RCM Technologies, Inc. (RCMT) ended the recent trading session at $16.42, demonstrating a -0.91% swing from the preceding day's closing price. This move lagged the S&P 500's daily gain of 2.51%. Meanwhile, the Dow experienced a rise of 2.66%, and the technology-dominated Nasdaq saw an increase of 2.71%. Coming into today, shares of the company had gained 10.32% in the past month. In that same time, the Business Services sector lost 7.26%, while the S&P 500 lost 8.86%. The upcoming earnings release of RCM Te ...

Financial Data and Key Metrics Changes - Consolidated gross profit for Q4 2024 was $21.6 million, flat compared to Q4 2023. For fiscal 2024, gross profit was $79.8 million, up from $76.7 million in fiscal 2023 [30] - Adjusted EBITDA for Q4 2024 was $6.3 million, down from $8.9 million in Q4 2023. For fiscal 2024, adjusted EBITDA was $25.9 million, compared to $26.6 million in fiscal 2023 [30][31] - Adjusted EPS for fiscal 2024 was $2.03, slightly down from $2.04 in fiscal 2023 [31] Business Line Data and Key Metrics Changes - In the Engineering segment, Q4 2024 gross profit was $5.2 million, down from $6.1 million in Q4 2023. Fiscal 2024 gross profit was $22.5 million, up from $20.6 million in fiscal 2023 [35] - In IT, Life Sciences, and Data Solutions, Q4 2024 gross profit was $3.9 million, down from $4.5 million in Q4 2023. Fiscal 2024 gross profit was $14.7 million, down from $16.2 million in fiscal 2023 [36] - In Health Care, Q4 2024 gross profit was $12.5 million, up from $11.0 million in Q4 2023. Fiscal 2024 gross profit was $42.5 million, compared to $39.9 million in fiscal 2023 [37] Market Data and Key Metrics Changes - School revenue for Q4 2024 was $34.9 million, up from $29.8 million in Q4 2023. Non-School revenue for Q4 2024 was $6.2 million, down from $6.9 million in Q4 2023 [38] - Days Sales Outstanding (DSOs) improved from 114 in Q3 2023 to 92 in Q4 2024 [39] Company Strategy and Development Direction - The company aims for smart growth, operational excellence, and delivering unparalleled service to clients as it moves into 2025 [11] - The focus on behavioral health services in schools is a key growth driver, with increasing demand for specialized providers [9] - The company is transitioning to AI and ML tools in its primary markets, indicating a strategic shift in service delivery [15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2025, citing a strong employee base and strategic positioning for success despite macroeconomic uncertainties [6] - The company aims for double-digit growth in adjusted EBITDA for each quarter in fiscal 2025, emphasizing a commitment to achieving these targets [41][74] Other Important Information - Several material expenses negatively impacted Q4 2024 profitability, including a canceled industrial process equipment order and high medical costs from a self-insured plan [32][33] - The company has an approved settlement agreement regarding a class action lawsuit, which added significant SG&A expenses [33] Q&A Session Summary Question: Was any of the extra costs realized in the tax rate? - The effective tax rate for the company overall is 34.0%, which is considered high and abnormal. It is expected to be well below 30% in the following year [45][47] Question: What is the normal tax rate range? - The normal tax rate range is expected to be between 26% to 29% [49] Question: Can you elaborate on the specific costs in Engineering? - The $900,000 reduction in gross profit was due to a canceled order and significant rework on a large project, both resulting in lower revenue [52][54] Question: Did the canceled order relate to any political factors? - No, the canceled order was not related to political factors but was a nuance with a particular client [62] Question: Is there any impact from DOGE or related headlines? - There is no direct impact from DOGE on the company, although it could affect the broader IT environment [66] Question: What are the expectations for operating income growth? - The company aims for low double-digit growth in adjusted EBITDA every quarter, despite a disappointing fourth quarter [73][74]

