RCM TECHNOLOGOGIES, INC.
2500 McCLELLAN AVE. TEL: 856-486-1777
PENNSAUKEN, NJ 08109-4613 FAX: 856-486-8833
info@rcmt.com
www.rcmt.com
P R E S S R E L E A S E
RCM TECHNOLOGIES, INC. ANNOUNCES RESULTS
FOR THE FOURTH QUARTER AND YEAR ENDED DECEMBER 31, 2003
Pennsauken, NJ - March 17, 2004 -- RCM Technologies, Inc. (NNM: RCMT) today
announced financial results for the fourth quarter and year ended
December 31, 2003.
The Company announced revenues of $206.6 million for the year ended December 31,
2003, up from $186.7 million for the prior year. Net income for the year ended
December 31, 2003 was $2.8 million, or $.26 per share, as compared to net loss
of $24.1 million, or $2.28 per share, for the prior year. For the year ended
December 31, 2003, earnings before interest income, interest expense,
depreciation, amortization, income taxes, other non-operating income and
expense, litigation charge, impairment of goodwill, and compensation expense for
stock tender offer (Adjusted EBITDA) was $12.0 million, or $1.10 per diluted
share, as compared to $13.3 million, or $1.26 per share, for the prior year.
The Company announced revenues of $45.5 million for the three months ended
December 31, 2003, up from $45.3 million for the same period a year ago. Net
loss for the three months ended December 31, 2003 was $2.3 million, or $.21 per
share, as compared to net loss of $29.4 million, or $2.77 per share, for the
same period a year ago. For the three months ended December 31, 2003, earnings
before interest, taxes, depreciation and amortization (Adjusted EBITDA) was $3.1
million, or $.28 per diluted share, as compared to $2.3 million, or $.19 per
share, for the same period a year ago.
The Company also announced the previously anticipated conclusion of two major
contracts in late 2003 (which accounted for $56.1 million of revenue in 2003).
Under these contracts, the Company performed certain of the services and
subcontracted to third parties on a "pass through" basis other services
recognizing a 1.2% processing fee for the subcontracted services. The portion of
these services performed by the Company represented $32.0 million in revenues,
and "pass through" subcontracted revenue was $24.1 million, in 2003. The Company
has been working to replace the non-subcontracted portion of the lost revenue
and remains optimistic about its prospects for 2004 and beyond based on the
current level of new projects and proposal activities in the Company's pipeline.
Leon Kopyt, Chairman and CEO of RCM, commented: "Although the confluence of
positive economic factors combined with prospects for a rebound in technology
spending have elevated belief, momentum and expectation towards a recovery, we
still have not seen compelling and pervasive evidence of significant new
spending across a number of relevant sectors. Nonetheless, we hope to continue
the transition back to internal growth from earlier priorities of revenue
stabilization and profit preservation."
About RCM
RCM Technologies, Inc. is a premier provider of business and technology
solutions designed to enhance and maximize the operational performance of its
customers through the adaptation and deployment of advanced information
technology and engineering services. RCM is an innovative leader in the design,
development and delivery of these solutions to commercial and government sectors
for more than 30 years. RCM's offices are located in major metropolitan centers
throughout North America. Additional information can be found at www.rcmt.com.
The Statements contained in this release that are not purely historical are
forward-looking statements within the Private Securities Litigation Reform Act
of 1995 and are subject to various risks, uncertainties and other factors that
could cause the Company's actual results, performance or achievements to differ
materially from those expressed or implied by such forward-looking statements.
Forward looking statements include, but are not limited to, those relating to
demand for the Company's services, expected demand for our services and
expectations regarding our revenues, the Company's ability to continue to
utilize goodwill, to continue to increase gross margins, to achieve and manage
growth, to develop and market new applications and services, risks relating to
the acquisition and integration of acquired businesses, demand for new services
and applications, timing of demand for services, industry strength and
competition and general economic factors. Investors are directed to consider
such risks, uncertainties and other factors described in documents filed by the
Company with the Securities and Exchange Commission.
Tables to Follow
RCM Technologies, Inc.
Consolidated Statements of Income
(In Thousands, Except Per Share Amounts)
Year Ended Three Months Ended
December 31, December 31,
--------------------------------- ----------------------------------
2003 2002 2003 2002
------------- -------------- -------------- --------------
Revenues $206,605 $186,651 $45,511 $45,343
Gross profit 44,595 46,665 10,851 10,599
Selling, general and administrative 32,558 33,320 7,748 8,256
Depreciation and amortization 1,223 1,279 309 335
Compensation expense for stock tender offer 6,692 6,692
Litigation charge 9,718 9,718
Impairment of goodwill 29,990 29,990
Other expense 182 155 118 52
Income (loss) from continuing operations
before income taxes 3,940 (27,797) (4,016) (37,752)
Income taxes (benefit) 1,161 (4,628) (1,689) (8,395)
Income (loss) from continuing operations 2,779 (23,169) (2,327)
Loss from discontinued operations, net of taxes (967) (3)
Net income (loss) $2,779 ($24,136) ($2,327) ($29,360)
Earnings per share (diluted)
Income from continuing operations $.26 ($2.19) ($.21) ($2.77)
Loss from discontinued operations (.09)
Net income (loss) $.26 ($2.28) ($.21) ($2.77)
RCM Technologies, Inc.
