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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

 

P R E S S   R E L E A S E

 

RCM TECHNOLOGIES, INC. ANNOUNCES

THIRD QUARTER RESULTS

 

Pennsauken, NJ – November 11, 2021 -- 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 October 2, 2021.

 

RCM Technologies reported revenue of $45.5 million for the thirteen week period ended October 2, 2021 (the current period), a 44.1% increase as compared to $31.6 million for the thirteen week period ended September 26, 2020 (the comparable prior year period). Gross profit was $12.2 million for the current period, a 38.5% increase as compared to $8.8 million for the comparable prior year period.  The Company experienced GAAP operating income of $3.7 million for the current period as compared to a GAAP operating loss of $0.2 million for the comparable prior year period.  The Company experienced Adjusted operating income of $1.6 million for the current period as compared to an Adjusted operating loss of $0.2 million for the comparable prior year period.  The Company experienced Adjusted EBITDA of $1.9 million for the current period as compared to Adjusted EBITDA of $0.2 million for the comparable prior year period.  The Company experienced GAAP net income of $2.8 million, or $0.24 per diluted share, for the current period as compared to a GAAP net loss of $0.2 million, or ($0.02) per diluted share, for the comparable prior year period.

 

RCM Technologies reported revenue of $139.0 million for the thirty-nine week period ended October 2, 2021 (the current period), a 27.2% increase as compared to $109.2 million for the thirty-nine week period ended September 26, 2020 (the comparable prior year period). Gross profit was $35.3 million for the current period, a 25.4% increase as compared to $28.2 million for the comparable prior year period.  The Company experienced GAAP operating income of $7.0 million for the current period as compared to a GAAP operating loss of $9.1 million for the comparable prior year period.  The Company experienced Adjusted operating income of $5.1 million for the current period as compared to an Adjusted operating loss of $0.7 million for the comparable prior year period.  The Company experienced Adjusted EBITDA of $5.9 million for the current period as compared to Adjusted EBITDA of $0.3 million for the comparable prior year period.  The Company experienced GAAP net income of $5.0 million, or $0.45 per diluted share, for the current period as compared to a GAAP net loss of $7.2 million, or ($0.58) per diluted share, for the comparable prior year period.

 

On July 30, 2021, the Company sold the principal assets and certain liabilities of its Pickering and Kincardine offices, located in Ontario, Canada. These two offices were often referred to as the Canadian Power Systems business and principally provided engineering services to two major nuclear power providers in Canada.  The two Canadian Power Systems offices were part of a reporting unit within the Company’s Engineering segment. The Company will continue to offer other engineering services in Canada and similar services in the United States.  For the thirteen week periods ended October 2, 2021 and September 26, 2020, these two offices generated revenue of $0.5 million and $2.7 million, respectively. For the thirty-nine week periods ended October 2, 2021 and September 26, 2020, these two offices generated revenue of $4.9 million and $8.6 million, respectively.  The Company recorded a $2.1 million gain on the sale of assets of the Canadian Power Systems business.

 

 
 

 

Bradley Vizi, Executive Chairman of RCM Technologies, commented, “Our third-quarter results demonstrate the tangible progress RCM Technologies has made over the past year. Our team's commitment to executing our vision has translated into tangible results. Compared to this point last year, the Company's business momentum and financial results have shown a stark improvement.”

 

Kevin Miller, Chief Financial Officer of RCM Technologies, commented, “Our third-quarter results exceeded our expectations. Adjusted EBITDA improved materially over a COVID-impacted third quarter of 2020, but more importantly, it equated to a roughly 70% improvement over the third quarter of 2019. We're excited to carry the momentum into the fourth quarter of 2021 and fiscal 2022. Also, mainly due to the sale of our Canadian Power Systems business, we ended the third quarter with a favorable net debt position. We expect a healthy uptick in debt during the fourth quarter as we invest in working capital.”

