Docoh
Loading...

RCMT RCM

Participants
Bradley Vizi Executive Chairman
Kevin Miller Chief Financial Officer
Bill Sutherland The Benchmark Company LLC
Alex Rygiel B. Riley FBR, Inc
Call transcript
Due to licensing restrictions, you must log in to view earnings call transcripts.
Bradley Vizi

Good morning, everyone. This is Brad Vizi, Executive Chairman of RCM Technologies. Welcome to the RCM Technologies 2020 First Quarter Earnings Call. I’m joined today by Kevin Miller, our Chief Financial Officer. Kevin will begin with a legal disclaimer, and then I will summarize the operating results for each of our business units before opening it up for questions. Kevin?

Kevin Miller

everyone. morning, Good

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

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

Bradley Vizi

changed since. most are We COVID-XX. put impacted the we last To Like by about heavily segment. by Kevin. discuss impact need ago, to spoke we obviously in but implications perspective, the months companies, Thanks, has two the world

Herculean stress escalated. employees. was themes. non-billable I overarching When want first, staff very quickly throughout quickly of company We home. work safety to and the our moved part workforce transition is of occasionally to most COVID-XX effort. volume billable But of a working from the sheer priority Though and several of highest to accustomed a our our home, from required the suddenness our the

of company are the for entire our We new proud quickly adapting environment. to

the revenue all in is In our financial short-term, it performance. to As pertains three segments impacted.

cash is and sheet. now number our maximizing flow one right focus Our shrinking balance

vigilantly We the and managing are reduction and of accounts deferment debt receivable. reducing costs pursuing by aggressively

two while concerned, segment principles. aggressively same we the as need far to separately, are As each reductions applying cost consider

managed must the cash to the maximize while flow in the expense. First, harming These maximizing SG&A order second, utilization; two carefully in not overarching short-term, long-term. in themes company and be reducing

on staffing impact healthcare COVID-XX significant our segment. the most has had

City, QX twofold. quarter. Hawaii clients, another know, the pandemic, York way on closed abruptly in including our most and of of school staffing many March. record our segment was healthcare you well as impact New the But middle on to was its Before Chicago, of The

We would in lost revenue million school from billed otherwise that we $X QX. in approximately personnel have

$X in lost revenue this lost in gross million profit also We over QX. from

to addition for full payroll March. the of month incurred we costs normal certain In margins, our

help not revenue segment structure. we QX, furloughed its mandated After reduction, short-term to offset billable in To aggressively personnel fully non-billable close the reduced healthcare most for has our utilized. our that XXX% absorbing is direct cost staff of costs statutory have

healthcare rate XXX%. or are Our at utilization near running in

actions flex gain we on XXXX/XXXX enable reduced Today, basis. we structure to The schedule. while are million have confidence the down to reopening the more short-term, that annualized ramp on $X.X up allowing have we us taken school year, schools us the SG&A than an expense to by our cost over once

on to – have engineering material in segments. the healthcare as and inquiries demonstrated segments less As seen current both compared proposals. new business impact seen a neither slowing IT and Though to our a reduction COVID-XX of of a healthcare, COVID-XX, result group predictably assignments has

engineering pipeline, our challenging. than we the for substation work, have predict and electrical in challenging work more field the Visibility several usual. of significant beyond pent-up is QX expect we is opportunities to Though demand timing

and have IT both cost focused in reducing we structure also result, on a As our engineering segments.

room utilization We preserving for proposal focused ever, still are more driving the on preparation. while than

to hour minimize billable increasing to through bench hourly salaried the quotient furloughs, personnel. going are We to staff for senior direct and RIFs, converting great lengths

Consistent material reductions of with in the SG&A. are rest we company, making the

in in SG&A have under annualized basis, an XXXX. expenditures on expense significant addition possible. $X wherever SG&A IT, budgeted million we and reduction engineering eliminated delayed and of is expense For just previously This to

we have next cost debt the business. and be our reduction long-term will in summary, without two sacrificing quarters, In focus progress the the during primary made

to economic to business COVID to grow the RCM today’s a in making is company the post managing positioned world. is reality, entire sure aggressively team the committed While

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

Operator

All right. will [Operator Instructions] Bill come Sutherland. our first And question from

Kevin Miller

morning, Good Bill.