Financial Data and Key Metrics Changes - Consolidated gross profit for Q4 2024 was $21.6 million, flat compared to Q4 2023. For fiscal 2024, gross profit was $79.8 million, up from $76.7 million in fiscal 2023 [30] - Adjusted EBITDA for Q4 2024 was $6.3 million, down from $8.9 million in Q4 2023. For fiscal 2024, adjusted EBITDA was $25.9 million, compared to $26.6 million in fiscal 2023 [31] - Adjusted EPS for fiscal 2024 was $2.03, slightly down from $2.04 in fiscal 2023 [31] Business Line Data and Key Metrics Changes - In Engineering, Q4 2024 gross profit was $5.2 million, down from $6.1 million in Q4 2023. Fiscal 2024 gross profit was $22.5 million, up from $20.6 million in fiscal 2023 [35] - In IT, Life Sciences, and Data Solutions, Q4 2024 gross profit was $3.9 million, down from $4.5 million in Q4 2023. Fiscal 2024 gross profit was $14.7 million, down from $16.2 million in fiscal 2023 [36] - In Health Care, Q4 2024 gross profit was $12.5 million, up from $11.0 million in Q4 2023. Fiscal 2024 gross profit was $42.5 million, compared to $39.9 million in fiscal 2023 [37] Market Data and Key Metrics Changes - School revenue for Q4 2024 was $34.9 million, compared to $29.8 million in Q4 2023. Non-School revenue for Q4 2024 was $6.2 million, down from $6.9 million in Q4 2023 [38] - Days Sales Outstanding (DSOs) improved from 114 in Q3 2023 to 92 in Q4 2024 [39] Company Strategy and Development Direction - The company aims for smart growth, operational excellence, and delivering unparalleled service to clients as it moves into 2025 [11] - The focus on behavioral health services in schools is a key growth driver, addressing the mental health crisis among students [9] - The company is transitioning to AI and ML tools in its IT services, indicating a shift in primary markets [15] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2025, citing a strong employee base and strategic positioning for success despite macroeconomic uncertainties [6] - The company aims for double-digit growth in adjusted EBITDA for each quarter in 2025, viewing any failure to meet this as a disappointing outcome [73] Other Important Information - The company faced several material expenses in Q4 2024, including a canceled industrial process equipment order and high medical costs, which negatively impacted gross profit [32][33] - A class action lawsuit settlement added approximately $450,000 in SG&A expenses [33] Q&A Session Summary Question: Was any of the extra costs realized in the tax rate? - The tax rate for Q4 was influenced by the overall effective tax rate for the year, which was 34.0%, considered high and abnormal [45][46] Question: What is the normal tax rate range? - The normal tax rate range is expected to be between 26% to 29% [48][49] Question: Can you elaborate on the specific costs in Engineering? - The $900,000 reduction in gross profit was due to a canceled order and significant rework on a project, both resulting in lower revenue [52][56] Question: Did the canceled order relate to any political factors? - No, the canceled order was due to nuances with a particular client, not political factors [62] Question: Is there any impact from DOGE or related headlines? - There is no direct impact from DOGE on the company, although general IT environment changes could occur [66][70] Question: What is the growth expectation for adjusted EBITDA? - The company aims for low double-digit growth in adjusted EBITDA every quarter in 2025 [73]

