Rcm Technologies, Inc. (NASDAQ:RCMT)

Rcm Technologies (NASDAQ:RCMT) a provider of business and technology solutions for engineering, specialty health and information technology services announced Q2 2023 results:

• Sales of $67.0 million vs $74.3 million in the prior year

• EPS of $0.47 vs $0.57 in the prior year

“We believe our strong cash generating business model and clean balance sheet afford us the ability to invest in value accretive growth throughout the economic cycle. Considering normal third quarter seasonality, we believe we are set up for a healthy double-digit earnings increase in the fourth quarter, consistent with our long-term trajectory. Also, we expect to continue to see strong cash flow from operations during the second half of fiscal 2023.”

Segment highlights from the conference call:

On the Life Sciences and IT front, we believe the division has reached a tipping point as we continue to grow our project and managed solutions business. Just 30 months ago, the division has had less than 5% of its business in these areas. In 2023, the number has grown to more than 33% in Q1 and 43% in Q2. With a much improved revenue stream comes a more robust margin profile.

HCM continues to galvanize partnerships within its core clients. becoming the #1 partner in its flagship offering and securing a long-term contract within the client's second key offering. Our HCM team continues to raise the bar and the rapid growth of our core clients has required increasing levels of support. We think the success of this group is in the early innings as we continue to grow our share within a fast-growing client base.

We had a noticeable acceleration in pipeline throughout the quarter, stemming from projects with both new and established customers. Aside from the significant revenue potential expected in 2024 this expansion of the sales funnel is strong evidence that our growth and market diversification plans are being realized and strengthening RCM's presence in the global energy transition.

Management’s comments suggest upcoming Q3 will likely be flat, strong growth resumes in Q4 and likely into 2024.

Rcm Technologies (NASDAQ:RCMT) ($11.78; $118M market cap; marked up ~25% pre market) a provider of business and technology solutions for engineering, specialty health and information technology services announced Q1 2022 results:

• Sales of $82.0 million vs $44.5 million in the prior year
• EPS of $0.62 vs $0.08 in the prior year

Management stated:

RCM’s first-quarter results demonstrated a good start to 2022. We continue to build on the strong foundation established and drive execution across our business units. We generated record profitability for the second-straight quarter, with adjusted EBITDA of $9.3 million, growing sequentially by 74% and 440% year-over-year. I want to thank the team for a job well done and their continued commitment to propelling RCM to the next level.

While growing revenue by over $17 million sequentially, we still generated approximately $2.5 million in cash flow from operations. We continue to benefit from the inherent leverage within our business model, and we expect to see strong cash flow generation throughout the balance of fiscal 2022.”

On April 12, 2022 we highlighted RCMT as one of three IT staffing stocks we felt could benefit from bullish industry trends.

Rcm Technologies (NASDAQ:RCMT) ($6.26; $75.1M market cap)

On December 4, 2017 we added RCMT, a provider of business and technology solutions, to Maj’s Favorite Stocks Screen.  We are now disclosing a long position as we head into its Q4 earnings report.  Back in December 2017, Maj commented:

“After 2 years of dealing with a decline in growth due to adverse business conditions, things seems to have tuned; Impressed that management was able to generally maintain profits through this period; Anticipate a Christmas gift in the way of a year end special dividend.”

A week after this note, RCMT announced a $1.00 special cash dividend.  The company also offered Q4 2017 sales guidance of $48 to $50 million which is inline with analyst estimates and would be the strongest quarter of the year for the company. The gross profit guidance implies that EPS may come in slightly ahead of the $0.09 analyst estimates for Q4.  

RCMT ($4.82) announced Q1 2017 results:

• Sales of $46.3 million vs $47.1 million in the prior year

• EPS of $0.05 vs $0.08 in the prior year

Quotes from management:

“We are pleased with our progress in the first quarter of 2017. While our revenues are down slightly from our first quarter of last year, our best quarter in 2016, our revenues in the first quarter of 2017 show approximately 5.0% sequential growth as compared to the fourth quarter of 2016. Both our Engineering and Health Care segments’ first quarter 2017 revenue and gross profit exceeded first quarter 2016. Of particular note is that our Health Care segment set yet another record quarter for both revenues and gross profit. While our information technology segment underperformed, we have been encouraged by recent activity levels. Our consolidated gross margin for first quarter 2017 decreased on a comparative basis but we expect sequential improvement as we progress through fiscal 2017.”

In our March 13, 2017 email we stated we had closed out our long position in RCMT.  We left RCMT on the GeoBargain list due to its history of returning capital to shareholders and management's stated confidence that growth will resume in the near future (however they have been saying this for some time).

