Earnings call transcript Q4 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, and these matters may materially change in the future. estimates are beliefs, changes. to these of and subject assumptions rapid Many

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

of to RCM's the call over Brad provide I fourth an Chairman, overview performance will turn now quarter. operating Vizi, to the during Executive

Brad Vizi

Kevin. Thanks, Good morning, everyone.

of note was RCM XX over economic on period. quarter months. a closed year-over-year last second our XXXX despite high an the a QX increased drumbeat comparable lapping adverse Also consecutive note, of pandemic-related prognostications

more environment. Our society normalized and labor labor a markets to transition

value to Again, client-first base. creation of RCM's and testament secular-end remain strength a platform, the markets devoted-employee growth and

within health on XXXX, building Health now school reflect significant I was progress Care made progress In will of RCM's care by made our businesses. in staffing. division each

policymakers staffing on and Many schools, faced brought infrastructure. focus recognized nationwide pandemic comprehensive safety providing and for underinvestment districts school to to of significant care The importance services for highlighting professionals students. further the health the care nation's students. highlighting increased in health social As in need trained health shortages the educators care

mental recent and COVID-XX expanding health mental health A was significant student's providers. In considering response, school years, been behavioral many more care growing schools especially the are There working has staffing to behavioral about hiring nurses, development improve their health in staffing, pandemic. therapists concern including health services. in and

BCBAs, behavioral our support. for and experts, behavioral social to many more RCM These professionals, mental professionals, additional subject workers. districts RCM mental recognized schools with RBTs, with power matter the including cooperation health hire counselors and team worked need health and In

with access RCM to there need of services to new services, offer a to to help clients positioned for students part is XXXX, critical support behavioral by schools needed their health students are increase years of We the in number vital school a solution the address RCM well-being a providing be was many helping come. their significant and In that believe their to students. of these

will RCM offerings. to service XXXX, expand In these continue

addition, and taking tackle high comprehensive while care strive its outstanding staffing maintaining in cost-effective care organizations vacancies proactive solutions. In solutions. also such through is challenge facilities allied hospitals recruitment RCM as significant of to voluntary long-term exceptional the for health is measures in The and nursing care provide shortages, services demand and turnover to and

this To innovative committed limited but RCM help clients to, not recruitment extensive include, fully initiatives. solutions, its achieve and objective, recruitment is to solutions. international world-class MSP solutions are offering These

and the our Life higher identity team in enabling advancing IT, our be to transition Sciences and As services, foundation, XXXX, accelerated for our to setting value we self-sufficient. divisional

We have to begun solidify our management team.

placed the managed that governance blocks blocks new successfully further our building our We building will allow have services, several We for attracting while and project relationships to with ones. new recruiting, data clients ACM, management. created division expand

those XXXX, to put will foundation into move use. blocks we As be good

to practice search and for an retain new Science assessment as or well level, We our build HCM those initiative including service practice new combine blocks companies. them will our executive take the as managed next Life

markets. and on for to existing has kept the scale customer new laser and base that focus in undergone trajectory. to the diversifying The I and structuring growth. their evolution and am this engineering has team XXXX client while deliver and inroads proud On continues relationships of future confirm strong the RCM new leadership with and a vendor team organization building and Industrial Process emerging front, growth

commitment a groups value-added our and to depth within adjacent and last around RCM scope, is markets in Performance several common led key and provide creativity, sets customers end of in years in our come. partnerships drive ultimately many of greater partner. that in to this has future contagious for our diverse united XXXX the to team and in XXXX will focus services and The on blossom

and made significant with Industrial XXXX, launch several has others in undoubtedly placing globe across partners commissioning the the projects Process worldwide on impact RCM progress society our in a that will pad while environment. the major revolutionize

with in the needs and our and XXst century, addressing pressing profitability. materially distillation integration problems evaporation, and most matching while saving productivity of each and specific ultimately change and one of carbon scores patented climate energy customers' lower expertise intensity technological including of optimal solutions Our the advanced aid proudly

team performed result projects the evaporation, our to The a material Through Center advance center houses opening to center, where Innovation with state-of-the-art to the we can specialty bringing and clients their market this The New more witness York, are crystallization, Kinetics Thermal of simulation. we are design supporting Amherst, process, tests risk which demonstrate, projects output beyond shovel-ready formative in lab multiple seeing ability feed computer to and work separated in in RCM distillation, with positioned and latest XXXX. led by customers efficiently perform in has less processed XXXX laboratory an and innovation being test enhanced equipment. already

