RCMT - Earnings call transcript Q2 2024

Due to licensing restrictions, you must log in to view earnings call transcripts.

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, assumptions and information currently available to us, and these matters may materially change in the future. estimates are beliefs, change. to these of and subject assumptions rapid Many

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

Bradley Vizi

Good morning, Thanks, Kevin. everyone.

growth aspect by foundation division continues carefully quarter the success The of leadership years. company as the to the over project Engineering's last several RCM not one thesis. Second activity any was our predicated led on laid More or of on fundamental ramp, is a building discipline. important, Engineering corroborates

of other In a then, we contribution IT care the the the Engineering is strength from on Five this XXXX, we XXXX, win anticipate outfit, a divisions but the was company, global services by strong we the data presented health of the an and nor In half with propelled transition can today. Also with stage. an XXXX, the And not Sciences and and vision post-COVID of engineering, compete an increased the RCM firm a success as emergence as scale. continued not back pillar in a engineering witnessing practice, division care. our in infrastructure health emerging to the world. that key note, year. years world-class That along reality X professional now the of performance to trajectory, completing was in Solutions are ago, to were Life world-class company's maintaining

provide strong. with the teams, more Healthcare of I of care. the Now, progress health finished school on granular starting year each update a RCM's will our division

extremely are prospects. year, the XXXX to and XXXX encouraged Looking about school we ahead our

new districts potentially added providers. our have successfully to portfolio, school many several new We to XX requiring XX

of has a proven is exact becoming to primary and the entering districts quickly be value the yet While these vendor. track of districts new record determined, RCM

Our dedicated to clients tirelessly time high providers recruiting This can into ensure to commitment the we reducing expect. bring it on takes of credentialing growing our is and and processes, working board maintain that new of streamline not cost is swiftly demand service to to but quality and team our meet the field. the standard efficiency

continued our for in to strongly unwavering domestic expansion our In commitment standards, and operations, building addition expanded operations we team. Investments This our team, to us with coupled high the international and recruitment includes operational significantly not Philippines. only a position our both have increasing and in success. also domestic growth, robust support efficiency our but growth

hopeful, not that continue are we second our efforts Sciences, confident integrated as to Data service significant expand offerings. In just enhance our quarter our progress We approach. will Solutions, solutions the footprint implemented & Life as our drive stakeholders but value showed and we our continued for

performance historic the the work our strengthen is industry. business. believe the to relative the and of We increase in profitability practice partners continue structural a one seen premier to have We to HCM

pharma quality our we Life straight team one control client. In have XX% company. successful implementation Puerto quotas a strategic exceeded X-month for packaging quarter, completed project Xth the for Sciences, just major For Rico a

reporting. its growth clients to while market Our to it to as leads products demonstrate bring compliance ability to continues faster, improving our practice Life Science commercial cheaper, assist new

application validation RPC qualification to strong quality, and interest managed We service our to to support. a support can offerings. see functions in ranging from our We broad of to continue range industry-leading

with Transitioning Energy Services. to Engineering, starting

and activity results, exceeding forecast. quarter Backlog robust EBITDA and healthy. revenue demonstrated second solid delivering The of remains figures XXXX is

substation a contributor Engineering targeted and while in associations new electrical the large satisfaction. is Lat to As engineering projects, and potential in Europe. Puerto existing The high-voltage additional Rico significant we but internationally, EPC with projects in high customers maintains execute levels California industry. for energy Am Energy German U.S., a growing markets staffing in in maintaining cooperation clients, growth. Services relations office significant evaluating our Anaheim, The demand prepare Energy a the begun strong market presence awareness, and in also events agreements IEEE in sees most strong client of has Puerto the participate to during Rico. To the becoming increase for Group against substation continue major further continued including Increasing technical Services

