RCM Technologies Q4 2024 Earnings Report

RCM Technologies EPS Results

• Actual EPS: $0.37
• Consensus EPS: $0.74
• Beat/Miss: Missed by -$0.37
• One Year Ago EPS: N/A

RCM Technologies Revenue Results

• Actual Revenue: $76.91 million
• Expected Revenue: $79.00 million
• Beat/Miss: Missed by -$2.09 million
• YoY Revenue Growth: N/A

RCM Technologies Announcement Details

• Quarter: Q4 2024
• Date: 3/12/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, March 13, 2025
• Conference Call Time: 11:30AM ET

RCM Technologies (NASDAQ:RCMT) (NASDAQ: RCMT) is an information technology consulting firm that specializes in delivering secure, enterprise-level technology solutions. The company’s core offerings include IT infrastructure design and integration, data center modernization, cloud migration and management, cybersecurity services, and digital collaboration platforms. RCM Technologies serves clients across federal and commercial markets, tailoring its services to meet the strict security and compliance requirements of government agencies as well as the performance and scalability needs of private-sector organizations.

Founded in the mid-1980s and headquartered in Dresher, Pennsylvania, RCM Technologies has built a reputation for end-to-end project delivery, from initial assessment and design through implementation and ongoing managed support. Its expertise spans network engineering, systems integration, application development and managed services, enabling organizations to modernize legacy environments, enhance operational efficiency and strengthen security postures. The company maintains strategic partnerships with leading technology vendors to ensure clients gain access to cutting-edge tools and platforms.

Over its history, RCM Technologies expanded its footprint through both organic growth and selective acquisitions, extending its service capabilities and geographic reach within the United States. The firm has supported a range of government entities, including defense, intelligence and civilian agencies, as well as Fortune 500 companies in industries such as finance, healthcare and manufacturing. In September 2021, RCM Technologies was acquired by Presidio, a global digital services and solutions provider, further integrating its expertise into a broader portfolio of enterprise IT offerings.

RCM Technologies Q4 2024 Earnings Call Transcript

Key Takeaways

• Q4 profitability affected by discrete items: A canceled equipment order ($900K), higher medical plan costs ($1.25M) and settlement/legal fees ($450K) drove adjusted EBITDA down to $6.3M, but management expects normalized earnings to align with 2025 targets.
• Robust Healthcare segment momentum: RCM Healthcare resumed growth in service hours, deepened K-12 partnerships amid surging behavioral health demand, and built a strong pipeline of new school districts and corrections clients into 2025.
• Life Sciences & Data Solutions outperformance: The division exceeded gross-profit and NOI targets through managed service growth, offshore delivery cost savings, and secured new clients plus multi-year renewals ahead of an AI/ML-driven market shift.
• Engineering segments driving expansion: Energy services landed grid modernization and data-center projects, Thermal Kinetics booked multimillion-dollar ethanol and lithium equipment orders, and Aerospace & Defense grew headcount 20% with strong EBITDA gains.
• Improved liquidity and growth outlook: DSOs fell from 114 to 92 days with a sub-80-day goal, full-year adjusted EPS held at $2.03, and the company targets low double-digit adjusted EBITDA growth each quarter in 2025.

Presentation

[Kevin Miller, CFO, Treasurer & Secretary at RCM Technologies Inc]

Good morning, and thank you for joining us. This is Kevin Miller, Chief Financial Officer of RCM Technologies. I am joined today by Brad Veasey, RCM's Executive Chairman. Our presentation and this call will contain forward looking statements. The information contained in the forward looking statements is based on our beliefs, estimates, assumptions and information currently available to us.

[Kevin Miller, CFO, Treasurer & Secretary at RCM Technologies Inc]

And these matters may materially change in the future. Many of these beliefs, estimates and assumptions are subject to rapid changes. For more information on our forward looking statements and the risks, uncertainties and other factors to which they are subject, please see the periodic reports on Forms 10 K, 10 Q and eight K that we filed with the SEC as well as our press releases that we issue from time to time. I will now turn the call over to Brad Veasey, Executive Chairman, to provide an overview of RCM's operating performance during the quarter.

