P R E S S R E L E A S E
RCM TECHNOLOGIES, INC. ANNOUNCES RESULTS
FOR THE THIRTEEN WEEKS ENDED MARCH 31, 2007
Pennsauken, NJ - May 9, 2007 -- RCM Technologies, Inc. (NASD: RCMT) today
announced financial results for the thirteen weeks ended March 31, 2007.
The Company announced revenues of $54.5 million for thethirteen weeks ended
March 31, 2007, up from $47.1 million for the thirteen weeks ended April 1, 2006
(comparable prior year period). Net income for the thirteen weeks ended March
31, 2007 was $1.6 million, or $.13 per diluted share, as compared to net income
of $811,000, or $.07 per diluted share, for the comparable prior year period.
Net income for the 2007 period includes income of $480,000, ($800,000, net of
income taxes of $320,000), or $.04 per diluted share, from a legal settlement.
Net income before equity-based compensation (1) for the thirteen weeks ended
March 31, 2007 was $1.8 million, or $.14 per diluted share, and excludes net
equity-based compensation expense of $186,000. Net income before equity-based
compensation (1) for the thirteen weeks ended April 1, 2006 was $1.1 million, or
$.09 per diluted share, and excludes net equity-based compensation expense of
$305,000.
For the thirteen weeks ended March 31, 2007, earnings before interest, income
taxes, depreciation and amortization, or EBITDA, was $3.1 million, or $.25 per
diluted share, as compared to $1.9 million, or $.16 per diluted share, for the
comparable prior year period. EBITDA for the 2007 period includes income of
$800,000 from a legal settlement.
Leon Kopyt, Chairman and CEO of RCM, commented: "We are pleased to report
revenue and net income increases, including the effect of a partial legal
settlement, of 15.8% and 93.7%, respectively, in the first quarter of 2007 over
the comparable period in 2006. Despite seasonal fluctuations, revenues have
increased on a sequential basis for six consecutive quarters as market activity
continues to trend modestly higher in certain business segments. We believe that
if the current strength in our sector and in the overall economy persists,
we should continue to experience moderate growth."
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.
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 (US GAAP). Net income before
equity-based compensation expense is not a measurement calculated in accordance
with US GAAP, and is not intended to be a replacement for, or to be considered
to be more important than, net income calculated in accordance with US GAAP. As
the calculation of net income before equity-based compensation expense is not
performed in accordance with US GAAP, 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 US
GAAP, which should be the primary measurement utilized to analyze the Company's
financial results. The Company does not utilize net income before equity-based
compensation expense for any other purpose.
Tables to Follow
RCM Technologies, Inc.
Consolidated Statements of Income
(Unaudited)
(In Thousands, Except Per Share Amounts)
Thirteen Weeks Ended
-------------------------------------------------------
March 31, 2007 April 1, 2006
--------------------------- -----------------------
Revenues $54,493 $47,054
Gross profit (1) 12,376 12,031
Selling, general and administrative (2) 10,094 10,086
Depreciation and amortization 354 353
Interest expense, net 7 65
Loss on foreign currency transactions 2 13
Income from legal settlement (800)
Income before income taxes 2,719 1,514
Income taxes 1,148 703
Net income 1,571 $811
Earnings per share (diluted)
Net income $.13 $.07
RCM Technologies, Inc.
Summary Consolidated Balance Sheet Data
(Unaudited)
(In Thousands)
March 31, December 30,
2007 2006
----------------------- ---------------------
Cash and equivalents $2,913 $2,449
Accounts receivable 49,216 48,141
Working capital 41,092 38,844
Goodwill and intangible assets 39,918 39,998
Total assets 100,918 100,040
Senior debt - -
Total liabilities 15,404 16,647
Stockholders' equity $85,514 $83,393
<FN>
(1) Reflects stock based compensation expense of $13,000 and $12,000 included in
cost of services for the thirteen weeks ended March 31 2007 and April 1,
2006, respectively.
(2) Includes stock based compensation expense of $173,000 and $293,000 for the
thirteen weeks ended March 31, 2007 and April 1, 2006, respectively.
</FN>
RCM Technologies, Inc.
Reconciliation of EBITDA to Net Income
(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.
Thirteen Weeks Ended
----------------------------------------------------
March 31, 2007 April 1, 2006
---------------------- -------------------------
(In Thousands)
----------------------------------------------------
EBITDA (1)(2) $3,080 $1,932
Depreciation and amortization 354 353
Interest expense, net of interest income 7 65
Income taxes 1,148 703
---------------------- -------------------------
Net income $1,571 $811
====================== =========================
Earnings per share (diluted)
EBITDA $.25 $.16
====================== =========================
Net income $.13 $.07
====================== =========================
Weighted average shares outstanding 12,352 12,007
====================== =========================
<FN>
(1) Includes stock based compensation expense of $186,000 and $305,000 for
the thirteen weeks ended March 31, 2007 and April 1, 2006, respectively.
(2) Includes $800,000 from a legal settlement for the thirteen weeks ended
March 31, 2007.
</FN>
RCM Technologies, Inc.
Calculation of Net Income and Net Earnings per Diluted Share before
Equity-Based Compensation Expense (1)
(Unaudited)
Thirteen Weeks Ended
----------------------------------------------------
March 31, 2007 April 1, 2006
--------------------- --------------------------
(In Thousands)
----------------------------------------------------
Net income $1,571 $811
Equity-based compensation, net of income tax 186 305
Net income before equity-based
compensation expense $1,757 $1,116
Net earnings per diluted share before
equity-based compensation expense $.14 $.09
<FN>
(1) See footnote 1 on page 2
</FN>
RCM Technologies, Inc.
Reconciliation of Net Income and Cash Provided
by Operating Activities
(Unaudited)
Thirteen Weeks Ended
----------------------------------------------------
March 31, 2007 April 1, 2006
--------------------- --------------------
(In Thousands)
----------------------------------------------------
Net income $1,571 $811
Adjustments to reconcile net income to cash
provided by (used in) operating activities:
Depreciation and amortization 354 353
Provision for allowance on accounts receivable 13 (6)
Stock based compensation expense 186 305
Deferred tax assets 835
Changes in operating assets and liabilities
Accounts receivable (1,117) (4,342)
Restricted cash (86)
Prepaid expenses and other current assets (303) 613
Accounts payable and accrued expenses 332 2,125
Accrued compensation (1,886) (467)
Payroll and withheld taxes 146 27
Income taxes payable 120 (1,142)
--------------------- --------------------------
Cash provided by (used in) operating activities $251 ($1,809)
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