RCM Technologies, Inc. (RCMT) research, news, and more from GeoInvesting

Company description

Mon, 28 Oct 2013 04:00:00 GMT

RCM Technologies, Inc. engages in the design, development, and delivery of business and technology solutions to commercial and government sectors in the United States, Canada, and Puerto Rico. The company operates in three segments: Information Technology, Engineering, and Specialty Health Care Services. The Information Technology segment provides enterprise business solutions, application services, infrastructure solutions, competitive advantage and productivity solutions, life sciences solutions, and other vertical market specific offerings. The Engineering segment offers engineering and design, engineering analysis, engineer-procure-construct, configuration management, hardware/software validation and verification, quality assurance, technical writing and publications, manufacturing process planning and improvement, reliability centered maintenance, component and equipment testing, and risk management engineering services. The Specialty Health Care Services segment provides long-term and short-term staffing, executive search, and placement services in various fields, including rehabilitation comprising physical therapists, occupational therapists, and speech language pathologists; nursing; managed care; allied health care; health care management; medical office support; and non-medical caregivers or companions. This segment offers in-patient, outpatient, sub-acute and acute care, multilingual speech pathology, and geriatric, pediatric, and adult day care services to hospitals, long-term care facilities, schools, sports medicine facilities, and private practices. RCM Technologies, Inc. serves aerospace/defense, energy, financial services, life sciences, manufacturing and distribution, the public sector, and technology industries. The company was founded in 1971 and is based in Pennsauken, New Jersey.

Research

Mon, 14 Aug 2023 18:24:35 GMT

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.

Research

Thu, 28 Apr 2022 14:56:43 GMT

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.

Research

Sun, 03 Apr 2022 04:00:00 GMT

Rcm Technologies (NASDAQ:RCMT) ($11.41) a provider of business and technology solutions for engineering, specialty health and information technology services announced Q4 2021 results:

Sales of $64.9 million vs $41.2 million in the prior year
Non-GAAP EPS of $0.34 vs $0.01 in the prior year

Our fourth quarter results serve as a nice bookend to 2021. As I reflect on our transformation plan dating back before the pandemic, I am proud of the team's execution. The results speak for themselves, with broad-based strength across each segment.

We are excited to announce our record fourth quarter of 2021, growing adjusted EBITDA by 627% over 2020 and 120% over 2019. In addition, we grew revenue by $53 million for the year and continued to generate positive cash flow from operations.”

Conference call comments:

"As we look to 2022 and beyond, the future of RCM Technologies has never been brighter. Now I will highlight just a few secular trends that bode well for our business in the future. We have the team, the infrastructure and the strategic direction to assist our clients in solving some of the most difficult problems facing society today."

Research

Fri, 09 Nov 2018 16:26:24 GMT

Closing Out Long Position and Removing RCMT From All Screens/Portfolios

Rcm Technologies (NASDAQ:RCMT) ($4.53; $55.6M market cap) a provider of business and technology solutions for engineering, specialty health and information technology services, announced Q3 2018 results:

Sales of $42.6 million vs $43.8 million in the prior year and below estimates of $46.2 million
EPS of $0.06 vs $0.08 in the prior year and slightly ahead of analyst estimates of $0.05

“Though third quarter operating income came in at the low end of our expectation, as the result of project timing within Engineering Services, we believe that we are well positioned to deliver a strong finish to the year and enter 2019 with momentum. On a year-to-date basis, our 2018 adjusted EBITDA of $6.4MM exceeds 2017 by a robust 16%.

We generated $5.7 million in cash flow from operations during our third quarter of 2018. We believe we will see good cash flow from operations in the fourth quarter as we look to strengthen our balance sheet.”

We’ve followed RCMT for a long time and have given management ample time to deliver, but the company always seems to be one quarter away from righting the ship towards consistent growth. We are disappointed that RCMT has underperformed in all of its divisions versus comparable companies we follow.