Bill Sutherland

Brad. morning, Good taking for Kevin. morning, questions. Thanks the good Hey,

you – XXX% it’s are a understand nearly business of just you temporary what you So also by understanding Brad, XXX%, more mentioned to it. that to mean XXX% the – Does you I – healthcare, you that? utilization. having of aspect little on staffing or nearly want think what a mean, never – I

Kevin Miller

have than we areas. do business segment, time have staffing is we don’t particularly paid staffing and bench but Well, off. lot the most of naturally bench, a of and other have We healthcare time sick our two some in healthcare XXX% bench in

have with in And schools. meant rates the in built we at billable billable. to be that that into schools supervisors use some we partially the are of the in or We bench not people all staff cases, that

that We salaried. a are also have of number therapists

of have XX%, XX% can they keeping got fantastic do we therapists away. March, normal course, Illinois bench time to salary because guys little in then, work utilization that requirements, kind the bit of so we hammered have under York. of they didn’t back And we statutory in range And right The do New of toward job a were as put times. well. and a necessarily

just right? we lay And needed some our some XX notice, with hours of them off off, can’t supervisors, lay to which of but

last costs kind that March having is of in for ratio wound against out But of our – terms depending amount all the loss fair the whack that. the of service normal of in go have time any so just which gross of necessarily revenue. the bench a that’s revenue you versus loss on didn’t that margins. gave So weeks And up Brad when see we and you’ll sort two of profit, extra this March, years of because unfortunately,

lines you going mentioned, we But very are focused utilization… all as margin gross a three never business very, in forward. And we’ll have in XXX% maximizing

Bill Sutherland

Yes.

Kevin Miller

we’re and running XXX.X%, some XX% now, – weeks, XX%, XXX%. … right to upper close XX% but pretty around XX%,

Bill Sutherland

Yes.

Kevin Miller

because on to critical cash and maximizing focused margin it focused gross we’re utilization, it’s but always right just more even our is that flow. The main we’re point now, on

Bill Sutherland

And of couple the different go assume the have fall. course, the is you I outlook other with I assumptions. issue, a of for to guess,

think to you If delayed, to be place with working are you other opportunities that could people? begin it

Kevin Miller

certainly. Yes, Yes.

We testing, opportunities. be promising the product of would when are say would in looking we’re we’re that means I both COVID that most I centers. looking of two new at say, screening of testing corporate at many different out things centers rolling and – testing,

testing centers. So – not screening actual COVID

probably have people working But So aren’t on-site right large of a off screenings to as change. lot and we with do are right come That’s corporations for away, going a that’s offices to they going to of the service now. to offering take everyday. in check a nurses into not because work lot temperature employees to businesses,

a So go service. number clients we interested have in now. that We’ve of right to that got that are offering ready

seen In is terms the have going that, And then and seen we for And grow providing will commercial other and generate not uptick we that’s optimistic over we’re that airports, nurses of that But in what have from significant instance, it’s to area like governments. time. screening to state say. in to revenue, hard an hospitals yet. really centers, revenue

interesting, chaos in though, of things much is now. healthcare so there’s the right market One that’s that the been

lot not get better as time, much a seeing see. seeing we’re we it. like to demand think that would execution, with but we we’ll of as – But seeing not for We’re nurses, we’re over

to telehealth that offering The the is we’re school. thing other

So our giant don’t are may not But schools doing It’s some schools, in we amount certainly a or telehealth some revenue. amount therapists also – of reopen. small doing are we teletherapy. doing be other teletherapy a some

how again, this this at opinion, the when because for Chicago different the seriously York our be they’re looking versus more opinion Hawaii, right the and they’ll different I it’s to they have opened may schools just think be is different New versus will open, be for virus. that XXXX/XXXX our It’s year now. they – all – are and that but and exposures our than exactly that all they right, opinion