a the The for a yielded on States. market tests The at the the supporting downstream current needs and pursued for processing which by strategically the derisked in For planned of U.S.-based chemistry example will and has excel team and the areas a and future-oriented order SAF focus, XXXX. detailed production Services Kinetics in lithium active fuel for facility are a being markets. test and Process that of and innovative Paris The is center. test through a additional this crystals. This recently refinement, test The trade and XXX% integrate and of is a customers to for lithium solution production microgrid an equipment to order the the lithium the to utilization conducted the of into slower-than-anticipated forced clients had The process and aftermarket. filtration the results and design, paper the with close stages lithium The market is clients. RCM team We our an test test is investment the integration together placement the good QX expansion Defense show engineering designing crystallization U.S. Industrial, focus patented The well The completion. energy theoretical in that week ethanol customer. Various score. Energy and equipment engineers crystallization, SEGRO X emergence upcoming due also of for how employs mixed optimization process the in In identifying was with order of development further a equipment Thermal X our our design. leader project a responsible in team plant. chemical enabling X present QX in chemistry of team XXXX and workshop recovery in benefits Kinetics rigs for the a sustainable remains completing chemistry carbon RCM chemical ethanol sales to chemical remains lower technical used equipment intensity focused The or center That plant session utilizing gain in technology the on The large business expects with design. substation. strength at in evaporation. center this Aerospace of Group for carbon utility as the Thermal evaluate continuation the team QX plant facility optimization also is projects solution is Thermal in involves Kinetics various TK also running are continually drawing continues who the our June. office improvement that lithium engineers momentum executing process at. center August, market presented studies United engineering complex and the their in is again, design

in business executing However, healthy. QX EBITDA with for clients XXXX. the or is new engineering of thriving, division X The remains

revenue anticipated existing of with increase in new piece holds had impact customers expected our for other our in business produce and half realizing and remains new vertical of arena estimate spend RFQs in have our second a profit customers, well EBITDA Our our of with of component headcount, in same, aerospace to current XXXX MSAs the to the aggressive is of revenue space of domain. finalize Engineering one strategy begun XXXX. The most recognizing to healthy the immediate RFIs, the true, manufacturers. divisions in Engineering most with overall customer as as with the escalate one QX expansion an in that and significant into our the has increase

increases much-anticipated customer realized in QX. requirements have in We

in to hires. a us Our world-class new has recruitment which team continues to experience noteworthy execute, allowed increase successfully

a experienced in We QX increase hires versus new XXXX in have XX% QX XXXX.

see expect to QX in We increase and QX. this quarter-over-quarter

expand base as throughout continuous and expertise opportunities drive well. our expertise, model-based avionics systems customer partnership and to QX and inventories with mechanical continue XXXX the in We software

issues interest. offering, service quality supply the solving continues with new Our production base and within of involving grow our to clients

major with work and QX of with expanded scheduled starts have statements been and skills QX QX, OEMs New received XXXX. XXXX in

We prioritize throughout will these continue clients with to and expand our XXXX XXXX. these and reach engagements

RFQs engineering air of second OEM large outlook our and aftermarkets XXXX with for and arena. received in have the new potential half within the for client The X a client bright. mobility is We base

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

Kevin Miller

Brad. you, Thank

million XXXX grew XX.X% quarter for for profit quarter as gross for grew XX.X% Adjusted $X.XX. to the $XX.X consolidated Regarding EBITDA million. XXXX million. from $X.XX XXXX by to $X.X our consolidated of to $X.X $XX.X X.X% quarter compared second results, grew EPS second second of Adjusted to diluted the million by by from from the

gross by If first by but deliberate services from Solutions our profit by removing of about X.X%. XX.X% Data quarter of the XX.X%. estimate quarter customer, the rehab second slow-paying by after Engineering to we grew the grew we about the that COVID performance XX.X%. revenue reduction large & XX.X%. Life segment quarter COVID of XXXX grew for grew a As quarter XXXX, second $XX.X of for second grew quarter XXXX, If second profit second that we in for of remove XXXX, we million XXXX revenue of a the the revenue of School XX.X%. long-time, impact XXXX. quarter COVID impact quarter second by Healthcare remove Sciences and by in estimate gross gross decreased comparable profit

consider school-based revenue care our growth, care certainly largely business we model. health for important While is health a nonschool our our delivery future

of is XX.X% school grew over from The XXXX, school. year XXXX XXXX prior school revenue. revenue COVID-related year. XX%. 'XX XXXX-XXXX XXXX, year first from $XXX.X removing since see by XXXX, schools comprise year XXXX this trends. exceeds exciting Our XXXX year-to-date We million year returned school school revenue also virtual school the The revenue the some school third COVID-related after to in X is