net-zero heavy to Fuel, beverage rapidly and and metals Center Bioeconomy, the pharmaceutical, in for integral renewable We chemical, expect supporting within food goals and evolving and the emission Innovation technologies markets. Aviation Sustainable be carbon-reduction

related expertise summary, hydrogen difficult a to accelerate and key achieve Process environmental in and seeking problems facilities at to sustainable to for scrapping, pursuit faced clients direction In in their drive and processes zero. to to are operations compliance momentum liquid most today. transportation RCM and optimize team and below the applications, net transformation clean our carbon heavy has many fuels, and patented separation and society our conquer oil air Industrial to strategic From

development increasing closer to clients investments engineering, bring growth with with become in our Florida group were Energy Rico grid clients, expand grid our ways. enhance business resiliency, and a grid. across the innovative and as of of and year part to The Services Continuing modernization in demand significant of solutions in RCM the transition Puerto get player the to bookings our power the globe. and to electrical a valuable we record and geographically closed security and strategic offices strategies communities energy serve step The the establishment made support to new in

one EPC to and gratifying value clients Our have companies safe-- these deliver client North testament sales continued delivery funnel we balanced and markets to we awarded projects serve efficiently. paramount. has largest and new growth built extremely utility are of see solutions. as America's and turnkey our trusting project of with approach our expanded, our and ability high-quality becoming The a portfolio with full more innovative relationships sectors is safely our long-term continued remain consistently clients' value to Being was the through X team's multiyear excellence partnerships. trust The

a energy seeing XXXX performance The strength. player excellence, building an relentlessly from team remains a becomes across on and as the position The of RCM the helping new international growth and driven transition. is we a multi-decade services navigate energy the demands world are significant by trajectory into evolving world stage,

high-level size and exceeded division and doubled base across recruitment. while mid-XXXX. talent These and objectives, solidify with close has more Finally, capabilities I operational in Aerospace is the will substantially management adding objectives which development, This to expertise in business enhanced engineering XXXX. all than goals and operations in since financial engineering Aerospace. aftermarket and

investing aftermarket to continues new in strategy within attract our management engineering technical employees customers, Our and highly to specialty encompass both and domains.

Our large depth continue OEMs suppliers within our Aerospace. to targets to broaden include will other X and Tier

to be also strengthen plan which to offerings. helps aftermarket will our to and and other In our space expansion XXXX, base engineering our our support groups include diversify customer within air mobility, service and

detail, take in moment progress a the turning on financial on to capital front. to will call cover touch our I Before who will the allocation Kevin, results more our

sell retire XXX,XXX During [mall] off perceived we fourth to to third nearly able financial to XX% the maintaining the quarter, flexibility. period of to shares XX-week fourth shares. call, quarter, between share take since economic of advantage of net in X.X financial while company the the reduction the over Encompassing, the and abundant markets end were end achieve count quarter were this able the of million a and over of we

As that the will value react enhance is able calls, we to of the every business that to opportunity we rate at in compound mentioned to over aspect scale ability we as nimble attribute our and an remain are believe on time. previous which

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

Kevin Miller

Brad. Thanks,

was by XX.X% $X.X year-over-year with or versus the Life consolidated was million, pleased with by basis. our $X.X fourth health profit XX.X%, quarter growing million million quarter engineering on fourth specialty the fourth on revenue $X basis Adjusted XX% points growing by $XX.X in was million, improving Gross year-over-year $X.X X%. care growing the by XX%. growing on and basis. quarter $X.X a year-over-year margin by or year-over-year million XXX a $X.X especially We're basis. by million a million growing in XX%, or our IT gross growth Regarding results, EBITDA for fourth Sciences versus quarter

we've As excited never and potential XXXX to been we more look and growth our new beyond, about initiatives.

tough but we do be from QX historic Of and in have building strong typical XXXX. we expect to quarterly more in XXXX, course, we growth a comps slow realized expect starting sequential completing have after We some that to XXXX, a curve 'XX the there.

results results engineering in XXXX, QX from we 'XX. optimistic and Due strong are we build to to see that we will 'XX pipeline, QX nice While expect will lumpy XXXX our beat jump in a our there.

