- Earnings call transcript Q3 2022

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Kevin Miller

Good morning, and thank you for joining us. This is Kevin Miller, Chief Financial Officer of 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. change future. materially matters these in the And Many to rapid beliefs, estimates are subject and assumptions changes. of these

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

Bradley Vizi

performance Kevin. our am everyone. Thanks, execution. morning, RCM Good the of weak delivered I continued quarter. strong in third team's seasonally proud

Our our client demonstrate model base. leverability to business our RCM's driven unwavering world-class results by of delivering the our commitment value for

strong each across quarter, the division. demonstrated was performance During

IT the Our about speak in RPO bolstered group talent of Life I its Sciences addition will offering and a moment. acquisition with

business I'm are Turning several of Engineering solid our Each we traction delivered the and to team. gaining business about initiatives. units performance, new our across excited

health share highlights our RCM of more market Power presence strategic third across several of cover for expand Canada care and financial million, want Kevin $XX its quarter. XX% end will the addition Systems the I to but financial after accounts. a performance adjusting with detail our from the in revenue the year-over-year several operational K-XX service generated Lastly, quarter increase sale.

million growth RCM in As approximately representing EBITDA on $X.X QX, basis. for profitability, a generated of adjusted XXX% of year-over-year

out more front, On detail. were calling there the in several worth highlights operational

for proven to methods environments processes a clients, and recruitment across competitive proven can TalentHerder's rates. changing the employment providing a remote leading models extending TalentHerder expanding acquisition Life to Sciences RPO to scale candidate service and reach, as working help landscape Group will companies our in-person capabilities our acquired existing company. IT globe. at First, services current previously incredibly TalentHerder, both by and recently responding talent alternative base, bolster new RCM's mentioned,

We are staff. presents to excited growth clients opportunities TalentHerder our about the and

of the Over focus the near the term, team. TalentHerder the seamless integration remains on

are acquired and the through have forward new addition groups sales gaining progress We sourcing in staff, updates several already our from opportunities sharing on identified to to look I more our efforts. recruiting we in our future integrating leverage calls. joint offshore

unit develop the I'm the team's front grand state-of-the-art facility of implementation enables announce this of [ph] Innovation new opening Thermokinetics. our On alongside Center existing to excited processes customers. and engineers equipment of to our our complements capabilities our The

including SAF through system expertise, to and trillion data applications, robust be will process process estimated across further planned demand go-to-market many initiatives ability be the for sustainable to a $X by required required technologies in the fuels run $XX up of which and a the aviation billion investment necessary we For ways the billion derisk design empirical scale as with supply scale cost we approach have in yields to to we scale emerging the $XX effectively. essential an version XXXX, XXXX, there will identifying small select This successfully. believe

position role scale Pivoting as process in many the plans. technologies become continues U.S. stragic their a emerging reconsider looking the for will play, tool has team will and and the Group, future. are has be center to caused the industry's not Services COVID-XX landscape. healthcare structural our near to test to issues in term. professionals amidst ever-changing it ourselves over clients a Our healthcare excel The we solved powerful to the to go-to Healthcare partner be a to

by that may talent substantial U.S. The is line, studies the to care. XXX,XXX in role shortfall nurses. bottom they health sector considering example, a they leaving a estimating supply-demand in Mackenzie, XX% said facing indicated by recent imbalance likely be patient respondents there current leave entirely. direct the of with XXXX, For XXX,XXX survey to were a in of the U.S. Many workforce RNs their were several

are of greatest have a end comes expertise experience end core decades committed We help Healthcare of the We prominently attributes. believe important clients an two robust Thankfully, our require combination market. will to RCM and healthcare's where role that most that in from unrivaled. execution the structural our and of our innovation is will in addressing service scale close for RCM's to education as it this this play these deficiency, gap market

