RCMT - Earnings call transcript Q2 2019

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Operator

Good morning, and welcome to the RCM Technologies Second Quarter Earnings Conference Call.

Your host today is Bradley Vizi. Mr. Vizi, you may now begin.

Bradley Vizi

Good morning, everyone. Executive RCM Vizi, Brad is Chairman Technologies. of This XXXX Earnings Call. to the Quarter Technologies RCM Welcome Second I today am Financial Chief joined by Kevin our Miller, Officer. will before opening with and up for for begin legal it of summarize I each units will results the business Kevin our questions. operating a then disclaimer, Kevin?

Kevin Miller

morning, Good everyone.

may Our and statements. information are change beliefs, information estimates estimates materially assumptions call and contained these based in Many forward-looking this beliefs, changes. presentation is our contain the available subject on us, to currently matters in will future. these the The forward-looking statements rapid in to and of assumptions and

XX-K, For on we filed and the information are time. risks, which issue X-K SEC and the with they our to as time as we uncertainties Forms and subject, that please more periodic press XX-Q forward-looking factors from the releases to our that other see well statements on reports

Bradley Vizi

I'll I units The to attribute segment, States. CapEx the segment, each cycle. American by the resilient, needs begin microcap economic peers. our throughout highlighting drivers students the to our Thanks, unique call the this and is most but operating our relatively servicing the Specific important against business major three medical is systems benchmarked majority driven utilities. believe in school of United an the of by Kevin. behavioral that are of RCM performance of of engineering of due is about budgets In when business the the majority major care North of health is delivered

highlight is publicly-traded may business, resilience time economic of of global the company by a of profitability business, price not reflect to increasing is on of pharmaceutical our the underlying any our driven security as Finally, to uncertainty. the it its view industry. not it Though that relates this, during servicing the our reality implicit IT substantially

results. and second highlight I operating Now our XXXX am performance the fiscal of quarter pleased to

are earnings we fiscal effectively separately. believe finish higher More poised will have importantly, for in the discuss division XXXX power I in we and demonstrate strong positioned XXXX. to a company each

the specialty second XXXX. quarter grew that Our first $XX.X quarter record of second On schools important days of staffing cumulative growing million the It the a days revenue quarter to quarter set quarter second three a have by health school basis, quarter XXXX for is with the X% XXX second cumulative school and note of of versus day during care big we versus over XXX our of contracts XXXX. the school X% revenue, of versus XXXX. for big per first for XX% XXXX school three by group

be to this the of sole quarter, state, The a anticipated services, Hawaii a close the a responsible million. certified contract the paraprofessional, implementation of contract the RBT autistic to the were behavior new analysts. kids. for analytics with is source Department technicians to mandate is Hawaii contract. RBTs practices RBT adding RBTs a passed who ongoing During DOE three-year awarded to its by or of second with under Under registered Education. An place we new direct Board-certified contract. note behavior a of It not important value contract $XX this is the primarily RBT Hawaii that annual supervision The is behavioral for is is

and month. next accretion we in and the XXXX anticipate begin based client, ramp to to However, performance the performance market to on share operating our with material contract historical provide

declined engineering of Our million fiscal second as $XX.X revenue XX% to compared quarter XXXX. by

this preliminary We recently in won segment, softness in for XXXX be though we this new contract year anticipate performance higher of that expect contract. operating and engineering, We after finish the anticipate we to year-over-year EPC calcium to engineering will we implement $XX a and deliver preliminary chloride discussed, completion to plant. the for the build strong million previously As substantially a XXXX. manufacturing manage selected

market. the using CBD an in ethanol. engagement our -- a first various engagement half This the similar We is manufacturing engineer inquiries certain market. oil won customers. potential we in company received products Canadian new with Additionally, we oil We've would fast-growing to CBD about provide already will projects equipment from dozen cannabis extract and a

line in Lastly, indicators million clients. have utility and softness, in additional with pulled are back not the current contention for $XX encouraging. activity contracts major we remain Despite final reiterate, leading U.S. two in of investments and stages uptick I rate the EPC to the top we to year-end. to third business deliver long-term we anticipate engineering an as quarter, fortify segment the but position it expect run approach on our softness our sustainable see We continued engineering results. in