On the positive side, management has consistently returned capital to shareholders via special dividends at the end of the year. With that in mind, we may consider a swing trad going into Q4 earnings. We will keep you posted on our decision, in the meantime, we feel there are better opportunities to allocate our capital towards for the short and long term. You can see our full coverage on RCMT here.

Research

Wed, 15 Aug 2018 14:43:29 GMT

GB Rcm Technologies (NASDAQ:RCMT) ($4.78; $58.5M market cap) a provider of business and technology solutions for engineering, specialty health and information technology services announced Q2 2018 results:

Sales of $51.7 million vs $45.5 million in the prior year
Non-GAAP EPS of $0.18 vs $0.12

“We are pleased with our 2018 consolidated second quarter results. We posted our third consecutive quarter with revenues exceeding $50 million. Our second quarter revenues of $51.7 million are the highest quarterly revenues we’ve seen in at least fifteen years. We are confident our fiscal 2018 revenues will exceed $200 million. We are pleased to see our adjusted EBITDA for the thirteen and twenty-six week periods ended June 30, 2018 of $2.6 million and $4.8 million, respectively, grow by approximately 30% and 38%, respectively, over the comparable prior year periods.”

“We generated $3.4 million in cash flow from operations in the second quarter of fiscal 2018, reducing our line of credit to $29.2 million as of June 30, 2018 from $32.0 million as of March 31, 2018. We anticipate better cash flow in the third quarter as we’ve seen strong accounts receivable collections so far in July and August.”

We plan to be on the conference call to get more color on the quarter. Unfortunately, management does not provide non-GAAP EPS in its PR, so the headline numbers look weak on that front. However, we calculate the company would have earned $0.18 for the quarter, significantly ahead of last year and ahead of analyst estimates of $0.11.

Research

Thu, 10 May 2018 14:49:03 GMT

Rcm Technologies (NASDAQ:RCMT) ($4.70; $57.5M market cap) (On Maj Favorite List), a provider of business and technology solutions for engineering, specialty health and information technology services, announced Q1 2018 results:

Sales of $50.8 million vs $46.3 million in the prior year
EPS of $0.09 vs $0.05 in the prior year

Quotes from management:

“We are very pleased with our results in the first quarter of 2018 as revenue, gross profit and operating income grew by approximately 10%, 7% and 66%, respectively, as compared to first quarter 2017... We continue to believe that fiscal 2018 will be a strong year for RCM.”

“Our first quarter growth in gross profit and operating income really illustrates the potential operating leverage at RCM. We expect to improve these results in the second quarter and beyond. However, we did experience several discrete but fixable issues in collecting our accounts receivables. We expect our ratio of accounts receivables to quarterly revenues in the second quarter to rebound to levels we experienced in fiscal 2017 and to continue to improve throughout fiscal 2018.”

On May 7, 2018 we stated that we were cautious of this quarter for RCMT as the Q4 2017 conference call indicated possible softness compared to previous quarters. The quarter was actually stronger than we expected and management reiterated its bullish outlook for 2018.

Research

Mon, 07 May 2018 04:00:00 GMT

Q1 Earnings Watch:

We wanted to give you some color on which stocks in some of our Model/Mock portfolios that may not be timely in the short-run .

Specifically, Information Analys (OOTC:IAIC) ($0.40, $4.5m market cap) and Rcm Technologies, Inc. (NASDAQ:RCMT) ($5.01, $61.3m market cap) Q1 financial results could disappoint investors. On its Q4 conference call, RCMT indicated that Q1 2018 might see some softness compared to its previous quarters. Thus, short term investors should be aware of this possibility. We do think RCMT is a potential takeover candidate at some point, but we will have to dissect Q1 2018 results to determine if the stock should remain in our favorite stock portfolio.

As for IAIC, the company is still in the early stages of its turnaround plan, and because of its heavy reliance on government contracts, we still expect volatility in quarterly results. Like many stocks in our run to one mock portfolio, time is needed for the story to play out.