[Bradley Vizi, Executive Chairman & President at RCM Technologies Inc]

Thanks, Kevin. Good morning, everyone. Yes, Kevin. We demonstrated strong top line momentum as many of our strategic initiatives gained traction. Though our profitability in Q4 was a disappointment, there is a clear delineation of discrete items that materially impacted the quarter and are not indicative of earnings power. Kevin will walk you through the details to help provide a better sense of a more normalized figure that is in line with our expectations for the business. Perhaps most important, the internals of the business are in very good shape. Despite the tragic wildfires in Los Angeles and a number of school closings, we are witnessing a resumption of growth in hours and increasing activity throughout most of the business.

[Bradley Vizi, Executive Chairman & President at RCM Technologies Inc]

Though the economy is migrating through a period of increased macroeconomic uncertainty, we take great care in working to insulate the business from these forces. In fact, we enter 2025 with considerable optimism due to the continued effort of our devoted employee base to position the business for secular success. I will now provide an update on the progress of each of the business units. RCM Healthcare closed 2024 on a high note that includes the resumption of growth in hours as we lap the strategic de emphasis of a slow paying long term care client. Our existing school district partnerships continue to deepen with increasing client penetration and a growing number of providers.

[Bradley Vizi, Executive Chairman & President at RCM Technologies Inc]

Additionally, we headed to 2025 with a robust pipeline of new school districts and clients positioning us for continued expansion. Many of our long standing contracts, which have matured into well established business lines, are also experiencing good growth. The continued expansion within these accounts reflects both the strength of our relationships and the quality of our services. Forward to our strategy, with increased value we deliver to each of our strategic accounts comes commensurate share gains and increased defensibility. A key driver of our growth in K-twelve has been the surging demand for behavioral health services.

[Bradley Vizi, Executive Chairman & President at RCM Technologies Inc]

Schools across the country are facing an unprecedented mental health crisis among students with an estimated one in five children experiencing a mental health disorder and the demand for school based behavioral health services has continued to grow. School districts increasingly prioritize mental and behavioral health support, leading to a surge in demand for specialized providers, including school psychologists, social workers, paraprofessionals and behavioral therapists. As a result, our ability to rapidly deploy highly qualified professionals has positioned us as a leader in addressing this critical need. We are also excited about the strong performance of our corrections clients. We demonstrated impressive growth in 2024.

[Bradley Vizi, Executive Chairman & President at RCM Technologies Inc]

This sector remains a key area of opportunity and we anticipate further expansion in the year ahead. Consistent with the strategy we employ throughout the company, we aim to benefit from the success of our initial accounts and leverage our learnings to tailor solutions that will allow us to further penetrate the market segment. As we move into 2025, we remain committed to smart growth, operational excellence and delivering unparalleled service to our clients. We look forward to capitalizing on the exciting opportunities ahead and building on the strong foundation we have established. In Q4, financial indicators for our Life Sciences, Data and Solutions division continued to show improvement as we delivered continued positive growth of our managed service contract portfolio.

[Bradley Vizi, Executive Chairman & President at RCM Technologies Inc]

Q4 revenue projections were in line with our expectations, exceeding GP and NOI targets for the quarter. Fourth quarter managed services growth also reflects further cost savings measures, including offshore delivery and productivity tools. In our HCM division, we continue to exceed quarterly quotas by utilizing advanced quality improvement techniques and creation of support utilities. We continue to deliver successfully on our managed solution initiatives and secured three new clients. Furthermore, RCM was awarded a multiyear renewals for three of our managed service engagements demonstrating client loyalty and consistent quality delivery.