Our technology approach strategically to as engage yesteryear analytical, holistic our to more to the focused to ad-hoc has that by according non-scalable resource practices on us placement This clients providing more tailored basis. needs on leveraging team to data-driven take with solutions of enable an opposed is allocation. a gocuas their

We are moat will sustained model lead confident and to value RCM. economic creation more our customers defensible a for this a for more

spent a to appreciation I behalf constructively-engaged to you employees. potential. their have Finally, shareholders group. of take current than third minute which know express long-term realize more a of of nearly portion a publicly-traded substantial companies and recall career I supportive, entire its my I would like helping I to one RCM are and RCM our prior cannot shareholders, more are employees. on

is support of weighted RCM. assets many Your at one

while of XXXX commitment summer future. company's the retire outstanding heavily company's Your of the us shares the allowed XX% has investing to in over since

a will to results have realities platform searching years XXXX initiatives your We company's businesses value as RCM increasingly are with to I underway. and Kevin turn the technical compound the cross-functional optimistic of call balance future scalable I we our further the about with now their our In support many expertise talents choice as back clients of the grapple detail. discuss with come. to have our exciting committed to and as clean facto in solutions. and QX world, for more remain closing, sheet stakeholders platform technology-driven positioned rewarding scaling to all de to the financial to for capabilities

Kevin Miller

Thank you, Brad.

$XX.X XXXX $X.X in representing XX.X million, during growing quarter, was third $X for approximately on the basis. RCM Regarding an by increase. year-over-year profit of a quarter million $XX. $XX. million gross basis. EBITDA year-over-year a X the million million, our was consolidated QX increase generated X year-over-year results, Adjusted revenue

Healthcare Turning The to of year-over-year. of positioned K-XX great increase generated group the remain team the and new health XX% million team expanded which its advantage. several to XXXX, progress to The a within has represents revenue with accountings onboarding market make QX segment. continues $XX robust, take and behavioral in across the is footprint our

Information and Turning segment. to Sciences our Life Technology

efforts mentioned, acquisition a missed going As team's practice groups Brad the the of remaining well, the not and the are regarding each very execution has across TalentHerder integration beat.

sets. of offerings an our adjusted Canada the flat doing adjusting is QX model profitability Systems a is gross the segment. XXX that generated each 'XX. essentially increased our skill into revenue our 'XX broad-based of the QX by $XX we the million. From Engineering service expanding Engineering to of $X team terms business for by was job After Power in as profile. sale performance revenues basis with In well leverage 'XX, leverage QX Engineering or XXXX, compared The of office which team revenue, And contract regarding and million standpoint, QX group's service more as managed to divisions, 'XX excellent profile grew $X.X QX each adjacent finally, of the in XX% points million the transition across margin

that in year and quarter, we fourth through we we XXXX confident enter migrate will finish the strong remain As stride. the

prepared We organization. about At in and each the strong questions. this be remarks. This throughout a excited continue to our for are position segments across of as our concludes we opportunistic the teams financially our we are open execute time, will XXXX to call

Operator

we like Benchmark looks of it Company. off, had first And Bill Instructions] [Operator Sutherland

Your line open. is now

William Sutherland

Good couple mix of -- between healthcare. questions morning, and the guys. on Kevin, was A what education

Kevin Miller

don't. in should but me, I I front Let's of see. have that

to you it as So get want for I -- you

William Sutherland

looking, clients. a and technology was comment Brad, there? thinking about for color little you're involved what's about us your Can While on the you I for leveraging healthcare give

Bradley Vizi

Yeah.

wave So the investment is recruitment of going our of first driving to focused be upon connectivity resources. our

you a able dots no there, needs As sure the there to I There's the shortage know of It's and closely. making you're that read, pretty the are you've industry out between needs that exist. follow connect matter just the of probably resources out really. though,

a could quite for think recruitment we of inevitably, upside unlock us. So productivity resources that our driving of bit potentially

Kevin Miller

So school revenue $XX.X million. was revenue and $XX.X our your million, answer to was non-school our just first question, Bill,

William Sutherland

And the seasonality played Kevin? expected, out about as you

Kevin Miller

Pretty much, yes.

