RCM Technologies, Inc.

Tel: 856.356.4500

Corporate Contacts:

2500 McClellan Avenue

Fax: 856.356.4600

Bradley S. Vizi

Pennsauken, NJ 08109

info@rcmt.com

Executive Chairman

www.rcmt.com

Kevin D. Miller

Chief Financial Officer

P R E S S R E L E A S E

RCM TECHNOLOGIES, INC. ANNOUNCES

FOURTH QUARTER AND FULL YEAR 2019 RESULTS

Pennsauken, NJ - March 4, 2020 -- 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 fifty-two week periods ended December 28, 2019.

RCM Technologies reported revenue of $48.6 million for the thirteen week period ended December 28, 2019 (the current period), a 12.2% decrease as compared to $55.3 million for the thirteen week period ended December 29, 2018 (the comparable prior year period). Gross profit was $12.7 million for the current period, a 2.9% decrease as compared to $13.0 million for the comparable prior year period. The Company experienced GAAP operating income of $2.0 million for the current period, as compared to $1.6 million for the comparable prior year period. GAAP net income was $1.0 million, or $0.08 per diluted share, for the current period as compared to $0.6 million, or $0.05 per diluted share, for the comparable prior year period.

RCM Technologies reported revenue of $191.1 million for the fifty-two week period ended December 28, 2019 (the current period), a 4.6% decrease as compared to $200.4 million for the fifty-two week period ended December 29, 2018 (the comparable prior year period). Gross profit was $48.6 million for the current period, a 1.5% decrease as compared to $49.3 million for the comparable prior year period. The Company experienced GAAP operating income of $6.6 million for the current period, as compared to $5.4 million for the comparable prior year period. GAAP net income was $4.1 million, or $0.31 per diluted share, for the current period as compared to $2.7 million, or $0.22 per diluted share, for the comparable prior year period.

The Company had adjusted EBITDA (non-GAAP) of $2.4 million for the thirteen week period ended December 28, 2019, a 4.8% decrease as compared to $2.6 million for the comparable prior year period. The Company had adjusted EBITDA (non-GAAP) of $8.2 million for the fifty-two week period ended December 29, 2018, a 8.1% decrease as compared to $8.9 million for the comparable prior year period. A reconciliation of adjusted EBITDA (non-GAAP) to EBITDA (non-GAAP) and net income (GAAP) can be found on the fourth page of this press release.

Bradley Vizi, Executive Chairman of RCM Technologies, commented, "Our Specialty Healthcare Group had a strong 2019, setting the stage to deliver what we anticipate will be another record year in 2020. Our Information Technology group delivered profitable growth in 2019 while making investments to position the business for long-term success. While we are disappointed with the performance of Engineering, we believe we have repositioned the business to begin to deliver sustainable growth in fiscal 2020 and beyond. In particular, our strategy of focusing on major utilities and OEMs that have one billion dollar plus capital spending budgets in growing markets is starting to bear fruit."

Kevin Miller, Chief Financial Officer of RCM Technologies, added, "We expect cash flow from operations to exceed $10 million in fiscal 2020. We believe we will materially deleverage the business in 2020, especially in the first half. We are already making good progress in the first quarter."

Conference Call

On Thursday, March 5, 2020, RCM Technologies will host a conference call to discuss these results. The call will begin at 10:00 a.m. Eastern Time. The dial-in number is (866) 403-9129.

About RCM

RCM Technologies, Inc. is a premier provider of business and technology solutions designed to enhance and maximize the operational performance of its customers through the adaptation and deployment of advanced information technology and engineering services. RCM is an innovative leader in the delivery of these solutions to commercial and government sectors. RCM is also a provider of specialty healthcare services to major health care institutions and educational facilities. RCM's offices are located in major metropolitan centers throughout North America. Additional information can be found at www.rcmt.com.

The Statements contained in this release that are not purely historical are forward-looking statements within the Private Securities Litigation Reform Act of 1995 and are subject to various risks, uncertainties and other factors that could cause the Company's actual results, performance or achievements to differ materially from those expressed or implied by such forward-looking statements. These statements often include words such as "may," "will," "expect," "anticipate," "continue," "estimate," "project," "intend," "believe," "plan," "seek," "could," "can," "should," "are confident" or similar expressions. In addition, statements that are not historical should also be considered forward-looking statements. These statements are based on assumptions that we have made in light of our experience in the industry, as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate in these circumstances. Forward-looking statements include, but are not limited to, those relating to demand for the Company's services, expectations regarding our future revenues and other financial results, our pipeline and potential project wins and our expectations for growth in our business. Such statements are based on current expectations that involve a number of known and unknown risks, uncertainties and other factors, which may cause actual events to be materially different from those expressed or implied by such forward-looking statements. Risk, uncertainties and other factors may emerge from time to time that could cause the Company's actual results to differ from those indicated by the forward-looking statements. Investors are directed to consider such risks, uncertainties and other factors described in documents filed by the Company with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q. The Company assumes no obligation (and expressly disclaims any such obligation) to update any forward-looking statements contained in this release as a result of new information or future events or developments, except as may be required by law.

Tables to Follow

RCM Technologies, Inc.

