P R E S S R E L E A S E
RCM TECHNOLOGIES, INC. REPORTS
2007 THIRD QUARTER AND YEAR-TO-DATE RESULTS
Third Quarter Operating Income Up 20% and Nine Months Operating Income Up 39%
Versus the Comparable Periods a Year Ago
Pennsauken, NJ - November 7, 2007 -- RCM Technologies, Inc. (NASD: RCMT) today
announced financial results for the thirty-nine weeks and thirteen weeks ended
September 29, 2007.
The Company announced revenues of $165.4 million for the thirty-nine weeks ended
September 29, 2007, up from $147.7 million for the thirty-nine weeks ended
September 30, 2006 (comparable prior year period). Net income for the
thirty-nine weeks ended September 29, 2007 was $5.1 million, or $0.41 per
diluted share, as compared to net income of $4.0 million, or $0.33 per diluted
share, for the comparable prior year period. The 2006 period included a $1.0
million income tax credit, or $.08 per share diluted.
Operating income for the thirty-nine weeks ended September 29, 2007 was $7.7
million, or $0.61 per diluted share, up from $5.5 million, or $0.46 per diluted
share, for the comparable period.
Net income before stock-based compensation (1) for the thirty-nine weeks ended
September 29, 2007 was $5.3 million, or $0.42 per diluted share, and excludes
net equity-based compensation expense of $151,000. Net income before stock-based
compensation (1) for the thirty-nine weeks ended September 30, 2006 was $4.7
million, or $0.39 per diluted share, and excludes net stock-based compensation
expense of $693,000.
Net income for the thirty-nine weeks ended September 29, 2007 includes income of
$480,000 ($800,000, net of income taxes of $320,000), or $.04 per diluted share,
from a legal settlement. No such income was realized during the comparable prior
year period.
For the thirty-nine weeks ended September 29, 2007, earnings before interest,
income taxes, depreciation and amortization, or EBITDA, was $9.6 million, or
$0.77 per diluted share, as compared to $6.6 million, or $0.55 per diluted
share, for the comparable prior year period. EBITDA for the 2007 period includes
income of $800,000 from a legal settlement, as discussed above.
The Company announced revenues of $54.0 million for the thirteen weeks ended
September 29, 2007, up from $51.6 million for the thirteen weeks ended September
30, 2006 (comparable prior year period). Net income for the thirteen weeks ended
September 29, 2007 was $1.7 million, or $0.14 per diluted share, as compared to
net income of $1.3 million, or $0.11 per diluted share, for the comparable prior
year period.
Operating income for the thirteen weeks ended September 29, 2007 was $2.8
million, or $0.22 per diluted share, up from $2.3 million, or $0.19 per diluted
share for the comparable period.
<Page>
Net income before stock-based compensation (1) for the thirteen weeks ended
September 29, 2007 was $1.8 million, or $0.14 per diluted share, and excludes a
net stock-based compensation credit of $57,000. Net income before equity-based
compensation(1) for the thirteen weeks ended September 30, 2006 was $1.4
million, or $0.12 per diluted share, and excludes net stock-based compensation
expense of $99,400.
For the thirteen weeks ended September 29, 2007, EBITDA was $3.2 million, or
$0.25 per diluted share, as compared to $2.7 million, or $0.22 per diluted
share, for the comparable prior year period.
Leon Kopyt, Chairman and CEO of RCM, commented: "We are pleased to report that
revenues and operating income in the third quarter and the nine months increased
on a comparable year basis. The third quarter and nine months performance were
highlighted by a 20% and 39% increase in operating income over the same periods
a year ago. We believe that the overall trend points towards moderate growth
despite seasonal factors."
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
<page>
RCM Technologies, Inc.
Consolidated Statements of Income(Unaudited)
(In Thousands, Except Per Share Amounts)
Thirty-Nine Weeks Ended
---------------------------------------
September 29, September 30,
2007 2006
------------------ -----------------
Revenues $165,418 $147,729
Gross profit (1) 39,768 37,163
Selling, general and administrative (2) 31,010 30,522
Depreciation and amortization 1,089 1,114
Operating income 7,669 5,527
Interest income (expense), net 32 (204)
Gain (loss) on foreign currency transactions 53 (16)
Income from legal settlement 800
Income before income taxes 8,554 5,307
Income taxes 3,406 1,287
Net income $5,148 $4,020
Earnings per share (diluted)
Net income $.41 $.33
Thirteen Weeks Ended
---------------------------------------
September 29, September 30,
2007 2006
------------------ -----------------
Revenues $54,079 $51,650
Gross profit (3) 13,433 12,952
Selling, general and administrative (4) 10,288 10,250
Depreciation and amortization 369 394
Operating income 2,776 2,308
Interest income (expense), net 32 (75)
Gain (loss) on foreign currency transactions 41 (5)
Income before income taxes 2,849 2,228
Income taxes 1,125 879
Net income $1,724 $1,349
Earnings per share (diluted)
Net income $.14 $.11
RCM Technologies, Inc.