William Sutherland

mix that Okay. It strong Healthcare. a margin, benefit? was gross was The in

Kevin Miller

that It's probably expect It's but what to expect. QX -- little Yeah. look you things. It's probably is mix. I what not compared robust long-term, couple a of It's substantially robust to demand. we higher than a of eyesight a we bit if tell the would future, sort market, out you

William Sutherland

just or capital for you rank And it about at you then -- guess, is Brad, thinking me opportunities Okay. as order? that? look I deployment, do how you're Or last. your tell

Bradley Vizi

and good But multiple refer trading, to would you in the we've the the judicious power been when is have look so. the guess rank response. I at Well, mean, business probably pretty news order. the stock earnings top you But where towards could what is normally I look, of there's is teams. -- stock our of we our The

capital opportunities for point We have we're a shortage at confidence where capital. behind, of on level to side so to which against our isn't of a put very there high a deploy turns

quickly. individuals we healthy and buybacks, it very ultimately review foremost or something and a is organic group is balance investment, be change again, earnings a clean in a behind. talented again, a believe very bolt-on whether of the with spot But power, we're where get good what in share it ends So that acquisitions can regularly up, to this we sheet,

William Sutherland

provide ask, guys to meant any the I in did Actually financial detail TalentHerder of you impact? on terms

Kevin Miller

it. There filing on not. an is have X-K We

William Sutherland

it. Yeah. All right. Thanks, Appreciate guys.

Operator

right. All

of Next up, have Alex we Riley. B. Rygiel

Your open. is now line

Bradley Vizi

Alex. Hey

Alexander Rygiel

nice morning, quarter. Good Very guys.

I of? about for purchase X-K talk what be? I could maybe around multiples the did a your acquisition what that If little generally in not, acquisition. a about in up maybe in $X talk range that you the bit Following paid, million think, contribution cash targeted revenue question, on traditional TalentHerder Can are notice that you

Kevin Miller

closing, that to a case in I X Xx that post we if it's synergies, in good TalentHerder, pay someone's what they're so happy and fit on performance drive talk but acquired. growth. we do against a to X times can really it's the outstanding somewhere performing In floor we for When of So also to outstanding team have performance. terms we're sort us and in the a mapping deals, and really some focus typical have for of of range if during market a potentially good Xx, well probably earnout we're is lot would multiples, can we for terms say about of of getting really low the period, seeing us. between We because the if you -- deliver want times

Alexander Rygiel

sort about you bit when the expectations the to And little or years? of TalentHerder, that about talk you next opportunity can you is -- see profile that compared of the yours? you revenue And think what over business of growth a that margin couple

Kevin Miller

is quite Well, the high. margin profile

You're major that We prominent a We And the probably in of so we maybe margins. our being brought sales looking time. on the operating we're has RCM at a become be But table. will players resources everything business, that combined we typical we but think is that -- on player in which is player space really we the to in to to and over the XX% pretty have RPO it in fairly the today, team space. this our with can something bring capability tremendous believe certainly RPO aspirations small terms accretive space, that that business margin in team.

Alexander Rygiel

Brad, bit? great. a that And space the in Can strategic several you and expand you That's then, accounts. Healthcare upon mentioned new

Bradley Vizi

our accounts as really, would near but core materially have are so certainly education think base. diversify grow opportunities end to importantly that Yeah, over being we that that to we market, the in of they there accretive are And from think where in them I today. is continue are aggregate, term as

gain the K-XX our really, starting initiative to build country. throughout really is presence footing and starting to its So our we're really

