Earnings call transcript: RCM Technologies beats Q2 2025 EPS expectations

RCM Technologies Inc. outperformed expectations in its second-quarter earnings report for 2025, posting an earnings per share (EPS) of $1.32, significantly higher than the forecasted $0.63. This 109.52% EPS surprise was accompanied by actual revenue of $78.17 million, slightly above the expected $77.47 million. According to InvestingPro analysis, the company appears undervalued based on its Fair Value calculations, with a "FAIR" overall financial health score. Despite these strong financial results, the company’s stock declined by 4.74% in aftermarket trading, closing at $22.73, reflecting investor concerns or broader market trends.

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Key Takeaways

• RCM Technologies reported a significant EPS surprise of 109.52%.
• Revenue slightly surpassed forecasts, reaching $78.17 million.
• Stock price fell by 4.74% in aftermarket trading despite strong earnings.
• Healthcare and engineering segments showed notable growth.

Company Performance

RCM Technologies demonstrated robust performance in Q2 2025, with a consolidated gross profit of $22.3 million, marking an 11.4% year-over-year growth. The company’s strong performance is reflected in its impressive 27.9% gross profit margin and 41% return on equity over the last twelve months. The company saw substantial gains across its segments, particularly in healthcare, which achieved a 15.4% increase in gross profit. The engineering and IT/life sciences divisions also contributed positively, indicating a balanced growth across its portfolio. Operating with a moderate debt level and maintaining strong liquidity, as evidenced by its 1.85 current ratio, RCM Technologies’ performance aligns with industry trends where sectors like healthcare and engineering are experiencing increased demand.

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Financial Highlights

• Revenue: $78.17 million, slightly above the forecast of $77.47 million.
• Earnings per share: $1.32 compared to a forecast of $0.63.
• Adjusted EBITDA: $8.1 million, reflecting a 12.9% year-over-year growth.
• Healthcare segment gross profit: $12.3 million, up by 15.4%.

Earnings vs. Forecast

RCM Technologies exceeded EPS expectations by 109.52%, with actual earnings of $1.32 per share against a forecast of $0.63. This significant surprise is a testament to the company’s operational efficiency and strategic initiatives. Revenue also slightly surpassed expectations, contributing to a positive earnings surprise of 0.9%.

Market Reaction

Despite the positive earnings surprise, RCM Technologies’ stock dropped by 4.74% in aftermarket trading, closing at $22.73. This decline may reflect broader market volatility or specific investor concerns, despite the company’s strong performance. Analysts maintain a "Strong Buy" consensus with price targets ranging from $30 to $32, suggesting significant upside potential. The stock remains within its 52-week range, with a high of $27.24 and a low of $13.18, indicating room for potential recovery. With a market capitalization of $168 million and a P/E ratio of 13.5x, the stock trades at compelling valuations according to InvestingPro metrics.

Outlook & Guidance

Looking ahead, RCM Technologies anticipates continued growth, projecting low double-digit adjusted EBITDA increases for the remainder of 2025. The company expects to achieve its highest adjusted EBITDA in Q4 2025, driven by expansions in K-12 education, energy, and aerospace sectors. Future guidance includes EPS forecasts of $0.84 for Q4 2025 and $2.52 for the full fiscal year.

Executive Commentary

• Kevin Miller, CFO, emphasized the company’s resilience: "We’re going to grow 2025-2026 school year whether immigration opens up or not."
• Brad Veazey, Executive Chairman, highlighted market conditions: "We’re facing a protracted secular bull market."
• Veazey also noted the company’s potential: "We’re a company that has a lot of big things, big attributes, but the reality is our size is relatively small."

Risks and Challenges

• Cash collection issues with school clients could affect liquidity.
• Potential market saturation in key sectors may limit growth.
• Macroeconomic pressures could impact future earnings.
• Dependence on government contracts in aerospace poses risks.
• Immigration policy changes could influence staffing capabilities.

