R C M Technologies Inc (RCMT) 2010 Q4 法說會逐字稿

Good morning and welcome to the RCM Technologies year end earnings conference. Your host for today, Leon Kopyt, will now begin.

Thank you, Alicia. Good morning and thanks very much for joining us this morning. Kevin Miller who is here with me, he will present the financial part of the preparation, and then we will make brief remarks, and then move onto the question and answer segment. I will turn over the first part of our presentation to Kevin.

Good morning everyone. I just wanted to give the quarterly breakout here, the sectorial breakout that is. For the fourth quarter total sales of $36,393,000 broken out as follows,Information Technology $15,502,000,Our Engineering group did $13,941,000,And our Specialty Healthcare Services group did $6,950,000. For the fourth quarter we had a blended gross margin of 29.5%. The Information Technology gross margin was 29.98%. Our Engineering gross margin was 26.55%. And our Specialty Healthcare Services group was 34.72%.

For the year we had total sales of $162,022,000 broken out as follows, Information Technology, $71,597,000,Engineering was $64,558,000,Our Specialty Healthcare Services was $25,866,000. And the blended gross margin was 28.51% broken out as follows, Information Technology 28.49%,Engineering, 26.03%,and Healthcare, 34.72%. So that is the sectorial data,I will turn it back to Leon, now.

Thanks, Kevin. Before we go to the question and answer segment, let me share with you a brief outlook for 2011. I will start with the Engineering group. That continues to enjoy a good business relationship with its clients. We believe it is well-positioned to have another good year. The general services agreements with major utilities provide us with sort of an unrestricted access to both operating and capital projects within the utilities. We continue to successfully supplement and transition part of our revenue from the capital side to the operating side to help balance and diversify the revenue stream.

As you know, participation in the significant projects offer us an attractive multi-year revenues ability but the award of some of these contracts sometimes are difficult to predict, due to political and funding processes, and that is one of the reasons why we are transitioning part of our revenue to the operating side in order to bridge some of these valleys on the operating projects. Capital projects are not sequential and synchronized.

The Healthcare group should continue to put up similar performance to the last year. We believe that with the reasonable alignment of the opportunities that we presently have, we could deliver respectable growth this year, in addition to the performance levels that we provided last year. IT group despite having attractive portfolio products and services and I believe decent market conditions, continues to fall below our expectation, and as we indicated in the press release we have taken a number of corrective measures to reenergize the sales engine, and believe that action should reverse the downward trend in revenue levels.

The overall key performance and operating metrics on both P&L and balance sheet, and with the exception of the revenue, obviously are trending in favorable directions. Gross margins are up, operating income is up, tangible net worth, shareholders' equity, all of these key metrics are significantly up in 2011.

Let's move on to the question and answer period. Alicia, can we start that process?

(Operator Instructions). Our first question comes from Sheldon. Please go ahead.

Grodsky & Associates. Good morning everybody.

Good morning.

Last year you received an unsolicited takeover bid, I think it was at $5.10 or $5.20 a share. The Board rejected it, and then we didn't hear anything again from it again. There are any discussions going on, or is that a dead story at this point?

It is our practice not to comment on a specific event. I think the public market would reflect any discussions, if there are any discussions going on. So that has been our practice, and I apologize for not giving you any more clarity on that issue.

Our next question is from Brad Vizi at Legion Partners. Please go ahead.

He Leon. Give you please give us an update on the sales pipeline for the IT segment?

The IT segment pipeline is improving. We have upgraded a number of our sales associates over the last quarter. We hired a new general manager. And I think that we have not seen obviously the results of those corrective measures, but there has been an improvement in the IT pipeline from the third quarter to the fourth quarter, to the beginning of this year.

Okay, thank you.

(Operator Instructions). Mr. Kopyt, There are no more questions in queue.

Can you ask the audience again to see whether someone may have difficulties dialing in?

Sure. (Operator Instructions). We will wait just a moment for questions to come in. There are no questions at this time, Mr. Kopyt.

Alright. Thank you very much for joining, and we will see you at the end of the first quarter.