P R E S S R E L E A S E
RCM TECHNOLOGIES, INC. ANNOUNCES RESULTS FOR FIFTY-TWO WEEKS
AND THIRTEEN WEEKS ENDED DECEMBER 30, 2006
Pennsauken, NJ-March 21, 2007 -- RCM Technologies, Inc. (NASD: RCMT) today
announced financial results for the fifty-two weeks and thirteen weeks ended
December 30, 2006.
The Company announced revenues of $201.9 million for the fifty-two weeks ended
December 30, 2006, up from $180.6 million for the fifty-two weeks ended December
31, 2005 (comparable prior year period). Net income for the fifty-two weeks
ended December 30, 2006 was $6.4 million, or $.53 per diluted share, as compared
to net income of $3.5 million, or $.30 per diluted share, for the comparable
prior year period. Net income before equity-based compensation (1) for the
fifty-two weeks ended December 30, 2006 was $7.3 million, or $.61 per diluted
share, and excludes net equity-based compensation expense of $956,000. No equity
based compensation expense was included in the 2005 period. Net income for the
2006 period includes the reversal of approximately $1.3 million in income tax
reserves or $.11 per diluted share, as compared to no such tax reversal in the
2005 period.
Revenues were $54.2 million for the thirteen weeks ended December 30, 2006, up
from $46.8 million for the thirteen weeks ended December 31, 2005 (comparable
prior year period). Net income for the thirteen weeks ended December 30, 2006
was $2.3 million, or $.19 per diluted share, as compared to net income of
$818,500, or $.07 per diluted share, for the comparable prior year period. Net
income before equity-based compensation (1) for the thirteen weeks ended
December 30, 2006 was $2.6 million, or $.21 per diluted share, and excludes net
equity-based compensation expense of $263,000. No equity based compensation
expense was included in the 2005 period.
For the fifty-two weeks ended December 30, 2006, earnings before interest,
income taxes, depreciation and amortization, or EBITDA, was $9.2 million, or
$.77 per diluted share, as compared to $7.2 million, or $.62 per diluted share,
for the comparable prior year period. For the thirteen weeks ended December 30,
2006, EBITDA was $2.6 million, or $.22 per diluted share, as compared to $2.0
million, or $.17 per diluted share, for the comparable prior year period.
Leon Kopyt, Chairman and CEO of RCM, commented: "We are pleased to report
improved operating results for fiscal year 2006 as revenues increased more than
11% and net earnings rose 22% over the prior year. These results can be
attributed in part to the continued progress of certain contracts and the
expansion of gross margins. We believe that sector leading indicators point
towards positive momentum for 2007."
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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 35 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.
(1) On January 1, 2006, the Company adopted the provisions of SFAS No. 123(R),
"Share-Based Payment," on a modified prospective basis, which required the
Company to record equity-based compensation expense for all awards granted after
the date of adoption and for the unvested portion of previously granted awards
outstanding as of the date of adoption. No compensation cost was recognized in
the statements of income for either the thirteen weeks or fifty-two weeks ended
December 31, 2005. For these periods, the Company, consistent with historical
practice, applied the recognition and measurement provisions of Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees,"
(APB No. 25) and related interpretations, as all options granted by the Company
had an exercise price that was equal to or greater than the market price of the
underlying common stock at the date of grant.
For the purposes of performing the calculation of net income before equity-based
compensation expense, all equity-based compensation expense, net of income tax,
is added back to net income as calculated in accordance with accounting
principles generally accepted in the United States (USGAAP). Net income before
equity-based compensation expense is not a measurement calculated in accordance
with USGAAP, and is not intended to be a replacement for, or to be considered to
be more important than, net income calculated in accordance with USGAAP. As the
calculation of net income before equity-based compensation expense is not
performed in accordance with USGAAP, the Company believes that the utility of
the calculation is significantly limited, and that the measure should only be
used to compare to net income year-over-year on a consistent basis. To mitigate
this limitation, the Company has provided a reconciliation of net income before
equity-based compensation expense to net income calculated in accordance with
USGAAP, which should be the primary measurement utilized to analyze the
Company's financial results.
The Company has provided these additional disclosures because net income
calculated on a USGAAP basis is not comparable year-over-year since the Company
did not incur any equity-based compensation expense in 2005. Accordingly, this
reconciliation allows the Company to evaluate the financial results of its
operations year-over-year on a consistent basis. Other than to measure net
income year-over-year on a consistent basis, the Company does not utilize net
income before equity-based compensation expense for any other purpose.
Tables to Follow
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RCM Technologies, Inc.
Consolidated Statements of Income
(Unaudited)
(In Thousands, Except Per Share Amounts)
Fifty-Two Weeks Ended
---------------------------------------
December 30, 2006 December 31, 2005
------------------ -----------------
Revenues $201,920 $180,618
Gross profit (1) 50,508 42,683
Selling, general and administrative (2) 41,243 35,461
Depreciation and amortization 1,508 1,206
Interest expense, net 256 221
Loss(gain) on foreign currency transactions 31 (12)
Income before income taxes 7,470 5,807
Income taxes 1,113 2,271
Net income $6,356 $3,536
Earnings per share (diluted)
Net income $.53 $.30
Thirteen Weeks Ended
---------------------------------------
December 30, 2006 December 31, 2005
------------------ -----------------
Revenues $54,192 $46,822
Gross profit (3) 13,346 11,364
Selling, general and administrative (4) 10,722 9,415
Depreciation and amortization 393 406
Interest expense, net 52 50
Loss(gain) on foreign currency transactions 15 (19)
Income before income taxes 2,163 1,512
Income tax (benefit)expense (174) 693
Net income $2,337 $819
Earnings per share (diluted)
Net income $.19 $.07
RCM Technologies, Inc.
