RCM Technologies, Inc. Tel: 856.486.1777 Corporate Contacts:
2500 McClellan Avenue Fax: 856.488.8833 Leon Kopyt
Pennsauken, NJ 08109-4613 info@rcmt.com Chairman, President & CEO
www.rcmt.com Stanton Remer
Executive VP & CFO
Kevin D. Miller
Senior Vice President
P R E S S R E L E A S E
RCM TECHNOLOGIES, INC. ANNOUNCES RESULTS FOR TWENTY-SIX WEEKS
AND THIRTEEN WEEKS ENDED JULY 1, 2006
August 9, 2006 -- RCM Technologies, Inc. (NNM: RCMT) today announced
financial results for the twenty-six weeks and thirteen weeks
ended July 1, 2006.
The Company announced revenues of $96.1 million for the twenty-six weeks ended
July 1, 2006, up from $90.4 million for the twenty-six weeks ended July 2, 2005
(same period a year ago). Net income for the twenty-six weeks ended July 1, 2006
was $2.7 million, or $0.22 per diluted share, as compared to net income of $2.0
million, or $0.17 per diluted share, for the year ago period. Net income for the
2006 period included a $1.0 million income tax credit, or $0.08 per diluted
share, as compared to no such tax credit in the 2005 period. For the twenty-six
weeks ended July 1, 2006, earnings before interest, income taxes, depreciation
and amortization, or EBITDA, was $3.9 million, or $0.33 per diluted share, as
compared to $3.8 million, or $0.33 per diluted share, for the same period a year
ago.
Revenues were $49.0 million for the thirteen weeks ended July 1, 2006, up from
$46.3 million for the thirteen weeks ended July 2, 2005 (same period a year
ago). Net income for the thirteen weeks ended July 1, 2006 was $1.9 million, or
$0.15 per diluted share, as compared to net income of $1.2 million, or $0.10 per
diluted share, for the year ago period. Net income for the 2006 period included
a $1.0 million income tax credit, or $0.08 per diluted share, as compared to no
such tax credit in the 2005 period. For the thirteen weeks ended July 1, 2006,
EBITDA was $2.0 million, or $0.17 per diluted share, as compared to $2.1
million, or $0.18 per diluted share, for the same period a year ago.
Effective January 1, 2006, the Company adopted the accounting required under
SFAS No. 123R for its stock-based compensation plans. The change in accounting,
plus the effect of additional awards which were granted in 2006, resulted in
increases of $593,000 and $288,000 in stock-based compensation expenses for the
twenty-six weeks and thirteen weeks ended July 1, 2006, respectively, as
compared to the same periods a year ago.
Leon Kopyt, Chairman and CEO of RCM, commented: "Our overall performance remains
consistent with recent quarters, albeit showing modest improvement in selected
markets. We are continuing to work to optimize our business model as a premier
professional services provider having a strong vertical focus and offering a
fully integrated solutions suite through a global delivery platform."
<page>
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
(Unaudited)
(In Thousands, Except Per Share Amounts)
Twenty-Six Weeks Ended
---------------------------------------
July 1, 2006 July 2, 2005
------------------ -----------------
Revenues $96,079 $90,406
Gross profit (1) 24,211 21,165
Selling, general and administrative (2) 20,271 17,335
Depreciation and amortization 721 528
Interest expense, net 129 108
Loss on foreign currency transactions 11 4
Income before income taxes 3,079 3,190
Income taxes 409 1,189
Net income $2,670 $2,001
Earnings per share (diluted)
Net income $0.22 $0.17
Thirteen Weeks Ended
---------------------------------------
July 1, 2006 July 2, 2005
------------------ -----------------
Revenues $49,025 $46,324
Gross profit (3) 12,180 11,057
Selling, general and administrative (4) 10,185 8,929
Depreciation and amortization 368 268
Interest expense, net 64 (15)
Gain on foreign currency transactions (2)
Income before income taxes 1,565 1,875
Income taxes (credit) (294) 707
Net income $1,859 $1,168
Earnings per share (diluted)
Net income $0.15 $0.10
RCM Technologies, Inc.