Kevin Miller

today. the have number lot you X lot we X if just ago, business school clients we to easily we have Yeah. a I momentum feel like more. And of to compare Alex, tripled years say, say, of would add our a or

with -- Idaho inroads are. which addition in bricks-and-mortar those school restricted to from can anywhere pretty regional large as the really systems services to have well, In where schools schools schools, school. don't because also virtual We a virtual not can the country. service we in Yeah. good the we're talent we're finding providing for making some is exciting We some somebody

each a So excited we really it is expanding we're potential of today, portion has still but business about And grow to the little fast. think that. small that really

Alexander Rygiel

the then decrease What play health year-over-year. would that lastly, the at either the or in that quarter? dynamics was number are in And increase business XX% revenue care up fourth

Kevin Miller

of quarter? terms third the the versus In fourth quarter

Alexander Rygiel

last Fourth quarter of year quarter this versus year. fourth

Kevin Miller

still school clients we is Sure. did I our demand the dynamic charts. services major We have Well, for the right? the lot more fantastic, mean, is off demand this year. is last year than a the

XXXX exceptionally on penetration the new endemic mean, the the the have It's clients. of people, Healthcare -- say have fourth signing is find. just But We a would else area well only But much our market to impediment and obviously, just obviously quality biggest would we're XXXX. is deeper the competitive we of the people. doing everything I in clients. last will place of that quarter. focused to and just crushing great -- We'll We've we on say they're transition a going enough, can an But quarter school about some right? -- our be in grow with year. not we're pandemic a focused able continuing probably find we're Healthcare we job. to I the every find the group I is school just fantastic. from every to getting Obviously, We're regard Healthcare. clients. because pretty people right, to little headwind fourth quarter compared added the incredibly for COVID never headwind for bit fourth to provider to

Alexander Rygiel

Very very much. helpful. Thanks,

Operator

right. All

we queue, private a Kelly, in Next investor. Frank have up

line is open. Your now

Unidentified Analyst

patient hanging Good company thank out Brad are the couple for morning, and -- have significant are that entire pulled a quarter with that the that a Brad, the shareholders together. you there One, team acknowledging What of great to that. will actually and gentlemen. at questions. I that out compliments kind long-term being of for with on start

the we capital about expenditures second, -- and The to capital us talked I you know whatnot, Brad, bit little a program.

investment, about some with response was shareholders earlier. talked as noted of organic talked those sort return. in You But of in what mix? was buybacks. was addressing missing the about missing that the we obviously Is It your rewarding

Bradley Vizi

No. Yeah.

continue to the back of is company Third when having it's shrink point, it. extent the count. grow to we dividend Look, and question, you and news to is share to do bought that this able Frank. bigger XX% be EBITDA The a one think likely day, at introduce reoccurring, dividend I much get we're good the

point. I see So in earlier, as XX% generate continue on as long to profile able that this I like that, potentially we continue we're we I it. capital, to keep numbers put to investment career, range add found anytime to a that my I mentioned in Frank, them were capital we the wanted up see returns think and think historically, extraordinary that to teams at and I

that dashboard. retiring we shares, the respect But really though to talk the with isn't look, And on again, we active pretty about a regularly. future always near could it very in So are dividend change.

Unidentified Analyst

come I five to been the I do direct actual there's any shareholders. December, just return affect since been buybacks Great. it's return. noticed, years the actually Obviously, but price, guess, Yeah, an

for SG& year-over-year, if future, versus XX%. a it's guess be a So at I that. like could -- in just that that we undifferent Q-over-Q, of on keep mind, increase XX% And it and great. much you're in I increase looking in would not doing A SG&A Kevin, the that see revenue sounds

would be growth. So to in higher -- that as the seems in a of degree Q the Could growing percentage some kind significantly -- you SG&A revenue expected just for least the I the than be in at year-over-year, to and

Kevin Miller

to Don't the we into have growth. that show left the You mix? out EBITDA

Unidentified Analyst

No.

pure looking current same I numbers, number are a interest that, there are not well -- think interest there just we're were SG& -- through lot buried so I that the in there. A, And the there's the at know at necessarily right, only which that run payments, in but for as not Q, higher some

