EX-99 2 pressrel110619.htm PRESS RELEASE 11/6/19

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 6, 2019 -- 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 28, 2019.

RCM Technologies reported revenue of $40.2 million for the thirteen week period ended September 28, 2019 (the current period), a 5.4% decrease as compared to $42.6 million for the thirteen week period ended September 29, 2018 (the comparable prior year period). Gross profit was $10.6 million for the current period, a 3.4% decrease as compared to $11.0 million for the comparable prior year period.  The Company experienced GAAP operating income of $0.7 million for the current period, as compared to $1.2 million for the comparable prior year period.  GAAP net income was $0.3 million, or $0.03 per diluted share, for the current period as compared to $0.7 million, or $0.06 per diluted share, for the comparable prior year period.

RCM Technologies reported revenue of $142.6 million for the thirty-nine week period ended September 28, 2019 (the current period), a 1.7% decrease as compared to $145.1 million for the thirty-nine week period ended September 29, 2018 (the comparable prior year period). Gross profit was $35.9 million for the current period, a 0.9% decrease as compared to $36.3 million for the comparable prior year period.  The Company experienced GAAP operating income of $4.6 million for the current period, as compared to $3.8 million for the comparable prior year period.  GAAP net income was $3.0 million, or $0.24 per diluted share, for the current period as compared to $2.1 million, or $0.17 per diluted share, for the comparable prior year period.

The Company had adjusted EBITDA (non-GAAP) of $1.1 million for the thirteen weeks ended September 28, 2019, a 29.1% decrease as compared to $1.6 million for the comparable prior year period.  The Company had adjusted EBITDA (non-GAAP) of $5.8 million for the thirty-nine weeks ended September 29, 2018, a 9.4% decrease as compared to $6.4 million for the comparable prior year period.  A reconciliation of adjusted EBITDA (non-GAAP) to EBITDA (non-GAAP) and net income (GAAP) can be found on the fourth page of this press release.

The Company experienced $1.4 million in severance, professional fees and other charges for the thirty-nine week period ended September 29, 2018.  These charges include severance accrued for the Company’s former chief executive officer and related payroll taxes, continuation of certain benefits and professional fees, totaling approximately $0.9 million.  The additional charges of $0.5 million incurred related to transactional financial advisory fees, legal fees associated with defending a frivolous lawsuit with a competitor of the Company, and search fees associated with hiring a senior executive.




Bradley Vizi, Executive Chairman of RCM Technologies, commented, “We continued to experience strong performance from our Health Care & Information Technology segments. While we’re disappointed with the softness in Engineering revenue, we believe we are taking positive steps towards growth in fiscal 2020 and beyond.”

Kevin Miller, Chief Financial Officer of RCM Technologies, added, “We expect strong cash flow through the remainder of the year and in fiscal 2020.”

Conference Call
On Thursday, November 7, 2019, 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 (866) 403-9129.

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 Per Share Amounts)

 
Thirteen Week Periods Ended
  
 
September 28,
2019
  
September 29,
2018
  
Revenue
$40,250
  
$42,559
  
Cost of services
29,635
  
31,571
  
Gross profit
10,615
  
10,988
  
Selling, general and administrative
9,498
  
9,412
  
Depreciation and amortization of property and equipment
304
  
337
  
Amortization of acquired intangible assets
82
  
7
  
Operating income
731
  
1,232
  
Other expense, net
(326
)
(295
)
Income before income taxes
405
  
937
  
Income tax expense
70
  
253
  
Net income
$335
  
$684
  
         
Diluted net earnings per share data
$0.03
  
$0.06
  

 
Thirty-Nine Week Periods Ended
  
 
September 28,
2019
  
September 29,
2018
  
Revenue
$142,550
  
$145,081
  
Cost of services
106,615
  
108,803
  
Gross profit
35,935
  
36,278
  
Selling, general and administrative
30,165
  
29,909
  
Depreciation and amortization of property and equipment
944
  
1,116
  
Severance, professional fees and other charges
-
  
1,371
  
Amortization of acquired intangible assets
247
  
40
  
Operating income
4,579
  
3,842
  
Other expense, net
(1,275
)
(990
)
Income before income taxes
3,304
  
2,852
  
Income tax expense
255
  
736
  
Net income
$3,049
  
$2,116
  
         
Diluted net earnings per share data
$0.24
  
$0.17
  

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

 
September 28,
2019
  
December 29,
2018
 
(Unaudited)
    
Cash and cash equivalents
$393
  
$482
Accounts receivable, net
$57,470
  
$52,335
Total current assets
$64,928
  
$58,811
Total assets
$91,740
  
$81,510
Total current liabilities
$21,421
  
$23,188
Borrowing under line of credit
$31,735
  
$27,540
Net debt (borrowings less cash)
$31,342
  
$27,058
Total liabilities
$60,689
  
$54,311
Stockholders’ equity
$31,051
  
$27,199


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 28, 2019 and September 29, 2018.