Summary Consolidated Balance Sheet Data
(Unaudited)
(In Thousands)
December 30, December 31,
2006 2005
----------------- ----------------
Cash and equivalents $2,449 $3,761
Accounts receivable 48,141 44,930
Working capital 38,844 33,032
Goodwill and intangible assets 39,998 38,469
Total assets 100,040 106,773
Senior debt 3,900
Total liabilities 16,647 31,084
Stockholders' equity $83,393 $75,689
<FN>
(1) Reflects stock based compensation expense of $45,837 included in cost of
services for the fifty-two weeks ended December 30, 2006.
(2) Includes stock based compensation expense of $909,685 for the fifty-two
weeks ended December 30, 2006. (3) Reflects stock based compensation expense
of $16,087 included in cost of services for the thirteen weeks ended
December 30, 2006.
(4) Includes stock based compensation expense of $246,760 for the thirteen weeks
ended December 30, 2006.
</FN>
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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 provided by operating
activities.
Fifty-Two Weeks Ended
-----------------------------------------
December 30, 2006 December 31, 2005
-------------------- -----------------
(In Thousands)
-----------------------------------------
EBITDA (1) $9,235 $7,234
Depreciation and amortization 1,508 1,206
Interest expense, net of interest income 256 221
Income taxes 1,113 2,271
-------------------- -----------------
Net income $6,356 $3,536
==================== =================
Earnings per share (diluted)
EBITDA $.77 $.62
==================== =================
Net income $.53 $.30
==================== =================
Weighted average shares outstanding 12,035 11,732
==================== =================
Thirteen Weeks Ended
-----------------------------------------
December 30, 2006 December 31, 2005
-------------------- -----------------
(In Thousands)
-----------------------------------------
EBITDA (2) $2,608 $1,967
Depreciation and amortization 393 405
Interest expense, net of interest income 52 50
Income tax (benefit) expense (174) 693
-------------------- -----------------
Net income $2,337 $819
==================== =================
Earnings per share (diluted)
EBITDA $.22 $.17
==================== =================
Net income $.19 $.07
==================== =================
Weighted average shares outstanding 12,100 11,859
==================== =================
<FN>
(1) Includes stock based compensation expense of $955,522 for the fifty-two
weeks ended December 30, 2006.
(2) Includes stock based compensation expense of $262,847 for the thirteen
weeks ended December 30, 2006.
</FN>
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RCM Technologies, Inc.
Calculation of Net Income and Net Earnings per Diluted Share before
Equity-Based Compensation Expense (1)
(Unaudited)
Fifty-Two Weeks Ended
-----------------------------------------
December 30, 2006 December 31, 2005
-------------------- -----------------
(In Thousands)
-----------------------------------------
Net income $6,356 $3,536
Equity-based compensation, net of income tax 956
Net income before equity-based
compensation expense $7,312 $3,536
Net earnings per diluted share before
equity-based compensation expense $.61 $.30
Thirteen Weeks Ended
-----------------------------------------
December 30, 2006 December 31, 2005
-------------------- -----------------
(In Thousands)
-----------------------------------------
Net income $2,337 $819
Equity-based compensation, net of income tax 263
Net income before equity-based
compensation expense $2,600 $819
Net earnings per diluted share before
equity-based compensation expense $.21 $.07
(1) See footnote 1 on page 2
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RCM Technologies, Inc.
Reconciliation of EBITDA to Net Income and Cash Provided by
Operating Activities (Continued)
(Unaudited)
Fifty-Two Weeks Ended
-----------------------------------------
December 30, 2006 December 31, 2005
-------------------- -----------------
(In Thousands)
-----------------------------------------
Net income $6,356 $3,536
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 1,508 1,206
Provision for losses on accounts receivable (120) (70)
Stock based compensation expense 956
Deferred tax assets 827 952
Changes in operating assets and liabilities
Accounts receivable (3,144) (4,342)
Restricted cash 8,572 (276)
Prepaid expenses and other current assets 1,132 (50)
Accounts payable and accrued expenses (7,666) 1,449
Accrued compensation 1,086 321
Payroll and withheld taxes 277 (232)
Income taxes payable (4,180) 1,103
-------------------- -----------------
Cash provided by operating activities $5,604 $3,597
==================== =================
Thirteen Weeks Ended
-----------------------------------------
December 30, 2006 December 31, 2005
-------------------- -----------------
(In Thousands)
-----------------------------------------
Net income $2,337 $818
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 393 405
Provision for losses on accounts receivable (11)
Stock based compensation expense 263 40
Deferred tax assets 972 871
Changes in operating assets and liabilities
Accounts receivable 653 (2,580)
Restricted cash (71)
Prepaid expenses and other current assets 1,066 (856)
Accounts payable and accrued expenses (2,395) 756
Accrued compensation (250) 1,360
Payroll and withheld taxes 27 292
Income taxes payable (2,033) (35)
-------------------- -----------------
Cash provided by operating activities $1,022 $1,000
==================== =================
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