Summary Consolidated Balance Sheet Data (Unaudited)
(In Thousands)
September 29, December 30,
2007 2006
---------------- ----------------
Cash and equivalents $7,916 $2,449
Accounts receivable, net 53,097 48,141
Working capital 45,605 38,844
Goodwill and intangible assets 40,017 39,998
Total assets 108,682 100,040
Senior debt - -
Total liabilities 18,862 16,647
Stockholders' equity $89,820 $83,393
<FN>
(1) Reflects stock based compensation expense of $5,000 and $30,000 included
in cost of services for the
thirty-nine weeks ended September 29, 2007 and September 30, 2006,
respectively.
(2) Includes stock based compensation expense of $146,000 and $663,000 for the
thirty-nine weeks ended September 29, 2007 and September 30, 2006,
respectively.
(3) Reflects stock based compensation expense of $1,000 and a stock based
compensation credit of $1,000 included in cost of services for the thirteen
weeks ended September 29, 2007 and September 30, 2006, respectively.
(4) Includes stock based compensation expense of $56,000 and $100,000 for the
thirteen weeks ended September 29, 2007 and September 30, 2006,
respectively.
</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 provided by operating
activities.
Thirty-Nine Weeks Ended
-----------------------------------------
September 29, 2007 September 30,
2006
-------------------- -----------------
(In Thousands)
-----------------------------------------
EBITDA (1) $9,611 $6,625
Depreciation and amortization (1,089) (1,114)
Interest income (expense), net 32 (204)
Income taxes (3,406) (1,287)
-------------------- -----------------
Net income $5,148 $4,020
==================== =================
Earnings per share (diluted)
EBITDA $.77 $.55
==================== =================
Net income $.41 $.33
==================== =================
Weighted average shares outstanding 12,492,599 12,020,901
==================== =================
Thirteen Weeks Ended
-----------------------------------------
September 29, 2007 September 30,
2006
-------------------- -----------------
(In Thousands)
-----------------------------------------
EBITDA (2) $3,186 $2,697
Depreciation and amortization (369) (394)
Interest income (expense), net 32 (75)
Income taxes (1,125) (879)
-------------------- -----------------
Net income $1,724 $1,349
==================== =================
Earnings per share (diluted)
EBITDA $.25 $.22
==================== =================
Net income $.14 $.11
==================== =================
Weighted average shares outstanding 12,616,405 12,003,750
==================== =================
<FN>
(1) Includes stock based compensation expense of $151,000 and $693,000 for the
thirty-nine weeks ended September 29, 2007 and September 30, 2006,
respectively.
(2) Includes stock based compensation expense of $57,000 and $99,000 for the
thirteen weeks ended September 29, 2007 and September 30, 2006,
respectively.
</FN>
RCM Technologies, Inc.
Reconciliation of EBITDA to Net Income and Cash Provided by
Operating Activities (Continued)
(Unaudited)
Thirty-Nine Weeks Ended
-----------------------------------------
September 29, 2007 September 30,
2006
-------------------- -----------------
(In Thousands)
-----------------------------------------
Net income $5,148 $4,020
Adjustments to reconcile net income to cash
provided by (used in) operating activities:
Depreciation and amortization 1,094 1,115
Stock based compensation expense 151 693
Provision for losses on accounts receivable 155 (109)
Deferred tax assets 2,153 (145)
Changes in operating assets and liabilities
Accounts receivable (4,195) (3,797)
Restricted cash 8,572
Prepaid expenses and other current assets (690) 66
Accounts payable and accrued expenses 643 (5,271)
Accrued compensation (111) 1,337
Payroll and withheld taxes 131 250
Income taxes payable 547 (2,149)
-------------------- -----------------
Cash provided by operating activities $5,026 $4,582
==================== =================
Thirteen Weeks Ended
-----------------------------------------
September 29, 2007 September 30,
2006
-------------------- -----------------
(In Thousands)
-----------------------------------------
Net income $1,724 $1,349
Adjustments to reconcile net income to cash
provided by (used in) operating activities:
Depreciation and amortization 371 394
Stock based compensation expense 57 100
Provision for losses on accounts receivable (28) (92)
Deferred tax assets 550 41
Changes in operating assets and liabilities
Accounts receivable 627 (660)
Prepaid expenses and other current assets 686 137
Accounts payable and accrued expenses (2,654) 827
Accrued compensation (871) (56)
Payroll and withheld taxes 178 158
Income taxes payable 453 (700)
-------------------- -----------------
Cash provided by operating activities $1,093 $1,498
==================== =================
####