We also want to mention Tss Inc (OOTC:TSSI) ($0.50, $7.8m marker cap) . We are still very bullish on the company and believe it will continue to successfully execute its turnaround. But we must be aware that Q1 may not be up to par with what the market is expecting due to Q4 2017 conference call comments that Q1 2018 will be sequentially down from Q4. Regardless, we still think the company will show significant growth in the quarter and throughout 2018.

Research

Thu, 29 Mar 2018 15:48:37 GMT

GB Rcm Technologies (NASDAQ:RCMT) ($5.79; $70.8M market cap) - On December 4, 2017 we added RCMT, a provider of business and technology solutions, to Maj’s Favorite Stocks Screen. On February 21, 2018 we disclosed a long position ahead of the Company’s Q4 earnings report. Our Q4 2017 earnings summary can be read here.

We came across a Seeking Alpha article titled, “RCM Technologies: An Undervalued Sum-Of-The-Parts With A Catalyst”, which we feel offers a good summary of the story.

RCMT is a cash-generative mini-conglomerate that has returned nearly $60M to investors since 2014.
RCMT's two main businesses are now firing on all cylinders.
There remains a significant "hidden asset" on RCMT's balance sheet.
We think the sum-of-the-parts value is $10+ per share vs. a share price of $5.50 today.
The company's activist Chairman controls 17% of the company and is the catalyst for value realization, including a potential sale of the company.

Research

Thu, 08 Mar 2018 12:38:57 GMT

Rcm Technologies (NASDAQ:RCMT) ($6.15; $73.8M market cap) a provider of business and technology solutions for engineering, specialty health and information technology services announced Q4 2017 results:

Sales of $51.1 million vs $44.2 million in the prior year and ahead of analyst estimates of $48.4 million
We calculated that Non-GAAP EPS of $0.16 vs $0.12 in the prior year, ahead of analyst estimates of $0.09
GAAP EPS of $0.02 vs a loss of $0.02 in the prior year

Unfortunately, management, did not provide non-GAAP EPS, so it is possible that shares could pull back in early trading, off the headline numbers. We might consider a pullback to be an opportunity to buy some trading shares around our core position. Hopefully, the 10:00 AM EST conference call offers more color on the non-GAAP financials, as well as the 2018 outlook. We’ll be on the call to find out.

Quotes from management:

“We are very pleased with our results in the fourth quarter of 2017 as revenue, gross profit and adjusted EBITDA grew by 15.5%, 5.8% and 24.4%, respectively, as compared to fourth quarter 2016. Our Specialty Health Care segment again set quarterly records for both revenues and gross profit, growing by 35.5% and 26.4%, respectively, over fourth quarter 2016, primarily from further growth in our school contracts. Our fourth quarter Engineering segment revenues grew by 12.8% as compared to fourth quarter 2016. Additionally, we made a small acquisition of an engineering firm in Belgrade, Serbia that we believe has significant potential for growth and diversification expansion for both our Engineering and IT segments. We look forward to carrying our fourth quarter momentum into fiscal 2018.”

Research

Wed, 21 Feb 2018 20:17:21 GMT

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.

Research

Tue, 12 Dec 2017 20:54:05 GMT

Rcm Technologies (NASDAQ:RCMT) ($6.85; $82.8M market cap), an engineering, information technology, specialty healthcare services company, announced a special cash dividend of $1.00 and provided Q4 2017 guidance.

On December 4, 2017 we disclosed Maj’s top 7 picks upon exiting Q3 2017. On RCMT, Maj stated:

“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.”

While we were expecting the dividend, we were pleasantly surprised by the size of the dividend. Management’s stated:

“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, other special dividends, and our stock repurchase initiatives, RCM has returned nearly $80 million to our shareholders. We expect that our revenues and gross profit for the current fourth quarter of fiscal 2017 will be amongst our best quarterly performances in at least five years. We are optimistic about the prospects of our business on a go forward basis and we expect to continue to generate strong operating income and cash flow in 2018.”

Q4 2017 sales guidance is $48 to $50 million, in line with analyst estimates. The gross profit guidance implies that EPS may come in slightly ahead of analyst estimates of $0.09. The company expects to build on the strong momentum of the second half of 2017 as it heads into 2018.