[Bradley Vizi, Executive Chairman & President at RCM Technologies Inc]

Overall, our Q4 performance reflects the efforts the division has invested in securing long term extended managed services contracts. 2025 will see a dramatic shift in our primary markets. Traditional IT services of business analysis and application development will be replaced by deployment of AI and ML tools that support key process automation. We have positioned ourselves to assist our clients to adopt these new paradigms and create opportunities for competitive advantage. Transitioning to engineering, starting with energy services, Demonstrating robust annual growth, 2024 was another year of strong performance.

[Bradley Vizi, Executive Chairman & President at RCM Technologies Inc]

Energy services' customer oriented mindset was key to promote this growth and to meet the requirements of the power and utility industry. The continuation of professional high quality service execution was well received by major energy utilities in North America, resulting in further negotiations for upcoming large scale projects. These include the grid modernization of The U. S. And increased demand for data center developments serving as a rapidly emerging driver of growth for RCM.

[Bradley Vizi, Executive Chairman & President at RCM Technologies Inc]

Additionally, Energy Services EPC Group developed a teaming agreement with a major construction company for executing large upcoming turnkey projects. RCM Europe continues to demonstrate strong progress With a third EPC project awarded and several new projects in negotiation, we are looking forward to our German office providing a healthy contribution in 2025. We are particularly pleased with the quality of the talent we have been able to secure in a talent constrained environment. RCM's reputation as a thought leader and significant contribution to internationally recognized projects is paying dividends. Particular's care and scaling up our core team of professionals helps ensure solid project execution and lays the foundation for RCN to become a long term trusted partner for Europe's energy transition as we add a second large utility in Germany to our world class client list.

[Bradley Vizi, Executive Chairman & President at RCM Technologies Inc]

Energy services continued to contribute with active leadership roles in major technical associations such as IEEE PES and SF6 and Alternatives Coalition hosted by NEMA. The team will participate in the Segre Colloquium twenty twenty five and will be a sponsor and main contributor to the IEEE PES substation meeting in New Orleans in May. In Process and Industrial, the RCM Thermal Kinetics office has successfully designed and launched a new plant expansion program, primarily focused on the ethanol industry. The next campaign has already resulted in an equipment order for $3,500,000 The project expands a plant from 85,000,000 gallons per year to 100,000,000 gallons per year. The team has received several quality leads from marketing and client outreach efforts.

[Bradley Vizi, Executive Chairman & President at RCM Technologies Inc]

The office expects two to three additional engineering orders in Q1 and Q2 for next projects. We believe the twelve to eighteen month ROI our solution targets for clients will result in additional equipment orders following our front end engineering efforts. Also of note, Thermal Kinetics has completed an engineering order to develop novel solution chemistry for a customer planned lithium facility in The U. S. A several month pilot campaign at the Teekay Test Center is expected to begin in Q1 utilizing brine extracted from U.

[Bradley Vizi, Executive Chairman & President at RCM Technologies Inc]

S. Base wells. The equipment for this facility is scheduled for purchase in late twenty twenty five. This project is a great example of the strength that Thermal Kinetics Test Center brings to the team. We believe the ability to prove the simulated chemistry greatly improved the likelihood of our selection as a process engineering lead for the project.

[Bradley Vizi, Executive Chairman & President at RCM Technologies Inc]

The test center also concluded a challenging evaporation test for a U. S. Based client for an expansion project in Mexico. This is another example of utilizing testing capabilities as a route to market. The $7,500,000 equipment order associated with this test is planned for early Q3.

[Bradley Vizi, Executive Chairman & President at RCM Technologies Inc]

Thermal Kinetics is continuing efforts to finalize an expanded partnership agreement with a U. S. Based client. Teekay has been an exclusive vendor utilized for the past seven years to support this customer's proprietary CO2 capture and conversion plants. The team remains focused on continuation of their emergence as a market leader in responsible and sustainable chemical process design.