Bill Sutherland

Yes, exactly.

then thinking good – And – And backlog, of how distribution the demand conversion, good opposed talked just power think? And canceled? you’re area, deferred or how you about thinking just or wondering some wanted I’m the about you Okay. the are as you gen. and were be to just curious you potential kind building some to transmission in about

Kevin Miller

sense any be of canceled. our major projects getting going to are that any not We’re

In fact, project had we the big before on we’re working has or we’re can and future, on haven’t not foreseeable any tell and for said, I hasn’t bidding the – you, happened. this that clients we’re doing that

stuff be if think even that the kidding some I we get going on not the to of have isn’t clients executed would think delayed. that we ourselves

the some to of is stuff Of get delayed. going course,

We a space. T&D activity proposal seeing decent the amount of in are

So we’re that. encouraged by

I some like a pent-up get mean, very demand at type lot We of to visit done. safety, be of that But in also our isn’t that walk a think work services now. going there’s all getting and done. people field even The few done for point, kinds downs lot right of field utility that get service there’s needs work to to points. has allowed work,

not engineering. optimistic in we it’s big is in – current or Brad But the as of engineering a like, the big, it’s have any about just past we’re on But cautiously particularly seen big erosion QX. remarks, a IT. work So, said visibility prepared challenge, our

seeing a We in are proposals. slowdown

we’ve proposals the of a T&D. But of so, week even couple nice seen out or last come

hell the we asterisk going that about know. don’t optimistic cautiously we’re the we forward don’t so And business what those know with two

Bill Sutherland

then, get know – And business, cash only improves I silver that’s slower. a expect And I things decent in the lining cash is can your guess, when your we quarter?

Kevin Miller

yes. Yes,

QX are lasts, forward. going how quarter. expect long driving realize and hyper-focused decent be matter, flow But And both cash cash flow towards and flow we’re flow You definitely in cash critical cash positive cash we in be really, we’re can this to and No for least to I a us QX be believe QX we going neutral. being at QX. positive and on it’s

Bill Sutherland

it That’s Thanks guys. again, me. from Okay.

Operator

Alex, does no there time, like come look [Operator from in open. is now It next this At line right. will Rygiel. further queue. question our Instructions] Alex questions are your All

Kevin Miller

Alex. Good morning,

Alex Rygiel

you Kevin morning, How and Brad. are Good today?

Bradley Vizi

Good. good. Oh,

Kevin Miller

to Good hear.

Alex Rygiel

A couple of random questions.

assignment percentage what the was billable many healthcare professionals First, that healthcare was furloughed? on how of are staff And today?

Kevin Miller

I But than just more of numbers about two-thirds those head would tell don’t probably I of have Alex. healthcare of front that, me, was exact staff my the our off in furloughed. top you

XX%, maybe. staff, probably, In terms our of least, at XX%, XX% billable

Alex Rygiel

Okay.

Kevin Miller

non-billable as [indiscernible] were few a quite furloughed people as and well – that unfortunately we And

Alex Rygiel

As it again, School fair? in season XX% up until wouldn’t I’m is to fall. assuming relates theory, come to back they the on starts that, that, that XX%,

Kevin Miller

pretty that’s staff. work. I But – furloughed scenario we’re we handful a we’re yes, case going best our Oh, billable of is for fair. for realistically, work work for But to looking we for find of them. all are mean, looking

of big that goal we’re to can. looking a we have wherever We nurses place

them for do as professionals the the in there’s not far much can As concerned, short-term. are we

Alex Rygiel

update stand Sure. And where right you covenants now? you and your then can debt us on

