RCM TECHNOLOGIES, INC. Tel:856-486-1777
2500 McClellan Avenue Fax:856-488-8833
Pennsauken, NJ 08109-4613 info@rcmt.com
WWW.rcmt.com
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 29, 2007
Pennsauken, NJ - March 19, 2008 -- RCM Technologies, Inc. (NASD: RCMT) today
announced financial results for the fifty-two weeks and thirteen weeks ended
December 29, 2007.
The Company announced revenues of $214.2 million for the fifty-two weeks ended
December 29, 2007, up from $201.9 million for the fifty-two weeks ended December
30, 2006 (comparable prior year period). Net income for the fifty-two weeks
ended December 29, 2007 was $6.8 million, or $0.54 per diluted share, as
compared to net income of $6.4 million, or $0.53 per diluted share, for the
comparable prior year period. The net income for the 2006 period included a $1.3
million income tax credit, or $0.11 per diluted share. There was no income tax
credit in the 2007 period.
Operating income for the fifty-two weeks ended December 29, 2007 was $10.1
million, or $0.81 per diluted share, up from $7.8 million, or $0.64 per diluted
share, for the comparable period.
Net income before stock-based compensation (1) for the fifty-two weeks ended
December 29, 2007 was $7.2 million, or $0.57 per diluted share, and excludes net
equity-based compensation expense of $411,000. Net income before equity-based
compensation (1) for the fifty-two weeks ended December 30, 2006 was $7.3
million, or $0.61 per diluted share, and excludes net equity-based compensation
expense of $956,000.
Net income for the fifty-two weeks ended December 29, 2007 includes income of
$480,000 ($800,000, net of income taxes of $320,000), or $0.04 per diluted
share, from a legal settlement. No such income was realized during the
comparable prior year period.
For the fifty-two weeks ended December 29, 2007, earnings before interest,
income taxes, depreciation and amortization, or EBITDA, was $12.4 million, or
$0.99 per diluted share, as compared to $9.2 million, or $0.77 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 $48.8 million for the thirteen weeks ended
December 29, 2007, down from $54.2 million for the thirteen weeks ended December
30, 2006 (comparable prior year period). Net income for the thirteen weeks ended
December 29, 2007 was $1.6 million, or $0.13 per diluted share, as compared to
net income of $2.3 million, or $0.19 per diluted share, for the comparable prior
year period. The net income for the thirteen weeks ended December 30, 2006
included a $1.0 million income tax credit, or $0.08 per diluted share. There was
no income tax credit in the 2007 period.
Operating income for the thirteen weeks ended December 29, 2007 was $2.4
million, or $0.20 per diluted share, up from $2.2 million, or $0.18 per diluted
share for the comparable period.
Net income before stock-based compensation (1) for the thirteen weeks ended
December 29, 2007 was $1.9 million, or $0.15 per diluted share, and excludes
net equity-based compensation expense of $259,000. Net income before
equity-based compensation(1) for the thirteen weeks ended December 30, 2006
was $2.6 million, or $0.21 per diluted share, and excludes net equity-based
compensation expense of $263,000.
For the thirteen weeks ended December 29, 2007, EBITDA was $2.8 million, or
$0.23 per diluted share, as compared to $2.6 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 for the 2007 fiscal year increased on a comparable
year basis by 6% and 30% respectively. Operating income in the second half of
the year was higher by approximately 7% over the first half despite moderately
lower revenues in the second half. Although we anticipate a challenging business
environment in the first half of 2008, we believe that we can achieve
respectable performance levels long term based on a sound business strategy,
solid fundamentals and continued financial discipline."
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, the ability of the
Company to consummate acquisitions as to which it executes non-binding letters
of intent, 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)
Fifty-Two Weeks Ended
---------------------------------------
December 29, 2007 December 30,
2006
------------------ -----------------
Revenues $214,209 $201,920
Gross profit (1) 52,976 50,508
Selling, general and administrative (2) 41,418 41,244
Depreciation and amortization 1,442 1,507
Operating income 10,116 7,757
Interest income (expense), net 59 (256)
Gain (loss) on foreign currency transactions 78 (31)
Income from legal settlement 800
Income before income taxes 11,053 7,470
Income taxes 4,284 1,114
Net income $6,769 $6,356
Earnings per share (diluted)
Net income $.54 $.53
Thirteen Weeks Ended
---------------------------------------
December 29, 2007 December 30,
2006
------------------ -----------------
Revenues $48,791 $54,192
Gross profit (3) 13,208 13,346
Selling, general and administrative (4) 10,408 10,722
Depreciation and amortization 353 393
Operating income 2,447 2,231
Interest income (expense), net 27 (52)
Gain (loss) on foreign currency transactions 25 (15)
Income before income taxes 2,499 2,164
Income taxes (credit) 878 (173)
Net income $1,621 $2,337
Earnings per share (diluted)
Net income $.13 $.19
RCM Technologies, Inc.
