R C M Technologies Inc (RCMT) 2008 Q2 法說會逐字稿

Ladies and gentlemen, thank you for joining the Second Quarter Earnings Conference Call. Your host for today is Leon Kopyt. Mr. Kopyt, you may now begin.

Thank you, Shauna. Good morning and thank you very much for joining us this morning. I am joined by Stanton Remer who will give you the financial highlights as well as sectorial data, as Kevin is on vacation this week. He will be joining us next time on our conference call. We're pleased to have you this morning. And Stanton, could you begin the presentation for us?

Yes. Thank you, Leon and thank you ladies and gentlemen for your interest in RCM Technologies. I'll give you the Safe Harbor statement.

Our presentation this call will contain forward-looking statements. The information contained in the forward-looking statements is based on our beliefs, estimates, and assumptions and information currently available to us. The forward-looking statements relate to matters such as estimates used for developing pro forma financial information, the general health and direction of the market for IT and engineering and other professional services, our intentions as we changes to our product offerings, our connection on - our concentration on higher margin service areas, our pursuit of strategic alliances, partnerships, clients, and acquisitions, the increased propensity of existing and potential clients to outsource IT and engineering functions, and anticipated operating performance in financial conditions.

The statements reflect our current views with respect to future events and are subject to variety of risks, uncertainties, and assumptions relating to operations and results of operations, competitive factors and shifts in market demand. If any of these risks or uncertainties materialize or if our underlying assumptions are incorrect, actual results may vary significantly from expected results. The following factors will specifically affect our ability to achieve expected results. Unemployment in general, economic conditions associated with the provision of information technology, engineering, and other professional solutions, services and placement of temporary staffing personnel.

Our ability to attract, train, and retain qualified personnel who posses the skills and experience necessary to meet the staffing requirements of our customers and future customers. Our ability to achieve and manage growth and selecting suitable acquisition candidates and analyzing their businesses accurately and integrating required businesses into our company, and other risk of our acquisition strategy. Many other factors will also affect our ability to achieve expected results.

The other factors we consider most pertinent are referred to in the periodic reports on forms 10-K, 10-Q, and 8-K that we filed with the SEC. We will be happy to send copies of these documents to you at your request. Otherwise, we encourage you to review the documents as they appears in the RCM Technologies Inc. website under Investor Relations. Thank you.

I want to give you the highlights of the second quarter ended June 28th as compared to the second quarter ended June 30th, '07. Our revenues were $55 million compared to $56.8 million. Gross profit was $15.2 million compared to $14 million.

It was a 27.5% gross margin percentage in the '08 compared to 24.6% in '07. Selling, General Administration was $12.1 million compared to $10.6 million. Depreciation-amortization, $560,000 compared to $366,000.

Operating income in '08 was $2.5 million compared to $3 million in '07. Income before taxes was $2.4 million compared to $3 million. Net income was a $1.4 million compared to $1.9 million in '07. Earnings per share was $0.11 compared to $0.16. On a basic basis on a fully diluted basis, it was $0.11 compared to $0.15.

On the year-to-date basis it was $104 million compared to $111 million. The gross profit was $27.4 million compared to $26.3 million which was 26.4% gross margin compared to 23.7%. Selling general administration was $22.6 million compared to $20.7 million. Operating income was a loss of $2.1 million which included a write off of bad debt in the first quarter, which was previously announced compared to $4.9 million.

Net income -- there was a net loss for the year-to-date, it was $1.2 million compared to a profit of $3.4 million which yielded a $0.10 loss per share compared to 28% -- $0.28 earnings per share.

On a sectorial basis. Revenues by sector for the second quarter with $28 million in I.T. Engineering was $14 million, and Commercial Services, which includes healthcare, was $12.9 million for a total of $55 million.

Gross margin percentage in Information Technology in the second quarter was 29.5%, Engineering was 23.7%, and Commercial Services is 27.6% in the second quarter.

Sales per day, billing day Information Technology was $438,000, Engineering, $220,000, and Commercial Services, $202,000. Leon, do you have any -- you want to take that from there?

Yes. Thank you Stanton. Shauna, can we begin the question-and-answer period please?

(OPERATOR INSTRUCTIONS). Our first question comes from William Jones with Smith Barney. Go ahead, Mr. Jones.

Yeah, operator?

Our next question comes from [Bill Detulio] with Boenning & Scattergood.

Good morning, guys. I'm just wondering if you could tell me, is was in the IT segment, absent the acquisitions, where would the revenue growth rate had been for the quarter?

Stanton, do we have those numbers?

No, I don't have those numbers available to me at this time without the two acquisitions that we completed.

Okay. Could you give us an idea of going forward, what do you think the organic growth there would be and what initiatives you think would get you there?

Yes. The pipelines for the IT was weak actually in the first six months of this year but is improving significantly especially in our enterprise software sale area. So we believe that we can achieve a low single-digit growth in the next two quarters of '08.

Some of the initiatives or the transformation of some of the commoditized services to specialized practices, developing some of the proprietary bundled that address the functionality gaps and mitigate business partners' deficiency. So a lot of those solutions align very closely the IT systems of the business operations. So those are some of the exciting projects and bundles that we are working on that's have a proprietary nature to it.

Okay. Great. And how about the same thing for the engineering segment?

Engineering pipeline is been very strong and we were, actually, successful in the last several months to sign a number of general services contracts, that don't necessarily agree of pre-described revenues stream, but historically have shown us that since we have the general services contract. We are one of the approved and trusted supplier to a number of utilities.

For example, we signed a contract with the New York City Power Authority both for engineering management services as well as facility services. We signed a general services contract with public service in gas. Similar work for fossil plants and planning, scheduling, and managing outages are some of the capital work. So those are some of the exciting contracts. They're multi-year contract that will provide, I think, some revenue stream to RCM.

Okay. And what do you see the growth drifting for next quarters from that one.

I don't believe it's prudent for us, really, to give any growth guidance. I think I want to see how these contracts develop and how they ramp up before we have a specific number that we can share with you.

Okay. Great. All right. Those are my questions. Thank you very much.

Thank you.

(OPERATOR INSTRUCTIONS). There are no further questions at this time.

Alright. Thank you very much for joining us and we'll reconnect again at the end of the third quarter. Thank you.

Thank you, ladies and gentlemen.