Q&A

During the earnings call, analysts inquired about the possibility of implementing dividends, cash collection challenges with school clients, and the impact of immigration on growth. Executives also discussed a strategic focus on intellectual property acquisition rather than large-scale acquisitions, reflecting a cautious approach to expansion.

Full transcript - RCM Technologies Inc (RCMT) Q2 2025:

Kevin Miller, Chief Financial Officer, RCM Technologies: Good morning, and thank you for joining us. This is Kevin Miller, Chief Financial Officer of RCM Technologies. I’m joined today by Brad Veazey, RCM’s Executive Chairman. A presentation on 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, 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 ks, 10 Q and eight ks that we file with the SEC as well as our press releases that we issue from time to time. I will now turn this call over to Brad Veazey, Executive Chairman, to provide an overview of RCM’s operating performance during the second quarter.

Brad Veazey, Executive Chairman, RCM Technologies: Thanks, Heather. Good morning, everyone. As alluded to our last call, the business remained resilient in the face of economic uncertainty, a testament to the model, which revolves around aligning the right talent in defensible positions of secular growth markets. Furthermore, our brand equity continues to strengthen, providing increased leverage to the business model while allowing us to diversify and strengthen our core client base. With increasing business success comes additional capital markets exposure and the inclusion of RCM into the Russell 2,000 Growth Index for the first time in its fifty year history, an important milestone in the journey of our great company and a testament to the strength and commitment of our employee base.

I will now provide an update on the progress of each of our business units. We are pleased to report that the health care services group closed out the twenty twenty four, twenty twenty five school year with momentum. We saw strong growth across our portfolio, driven by our commitment to quality, innovation, and client satisfaction. As we look ahead to the twenty twenty five, twenty twenty six school year, we are entering it with tremendous excitement and confidence. Our roster of new school partners is expanding, and we are equally encouraged by the commitments from our existing clients to broaden our role in staffing their schools.

This speaks volumes about the trust we have built and the results we have delivered. One of the achievements we are most proud of is our ability to win over districts previously served by competitors. These wins are a direct result of RCM’s consultative approach, one that emphasizes partnership, responsiveness, and a relentless focus on quality. Our internal training programs continue to sell us part, enabling us to deliver providers who are not only highly qualified, but also better prepared to meet the unique needs of each district. Our pipeline remains robust with a strong flow of additional opportunities that position us well for continued growth.

Additionally, we continue to leverage our outstanding team in The Philippines. This resource has proven to be a highly cost effective asset, accelerating our ability to scale and support new client engagements with speed and efficiency. In short, we are entering the new school year with strong tailwinds and clear strategy and a deep commitment to delivering value to our clients and shareholders. Transition to life sciences, data and solutions. In the life sciences division, we continue to see momentum driven by our strategic focus on innovation and operational excellence.

Our recent investment in AI driven equipment qualification has streamlined compliance protocols while reducing turnaround times across manufacturing sites. Additionally, advancements in data integrity solutions are improving audit readiness and strengthening our competitive position with pharma partners focused on speed to market. These initiatives reinforce our commitment to digital transformation in regulated environments and set the stage for scalable growth. This combined with building a dedicated life sciences engineering group will clearly differentiate RCM for the future. From an IT perspective, we have made meaningful progress in AI and analytics, particularly as applied to life sciences.

This continues to unlock actionable insights from predictive forecasting to real time monitoring. These updates reflect how we are leading techno technology not just to optimize operations, but to fuel innovation at the core of our business. Lastly, we see continued evolution of our HCM practice beyond our flagship EKG ready managed service program with our reseller and extension to other future partners. Now shifting to engineering. Energy Services continues to move forward with increasing velocity.

