8-K
RCM TECHNOLOGIES, INC. (RCMT)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
________
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): November 9, 2020
RCM Technologies, Inc.
(Exact Name of Registrant as Specified in Charter)
| Nevada<br><br> <br>(State or Other<br><br> <br>Jurisdiction of<br><br> <br>Incorporation) | 1-10245<br><br> <br>(Commission File<br><br> <br>Number) | 95-1480559<br><br> <br>(I.R.S. Employer<br><br> <br>Identification No.) |
|---|---|---|
| 2500 McClellan Avenue, Suite 350 | ||
| --- | --- | |
| Pennsauken, NJ | 08109-4613 | |
| (Address of Principal Executive Offices) | (Zip Code) |
Registrant’s telephone number, including area code: (856) 356-4500
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, par value $0.05 par value | RCMT | The NASDAQ Stock Market LLC |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| [ ] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425). |
|---|---|
| [ ] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12). |
| [ ] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240-14d-2(b)). |
| [ ] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240-13e-4(c)). |
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company [ ]
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [ ]
| Item 2.02. | Results of Operations and Financial Condition. |
|---|
On November 9, 2020, the Registrant issued a press release regarding its financial results for the thirteen and thirty-nine week periods ended September 26, 2020. A copy of the press release is furnished as Exhibit 99 to this report.
The information set forth under this “Item 2.02. Results of Operations and Financial Condition” (including the exhibit) shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be incorporated by reference in any filing made by the Registrant pursuant to the Securities Act of 1933, as amended, other than to the extent that such filing incorporates by reference any or all of such information by express reference thereto.
Item 9.01. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired.
None.
(b) Pro Forma Financial Information.
None.
(c) Shell Company Transactions.
None.
(d) Exhibits.
| Exhibit Number | |
|---|---|
| 99 | Press Release by the Registrant, dated November 9, 2020, furnished in accordance with Item 2.02 of this Current Report on Form 8-K. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
RCM TECHNOLOGIES, INC.
| By: | /s/ Kevin D. Miller |
|---|---|
| Kevin D. Miller | |
| Chief Financial Officer, Treasurer and<br><br> <br>Secretary |
Dated: November 9, 2020
| 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
THIRD QUARTER RESULTS
Pennsauken, NJ – November 9, 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 thirty-nine week periods ended September 26, 2020.
RCM Technologies reported revenue of $31.6 million for the thirteen week period ended September 26, 2020 (the current period), a 21.6% decrease as compared to $40.3 million for the thirteen week period ended September 28, 2019 (the comparable prior year period). Gross profit was $8.8 million for the current period, a 16.9% decrease as compared to $10.6 million for the comparable prior year period. The Company experienced a GAAP operating loss of $0.2 million for the current period, as compared to GAAP operating income of $0.7 million for the comparable prior year period. The Company experienced a GAAP net loss of $0.2 million, or $0.02 per diluted share, for the current period as compared to GAAP net income of $0.3 million, or $0.03 per diluted share, for the comparable prior year period.
RCM Technologies reported revenue of $109.2 million for the thirty-nine week period ended September 26, 2020 (the current period), a 23.4% decrease as compared to $142.6 million for the thirty-nine week period ended September 28, 2019 (the comparable prior year period). Gross profit was $28.2 million for the current period, a 21.6% decrease as compared to $35.9 million for the comparable prior year period. The Company experienced a GAAP operating loss of $9.1 million for the current period, as compared to GAAP operating income of $4.6 million for the comparable prior year period. The Company experienced a GAAP net loss of $7.2 million, or $0.58 per diluted share, for the current period as compared to GAAP net income of $3.0 million, or $0.24 per diluted share, for the comparable prior year period.
Bradley Vizi, Executive Chairman of RCM Technologies, commented, “We continue to make progress on our COVID plan that we outlined in May. Optimizing our SGA costs and focusing on gross margin allowed us to achieve positive EBITDA in the third quarter. We are looking forward to delivering sequentially better results in the fourth quarter of 2020, and, despite obvious headwinds, we will continue to focus on further improvement as we head into 2021.”
Kevin Miller, Chief Financial Officer of RCM Technologies, commented, “We generated another $6.0 million in cash flow from operations in the third quarter of 2020 and $22.8 million in the second and third quarters combined. Our robust cash flow has allowed us to reduce our net debt by 62%, from $32.9 million as of December 28, 2019, to $12.5 million as of September 26, 2020.”
Conference Call
On Tuesday, November 10, 2020, RCM Technologies will host a conference call to discuss these results. The call will begin at 11:00 a.m. Eastern Time. The dial-in number is (866) 578-1005.
About RCM
RCM Technologies, Inc. is a premier provider of business and technology solutions designed to enhance and maximize the operational performance of its customers through the adaptation and deployment of advanced information technology and engineering services. RCM is an innovative leader in the delivery of these solutions to commercial and government sectors. RCM is also a provider of specialty healthcare services to major health care institutions and educational facilities. RCM’s offices are located in major metropolitan centers throughout North America and Serbia. Additional information can be found at www.rcmt.com.
