RCM Technologies(US:RCMT)2025-03-13 21:13Revenue 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].