RCMT - Earnings call transcript Q2 2022

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Kevin Miller

Good morning, and thank you for joining us. This is Kevin Miller, Chief Financial Officer at RCM Technologies. I am joined today by Brad Vizi, RCM's Executive Chairman.

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

an For more are and XX-Q SEC other the information risks, reports and factors the on periodic file to our operating X-K forward-looking as well I that Vizi, that which now during the with Forms they on turn releases Chairman, will to Executive from Brad RCM's subject, issue as we see statements we press overview please to XX-K, and quarter. the provide call performance our time. time the of over uncertainties to

Bradley Vizi

Thanks, that the capital believe pleased lead return-starved company investment am success leading can with I talent technology combining attract long-term Kevin. a I where environment. returns. markets RCM top virtuous be against to throughout as continue we allocation strong strategy. to talent Furthermore, the execute to excellent talent and performance everyone. and emerged Good growth platform as in morning, secular a our believed announce and a always to of has I would long-term a superior leveraged opportunities cycle have and

engage alacrity passive the are if described specialized mass, join can workforce with and ones with will at benefits the company candidate the participants skill firm like of the or tangible both compounding comprising these particular critical increase regard, and reaches economic rate. not the a that high Often, today, those a Canada sets, calls in especially intangible holds above, a the team.When many Specifically, assets looking the in for but are participants. individuals highly work, colleague a

forward beyond, in year adjacencies. rest of into to our As and our share existing we look grow we performance this new we scale and as expect markets the to carry

markets. Each quarter. execution mostly in well our second and recession-resistant our solid demonstrated performed unit end to Turning

continued our the exceed to financial on multiple gain quarter. Our engineering for expectations team traction fronts and

strategic infrastructure country's footprint and within backdrop to of the expand against care disrepair. the decades team services its where social deliver market in the left health Our continues education have underinvestment

several sciences our to progress team summary, continue and and demonstrable defensive leadership made companies falling in cover a to ranks. second performance back Power solution-driven the position, our for its sale. life generated toward Systems will quarter. detail, have managed invest financial our Finally, our operational more with I we financial year-over-year and $XX fill journey of IT highlights share to XX% but Canada for revenue adjusting service model. are In a want Starting and performance. while in a million, financial group other in after increase out the Kevin RCM quarter the

also of of performed growth with $X.X XXX% RCM in QX, basis. profitability, well, Regarding on million representing generating year-over-year a we EBITDA

RCM for the team the our and cash operations organization. our generating from quarter with within finance leadership I see flow I'm raise of to some bar, end the strategic about under continues each of we the enthusiastic across industry $XX.X about future, of pursuits developments excited million. markets Our and our Kevin's record remain

for the drives which people. appreciation our engine is highlight our I First, that my want to ultimately performance,

have of continue attract pursuits Francis brings operations, success and us has demonstrated help Martin. held for cycle, development. and across and Mark experience to manufacturing companies X that a new to I'm with also increasing Lockheed excited Engineering manager as Mark to group. export Group. success engineering operate of our folks Tier of leadership well help general good roles Staying manufacturing joined aerospace build that board out wealth has Mark In people, President engineering support held as again, in attractive importantly, the announce excited our the I'm particular, has RCM industry. Our vision is team. Aerospace our positions recently for and quality, teams us to Senior Mark but to for a on in, as Vice resonating the successfully engineering more industries will enabling engineering business we people, to RCM. in manufacturing, execute, talent most the Mark with virtuous to aerospace client top

of working Our policy take is on innovative P&I positioned on biofuel team ideally is the projects also within to front. the several space and developments advantage recent

the allocated to energy biofuels, regarding many provide a expertise necessary totaling We technologies recent ethanol you roughly in the change, a past to affords Services more carbon division a attributable to a in conversion clients breakthrough investments Pivoting climate with group the we and our grown has footprint the with of profitably investments made Care The smart of us realizing job the is path success year. doing even tremendous Inflation decarbonize helping strategic sustainable is Part to Reduction as incentives. to believe believe team capture technology Act the Health great scaling know, and the As the start. has carbon starts the in economy. security industry organization's Washington its $XXX and our advanced With is the the advantage considerably the strategic over systems. group. billion legislation our in in size

before. more new to back-end than team efficiently the For deliver clients and is productively revamping solutions example, the to enabling our systems with platform ever and group its the front-end

However, special in success I'm In health clients excited U.S. education is is to expand to solutions the its the leveraging the to footprint about attributable market in strategic investments team primary the education. particular, behavioral across offering and secondary team's also the and making its

it footprint, the industry's our we XX% for pain the will XXXX-XXXX Education approximately education point shortage. education talent the address expand school be U.S. Center of teachers schools is public the all services of nationwide clients vacancies special students the we will Unfortunately, Statistics, the solutions this find country. cohort to growing confident I to districts growing serve greater deliver address solution special needed school in to According enough school during am can't help this fill has to desperately holistic needed to across a education of received able that become year. children. that our clear As