recruiting strong demonstrated second made million a technology since and our the continued The information is of IT leadership group XXXX. XX% in with the growth $X.X transformation half sales, prior and revenue over we a quarter personnel of a year. trajectory first increase of of of significant result Our management change group XXXX, the of in upward performance the the

this including Before we been of recent people, have change, XX Today, whom XX have of hires. a staff had we staff XX terminated. a of XX,

seven of replaced our senior management have nine staff. of members We

Our the Though consolidated leadership be third typical business. enterprise. this driving concludes exceed they for At call of we open with that performance, long-term should This confident will seasonality, odds prepared up sustainable with investors we success team align our the period. that the second to is Though may times improvement at will XXXX performance on at these a are quarter fiscal we time, comparable remarks. basis, on focused questions. the expect short-term XXXX changes anticipate the half

Operator

ahead. question first be Bill will go coming from Please Sutherland. Our Instructions] [Operator

Bill Sutherland

quick. at here looking healthcare Just real

here, I signs business forward, know seeing you've As are going mix at trend permanent that you a better to is you showing look pickup? life? that any your been any placements of area an see of wanted

Kevin Miller

place, meaningful but not encouraged we in any there. seen have to and have that business, excited We not that We meaningful change teams seen the Bill. we have about any remain uptick

BillSutherland

Okay.

Hawaii in terms is the of your experience to business, portion in aren't those contract? past the realized you the for what contract? add-on source, where this the in contracts total sole have outlook you And the So school

Kevin Miller

contract Well, we an significant sole that is One which two other have source Department for nursing, with sole -- works not have of to with us. employee. work of only is provider. Hawaii, the the sourced Hawaii where every Education. every nurse is one Recall, contracts Department that the RCM Hawaii we're we nurse other Education And significant

think that share would dozen say of I the As have lion's about far maybe kind And business. four paraprofessionals, as vendors I contract. of the the half there's a on about

we're players some largest the future. be not largest hope and We the are at one there, player the largest to in but the point of player

As has large far we value don't as maximum going know is be. million the It yet RBT $XX of how per contract purchasing per permitted to a year the contract is concerned, contract. that

three, that the kind We grab material regular from going of the the But believe with really firms will it versus but is on we the them. think big continue rest know share that We paraprofessionals what more impact specialist-type same it. the the terms is be we one the contract, that net mom-and-pop will believe there there's be vendors this really dozen but to a we five major be should fact to RBTs. of players don't in work add of are believe a list, a maybe won't four, companies about that us being of probably

the regular As to paraprofessionals, with going that meaningful you is color pretty how we school RBTs it's a a more believe be will rates higher effective of get into we But gross as we little year, we be. and well. terms to believe more the contract, on going The higher bill significantly little the than it's margin significant. be can are August which in bit the bit give and statistics

BillSutherland

Okay.

to other, from business. there's the retroactive What of school the I big terms The the York there? outlook New rates, right? is coming in a payment three think relative

Kevin Miller

in we Yes. to we had probably of received of some and school at as finish was in out that QX. a that increase year. -- 'XX another We're quarter of continue all 'XX, of chunk half the it have going in Chicago still fourth It's the the recently, on of XXXX -- should a but not and received some bill We it, we that, early impact had in QX. have to just we effective rate least that first positive it haven't May,

with So on we're going are about schools. our everything three big very that's harmonious. Things excited

QX QX, three day As from Brad school a And mentioned, see versus those performance continued we're XX% to per up on schools. expect we strong basis.

BillSutherland

you know two don't backlog that for us a I guys number three Great. called out -- and engineering. are emerging. Brad opportunities a sense provide or And Give

this got point. the aggregate, how to maybe about guess, up in I lined what at So just you've think

Kevin Miller

which binary of right? have Right. three hard to Well, But EPC have for of chance significant we pretty will it pretty huge. opportunities, opportunities, could three we good a or mentioned, winning. give really very think as zero could guidance be on be it's us all It Brad

So have type in for is projects. also guidance point. in terms at But sort opportunities, out we pipeline of typical giving more next of of stripping of a a revenue this nice of these big difficult terms year little any bit