Research

Mon, 20 Nov 2017 16:20:08 GMT

GB Rcm Technologies Inc. (NASDAQ:RCMT) ($6.84; $82.1m market cap), a premier provider of business and technology solutions, has been hitting new highs on the heels of strong Q3 2017 results. We recently highlighted its results on November 2, 2017, which can be seen here. A 13D/A filed last Friday after hours shows IRS Partners has increased its stake to 17.1% from the 15.6% it reported in early August.

On July 14, 2017 we added RCMT to our Buy on Pullback Mock Portfolio 5.0 when shares were trading at $5.25 as we stated the stock had yet to react to positive near-term “inflection point” developments included in the then Q1 2017 conference call. In its Q1 conference call the company stated it expected to have at least 3 straight quarters of year over year growth. Q2 and Q3 showed this growth, and now the company states its upcoming Q4 will be the best quarter of the year.

Research

Thu, 02 Nov 2017 14:57:40 GMT

GB Rcm Technologies Inc. (NASDAQ:RCMT) ($5.84), a premier provider of business and technology solutions, announced Q3 2017 results:

Sales of $43.8 million vs $39.7 million in the prior year, slightly below analyst estimates of $44.1 million
EPS of $0.08 vs $0.01 in the prior year and ahead of analyst estimates of $0.06

Quotes from management:

“Our Engineering Group achieved its second highest quarterly gross profit in history and best amount in the past three years. Our Health Care division, which experiences significant seasonality in the third quarter due to summer school closings, set new third quarter records for both revenues and gross profit, growing both over 2016 by approximately 19% and 13%, respectively. Much more importantly, we started strong with our new 2017/2018 school contracts. Our robust start to the new school year should result in solid year-over-year growth for our Health Care division in fiscal 2018. We believe that the consolidated results for the fourth quarter of 2017 will be our best quarter this year. We are excited about finishing 2017 on a high note as we head into fiscal 2018.”

On July 14, 2017 we added RCMT to our Buy on Pullback Mock Portfolio 5.0 when shares were trading at $5.25 as we stated the stock had yet to react to positive near-term “inflection point” developments included in the then Q1 2017 conference call. In its Q1 conference call the company stated it expected to have at least 3 straight quarters of year over year growth. Q2 and Q3 showed such growth, and now the company states its upcoming Q4 will be the best quarter of the year.

Research

Thu, 10 Aug 2017 14:56:37 GMT

RCMT- Reported Q2 2017 earnings yesterday after the bell:

Revenue: $45.5 million vs. $45.4 million
Non GAAP EPS of $0.10 vs $0.07

Quotes from Management:

“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.”

“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.”

Research

Fri, 14 Jul 2017 15:10:16 GMT

**Buy on Pullback Mock Portfolio 5.0 Update

Yesterday we said we were digging into a stock we would considering adding to our Mock 5.0 portfolio. We have decided to add GeoBargain $RCMT ($5.26) to the portfolio. The stock has yet to react positively to near-term “inflection point” developments included in the company’s Q1 press release and related conference call on May 3, 2017.

We closed out our long position in RCMT in March 2017 but stated we would leave it as a GeoBargain due to its history of returning capital to shareholders and management's continued confidence that growth will resume in the near future, a stance that was beginning to fall on deaf ears after several quarters of failed attempts to resume growth.

Finally, per its Q1 2017 release and conference call transcript, it seems the Company is slated to have at least 3 straight quarters of year over year growth. While it uncertain how strong the growth will be, the Company stated in its Q1 CC transcript that it expects gross margins and operating income to sequentially increase each quarter for the remainder of 2017, setting the stage for possible strong Q3 and Q4 results.

he company reported $0.05 EPS in Q1 2017. In fiscal 2016’s Q3 and Q4, the Company reported EPS of $0.01. Assuming the Company delivers sequential and year over year improvements as stated in its press release and CC transcripts, we have calculated that it is likely we can see EPS minimums of $0.09, $0.10 and $0.11 or higher for Q2 through Q4 of 2017, respectively. If this were to be the case, 2017 year- end EPS could come in at around $0.35.

