RCMT
$1.39
R C M Tech
Earnings Details
2nd Quarter June 2020
Monday, August 10, 2020 4:05:00 PM
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Summary

R C M Tech (RCMT) Recent Earnings

R C M Tech (RCMT) reported a 2nd Quarter June 2020 loss of $0.08 per share on revenue of $32.7 million. The consensus estimate was a loss of $0.15 per share on revenue of $31.2 million. Revenue fell 35.6% compared to the same quarter a year ago.

Results
Reported Earnings
($0.08)
Earnings Whisper
-
Consensus Estimate
($0.15)
Reported Revenue
$32.7 Mil
Revenue Estimate
$31.2 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

RCM Technologies, Inc. Announces Second Quarter Results

PENNSAUKEN, N.J., Aug. 10, 2020 (GLOBE NEWSWIRE) -- 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 27, 2020.

RCM Technologies reported revenue of $32.7 million for the thirteen week period ended June 27, 2020 (the current period), a 35.6% decrease as compared to $50.7 million for the thirteen week period ended June 29, 2019 (the comparable prior year period). Gross profit was $8.5 million for the current period, a 33.6% decrease as compared to $12.8 million for the comparable prior year period. The Company experienced a GAAP operating loss of $1.2 million for the current period, as compared to GAAP operating income of $2.2 million for the comparable prior year period. The Company experienced a GAAP net loss of $1.0 million, or $0.08 per diluted share, for the current period as compared to GAAP net income of $1.3 million, or $0.10 per diluted share, for the comparable prior year period.

RCM Technologies reported revenue of $77.7 million for the twenty-six week period ended June 27, 2020 (the current period), a 24.1% decrease as compared to $102.3 million for the twenty-six week period ended June 29, 2019 (the comparable prior year period). Gross profit was $19.3 million for the current period, a 23.6% decrease as compared to $25.3 million for the comparable prior year period. The Company experienced a GAAP operating loss of $8.9 million for the current period, as compared to GAAP operating income of $3.8 million for the comparable prior year period. The Company experienced a GAAP net loss of $6.9 million, or $0.54 per diluted share, for the current period as compared to GAAP net income of $2.7 million, or $0.21 per diluted share, for the comparable prior year period.

Bradley Vizi, Executive Chairman of RCM Technologies, commented, “We believe that RCM performed well against our COVID plan that we outlined in May. We outlined a plan where we would surgically cut non-critical SGA expenses and focus heavily on utilization and gross margin, while at the same time working to maximize cash flow from operations. We are pleased with the results on all three fronts and look forward to the second half of 2020.”

Kevin Miller, Chief Financial Officer of RCM Technologies, commented, “As we reduced our net debt by 51% in only thirteen weeks, from $32.1 million on March 28, 2020, to $15.7 million on June 27, 2020, I believe we executed well against this high second-quarter priority. We expect to reduce our debt further during the third quarter.”

Conference Call
On Tuesday, August 11, 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 
 June 27, 2020 June 29, 2019 
Revenue$32,652 $50,705 
Cost of services 24,149  37,902 
Gross profit 8,503  12,803 
Selling, general and administrative 8,994  10,202 
Depreciation and amortization of property and equipment 246  325 
Amortization of acquired intangible assets 80  83 
Write-off of receivables and professional fees incurred related to arbitration 350  - 
Operating (loss) income (1,167) 2,193 
Other expense, net 233  483 
(Loss) income before income taxes (1,400) 1,710 
Income tax (benefit) expense (408) 459 
Net (loss) income($992)$1,251 
     
Diluted net (loss) earnings per share data($0.08)$0.10 


 Twenty-Six Week Periods Ended 
 June 27, 2020 June 29, 2019 
Revenue$77,685 $102,300 
Cost of services 58,339  76,980 
Gross profit 19,346  25,320 
Selling, general and administrative 19,231  20,667 
Depreciation and amortization of property and equipment 501  640 
Amortization of acquired intangible assets 160  165 
Write-off of receivables and professional fees incurred related to arbitration 8,397  - 
Operating (loss) income (8,943) 3,848 
Other expense, net 642  949 
(Loss) income before income taxes (9,585) 2,899 
Income tax (benefit) expense (2,648) 185 
Net (loss) income($6,937)$2,714 
     
Diluted net (loss) earnings per share data($0.54)$0.21 


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

 June 27,
2020
 December 28,
2019
 (Unaudited)  
Cash and cash equivalents$1,632 $1,847
Accounts receivable, net$39,519 $59,760
Total current assets$43,646 $70,657
Total assets$70,178 $96,173
Total current liabilities$21,152 $21,408
Borrowing under line of credit$17,363 $34,761
Net debt (line of credit less cash)$15,731 $32,914
Note payable$2,230 -
Total liabilities$46,640 $63,770
Stockholders’ equity$23,538 $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 twenty-six week periods ended June 27, 2020 and June 29, 2019

