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RCM Technologies, Inc. Announces Third Quarter Results

RCM Technologies, Inc.
·11 min read

PENNSAUKEN, N.J., Nov. 09, 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 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