RCM Technologies(US:RCMT)2025-03-13 22:03Financial 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]