[Bradley Vizi, Executive Chairman & President at RCM Technologies Inc]

The Aerospace and Defense Group continued to win business on new programs with existing and new clients in Q4 twenty twenty four, which allowed us to consistently grow our resource base. Headcount has increased an additional 20% in Q4 twenty twenty four over Q3 twenty twenty four, which was already a significant increase over the first half of twenty twenty four. As projected, we have realized a healthy increase in EBITDA for 2024 compared to 2023, and the weekly run rate continued to increase an additional 65,000 in Q4, which amounted to a top line increase of $1,300,000 quarter over quarter. As previously mentioned, the RFIs, RFQs and MSAs that were finalized in 2024 have allowed us to realize an aggressive increase in headcount revenue and profit, which we expect to continue to increase through 2025. Our vertical of customers and technology innovator customers doing business with the U.

[Bradley Vizi, Executive Chairman & President at RCM Technologies Inc]

S. Government and Tier 1s has reinforced our expansion across air, land, sea, space and cyber. We have also experienced growth throughout new design programs in engineering as well as established long term supported products in manufacturing with increased aftermarket demands as well. All anticipated requirements throughout our customer base in Q4 twenty twenty four have now been surpassed as we begin 2025 in a much better place than years past. The recruitment team continues to build trusted, valued relationships throughout the client and candidate base, which has allowed this team to exceed all hiring expectations in 2024.

[Bradley Vizi, Executive Chairman & President at RCM Technologies Inc]

We continue to embark on new tools and technologies to maximize the reach and efficiencies of this team. One of our newest awards have just begun to gain traction and we expect these new multi year contracts to drive and expand our model based expertise, software, systems, logistics, avionics and aftermarket expertise throughout 2025 and 2026. We expect to continue to grow with all our aerospace and defense clients in 2025 and beyond as we are the cost effective, flexible and high quality workforce solution that is needed in this environment. We look forward to solidifying additional clients and program wins in 2025. Now, I will return the call to Kevin to discuss the Q4 twenty twenty four financial results in more detail.

[Kevin Miller, CFO, Treasurer & Secretary at RCM Technologies Inc]

Thank you, Brad. Regarding our consolidated results, consolidated gross profit for fourth quarter of twenty twenty four was $21,600,000 flat as compared to the fourth quarter of twenty twenty three. Consolidated gross profit for fiscal twenty twenty four was $79,800,000 compared to $76,700,000 for fiscal twenty twenty three. Adjusted EBITDA for the fourth quarter was $6,300,000 as compared to $8,900,000 for the fourth quarter of twenty twenty three. Adjusted EBITDA for fiscal twenty twenty four was $25,900,000 compared to $26,600,000 for fiscal twenty twenty three.

[Kevin Miller, CFO, Treasurer & Secretary at RCM Technologies Inc]

Adjusted EPS was $2.03 for fiscal 'twenty four as compared to $2.04 for fiscal twenty twenty three. During Q4 'twenty four, we had several material expenses move in the wrong direction. In our engineering group, a significant industrial process equipment order was abruptly canceled midway through the project. Also, our technical publications group experienced significant rework on a large project with one of our aerospace clients. These two items caused an approximate $900,000 reduction in gross profit in Q4.

[Kevin Miller, CFO, Treasurer & Secretary at RCM Technologies Inc]

Additionally, our self insured medical plan had abnormally high medical costs that increased SG and A expenses by about $1,250,000 from what we would normally expect. We settled a class action lawsuit regarding California wages in 2023, but the judge denied the initial settlement in 2024 and sent it back to the attorneys. We had to go back to mediation. We now have an approved settlement agreement, but it added about $450,000 in SG and A expenses between the increased settlement costs and the additional legal fees. As for segment performance in the fourth quarter of twenty twenty four, in engineering, gross profit for the fourth quarter of twenty twenty four was $5,200,000 compared to $6,100,000 for the fourth quarter of twenty twenty three.