consolidated care. expect a of half the engineering expect current look similar health very in we to second for our half except first pipeline, and XXXX, on in a second we the And to our basis, backlog half seasonality long QX of time. Based XXXX on best

second year that especially during in behavioral initiatives September half the improvement XXXX-XXXX kick XXXX. expect starting school and will by We're school We new new health XXXX. contracts of the significant in into of excited gear

will our At this remarks. prepared the concludes time, questions. for call we open This

Operator

All Instructions] [Operator right.

have First Sutherland. up, Bill looks we like it

William Sutherland

you Brad, in Kevin. specialty health the care if is, get couple a education give and care? I One wondered numbers. if could health could just of clients between split I

Kevin Miller

Sure.

for me Let just you... that get

William Sutherland

-- you're out as care biggest Kevin. care? some the is health searching certainly know I'm wondering world, education. about And I headwinds seeing And education on of map guys are What tailwinds a your you there's lot you piece. while in apart 'XX and health in the that for so going are that, from

Brad Vizi

Bill, the take Yes, say effectively increasing I'd discussion that I'll of around has most been bandwidth. one.

in for to the recruiter We and us. see as been move QX. as initiative has productivity a we month discussed through should start we major calls, this benefits that online of As prior come

not So we side. have pretty call good out days data it, on XX points, that

making looking also are we program. ramping significant addition, [foreign] at and our investments In up

a changed been supply bit around discussion would of cadence frankly, last the of the has has the the couple years, I describe market. most not meeting of the basically So in activity but

waning So wouldn't describe I whatsoever. demand

William Sutherland

And you? then is the MSP more solution on for new focusing Or Okay. are now? on just Brad, front, that a it you

Brad Vizi

a have leverage and MSP client. to more build relationship looking ultimately offering that major can evolve robust we're And into the portfolio. We out a

to for opportunity a further. been us it's sort expand very So an the of division and successful endeavor

Kevin Miller

Yes.

So our Bill, million, quarter, our was $XX.X million. revenue $XX about in non-school revenue the school was and fourth

William Sutherland

it out in The I was noticed there? XQ in that stood first And I'm a for margins on are segments in quarter. project the color but of gross only depending you moves just the down where points thing print was versus margin the around the just Any -- then couple IT the Engineering. And assuming that's it fourth Okay. kind a gross for -- huge of quarters? X with

Kevin Miller

Sure.

out, jump can a around bit. engineering quite you As pointed

have lot of fixed contracts. price We a

We have large EPC contracts.

the as pretty can know. haphazard, you So be margin

see little particular other margins discuss the really So there, historically expect [indiscernible] in in just jump seen a what bit. to to you we've than around frankly, there's nothing future. That's should and

William Sutherland

remind Kevin, Canadian you Power? divested guys when me

Kevin Miller

July That was 'XX. of in

William Sutherland

Okay.

So numbers year. that's of out the last

Kevin Miller

first both out the terms bit on margins high as a gross that on but that's the of you quite see above QX And RPO far in overall concerned, the you're then it push Okay. numbers high certainly business probably go-forward to because margins. higher to X get seeing as in is far know, little Yes, of the in as periods. used what margins impacted to quarters. where business, continuing the IT We're basis, I to we'll we're expect just be are for our margins. a quarterly Obviously, as

in a of IT. we'll but be margin what be was the bit -- past we'll done QX beating the a So gross consistently we've of spike in terms of

William Sutherland

one, being? last I'm this here, capital then And repurchase probably of going time the impressive just Great. major the allocation for focus is share of on

Brad Vizi

Yes.

and tend things match assessment, to nerves general economy follow in trends with to I don't reality. fair think with always I sentiments a up look, just that's think or I said Bill. kind these around those of respect the economic

can think I So stand we to that. substantially from potentially benefit

is repurchases way to so it. And go about one

it there, so. when and and the allocation at you compelling of decisions map least over the capital look at makes near term easy, frankly, becomes pretty So these levels, the quite

Operator

Next up, we have Rygiel. Alex

Alex Rygiel

for Thank expectations guidance the revenue maybe little relates you margins for Brad, XXXX. term growth as little directional you a talk it maybe could how a at But they go level. higher? about to maybe Long-term about high-end bit Very the long helpful. talk can growth? just bit directionally and And macro

Brad Vizi

No, comprehensive and Yes. fair question. that's a

the you business. a So Alex, as revenue before, services of can we the on may have front, revenue said book in lot

translate into cash very focused quality, are on adequate productive ultimately We revenue that free flow. at margins booking

very regard. much in returns that So focused

a to as over high been is what paramount we business. client We move to underwriting to cognizant continue of value-add we always move there's sure and solutions chain really selection differentiated, that of and value feel major underwriting several add also our our need be make last I'll our up the to do years more the in But portfolio.