Finally, sciences expand base. life team managed our to its service contract continues

markets. to macroeconomic these We to the parallel and the team in of the executed am in the about breadth looking each newspapers, growth have end anticipate expanding of bandwidth we about. we I clients excited advantage secular our bolstering we've in with In have well of robust thank RCM all is secured technologies. these tailwinds share reading opportunities analytics forward we its contracts efforts, the our investments want sharing in we the that job with Despite more all leadership to In the its group front the culture our strong emerging us. done. well and have remain continues offerings remain during ensure several future. progress other to excited of all take driving make related also that data a very XXXX. to bidding by of been headwinds half are employees of select updates and across to I'm ranks first deals multiyear to strategic due initiatives on unabated to I our team closing, our for to expertise

for offense. day our the sharing I firmly the and delivering progresses. I'm to future day about holds organization, updates put to value look of our what RCM has out in year excited all forward clients to more Your and commitment on unwavering stakeholders as

the will back Kevin I financial more discuss to detail. call Now results the turn to QX in XXXX

Kevin Miller

Thank you, Brad.

a a increase. XX% million for representing on Regarding million, on was about $XX a growing Gross came XXXX year-over-year $XX.X year-over-year in QX in million, over at quarter, revenue $XX.X our million the increase quarter year-over-year was million consolidated $X the Adjusted a EBITDA during basis. results, basis. about profit $X.X

revolving cash we operations half of debt-free. credit pay remaining we the during balance generation the were flow on robust able from facility, Given now and million down $XX.X are XXXX, to of first our

within education our several Health we K-XX to in Care was and in engaging The the year-over-year. market. $XX.X The million group team Turning regarding QX performance represents XX% excited broad-based, generated remain is revenue end which the of initiatives increase growth an XXXX, segment.

our profitability. in year-over-year Information Life continues segment. each The practice of execute its Technology to and Turning growth team groups across solid demonstrated Sciences revenue and to and

Regarding group finally, revenue, compared We future, managed to XXXX, group's revenue the believe in base its the stickier $XX to our in turning about QX $X.X expands XXXX. that Engineering in continue as profitable. will QX million million And become we service more the segment. generated contract base and to

adjusted end Engineering QX million of compared continue base the grew markets. to XXXX, After offices of Systems across our We million. QX XXXX by revenue and Canada in our $XX.X of the respective Power Engineering revenue of adjusting the for our QX sale $XX.X XXXX as vigorous see to XX% activity client

our with quarter, the the during and well groups and performed units leading way. industrial engineering Our aerospace process

gain future very fuels mentioned, excited for the with and group holds our continue ideally decarbonization the As process are to are technologies. for a industrial growing market traction address and suited to we demand sustainable what about and

the that we Turning operating echo in call our concludes questions. will This the the will of our open the remain prepared At anticipate year. second performance comments for and our to attention we made of into earlier progress the carry time, year. Brad's confident half half demonstrable I'll back this we the remarks. forward strong

Operator

line our And Alex Alex, Rygiel with to come is B. is from Instructions] your going first [Operator Riley. question open.

Alex Rygiel

quarter. nice morning, Good gentlemen you. Thank very and

Kevin Miller

Thank you.

Bradley Vizi

morning. Good

Alex Rygiel

flow cash talk $XX [indiscernible] for in me so and to could of outlook you your little maybe that next strong that million, about six incredibly months? a What's most bit if the strength and was the

Kevin Miller

we had Obviously, a Yes. great quarter.

We faster our quicker job team, our factors it invoices receivables EBITDA. finance was getting there's ever than collecting there, and than a had we think three did -- -- out particularly had ever. of on right? I strong our Obviously, fantastic team,

school best the QX, we've seasonality there's of obviously, flow our kicking end there have terms QX. towards cash had. of ever -- in We we that's closings some into have the that And particularly DSOs in then

of a cash gives to the bit So a benefit that flow. little

cash quarter. extraordinary So an QX was flow

Going forward, to sheet. a job nice we balance expect the to do managing continue

expect XX new time frankly, under and continuing Our XX the manage the company. nice history QX, sheet, DSOs for And days continuing standard, keeping to cash is flow our have flow. in in first the the to see which the strong of to we cash DSOs a some balance under But we were that's continue to seasonality Obviously, standpoint. from post helps EBITDA.

Alex Rygiel

number new Sciences Life a for opportunity the Can a that of mentioned you awards then on segment. the in you bit? And expand Okay.