Summary Consolidated Balance Sheet Data
(Unaudited)
(In Thousands)
July 1, December 31,
2006 2005
--------------- ----------------
Cash and equivalents $6,921 $3,761
Accounts receivable 48,084 44,930
Working capital 35,493 33,032
Goodwill and Intangible assets 38,947 38,469
Total assets 105,892 106,773
Senior debt 5,500 3,900
Total liabilities 26,623 31,084
Stockholders' equity $79,269 $75,689
<FN>
(1) Reflects stock based compensation expense of $30,000 included in cost of
services for the twenty-six weeks ended July 1, 2006.
(2) Includes stock based compensation expense of $563,000 for the twenty-six
weeks ended July 1, 2006.
(3) Reflects stock based compensation expense of $18,000 included in cost of
services for the thirteen weeks ended July 1, 2006.
(4) Includes stock based compensation expense of $270,000 for the thirteen weeks
ended July 1, 2006.
</FN>
RCM Technologies, Inc.
Reconciliation of EBITDA to Net Income and Cash Provided by Operating Activities
(Unaudited)
As used in this report, EBITDA means earnings before interest income, interest
expense, income taxes, depreciation and amortization. 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. EBITDA is also used by our creditors in
assessing debt covenant compliance. We understand that, although security
analysts frequently use EBITDA in the evaluation of companies, it is not
necessarily comparable to EBITDA 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, nor as an alternative to net income 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 and cash flow (used in) provided by
operating activities.
Twenty-Six Weeks Ended
-----------------------------------------
July 1, 2006 July 2, 2005
-------------------- -----------------
(In Thousands)
-----------------------------------------
EBITDA (1) $3,929 $3,827
Depreciation and amortization 721 528
Interest expense, net of interest income 129 108
Income taxes 409 1,190
-------------------- -----------------
Net income $2,670 $2,001
==================== =================
Earnings per share (diluted)
EBITDA $.33 $.33
==================== =================
Net income $.22 $.17
==================== =================
Weighted average shares outstanding 12,040 11,566
==================== =================
Thirteen Weeks Ended
-----------------------------------------
July 1, 2006 July 2, 2005
-------------------- -----------------
(In Thousands)
-----------------------------------------
EBITDA (2) $1,997 $2,128
Depreciation and amortization 368 268
Interest expense, net of interest income 64 (15)
Income taxes (credit) (294) 707
-------------------- -----------------
Net income $1,859 $1,168
==================== =================
Earnings per share (diluted)
EBITDA $.17 $.18
==================== =================
Net income $.15 $.10
==================== =================
Weighted average shares outstanding 12,044 11,545
==================== =================
<FN>
(1) Includes stock based compensation expense of $593,000 for the twenty-six
weeks ended July 1, 2006.
(2) Includes stock based compensation expense of $288,000 for the thirteen
weeks ended July 1, 2006.
</FN>
RCM Technologies, Inc.
Reconciliation of EBITDA to Net Income and Cash Provided by
Operating Activities (Continued)
(Unaudited)
Twenty-Six Weeks Ended
-----------------------------------
July 1, 2006 July 2, 2005
------------ ------------
(In Thousands)
-----------------------------------
Net income $2,670 $2,001
Adjustments to reconcile net income to cash
provided by (used in) operating activities:
Depreciation and amortization 721 528
Stock based compensation expense 593
Provision for losses on accounts receivable (17) (19)
Changes in operating assets and liabilities
Accounts receivable (3,137) (2,038)
Restricted cash 8,572 (148)
Prepaid expenses and other current assets (71) 317
Deferred tax assets (186)
Accounts payable and accrued expenses (6,098) (776)
Accrued compensation 1,393 372
Payroll and withheld taxes 93 (328)
Income taxes payable (1,449) 378
-------------------- -----------------
Cash provided by operating activities $3,084 $287
==================== =================
Thirteen Weeks Ended
----------------------------------
July 1, 2006 July 2, 2005
------------ ------------
(In Thousands)
----------------------------------
Net income $1,859 $1,168
Adjustments to reconcile net income to cash
provided by (used in) operating activities:
Depreciation and amortization 368 268
Stock based compensation expense 288
Provision for losses on accounts receivable (11) (10)
Changes in operating assets and liabilities
Accounts receivable 1,205 (808)
Restricted cash 8,658 (148)
Prepaid expenses and other current assets (685) (219)
Deferred tax assets (186)
Accounts payable and accrued expenses (8,223) (437)
Accrued compensation 1,860 1,777
Payroll and withheld taxes 66 359
Income taxes payable (307) 210
-------------------- -----------------
Cash provided by operating activities $4,892 $2,160
==================== =================
####