 

Conference Call

On Friday, November 12, 2021, 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 Operations

(Unaudited)

(In Thousands, Except Per Share Amounts)

 

 

Thirteen Week Periods Ended

 
 

October 2,

2021

  

September 26,

2020

  

Revenue

$45,471

  

$31,561

  

Cost of services

33,257

  

22,741

  

Gross profit

12,214

  

8,820

  

Selling, general and administrative

10,332

  

8,606

  

Depreciation and amortization of property and equipment

250

  

292

  

Amortization of acquired intangible assets

6

  

80

  

Write-off of receivables and professional fees incurred related to arbitration

-

  

-

  

Tax credit professional fees

50

  

-

  

Gain on sale of assets

(2,151

)

-

  

Operating income (loss)

3,727

  

(158

)

Other expense, net

16

  

253

  

Income (loss) before income taxes

3,711

  

(411

)

Income tax expense (benefit)

959

  

(167

)

Net income (loss)

$2,752

  

($244

)
         

Diluted net earnings (loss) per share data

$0.24

  

($0.02

)

 

 

Thirty-Nine Week Periods Ended

 
 

October 2,

2021

  

September 26,

2020

  

Revenue

$138,953

  

$109,246

  

Cost of services

103,623

  

81,080

  

Gross profit

35,330

  

28,166

  

Selling, general and administrative

29,396

  

27,837

  

Depreciation and amortization of property and equipment

775

  

793

  

Amortization of acquired intangible assets

95

  

240

  

Write-off of receivables and professional fees incurred related to arbitration

-

  

8,397

  

Tax credit professional fees

170

  

-

  

Gain on sale of assets

(2,151

)

-

  

Operating income (loss)

7,045

  

(9,101

)

Other expense, net

229

  

895

  

Income (loss) before income taxes

6,816

  

(9,996

)

Income tax expense (benefit)

1,801

  

(2,815

)

Net income (loss)

$5,015

  

($7,181

)
         

Diluted net earnings (loss) per share data

$0.45

  

($0.58

)

 

RCM Technologies, Inc.

Summary Consolidated Selected Balance Sheet Data

(In Thousands)

 

 

October 2,

2021

  

January 2,

2021
 

(Unaudited)

    

Cash and cash equivalents

$2,820

  

$734

Accounts receivable, net

$43,074

  

$36,007

Total current assets

$47,282

  

$43,934

Total assets

$70,291

  

$68,339

Total current liabilities

$33,726

  

$28,741

Borrowing under line of credit

$7,964

  

$11,890

Net debt (line of credit less cash)

$5,144

  

$11,156

Total liabilities

$45,739

  

$46,101

Stockholders’ equity

$24,552

  

$22,238

 

 
 

 

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 (“EBITDA”, “Adjusted EBITDA” and “Adjusted operating income”) 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.  EBITDA, Adjusted EBITDA and Adjusted operating income should not be considered as an alternative to net income as an indicator of performance.  In addition, EBITDA, Adjusted EBITDA, and Adjusted operating income do 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 tables present the Company's GAAP net income and GAAP operating income and the corresponding adjustments used to calculate EBITDA, Adjusted EBITDA and Adjusted operating income for the thirteen and thirty-nine week periods ended October 2, 2021 and September 26, 2020. 

 

 

 

Thirteen

Week Periods Ended

  

Thirty-Nine

Week Periods Ended

  
 

October 2,

2021

  

September 26,

2020

  

October 2,

2021

  

September 26,

2020

  

GAAP net income (loss)

$2,752

  

($244

)

$5,015

  

($7,181

)

Income tax expense (benefit)

959

  

(167

)

1,801

  

(2,815

)

Interest expense

64

  

126

  

307

  

650

  

Change in fair value of contingent consideration

-

  

36

  

52

  

108

  

Depreciation of property and equipment

250

  

292

  

775

  

793

  

Amortization of acquired intangible assets

6

  

80

  

95

  

240

  

EBITDA (non-GAAP)

$4,031

  

$123

  

$8,045

  

($8,205

)
                 

Adjustments

                

 Write-off of receivables and professional fees

  incurred related to arbitration

-

  

-

  

-

  

8,397

  

 Gain on sale of assets

(2,151

)

-

  

(2,151

)

-

  

 Tax credit professional fees

50

  

-

  

170

  

-

  

  (Gain) loss on foreign currency transactions

(48

)

91

  

(130

)

137

  

Adjusted EBITDA (non-GAAP)

$1,882

  

$214

  

$5,934

  