 
Thirteen
Week Periods Ended
  
Thirty-Nine
Week Periods Ended
  
 
September 28,
2019
  
September 29,
2018
  
September 28,
2019
  
September 29,
2018
  
GAAP net income
$335
  
$684
  
$3,049
  
$2,116
  
Income tax expense
70
  
253
  
255
  
736
  
Interest expense
390
  
305
  
1,276
  
971
  
Imputed interest on contingent consideration
(56
)
-
  
40
  
-
  
Depreciation of property and equipment
304
  
337
  
944
  
1,116
  
Amortization of acquired intangible assets
82
  
7
  
247
  
40
  
EBITDA (non-GAAP)
$1,125
  
$1,586
  
$5,811
  
$4,979
  
                 
Adjustments
                
   Severance, professional fees and other charges
-
  
-
  
-
  
1,371
  
   (Loss) gain on foreign currency transactions
(8
)
(10
)
(41
)
19
  
Adjusted EBITDA (non-GAAP)
$1,117
  
$1,576
  
$5,770
  
$6,369
  



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

 
Thirteen Week Periods Ended
  
 
September 28,
2019
  
September 29,
2018
  
Net income
$335
  
$684
  
Adjustments to reconcile net income to cash
   used in operating activities
442
  
1,125
  
Changes in operating assets and liabilities:
        
 
Accounts receivable
727
  
4,496
  
 
Prepaid expenses and other current assets
(175
)
(867
)
 
Net of transit accounts receivable and payable
(39
)
(466
)
 
Accounts payable and accrued expenses
(1,901
)
1,206
  
 
Accrued payroll and related costs
(769
)
(760
)
 
Right of use assets and liabilities
(14
)
-
  
 
Income taxes payable
1
  
256
  
Total adjustments
(1,728
)
4,990
  
Cash (used in) provided by operating activities
($1,393
)
$5,674
  
         
Net cash used in investing activities
(58
)
(810
)
Net cash provided by (used in) financing activities
1,020
  
(4,552
)
Effect of exchange rate changes
(44
)
(33
)
(Decrease) increase in cash and cash equivalents
($475
)
$279
  


 
Thirty-Nine Week Periods Ended
  
 
September 28,
2019
  
September 29,
2018
  
Net income
$3,049
  
$2,116
  
Adjustments to reconcile net income to cash
   used in operating activities
1,936
  
2,527
  
 Changes in operating assets and liabilities:
        
 
Accounts receivable
(5,184
)
(1,664
)
 
Prepaid expenses and other current assets
483
  
(593
)
 
Net of transit accounts receivable and payable
923
  
(1,560
)
 
Accounts payable and accrued expenses
(3,366
)
(219
)
 
Accrued payroll and related costs
(1,986
)
905
  
 
Right of use assets and liabilities
245
  
-
  
 
Income taxes payable
30
  
552
  
Total adjustments
(6,919
)
(52
)
Cash (used in) provided by operating activities
($3,870
)
$2,064
  
         
Net cash used in investing activities
(296
)
(1,423
)
Net cash provided by (used in) financing activities
4,160
  
(2,735
)
Effect of exchange rate changes
(83
)
(47
)
Decrease in cash and cash equivalents
($89
)
($2,141
)



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


 
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
%


 
Thirteen Week Period Ended September 29, 2018
  
 
Engineering
  
Specialty
Health Care
  
Information
Technology
  
 
Consolidated
  
                 
Revenue
$19,424
  
$15,106
  
$8,029
  
$42,559
  
Cost of services
14,049
  
11,665
  
5,857
  
31,571
  
Gross profit
$5,375
  
$3,441
  
$2,172
  
$10,988
  
Gross profit margin
27.7
%
22.8
%
27.1
%
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
%


 
Thirty-Nine Week Period Ended September 29, 2018
  
 
Engineering
  
Specialty
Health Care
  
Information
Technology
  
 
Consolidated
  
                 
Revenue
$62,412
  
$60,599
  
$22,070
  
$145,081
  
Cost of services
45,706
  
46,822
  
16,275
  
108,803
  
Gross profit
$16,706
  
$13,777
  
$5,795
  
$36,278
  
Gross profit margin
26.8
%
22.7
%
26.3
%
25.0
%