As we migrate into the second half of the year, we are seeing a sharp acceleration in activity as we align to an expansive integrated strategy, combining our custom engineering capabilities with our turnkey EPC solutions to meet surging market demand. As the need for reliable and resilient power delivery continues to outpace legacy infrastructure, our team is increasingly called upon for engineering design, builds, and upgrades. We have made a number of changes in the organization, including increasing efforts to align our brand with our marquee project work, and the industry is taking notice. Furthermore, our ability to deliver precision engineered solutions across the most demanding environments at scale has served as a key differentiator. This is enabled by our growing EPC footprint, our high performing engineering teams, and our focus on integrating advanced technologies and industry leading three d design into the delivery model.

With continued growth in grid modernization, infrastructure upgrades and data center expansion, our teams are delivering custom solutions that align with evolving market needs. Key developments this quarter include: our integrated growth strategy, which is comprised of an expanded focus on custom engineering and turnkey EPC solutions infrastructure builds to support large scale client programs expanding our depth of services with utility and industrial clients by designing and upgrading facilities with advanced energy efficient technologies and providing engineering solutions for data centers and their and supporting substations and electrical infrastructure. Continued technical contributions to the IEEE Power and Energy Society, reinforcing RCM’s leadership in the power engineering space. Operational maturity, resulting in streamlined project execution, enhanced talent integration, and improved cross unit coordination through shared services. Our engineering teams remain in the forefront of enabling next generation energy solutions, positioning RCM as a trusted partner in an increasingly complex opportunity rich market.

Now to Aerospace. Due to the ongoing significant ramp up on existing programs and the addition of new clients, the Aerospace and Defense Group has exceeded our business plan goals through the second quarter by almost $3,000,000 in revenue with a healthy margin EBITDA performance. Though we have an aggressive plan for 2025, barring any unforeseen circumstances, we are on our way to achieving it. Headcount continued to increase through Q2 twenty twenty five by 53 additional hires topping Q1 performance. As projected, we have realized a significant year over year increase in gross margin and EBITDA in Q2 twenty twenty five as well as sequential increase of 118% in gross margin and EBITDA, respectively.

Our vertical lift and technology innovator customers doing business with the U. S. Government continued to spearhead our growth thus far in 2025 with multiple opportunities on the horizon. As anticipated, continued success in supply chain manufacturing and quality engineering with new clients continue to have a positive impact on 2025. Additionally, wins at the beginning of 2025 with two existing customers on two large multiyear projects for S1000D conversion continue to contribute to our success in delivering to our aftermarket clients.

Our recruitment team, which continues to build trusted valuable relationships throughout the client and candidate base, have solidified our year to date goals. Our integration of new tools and technologies have kept our team in the forefront of providing enhanced speed to market capabilities. We continue to add new clients in 2025 with customers requiring our expertise in supply chain manufacturing and quality engineering with continued requirements for software and systems expertise. We anticipate our growth to continue throughout 2025 as more of the opportunities in hand are realized with the aerospace and defense environment, seeking American companies who can hold clearances up to secret and top secret levels. We anticipate a record year for the Aerospace and Defense Group in 2025.

Now I will return the call to Kevin to discuss the Q2 twenty twenty five financial results in more detail.

Kevin Miller, Chief Financial Officer, RCM Technologies: Thank you, Brad. Regarding our consolidated results, consolidated gross profit for the 2025 was $22,300,000 which grew 11.4% over Q2 twenty twenty four and yielded our highest gross profit over the past thirteen quarters. Adjusted EBITDA for Q2 twenty twenty five was $8,100,000 as compared to $7,200,000 for the Q2 twenty twenty four growth of 12.9%. Adjusted EPS for Q2 twenty twenty five was zero six nine dollars as compared to $0.57 for Q2 twenty twenty four growth of 21.1%. As far as segment performance in the 2025, in Healthcare, gross profit for Q2 twenty twenty five was $12,300,000 compared to $10,600,000 for Q2 twenty twenty four, growing 15.4%.

