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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.

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

Source:RCM Technologies, Inc.