Applying a P/E multiple of 25 on the above year end estimates gives us a 5 month price target of $8.75.

While management has had a recent history of overpromising and under-delivering, we are willing to give them another opportunity. Yesterday, shares saw a 5% jump on a “Buy” rating and $7 price target from The Benchmark Company.

We first coded RCMT as a GeoBargain on December 16, 2014 when the stock was trading at $4.78 (adjusted for special dividends and stock splits). Shares had a brief run, attaining a high of $9.25 in late 2014.

Research

Thu, 04 May 2017 15:28:42 GMT

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).

Research

Mon, 13 Mar 2017 14:33:57 GMT

Closed Our Long Positions In Two GeoBargains

To free up capital for more timely opportunities, we have decided to exit our positions in two long-tenured GeoBargains, but continue to believe long-term shareholders will likely be rewarded. The management teams of both companies have a history of returning capital to shareholders as well as confidence that growth will resume in the near future. For these reasons, we have still decided to leave both as GeoBargains.

$RCMT ($5.13) engages in the design, development, and delivery of business and technology solutions to commercial and government sectors. We coded RCMT as a GeoBargain on December 16, 2014 when the stock was trading at $4.78 (adjusted for special dividends and stock splits). Shares had a brief run reaching a high of $9.25 in late 2014. It seems management's plan of returning to growth, initially stymied by the oil crisis, has been taking much longer than anticipated. However, its latest earnings release suggests growth for 2017:

“We believe that the foundation laid in 2016 will set RCM up for significantly improved operational performance in 2017, particularly as we progress throughout the year.”

“We are very excited about our business as we head into 2017 and expect to see significant growth in annual operating income.”

A potential positive to RCMT would be growth coming back from its oil and gas customers

$MHH ($6.26) provides information technology (IT) and specialized healthcare staffing services primarily in the United States. We coded MHH as a GeoBargain on December 19, 2012 when the stock was trading at $4.40. Similar to RCMT, MHH had early success, eclipsing $19 in late 2013. In conjunction with its recent Q4 2016 results, management stated:

“With investments made in 2016 to enhance both our sales and recruitment capabilities, I'm confident in our abilities to accelerate growth in 2017."

As for MHH, there is the added caveat of potential adverse effects from regulatory changes made by the Trump administration that could lead to less companies hiring workers outside the United States. A positive catalyst is that management is on the hunt for acquisitions.

We can see both stocks not moving higher until the management teams prove they have turned the corner back to sustainable growth trends.

With both companies trading at TTM P/E of 12, we certainly feel that multiple expansion is likely once the companies prove that they are indeed back on a growth path. We plan to interview RCMT in the coming days.

Research

Thu, 02 Mar 2017 14:51:22 GMT

RCMT ($5.64) announced Q4 2016 results:

Sales of $44.2 million vs $47.4 million in the prior year period
Non-GAAP EPS of $0.10 vs $0.17 (non taxed figures)

Quotes from management:

“We believe that the foundation laid in 2016 will set RCM up for significantly improved operational performance in 2017, particularly as we progress throughout the year.”

“We are very excited about our business as we head into 2017 and expect to see significant growth in annual operating income.”

Once again, it seems the start of the turnaround is taking slightly longer than management anticipated. While management did discuss how fourth quarter results were up sequentially vs. the third quarter, financials are still down on a year over year basis. However, once again, management's commentary indicates that 2017 could be a year of significant growth, but the tone of commentary also suggests that Q1 and Q2 could be challenging as the company expects the second half of the year to outperform the first half. As we have previously stated, we normally would have removed the stock from the GeoBargain list due to its lackluster growth. Still, we believe there is a high probability that long term investors will be rewarded. The company also has a habit of returning capital to shareholders through special dividends.

