |
|
483 |
|
| |
Net of
transit accounts receivable and payable |
1,056 |
|
923 |
|
| |
Accounts
payable and accrued expenses |
1,508 |
|
(3,366 |
) |
| |
Accrued
payroll and related costs |
825 |
|
(1,986 |
) |
| |
Right of use
assets and liabilities |
(16 |
) |
245 |
|
| |
Income taxes
payable |
94 |
|
30 |
|
|
Total adjustments |
30,921 |
|
(6,919 |
) |
|
Cash provided by (used in) operating activities |
$23,740 |
|
($3,870 |
) |
|
|
|
|
|
|
|
Net cash used in investing activities |
(360 |
) |
(296 |
) |
|
Net cash (used in) provided by financing activities |
(24,191 |
) |
4,160 |
|
|
Effect of exchange rate changes |
(279 |
) |
(83 |
) |
|
Decrease in cash and cash equivalents |
($1,090 |
) |
($89 |
) |
RCM Technologies, Inc.
Summary of Selected Income Statement Data
(Unaudited) (In Thousands)
| |
Thirteen Week Period Ended September 26, 2020 |
|
|
|
Engineering |
|
Specialty Health Care |
|
Information Technology |
|
Consolidated |
|
| |
|
|
|
|
|
|
|
|
| Revenue |
$15,087 |
|
$9,015 |
|
$7,459 |
|
$31,561 |
|
| Cost of
services |
10,674 |
|
6,724 |
|
5,343 |
|
22,741 |
|
| Gross
profit |
$4,413 |
|
$2,291 |
|
$2,116 |
|
$8,820 |
|
| Gross profit
margin |
29.3 |
% |
25.4 |
% |
28.4 |
% |
27.9 |
% |
| |
Thirteen Week Period Ended September 28, 2019 |
|
|
|
Engineering |
|
Specialty Health Care |
|
Information Technology |
|
Consolidated |
|
| |
|
|
|
|
|
|
|
|
| Revenue |
$15,140 |
|
$16,765 |
|
$8,345 |
|
$40,250 |
|
| Cost of
services |
10,984 |
|
12,795 |
|
5,856 |
|
29,635 |
|
| Gross
profit |
$4,156 |
|
$3,970 |
|
$2,489 |
|
$10,615 |
|
| Gross profit
margin |
27.5 |
% |
23.7 |
% |
29.8 |
% |
26.4 |
% |
| |
Thirty-Nine Week Period Ended September 26,
2020 |
|
|
|
Engineering |
|
Specialty Health Care |
|
Information Technology |
|
Consolidated |
|
| |
|
|
|
|
|
|
|
|
| Revenue |
$43,288 |
|
$41,896 |
|
$24,062 |
|
$109,246 |
|
| Cost of
services |
30,673 |
|
33,037 |
|
17,370 |
|
81,080 |
|
| Gross
profit |
12,615 |
|
8,859 |
|
6,692 |
|
28,166 |
|
| Gross profit
margin |
29.1 |
% |
21.1 |
% |
27.8 |
% |
25.8 |
% |
| |
Thirty-Nine Week Period Ended September 28,
2019 |
|
|
|
Engineering |
|
Specialty Health Care |
|
Information Technology |
|
Consolidated |
|
| |
|
|
|
|
|
|
|
|
| Revenue |
$52,778 |
|
$64,305 |
|
$25,467 |
|
$142,550 |
|
| Cost of
services |
38,666 |
|
49,395 |
|
18,554 |
|
106,615 |
|
| Gross
profit |
$14,112 |
|
$14,910 |
|
$6,913 |
|
$35,935 |
|
| Gross profit
margin |
26.7 |
% |
23.2 |
% |
27.1 |
% |
25.2 |
% |
|
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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