RCMT ($5.20) reported first quarter 2016 results:

• Sales of $47.2 million vs $48.0 million in the prior year period

• EPS of $0.08 vs $0.11

Quotes from management:

“We are pleased with the results of the first quarter of fiscal 2016. We continue to build our pipeline with new and existing clients and believe we will have a strong second half of the year. Of significant note, our Healthcare segment continues to excel by setting historically high quarterly revenues and gross profit. Both our Engineering and Information Technology segments met our expectation for this quarter and while revenue and gross profit were slightly less than recent quarters, we are confident that both of these groups will realize improved results in the third and fourth quarters of fiscal 2016…

...We expect a significant increase in demand from our Canadian Engineering clients in the second half of fiscal 2016 and beyond. We are ready to meet that demand; however, predicting the quarterly timing of the increase in demand can be a challenge. We anticipate that our second quarter operating income results will continue to be soft as we manage our bench in Canada.”

As we stated in the Q4 update, we normally would have removed the stock from the GeoBargain list due to its lackluster growth.  However, we believe long term investors have a high probability of being rewarded.  Activist involvement and  management’s habit of returning capital to shareholders should offer support until RCMT’s growth kicks back into gear which looks to be in Q3 and Q4.  We will give management the benefit of the doubt and see how the next several quarters play out.

PENNSAUKEN, N.J., Dec. 10, 2015 (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 that its Board of Directors declared a special cash dividend of $1.00 per share, payable on December 30, 2015 to stockholders of record at the close of business on December 22, 2015.

Rocco Campanelli, President and CEO of RCM Technologies, Inc., commented: “We are excited to announce a special dividend of $1.00 per share and continue our impressive record of returning capital to our shareholders.  Including an estimate of this upcoming $1.00 special dividend, the $1.00 special dividend declared in December 2012, the $2.00 special dividend declared in December 2014, the $7.5 million stock buyback initiative completed in January 2013 and approximately $2.6 million in shares we have repurchased in fiscal 2015 to date, RCM has returned approximately $61.5 million to our shareholders in a relatively short timeframe.  We are optimistic about the prospects of our business on a go forward basis and we expect to continue to generate strong cash flow in 2016 and beyond.”

Kevin Miller, Chief Financial Officer, added: “Due to the favorable cash generating characteristics of RCM’s business model, the Board believes a target long-term capital structure generally in the range of 1.00x to 2.00x net debt/EBITDA will allow the Company to invest internally for profitable organic growth, consider acquisitions that are a strategic fit to RCM’s core business, and, when appropriate, return capital to shareholders as part of a comprehensive capital allocation framework that is reviewed quarterly by our Board of Directors.  While we anticipate that the issuance of this dividend will cause RCM initially to exceed this long-term targeted net debt/EBITDA ratio, we also expect that we will lower our net debt/EBITDA ratio in line with this range sometime in 2016.  We expect approximately $0.75 or more of the special dividend will receive the tax advantageous characterization of return of capital to shareholders.”

RCMT  announced Q2 2015 results:

• Sales of $45.3 million vs $49.5 million in the prior year

• EPS of $0.05 vs $0.15 in the prior year period

Quotes from management:

“While we remain optimistic about our Canadian Engineering Group going forward, particularly as we look to fiscal 2016, we’ve had to make staffing adjustments for the second half of fiscal 2015. We are cautiously optimistic that we will soon announce a very large master services agreement with a major client in Canada...

...We are obviously disappointed with the decline in revenues in the second quarter of fiscal 2015 versus last year’s second quarter. The primary reason for the decrease was an $8.0 million reduction in revenues from work performed, as a subcontractor or directly, for a large Engineering client in Canada. While we do not foresee any near term material expansion of work for this client, we do have a robust pipeline across all three segments of our business and expect to see improvement in operating income for the second half of fiscal 2015 as compared to the first half of the year.”

PENNSAUKEN, N.J., June 26, 2015 (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 that its Specialty Health Care Division has been awarded a new contract by the Chicago Board of Education to improve the quality of nursing across Chicago Public Schools (CPS) and increase nurse support. CPS serves 396,000 students in 664 schools. It is the nation’s third-largest school district.

Under a four-year, $30 million contract, RCM will manage hiring, staffing and training of nurses for CPS as its exclusive vendor for nursing services. CPS has the option to renew the contract for an additional two years after the initial term.