XXXX, school in in XX.X% XXXX, XXXX last non-COVID was XXXX. million, XX of we XXXX, in districts we We revenue the pre-COVID doubled XXXX, nearly now revenue exceed school by have XXXX, Our revenue. year X. XXXX from over had $XXX,XXX School that In grew which XXXX. $XX.X XXXX,

XXXX, we X. had XXXX, For

over get August, for school the XXXX We $XXX,XXX XX are that year. school optimistic in of begins XXXX, this year that districts exceed we'll this well September

As it's heading the ever into school new school is year. best been our pipeline new a

at have school is say contracts that what can time While $XX,XXX our we've we $XXX,XXX serving or XXXX, districts. if I XXXX far than for in August, we revenue, school new will client generate new signed don't any school July, know a often more in history long in

As compared EBITDA are XXXX, fiscal to see when second consolidated to low half similar will growth continue compared cadence a fiscal we to for XXXX fiscal as quarterly with the of we optimistic XXXX. adjusted that double-digit

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

Operator

have Securities. of Rygiel [Operator B. we Instructions] Alex First Riley off,

Alexander Rygiel

Brad A and Nice here. Kevin, very questions solid see. quick of couple quarter. to

schools schools all it's in and growth. low business but bullish Engineering commentary and it the bullish double-digit more Obviously, segments, or the strength EBITDA First, than business. doing to fantastic, the seems very regards other with

maybe So what I target. conservative feel wanted I helping to about a bit you little that maybe understand us talk to is to a

Kevin Miller

already in August about revenue new really schools Well, talking of they the I this and week And we're kind sprinkle how the into terms just going of like sort right? often strong long-time is know don't of sometimes slow QX then The and mean going baked, September. QX that they're ramp of start schools even A little don't a until the of get and bear of second some start year. September. and up. in to we mind, into of lot sort in clients

we a to So big it's from had general, pretty QX, -- year have look compared XXXX, very QX at -- school numbers, the in right? jump we're some you on in bullish we the but if

don't conservative, increase XX%-ish out rapidly, to there, movement sequential revenue the by in EBITDA but nice I terms a because we that's we is of a already a obviously. being basically baking increase mean are can in in and design numbers pretty change EBITDA but So obviously, of predicting bit put big sort pretty little things want yes, and of

Alexander Rygiel

standpoint, as months, Brad, what then the sort do think fastest? next grows of think XX you a you revenue And about the from segment

Bradley Vizi

T+X, that and an think business leaders with for business T+X, up so single interesting set that's we we question. success, well Well, about Look, set can -- day, the help the future. to every into team work the

based naturally, over being the -- in strength that businesses relative the when the right? underwrite years to you and X another at success X place X, drivers able X short to term So in put one all these X, look invested of of we're ago, on potentially

from become can perspective. an It difficult underwriting

However, confidence This platform. can really bit this when emphasizes be key collection of outcomes, the short one a isolate frankly I period of businesses point expected about of think of short when in some over built could be a you that any that was quite the underwriting think both that's is the inevitably, you gained a long-term. and of and divisions time, there gyration unexpected. But up,

Alex, hope bit or not sorry little answers but much So if enough it's too your a I question. that

