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RCM Technologies, Inc. Announces First Quarter Results

May 8, 2019

PENNSAUKEN, N.J., May 08, 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 week period ended March 30, 2019.

RCM Technologies reported revenues of $51.6 million for the thirteen week period ended March 30, 2019, a 1.5% increase as compared to $50.8 million for the thirteen week period ended March 31, 2018 (the comparable prior year period). Gross profit was $12.5 million for the thirteen week period ended March 30, 2019, a marginal decrease as compared to $12.6 million for the comparable prior year period. The Company experienced GAAP operating income of $1.7 million for both periods presented. GAAP net income was $1.5 million, or $0.11 per diluted share, for the thirteen week period ended March 30, 2019 as compared to $1.0 million, or $0.09 per diluted share, for the comparable prior year period.

Bradley Vizi, Executive Chairman of RCM Technologies, commented, “We are pleased with our first quarter 2019 results relative to recent expectations. More importantly, we continue to believe we are poised for strong second half performance in fiscal 2019.”

Kevin Miller, Chief Financial Officer of RCM Technologies, added, “As operating performance builds throughout the year, we anticipate disproportionate and significant positive cash generation as accounts receivable balances normalize.”

Conference CallOn Thursday, May 9, 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 (866) 403-9129.

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(Unaudited) (In Thousands, Except Per Share Amounts)

Thirteen Week Periods Ended March 30, March 2019 31, 2018 --------- ------- Revenues $51,595 $50,812 Cost of services 39,078 38,257 --------- ------ Gross profit 12,517 12,555 Selling, general and administrative 10,466 10,421 Depreciation and amortization of property and equipment 315 397 Amortization of acquired intangible assets 82 17 Operating income 1,654 1,720 Other expense, net (465 ) (307 ) Income before income taxes 1,189 1,413 Income tax (benefit) expense (274 ) 362 --------- ------ Net income $1,463 $1,051 --------- ------- Diluted net earnings per share data $0.11 $0.09

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

March 30, December 29, 2019 2018 ----------- ------------ (Unaudited) Cash and cash equivalents $1,693 $482 Accounts receivable, net $58,613 $52,335 Total current assets $64,626 $58,811 Total assets $92,811 $81,510 Total current liabilities $21,255 $23,188 Borrowing under line of credit $34,429 $27,540 Net debt (borrowings less cash) $32,736 $27,058 Total liabilities $63,732 $54,311 Stockholders’ equity $29,079 $27,199

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 week periods ended March 30, 2019 and March 31, 2018.

Thirteen Week Periods Ended -------------------------------------------- ---------------------- March 30, March 31, 2019 2018 -------------------------------------------- --------- - --------- GAAP net income $1,463 $1,051 Income tax (benefit) expense (274 ) 362 Interest expense 428 266 Imputed interest on contingent consideration 48 - Depreciation of property and equipment 315 397 Amortization of acquired intangible assets 82 17 -------------------------------------------- --------- - --------- EBITDA (non-GAAP) $2,062 $2,093 -------------------------------------------- --------- - --------- Adjustments (Gain) loss on foreign currency transactions (11 ) 41 -------------------------------------------- --------- - --------- Adjusted EBITDA (non-GAAP) $2,051 $2,134 -------------------------------------------- --------- - ---------

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

Thirteen Week Periods Ended ---------------------- March 30, March 31, 2019 2018 --------- --------- Net income $1,463 $1,051 Adjustments to reconcile net income to cash 733 779 used in operating activities Changes in operating assets and liabilities: Accounts receivable (6,264 ) (6,078 ) Prepaid expenses and other current assets 110 (2 ) Net of transit accounts receivable and payable 45 (1,243 ) Accounts payable and accrued expenses (826 ) (1,212 ) Accrued payroll and related costs (872 ) (70 ) Right of use assets and liabilities 266 - Income taxes payable (210 ) (269 ) -- ------ -- ------ Total adjustments (7,018 ) (8,095 ) -- ------ -- ------ Cash used in operating activities ($ 5,555 ) ($ 7,044 ) Net cash used in investing activities (102 ) (300 ) Net cash provided by financing activities 6,883 4,928 Effect of exchange rate changes (15 ) 17 -- ------ -- ------ Increase (decrease) in cash and cash $1,211 ($ 2,399 ) equivalents --------- -- ------

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

Thirteen Week Period Ended March 30, 2019 ------------------------------------------- Specialty Informat Engineeri Health ion ng Care Technolo Consolida gy ted -------- -------- ------- -------- Revenue $ 19,055 $ 24,171 $ 8,369 $ 51,595 Cost of services 14,357 18,533 6,188 39,078 Gross Profit $ 4,698 $ 5,638 $ 2,181 $ 12,517 Gross Profit Margin 24.7 % 23.3 % 26.1 % 24.3 %

Thirteen Week Period Ended March 31, 2018 --------------------------------------------------------- Specialty Information Engineering Health Care Technology Consolidated ----------- ----------- ----------- ------------ Revenue $21,418 $22,634 $6,760 $50,812 Cost of services 15,724 17,384 5,149 38,257 Gross Profit $5,694 $5,250 $1,611 $12,555 Gross Profit Margin 26.6 % 23.2 % 23.8 % 24.7 %

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