GlobeNewswire Inc | Aug 10, 2020 04:05PM EDT

August 10, 2020

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 CallOn 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 RCMRCM 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. RCMs 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 Companys 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 Companys 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, June 29, 2020 2019Revenue $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 246 325 equipmentAmortization of acquired intangible assets 80 83 Write-off of receivables and professional fees 350 - incurred related to arbitrationOperating (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, June 29, 2020 2019Revenue $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 501 640 equipmentAmortization of acquired intangible assets 160 165 Write-off of receivables and professional fees 8,397 - incurred related to arbitrationOperating (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, December 28, 2020 2019 (Unaudited) Cash and cash equivalents $1,632 $1,847Accounts receivable, net $39,519 $59,760Total current assets $43,646 $70,657Total assets $70,178 $96,173Total current liabilities $21,152 $21,408Borrowing under line of credit $17,363 $34,761Net debt (line of credit less cash) $15,731 $32,914Note payable $2,230 -Total liabilities $46,640 $63,770Stockholders? 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 Twenty-Six Week Periods Ended Periods Ended June June June 27, June 27, 29, 2020 29, 2020 2019 2019GAAP 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 36 48 72 96 considerationDepreciation of property and 246 325 501 640 equipmentAmortization of acquired intangible 80 83 160 165 assetsEBITDA (non-GAAP) ($854 ) $2,624 ($8,328 ) $4,687 Adjustments Write-off of receivables andprofessional feesincurred related 350 - 8,397 - to arbitrationLoss (gain) on foreign currency 13 (23 ) 46 (34 )transactionsAdjusted 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, June 29, 2020 2019Net (loss) income ($992 ) $1,251 Adjustments to reconcile net income to cash used in (38 ) 761 operating activitiesChanges 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, June 29, 2020 2019Net (loss) income ($6,937 ) $2,714 Adjustments to reconcile net income to cashused in 5,977 1,494 operating activitiesChanges 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 Specialty Information Engineering Health Technology Care 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 Specialty Information Engineering Health Technology Care 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 Specialty Information Engineering Health Technology Care 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 Specialty Information Engineering Health Technology Care 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: 856.356.4500 Corporate Contacts:2500 McClellan Avenue Fax: 856.356.4600 Bradley S. ViziPennsauken, NJ 08109 info@rcmt.com Executive Chairman www.rcmt.com Kevin D. Miller Chief Financial Officer