Alexander Rygiel

strong. pretty is sheet balance lastly, And

priorities? on So allocation capital quick thoughts

Bradley Vizi

position be very opportunistically. a to and Yes. Look, to play and tried in down this move just we've and be open-minded flexible middle always the

to balance in to relatively and a capital risk structure" anyone So not keep manage a be and necessarily be also "optimal position profile it but low. the to flexible sheet and manage nimble

the So be time, deviate but -- we've been M&A alignment active platform have the to we going it this retired. with strengthen, grow has from buybacks, the we that years. and Well vision baseline culture the base. of to pipeline to that and to an share can At believe evaluating to substantially with we're opportunities existing opportunities we been same with bolt can point plan respect on continues and to respect very not our company the over on last at obviously, continues the over front, XX% the several

So say call are relevant the plus probably change, I too. terms term of we it, can the Engineering, near that in opportunity equals are but ones always X Over, X. the set, X think most in

it's the like, seems right one So nicely to as that million, front, fallen far leverage, turn we've led we're that in on -- place the but not EBITDA allocation of to model. of been as the that under you said, have $X where consistent, we've mark, as capital things be pretty

Operator

have we up, Next Bill of Benchmark. Sutherland

William Sutherland

for all I in Brad, the if you could first half. time I whether frame guess increase and of XX% a think you Engineering? clarify mentioned new hires, just if that's And it's

Bradley Vizi

more whole was aerospace. That's a bit we Aerospace little sluggish Yes. first Frankly, the a than in anticipated half. as

our However, the crystallization is confidence that of improving. pipeline and

remarks are to the those So relative aerospace.

William Sutherland

life-size. timing? pronounced Okay. in than usually A Is see project that little more just you quarter-on-quarter in dip --

Bradley Vizi

bit timing. Yes. of Good guess. That's a little

basically an So with we have -- a last of QX. we're what end we're in particular high-margin later project what in going to start QX come And year. to backfilling a little bit

back into we get a So the of should uptick QX you you actually healthy think that business. and QX, into in as be half very

William Sutherland

you Or are school are -- signed an ready? Okay. pipe, just in maybe to and districts, a... when those this refers pipeline? those And implementation the Kevin districts is I mean, it's Rick

Kevin Miller

that's we're -- So it's XX year. a we number. And have we'll a we'll really next school over pretty a think school districts hopeful of heading we significant significant over that -- are number districts sign XX new signed And into actually. significant

we that But have pretty side, the you disappointed into just because to with Now, year. the of we've on sitting with get. for July sometimes -- here and have we these we we schools number in we're get that caution new flip never districts of school number the next reps been I

see how exciting maybe business. don't health know, it to we'll have out, a just but hopefully, So time I plays penetrate, meaningfully them, the XX real more, can it's of we care all for

William Sutherland

for So more be 'XX full 'XX I'm got year? XX. up for the than 'XX, the -- to you clear, just signed That's XX the sorry, for

Kevin Miller

No.

of for now. these August, September. 'XX, mean, right schools For we're in 'XX, recruiting some I starting they're

William Sutherland

Okay.

Kevin Miller

parts school when to second for August and schools start from from in anywhere early different year. school a end different They quarter to -- late I 'XX, right? about just anywhere of June, started May early first be When the years, and sort country quarter times. talk early our to you clear, to and third and I'm So 'XX, when of different say September talking they I added fourth about our

William Sutherland

terms looking Right, with of think right, operating half like Should we is flow at seeing in quarter. last, right. the first half? pretty much second back cash being the kind in and then that about just first and of quarter line cash the the flow

Kevin Miller

it's drop third hope strong, expect hope I it's a should I we in revenue right, better. the better. to be I have seasonality. quarter because due

our just So that will going the improve is -- hard in to flow. back QX DSOs naturally to offset revenue Obviously, in some flow. of But boost working that. cash I up to which spikes sort of cash hurt QX, we're

the add at flow and be not versus if look QX it's half cash than and I'll and we QX. operations, when expect second take together, better half when you obviously. So second be flow first to and from I QX half, the that them cash disappointed QX

Operator

further at there this All And are right. questions. time, no

Instructions] [Operator did more, one get We Kelly. Frank

Frank Kelly

the obviously percent And "Oh, we've quarter. We're But and little trend are in year." Certainly the time year-over-year, and obviously X-plus year doing in right on the seems this we the last X% up Gentlemen, Kevin, item? additional well, What drives when kind and said, on we revenues SG&A? -- it's what great can line whatnot SG&A last doing call, that in shed It some we're staff, to But were to we be light, investing. are infrastructure you now over bit for on that improvement been of not. at and investing keep? AR.

