RCM Technologies(US:RCMT)2024-08-09 17:42Financial Data and Key Metrics Changes - Consolidated gross profit for Q2 2024 grew by 6.6% from $18.8 million to $20.0 million [15] - Adjusted EBITDA for Q2 2024 increased by 10.8% from $6.5 million to $7.2 million [15] - Adjusted diluted EPS for Q2 2024 rose by 12.0% from $0.50 to $0.56 [15] Business Line Data and Key Metrics Changes - Engineering gross profit grew by 23.7% in Q2 2024 [16] - Life Sciences Data & Solutions gross profit decreased by 17.9% [16] - Healthcare gross profit increased by 8.6% in Q2 2024 [16] - School revenue for Q2 2024 was $30.8 million, growing by 23.0% after removing COVID revenue from the previous year [16] Market Data and Key Metrics Changes - Year-to-date 2024 school revenue exceeds 83% of total revenue, with a 24.9% growth over the previous year after removing COVID-related revenue [17] - The company anticipates signing over 30 new school districts for the 2024-2025 school year, a significant increase compared to previous years [28] Company Strategy and Development Direction - The company is positioning itself as a world-class professional services firm, not limited to healthcare or engineering, but as a competitive entity on a global scale [3] - Continued strong contributions from the engineering division are expected, alongside growth in healthcare and life sciences [4] - The company is investing in technology and infrastructure to support anticipated growth, particularly in healthcare [33][35] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for low double-digit consolidated adjusted EBITDA growth in the second half of 2024 compared to fiscal 2023 [19] - The company is cautious about predicting revenue strength due to seasonal factors affecting school operations [20] - Management highlighted the importance of maintaining a strong balance sheet while being flexible in capital allocation for potential M&A opportunities [22][23] Other Important Information - The company has expanded operations in the Philippines, enhancing recruitment and operational support [5] - The engineering division is actively pursuing opportunities in international energy markets, particularly in Latin America and Europe [8] Q&A Session Summary Question: Strength in the schools business and overall growth outlook - Management acknowledged the strong performance but noted that predictions for EBITDA growth are conservative due to seasonal revenue patterns [20] Question: Fastest growing segment in the next 12 months - Management indicated that all three business segments are strong, making it difficult to isolate one as the fastest growing [21] Question: Capital allocation priorities - Management emphasized a flexible approach to capital allocation, focusing on share buybacks and potential M&A opportunities [22][23] Question: Increase in new hires - The 54% increase in new hires was primarily in the aerospace sector, which had previously been sluggish [25] Question: Timing of project impacts in Life Sciences - Management confirmed that a dip in Life Sciences was due to project timing, with expectations for a healthy uptick in the latter half of the year [26] Question: Status of signed school districts - Management confirmed over 20 signed school districts for the upcoming year, with hopes to penetrate more effectively [28] Question: Operating cash flow expectations - Management expects the second half of the year to show improved cash flow compared to the first half [30] Question: Increase in SG&A expenses - Management attributed the increase in SG&A to inflation, technology investments, and infrastructure support for growth [32][33]