Condensed Consolidated Statements of Income

(Unaudited)

(In Thousands, Except Per Share Amounts)

Thirteen Week Periods Ended

December 28,

December 29,

Revenue

2019

2018

$48,550

$55,271

Cost of services

35,893

42,239

Gross profit

12,657

13,032

Selling, general and administrative

10,225

10,477

Depreciation and amortization of property and equipment

317

326

Amortization of acquired intangible assets

80

85

Severance, professional fees and other charges

-

200

Tax credit professional fees

47

371

Operating income

1,988

1,573

Other expense, net

(470 )

(517 )

Income before income taxes

1,518

1,056

Income tax expense

509

457

Net income

$1,009

$599

Diluted net earnings per share data

$0.08

$0.05

Fifty-Two Week Periods Ended

December 28,

December 29,

Revenue

2019

2018

$191,100

$200,352

Cost of services

142,508

151,042

Gross profit

48,592

49,310

Selling, general and administrative

40,390

40,386

Depreciation and amortization of property and equipment

1,261

1,442

Amortization of acquired intangible assets

327

125

Severance, professional fees and other charges

-

1,571

Tax credit professional fees

47

371

Operating income

6,567

5,415

Other expense, net

(1,745 )

(1,507 )

Income before income taxes

4,822

3,908

Income tax expense

764

1,193

Net income

$4,058

$2,715

Diluted net earnings per share data

$0.31

$0.22

RCM Technologies, Inc.

Summary Consolidated Selected Balance Sheet Data

(In Thousands)

December 28,

December 29,

2019

2018

(Unaudited)

Cash and cash equivalents

$1,847

$482

Accounts receivable, net

$59,760

$52,335

Total current assets

$70,657

$58,811

Total assets

$96,173

$81,510

Total current liabilities

$21,408

$23,188

Borrowing under line of credit

$34,761

$27,540

Net debt (borrowings less cash)

$32,914

$27,058

Total liabilities

$63,770

$54,311

Stockholders' equity

$32,403

$27,199

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 fifty-two week periods ended December 28, 2019 and December 29, 2018.

Thirteen

Fifty-Two

Week Periods Ended

Week Periods Ended

December 28,

December 29,

December 28,

December 29,

2019

2018

2019

2018

GAAP net income

$1,009

$599

$4,058

$2,715

Income tax expense

509

457

764

1,193

Interest expense

419

396

1,695

1,367

Imputed interest on contingent consideration

21

104

61

104

Depreciation of property and equipment

317

326

1,261

1,442

Amortization of acquired intangible assets

80

85

327

125

EBITDA (non-GAAP)

$2,355

$1,967

$8,166

$6,946

Adjustments

Severance, professional fees and other charges

-

200

-

1,571

Tax credit professional fees

47

371

47

371

Loss (gain) on foreign currency transactions

30

17

(11 )

36

Adjusted EBITDA (non-GAAP)

$2,432

$2,555

$8,202

$8,924

RCM Technologies, Inc.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(In Thousands)

Thirteen Week Periods Ended

December 28,

December 29,

Net income

2019

2018

$1,009

$599

Adjustments to reconcile net income to cash

used in operating activities

1,945

2,167

Changes in operating assets and liabilities:

Accounts receivable

(2,442)

(6,017)

Prepaid expenses and other current assets

(1,128)

423

Net of transit accounts receivable and payable

(1,216)

(156 )

Accounts payable and accrued expenses

281

1,240

Accrued payroll and related costs

644

430

Right of use assets and liabilities

(9 )

-

Income taxes payable

8

(814 )

Total adjustments

(1,917

)

(2,727)

Cash used in operating activities

(908

)

(2,128)

Net cash used in investing activities

(67 )

(1,160)

Net cash provided by financing activities

2,467

3,081

Effect of exchange rate changes

(38 )

(21 )

Increase (decrease) in cash and cash equivalents

$1,454

($228

)

Fifty-Two Week Periods Ended

December 28,

December 29,

Net income

2019

2018

$4,058

$2,715

Adjustments to reconcile net income to cash

used in operating activities

3,881

4,694

Changes in operating assets and liabilities:

Accounts receivable

(7,626)

(7,681)

Prepaid expenses and other current assets

(645 )

(170 )

Net of transit accounts receivable and payable

(293 )

(1,716)

Accounts payable and accrued expenses

(3,085)

1,021

Accrued payroll and related costs

(1,342)

1,335

Right of use assets and liabilities

236

-

Income taxes payable

38

(262 )

Total adjustments

(8,836

)

(2,779)

Cash used in operating activities

(4,778

)

(64

)

Net cash used in investing activities

(363 )

(2,583)

Net cash provided by financing activities

6,627

346

Effect of exchange rate changes

(121 )

(68 )

Increase (decrease) in cash and cash equivalents

$1,365

($2,369)

RCM Technologies, Inc.

Summary of Selected Income Statement Data

(Unaudited) (In Thousands)

Thirteen Week Period Ended December 28, 2019

Specialty

Information

Consolidated

Engineering

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 margin

28.9%

23.9%

27.5%

26.1%

Thirteen Week Period Ended December 29, 2018

Specialty

Information

Consolidated

Engineering

Health Care

Technology

Revenue

$23,666

$23,064

$8,541

$55,271

Cost of services

17,782

18,038

6,419

42,239

Gross profit

$5,884

$5,026

$2,122

$13,032

Gross profit margin

24.9%

21.8%

24.8%

23.6%

Fifty-Two Week Period Ended December 28, 2019

Specialty

Information

Consolidated

Engineering

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 margin

27.2%

23.4%

27.2%

25.4 %

Fifty-Two Week Period Ended December 29, 2018

Specialty

Information

Consolidated

Engineering

Health Care

Technology

Revenue

$86,078

$83,663

$30,611

$200,352

Cost of services

63,488

64,860

22,694

151,042

Gross profit

$22,590

$18,803

$7,917

$49,310

Gross profit margin

26.2%

22.5%

25.9%

24.6 %

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RCM Technologies Inc. published this content on 04 March 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 04 March 2020 22:40:04 UTC