Good morning and thank you for joining us. This is Kevin Miller, Chief Financial Officer of RCM Technologies. I am joined today by Brad Vizi, RCM's Executive Chairman. Our presentation in this call will contain forward-looking statements. The information contained in the forward-looking statements is based on our beliefs, estimates and assumptions and information currently available to us. These matters may materially change in the future. Many of these beliefs, estimates and assumptions are subject to rapid changes. For more information on our forward-looking statements and the risks, uncertainties and other factors to which they are subject, please see the periodic reports on Forms 10-K, 10-Q and 8-K that we file with the SEC as well as our press releases that we issue from time to time. I will now turn the call over to Brad Vizi, Executive Chairman, to provide an overview of RCM's operating performance during the quarter.

Thanks, Kevin. Our third quarter results demonstrate tangible progress RCM Technologies has made over the past year. Our team's commitment to the process and execution of our vision has translated into tangible results. Compared to this point last year, the Company's business momentum and financial results have shown stark improvement. I will provide more detail regarding these improvements in a moment. Over the past several quarters, we have discussed our steps to ensure these results continue to scale consistently. We have honed our processes and refined our focus. We have strengthened our balance sheet and made the necessary investments into our people. In essence, the foundation is now in place. I've also delineated our vision of RCM becoming a world-class services organization, and we remain steadfast in our commitment to ensure this becomes a reality. That said, we understand this journey requires a detailed road map capable of taking us from where we stand today to where we want to be in the future. The road map to becoming a world-class services organization of the future requires us to embrace and help facilitate the digital transformation underway across every facet of the economy. That requires us to revamp our digital architecture to ensure scalability, but it also requires RCM to modernize the way we deliver solutions to our clients in the future. They need help in accelerating their digital adoption curve, and our mission is to assist them in getting there. In essence, the winners of B2B services in the future will be the ones who aggressively productize their solutions today. We are already beginning to see our efforts bear fruit. As we've mentioned in the past, leveraging technology is a necessary ingredient to fulfilling our vision. We are prioritizing a range of strategic investments to revamp the Company's digital architecture. From our back-end systems to our front-end business development efforts, technology is augmenting our process every step of the way. As the economy's digital transformation accelerates, we are building out RCM's architecture to help facilitate a digital-first go-to-market strategy in the future. In doing so, we are beginning to capture a wealth of data that enables us to extract more data-driven insights that we can integrate into our approach to the benefit of our clients. The revamping of our digital presence is one example, but we are also pairing that with investments in building out our CRM capabilities and modernization of our ERP system soon. The efforts to modernize how we work internally also have the additional benefit of helping our clients innovate externally. For example, our engineering group's internal approach to project management has caught the attention of some of our largest clients. Our customers' effort to modernize their process has led to our group's 3D/4D project management tools gaining traction in helping facilitate large-scale projects at RCM's most prominent utility clients. Another example comes from our Aerospace unit. They are developing a patented solution for the Technical Publications Group to help our clients digitize their mission-critical documentation in a sustainable and scalable way. I will have more to share on our digital transformation efforts in the future. In the meantime, our team continues to execute against our strategic road map. I am pleased to share that they have put in another solid performance during the third quarter. I will provide several highlights before Kevin dives deeper into the numbers. Our Q3 results were solid across the board. The team did a tremendous job and in particular, our healthcare group performed exceptionally well during the quarter. HCS segment for the third quarter increased 118% year-over-year as the demand for healthcare professionals for our most significant clients continues to grow. I am also optimistic about the future as the group's momentum carries into Q4 2021 with demand from school districts for testing and nursing personnel remaining robust. The Company's profitability was also strong for the third quarter. The Company generated adjusted EBITDA of $1.9 million during Q3, representing an increase of about 780% year-over-year. We ended Q3 with a favorable net debt position of $5.1 million, primarily the result of proceeds from the sale of our Canadian assets. As we enter our strongest seasonal quarter, we anticipate a material uptick in net debt towards the high end of our target range of 1 to 2x EBITDA. As we look to the fourth quarter and position ourselves for 2022, we remain optimistic that our operational momentum will continue. In closing, our mission to become a world-class services organization requires us to modernize our solutions for a digital-first world. We have outlined the strategic road map that will help accelerate our organization and our clients' digital transformation efforts currently underway. I look forward to sharing more updates on our progress in the future. Now, I will turn the call back to Kevin to discuss the Q3 2021 financial results in more detail.