 Thirteen Week
Periods Ended
 Twenty-Six Week
Periods Ended
 
 June 27,
2020
 June 29,
2019
 June 27,
2020
 June 29,
2019
 
GAAP net (loss) income($992)$1,251 ($6,937)$2,714 
Income tax (benefit) expense (408) 459  (2,648) 185 
Interest expense 184  458  524  887 
Imputed interest on contingent consideration 36  48  72  96 
Depreciation of property and equipment 246  325  501  640 
Amortization of acquired intangible assets 80  83  160  165 
EBITDA (non-GAAP)($854)$2,624 ($8,328)$4,687 
         
Adjustments        
Write-off of receivables and professional fees incurred related to arbitration 350  -  8,397 - 
Loss (gain) on foreign currency transactions 13  (23) 46 (34)
Adjusted EBITDA (non-GAAP)($491)$2,601 $115 $4,653 


RCM Technologies, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In Thousands)

 Thirteen Week Periods Ended 
 June 27,
2020
 June 29,
2019
 
Net (loss) income($992)$1,251 
Adjustments to reconcile net income to cash used in operating activities (38) 761 
Changes in operating assets and liabilities:    
 Accounts receivable 11,253  353 
 Prepaid expenses and other current assets 1,620  548 
 Net of transit accounts receivable and payable (66) 917 
 Accounts payable and accrued expenses 2,745  (639)
 Accrued payroll and related costs 2,239  (345)
 Right of use assets and liabilities (17) (7)
 Income taxes payable 110  239 
Total adjustments 17,846  1,827 
Cash provided by operating activities$16,854 $3,078 
     
Net cash used in investing activities (76) (136)
Net cash used in financing activities (15,830) (3,743)
Effect of exchange rate changes 42  (24)
Increase (decrease) in cash and cash equivalents$990 ($825)


 Twenty-Six Week Periods Ended 
 June 27,
2020
 June 29,
2019
 
Net (loss) income($6,937)$2,714 
Adjustments to reconcile net income to cash used in operating activities 5,977  1,494 
Changes in operating assets and liabilities:    
 Accounts receivable 12,227  (5,911)
 Prepaid expenses and other current assets 1,786  658 
 Net of transit accounts receivable and payable 907  962 
 Accounts payable and accrued expenses 2,739  (1,465)
 Accrued payroll and related costs 950  (1,217)
 Right of use assets and liabilities 3  259 
 Income taxes payable 131  29 
Total adjustments 24,720  (5,191)
Cash provided by (used in) operating activities$17,783 ($2,477)
     
Net cash used in investing activities (111) (238)
Net cash (used in) provided by financing activities (17,764) 3,140 
Effect of exchange rate changes (123) (39)
(Decrease) increase in cash and cash equivalents($215)$386 


RCM Technologies, Inc.
Summary of Selected Income Statement Data
(Unaudited)
(In Thousands)

 Thirteen Week Period Ended June 27, 2020 
 Engineering Specialty
Health Care
 Information
Technology
  

Consolidated
 
         
Revenue$14,038 $10,684 $7,930 $32,652 
Cost of services 9,804  8,487  5,858  24,149 
Gross profit$4,234 $2,197 $2,072 $8,503 
Gross profit margin 30.2% 20.6% 26.1% 26.0%


 Thirteen Week Period Ended June 29, 2019 
 Engineering Specialty
Health Care
 Information
Technology
  

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%


 Twenty-Six Week Period Ended June 27, 2020 
 Engineering Specialty
Health Care
 Information
Technology
  

Consolidated
 
         
Revenue$28,201 $32,881 $16,603 $77,685 
Cost of services 20,001  26,311  12,027  58,339 
Gross profit$8,200 $6,570 $4,576 $19,346 
Gross profit margin 29.1% 20.0% 27.6% 24.9%


 Twenty-Six Week Period Ended June 29, 2019 
 Engineering Specialty
Health Care
 Information
Technology
  

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%


RCM Technologies, Inc.Tel:  856.356.4500Corporate Contacts:
2500 McClellan AvenueFax: 856.356.4600Bradley S. Vizi
Pennsauken, NJ 08109info@rcmt.com Executive Chairman
 www.rcmt.com Kevin D. Miller
  Chief Financial Officer

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Source: RCM Technologies, Inc.