RCM Technologies(RCMT) - 2025 Q2 - Quarterly Results

Financial Performance Highlights RCM Technologies achieved robust revenue growth and enhanced adjusted profitability in Q2 and H1 2025 Second Quarter 2025 Performance RCM Technologies reported a 13.0% year-over-year increase in revenue to $78.2 million for the second quarter of 2025. While GAAP net income remained flat at $3.8 million, adjusted net income per diluted share grew by a strong 21.1% to $0.69, reflecting improved underlying operational profitability Q2 2025 vs Q2 2024 Key Financial Metrics | Metric | Q2 2025 (Thirteen weeks ended June 28, 2025) | Q2 2024 (Thirteen weeks ended June 29, 2024) | Change | | :--- | :--- | :--- | :--- | | Revenue | $78.2 million | $69.2 million | +13.0% | | Gross Profit | $22.3 million | $20.0 million | +11.4% | | GAAP Net Income | $3.8 million | $3.8 million | 0.0% | | GAAP Diluted EPS | $0.50 | $0.47 | +6.4% | | Adjusted EBITDA (Non-GAAP) | $8.1 million | $7.2 million | +12.5% | | Adjusted Diluted EPS (Non-GAAP) | $0.69 | $0.57 | +21.1% | Year-to-Date 2025 Performance For the first half of 2025, revenue increased by 15.3% to $162.6 million compared to the same period in 2024. This top-line growth translated to an 18.9% increase in adjusted net income per diluted share, which reached $1.32 H1 2025 vs H1 2024 Key Financial Metrics | Metric | H1 2025 (Twenty-six weeks ended June 28, 2025) | H1 2024 (Twenty-six weeks ended June 29, 2024) | Change | | :--- | :--- | :--- | :--- | | Revenue | $162.6 million | $141.1 million | +15.3% | | Gross Profit | $44.3 million | $40.4 million | +9.6% | | GAAP Net Income | $8.0 million | $7.7 million | +3.9% | | GAAP Diluted EPS | $1.04 | $0.95 | +9.5% | | Adjusted EBITDA (Non-GAAP) | $15.9 million | $14.0 million | +13.6% | | Adjusted Diluted EPS (Non-GAAP) | $1.32 | $1.11 | +18.9% | Management Commentary Management expressed a positive outlook, highlighting consistent growth across all business segments during the second quarter. They specifically pointed to growing momentum in the Engineering division and are anticipating a strong second half of the year - Executive Chairman Bradley Vizi emphasized the resilience of the business model, citing consistent growth across all three segments and building towards an expected strong second half of the year[5] - CFO Kevin Miller noted that momentum within the Engineering segment continues to build, suggesting the company is unlocking the next phase of growth in that business[5] Consolidated Financial Statements Consolidated statements for Q2 and H1 2025 show revenue growth, increased operating expenses, and shifts in cash flow Statements of Operations The consolidated statements of operations detail a year-over-year revenue increase for both the second quarter and first half of 2025. However, growth in operating income was tempered by higher cost of services and a significant rise in Selling, General and Administrative (SG&A) expenses, which grew by 12.8% in the second quarter Q2 Income Statement Highlights (in thousands) | Account | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $78,166 | $69,164 | 13.0% | | Gross Profit | $22,277 | $20,001 | 11.4% | | SG&A | $15,275 | $13,545 | 12.8% | | Operating Income | $6,601 | $5,819 | 13.4% | | Net Income | $3,785 | $3,762 | 0.6% | H1 Income Statement Highlights (in thousands) | Account | H1 2025 | H1 2024 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $162,639 | $141,103 | 15.3% | | Gross Profit | $44,255 | $40,368 | 9.6% | | Operating Income | $13,184 | $11,655 | 13.1% | | Net Income | $7,971 | $7,714 | 3.3% | Balance Sheets As of June 28, 2025, the company's balance sheet strengthened, with total assets increasing to $135.6 million and total stockholders' equity rising by 12.8% to $37.8 million since year-end 2024. Key changes in current assets and liabilities include an increase in accounts receivable and a significant rise in deferred revenue, offset by a decrease in accounts payable Selected Balance Sheet Data (in thousands) | Account | June 28, 2025 | Dec 28, 2024 | % Change | | :--- | :--- | :--- | :--- | | Total Current Assets | $100,709 | $97,038 | 3.8% | | Total Assets | $135,586 | $132,077 | 2.7% | | Total Current Liabilities | $54,490 | $53,633 | 1.6% | | Borrowings under line of credit | $34,015 | $34,967 | -2.7% | | Total Stockholders' Equity | $37,786 | $33,484 | 12.8% | Statements of Cash Flows For the first half of 2025, net cash provided by operating activities was $8.8 million, a decrease from $12.2 million in the prior-year period, primarily driven by a $15.3 million increase in accounts receivable during the second quarter. The company used $7.1 million for financing activities, largely for treasury stock repurchases, compared to $13.5 million in the first half of 2024 - In Q2 2025, the company experienced a net cash usage of $7.9 million from operating activities, a stark contrast to the $5.7 million provided by operations in Q2 2024. This was mainly due to a significant increase in accounts receivable[23] H1 Cash Flow Summary (in thousands) | Cash Flow Activity | H1 2025 | H1 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $8,782 | $12,151 | | Net cash used in investing activities | ($900) | ($1,067) | | Net cash used in financing activities | ($7,092) | ($13,510) | | Increase (decrease) in cash | $743 | ($2,804) | Segment Performance Q2 2025 segment performance shows strong revenue growth in Specialty Health Care and Engineering, with varied margin trends Segment Revenue and Gross Profit Analysis In Q2 2025, growth was led by the Specialty Health Care and Engineering segments, with revenues increasing 15.9% and 17.8% YoY, respectively. The Life Sciences, Data and Solutions segment experienced a 9.3% revenue decline. Gross profit margins compressed slightly in the Engineering segment from 26.5% to 24.5%, while the Life Sciences, Data and Solutions segment saw margin expansion to 39.8% Q2 2025 Revenue by Segment (in thousands) | Segment | Q2 2025 Revenue | Q2 2024 Revenue | YoY Change | | :--- | :--- | :--- | :--- | | Specialty Health Care | $42,822 | $36,932 | +15.9% | | Engineering | $26,521 | $22,508 | +17.8% | | Life Sciences, Data and Solutions | $8,823 | $9,724 | -9.3% | | Consolidated | $78,166 | $69,164 | +13.0% | Q2 2025 Gross Profit Margin by Segment | Segment | Q2 2025 Gross Profit Margin | Q2 2024 Gross Profit Margin | Change (bps) | | :--- | :--- | :--- | :--- | | Specialty Health Care | 28.7% | 28.8% | -10 bps | | Engineering | 24.5% | 26.5% | -200 bps | | Life Sciences, Data and Solutions | 39.8% | 34.9% | +490 bps | | Consolidated | 28.5% | 28.9% | -40 bps | Non-GAAP Financial Measures Non-GAAP metrics provide a clearer view of operational performance by adjusting for non-recurring and non-cash items Reconciliation of GAAP to Non-GAAP Results The company provides non-GAAP metrics to offer a clearer view of ongoing operational performance by excluding items such as equity compensation, foreign currency transaction impacts, and potential financing costs. For Q2 2025, Adjusted EBITDA increased to $8.1 million from $7.2 million YoY. Adjusted net income grew to $5.2 million ($0.69 per diluted share) from $4.6 million ($0.57 per diluted share) in the prior-year quarter Reconciliation of GAAP Net Income to Adjusted EBITDA (in thousands) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | GAAP Net Income | $3,785 | $3,762 | $7,971 | $7,714 | | Income tax expense | 1,887 | 1,483 | 3,586 | 2,941 | | Interest expense, net | 650 | 581 | 1,301 | 1,059 | | Depreciation & Amortization | 401 | 378 | 825 | 710 | | EBITDA (Non-GAAP) | $6,723 | $6,204 | $13,683 | $12,424 | | Other Adjustments* | 1,412 | 1,004 | 2,232 | 1,587 | | Adjusted EBITDA (Non-GAAP) | $8,135 | $7,208 | $15,915 | $14,011 | *Other Adjustments include Equity compensation, foreign currency transactions, and potential financing transactions Reconciliation of GAAP to Adjusted Diluted EPS | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | GAAP Diluted EPS | $0.50 | $0.47 | $1.04 | $0.95 | | Adjustments | $0.19 | $0.10 | $0.28 | $0.16 | | Adjusted Diluted EPS (Non-GAAP) | $0.69 | $0.57 | $1.32 | $1.11 |