Revenue Breakdown - Approximately 51.2% of RCM's total revenue for the fiscal year ended December 28, 2024, was derived from Specialty Health Care services, 34.7% from Engineering services, and 14.1% from Life Sciences, Data and Solutions[16]. - Revenue for the fiscal year ended December 28, 2024, totaled $278.4 million, an increase from $263.2 million in the previous fiscal year[169]. - Specialty Health Care revenue increased by 4.7% to $142.7 million for the fiscal year ended December 28, 2024, driven by school clients, while non-school client revenue decreased to $25.0 million from $33.2 million[202]. - Engineering revenue rose by 13.9% to $96.5 million, with Energy Services revenue increasing by $15.1 million, despite declines in Aerospace and Industrial Processing revenues[204]. - Life Sciences, Data and Solutions revenue decreased by 7.3% to $39.2 million, attributed to the timing of large projects and a deemphasis on legacy staffing[205]. Operational Strategy - The Company aims to pursue selective strategic acquisitions to broaden its service scope and enhance technical competencies, focusing on companies with substantial growth prospects and experienced management[34]. - The Company is adapting its operating strategies to transition into higher value-oriented services, aiming to increase margins and generate sustainable revenue[28]. - RCM's growth strategy includes promoting full life cycle solution capabilities to strengthen long-term client relationships and create a more predictable revenue stream[26]. - The Company believes that maintaining or improving financial performance requires obtaining service agreements with new clients and retaining existing clients[119]. Workforce and Personnel - As of December 28, 2024, RCM assigned approximately 3,140 specialty healthcare services personnel to its customers[40]. - The Company has approximately 200 personnel assigned to its Life Sciences, Data and Solutions segment as of December 28, 2024[52]. - As of December 28, 2024, the company employed approximately 370 nonbillable employees and 3,710 billable employees, with a total workforce of about 4,100[84][93]. - Billable salaried employees typically have utilization rates ranging from 20% to 90%, while billable hourly long-term employees aim for near 100% utilization[86][87]. Financial Performance - Operating income decreased to $22.3 million, or 8.1% of revenue, for the fiscal year ended December 28, 2024, compared to 9.0% in the prior year[192]. - Net income for the fiscal year ended December 28, 2024, was $13.3 million, or 4.8% of revenue, down from 6.4% in the prior year[192]. - Selling, general and administrative expenses were $56.8 million for the fiscal year ended December 28, 2024, representing 20.4% of revenue[195]. - The Company incurred total expenses of $0.3 million related to potential stock issuance and financing activities during the fiscal year ended December 28, 2024[196]. - Cash provided by operating activities decreased to $6.2 million from $12.5 million, while cash used in financing activities increased to $4.8 million from $3.9 million[212]. Market and Industry Trends - The demand for healthcare professionals is expected to continue growing due to an aging population and technological advancements, with a significant market opportunity in telemedicine[19]. - The Engineering group is focused on growth areas including utility/electric power, aerospace, and renewable energy, with the EIA estimating that 38% of the U.S. electric generation capacity will be from wind and solar by 2050[20]. - The Department of Defense plans to spend over $1 trillion on procurement-related aviation expenditures over the next three decades, presenting significant opportunities for the Company in Aerospace Services[46]. - The Company believes that businesses are increasingly evaluating outsourcing for critical systems, indicating a potential growth area for its services[159]. Compliance and Risk Management - The Company is subject to various government regulations, including compliance with employee-related statutes, which it believes it is in material compliance with[75]. - The Company is subject to complex and evolving data privacy regulations, which can increase operating costs and pose compliance risks[129]. - The Company has experienced cybersecurity events but has not identified any that materially affected its financial condition or operations during the year ended December 28, 2024[133]. - The Company has implemented a cybersecurity risk management program that includes a cybersecurity incident response plan and is integrated with its overall enterprise risk management[132]. Customer Relationships - The Company emphasizes a relationship-oriented approach to business, aiming to develop strong customer relationships and enhance client satisfaction[35]. - The Company emphasizes long-term relationships with clients, resulting in repeat business from many of its largest strategic accounts[63]. - Two customers exceeded 10% of consolidated revenue, contributing 19.5% and 14.1% respectively, while the top five customers accounted for approximately 48.5% of total revenue[63]. International Operations - The Company generated approximately 7.8% of its revenue from international operations for the fiscal year ended December 28, 2024[57]. - The Company operates in multiple countries including Canada, Germany, Philippines, Puerto Rico, and Serbia, which exposes it to various international business risks[115]. - The company is exposed to foreign currency fluctuations related to operations in Canada, Germany, and Serbia, affecting the U.S. dollar value of reported earnings[108]. Financial Position and Capital Structure - The Company has no plans to issue dividends in the near future, with any future payments dependent on earnings and financial condition[150]. - The Board authorized a share repurchase program of up to $50 million on March 29, 2024, to optimize capital structure[151]. - The Company has net deferred tax liabilities of $4.4 million as of December 28, 2024[182]. - The company had $35.0 million in borrowings under its Revolving Credit Facility and $7.4 million outstanding under letters of credit, with an additional availability of $22.6 million for further borrowings[105].