Research

Thu, 10 Nov 2016 16:01:39 GMT

RCMT ($6.63)announced Q3 2016 results:

Sales of $39.7 million vs $45.1 million in the prior year
EPS of $0.01 vs $0.07 in the prior year

Management released the following:

“We anticipate a significant increase in consolidated operating results in the fourth quarter as compared to our third quarter, driven by new historic record revenues in our Specialty Health Care segment and an increase in activity for our Engineering segment. We are excited about our prospects heading into 2017 and among other initiatives we are focused on the following in order to grow our revenues and operating income:

We have recently closed contracts with several new large utility clients and considerably improved our Engineering segment backlog and pipeline from this time last year which we believe positions us for a very strong 2017.

Our Specialty Health Care segment has realized several recent contract wins that we believe will positively impact our fourth quarter and beyond;

We continue to make investments in sales and recruiting resources in our Information Technology segment while focusing on increasing our sales activity levels and improving our recruiting processes that we expect will positively impact 2017.”

As previously conveyed, we normally would have removed the stock from the GeoBargain list due to its lackluster growth. However, we believe there is a high probability that long term investors will be rewarded. Commentary suggest that Q4 should be the start of the turnaround, we will give RCMT one more quarter to execute on its growth initiatives. The company also has a habit of returning capital to shareholders through special dividends at the end of the year.

Research

Mon, 19 Sep 2016 15:17:44 GMT

RCMT ($6.00) - As we have previously stated, we normally would have removed RCMT from the GeoBargain list at this point due to its inability to log consistent growth. While the health care services segment has been growing, its IT and engineering segments have been choppy. However, in this case, we believe long term investors may choose to trust the management team. For example, the Company has a habit of returning capital to shareholders which has likely helped support the stock during this lull in growth. Management has also done a nice job of keeping investors informed and it seems that RCMT could be back on track later this year.

Management's planned recovery and execution has taken longer than anticipated. The company has suffered from poor timing of orders and delays in projects over the last several quarters, particularly in Canada where they provide infrastructure services to energy clients. While the company's upcoming Q3 likely will experience many of the same issues, commentary in the Q2 release and information arbitrage comments in the related conference call suggest to us that the Company may be gearing up for sustained growth starting with Q4 2016 into fiscal 2017. Some bullish quotes from the conference call follow:

“We are confident that our backlog at Bruce Power will continue to ramp up sometime this year and into 2017 and 2018.”

“Energy Services and Aerospace hit their targets as we expect and we see improvement in IT, we will see a very strong Q4 and really good momentum as we head into 2017.”

“As RCMT's name recognition continues to grow we are optimistic that energy services market share will grow accordingly for years to come.”

The company operates through 3 segments: health care service, engineering and IT Services.

Research

Thu, 11 Aug 2016 18:35:29 GMT

RCMT ($5.63) reported second quarter 2016 results:

Sales of $45.4 million vs $45.3 million in the prior year period
EPS of $0.08 vs $0.06 in the prior year

Quotes from management:

“We are pleased that our second quarter results were consistent with our expectations. Once again, our Health Care segment’s results were exceptional, as we achieved historic second quarter highs in both revenues and gross profit. Also, our Health Care segment continued to diversify by launching a new Locum Tenens Group to staff physicians, a large and growing Health Care staffing sector that we believe is well suited for our business model. While our revenues from our IT segment declined this quarter, we are increasing our sales activity across all of our IT divisions to improve our performance. Additionally, we are anticipating improved results in our Canadian Engineering Group, starting late in the third quarter. We are kicking off awarded projects at our major clients in Canada and have continued to retain our professional workforce in order to execute these significant awards.”

As previously conveyed, 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 now looks to be partially in Q3 and more so in Q4 of this year. We will give management the benefit of the doubt and see how the next several quarters play out.

The conference call is later this morning. After listening to this, we’lll also look to set up a call with management to determine if we feel it is worth adding to our position at current levels.

Comments & Business Outlook

Wed, 11 May 2016 15:37:08 GMT

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.