Gross margin for Q2 twenty twenty five was 28.7% as compared to 28.8% for Q2 ’twenty four. School revenue for Q2 ’twenty five was $37,200,000 compared to $30,700,000 for Q2 ’twenty four growing 21.1%. Non school revenue for Q2 twenty twenty five was $5,600,000 compared to $6,200,000 for Q2 twenty twenty four. In engineering, gross profit for Q2 twenty twenty five was $6,500,000 compared to $6,000,000 for Q2 twenty twenty four, growing 8.8% on our best engineering gross profit quarter in our entire history. Gross profit for Q2 twenty five excuse me, gross margin for Q2 twenty five was 24.5% compared to 26.5% for Q2 twenty twenty four.

As a reminder, our engineering gross margins can be volatile, but we generally expect normalized gross margins between 2226%. In IT, Life Sciences and Data Solutions, gross profit for Q2 ’twenty five was $3,500,000 compared to $3,400,000 for Q2 ’twenty four, increasing by 3.4%. Gross margin for Q2 ’twenty five was 39.8% compared to thirty four point nine percent for Q2 ’twenty four. Regarding our balance sheet, though operating cash flow was weak for the quarter coming off a strong Q1, we anticipate full year free cash flow to align with our net income. Specific to Q2, we had over $10,000,000 from two major school clients delayed due to school year twenty twenty four-twenty twenty five.

But we’ve collected over 80% of that money and expect the rest to come in this quarter. As a reminder, we have significant seasonality in Q3 with summer school closings and heavy vacation months for our billable workforce, which makes Q3 challenging to forecast. We do expect to continue to deliver at least low double digit growth in adjusted EBITDA for the 2025. And while we don’t expect the fourth quarter jump we saw in fiscal twenty twenty three, we do expect Q4 twenty twenty five will produce our highest adjusted EBITDA quarter for the year. This concludes our prepared remarks.

At this time, we will open the call for questions. And

Call Moderator: first up, I see Liam Burke of B. Riley Securities.

Liam Burke, Analyst, B. Riley Securities: You. Good morning, Vic. Good morning, Kevin.

Bill Duberstein, Analyst, Stone Oak Capital: Good morning.

Brad Veazey, Executive Chairman, RCM Technologies: Hi, Liam.

Liam Burke, Analyst, B. Riley Securities: We’ve talked you talked about the data center infrastructure and the grid modernization and how that’s accelerating. Could you give us some color on you have some multiyear preferred partner agreements, how that’s working and how that’s helping you accelerate into that sector?

Brad Veazey, Executive Chairman, RCM Technologies: Yes, absolutely. Liam, I think it starts with some of the initiatives that we had in place for a number of years that are starting to come to fruition. Know, first and foremost, I’d point to, you know, some of the projects, I call marquee projects that, you know, are attracting a good bit of attention within the industry. So naturally, you know, those become associated with your firm and there’s brand equity that grows with it. And word spreads and the phone starts to ring a little bit more.

In addition to that, I think historically, when you look at RCM, it has had a set of really good capabilities, did not do a good job as far as coordinating and integrating the operations. That is something that we have put an increased focus on and really doubled down on, and call it the last twelve to eighteen months, and ultimately rolling that out to the marketplace. So I think some of it is RCM specific, but also some of it is certainly industry specific. You know, just at a very high level, I think, you know, we’re all kind of reading the same things in the newspapers and and, you know, through different media outlets. But, I think the surge in spend, that is frankly, it’s here.

It’s pretty overwhelming. I mean, it’s historic, without a question. And it’s really hard to find an argument that, you know, we’re anything but in the early innings of it. So if anything, I think you when you look at the landscape of the industry, I think that you’re gonna we’re facing a a protracted secular bull market. And in many ways, it’s it’s it’s almost guaranteed in my mind because you simply have a number of bottlenecks within the supply chain that just simply take years, to unlock.

So, you know, all else being equal, that would rank in the cycle regardless. But, you know, from our perspective, I mean, the industry is so large and, you know, we’re certainly, you know, hit starting to hit our stride at at a good time that it’s hard not to see it be a big positive for the business.