The Statements contained in this release that are not purely historical are forward-looking statements within the Private Securities Litigation Reform Act of 1995 and are subject to various risks, uncertainties and other factors that could cause the Company's actual results, performance or achievements to differ materially from those expressed or implied by such forward-looking statements. These statements often include words such as “may,” “will,” “expect,” “anticipate,” “continue,” “estimate,” “project,” “intend,” “believe,” “plan,” “seek,” “could,” “can,” “should,” “are confident” or similar expressions. In addition, statements that are not historical should also be considered forward-looking statements. These statements are based on assumptions that we have made in light of our experience in the industry, as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate in these circumstances. Forward-looking statements include, but are not limited to, those relating to the impact of the COVID-19 pandemic, demand for the 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 | ||
|---|---|---|
| September 26, 2020 | September 28, 2019 | |
| Revenue | 31,561 | $40,250 |
| Cost of services | 22,741 | 29,635 |
| Gross profit | 8,820 | 10,615 |
| Selling, general and administrative | 8,606 | 9,498 |
| Depreciation and amortization of property and equipment | 292 | 304 |
| Amortization of acquired intangible assets | 80 | 82 |
| Operating (loss) income | (158 | 731 |
| Other expense, net | 253 | 326 |
| (Loss) income before income taxes | (411 | 405 |
| Income tax (benefit) expense | (167 | 70 |
| Net (loss) income | (244 | $335 |
| Diluted net (loss) earnings per share data | (0.02 | $0.03 |
All values are in US Dollars.
| Thirty-Nine Week Periods Ended | ||
|---|---|---|
| September 26, 2020 | September 28, 2019 | |
| Revenue | 109,246 | $142,550 |
| Cost of services | 81,080 | 106,615 |
| Gross profit | 28,166 | 35,935 |
| Selling, general and administrative | 27,837 | 30,165 |
| Depreciation and amortization of property and equipment | 793 | 944 |
| Amortization of acquired intangible assets | 240 | 247 |
| Write-off of receivables and professional fees incurred related to arbitration | 8,397 | - |
| Operating (loss) income | (9,101 | 4,579 |
| Other expense, net | 895 | 1,275 |
| (Loss) income before income taxes | (9,996 | 3,304 |
| Income tax (benefit) expense | (2,815 | 255 |
| Net (loss) income | (7,181 | $3,049 |
| Diluted net (loss) earnings per share data | (0.58 | $0.24 |
All values are in US Dollars.
RCM Technologies, Inc.
Summary Consolidated Selected Balance Sheet Data
(In Thousands)
| September 26,<br><br> <br>2020 | December 28,<br><br> <br>2019 | |
|---|---|---|
| (Unaudited) | ||
| Cash and cash equivalents | $757 | $1,847 |
| Accounts receivable, net | $32,986 | $59,760 |
| Total current assets | $36,121 | $70,657 |
| Total assets | $62,553 | $96,173 |
| Total current liabilities | $19,930 | $21,408 |
| Borrowing under line of credit | $13,258 | $34,761 |
| Net debt (line of credit less cash) | $12,501 | $32,914 |
| Total liabilities | $38,926 | $63,770 |
| Stockholders’ equity | $23,627 | $32,403 |
RCM Technologies, Inc.
Supplemental Operating Results on a Non-GAAP Basis
(Unaudited)
(In Thousands)
The following non-GAAP data, which adjusts for the categories of expenses described below, is a non-GAAP financial measure. Our management believes that this non-GAAP financial measure is useful information for investors, shareholders and other stakeholders of our Company in gauging our results of operations on an ongoing basis. We believe that EBITDA and Adjusted EBITDA are performance measures and have provided a reconciliation between net income and EBITDA and Adjusted EBITDA. Neither EBITDA nor Adjusted EBITDA should be considered as an alternative to net income as an indicator of performance. In addition, neither EBITDA nor Adjusted EBITDA takes into account changes in certain assets and liabilities as well as interest and income taxes that can affect cash flows. We do not intend the presentation of these non-GAAP measures to be considered in isolation or as a substitute for results prepared in accordance with GAAP. These non-GAAP measures should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP.
The following unaudited table presents the Company's GAAP net income measure and the corresponding adjustments used to calculate “EBITDA” and “Adjusted EBITDA” for the thirteen and thirty-nine week periods ended September 26, 2020 and September 28, 2019.
| Thirteen<br> Week Periods Ended | Thirty-Nine<br> Week Periods Ended | |||
|---|---|---|---|---|
| September 26,<br> 2020 | September 28,<br> 2019 | September 26,<br> 2020 | September 28,<br> 2019 | |
| GAAP net (loss) income | (244 | 335 | (7,181 | 3,049 |
| Income tax (benefit) expense | (167 | 70 | (2,815 | 255 |
| Interest expense | 126 | 390 | 650 | 1,276 |
| Imputed interest on contingent consideration | 36 | (56 | 108 | 40 |
| Depreciation of property and equipment | 292 | 304 | 793 | 944 |
| Amortization of acquired intangible assets | 80 | 82 | 240 | 247 |
| EBITDA (non-GAAP) | 123 | 1,125 | (8,205 | 5,811 |
| Adjustments | ||||
| Write-off of receivables and professional fees<br><br> <br>incurred related to arbitration | - | - | 8,397 | - |
| Loss (gain) on foreign currency transactions | 91 | (8 | 137 | (41 |
| Adjusted EBITDA (non-GAAP) | 214 | 1,117 | 329 | 5,770 |
All values are in US Dollars.