[Kevin Miller, CFO, Treasurer & Secretary at RCM Technologies Inc]

Gross profit for fiscal twenty twenty four was $22,500,000 compared to $20,600,000 for fiscal twenty twenty three. Gross margin for the fourth quarter of twenty twenty four was 19.7% compared to twenty seven point zero percent for the fourth quarter of twenty twenty three. Gross margin for fiscal twenty twenty four was 23.4% compared to 24.3% for fiscal twenty twenty three. Gross margin in the fourth quarter of twenty twenty four was very low, primarily due to the two expenses mentioned earlier, but also because we had a high mix shift of lower margin work in Q4. Our engineering gross margins can be very volatile, but we generally expect them to land between 2428%.

[Kevin Miller, CFO, Treasurer & Secretary at RCM Technologies Inc]

In IT, life sciences and data solutions, gross profit for the fourth quarter of twenty twenty four was $3,900,000 compared to $4,500,000 for the fourth quarter of twenty twenty three. Gross profit for fiscal twenty twenty four was $14,700,000 compared to $16,200,000 for fiscal twenty twenty three. Gross margin for the fourth quarter of twenty twenty four was 40% compared to 38.7% for the fourth quarter of twenty twenty three. Gross margin for fiscal twenty twenty four was 37.5% as compared to 38.2% for fiscal twenty twenty three. We generally expect IT, life sciences and data solutions gross margins between 3640%.

[Kevin Miller, CFO, Treasurer & Secretary at RCM Technologies Inc]

In healthcare, gross profit for the fourth quarter of twenty twenty four was $12,500,000 compared to $11,000,000 for the fourth quarter of twenty twenty three. Gross profit for fiscal twenty twenty four was $42,500,000 compared to $39,900,000 for fiscal twenty twenty three. Gross margin for the fourth quarter of twenty twenty four was 30% compared to 29.8% for the fourth quarter of twenty twenty three. Gross margin for fiscal twenty twenty four was 29.8% as compared to 29.3% for fiscal twenty twenty three. We generally expect healthcare gross margins to be between 2830%.

[Kevin Miller, CFO, Treasurer & Secretary at RCM Technologies Inc]

School revenue for the fourth quarter of twenty twenty four was $34,900,000 compared to $29,800,000 for the fourth quarter of twenty twenty three. Non school revenue for the fourth quarter of twenty twenty four was $6,200,000 compared to $6,900,000 for the fourth quarter of twenty twenty three. However, if we remove a large long term care group where we deliberately reduce services, revenue would be $5,600,000 in 2024 versus $5,500,000 in the fourth quarter of twenty twenty three. Regarding our trade accounts receivables, we made some headway this quarter going from 114 DSOs for the third quarter of twenty twenty three to 92 DSOs for the fourth quarter of twenty twenty four. We had two balances at the end of fiscal twenty twenty four, both of which were cleaned up in the first quarter of fiscal twenty twenty five.

[Kevin Miller, CFO, Treasurer & Secretary at RCM Technologies Inc]

First, a large school client stopped payment early in the fourth quarter due to administrative issues unrelated to the company. The company estimates that this school client's 12/28/2024 accounts receivable balance exceeded normalized levels by about $6,000,000 An IT, life sciences, data and solutions client stopped making payments while we negotiated change orders and a two year contract extension. The company estimates that the client's '28 excuse me, 12/28/2024 accounts receivable balance exceeded normalized levels by approximately $3,800,000 Our goal for DSOs is to get to under $80,000,000 by the end of fiscal twenty twenty five. Our goal for all quarters in fiscal twenty twenty five is at least double digit growth on adjusted EBITDA, and we are very optimistic about 2025. We'll give more guidance as the year progresses and we'll have another call in May, which is not too far away.

[Kevin Miller, CFO, Treasurer & Secretary at RCM Technologies Inc]

This concludes our prepared remarks. At this time, we will open the call for questions. All right. We do have a William Duberstin. Your line is now open.