“RCM will partner with the Chicago Public Schools and the outstanding nurses who are CPS staff employees to provide additional highly qualified school nurses,” said Andrew Hay, Director of School Nursing Operations for RCM Health Care Services.

RCM Health Care Services was selected from a pool of 11 applicants after an extremely competitive RFP process based upon its ability to address three key issues: efficient scheduling of nurses, professional development opportunities, and staffing vacancies. RCM will use its best practices gained from their other school nursing contracts to offer CPS a more cost-effective and demand-driven model for hiring nurses. With schools experiencing nursing shortages, RCM will also work with CPS to recruit highly qualified nurses so the district can hire more permanent school nurses.

Marc Chafetz, Vice President of RCM’s Specialty Health Care Division, said, “With additional school nurses available to supplement the CPS School Health Staff, CPS can help ensure that Chicago students who need a nurse get the care they deserve. RCM’s commitment to service and excellence will be underscored by efforts to make sure parents and students know about the health services that are available to them through community outreach, education and communication.”

RCM has demonstrated extensive experience providing nursing services to students with special needs, and believes that there is a link between quality nursing services and academic achievement. For more than 25 years, RCM has specialized in school services, and works with school districts in Hawaii, New York City and Philadelphia and other municipalities across the United States. By working with school staff and families, RCM has consistently delivered positive student outcomes through individualized nursing care.

RCM will provide approximately 170 nurses to CPS. RCM’s nurses will supplement the over 200 nurses currently employed by the district.

Michael Saks, Senior Vice President of RCM, said, “By having RCM manage the credentialing and professional development for both CPS and RCM nurses, we can ensure that the care provided meets the highest standards and that caregivers are up to date on required credentials and training. CPS’ highly trained nurses will be able to focus on providing care to the children of the Chicago Public Schools rather than on clerical responsibilities. RCM looks forward to working closely with nurses at CPS to gain suggestions for training programs and insight on clinical professional development areas that would be beneficial to the nurses and students.”

- See more at: http://globenewswire.com/news-release/2015/06/26/747881/0/en/RCM-Technologies-Specialty-Health-Care-Division-Announces-Award-of-Contract-by-the-Chicago-Board-of-Education.html#sthash.oXBmAqsb.dpuf

First Quarter 2015 Results

• Q1 2015 revenues of $48.0 million vs $48.6 million in the prior year period
• Q1 2015 EPS of $0.11 vs $0.10 in the prior year period

Rocco Campanelli, President and Chief Executive Officer of RCM Technologies, commented, “We are generally pleased with the consolidated results of our first quarter. While we experienced a slight decline in revenues in the first quarter of 2015 versus the first quarter of 2014, we grew gross profit and operating income by 8.5% and 15.6%, respectively. Our Specialty Healthcare segment led the way with revenue and gross profit growth of 19.2% and 25.6%, respectively. Our IT Consulting & Solutions Group (“ITC&S”) continues on a positive growth curve. What is particularly rewarding is that some of this growth is being realized from groups within ITC&S that have not made significant contributions in the recent past. We expect to see some softness in our performance in the second quarter of 2015 as we are experiencing delays or gaps in major projects for our Canadian Engineering Group. However, we have a robust pipeline in Canada and we anticipate that we will be in a position to announce several major project wins in the near future. Our pipeline across all three of our segments is favorable.”

Kevin Miller, Chief Financial Officer of RCM Technologies, added, “The Company is cautiously optimistic that overall results for fiscal 2015 should remain favorable as compared to fiscal 2014. However, due to gaps and timing of projects, primarily in the Company’s Canadian Engineering Group, we expect to see a decline in operating income in the second quarter of 2015 as compared to both the second quarter of 2014 and the first quarter of 2015. Our current estimate is that operating income for the second quarter of 2015 will be somewhere between $1.0 million and $1.6 million. Because of our strong pipeline, it benefits us to carry a large bench of engineers in Canada, even though they may not have billable work until our pipeline is realized as expected. This will result in reductions to our gross and operating margins in the near term. That said, we do have several multi-million, multi-year opportunities in our pipeline that we expect to win in 2015, and which we anticipate will positively impact performance starting sometime in the second half of 2015. For example, we have been told that we are being recommended to the Board of Education of a major US city as the exclusive vendor for school nursing services. While we cannot provide assurances that we will ultimately win the contract, we believe that opportunity, if realized, will generate approximately $6.0 million annually starting in September 2015 and that contract should be for six years. Additionally, after a competitive bidding process, we have been awarded the renewal of our exclusive school nursing contract with the Hawaii Department of Education for three years starting in August 2015.”