GlobeNewswire Inc | Apr 1, 2021 04:05PM EDT

April 01, 2021

PENNSAUKEN, N.J., April 01, 2021 (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 fourteen and fifty-three week periods ended January 2, 2021.

RCM Technologies reported revenue of $41.2 million for the fourteen week period ended January 2, 2021 (the current period), a 15.2% decrease as compared to $48.6 million for the thirteen week period ended December 28, 2019 (the comparable prior year period). Gross profit was $10.7 million for the current period, a 15.5% decrease as compared to $12.7 million for the comparable prior year period. The Company experienced a GAAP operating loss of $1.9 million for the current period, as compared to GAAP operating income of $2.0 million for the comparable prior year period. The Company experienced a GAAP net loss of $1.7 million, or $0.15 per diluted share, for the current period as compared to GAAP net income of $1.0 million, or $0.08 per diluted share, for the comparable prior year period.

RCM Technologies reported revenue of $150.4 million for the fifty-three week period ended January 2, 2021 (the current period), a 21.3% decrease as compared to $191.1 million for the fifty-two week period ended December 28, 2019 (the comparable prior year period). Gross profit was $38.9 million for the current period, a 20.0% decrease as compared to $48.6 million for the comparable prior year period. The Company experienced a GAAP operating loss of $11.0 million for the current period, as compared to GAAP operating income of $6.6 million for the comparable prior year period. The Company experienced a GAAP net loss of $8.9 million, or $0.73 per diluted share, for the current period as compared to GAAP net income of $4.1 million, or $0.31 per diluted share, for the comparable prior year period.

Bradley Vizi, Executive Chairman of RCM Technologies, commented, We are pleased with the quarterly trajectory of our adjusted EBITDA. After realizing just under $1 million in adjusted EBITDA in the fourth quarter of fiscal 2020, we expect to build on this progress and grow adjusted EBITDA sequentially in the first two quarters of fiscal 2021. After our school clients return from summer vacation in the fall of 2021, when we expect most schools to be in person, we believe our fourth quarter will reflect continued strength.

Kevin Miller, Chief Financial Officer of RCM Technologies, commented, We ended 2020 by generating $1.5 million in cash from operations while sequentially growing revenue by $9.6 million. Our line of credit in 2020 decreased by $22.9 million, or 66%, from $34.8 million at the end of 2019 to $11.9 million at the end of 2020. We look forward to improved operating results in 2021.

Conference Call On Friday, April 2, 2021, RCM Technologies will host a conference call to discuss these results. The call will begin at 10:30 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. 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) Fourteen Thirteen Week Week Period Ended Period Ended December 28, January 2, 2019 2021Revenue $41,163 $48,550 Cost of services 30,474 35,893 Gross profit 10,689 12,657 Selling, general and administrative 9,714 10,225 Depreciation and amortization of property 272 317 and equipmentAmortization of acquired intangible assets 81 80 Impairment of right of use assets and 2,231 - related costsTax credit professional fees 240 47 Operating (loss) income (1,849 ) 1,988 Other expense, net (212 ) (470 )(Loss) income before income taxes (2,061 ) 1,518 Income tax (benefit) expense (373 ) 509 Net (loss) income ($1,688 ) $1,009 Diluted net (loss) earnings per share data ($0.15 ) $0.07

Fifty-Three Fifty-Two Week Week Period Period Ended Ended January 2, December 2021 28, 2019Revenue $150,409 $191,100 Cost of services 111,554 142,508 Gross profit 38,855 48,592 Selling, general and administrative 37,551 40,390 Depreciation and amortization of property and 1,065 1,261 equipmentAmortization of acquired intangible assets 321 327 Write-off of receivables and professional fees 8,397 - incurred related to arbitrationImpairment of right of use assets and related 2,231 - costsTax credit professional fees 240 47 Operating (loss) income (10,950 ) 6,567 Other expense, net (1,107 ) (1,745 )(Loss) income before income taxes (12,057 ) 4,822 Income tax (benefit) expense (3,188 ) 764 Net (loss) income ($8,869 ) $4,058 Diluted net (loss) earnings per share data ($0.73 ) $0.31

RCM Technologies, Inc.Summary Consolidated Selected Balance Sheet Data(In Thousands) January 2, December 28, 2021 2019 (Unaudited) Cash and cash equivalents $734 $1,847 Accounts receivable, net $36,007 $59,760 Total current assets $43,934 $70,657 Total assets $68,339 $96,173 Total current liabilities $28,741 $21,408 Borrowing under line of credit $11,890 $34,761 Net debt (line of credit less cash) $11,156 $32,914 Total liabilities $46,101 $63,770 Stockholders? equity $22,238 $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 fourteen and fifty-three week periods ended January 2, 2021 and the thirteen and fifty-two week periods ended December 28, 2019.

