RCM Technologies(US:RCMT)2025-11-06 17:30Financial Data and Key Metrics Changes - Consolidated gross profit for Q3 2025 was $19.4 million, an increase of 8.8% compared to Q3 2024 [13] - Adjusted EBITDA for Q3 2025 was $5.5 million, slightly down by 1.4% from $5.6 million in Q3 2024 [13] - Adjusted EPS remained stable at $0.42 for both Q3 2025 and Q3 2024 [13] Business Line Data and Key Metrics Changes - In healthcare, gross profit for Q3 2025 was $9.0 million, up 8.5% from $8.3 million in Q3 2024, with school revenue growing 20.7% to $24.4 million [13][14] - Engineering gross profit for Q3 2025 reached $6.9 million, a 17.3% increase from $5.9 million in Q3 2024, marking the best engineering gross profit quarter in company history [15] - IT, life sciences, and data solutions group gross profit for Q3 2025 was $3.5 million, down 4.2% from $3.7 million in Q3 2024 [16] Market Data and Key Metrics Changes - The company reported a record engineering backlog for 2026, exceeding $70 million, compared to $21 million for 2025 at the same time last year [15] - Billable hours for the first four weeks of October 2025 increased by 18% compared to the same period in 2024, indicating strong momentum heading into Q4 [15] Company Strategy and Development Direction - The company is focusing on expanding its healthcare services and enhancing its brand awareness, which has led to increased traction and a stronger talent pool [2][3] - In life sciences, the company is capitalizing on industry shifts by partnering with AI-driven companies to streamline compliance and reduce turnaround times [5] - The engineering segment is emphasizing its integrated model and strategic partnerships to enhance procurement agility and mitigate resource bottlenecks [9] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about Q4 2025, expecting it to yield the highest quarterly gross profit and adjusted EBITDA of the fiscal year [17] - The company anticipates continued growth in the aerospace and defense sectors, with many programs still in their infancy [12] - Management acknowledged challenges with medical costs but indicated that measures are being taken to address these long-term [20][44] Other Important Information - The company experienced excess medical costs of approximately $1.8 million year-to-date, with Q3 particularly impacted [3] - SG&A expenses included $800,000 in medical claims over budget for Q3 alone [16] Q&A Session Summary Question: Impact of foreign candidates in the healthcare group - Management indicated that they have a pipeline of at least 300 nurses ready to come over if visa issues are resolved, with potential for 50-60 nurses in the near term [18][19] Question: Predictability of excess medical costs - Management suggested that the current level of excess medical costs is likely to continue into Q4, with long-term measures being implemented to reduce these costs [20] Question: Performance of the industrial process segment - Management noted that while the industrial process segment is stable, it requires a different trajectory for growth, with potential upside expected in 2026 [25][27] Question: Growth opportunities in energy services - Management confirmed that energy services are a significant growth area, focusing on tier-one utility clients and exploring new partnerships [30][32] Question: Capital allocation and share buyback program - Management discussed the balance between available debt and the share buyback program, emphasizing the undervaluation of their stock and the potential for future dividends [56][58]