Revenue Performance - RCM Technologies reported revenue of $76.9 million for the thirteen weeks ended December 28, 2024, an increase of 8.3% compared to $71.0 million for the prior quarter[3] - For the fifty-two weeks ended December 28, 2024, revenue was $278.4 million, reflecting a 5.8% increase from $263.2 million in the prior year[4] - Revenue for the thirteen weeks ended December 28, 2024, was $76,912 million, an increase of 8.1% compared to $71,028 million for the same period in 2023[19] - For the fifty-two weeks ended December 28, 2024, total revenue reached $278,380 million, up from $263,237 million in the previous year, representing a growth of 5.8%[19] Profitability - GAAP net income for the current quarter was $2.9 million, or $0.37 per diluted share, down from $5.3 million, or $0.65 per diluted share, in the comparable prior quarter[3] - The company experienced a GAAP net income of $13.3 million, or $1.68 per diluted share, for the current year, compared to $16.8 million, or $1.96 per diluted share, for the prior year[4] - Adjusted net income per diluted share (non-GAAP) for the current year was $2.03, slightly down from $2.04 in the prior year[4] - Adjusted EBITDA for the current quarter was $6.3 million, compared to $8.9 million for the prior quarter[3] - The company reported a net income of $2,867 million for the thirteen weeks ended December 28, 2024, compared to $5,255 million for the same period in 2023[23] Expenses and Costs - Selling, general and administrative expenses increased to $16.0 million in the current quarter from $13.4 million in the prior quarter[3] - Gross profit for the current quarter was $21.6 million, consistent with the prior quarter's gross profit of $21.6 million[3] - The company’s gross profit for the fifty-two weeks ended December 28, 2024, was $79,778 million, compared to $76,696 million in the previous year[19] - Gross profit margin for the consolidated segment improved to 28.0% in Q4 2024 from 30.5% in Q4 2023[19] Assets and Liabilities - Total current assets increased to $97,038 million as of December 28, 2024, from $90,502 million a year earlier[21] - Cash and cash equivalents decreased to $4,729 million in Q4 2024 from $6,284 million in Q4 2023[21] - The company’s total liabilities rose to $98,593 million as of December 28, 2024, compared to $94,694 million in the previous year[21] - Stockholders' equity increased to $33,484 million as of December 28, 2024, from $25,790 million a year earlier[21] Future Outlook - The company plans to leverage its strategic initiatives to enhance earnings power in 2025[5] - RCM Technologies will host a conference call on March 13, 2025, to discuss these results[6] Cash Flow - Net cash used in operating activities for the thirteen weeks ended December 28, 2024, was $1,637 million, a decrease from $15,066 million in the same period of 2023[23]

Core Viewpoint - RCM Technologies, Inc. reported financial results for the thirteen and fifty-two weeks ended December 28, 2024, showing revenue growth but a decline in net income compared to the previous periods [2][3][4]. Financial Performance - For the thirteen weeks ended December 28, 2024, revenue was $76.9 million, an increase of 8.3% from $71.0 million in the prior quarter [2]. - Gross profit for the current quarter was $21.6 million, consistent with the prior quarter [2]. - GAAP net income for the current quarter was $2.9 million, or $0.37 per diluted share, down from $5.3 million, or $0.65 per diluted share, in the comparable prior quarter [2]. - Adjusted EBITDA for the current quarter was $6.3 million, compared to $8.9 million in the prior quarter [2]. - For the fifty-two weeks ended December 28, 2024, revenue was $278.4 million, a 5.8% increase from $263.2 million in the prior year [3]. - Gross profit for the current year was $79.8 million, a 4.0% increase from $76.7 million in the prior year [3]. - GAAP net income for the current year was $13.3 million, or $1.68 per diluted share, down from $16.8 million, or $1.96 per diluted share, in the prior year [3]. - Adjusted EBITDA for the current year was $25.9 million, compared to $26.6 million in the prior year [3]. Strategic Insights - Executive Chairman Bradley Vizi noted that 2024 demonstrated substantial progress as many strategic initiatives gained traction [4]. - CFO Kevin Miller expressed confidence in the foundation laid for increased earnings power in 2025 [4]. Revenue Breakdown - For the thirteen weeks ended December 28, 2024, revenue by segment was $41.0 million in Specialty Health Care, $26.3 million in Engineering, and $9.6 million in Life Sciences and Data Solutions [18]. - For the fifty-two weeks ended December 28, 2024, revenue by segment was $142.7 million in Specialty Health Care, $96.5 million in Engineering, and $39.2 million in Life Sciences and Data Solutions [18]. Balance Sheet Highlights - As of December 28, 2024, total assets were $132.1 million, up from $120.5 million a year earlier [20]. - Current assets increased to $97.0 million from $90.5 million [20]. - Total liabilities were $98.6 million, compared to $94.7 million in the prior year [20]. Cash Flow Analysis - For the thirteen weeks ended December 28, 2024, net cash used in operating activities was $(1.6) million, compared to $(15.1) million in the prior quarter [23]. - For the fifty-two weeks ended December 28, 2024, net cash provided by operating activities was $6.2 million, down from $12.5 million in the prior year [24].