Fourteen Thirteen Fifty-Two Week Week Fifty-Three Week Period Period Week Period Period Ended Ended Ended Ended January December January 2, December 2, 28, 2021 28, 2021 2019 2019GAAP net (loss) ($1,688 ) $1,009 ($8,869 ) $4,058 incomeIncome tax (373 ) 509 (3,188 ) 764 (benefit) expenseInterest expense 128 419 778 1,695 Change in fairvalue of 37 21 145 61 contingentconsiderationDepreciation ofproperty and 272 317 1,065 1,261 equipmentAmortization ofacquired 81 80 321 327 intangible assetsEBITDA (non-GAAP) ($1,543 ) $2,355 ($9,748 ) $8,166 Adjustments Write-off ofreceivables andprofessional fees - - 8,397 - incurred relatedto arbitrationImpairment ofright of use 2,231 - 2,231 - assets and relatedcostsTax credit 240 47 240 47 professional feesGain (loss) onforeign currency 47 30 184 (11 )transactionsAdjusted EBITDA $975 $2,432 $1,304 $8,202 (non-GAAP)

RCM Technologies, Inc.Condensed Consolidated Statements of Cash Flows(Unaudited)(In Thousands) Fourteen Thirteen Week Week Period Period Ended Ended January 2, December 2021 28, 2019Net (loss) income ($1,688 ) $1,009 Adjustments to reconcile net income to cash 2,776 1,945 used in operating activitiesChanges in operating assets and liabilities: Accounts receivable (2,944 ) (2,442 ) Prepaid expenses and other current assets (2,432 ) (1,128 ) Net of transit accounts receivable and 1,701 (1,216 ) payable Accounts payable and accrued expenses 131 281 Accrued payroll and related costs 3,732 644 Right of use assets (810 ) 471 Right of use liabilities 787 (480 ) Income taxes payable 210 8 Total adjustments 3,151 (1,917 )Cash provided by (used in) operating activities 1,463 (908 ) Net cash used in investing activities (59 ) (67 )Net cash (used in) provided by financing (1,441 ) 2,467 activitiesEffect of exchange rate changes 14 (38 )(Decrease) increase in cash and cash ($23 ) $1,454 equivalents

Fifty-Three Fifty-Two Week Week Period Period Ended Ended January 2, December 2021 28, 2019Net (loss) income ($8,869 ) $4,058 Adjustments to reconcile net income to cash 9,069 3,881 used in operating activitiesChanges in operating assets and liabilities: Accounts receivable 15,947 (7,626 ) Prepaid expenses and other current assets (162 ) (645 ) Net of transit accounts receivable and 2,757 (293 ) payable Accounts payable and accrued expenses 1,639 (3,085 ) Accrued payroll and related costs 4,557 (1,342 ) Right of use assets 1,490 (5,820 ) Right of use liabilities (1,529 ) 6,056 Income taxes payable 304 38 Total adjustments 34,072 (8,836 )Cash provided by (used in) operating 25,203 (4,778 )activities Net cash used in investing activities (419 ) (363 )Net cash (used in) provided by financing (25,632 ) 6,627 activitiesEffect of exchange rate changes (265 ) (121 )(Decrease) increase in cash and cash ($1,113 ) $1,365 equivalents

RCM Technologies, Inc.Summary of Selected Income Statement Data(Unaudited)(In Thousands) Fourteen Week Period Ended January 2, 2021 Engineering Specialty Information Consolidated Health Care Technology Revenue $14,427 $18,585 $8,151 $41,163 Cost of services 10,554 14,079 5,841 30,474 Gross profit $3,873 $4,506 $2,310 $10,689 Gross profit 26.8 % 24.2 % 28.3 % 26.0 %margin

Thirteen Week Period Ended December 28, 2019 Engineering Specialty Information Consolidated Health Care Technology Revenue $15,095 $25,043 $8,412 $48,550 Cost of services 10,729 19,069 6,095 35,893 Gross profit $4,366 $5,974 $2,317 $12,657 Gross profit 28.9 % 23.9 % 27.5 % 26.1 %margin

Fifty-Three Week Period Ended January 2, 2021 Engineering Specialty Information Consolidated Health Care Technology Revenue $57,715 $60,481 $32,213 $150,409 Cost of services 41,227 47,116 23,211 111,554 Gross profit $16,488 $13,365 $9,002 $38,855 Gross profit 28.6 % 22.1 % 28.0 % 25.8 %margin

Fifty-Two Week Period Ended December 28, 2019 Engineering Specialty Information Consolidated Health Care Technology Revenue $67,873 $89,348 $33,879 $191,100 Cost of services 49,395 68,464 24,649 142,508 Gross profit $18,478 $20,884 $9,230 $48,592 Gross profit 27.2 % 23.4 % 27.2 % 25.4 %margin

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