PRESS R E L E A S E
RCM TECHNOLOGIES, INC. ANNOUNCES RESULTS FOR THE FIFTY-THREE WEEKS
AND THIRTEEN WEEKS ENDED JANUARY 1, 2005
Pennsauken, NJ - March 16, 2005 -- RCM Technologies, Inc. (NNM: RCMT) today
announced financial results for the fifty-three weeks and thirteen weeks ended
January 1, 2005.
The Company announced revenues of $169.3 million for the fifty-three weeks ended
January 1, 2005, down from $206.6 million for the fifty-two weeks ended December
27, 2003 (same period a year ago). Net income for the fifty-three weeks ended
January 1, 2005 was $2.2 million, or $.19 per diluted share, as compared to net
income of $2.8 million, or $.26 per diluted share, for the same period a year
ago. For the fifty-three weeks ended January 1, 2005, earnings before interest
income, interest expense, depreciation, amortization and income taxes (EBITDA)
was $4.5 million, or $.38 per diluted share, as compared to $5.3 million, or
$.49 per diluted share, for the same period a year ago. Included in EBITDA for
the fifty-three weeks ended January 1, 2005 was a charge for impairment of
goodwill of $2.2 million, or $.19 per diluted share. Included in EBITDA for the
fifty-two weeks ended December 27, 2003 was a charge for compensation expense
relating to a stock tender offer of $6.7 million, or $.61 per diluted share.
The Company announced revenues of $41.7 million for the thirteen weeks ended
January 1, 2005, down from $45.5 million for the thirteen weeks ended December
27, 2003 (same period a year ago). Net loss for the thirteen weeks ended January
1, 2005 was $223,900, or $.02 per diluted share, as compared to a net loss of
$2.3 million, or $.21 per diluted share, for the same period a year ago. For the
thirteen weeks ended January 1, 2005, EBITDA was a loss of $562,200, or $.05 per
diluted share, as compared to a loss of $3.6 million, or $.33 per diluted share,
for the same period a year ago. Included in EBITDA for the thirteen weeks ended
January 1, 2005 was a charge for impairment of goodwill of $2.2 million, or $.19
per diluted share. Included in EBITDA for the thirteen weeks ended December 27,
2003 was a charge for compensation expense relating to a stock tender offer of
$6.7 million, or $.61 per diluted share.
Leon Kopyt, Chairman and CEO of RCM, commented: "Last year's results were
largely impacted by the earlier completion of two major contracts in IT and
engineering and unexpected delays in the awarding of other significant
contracts. Despite revenue weakness in these business groups, we managed to
maintain a moderate level of profitability, stabilize gross margins and increase
working capital and stockholders' equity. We anticipate improvement across
selective sectors in 2005 and maintain a forward focus on results."
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 Operations
(In Thousands, Except Per Share Amounts)
Fifty-Three Fifty-Two
Weeks Ended Weeks Ended
January 1, December 27,
2005 2003
---------------- ----------------
Revenues $169,277 $206,605
Gross profit 40,974 44,595
Selling, general and administrative 34,331 32,558
Depreciation and amortization 1,219 1,223
Impairment of goodwill 2,164
Compensation expense for stock tender offer 6,692
Other expense 474 314
Gain on foreign currency transactions (25) (132)
Income before income taxes 2,811 3,940
Income taxes 604 1,161
Net income $2,207 $2,779
Earnings per share (diluted)
Net income $.19 $.26
Thirteen Thirteen Weeks
Weeks Ended Ended
January 1, December 27,
2005 2003
---------------- ----------------
Revenues $41,723 $45,511
Gross profit 10,283 10,851
Selling, general and administrative 8,681 7,748
Depreciation and amortization 313 309
Impairment of goodwill 2,164
Compensation expense for stock tender offer 6,692
Other expense 123 134
Gain on foreign currency transactions (29) (16)
Loss before income taxes (969) (4,016)
Income tax benefit (745) (1,689)
Net loss ($224) ($2,327)
Earnings per share (diluted)
Net loss ($.02) ($.21)
RCM Technologies, Inc.