Summary Consolidated Balance Sheet Data (Unaudited)
(In Thousands)
December 29, December 30,
2007 2006
---------------- ----------------
Cash and equivalents $11,642 $2,449
Accounts receivable, net 45,468 48,141
Working capital 43,541 38,844
Goodwill and intangible assets 39,937 39,998
Total assets 109,714 100,040
Total liabilities 17,666 16,647
Stockholders' equity $92,048 $83,393
(1) Reflects stock based compensation expense of $22 and $46 included in cost of
services for the fifty-two weeks ended December 29, 2007 and December 30,
2006, respectively.
(2) Includes stock based compensation expense of $389 and $910 for the fifty-two
weeks ended December 29, 2007 and December 30, 2006, respectively.
(3) Reflects stock based compensation expense of $16 and $16 included in cost of
services for the thirteen weeks ended December 29, 2007 and December 30,
2006, respectively.
(4) Includes stock based compensation expense of $243 and $247 for the thirteen
weeks ended December 29, 2007 and December 30, 2006, respectively.
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 29, 2007 December 30,
2006
-------------------- -----------------
(In Thousands)
-----------------------------------------
EBITDA (1) $12,436 $9,233
Depreciation and amortization 1,442 1,507
Interest income (expense), net 59 (256)
Income taxes 4,284 1,114
-------------------- -----------------
Net income $6,769 $6,356
==================== =================
Earnings per share (diluted)
EBITDA $.99 $.77
==================== =================
Net income $.54 $.53
==================== =================
Weighted average shares outstanding 12,485 12,035
==================== =================
Thirteen Weeks Ended
-----------------------------------------
December 29, 2007 December 30,
2006
-------------------- -----------------
(In Thousands)
-----------------------------------------
EBITDA ((2)) $2,825 $2,609
Depreciation and amortization 353 393
Interest income (expense), net 27 52
Income taxes 878 (173)
-------------------- -----------------
Net income $1,621 $2,337
==================== =================
Earnings per share (diluted)
EBITDA $.23 $.22
==================== =================
Net income $.13 $.19
==================== =================
Weighted average shares outstanding 12,545 12,100
==================== =================
(1) Includes stock based compensation expense of $411 and $956 for the fifty-two
weeks ended December 29, 2007 and December 30, 2006, respectively.
((2)) Includes stock based compensation expense of $259 and $263 for the
thirteen weeks ended December 29, 2007 and December 30, 2006, respectively.
RCM Technologies, Inc.
Reconciliation of EBITDA to Net Income and Cash Provided
by Operating Activities (Continued)
(Unaudited)
Fifty-Two Weeks Ended
-----------------------------------------
December 29, 2007 December 30,
2006
-------------------- -----------------
(In Thousands)
-----------------------------------------
Net income $6,769 $6,356
Adjustments to reconcile net income to cash
provided by (used in) operating activities:
Depreciation and amortization 1,449 1,508
Stock based compensation expense 411 956
Provision for losses on accounts receivable (89) (120)
Deferred tax assets 2,474 827
Changes in operating assets and liabilities
Accounts receivable (3,030) (3,144)
Restricted cash 8,572
Prepaid expenses and other current assets 244 1,132
Accounts payable and accrued expenses 118 (7,666)
Accrued compensation (780) 1,086
Payroll and withheld taxes (87) 277
Income taxes payable 1,126 (4,180)
-------------------- -----------------
Cash provided by operating activities $8,605 $5,604
==================== =================
Thirteen Weeks Ended
-----------------------------------------
December 29, 2007 December 30,
2006
-------------------- -----------------
(In Thousands)
-----------------------------------------
Net income $1,621 $2,337
Adjustments to reconcile net income to cash
provided by (used in) operating activities:
Depreciation and amortization 355 393
Stock based compensation expense 260 263
Provision for losses on accounts receivable (244) (11)
Deferred tax assets 321 972
Changes in operating assets and liabilities
Accounts receivable 1,165 653
Prepaid expenses and other current assets 934 1,066
Accounts payable and accrued expenses (525) (2,395)
Accrued compensation (669) (250)
Payroll and withheld taxes (218) 27
Income taxes payable 579 (2,033)
-------------------- -----------------
Cash provided by operating activities $3,579 $1,022
==================== =================
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