we margin a margin. long in the when where you we at double-digit and balance perspective, operating hope growth for from right company should the company cycle So a we're the where term, of to speaking, get generally and

there's in been to So past. certainly where upside the we've

that But and toggle between a P&L again, bit of a investments. there's the of maximizing high-return part

we that. to And think year that part. look throughout divisions would starting long you're had term, can something the last around I band for think similar profile already we've some that company. So certainly I enhance the But to we margin to the what this of most with the see

Alex Rygiel

it for health -- to you greater of driving to new can it is pricing? the as you're how then new growth the -- schools systems term existing care outlook depth intermediate what or to relates school inside school relates And as understand us the business, versus versus or help systems sort

Kevin Miller

about Well, talk probably I the yesterday, school only Today, $XXX,XXX of bit and and school well are can and pricing. X customers at I talk XXXX, year. a than a looking at But the at year. we less had XX bit over XX well have was little this Brad the about can end little we of over have school and customers over were end contracts we $XXX,XXX the -- over that a XX a

hundreds of schools million. more are X and are million-plus quite $X many that over that have a out or look over you the over schools we million. And and -- the clients there number number of the and in growth focused. we few but of potentially $X that or that's aren't clients, growth continue we what at terms the where of total when see $XXX,XXX larger curve schools $XXX,XXX that of can call of So there ones are that that more over are more, $XXX,XXX kind there, a absolutely are schools we're There curve year and

be X So going to XXx today, And we're overall is percentage the market, scratching the capturing an frankly, and care explosive the of believe largest we clearly the health is market in still market. just the in pretty country, it's as we're school look a today on from big when provider And to side, but we're our health at just years It's now, small think we X market. just school is or growth the opinion. the it the behavioral there. surface, which you

Brad Vizi

Yes.

but and really of shift to the margins on. you're have I behavioral to so mix that with meaningful we'll end to staff respect kind to health going We'll from we focus and so we primary leg a and I of opportunity. key think on. pricing Pricing articulate point in isn't the think it be scratching good of that growth driving general surface market depending that's a And of on. another professionals types the variable a and on a see way

really of less matter a maximizing But is rate. it

long think as of just COVID long for with you're get is to area up would just and So bit out anticipate been you, ways little of significant wake has back it, a starting up our half into ramped honest than reflected it we an to see we time. even people in a it a the market for education have the we a move and throttle slower coming we really in as many even anticipated, time, result And that's this of but To full being year. kind that results COVID. of now. starting forward underinvested legs This be to are and in

Alex Rygiel

And then Obviously, in is services this to pretty one last Florida Rico business. is and Energy relates Puerto it question as the strategic.

talk of ongoing repair and be is the markets. has you customers your that you're needed Given and or and thoughts area in services in some to sort and and infrastructure providing those the hurricane the upgrade [underground] expectations activity other of maybe to in or needed new Can of sort and amount activities going geographies been growth that forever Florida about of the... are

Brad Vizi

a but actually for these in Life Rico very is question. in very Sciences front. doing We're business the great We've excited Puerto This Yes. about been time, primarily long a initiatives.

We major the market that's increased leverage and we've ways, And States a of been utility in Rico. the Services increasing United goodwill many technological significantly into in in to function are with there. clients really share capability able that Energy in Puerto the

look grow to over in We so, call or for bright the that's and actually portfolio XX be hold last, East the success that had actually the exciting of we it, concentration think Northeast spot the going you as start look business, days to at if I you see had very a and forward. XXX throughout we the a because it's So certainly Coast. to And much significant in geographic that, certainly historically, strong beginning. at the the portfolio the

we a in meaningful demographics West. way the down are migrate Now more Southeast, much follow starting and to and out in South

exciting and for number strategic it's of So a reasons.

Operator

you me, time, questions All Did And to sorry. no further want press in --excuse are at queue. right. this there gentlemen

Brad Vizi

No.

I think we're fine.

So we'll of close ahead go here. and out kind it

So thank May. forward for call, and the we to next fourth attending update everyone, our in quarter you, look

Operator

All conclude call. does right. your that Ladies and gentlemen,

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

RCM (RCMT) 16 Mar 232022 Q4 Earnings call transcript