Kevin Miller

just technology -- natural There's would in is up cost goes or rent costs, Labor X, say. of goes right? up, some inflation really drivers of areas. of X I One up, general goes

put an is area into So we're a lot particularly where in making we've big Two we're is investment and money to cybersecurity of had that's a -- one. it. technology,

right? cyber of get with up in there's a company our lot doesn't cybersecurity that's been and money sure initiatives. Just taken down making threats, other IT to invested And keep by

we area, as care side. we course, followed later, mean the we a as we'll and long hire same SG&A. of prune just recruiters can in just care health well. you SG&A care, growth if to to And but especially time, infrastructure the in an investing I health the and support you overhire company many look bit a to on expect that figure the because as token, health out find, it investing as we know in continually continually we're we'll come, By little

to bring and for So we'll the instance, just double just of down company, just to the where over it opportunities digits. for of can't a you has like certain continue cost you couple look areas are way -- bring above last incredibly years, like there gone being up public

look -- opportunities. So continue for but to we'll

For opening some lot office talent And is of than continue there something Brad up over leverage to to instance, a cheaper the an is going that it Philippines. mentioned about in we're the here.

that So Frank. to we way the profit SG&A. growth of our grow don't exceeds the continue significantly continue at we sort ways we'll amount gross at in profit looked I as revenue SG&A. to the pay to and look look And SG&A. an to that can in much versus And gross that's relative ratio to growth improve attention I to growth will. the in it, we

Bradley Vizi

Yes.

million $X company So company. a it's just add thing more billion starting to a Frank, real I'd $XXX think about quick, one the company and as

state. And So little in naturally, existing look our that bit, in at -- we infrastructure historically, when infrastructure. you frankly, underinvest the RCM was a

to inevitably, it's towards think news Now that addition forward, in some a And of up much is of international an whole look, you well catching on profile to infrastructure. when that underway. company, building investment, company, a good brings the another start larger

we're our dollars thoughtful we about structure. measured how always, and add into As cost

GP should good. accelerate, far, grew well. So, the I as so mean and as revenue naturally, fall-through so up

Frank Kelly

becoming unnecessary to well we're down that like SG&A. and things bricks this sure spot some more I'm expensive those point, locations And Understood. Great. of at looking mortar Right. at more and are as bring that

Kevin Miller

We depends that obviously years per costs to really week, office foot bricks bricks-and-mortar person surprise it's square going don't bricks for per over and needed to same which couple X, X years the think the business, really important. a need who but to come of of amount and ago, important down last we our days people the still depending be couple like the But having a sure. not we is For mortar and a think a that on have is the on again, have it come back, mortar space business. you, do on to but of we space

we'd that employees to that us others to want our space to learn businesses like important we some much to XX% and collaborate and space. get want have that there's remote come are want have are have But and There to they to that they pretty and they work to want It's to aren't. trained. where

a So down. looking ever to move to going we're those company. we're to not fully costs But remote keep always

love couple I down we know leases anywhere You cheap. continue And those pretty drive and are look we we just costs to that of can. some a to have those

Bradley Vizi

Yes, that Frank, They by good stop centers to in. more leases of next some right? time functional. more training the bit much you're in little HQ Pensilhawkin, why when being about pretty feel you resemble tend leases, about don't think you'll higher And a we're and you investing

associated As you there's through clear those it's pretty the ROI an with facilities, investments. walk that

Operator

there in queue. Ladies final no and questions gentlemen, are the

Bradley Vizi

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

Operator

this ladies gentlemen, conclude does and with that, And your call.

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

RCM (RCMT) 8 Aug 242024 Q2 Earnings call transcript