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This content is a press release from our partner Globe Newswire. The AP newsroom and editorial departments were not involved in its creation.

RCM Technologies, Inc. Announces Fourth Quarter and Full Year 2018 Results

March 6, 2019

PENNSAUKEN, N.J., March 06, 2019 (GLOBE NEWSWIRE) -- RCM Technologies, Inc. (NasdaqGM: RCMT), a premier provider of business and technology solutions designed to enhance and maximize the operational performance of its customers through the adaptation and deployment of advanced engineering, specialty health care and information technology services, today announced financial results for the thirteen and fifty-two week periods ended December 29, 2018.

RCM Technologies reported revenues of $55.3 million for the thirteen week period ended December 29, 2018, an 8.3% increase as compared to $51.1 million for the thirteen week period ended December 30, 2017 (the comparable prior year period). Gross profit was $13.0 million for the thirteen week period ended December 29, 2018, a 1.8% increase as compared to $12.8 million for the comparable prior year period. The Company experienced GAAP operating income of $1.6 million for the thirteen week period ended December 29, 2018 as compared to an operating loss of $3.2 million for the comparable prior year period. GAAP net income was $0.6 million, or $0.05 per diluted share, for the thirteen week period ended December 29, 2018 as compared to $0.3 million, or $0.02 per diluted share, for the comparable prior year period.

RCM Technologies reported revenues of $200.4 million for the fifty-two week period ended December 29, 2018 (fiscal year 2018), a 7.3% increase as compared to $186.7 million for the fifty-two week period ended December 30, 2017 (fiscal year 2017). Gross profit was $49.3 million for fiscal year 2018, a 1.9% increase as compared to $48.4 million for fiscal year 2017. The Company experienced GAAP operating income of $5.4 million for fiscal year 2018 as compared to $0.3 million for fiscal year 2017. GAAP net income was $2.7 million, or $0.22 per diluted share, for fiscal year 2018 as compared to $2.0 million, or $0.17 per diluted share, for fiscal year 2017.

The Company had adjusted EBITDA (non-GAAP) of $2.6 million for the thirteen weeks ended December 29, 2018 as compared to $2.5 million for the comparable prior year period. The Company had adjusted EBITDA (non-GAAP) of $8.9 million for fiscal year 2018 as compared to $8.0 million for fiscal year 2017. A reconciliation of adjusted EBITDA (non-GAAP) to EBITDA (non-GAAP) and net income (GAAP) can be found on the fourth page of this press release.

The Company experienced $1.6 million in severance, professional fees and other charges during fiscal year 2018 as compared to $1.4 million in fiscal year 2017. For fiscal year 2018, these charges include severance accrued for the Company’s former chief executive officer and related payroll taxes; continuation of certain benefits; and professional fees, totaling approximately $0.9 million. The additional charges of $0.7 million incurred related to transactional financial advisory fees; legal fees associated with defending an ongoing frivolous lawsuit with a competitor of the Company; professional fees associated with the acquisition of Thermal Kinetics and search fees associated with hiring a senior executive. Fiscal year 2017 charges included costs relating to closure of the Purchase, NY engineering office and the Edina, MN Information Technology office, totaling approximately $0.8 million. The additional charges of $0.6 million incurred severance to a senior executive; legal fees associated with the acquisition of PSR Engineering; and other discrete legal related and miscellaneous charges.

Bradley Vizi, Executive Chairman of RCM Technologies, commented, “We are pleased with our fourth quarter and fiscal 2018 performance. Our fiscal 2018 adjusted EBITDA of $8.9 million grew by about 12% over fiscal 2017. More importantly, we believe we are poised for strong performance in fiscal 2019.”

Kevin Miller, Chief Financial Officer of RCM Technologies, added, “Considering the large uptick in fourth quarter 2018 revenue, we are pleased with cash flow from operations. We experienced significant improvement in fourth quarter accounts receivables collections relative to both the first three quarters of fiscal 2018 and the fourth quarter of fiscal 2017.”

Conference CallOn Thursday, March 7, 2019, RCM Technologies will host a conference call to discuss these results. The call will begin at 10:00 a.m. Eastern Time. The dial-in number is (800) 285-6670.

About RCMRCM Technologies, Inc. is a premier provider of business and technology solutions designed to enhance and maximize the operational performance of its customers through the adaptation and deployment of advanced information technology and engineering services. RCM is an innovative leader in the delivery of these solutions to commercial and government sectors. RCM is also a provider of specialty healthcare services to major health care institutions and educational facilities. RCM’s offices are located in major metropolitan centers throughout North America. Additional information can be found at www.rcmt.com.