$329

  
                 

GAAP operating income

$3,727

  

($158

)

$7,045

  

($9,101

)

Adjustments

                

 Write-off of receivables and professional fees

  incurred related to arbitration

-

  

-

  

-

  

8,397

  

 Gain on sale of assets

(2,151

)

-

  

(2,151

)

-

  

 Tax credit professional fees

50

  

-

  

170

  

-

  

Adjusted operating income (loss) (non-GAAP)

$1,626

  

($158

)

$5,064

  

($704

)
 
 

 

RCM Technologies, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In Thousands)

 

 

Thirteen Week Periods Ended

 
 

October 2,

2021

  

September 26,

2020

  

Net income (loss)

$2,752

  

($244

)

Adjustments to reconcile net income (loss) to cash

 (used in) provided by operating activities

(1,400

)

906

  

Changes in operating assets and liabilities:

        
 

Accounts receivable

(8,673

)

6,664

  
 

Prepaid expenses and other current assets

1,133

  

484

  
 

Net of transit accounts receivable and payable

(1,326

)

149

  
 

Accounts payable and accrued expenses

617

  

(825

)
 

Accrued payroll and related costs

2,007

  

(125

)
 

Right of use liabilities

(419

)

(609

)
 

Income taxes payable

508

  

(37

)
 

Deferred revenue

3,522

  

(406

)
 

Deposits

(11

)

-

  

Total adjustments

(4,042

)

6,201

  

Net cash (used in) provided by operating activities

($1,290

)

$5,957

  
         

Net cash provided by (used in) investing activities

6,229

  

(249

)

Net cash used in financing activities

(3,537

)

(6,427

)

Effect of exchange rate changes

19

  

(156

)

Increase (decrease) in cash and cash equivalents

$1,421

  

($875

)

 

 

Thirty-Nine Week Periods Ended

 
 

October 2,

2021

  

September 26,

2020

  

Net income (loss)

$5,015

  

($7,181

)

Adjustments to reconcile net income (loss) to cash

 provided by operating activities

1,133

  

8,027

  

Changes in operating assets and liabilities:

        
 

Accounts receivable

(9,602

)

18,891

  
 

Prepaid expenses and other current assets

3,090

  

2,270

  
 

Net of transit accounts receivable and payable

(1,449

)

1,056

  
 

Accounts payable and accrued expenses

2,523

  

1,914

  
 

Accrued payroll and related costs

1,794

  

825

  
 

Right of use liabilities

(1,457

)

(1,750

)
 

Income taxes payable

259

  

94

  
 

Deferred revenue

3,522

  

(406

)
 

Deposits

(6

)

40

  

Total adjustments

(193

)

30,961

  

Net cash provided by operating activities

$4,822

  

$23,780

  
         

Net cash provided by (used in) investing activities

6,098

  

(400

)

Net cash used in financing activities

(8,751

)

(24,191

)

Effect of exchange rate changes

(83

)

(279

)

Increase (decrease) in cash and cash equivalents

$2,086

  

($1,090

)
 
 

 

RCM Technologies, Inc.

Summary of Selected Income Statement Data

(Unaudited)

(In Thousands)

 

 

 

Thirteen Week Period Ended October 2, 2021

  
 

Engineering

  

Specialty

Health Care

  

Information

Technology

  

Consolidated

  
                 

Revenue

$16,482

  

$19,646

  

$9,343

  

$45,471

  

Cost of services

12,694

  

14,115

  

6,448

  

33,257

  

Gross profit

$3,788

  

$5,531

  

$2,895

  

$12,214

  

Gross profit margin

23.0

%

28.2

%

31.0

%

26.9

%

 

 

 

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

%

 

 

 

Thirty-Nine Week Period Ended October 2, 2021

  
 

Engineering

  

Specialty

Health Care

  

Information

Technology

  

Consolidated

  
                 

Revenue

$47,882

  

$63,723

  

$27,348

  

$138,953

  

Cost of services

36,875

  

47,564

  

19,184

  

103,623

  

Gross profit

$11,007

  

$16,159

  

$8,164

  

$35,330

  

Gross profit margin

23.0

%

25.4

%

29.9

%

25.4

%

 

 

 

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

%