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RCM Technologies, Inc. Announces Second Quarter Results

PENNSAUKEN, N.J., Aug. 09, 2017 (GLOBE NEWSWIRE) -- RCM Technologies, Inc. (Nasdaq: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, information technology and specialty health care services, today announced financial results for the thirteen and twenty-six week periods ended July 1, 2017.

/EIN News/ -- RCM Technologies reported revenues of $45.5 million for the thirteen week period ended July 1, 2017, a 0.2% increase as compared to $45.4 million for the thirteen week period ended July 2, 2016 (the comparable prior year period). Gross profit was $12.1 million for both the thirteen week period ended July 1, 2017 and for the comparable prior year period.  The Company experienced net income of $0.2 million for the thirteen week period ended July 1, 2017 as compared to net income of $0.9 million for the comparable prior year period.  The primary reason for the decline in net income was a charge of $0.8 million in the current period, with no offsetting tax deduction, related to an increase in contingent consideration, primarily related to an acquisition in Canada.  Adjusted EBITDA was $2.0 million for the thirteen week period ended July 1, 2017 as compared to $1.9 million for the comparable prior year period, an increase of 5.8%. Please refer to “Supplemental Operating Results on a Non-GAAP Basis” below for a discussion of this and other non-GAAP measures, including a reconciliation to the most comparable GAAP measure.

RCM Technologies reported revenues of $91.9 million for the twenty-six week period ended July 1, 2017, a 0.8% decrease as compared to $92.6 million for the twenty-six week period ended July 2, 2016 (the comparable prior year period). Gross profit of $23.9 million for the twenty-six week period ended July 1, 2017 decreased 3.7% as compared to $24.8 million for the comparable prior year period.  The Company experienced net income of $0.7 million for the twenty-six week period ended July 1, 2017 as compared to net income of $1.9 million for the comparable prior year period.  Adjusted EBITDA was $3.5 million for the twenty-six week period ended July 1, 2017 as compared to $4.1 million for the comparable prior year period.

Rocco Campanelli, President and Chief Executive Officer of RCM Technologies, commented, “We are pleased with our progress in the second quarter of 2017 as revenue, gross profit and adjusted EBITDA all experienced slight increases from second quarter 2016. Our gross margin and adjusted EBITDA experienced nice gains from first quarter 2017. We are particularly excited about finishing the second quarter with a strong June, which bodes well for the second half of fiscal 2017.”

Kevin Miller, Chief Financial Officer of RCM Technologies, added, “We continue to exhibit strong cash flow, generating $3.5 million in cash provided by operating activities in our second quarter and $5.3 million year to date through July 1 in fiscal 2017. We expect to continue to have strong cash flow as our operating income for the balance of 2017 improves as compared to fiscal 2016. Despite third quarter seasonality across our business, especially in our Health Care segment due to school closings over summer, we believe our operating income for the second half of fiscal 2017 will exceed our first half of fiscal 2017.”

Conference Call
On Thursday, August 10, 2017, 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 (877) 331-7677.

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.  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  
  July 1, 2017   July 2, 2016  
Revenues $ 45,512   $ 45,379  
Cost of services   33,399     33,275  
Gross profit   12,113     12,104  
Selling, general and administrative   10,075     10,177  
Depreciation and amortization   410     399  
Change in contingent consideration   781     -  
Operating income   847     1,528  
Interest expense, net and foreign currency transactions   (81 )   (85 )
Income before income taxes   766     1,443  
Income tax expense   577     580  
Net income $ 189   $ 863  
         
Diluted net earnings per share data $ 0.02   $ 0.07  


  Twenty-Six Week Periods Ended  
  July 1, 2017   July 2, 2016  
Revenues $ 91,853   $ 92,555  
Cost of services   67,988     67,775  
Gross profit   23,865     24,780  
Selling, general and administrative   20,392     20,642  
Depreciation and amortization   807     789  
Change in contingent consideration   781     -  
Operating income   1,885     3,349  
Interest expense, net and foreign currency transactions   (217 )   (285 )
Income before income taxes   1,668     3,064  
Income tax expense   929     1,200  
Net income $ 739   $ 1,864  
         
Diluted net earnings per share data $ 0.06   $ 0.15  


RCM Technologies, Inc.
Summary Consolidated Selected Balance Sheet Data
 (In Thousands)

 
   
  July 1,
2017
  December 31,
2016
 
  (Unaudited)      
Cash and cash equivalents $ 391   $ 279  
Accounts receivable, net $ 43,152   $ 45,170  
Total current assets $ 48,992   $ 53,071  
Total assets $ 65,626   $ 69,831  
Total current liabilities $ 22,504   $ 23,713  
Borrowing under line of credit $ 10,092   $ 14,311  
Net debt (borrowings less cash) $ 9,701   $ 14,032  
Total liabilities $ 33,413   $ 38,576  
Stockholders’ equity $ 32,213   $ 31,255  
Treasury stock ($ 14,987 ) ($ 14,622 )

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, primarily changes in contingent consideration, 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 is a performance measure and not a liquidity measure, and therefore a reconciliation between net income and EBITDA and Adjusted EBITDA has been provided.  EBITDA should not be considered as an alternative to net income as an indicator of performance.  In addition, EBITDA does not take 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”, “Adjusted EBITDA”, “Adjusted Net Income” and “Diluted EPS” for the thirteen weeks and twenty-six weeks ended July 1, 2017 and July 2, 2016. 