Core Insights - 92% of healthcare leaders prioritize AI and advanced automation to address industry challenges, focusing on patient access and claim management for automation investments [1][4] Industry Trends - Rising administrative costs, increasing claim denials, payer conflicts, and cybersecurity threats are driving healthcare leaders to invest strategically in software that enhances cash flow and adapts to payer policies [2] - The top six trends for healthcare leaders in 2025 emphasize the importance of AI and advanced automation for improving efficiency, accuracy, and security [2] Investment Priorities - Key areas for RCM investment include patient access, claim management, revenue integrity, patient financial care, denial prevention, and denial management [4] - Return on investment (ROI) is a critical factor in RCM purchasing decisions, with many providers considering alternative vendors due to low ROI from current solutions [4] Data Security - Data security concerns rank as the second most important factor in switching RCM software, following negative client support experiences [4] Software Platform Preferences - Over 70% of providers now prefer working with one to two software partners for all RCM needs, moving away from multiple siloed solutions [4] - A 2024 study indicates that 100% of leaders using end-to-end software platforms report a positive ROI, highlighting the industry's shift towards integrated solutions [4] Patient Access and Claim Management - Hospitals spend nearly $20 billion annually to overturn denied claims, with 60% of denials stemming from front-end patient access errors, prompting increased automation in financial clearance processes [4] - Claim denials have increased by 20%, and labor costs for claims inquiries have risen by 71% over five years, leading providers to prioritize automation in claim management [4] Company Overview - Waystar serves approximately 30,000 clients, processing over 6 billion healthcare payment transactions annually, which includes over $1.8 trillion in gross claims [5]

Company Overview - RCM Technologies, Inc. has launched a new program to resell the UKG Ready suite, expanding its Human Capital Management (HCM) service offerings [1] - The company has established itself as a premier provider of business and technology solutions across various sectors, including Energy Services, Aerospace & Defense, and Health Care Services [5][8] Industry Context - There are over 33 million small businesses in the U.S., employing more than 61.6 million workers, indicating a significant demand for scalable and user-friendly HR solutions [2] - Small businesses often lack access to high-quality HCM solutions compared to larger enterprises, creating an opportunity for RCM to fill this gap [3] Product Offering - RCM's HCM Solutions provide immediate access to industry-leading technology, enabling small business owners to manage workforce needs efficiently while ensuring compliance and promoting growth [2][6] - The partnership with UKG Ready allows RCM to offer a comprehensive platform for payroll, time tracking, talent management, and employee engagement [6] Strategic Commitment - RCM's new reseller partnership with UKG emphasizes customer service, deep product expertise, and tailored workforce strategies, reinforcing its commitment to delivering top-tier HCM solutions [4] - The company aims to help small business owners streamline HR operations and focus on business growth [3][7]

Core Insights - RCM Thermal Kinetics has launched the New Ethanol eXpansion Technology (NEXT) program aimed at enhancing ethanol production capacity and energy efficiency without major equipment replacement [1][2][4] Industry Overview - International fuel ethanol consumption is expected to increase by 173% from 2021 to 2030, indicating a significant growth opportunity for ethanol producers [2] - The NEXT program allows existing ethanol plants to achieve over 20% additional production annually, translating to an increase of 20 million gallons for a plant producing 100 million gallons per year [2] Company Strategy - The NEXT program integrates strategic equipment upgrades and detailed hydraulic balance across critical systems, improving operational efficiency and profitability for ethanol producers [3] - The implementation of NEXT can occur during short-duration plant turnarounds, ensuring uninterrupted production schedules while providing a cost-effective expansion strategy [3][4] Environmental Impact - The NEXT program aligns with RCM Thermal Kinetics' mission to promote eco-conscious solutions in the biofuels industry, supporting both business success and environmental stewardship [4][5]

RCM Technologies, Inc. (RCMT) closed at $19.55 in the latest trading session, marking a +0.51% move from the prior day. The stock's change was less than the S&P 500's daily gain of 0.88%. On the other hand, the Dow registered a gain of 1.24%, and the technology-centric Nasdaq increased by 0.65%.Shares of the company have depreciated by 11.11% over the course of the past month, underperforming the Business Services sector's gain of 0.03% and the S&P 500's gain of 1.17%.Market participants will be closely fol ...