Thank you, Brad. Regarding our consolidated results, revenue grew over $13.9 million on a year-over-year basis or about 44% as compared to Q3 2020, while decreasing sequentially by $1.9 million after removing the impact from the Canada Power Systems divestiture. Since summer school closings heavily impacted our consolidated results. In Q3, the sequential decline in revenue is sharply improved as compared to most years. As Brad mentioned, adjusted EBITDA in Q3 2021 was $1.9 million, an increase of about 780% year-over-year over $0.2 million in Q3 2020. Our adjusted EBITDA in Q3 2021 even exceeded our adjusted EBITDA in Q3 2019 of $1.1 million by about 70%. Gross profit expanded to $12.1 million, a 38% increase over Q3 2020 and a 15% increase over Q3 2019. Sequentially, SG&A expense increased by about $327,000 as we continue to invest in our team, our systems and reward our employees for strong operational performance year-to-date. Turning to our healthcare division. As Brad mentioned, the group generated revenue of $19.6 million in Q3 2021, which represents a 118% increase year-over-year. The division's revenue seasonally decreased by $3.3 million compared to the $22.9 million generated in Q2 2021, exceeding expectations and our seasonally lowest quarter. Every unit in healthcare performed well during the quarter, and the demand for healthcare professionals continues to be strong. We are optimistic about the group's Q4 '21 outlook as we close out the year. Our IT division had another strong quarter with revenue and profitability both up sequentially and year-over-year. On revenue, we generated $9.3 million in Q3 2021 compared to $7.5 million in Q3 of 2020 and $9.1 million in Q2 2021. The group continues to perform well, and we are making investments in sales and marketing to lay the groundwork for continued momentum in 2022. We expect a solid finish to close out the year in 2021. Lastly, turning to our Engineering Division. We generated revenue of $16.0 million in Q3 2021, net of Canada Power Systems, growing sequentially and year-over-year. The Aerospace unit continues to perform well, and the backlog and pipeline are shaping up well as we head into 2022 with several new client wins. Energy Services has maintained its momentum with the unit's backlog and pipeline continuing to improve. We are optimistic about the Engineering division's outlook heading into the fourth quarter and into fiscal 2022. This concludes our prepared remarks. At this time, we will open the call for questions.

Our first question is coming from Bill Sutherland. Bill, your line is open.

So healthcare was a huge upside relative to my expectations given the normal quarterly seasonality. Maybe talk about kind of how you booked that trend in a little more detail?

Sure. Basically, it was really just strength across all of our businesses. The schools came back strong starting in October and September. And nonschool revenue was strong. We had a lot of testing revenue in various places from COVID testing. Just the demand right now for healthcare professionals, which is probably not a big surprise to anyone, is incredibly strong, right? And we're just seeing strength across our entire group. So even our HIM group had a great quarter and...

Yes. So the one thing I'd add to that, Bill, really quick is I always believe that there's an intangible asset in healthcare and that we're the largest purveyor of healthcare professionals to school systems here in the U.S. And what happens is ultimately that synergy effectively, I believe, feeds on itself, especially during times of distress like we saw here with the pandemic. So we believe that we are the go-to player in that space. We are the largest and ultimately, we benefited from that.

It's clear that students returned to school, and I understand the year-over-year comparison due to last year's disruptions in attendance. However, I wonder if the significant growth came from non-school revenue or if there were increased services within school contracts as well.

Both.

Okay. And I think you've added several contracts year-to-date, correct? In school?

We have. Yes. So we have more schools, stronger participation in our core schools and our nonschool revenue is performing very well also.

And just last one...

Across the entire group.

Yes. And then to what degree do you see it in your rates as far as the revenue growth as opposed to volumes?

Well, it's both. We've seen some uptick in some rates in certain instances. Some of the rates are prescribed by contract, but there have been some instances where we've been able to get some better rates in order to make sure that we get the people that they need.