Research

Wed, 02 Mar 2016 15:51:22 GMT

RCMT ($5.88) reported fourth quarter 2015 results:

Sales of $47.4 million vs $49.3 million in the prior year
Non-GAAP fully taxed EPS of $0.11 vs $0.14

Quotes from management:

“While we are disappointed in our consolidated results for fiscal 2015, there are more than a few highlights that we believe will set the stage for a strong fiscal 2016 and beyond"

Our Healthcare segment grew revenues and gross profit by 32.4% and 36.4%, respectively, over fiscal 2014.

Our Information Technology segment essentially had level revenues and gross profit year-over-year despite revenues from its two largest 2014 life sciences clients reducing by $8.8 million in fiscal 2015 as compared to fiscal 2014. The decline in revenues is due to large discrete projects ending in late fiscal 2014 and early fiscal 2015. Normalizing for these two clients, Information Technology segment revenues grew 18.4%.

Our HR Solutions practice in our Information Technology segment and our Energy Services, USA practice in our Engineering segment both had outstanding years.

We acquired Substation Design Services, a company specializing in utility transmission and distribution services, which added several new clients, including Atlantic City Electric, Baltimore Gas and Electric (BGE), Delmarva Power and Potomac Electric Power Company (PEPCO).

“We generated significant cash flow in fiscal 2015 and returned another $12.5 million to our shareholders through a special cash dividend. We were able to issue the large dividend while only increasing our debt from $20.0 million at the end of 2014 to $21.0 million at the end of 2015. Including the stock buyback we completed in January 2013 and our ongoing buyback program, we have returned approximately $62.8 million to our shareholders through $4.00 in special cash dividends and stock repurchases. We are optimistic that we will deliver good cash flow again in fiscal 2016, through improved operating income and/or reduced days outstanding in our accounts receivable. We expect to improve our fiscal 2016 operating income as compared to fiscal 2015 by achieving attractive gross profit growth rates while efficiently managing our growth in SGA expense. However, due to expected project delays in our Canadian Engineering group, we expect a slow start to fiscal 2016.”

Normally, given the lackluster growth in sales and EPS the company has experienced over the last several quarters, we would remove the stock from the GeoBargain list. However, we still think long term investors have a high probability of being rewarded. Although the stock may suffer or be stagnant in the short term, activist involvement and the Company’s habit of returning capital to shareholders could give the stock some support. We will be on the conference call later this afternoon and will update you accordingly.

Special Dividend

Fri, 11 Dec 2015 15:35:01 GMT

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.”

Comments & Business Outlook

Thu, 13 Aug 2015 17:28:52 GMT

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.”

Contract Awards

Fri, 26 Jun 2015 18:26:16 GMT

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

Comments & Business Outlook

Wed, 13 May 2015 04:00:00 GMT

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.”

Comments & Business Outlook

Thu, 05 Mar 2015 05:00:00 GMT

$RCMT ($6.36) - RCMT designs, develops, and delivers business and technology solutions to commercial and government sectors in the U.S., Canada, and Puerto Rico. Yesterday, we released our bullish article “Activist Investor Decision To Buy RCM Technologies (RCMT) Is Bullish Signal”. After the close, RCMT reported its Q4 2014 results:

Q4 2014 revenues of $49.3 million vs $45.8 million in the prior year
Q4 EPS of $0.14 vs a loss of $0.13 in the prior year. We are unable to calculate a non-GAAP number as the 10-K has yet to be filed.

Overall, management commentary was bullish. The company expects operating income, gross margins and free cash flow improvements in 2015. They have a history of returning capital to shareholders and it is our belief the expected significant increase in free cash flow will likely lead to another special dividend in 2015. (Recall, RCMT paid a $2.00 special dividend on 12/30/2014.)