Bradley Vizi

Yes.

and multiyear say, to won seven-figure in primarily particular, Now we of, a couple awards, regulatory also HCM. in range in just price but our compliance side, the our

business. So of a focus predictability, more and more that ultimately you staffing the of solution pivot orientation of could to resources service naturally, to higher up -- the freeing manage for to margins further a business orientation, serious more that in as portion growth result on in our

had that more horizon we on. few look, on a getting So the close we're

have forward. hopefully, positive for on So the front update that we'll -- going

Alex Rygiel

had And about opportunities gotten stabilized then we if stable health Health you going of came bit of the bit to some to a to more partly Have in maybe could segment. XQ closer of kind probably some where rate sort care degree therefore, roll-off the period. lastly seasonality seasonality. little run suspect that's getting little downside, COVID because I of in a we're lessen Obviously, a a there's you talk sort and of level? during revenues to point opportunistic of Care that specialty

Kevin Miller

we'll Frankly, I in QX QX. I mean there. already much pretty and happens what think we're see

Care good in almost We very And closed. QX. August, post expect school and closed. with July QX results -- with QX seasonality significant July, we basically, work every Health is then Obviously, is in Chicago to Health have for Care

our of York California open New is schools is the Hawaii August August. closed. of A sort to schools in secondary end other in closed. of A the August. lot of middle lot opened of are the

year. to So as QX schools. there. new here we of added as expect of lot school our any we significant we'll really off, a sitting several discussions we're see new the don't also and clients, good. we're for having adding be some falling because And school with schools seasonality COVID this revenue falloff some We've But today expect is

So and XX you terms like in QX. In Hawaii, more there's you bit real there's an results in QX color a little XX. good To we expect just QX, to example. give QX, QX days. school in Like of give for

from York For XX. Chicago, XX then school And days. there's there's QX, to XX. goes XX New In

favorably. related falloff, So when revenue a you but a revenue day, days, from yes, back frankly. of and QX, bit entirely about school falloff to QX look per almost very was there talk at day I go QX, compare QX little -- school versus a per they it's to When

Alex Rygiel

Traditionally, answer. fall the up in And of to sequentially quarter, to XX% then XX%. on of seems to just kind follow kind that third revenue off

sequential XQ XX% you in to from still Given contract of to XX%? of that do mix, XQ falloff anticipate sort the sort shift of

Kevin Miller

higher see right Yes. in the shake I of probably school That end, probably starts how say. sounds in the out things how would towards ballpark, year more terms the But we'll off.

Alex Rygiel

Thank you quarter. much. Nice very

Operator

to is going Benchmark. Sir your open. next question from come Sutherland Our Bill line is with

Bill Sutherland

Thank Hey, in more Kevin Kevin. on of and and just other terms clients segment give detail revenue you. Brad a Care you Health little could from clients? us the then all education

Kevin Miller

Sure.

Let me -- put have you -- I just do fingertips question when another my

Bill Sutherland

yes, define order kind of -- I'm as view would strong -- since really of as what that Yes, in percent sure. for that. of just interested percent the the is rough a of as you yes. magnitude, Life IT IT? is that group, of also I as services coming managed I'm a line Sure, then And Just wondering a rough kind it Science maybe on

Kevin Miller

-- total of Sciences in obviously. that's around general Life Well, a number. for runs roughly. fluctuates revenue runs from But IT, It about rough XX% our quarter-to-quarter,

Bill Sutherland

-- direct margin? in Care, Health Okay. do you they ask seasonality going margins the and -- I'm with much the -- the to of are the fluctuate The

Kevin Miller

They pricing the pretty but past, we're think frankly. robust have I care all health that our of in seeing lines, across

from expect have -- QX. in any expect of do significant bit expect But little significant quarter-to-quarter a year. seen school of margin see or of always bill the don't contracts in little downturn bit may maybe are a new QX, coming bit of in at in QX we a lower erosion in don't half a than from because We in on a rates some blend what to some we QX we've QX I that gross first I variety see they this a certainly So QX. factors, little fluctuation fluctuate and can but don't based

your million. getting school So our school QX, back in to question $XX.X were revenues

in was QX million. $XX.X revenue non-school Our

Bill Sutherland

comp? to net have you Do

Kevin Miller

XX.X% do. in I X.X% In looking QX and QX, at school revenue of 'XX. for we're

Bill Sutherland

And to maybe position, Brad, That's Okay. thinking you do? allocation, Maybe -- on Kevin. know. -- you're last net net a may then in don't your cash that any want what Capital helpful. cash new I now

Bradley Vizi

Yes. Bill. Fair question,

capital Our framework hasn't changed to when it comes allocation.

have record, substantive track you We a as know.

investment. You followed while. of a share and the for acquisitions, Whether buybacks form in us or dividends internal

a strong ROIC. pretty have We

this at Star. think as kind we're I It North of XX% serves pushing point. our

of basically the capital to look we to the -- between the with agnostic on So those continue approach to vectors. more allocation same do four

Bill Sutherland

Okay. Thank you, both.

Operator

in [indiscernible] Currently, it’s look like there aren't queue. questions the more

Bradley Vizi

We next everyone, quarter for call. you, to November. in forward Thank attending second our update conference RCM's look

Operator

Okay. call. This concludes your

You may now disconnect.

RCM (RCMT) 12 Aug 222022 Q2 Earnings call transcript