Summary Consolidated Balance Sheet Data
(In Thousands)
December 31, December 31,
2003 2002
---------------- ---------------
Cash and equivalents $5,152 $2,845
Accounts receivable 36,270 31,754
Working capital 23,882 16,516
Intangible assets 38,076 36,753
Total assets 99,704 89,440
Senior debt 7,300 7,400
Total liabilities 32,533 29,194
Stockholders' equity $67,170 $59,246
RCM Technologies, Inc.
Reconciliation of Adjusted EBITDA to Net Income (Loss)
and Cash Provided by Operating Activities
As used in this report, Adjusted EBITDA means earnings before interest income,
interest expense, depreciation, amortization, income taxes, other non-operating
income and expense, litigation charge, impairment of goodwill, and compensation
expense for stock tender offer. We believe that Adjusted EBITDA, as presented,
represents a useful measure of assessing the performance of our operating
activities, as it reflects our earnings trends without the impact of certain
non-cash and unusual charges or income. Adjusted EBITDA is also used by our
creditors in assessing debt covenant compliance. We understand that, although
security analysts frequently use Adjusted EBITDA in the evaluation of companies,
it is not necessarily comparable to other similarly titled captions of other
companies due to potential inconsistencies in the method of calculation.
Adjusted EBITDA is not intended as an alternative to cash flow provided by
operating activities as a measure of liquidity, as an alternative to net income
(loss) as an indicator of our operating performance, nor as an alternative to
any other measure of performance in conformity with generally accepted
accounting principles. The following is a reconciliation of Adjusted EBITDA to
both net income (loss) and cash flow provided by operating activities.
Year Ended Three Months Ended
December 31, December 31,
(In Thousands) (In Thousands)
---------------------------- ------------------------------
2003 2002 2003 2002
---------- ------------ --------------- -------------
EBITDA $12,037 $13,345 $3,103 $2,343
Depreciation and amortization 1,223 1,279 309 335
Compensation expense for stock tender offer 6,692 6,692
Litigation charge 9,718 9,718
Impairment of goodwill 29,990 29,990
Interest expense, net of interest income 314 172 134 104
(Gain) loss on foreign currency transactions (132) (17) (16) (52)
Income taxes (benefit) 1,161 (4,628) (1,689) (8,395)
Loss from discontinued operations 967 3
---------- ------------ --------------- -------------
Net income (loss) $2,779 ($24,136) ($2,327) ($29,360)
========== ============ =============== =============
Earning per share (diluted)
EBITDA $1.10 $1.26 $.28 $.19
============== =============== =============== =============
Net income (loss) $.26 ($2.28) ($.21) ($2.77)
============== =============== =============== =============
Weighted average shares outstanding 10,896 10,586 11,164 10,602
============== =============== =============== =============
RCM Technologies, Inc.
Reconciliation of EBITDA to Net Income (Loss) and Cash Provided by
Operating Activities (Continued)
Year Ended Three Months Ended
December 31, December 31,
2003 2002 2003 2002
------------- ------------ --------------- -------------
Net income (loss) $2,779 ($24,136) ($2,327) ($29,360)
Adjustments to reconcile net income (loss) to
cash provided by operating activities:
Loss from discontinued operations 967 3
Depreciation and amortization 1,223 1,279 309 337
Provision for losses on accounts receivable 305 (246) (6) (52)
Recognition of noncash portion of
compensation expense for stock tender offer 3,829 3,829
Goodwill impairment 29,990 29,990
Changes in operating assets and liabilities
Accounts receivable (4,820) 9,667 5,925 4,041
Income tax refund receivable 3,767 3,044 332 (3,766)
Restricted cash (8,296)
Deferred tax asset 110 2,023 (182) (2,638)
Prepaid expenses and other current assets 536 (775) (732) 442
Accounts payable and accrued expenses 845 6,075 (3,040) 7,278
Accrued payroll 1,093 (774) (2,112) (2,141)
Payroll and withheld taxes (16) (182) (413) (206)
Income taxes payable 1,538 3,578 (1,474) (2,589)
------------- ------------ --------------- -------------
Cash provided by operating activities $2,893 $30,510 $109 $1,339
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