Liam Burke, Analyst, B. Riley Securities: Great. Thank you. You seem to be adding contracts in the healthcare space on the educational side. Are most of those still K-twelve? Or are you able to leverage your brand into other areas of education like community college or other municipal health programs?

Kevin Miller, Chief Financial Officer, RCM Technologies: No, they’re primarily K-twelve. We’re very, very excited about this coming school year. We’ve added another dozen or so new contracts, half of which we believe can be of a decent a meaningful impact to the revenue for the twenty twenty five-twenty twenty six school year. So we’re having a lot of success in the K-twelve. That doesn’t mean we’re not looking at other areas, but we’re pretty focused on K-twelve.

Liam Burke, Analyst, B. Riley Securities: Just a follow on to that. You mentioned that you’ve gone in and you’re taking new business at the expense of competitors. Is that a trend we can expect to continue to see as you continue to add districts?

Bill Duberstein, Analyst, Stone Oak Capital: We better.

Liam Burke, Analyst, B. Riley Securities: Fair enough.

Kevin Miller, Chief Financial Officer, RCM Technologies: Yes, we certainly expect that. And just to put a little bit more on that, while we are certainly grabbing market share from competitors, it is a high growth market, right? So you don’t necessarily need to grab market share from competitors to grow. But we look to do both, obviously. Yes.

Brad Veazey, Executive Chairman, RCM Technologies: The other thing, William, I’d add to that is if you step back in with the K-twelve market as leaders, right? I mean, like a lot of relatively nascent markets that are highly fragmented, there’s really a lack of institutionalization for a better term, best practices, etcetera. So kinda as a leader in that space is a big opportunity for us to step in and really demonstrate, you know, our knowledge base and ultimately win against some of the more local and regional competitors. And naturally, when you think about the different segments of the health care market, I mean, are the things that make that market special, right? I mean, the inability to replace that human touch, Right?

I mean, know, you magnify that when you start to deal with with kids. So and so there’s a significant opportunity from our perspective that, you know, certainly from our vantage point and and our size, it’s and given the market opportunity, there’s a way to go there.

Liam Burke, Analyst, B. Riley Securities: Great. Thank you, Vic. Thank you, Kevin.

Call Moderator: All right. Next up, we have Bill Sutherland of Benchmark.

Bill Sutherland, Analyst, Benchmark: Hey, Bill. Thanks. Hey, good morning, guys. On health care, Kevin, did you give the breakout of school and other?

Kevin Miller, Chief Financial Officer, RCM Technologies: Yeah, we did. Hold on. Let me just Okay. Then

Bill Duberstein, Analyst, Stone Oak Capital: I’ll just

Bill Sutherland, Analyst, Benchmark: I can get that later then. Wanted to me see

Kevin Miller, Chief Financial Officer, RCM Technologies: real fast. It’s 30 we were at 37.2 for schools and 5.6 for non schools for the quarter. Okay.

Bill Sutherland, Analyst, Benchmark: Interested in that internal training program you mentioned, can you give us some color on that in health care?

Kevin Miller, Chief Financial Officer, RCM Technologies: In terms of our internal training program? Yeah, mean, go out, we find people that we think would make good candidates for our schools, and we train them up ourselves. And we have training centers in several different locations. It’s not something I want to speak a lot about just for competitive reasons. But yeah, we Are these paras?

Or is this

Bill Sutherland, Analyst, Benchmark: I mean, because you’re doing a lot of behavioral health now.

Kevin Miller, Chief Financial Officer, RCM Technologies: It can be paras or RBTs as well, but mainly powers. But there are other types of people that we engage in training as well.

Bill Sutherland, Analyst, Benchmark: Okay. And what about the international nurse side? I know you’ve been performing that a bit.