  Thirteen Week Periods Ended   Twenty-Six Week Periods Ended  
  July 1, 2017   July 2, 2016   July 1, 2017   July 2, 2016  
GAAP net income $ 189   $ 863   $ 739   $ 1,864  
Income tax expense   577     580     929     1,200  
Interest expense   134     96     272     308  
Depreciation and amortization   410     399     807     789  
EBITDA (non-GAAP) $ 1,310   $ 1,938   $ 2,747   $ 4,161  
                 
Adjustments                
  Change in contingent consideration   781     -     781     -  
  Gain on foreign currency transactions   (53 )   (11 )   (55 )   (23 )
Adjusted EBITDA (non-GAAP) $ 2,038   $ 1,927   $ 3,473   $ 4,138  
                 
GAAP net income $ 189   $ 863   $ 739   $ 1,864  
Adjustments                
  Change in contingent consideration   781     -     781     -  
Adjusted net income (non-GAAP) $ 970   $ 863   $ 1,520   $ 1,864  
                 
GAAP Diluted EPS $ 0.02   $ 0.07   $ 0.06   $ 0.15  
Adjustments                
  Change in contingent consideration $ 0.06     -   $ 0.06     -  
Adjusted Diluted EPS (non-GAAP) $ 0.08   $ 0.07   $ 0.12   $ 0.15  


RCM Technologies, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In Thousands)
 
   
  Thirteen Week Periods Ended  
  July 1, 2017   July 2, 2016  
Net income $ 189   $ 863  
Adjustments to reconcile net income to cash
  provided by operating activities
  1,805     652  
Changes in operating assets and liabilities        
  Accounts receivable   887     5,385  
  Prepaid expenses and other current assets   272     553  
  Net of transit accounts receivable and payable   (489 )   (1,143 )
  Accounts payable and accrued expenses   71     (1,456 )
  Accrued payroll and related costs   417     977  
  Income taxes payable   309     796  
Total adjustments   3,272     5,764  
Cash provided by operating activities $ 3,461   $ 6,627  
         
Net cash used in investing activities   (459 )   (249 )
Net cash used in financing activities   (2,882 )   (6,221 )
Effect of exchange rate changes   (22 )   (26 )
Increase in cash and cash equivalents $ 98   $ 131  


  Twenty-Six Week Periods Ended  
  July 1, 2017   July 2, 2016  
Net income $ 739   $ 1,864  
Adjustments to reconcile net income to cash
  provided by operating activities
  2,607     1,367  
Changes in operating assets and liabilities        
  Accounts receivable   1,607     3,163  
  Prepaid expenses and other current assets   251     1,606  
  Net of transit accounts receivable and payable   (272 )   1,684  
  Accounts payable and accrued expenses   (536 )   (1,947 )
  Accrued payroll and related costs   468     (836 )
  Income taxes payable   466     780  
Total adjustments   4,591     5,817  
Cash provided by operating activities $ 5,330   $ 7,681  
         
Net cash used in investing activities   (551 )   (642 )
Net cash used in financing activities   (4,649 )   (7,766 )
Effect of exchange rate changes   (18 )   (24 )
Increase (decrease) in cash and cash equivalents $ 112   ($ 751 )


RCM Technologies, Inc.
Summary of Selected Income Statement Data
(Unaudited)
(In Thousands)
 
   
  Thirteen Week Period Ended July 1, 2017  
  Engineering   Information
Technology
  Specialty
Health Care
   

Consolidated
 
                 
Revenue $ 20,586   $ 8,557   $ 16,369   $ 45,512  
Cost of services   14,889     6,200     12,310     33,399  
Gross Profit   5,692     2,357     4,059     12,113  
Gross Profit Margin   27.7 %   27.5 %   24.8 %   26.6 %


  Thirteen Week Period Ended July 2, 2016  
  Engineering   Information
Technology
  Specialty
Health Care
   

Consolidated
 
                 
Revenue $ 18,742   $ 10,957   $ 15,680   $ 45,379  
Cost of services   13,715     8,172     11,388     33,275  
Gross Profit $ 5,027   $ 2,785   $ 4,292   $ 12,104  
Gross Profit Margin   26.9 %   25.4 %   27.4 %   26.7 %


  Twenty-Six Week Period Ended July 1, 2017  
  Engineering   Information
Technology
  Specialty
Health Care
   

Consolidated
 
                 
Revenue $ 39,810   $ 17,167   $ 34,876   $ 91,853  
Cost of services   29,076     12,657     26,255     67,988  
Gross Profit   10,734     4,510     8,621     23,865  
Gross Profit Margin   27.0 %   26.3 %   24.7 %   26.0 %


  Twenty-Six Week Period Ended July 2, 2016  
  Engineering   Information
Technology
  Specialty
Health Care
   

Consolidated
 
                 
Revenue $ 37,427   $ 23,697   $ 31,431   $ 92,555  
Cost of services   27,568     17,120     23,087     67,775  
Gross Profit $ 9,859   $ 6,577   $ 8,344   $ 24,780  
Gross Profit Margin   26.3 %   27.8 %   26.6 %   26.8 %
RCM Technologies, Inc.
2500 McClellan Avenue
Pennsauken, NJ 08109

Tel:  856.356.4500
Fax: 856.356.4600
info@rcmt.com
www.rcmt.com

Corporate Contacts:
Rocco Campanelli
President & CEO
Kevin D. Miller
Chief Financial Officer

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