RCM Technologies, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In Thousands)
| Thirteen Week Periods Ended | |||
|---|---|---|---|
| September 26,<br> 2020 | September 28,<br> 2019 | ||
| Net (loss) income | (244 | 335 | |
| Adjustments to reconcile net income to cash<br><br> <br>used in operating activities | 316 | 442 | |
| Changes in operating assets and liabilities: | |||
| Accounts receivable | 6,664 | 727 | |
| Prepaid expenses and other current assets | 484 | (175 | |
| Net of transit accounts receivable and payable | 149 | (39 | |
| Accounts payable and accrued expenses | (1,231 | (1,901 | |
| Accrued payroll and related costs | (125 | (769 | |
| Right of use assets and liabilities | (19 | (14 | |
| Income taxes payable | (37 | 1 | |
| Total adjustments | 6,201 | (1,728 | |
| Cash provided by (used in) operating activities | 5,957 | (1,393 | |
| Net cash used in investing activities | (249 | (58 | |
| Net cash (used in) provided by financing activities | (6,427 | 1,020 | |
| Effect of exchange rate changes | (156 | (44 | |
| Decrease in cash and cash equivalents | (875 | (475 |
All values are in US Dollars.
| Thirty-Nine Week Periods Ended | |||
|---|---|---|---|
| September 26,<br> 2020 | September 28,<br> 2019 | ||
| Net (loss) income | (7,181 | 3,049 | |
| Adjustments to reconcile net income to cash<br><br> <br>used in operating activities | 6,293 | 1,936 | |
| Changes in operating assets and liabilities: | |||
| Accounts receivable | 18,891 | (5,184 | |
| Prepaid expenses and other current assets | 2,270 | 483 | |
| Net of transit accounts receivable and payable | 1,056 | 923 | |
| Accounts payable and accrued expenses | 1,508 | (3,366 | |
| Accrued payroll and related costs | 825 | (1,986 | |
| Right of use assets and liabilities | (16 | 245 | |
| Income taxes payable | 94 | 30 | |
| Total adjustments | 30,921 | (6,919 | |
| Cash provided by (used in) operating activities | 23,740 | (3,870 | |
| Net cash used in investing activities | (360 | (296 | |
| Net cash (used in) provided by financing activities | (24,191 | 4,160 | |
| Effect of exchange rate changes | (279 | (83 | |
| Decrease in cash and cash equivalents | (1,090 | (89 |
All values are in US Dollars.
RCM Technologies, Inc.
Summary of Selected Income Statement Data
(Unaudited)
(In Thousands)
| Thirteen Week Period Ended September 26, 2020 | ||||
|---|---|---|---|---|
| Engineering | Specialty<br> Health Care | Information<br> Technology | Consolidated | |
| Revenue | 15,087 | 9,015 | 7,459 | 31,561 |
| Cost of services | 10,674 | 6,724 | 5,343 | 22,741 |
| Gross profit | 4,413 | 2,291 | 2,116 | 8,820 |
| Gross profit margin | 29.3 | 25.4 | 28.4 | 27.9 |
All values are in US Dollars.
| Thirteen Week Period Ended September 28, 2019 | ||||
|---|---|---|---|---|
| Engineering | Specialty<br> Health Care | Information<br> Technology | Consolidated | |
| Revenue | 15,140 | 16,765 | 8,345 | 40,250 |
| Cost of services | 10,984 | 12,795 | 5,856 | 29,635 |
| Gross profit | 4,156 | 3,970 | 2,489 | 10,615 |
| Gross profit margin | 27.5 | 23.7 | 29.8 | 26.4 |
All values are in US Dollars.
| Thirty-Nine Week Period Ended September 26, 2020 | ||||
|---|---|---|---|---|
| Engineering | Specialty<br> Health Care | Information<br> Technology | Consolidated | |
| Revenue | 43,288 | 41,896 | 24,062 | 109,246 |
| Cost of services | 30,673 | 33,037 | 17,370 | 81,080 |
| Gross profit | 12,615 | 8,859 | 6,692 | 28,166 |
| Gross profit margin | 29.1 | 21.1 | 27.8 | 25.8 |
All values are in US Dollars.
| Thirty-Nine Week Period Ended September 28, 2019 | ||||
|---|---|---|---|---|
| Engineering | Specialty<br> Health Care | Information<br> Technology | Consolidated | |
| Revenue | 52,778 | 64,305 | 25,467 | 142,550 |
| Cost of services | 38,666 | 49,395 | 18,554 | 106,615 |
| Gross profit | 14,112 | 14,910 | 6,913 | 35,935 |
| Gross profit margin | 26.7 | 23.2 | 27.1 | 25.2 |
All values are in US Dollars.