Kevin Miller

because -- interest we know I us, no, of on was bit is SG&A. is well, as interest needling I and But down, the line you SG&A. is, is think dollar just down little I that mindful incredibly debt spend look. included is anyway, we're do Well, bottom that. The the can every in but anyway, on a for Sure. not But Frank,

say look we and this. to them, $XXX need -- and to going a that $XX decision them continue to However, we are million going out continue, okay? If increase But know market the to We're price. Every is to most we this of want and I to. very it and of We're will in do more keep because is stock EBITDA SG&A obviously, in not way all we're I get the them our have, is SG&A. EBITDA interested across exploding, every opportunities. to of growing and businesses, see to company SG&A that invest So the turn incredible to make have for happy most on to without front single we frankly, we not we drive business SG&A being we that a and long. to to we wisely in Bradley increasing expect make, Simply, company. do million that not EBITDA. the here --

SG&A part mistakes, historically, to to do look where we some we grow performance And past is hesitant make we've investments. And A. the at absolutely I this investing of where been to have if invest we've area SG& an it have Now but the wisely, to that's company in in we in our think company. made

people this know company So to give listening. And really really to well, you to just -- a example other you obviously, we're are understand. going easy

every period. recruiting find, qualified We will recruiter, can single that we hire

that I'd to hire period. really really, your recruiters, how looking when work recruits short-term out return. about that's to be a the know them, to we're look that Well, you aware to going front, going mindful And continue for continually of going have four something well, on dollar came worry the long-term them efficiencies with XX are we the SG&A I I'm at very that if to about to I we get tomorrow, me XX to get that's we're investment And outstanding not going because increase to spend. you in return could But hire we're take recruiters. this technology. an through are do. drive I every And investment business we that If going of and can

Unidentified Analyst

hear. Yeah. that's maybe to concerns quarter one growth growth rev, the the rate rev, versus in the versus rate this XX certainly at encouraging Well, Yes, had the we're to I at 'XX. revenue SG&A I increase guess they're -- because past But XX XX of investing. in of was SG&A close

Kevin Miller

QX you're profit fixed SG&A you -- But basis. year-to-date it looking a as also cost in know. QX, of ought in revenue gross to the has on you and Because in really we have a lot variability be it, at lot a and of seasonal

to it growth compared the So that the to in look SG&A, going and revenue. if at through you're go exercise growth in

Unidentified Analyst

On a year basis.

Bradley Vizi

disagree basis XXX going what to the was -- year-over-year? I points, XXX I'm basis points? you. increase margin both of might Kevin, with operating

Kevin Miller

Yeah.

Bradley Vizi

like are a long the going clip as margin all to we So to going outcome. Frank, I like as at you're SG&A. think operating And we near core on anywhere increase that,

Unidentified Analyst

increase SG&A. Kevin's do XX% see, point, and a revenue on to the year-over-year Yeah, increase in we XX% because Okay. a

drill something as being do to and But -- in historically, into the it's long we that. it's guess need A and SG& what's monitored, that down as sometimes of specifics I certainly So there.

Bradley Vizi

been couple you've a them, -- great you. the being and This thought feedback, of definitely of appreciate Frank. topics. Thank on Appreciate always partner one a

Unidentified Analyst

at at we're seasonality in great And Again, third looking quarter, without the anomaly certainly, absolutely the an -- quarter. XQ. outstanding hopefully, looking

Operator

At this no Instructions] time, [Operator queue. in seeing I'm further questions

Bradley Vizi

next you for XXXX. update quarter our third Thank RCM's conference We call. attending forward look to in

Operator

that your looks and right. gentlemen, Ladies All it like call. concludes

and lines, us you again thank your joining today. disconnect now for may You

RCM (RCMT) 10 Nov 222022 Q3 Earnings call transcript