The Statements contained in this release that are not purely historical are forward-looking statements within the Private Securities Litigation Reform Act of 1995 and are subject to various risks, uncertainties and other factors that could cause the Company’s actual results, performance or achievements to differ materially from those expressed or implied by such forward-looking statements. These statements often include words such as “may,” “will,” “expect,” “anticipate,” “continue,” “estimate,” “project,” “intend,” “believe,” “plan,” “seek,” “could,” “can,” “should,” “are confident” or similar expressions. In addition, statements that are not historical should also be considered forward-looking statements. These statements are based on assumptions that we have made in light of our experience in the industry, as well as our perceptions of historical trends, current conditions, expected future developments and other factors we believe are appropriate in these circumstances. Forward-looking statements include, but are not limited to, those relating to demand for the Company’s services, expectations regarding our future revenues and other financial results, our pipeline and potential project wins and our expectations for growth in our business. Such statements are based on current expectations that involve a number of known and unknown risks, uncertainties and other factors, which may cause actual events to be materially different from those expressed or implied by such forward-looking statements. Risk, uncertainties and other factors may emerge from time to time that could cause the Company’s actual results to differ from those indicated by the forward-looking statements. Investors are directed to consider such risks, uncertainties and other factors described in documents filed by the Company with the Securities and Exchange Commission, including our most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q. The Company assumes no obligation (and expressly disclaims any such obligation) to update any forward-looking statements contained in this release as a result of new information or future events or developments, except as may be required by law.

Tables to Follow

RCM Technologies, Inc.Condensed Consolidated Statements of Income (In Thousands, Except Per Share Amounts)

Thirteen Week Periods Ended December December 29, 30, 2018 2017 ------- ------- (Unaudit ed) Revenues $55,271 $51,057 Cost of services 42,239 38,253 ------ ------ Gross profit 13,032 12,804 Selling, general and administrative 10,477 10,293 Depreciation and amortization of property and equipment 326 512 Amortization of acquired intangible assets 85 16 Severance, professional fees, office closures and other 200 1,447 Tax credit professional fees 371 259 Change in contingent consideration - - Goodwill impairment - 3,478 Operating income (loss) 1,573 (3,201 ) Other expense, net (517 ) (154 ) Income before income (loss) taxes 1,056 (3,355 ) Income tax expense (benefit) 457 (3,606 ) ------ ------ Net income $599 $251 ------- ------- Diluted net earnings per share data $0.05 $0.02

Fifty-Two Week Periods Ended December December 29, 30, 2018 2017 -------- -------- (Unaudite d) Revenues $200,352 $186,737 Cost of services 151,042 138,350 ------- ------- Gross profit 49,310 48,387 Selling, general and administrative 40,386 40,385 Depreciation and amortization of property and equipment 1,442 1,691 Amortization of acquired intangible assets 125 66 Severance, professional fees, office closures and other 1,571 1,447 Tax credit professional fees 371 259 Change in contingent consideration - 781 Goodwill impairment - 3,478 Operating income 5,415 280 Other expense, net (1,507 ) (525 ) Income (loss) before income taxes 3,908 (245 ) Income tax expense (benefit) 1,193 (2,255 ) ------- ------- Net income $2,715 $2,010 -------- -------- Diluted net earnings per share data $0.22 $0.17

RCM Technologies, Inc.Summary Consolidated Selected Balance Sheet Data (In Thousands)

December 29, December 30, 2018 2017 ------------ ------------ (Unaudited) Cash and cash equivalents $482 $2,851 Accounts receivable, net $52,335 $46,080 Total current assets $58,811 $55,639 Total assets $81,510 $73,279 Total current liabilities $23,188 $22,188 Borrowing under line of credit $27,540 $27,279 Net debt (borrowings less cash) $27,058 $24,428 Total liabilities $54,311 $51,248 Stockholders’ equity $27,199 $22,031

RCM Technologies, Inc.Supplemental Operating Results on a Non-GAAP Basis(Unaudited)(In Thousands)

The following non-GAAP data, which adjusts for the categories of expenses described below, is a non-GAAP financial measure. Our management believes that this non-GAAP financial measure is useful information for investors, shareholders and other stakeholders of our Company in gauging our results of operations on an ongoing basis. We believe that EBITDA and Adjusted EBITDA are performance measures and have provided a reconciliation between net income and EBITDA and Adjusted EBITDA. Neither EBITDA nor Adjusted EBITDA should be considered as an alternative to net income as an indicator of performance. In addition, neither EBITDA nor Adjusted EBITDA takes into account changes in certain assets and liabilities as well as interest and income taxes that can affect cash flows. We do not intend the presentation of these non-GAAP measures to be considered in isolation or as a substitute for results prepared in accordance with GAAP. These non-GAAP measures should be read only in conjunction with our consolidated financial statements prepared in accordance with GAAP.

The following unaudited table presents the Company’s GAAP net income measure and the corresponding adjustments used to calculate “EBITDA” and “Adjusted EBITDA” for the thirteen and fifty-two week periods ended December 29, 2018 and December 30, 2017.