Research

Wed, 17 Dec 2014 05:00:00 GMT

RCMT - Initiated Long Position and Coded as a GeoBargain

Yesterday on our message boards we coded RCMT as a GeoBargain and stated we have initiated a long position. Here is our message board post:

We are coding RCM Technologies (RCMT) as a GeoBargain. Reasons for tracking:

Serves 3 attractive industry segments

- Engineering - Nice chunk of revenue comes from services performed for energy /power distribution customers. We are excited about the money that will be spent by energy providers (electricity/nuclear power) to improve outdated infrastructure as well as pressure for them to offer alternative sources of energy.
- IT segment - The company services the middle market of the IT industry which presents an opportunity for RCMT. RCMT offers a one stop service/product offering to customers that typically meet their IT solutions from several service providers. In general, we look favorably at companies that offer solutions to save money for their customers by helping them operate in a more efficient environment. The IT industry has been and continues to grow at a healthy growth rate of around 7% annually.
- Specialty healthcare Staffing - shortage of nurses in the U.S. will provide growth opportunity for the company.
Has grown EPS at a healthy rate for 6 consecutive quarters on a year over year basis, giving us confidence that the company can attain a favorable Geo Power Ranking (GPR) of at least 4. (GPR= number of consecutive strong quarters of EPS growth, YOY) Management commentary supports this assumption. For Example, even though Q4 2014 financial results could be sequentially down from Q3 2014 , comments from management call for year over year growth when compared to Q4 2013. From Q3 2014 conference call:

“So, just to reiterate, I think as I’m sitting here today with the information I have today, I’m optimistic that Q4 will be a strong quarter as compared to Q4 of last year; it may or may not beat Q3 of this year, but if it doesn’t, I don’t think it will be too far off, will be my best guess, as I sitting here today.”

"Additionally, we’re really optimistic about fiscal 2015 as compared to 2014, despite the fact that we expect to see a little bit of a slowdown in our run rate into Q1.”

Regarding the energy division: “We expect the fourth quarter to compare favorably to the fourth quarter of 2013 and we’re optimistic we’ll continue to deliver strong growth for fiscal 2015.”

Operating leverage exists. Current operating margins of roughly 6% can significantly improve as revenues increase.
Special dividend: RCMT recently stated it would announce a special dividend of “at least” $1.00 per share to be issued sometime by calendar year end 2014. RCMT announced a $2.00 special dividend 12/15/2014.
Shareholder activist involvement whose ultimate role is in the best interest of creating value for shareholders. For more color on the activist role, pleasego here.
Our initial short term price target is $12.75 which we derive from assigning a P/E multiple of 25 on trailing non-Gaap EPS of $0.51.

Notable Share Transactions

Mon, 28 Oct 2013 04:00:00 GMT

PENNSAUKEN, N.J., Oct. 28, 2013 (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 information technology, engineering and specialty healthcare services, today announced that its board of directors has approved a new stock repurchase program to repurchase up to $5.0 million of RCM's outstanding shares of common stock from time to time over the next 12 months. Under RCM's previous stock repurchase program, RCM repurchased $7.5 million of RCM's common stock during the period from February 2010 through January 2013.

In accordance with applicable securities and other laws, including Rule 10b-18 of the Securities Exchange Act of 1934, the stock repurchases may be made from time to time in the open market or in privately negotiated transactions, depending on market conditions, share price and availability and other factors at RCM's discretion. The stock repurchase program may be suspended or discontinued at any time without prior notice.

"The board's authorization of this stock repurchase program is a reflection of the confidence that our board and management have in RCM's operating fundamentals, business opportunities and growth prospects," said Leon Kopyt, RCM's Chairman and CEO. "As demonstrated by today's announcement and our record over the past three years in returning close to $20 million in value to our stockholders through stock repurchases and special dividends, our board remains committed to taking swift and decisive action to deliver value to our stockholders without compromising our strong balance sheet, financial flexibility and strategic growth trajectory, or our ability to continue investing in our business. While future stock repurchase programs and dividend declarations are subject to approval of the board and will depend on RCM's results of operations, financial condition, anticipated capital requirements, business conditions, contractual restrictions and other factors deemed relevant by our board, we remain committed to continuing to explore further actions to enhance stockholder value," concluded Mr. Kopyt.

RCM intends to finance this stock repurchase program using RCM's available cash and cash equivalents. As of June 29, 2013, RCM had cash, cash equivalents and marketable securities of approximately $13.2 million.

As of September 28, 2013, RCM had approximately 12.4 million shares of common stock outstanding.