Okay. And then last, give us a little bit of a picture on the Engineering pipeline. I know that you didn't expect it to be too different than second quarter, this quarter. How do you see it going forward?

We think we should see a meaningful uptick going forward. As you know, our Engineering group can be a little bit lumpy just because we tend to win very big contracts. So, while we may see a little bit of a lump in a quarter or maybe a little bit of a downturn, we expect a steady upward trend in our Engineering group on a go-forward basis, at least for the next couple of quarters.

Which group is performing well overall? Or is there one...

I think it's pretty good across the groups. Certainly, in Aerospace, we've won some new contracts that we think should perform well. Sometimes you don't know until you actually implement them, but we're optimistic about all three groups, frankly.

Great. And then Kevin, can you tell us how much of the Engineering revenue for 2Q came from Canadian Power?

Are you asking for Q3 or Q2?

I'm actually wondering if you are restating for the comps or if you're just going to keep those.

Yes. Well, we haven't restated revenues, but I can certainly give you the revenue. So we closed the Canada sale on July and all this will be in our Q, which will be filed by the end of today.

Oh okay. Then we don't have to take up in the call. That's fine. I'll just wait for the Q. Okay. That's it for me guys. Great job in the quarter.

Thank you.

Our next question is coming from Alex Rygiel. Alex, your line is open.

This is actually Min Cho for Alex this morning. Congratulations on a good quarter. Just a couple of questions here. Kevin, can you just break out the percentage of health care revenues from schools?

In Q3, we had about $9.5 million from nonschool and approximately $10.1 million from schools.

Okay. Also, in terms of the margins, and I understand that it looks like you have strong momentum kind of across all of your segments here. But are the margins pretty sustainable at these levels, assuming that the volumes kind of stay or improve from these levels?

Which group are you referring to? Just generally...

Specifically healthcare right now, but in general as well.

Yes. I think the margins in the short term are certainly sustainable in healthcare. What's going to happen three quarters from now, a year from now? It's hard to really predict that. But certainly, in the short term, we feel like the margins are very sustainable where they are right now. You might see some variation, obviously. But we feel like right now in this environment, we'll be able to produce strong gross margins in healthcare on a go-forward basis.

Excellent. And again, I know that you were awarded some new school contracts in 2021. Have you determined some of those staffing needs going into 2022 and maybe potential impact to 2022? Should we see a significant increase in healthcare revenue just from the nonschool business?

We expect strong revenue in Q4 and Q1 in 2022, very strong revenue in healthcare across schools and nonschools. And frankly, we don't have any reason to believe that after the next couple of quarters where we have more visibility, there's no reason for us not to expect that to continue. We're excited about the revenue-generating capability for our healthcare business for sure.

All right. Moving on to Engineering, I know you've discussed Aerospace extensively. I'm curious about the potential impacts from the infrastructure bill, particularly regarding your energy transmission, distribution, and renewables segment. Can you share some insights about the progress you're making there and any potential impact?

Yes. No, we think that there's upside both in our TMV business as well as our industrial business. Ultimately, how that trickles in directly from the bill is to be determined. But probably more importantly, what happens is an overall uplift in spend in this space. So when you have a shoring up of funds like that, it provides more confidence to utilities to start to open up the spigots with respect to their CapEx budgets. So we've certainly seen an uptick in activity and looking for the numbers to improve going forward.

Excellent. I know your Life Sciences business has been performing very well. Can you discuss any labor issues you might be experiencing there and whether this presents an opportunity for acquisitions to enhance your Life Sciences services and workforce?