Operator

from Daniel will question Drawbaugh. next coming Our be

Daniel Drawbaugh

the And Engineering the XX% forward be that? about you Anything gross in going Can start. what margin, year-over-year. to we margin quite call that's comment in segment? should to sequentially just out? quarter, and gross specific up on engineering Just thinking significantly from

Kevin Miller

type so a lower-margin the margins that is little ongoing engagements, I mix. as our less expect a recent reason of think price improvement basis. rework task our frankly, typical a margins, on is better some of of achieve sort speak, tightening, from to bit we an of to managed bit T&M little the work on the less belt for utilization, that fixed of more to And just

one not I really is improvement. would there that the to So for factor point

ongoing where, is gross of reasons, more are successful you margin XX% XXXX. what to But is expect percentage. that if in margins you of target concerned, those as we're of expect, as we a that think more kind I success -- see as to far are it will be, quarters margins should in believe for it see expect drops. And XXXX should the we As whatever I

Daniel Drawbaugh

we up should they when revenue Okay. That's you in Could color? chloride to looking cannabis executing frame sort just And guys of you the be then good were some for project. hear. those? give the you Can talking showing business, a shed about that projects of Great. when and time engineering us sort the When -- the specifically the calcium magnitude? begin you -- the on

Kevin Miller

Yes. of Sure, sure. I are executed engagements those neither in size. been significant mean one that have

is year. by cannabis -- $XXX,XXX a most engagement, expect of which it end of by the we engagement the to So the finish

but and market it opportunity really about this us and just offering, of the to probably researching as What's exciting in a the of CBD this and an crafting cannabis some to well. demand oil. There's that QX and market, is it we're built plants or all the over being already as right? -- will US huge getting Although, sort spill into answer you know, is Canada built into huge

it think it's So we be we're space. sure exactly for a excited excited that And pretty about We're but we're in yet means to that. not opportunity. us, what big

As $XXX,XXX far about is the is as -- the contract going engineering preliminary to project, EPC in be revenue. the first

early think itself, that talking get about XXXX, another the are believe a do a return. far we excited engineering, the engagement plant looking a XXXX. it could it's assuming nice Once that, And add plant which early this engineering in already at started thousand should in which that's the we dollars. second hundred particular in But few we about. We're venture on as go, we're if probably what go tighter believe pretty goes, will investors as the we

step when in to yes, is trying a as So anxious get yes, go, we're those once utility. determined investors get to return nice they've cram on Typically, investment. at pretty a scenario dollars our opposed going typically, budget have the you and to are going that a this to

I optimistic your that So sometime that start question? Did XXXX. early we're answer we'll in cautiously in --

Daniel Drawbaugh

I second you I it the nice IT little there you of business? really and of market from quarter. Can are growth potential But levels bit first a I taking you're about you mean like competitors? you've seeing That's that year-to-date a What challenging. color. the had some know XX-plus business? terribly compares also seems more in are I share percent mean, sort helpful in demand kind Great. and seeing really were bit talk mean growth not in both the the

Kevin Miller

tiny tiny, know, speck right? as Well, tiny little the tiny, that IT terms market you Dan, in we're little, services of is a huge. So firms,

But to our others, to terms life demand, make in more probably our share certainly to we're of see win in the spending there's IT, opportunities business. a a The of on scenarios So business sciences where meaningful plenty frankly. seeing impact of we in particularly market the space. broader lot than

space probably, Management that's but plenty it the like as one of Our performing there's as Human perform, there to opportunity Capital is maybe not well. we

Operator

Bulva] [Operator Instructions] coming from Our next question [Steven will be

Unidentified Analyst

the Congratulations particularly, improvement on in, outlook. the

Just a couple questions. of quick

-- will three your three-year did per spend? million Or $XX RBT years? it's $XX it that they year understand the On over that add, I Hawaii million is

Kevin Miller

an of It's does not $XX will annual This cap million. million. we mean $XX that spend

Unidentified Analyst

Okay. No, understand that, was it cap. I clarification, wanted three-year just but or a I a whether annual

good. that's So

Kevin Miller

it's And train continuing We've train gotten as RBTs. to RBTs limited It's we of we But that them kind ourselves. get it's more what's really, certified pass. of we they only time, to with train need at really exciting test this that and to our the and find day to believe the of school believe over to expect and annual. since -- trained new. something can And It's number that slow by we're certification or we that it's do start we paraprofessionals more XX us, them ourselves. only is try least every year pass