[William Duberstein, Financial Advisor at Stone Oak Capital LLC]

Hey, guys. Nice to talk to you again and thanks for all that detail on the extra costs. You went through a bunch of line items and I might have missed this, but it looks like you're was any of that realized in the tax rate? Because it looks like the tax rate was over 50% this quarter. I'm not sure.

[Kevin Miller, CFO, Treasurer & Secretary at RCM Technologies Inc]

Yes. Sure. So, Bill, the tax rate obviously in the fourth quarter is a function of the tax rate for the year, right? So, you really can't look at the tax rate in the quarter. You need to look at the effective tax rate for the company overall.

[Kevin Miller, CFO, Treasurer & Secretary at RCM Technologies Inc]

And the effective tax rate is 34. When we file the 10 ks later, you'll see a rate reconciliation. Certainly, if you have any questions on it, feel free to give me a call. But I'll just say that the 34 effective tax rate is very, very high for us and very abnormal. And what is driving a big chunk of that is permanent differences having to do with truing up deferred tax liabilities, right?

[Kevin Miller, CFO, Treasurer & Secretary at RCM Technologies Inc]

So it doesn't impact your cash taxes, but it impacts your GAAP taxes. So about 5% of that is stuff that we don't normally that we don't normally see. So the upshot of it is, absent anything I'm not aware of, we should not see a tax rate anywhere near 34% next year at effective tax rate. It should be well below 30%.

[William Duberstein, Financial Advisor at Stone Oak Capital LLC]

Do you have a range of what so called normal tax rate might

[Kevin Miller, CFO, Treasurer & Secretary at RCM Technologies Inc]

Sure, sure. I would say normal a range would be 26% to 29% and probably the midpoint of that is probably a pretty good guess. The more we make the more pretax we make, obviously that rate is going to come down some because your permanent differences have a lower impact on your rate. But in a normal year, we don't typically have big, big permanent differences. So if you ignore permanent differences altogether, our rates are around 26.5%.

[Kevin Miller, CFO, Treasurer & Secretary at RCM Technologies Inc]

But if we were above 27.5% next year, it would surprise me on an effective tax rate basis.

[William Duberstein, Financial Advisor at Stone Oak Capital LLC]

And for the specific costs on engineering, I think you called out an order being

[Kevin Miller, CFO, Treasurer & Secretary at RCM Technologies Inc]

$900,000 The $900,000 Total for the two items that occurred. And that's an increase to direct costs essentially. It's a combination of increased direct costs and essentially lost revenue that we expected to get in the fourth quarter. So you wind up with a little bit lower revenue and higher costs and the end result is about $900,000 in lower gross profit than we would have had absent those two items.

[William Duberstein, Financial Advisor at Stone Oak Capital LLC]

Right. So sorry, was one item resulting in lower revenue and one item increased cost?

[Kevin Miller, CFO, Treasurer & Secretary at RCM Technologies Inc]

No, they're both resulting in lower revenue. Obviously, the canceled order reduced revenue. And then when we have people doing rework, they're essentially working with hours that would normally be billable and would normally generate revenue, and you're not generating any revenue because we're doing work for free essentially. So in that case, it's you're losing revenue on people that normally would be generating revenue. So it's both.

[Kevin Miller, CFO, Treasurer & Secretary at RCM Technologies Inc]

You have higher and you wind up with a real crush to your gross profit dollars and your gross margin.

[William Duberstein, Financial Advisor at Stone Oak Capital LLC]

And the client doesn't recompense you for the work done to that before the project was canceled?

[Kevin Miller, CFO, Treasurer & Secretary at RCM Technologies Inc]

Well, yes. But we certainly cut it off. But the way the contract works, we still lose significant revenue by canceling the order midstream. Had we completed it, we would have delivered equipment that we would and we would have made a lot more money on it than having a canceled order.

[William Duberstein, Financial Advisor at Stone Oak Capital LLC]

Right. And I don't know if you can go into these details, but did that canceled order have anything to do with sort of the change in administration? Obviously, the election happened during November. I was just wondering if either that was a result of a change in The UK?