Generally speaking, on the acquisition front, we tend to be a little bit more opportunistic. I think historically, if you look at our approach, we look at small bolt-ons of either acquisition targets or teams or very talented individuals that we can add to our platform and help them build their business. It's funny. All of our businesses are very analogous to the example of financial services where you have a fund manager that might be throwing up 25% a year for five, six, seven years, but he still only has $50 million of AUM, then suddenly gets a seed from a named brand investor 24 months later. It's a $2 billion AUM business. I think that, that dynamic in our space is very analogous and it's exciting. As a result, we haven't had to look at any major acquisitions to grow the business. We believe that our platform brings a lot to the table for both entrepreneur and the shareholders and all the stakeholders at RCM. So the ability to grow capital efficiently is probably one of the more attractive features to our business model. And your second question with regard to the tightness of the labor market. Labor markets are tight, but ultimately, this is our business, and this is what we do. We've been around for close to about 40 years. Our domain knowledge is very deep in the spaces in which we operate. And as you can imagine, you have a database of all previous hires that builds up and ultimately, intangible assets within those end markets in the form of reputation that allows you to attract clients and be able to tap into talent in a much more efficient way that can unlock value for the client, again in the enterprise. So we're quite optimistic about how business is shaping up across the board.

All right. And then my final question is for Kevin. Just regarding SG&A expenses, obviously, Brad talked about your digital focus going forward. It sounds like SG&A probably stays around this level as a percentage of revenue. I mean, it's definitely up over the last two quarters, but just if you can talk about…

We will definitely aim to reduce that as a percentage of revenue moving forward. However, we anticipate a significant increase in revenue, so you should also expect a rise in SG&A. Across all our businesses, especially in healthcare, we are very active in sourcing candidates for our clients. The more recruiters we can bring on board, the better. If it were as easy as adding $1 million in recruiters tomorrow, we would do it right away. Therefore, you can expect us to focus on boosting productivity while also increasing SG&A in absolute terms, even as we work to lower it as a percentage of revenue.

All right. And actually, I have one more question. Just Kevin, in terms of your margins in the Engineering segment, was that just, again, kind of mix issues in Aerospace? If you can just talk a little bit to that, please?

Yes. I feel that the margins in our Engineering segment have been disappointing for the last couple of quarters due to several factors. However, I certainly expect them to improve moving forward. One reason for this is a significant Aerospace contract, which is beneficial as our operating margins on that contract are strong. Nonetheless, we have faced challenges in managing bench time effectively and a few other issues. We have addressed these concerns and anticipate improvement in that area starting in Q4.

Okay. And when you talk about improvement, you mean sequential improvement from current quarter?

Sequential improvement is just under 23%. I expect to see significant improvement in Q4 on that.

Our next question is coming from Frank Kelly. Frank, your line is open.

The operational results have been strong, even when taking into account the adjustment from the Canada sale. I want to commend our operational leaders, Bill, Mike, Mark, and the Engineering team. Given our excellent cash position, clean accounts receivable, and a line of credit reduced to a minimal level, our business is clearly thriving with ongoing operational momentum. Is the Board contemplating ways to reward shareholders for their patience over the past few challenging years?

Yes. In response to your third question, Frank, we believe we have been quite favorable to shareholders in terms of returning capital. Many shareholders who have remained with us actually have a negative cost basis due to the tax-deferred distributions we've made. Additionally, we have repurchased a significant portion of our outstanding shares. As long as we can continue to enhance the fundamentals of our business and operate more efficiently with fewer shares available, we remain optimistic about the future. We are flexible in how we allocate capital, whether that involves acquisitions, buybacks, or direct returns to shareholders through dividends. We have pursued all these options and will continue to do so.

Do we anticipate any specific rewards for shareholders in the next quarter?

Though that's something we discuss at least quarterly, with the Board and Kevin and I, frankly, almost on a weekly basis. I don't think it would be reasonable to expect a dividend per se. Also, the one thing to keep in mind, Frank, is, for the first time in a long time, we're enjoying the benefits of having a clean balance sheet. There's a lot of optionality that comes with that. So though with respect to distribution in the form of a dividend, I'd say it's unlikely over the short term, we are very much focused on opportunities to allocate capital that we will reward shareholders over the long term, two of the largest of which you're speaking with on the call this morning.

Understood, understood. But I appreciate the candidness and certainly delights our expectations as shareholders. Thank you.

Thank you. Thank you for your support too.

Okay, it does sound like there are no more questions in the queue.

Thank you for attending RCM's third quarter conference call. We look forward to our next update in 2022.

This concludes your call. You may now disconnect.