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RCMT RCM

Participants
Bradley Vizi Executive Chairman
Kevin Miller CFO
Bill Sutherland The Benchmark Company
Frank Kelly Scopia Capital Management
Call transcript
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Operator

Good morning ladies and gentlemen, and welcome to the RCM Technologies Third Quarter Earnings Conference Call.

Your host today is Bradley Vizi. Mr. Vizi, you may now begin.

Bradley Vizi

Good morning, everyone. Executive RCM Vizi, Brad is Chairman Technologies. of This XXXX earnings call. to the quarter Technologies RCM Welcome third I today am Financial Chief joined by Kevin our Miller, Officer. will before opening with and up for for begin legal it of summarize I each units will results the business Kevin our questions. operating the then disclaimer Kevin?

Kevin Miller

morning, Good everyone.

may Our and statements. information are change beliefs, information estimates estimates materially assumptions call and contained these based in Many forward-looking this beliefs, changes. presentation is our contain the available subject on us, to currently matters in will future. these the The forward-looking statements rapid in to and of assumptions and

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

Bradley Vizi

momentum. came expectation, timing the services, to third Kevin. at we are finish with low-end and XX%. operating deliver exceeds project of in will by robust the a year-to-date EBITDA result well-positioned year X.X a our income enter XXXX a XXXX our of million within believe a that division each of Thanks, separately. discuss quarter I of basis, we Though strong adjusted On engineering as

going quarter. continue Division business news tipping by Healthcare third during contributing we we Specialty of with the this over posted build revenue, $XX,XXX expected the seasonality operating a out, Group believe revenue scale Locum each have than with of to we Perhaps we better fine one a to new Specialty our compared positively for performance growing Despite income. the mitigate our set and business to experienced year quarter third in $XXX,XXX additional strategy Healthcare to now operating the record Greenfield point from revenue have to in of X.X% inherent Staffing it $XX.X third Though Our third tune longer reached practice forward. platform XXXX school best quarter quarter the took million third in in the the record drive as XXXX. Tenens its our quarter to

Specialty XXXX, sometimes and through many be major large award client's and to our flow quarter large projects of the in our expect XXXX our performance XXXX.Our bodes XXXX, contracts gross with of expected Despite revenue a today, disappointed XXXX. have major -- are engineering seasonality have profit with fourth quarter fiscal RCM the record resulting typical in the our We off great segment generally ended to Hawaii ended XXXX and professionals Group a that in quarter cyclicality. that power know XXX in hit Healthcare school XXX professionals. again professionals is in those for approximately as start. engineering well approximately the the new see have And of therapists. of and XXX while third year months as gotten XXX our our in to New of clients, quarter we XXXX today, quarterly followed those has while with engineering We fourth a the projects XXX of of fourth that completed with summer power We school projects but we we as City in to the believe in professionals power with We for therapists. three fall XXX York start projects segment, It and of power to strong spring. revenue have

XXXX third quarter the of $X million XXXX. and Canada compared of in in in million third Serbia Energy of quarter Group posted $X.X operates which as Our Services the the to revenue U.S.,

markets including secure distribution awards in increase project. award We an an EPC of are seeing a our bidding recently transmission and in activity

Our bidding Energy on are now right pipeline projects for Group XXXX. has Services a of we robust

from our to as strong looking forward continued are performance backlog energy to and We services, build. pipeline continue

Our Power generated of revenue third in both of of and activity Power XXXX forward. million Ontario uptick utilization Canadian versus towards quarterly $X.X Group Group project mainly in Bruce Power XXXX. anticipate improve the which an and $X.X third service revenue and Power an new Bruce in billion and We OPG increase the in in quarter quarter Systems with going resulting

million in of XXXX. $X.X revenue million of quarter XXXX Our $X.X of major generated in from the major decreased activity aerospace the versus decrease is third quarter clients. our the Aerospace Group revenue in of the The third driver