[Kevin Miller, CFO, Treasurer & Secretary at RCM Technologies Inc]

No. No. There's no political factors there. It's just a nuance with a particular client.

[William Duberstein, Financial Advisor at Stone Oak Capital LLC]

Okay. And I guess that led me to wonder if there's any sort of effect you're seeing from maybe like Doge or any sort of headlines that are out there, considering some of your clients are government contractors or may receive money from some government agencies?

[Kevin Miller, CFO, Treasurer & Secretary at RCM Technologies Inc]

No direct nothing direct. I mean, I think Doge can potentially have some impact on the IT environment in general, not talking about RCM. I mean, we don't do most of our work for government is working as a subcontractor and most of that work is in the aerospace industry. And we don't as of today, we don't expect any major impact. Certainly, if a lot of IT workers are getting laid off because of Doge, that can impact the IT environment in general.

[Kevin Miller, CFO, Treasurer & Secretary at RCM Technologies Inc]

But we don't see any direct link as of today to any major impact on RCM. And I'm sure Brad probably could expand on this, but that's what we're seeing today.

[Bradley Vizi, Executive Chairman & President at RCM Technologies Inc]

Yes. I'm just really, I'd just echo Kevin's sentiments. The other thing I see playing out, right, we seem to generally be insulated from when you start to think about services business and particularly ours, the times where you do have blips and material reductions in workforce, inevitably they overshoot, right? And so the first ones actually come back to the big contractors like us, right? So as I see all this playing out just like you do, and we're again managing the business every single day to continue to move the ball on the field, and we're not really seeing an impact.

[Bradley Vizi, Executive Chairman & President at RCM Technologies Inc]

The more I see this play out, the more I think to myself, at some point, these reductions in workforce, when are we going to be on the right end of overshooting, right? So in other words, make these government reductions, you're bringing people back, right? Those people that you just let go, oftentimes they are dispersed into the broader economy and they find different jobs and you have a gap you have to fill pretty quickly. So it's too early and there's too much uncertainty with respect for me to pound the table either way. But it hasn't been an impact today and we're optimistic that at some point it may actually be a tailwind.

[William Duberstein, Financial Advisor at Stone Oak Capital LLC]

Okay. That's encouraging. And sorry, my final thing. It looks like absent those one time charges, you guys would have grown operating income a little over 12%. So, that's obviously much better.

[William Duberstein, Financial Advisor at Stone Oak Capital LLC]

And did you say you were looking towards double digit bottom line growth every quarter or for the full year? I was wondering if there was a side.

[Kevin Miller, CFO, Treasurer & Secretary at RCM Technologies Inc]

Yes, at least that for the full year, right, because we had a disappointing fourth quarter. But we strive to grow our adjusted EBITDA quarter over quarter, every quarter in the low double digits. That's our goal, okay, is to grow at least in the low double digits. And we don't see any reason why we can't accomplish that in 2025.

[Kevin Miller, CFO, Treasurer & Secretary at RCM Technologies Inc]

I mean, Q4 twenty twenty five is sort of a long ways away. I don't think we're going to see sort of the hockey stick in numbers that we saw in 2023, and which we thought we might see in 2024 that we didn't see. But our expectation as a company is to grow adjusted EBITDA low double digits every quarter. And if we don't, then it's a failed quarter, frankly. And that's how we ring it up on the scorecard.

[Kevin Miller, CFO, Treasurer & Secretary at RCM Technologies Inc]

If we don't hit those numbers, then it's a failed quarter. So and as we look out at 2025, we're optimistic. And we don't see any reason why we can't hit our goals. So, I'll just leave it at that.

Participants

Executives

• Kevin Miller, CFO, Treasurer & Secretary
• Bradley Vizi, Executive Chairman & President

Analysts

• William Duberstein, Financial Advisor at Stone Oak Capital LLC