Kevin Miller

QX, higher would a characterization, Citizens was we we be we is an issue, getting – easy Well, automatic. will. we like feel it. ratio formula have cash waiver I debt It’s was end positive – our paying like of future, to the X.X. If that be. our having say I in I would my I flow, and works provided relatively for from and which than that the where on we’d that waiver won’t reasonably waivers supposed our execute confident That’s we’re above in see after feel Bank terms for to this but down the need that debt-to-EBITDA was QX, way

the no We’ve that been for mostly get problem. a or they past, and of we’ll it’s see amendments. through getting as that us. never Citizens and indication Citizens been problem, thin, kind rarely behind We have issue keep what thick we’re an don’t any And been fixed barely stood you. XX you’re But forward. today And stand over It’s going needed is I with to from years. behind doing in when So Bank waivers Bank every doing we fortunately.

Alex Rygiel

[Multiple were Speakers] correct three maybe it the on up relates to I million outstanding thought be to them of settlement, As or might that the just maybe I but one? me, XX with arbitration there books was wrong,

Kevin Miller

was There one major Yes. involved arbitration. three projects in

is arbitration the complete. So

best finished. arbitration the the So That’s it’s news is we are about done.

Alex Rygiel

business? then Excellent. in flow you be quarter can And childcare the cash positive special the second in

Kevin Miller

Yes.

Alex Rygiel

Excellent. you. That’s it me. for Thank

Kevin Miller

you, Thank Alex. Okay.

Operator

Do we All it reprompt look doesn’t me queue. right, any to want more or… in Speakers, like questions you have

Kevin Miller

go. We’ll

Operator

Bulva] getting [Steve some, want have final We take [ph]. think. a We’re from to as you Do I that one do question?

Kevin Miller

Please? be That great. would

Unidentified Analyst

Kevin. morning, Good morning. good Hey,

Kevin Miller

Steve. morning, Good

Unidentified Analyst

received regard receive cash In did as any hadn’t that? to the you already a you arbitration, result of that

Kevin Miller

we’ll cash QX. we’re We hopeful, not not We know get have to that. But we’re get the received exactly yet. do in it when going

Unidentified Analyst

much How that? is

Kevin Miller

million. $X.X

Unidentified Analyst

right? that Is million. $X was write-off the And

Kevin Miller

$X million. million. $X.X

Unidentified Analyst

million, $X What finalized okay. – when that arbitration? that was

Kevin Miller

weeks In April, ago. few

Unidentified Analyst

or it Does the Speakers]? your Okay. – sheet – [Multiple balance do

Kevin Miller

balance condensed reflects will – to be Yes. we sheet reflect that The balance our and it, file in – sheet balance expect does reflect press sheet will full the release Q that in today it. also the

subsequent close and statement material our we at and event, balance incorporated we it important, So income but a it’s into that since sheet.

Unidentified Analyst

are What’s that Okay. selling during collect the optimistic you for – how the quarter? in you’ll

Kevin Miller

sure, really not I’m Steve.

think doesn’t getting not clients into sense the to make chance. would there’s It I it. a decision it. for good to lot our pay Without there’s that pretty any wires a few barbed in of pay incentivize them details, a

don’t into position I an be think if it, So I the thought pay place. unwise we’d first get would they never But it decision. this in

what to for hard me do. it’s project they’re to going So

Unidentified Analyst

PPP any Okay. Switching COVID, to over for qualify you do money?

Kevin Miller

not. do We

large. too We’re

Unidentified Analyst

That’s have. Okay. I all

Kevin Miller

interest for right. in. Thank your All Steve. Okay. Thank you, you

Operator

further no in There’s Yes. queue. questions

Kevin Miller

RCM’s conference look first call. We update for to in Thank August. forward you quarter early next attending our

Operator

gentlemen, call. this and concludes your Ladies

now your disconnect may You lines.