Thirteen Fifty-Two Week Periods Week Periods Ended Ended ------------------------------------------ ------------- - --------------- Decem December Decembe December ber 30, r 29, 30, 29, 2017 2018 2017 2018 ------------------------------------------ ---- ------- - ------ ------- GAAP net income $599 $251 $2,715 $2,010 Income tax expense (benefit) 457 (3,606 ) 1,193 (2,255 ) Interest expense 500 181 1,471 590 Depreciation of property and equipment 326 512 1,442 1,691 Amortization of acquired intangible assets 85 16 125 66 ------------------------------------------ --- ------ - ----- ------ EBITDA (non-GAAP) $1,96 ($2,646 ) $6,946 $2,102 7 ------------------------------------------ ---- ------- - ------ ------- Adjustments Severance, professional fees, office 200 1,447 1,571 1,447 closures and other charges Tax credit professional fees 371 259 371 259 Change in contingent consideration - - - 781 Goodwill impairment - 3,478 - 3,478 Loss (gain) on foreign currency 17 (27 ) 36 (65 ) transactions --- ------ - ----- ------ Adjusted EBITDA (non-GAAP) $2,55 $2,511 $8,924 $8,002 5 ------------------------------------------ ---- ------- - ------ -------

RCM Technologies, Inc.Condensed Consolidated Statements of Cash Flows(In Thousands)

Thirteen Week Periods Ended ----------------- December December 29, 30, 2018 2017 ------- ------- (Unaudit ed) Net income $599 $251 Adjustments to reconcile net income to cash 2,167 1,634 used in operating activities Changes in operating assets and liabilities: Accounts receivable (6,017 ) (4,141 ) Prepaid expenses and other current assets 423 (523 ) Net of transit accounts receivable and payable (156 ) 359 Accounts payable and accrued expenses 1,240 995 Accrued payroll and related costs 430 668 Income taxes payable (814 ) (1,128 ) ------ ------ Total adjustments (2,727 ) (2,136 ) ------ ------ Cash used in operating activities ($2,128 ) ($1,885 ) Net cash used in investing activities (1,160 ) (1,060 ) Net cash provided by financing activities 3,081 4,795 Effect of exchange rate changes (21 ) 176 ------ ------ (Decrease) increase in cash and cash ($228 ) $2,026 equivalents ------- -------

Fifty-Two Week Periods Ended ----------------- December December 29, 30, 2018 2017 ------- ------- (Unaudit ed) Net income $2,715 $2,010 Adjustments to reconcile net income to cash 4,694 4,660 (used in) provided by operating activities Changes in operating assets and liabilities: Accounts receivable (7,681 ) (459 ) Prepaid expenses and other current assets (170 ) (293 ) Net of transit accounts receivable and payable (1,716 ) (830 ) Accounts payable and accrued expenses 1,021 (318 ) Accrued payroll and related costs 1,335 483 Income taxes payable (262 ) (182 ) ------ ------ Total adjustments (2,779 ) 3,061 ------ ------ Cash (used in) provided by operating activities (64 ) $5,071 Net cash used in investing activities (2,583 ) (1,803 ) Net cash provided by (used in) financing 346 (826 ) activities Effect of exchange rate changes (68 ) 130 ------ ------ (Decrease) increase in cash and cash ($2,369 ) $2,572 equivalents ------- -------

RCM Technologies, Inc.Summary of Selected Income Statement Data(Unaudited)(In Thousands)

Thirteen Week Period Ended December 29, 2018 ------------------------------------ Specialt Informa Engineer y tion Consolid ing Health Technol ated Care ogy ------- ------- ------ ------- Revenue $23,666 $23,065 $8,540 $55,271 Cost of services 17,781 18,039 6,419 42,239 Gross Profit $5,885 $5,026 $2,121 $13,032 Gross Profit Margin 24.9 % 21.8 % 24.8 % 23.6 %

Thirteen Week Period Ended December 30, 2017 ------------------------------------ Specialt Informa Engineer y tion Consolid ing Health Technol ated Care ogy ------- ------- ------ ------- Revenue $21,236 $22,104 $7,717 $51,057 Cost of services 15,745 16,750 5,758 38,253 Gross Profit $5,491 $5,354 $1,959 $12,804 Gross Profit Margin 25.9 % 24.2 % 25.4 % 25.1 %

Fifty-Two Week Period Ended December 29, 2018 -------------------------------------- Specialt Informat Engineer y ion Consolida ing Health Technolo ted Care gy ------- ------- ------- -------- Revenue $86,078 $83,663 $30,611 $200,352 Cost of services 63,488 64,860 22,694 151,042 Gross Profit $22,590 $18,803 $7,917 $49,310 Gross Profit Margin 26.2 % 22.5 % 25.9 % 24.6 %

Fifty-Two Week Period Ended December 30, 2017 -------------------------------------- Specialt Informat Engineer y ion Consolida ing Health Technolo ted Care gy ------- ------- ------- -------- Revenue $82,753 $71,316 $32,668 $186,737 Cost of services 60,352 53,801 24,197 138,350 Gross Profit $22,401 $17,515 $8,471 $48,387 Gross Profit Margin 27.1 % 24.6 % 25.9 % 25.9 %

RCM Technologies, Inc. Tel: 856.356.4500 Corporate Contacts: 2500 McClellan Avenue Fax: 856.356.4600 Bradley S. Vizi Pennsauken, NJ 08109 info@rcmt.com Executive Chairman www.rcmt.com Kevin D. Miller Chief Financial Officer