RCM Technologies(US:RCMT)2022-08-12 01:26Financial Data and Key Metrics Changes - RCM generated second quarter revenue of $74 million, a 59% increase year-over-year after adjusting for the Power Systems Canada sale [8][20] - EBITDA for Q2 was $8.4 million, representing growth of 281% year-over-year [8] - Cash flow from operations reached a record $18.3 million for the quarter [8] Business Line Data and Key Metrics Changes - Health Care segment revenue was $43.4 million in Q2 2022, an 89% increase year-over-year [21] - Life Sciences and IT segment generated approximately $10 million in Q2 2022, up from $9.1 million in Q2 2021 [22] - Engineering segment revenue was $20.9 million in Q2 2022, a 41% increase compared to adjusted Q2 2021 revenue of $14.9 million [23] Market Data and Key Metrics Changes - The company continues to see strong performance in recession-resistant end markets, particularly in engineering and health care services [6][8] - The health care services team is expanding its strategic footprint within the education market, addressing a growing talent shortage in special education [14][15] Company Strategy and Development Direction - The company aims to grow its share in existing markets and scale into new adjacencies, leveraging its talent and technology [5][6] - Strategic investments in technology systems are being made to enhance efficiency and productivity in the Health Care segment [13] - The company is focusing on expanding its managed service contract base in Life Sciences, which is expected to lead to higher margins and predictability [33] Management's Comments on Operating Environment and Future Outlook - Management remains confident in the company's ability to maintain strong operating performance despite macroeconomic headwinds [18][24] - The company anticipates continued strong cash flow management and expects to keep Days Sales Outstanding (DSOs) under 60 days [32] Other Important Information - The company is now debt-free after paying down the remaining balance on its revolving credit facility [20] - Recent breakthroughs in legislation, such as the Inflation Reduction Act, are seen as beneficial for the company's expertise in sustainable technologies [12] Q&A Session Summary Question: What contributed to the strong cash flow of $18 million? - Management attributed the strong cash flow to high EBITDA, efficient invoicing and collections, and seasonal factors related to school closings [30] Question: Can you elaborate on new awards in the Life Sciences segment? - Management mentioned recent multiyear awards in the regulatory and compliance side, which could lead to higher margins and more predictability [33] Question: What is the expected seasonality impact on the Health Care segment? - Management expects significant seasonality in Q3 but anticipates strong results in Q4 due to new school contracts [36] Question: What is the revenue breakdown for the Health Care segment? - In Q2, school revenues were $32.3 million, while non-school revenue was $11.2 million [45] Question: What is the capital allocation strategy now that the company is net cash positive? - Management indicated a continued agnostic approach to capital allocation, focusing on share buybacks, dividends, acquisitions, and internal investments [48]