As we on aerospace on previous clients. of number small a calls, reliant mentioned are too far

services Our primary notified that we Government. our to client have months we've base, and recently the in is XX past goal years. this grow have Related in energy what to services deliver Federal objective, awarded to been to aerospace to diversify two GSA similar the over we contract the a accomplished next been

source we a new to expect that While into revenue market anticipate grow take this RCM. will for to it time we develop, some substantial

our the Information encouraged Technology activity in Group. are We by

that we cybersecurity quarter the two about will XX gross has with Serbia. will two It in years IT American been cloud also growth. but IT prior this the for delivered engagements computing sequentially These our potential Solutions be three accomplish revenue small sold grew start and out it since substantial of third North major space consultants, to is profit Information and Technology feat. year, firm have Our the engagements and noting worth Group over that

Information results discussing the of to remarks. fourth of in prepared basis, leadership We to from will our see a infrastructure, we progress concludes now fiscal This quarter open anticipate our As our significant improved result the a February. look investment in this performance we call sales Companywide and consolidated forward XXXX. our time, questions. for changes At for on to up we Technology Group. positive are starting

Operator

[Operator Instructions] Our Sutherland. question Please Bill first comes from ahead. go

Bill Sutherland

Thank morning guys good you, and

Kevin Miller

Good morning, Bill.

Bill Sutherland

other and to prior you were this morning? Locum late call you up really rather or saying business the so and lines has business that on a minute the called I got Locum on out any picked

Kevin Miller

Well, we the did little contracts? school bit 'XX talk a about 'XX,

Bill Sutherland

Yes, got got that. I that. I Oh, yes,

Kevin Miller

that a York That's New business Hawaii; So had State little contribution Locum other discussed. we did revenues the margin. we talked Obviously, than positive that of about bit. and impacts City which XXXk that, and and all about in

Bill Sutherland

Okay. business, know margin Well, maybe well. in the seeing then on gross placement of reflected a couple been in some the in as you've healthcare. questions I headwinds it's

mentioned get I'm of -- but not or And on IT then, the kind -- guys of I because Let's business you healthcare guess update and the you've HIM mentioned have an that. sure

Kevin Miller

HIM is No, of part business though. the healthcare

PERM unfortunately in down which compared XXXX has been [ph] So to let's little bit, talk significantly as about XXXX. a

XXXK. PERM revenue about year, so we XXXX, of is and 'XX very at in our versus down profitable because about against this XXXK over year you're So, commissions. dedicated did XXXK Group basically as only in million that's down in about XXXK are year-to-date so are running Year-to-date, X that versus firm revenue X.X last costs QX million variable

so has gross line. margin. Obviously, profit much that margin contribution the impacted and top So impacts it but not gross and the the

great is You last also not and year year having to relative about asked either. a HIM HIM

XXX,XXX up year-over-year. in are We revenues

that in but we XX hasn't three that's contracts when the going that be a and get really of to We going fairly engine quarter that December job a it grown short such business at we're at business So point nice can first really a in this just engagement it's an and can in to year, that's really believe general small growing were forward. rate a do but contract, growth feel six going nice a hoped to forward, won a going recently lot we still we for market and to forward. into market give nice on be this November HIM months, and bullish we it and typically a this in like tend big little would we that term 'XX be health us big it's in players grab. care going because month the for like driver We can just but think growth

Bill Sutherland

as business being count that I now are couple Can you center guess handled out far in pieces on of where and? called in Serbia as head a of your you excellence are they're of

Kevin Miller

sort headcount right year we engagements about cloud two people know of five expect exactly don't about can doing XX what's now is a where that like seven another quite the lot a to grow a we think up it's is they're XX Serbia. security based of and the on two of we or to referenced and have might couple one We The is spending grow some we eight X internal about in a our really that thought quite you in out about that as computing the areas billing XX who, these it and just as and we practice going because end it's on as working people well persons we're engagement engagement have far bit engagements those one working so IT a bit. from nice be runs are engagement. those now XX our Right is probably I And these so total have assignment people maybe potential that the so as like a is also recurring Right, to than have they and people what more these feel on two think cyber where have nine roughly engineering now is by little software higher today? a know. have out. I engagements nice development we IT specific well, is bit clients, not of a for we can on a Brad this be on One be customers are that is five areas that on we

effort to over in we're under use going just So but must really quickly these as that IT America, around we be. hoping to we we're similar it illusion that were potential great to North any can go engagements think has that is time Serbia after the references not

end. You're not

Bill Sutherland

Well.