So view for just because we're really, competing, our in us RBTs. finding training it's and RBTs exciting it's against

Unidentified Analyst

capable Okay. Is in volume? recruit people to it difficult that

Kevin Miller

And converted we paras better-rated continuing have we had We've we XXX school RBTs but had or look new XX think about have that contract. we It's approximately we've certainly over and it's paraprofessionals. that we already than switch we employees about to can we get year's recruited year, doable. on a new more that, can XXX. to And since we convert, another trained and easy, we've worked wanted last that XX, recruited we're not XX trained When and/or for up. the ended -- paraprofessional, can and that we've

say what it's but do. this easy, I So is wouldn't we

and can. in We good just have try really a we going good as a engine RBTs really in to continue training many to we're place and recruiting find engine and as place,

Unidentified Analyst

expect you this any in Would this actually quarter? from third Okay. quarter, start revenue contract to

Kevin Miller

first the have it's relative little more to We'll we more but a in But quarter, in and We'll the see huge it's not operation, third see quarter. do think to build. meaningful have impact we we going see health second next a quarter. the quarter gradual -- see it a of the like expect will it overall more in bit will We'll fourth care a kind of QX the believe, in year going a -- to have on impact, in QX. to

Unidentified Analyst

Okay. Great. over HIM XX% year do in it that practice during call, On indicated grew your How first the quarter? did the you quarter quarter. prior second

Kevin Miller

end we need that QX we we of didn't in perform to win the And QX. our relates second quarter, the get coders. And to nice engagements had a large it in fairly then towards tend It in well Steve. -- where to from clients, they did QX that's ended replace assignment or not big XX XX and

big for is we're start in We to up that that have assignment gearing going QX. another

see year So should pretty that out of we some into HIM in and QX. this nice project results spill over should QX

projects, or business, So group offshore of final be our will to long amount of but on of in term. things be little capability, months of engineering developing the bit it in three to going sort tends we tend that which think going two a to to the so big -- have there. a we months of like tends which We're process -- go because to HIM typically win business, -- help there's lumpy tends steady be to a stages an bit little and we some -- the then from anywhere the or four five interesting are

not able overall believe So we'll an be That's to HIM over sell be of immediate business. to time, meaningful offshore. we the impact. onshore and But going a that'll have piece

Unidentified Analyst

quarter expected? that then call, in the also lot it was do a receivables. finally, to magnitude indicated And accounts going see you progress And on you're our at of some first Okay. improvement, the make you venture I

Kevin Miller

disappointed, weeks big City get $X the that New No. was We check from Board million. in Education with about I the quarter after York we QX. did very three over ended, a made frankly, of progress

see standpoint consequently will -- it do paying and see our break is operating paying say So driving that this and should we from But to down cash positive again of, our down flow to. we X expect probably expect our number priority an QX, getting obviously, revenues. or outside continued DSOs QX, cash debt things down assuming we way in in the them I

Unidentified Analyst

Yes.

Okay.

you target on of think end the quarter hit So debt? the you'll net other at this

Kevin Miller

hesitant debt so I'm a quarter. give happen many other our given don't. very as on we're because -- focused to and in paying just quickly as target, and very, can down much a I Steve, But things as possible.

is driver that Obviously, as big of know. the you receivables,

Unidentified Analyst

that on Yes. Is care? most your of health centered

Kevin Miller

and care end an think of we pretty by that's the amount a year, of to going is provide conclude think we've on Health the to cash. we going that arbitration got meaningful and going

of that we're going a we year, unfortunately, to to that this we're we concludes year, to the believe don't arbitration. And at that's which influx have pretty going win of this we we completely conclude assuming cash So control, year. big believe that going believe and the but end

Operator

[Operator Instructions] Okay. in we queue for questions. any do callers not have Gentlemen, more

Bradley Vizi

attending We in November. Quarter to for forward RCM's look update Call. next Conference you Thank Second our

Operator

and Thank you, gentlemen, ladies for joining.

day. and this at all Thank may great You have a time, disconnect you.

RCM (RCMT) 12 Aug 192019 Q2 Earnings call transcript