Summary Consolidated Balance Sheet Data
(In Thousands)
January 1, December 27,
2005 2003
---------------- ---------------
Cash and equivalents $2,402 $5,152
Accounts receivable 40,536 36,269
Working capital 29,545 23,882
Intangible assets 35,843 38,076
Total assets 98,101 99,704
Senior debt 4,900 7,300
Total liabilities 28,156 32,533
Stockholders' equity $69,945 $67,170
RCM Technologies, Inc.
Reconciliation of EBITDA to Net Income (Loss) and Cash Provided
by Operating Activities
As used in this report, EBITDA means earnings before interest income, interest
expense, depreciation, amortization, and income taxes. We believe that 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 charges or income. Our creditors in assessing debt covenant
compliance also use EBITDA. We understand that, although security analysts
frequently use 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. 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 EBITDA to both net income (loss) and cash flow provided by
operating activities.
Fifty-Three Fifty-Two
Weeks Ended Weeks Ended
January 1, December 27,
2005 2003
------------------ ------------------
(In Thousands)
EBITDA $4,479 $5,345
Depreciation and amortization 1,219 1,223
Interest expense, net of interest income 474 314
Gain on foreign currency transactions (25) (132)
Income taxes 604 1,161
------------------ ------------------
Net income $2,207 $2,779
================== ==================
Earning per share (diluted)
EBITDA $.38 $.49
================== ==================
Net income $.19 $.26
================== ==================
Weighted average shares outstanding 11,680 10,896
================== ==================
Thirteen Thirteen
Weeks Ended Weeks Ended
January 1, December 27,
2005 2003
------------------ ------------------
(In Thousands)
EBITDA loss ($562) ($3,589)
Depreciation and amortization 313 309
Interest expense, net of interest income 123 134
Gain on foreign currency transactions (29) (16)
Income taxes (benefit) (745) (1,689)
------------------ ------------------
Net loss ($224) ($2,327)
================== ==================
Earning per share (diluted)
EBITDA loss ($.05) ($.33)
================== ==================
Net loss ($.02) ($.21)
================== ==================
Weighted average shares outstanding 11,352 10,952
================== ==================
RCM Technologies, Inc.
Reconciliation of Adjusted EBITDA to Net Income (Loss) and Cash
Provided by Operating Activities (Continued)
Fifty-Three Fifty-Two
Weeks Ended Weeks Ended
January 1, December 27,
2005 2003
----------------- ------------------
Net income $2,207 $2,779
Adjustments to reconcile net income to cash
(used in) provided by operating activities:
Depreciation and amortization 1,219 1,223
Provision for losses on accounts receivable 8 305
Recognition of noncash portion
of compensation expense for
stock tender offer 3,829
Goodwill impairment 2,164
Changes in operating assets and liabilities
Accounts receivable (4,275) (4,820)
Income tax refund receivable 3,767
Restricted cash (8,296)
Deferred tax asset (365) (308)
Prepaid expenses and other current assets 595 536
Accounts payable and accrued expenses (3,330) 845
Accrued payroll 1,310 1,093
Payroll and withheld taxes 923 (16)
Income taxes payable (880) 1,956
----------------- ------------------
Cash (used in) provided by operating activities ($424) $2,893
================= ==================
Thirteen Thirteen
Weeks Ended Weeks Ended
January 1, December 27,
2005 2003
----------------- ------------------
Net loss ($224) ($2,327)
Adjustments to reconcile net loss to cash provided
by operating activities:
Depreciation and amortization 314 309
Provision for losses on accounts receivable (55) (6)
Recognition of noncash portion
of compensation expense for stock tender offer 3,829
Goodwill impairment 2,164
Changes in operating assets and liabilities
Accounts receivable (2,867) 5,925
Income tax refund receivable 332
Deferred tax asset 53 (600)
Prepaid expenses and other current assets (107) (732)
Accounts payable and accrued expenses 177 (3,040)
Accrued payroll 1,200 (2,112)
Payroll and withheld taxes 197 (413)
Income taxes payable (1,361) (1,056)
----------------- ------------------
Cash (used in) provided by operating activities ($509) $109
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