Bradley Vizi

have questions? Keep more going, as we

Bill Sutherland

in we the to Doesn't level job about the think sorry. jump which kind need at quarter. on the I'll queue and then of you expect this future? of Yes, Actually SG&A WE in just remarkable the should one P&L to get

Bradley Vizi

on down and the calls. at obviously focused sales reasons, on SG&A mean seasonality couple efficiency time discussed a very as on some as previous our But We're that the reinvesting SG&A out commissions. of into particularly the as the I've same possible QX I is of activities. QX getting for primarily the much into Sure, while in generating

So, QX you're our of terms than see quarterly of going forward, I the to what a continue in think discipline spend. to that's SG&A you're lower see in but obviously to going going SG&A of terms in lot

Bill Sutherland

And too. I'll cash quarter back I surprised, this queue. good job in on the get Thanks.

Operator

coming from ahead. is question next Frank Kelly. Our Please Instructions] [Operator go

Frank Kelly

gentlemen. morning you? Good How are

Bradley Vizi

Good, Frank. morning. Good

Frank Kelly

Great, are could on area other noticed in those had I of this composed $XXX,XXX we what some some of? expenses light the share numbers quarter, you of

Bradley Vizi

Frank. interest primarily It's

Frank Kelly

Is up of interest off Primarily okay. last it quarter?

Bradley Vizi

lot. a by up not It's

Frank Kelly

Right are down, one that's I but borrowing kind things. why the so of of

Bradley Vizi

misleading end XXX,XXX was quarter about quarter last a borrowings be it's looking we're quarter, about You're so little but XXXK. so our down interest that this Frank, can bit XXX

Frank Kelly

and as we quarter far in and as borrowings do going next Okay where see that then numbers? interest

Bradley Vizi

probably in interest debt to little can any just like there anything go in I difficult or relative sort quarter revenues debt course absent I but could jump a go out of typical acquisition an up to to number. appreciate the receivables as along of that to increase of drive bit would in the our QX expect because the QX. big that our other those QX I it's things because in events. a up and lines drive expect are to you that really QX And predict expect

Frank Kelly

I DSOs, historical AR see has up and well where a bit little QX noticed Great for we gone DSO. as as the

Bradley Vizi

that will I to in DSO's relative down the QX. think QX our come

see we'll some I think improvement there.

revenue the get seasonality base not because but receivables. lot coming July very we this quarter you've revenues distorts DSO's business on you that little have got come September of this so bit collections kind particularly care no the a We of a high of in in little low because health sort if the and in school take right, have the typically any but revenues August

is are some an with which as and and continue also City in client other of in City Board and money of quarter client payment September shut get collections fair know from a will just New say it can with issue given Education but to issues kinds all largest XX,XX DSOs the tend a early We unfortunately in we'll all in have outstanding for we of And York issues a our bit them but fast and unfortunately still any an New we school approvals QX all so which We amount and have had furious some we issue our be with drive computer down. glitches and QX never things started they in they with and collected off hopeful you Frank, I'm the up receivables a get a QX cleaned wildcard. July quite bit. ton year we of September of August then didn't in they're everything a of to York

Frank Kelly

Thank you. Great.

Operator

[Operator more Instructions] Gentlemen, call. there you for are no thank We questions.

Bradley Vizi

the everyone forward Okay, for you to RCM speaking Technologies attending with looking thank call, in QX you XXXX.

Operator

and today's call. Thank gentlemen for joining ladies you,

here disconnect You day. all and great a time may at this have