Kevin Miller, Chief Financial Officer, RCM Technologies: Yeah, well, they just moved up these retrogressions for a couple of countries, and we think we’re probably going to have about, I don’t know, 15 to 20 nurses coming in either this year or early next year. But if the V0 retrogression gets moved, which we think it will at some point, we could have who knows how many. We have probably 500 nurses in our pipeline that are interested in coming to The U. S. If you have any inroads with this administration, write a letter.

Bill Sutherland, Analyst, Benchmark: Yeah, I wish I did. The engineering GM bounced back very nicely, as

Brad Veazey, Executive Chairman, RCM Technologies: you guys

Bill Sutherland, Analyst, Benchmark: noted. Is this kind of a level we should think about as kind of where the business is at this point?

Kevin Miller, Chief Financial Officer, RCM Technologies: I think it’s a good indication of where the business is. But like I said earlier, it’s volatile, right? Going to see quarters where it spikes up and you’re going see quarters where it spikes down depending on what the mix shift is. And as we said on our last call, we’re very, very focused on gross profit dollars and then managing the cash flow around those gross profit dollars. So if we drop under 20% and we have strong gross profit, that’s great.

If we push it up and we have strong gross profit, that’s great, too. We’re just really, really focused on gross profit dollars.

Call Moderator: Alright. Next up, we have William Duberstein of Stone Oak Capital.

Bill Duberstein, Analyst, Stone Oak Capital: Hi, guys. Good morning, Bill. Hey. Good morning, guys. Nice to talk to you guys again.

Great quarter. Just had a couple details coming through. Nice sequential improvement in the engineering gross margins, but just double clicking on that. You guys are, I think, winning a lot of new customers. Could could we expect new contracts to sort of with with new clients to sort of start at a lower gross margin and then potentially expand over time as you

Brad Veazey, Executive Chairman, RCM Technologies: prove yourselves out, or is

Bill Duberstein, Analyst, Stone Oak Capital: it just sort of standard between I don’t know if you wanna get into your contract.

Kevin Miller, Chief Financial Officer, RCM Technologies: Are you talk you’re talking about engineering?

Bill Duberstein, Analyst, Stone Oak Capital: Engineering specifically.

Kevin Miller, Chief Financial Officer, RCM Technologies: We don’t really look at it that way. I mean, certainly, if we really want to get into a client and we need to bid something at a lower margin than we normally would, we certainly will consider doing that and would do that for the right client. But for the most part, we’re looking to get our margin that we think is fair and competitive. And I don’t think that it’s frankly, it’s a super price sensitive market. I mean, it’s price sensitive, of course, you’re dealing with utilities.

Ben Andrews, Analyst: But

Kevin Miller, Chief Financial Officer, RCM Technologies: they’re much more interested in quality than there are a couple of points or a couple of bucks. And obviously, they don’t know what your margins are. But there’s a lot of work out there, right? And quality work gets more work at good margins. And that’s the way that we kind of see it.

The biggest reason why you potentially see lower margins in our engineering group is when we have our fixed price contracts that in any given quarter are heavy on the subs and we have the subs costs running through our income statement, we’re going to see we don’t make the same margin on our subs, obviously, than we do on our internal salaried engineers. So that’s typically why you’re going to see a little bit where you might see it drop a little bit. And there are other factors involved. But when we start talking about engineering and we look at the three pillars, aerospace is a little bit more competitive, so those margins tend to be a little bit lower. But with the other two groups in terms of energy services and our industrial processing, those margins are generally pretty good.

But again, they will come down depending on what’s running through the projects in any given quarter as I talked about in terms of how much of our revenue is driven by ourselves.

Bill Duberstein, Analyst, Stone Oak Capital: Does that make sense? Got it. Yes, yes, absolutely. It was nice to see the improvement there from last quarter. And then just

Kevin Miller, Chief Financial Officer, RCM Technologies: Yes. We’re generally trying to drive margins in the engineering above where we were in the second quarter. But it just again, it just depends on the mix shift.

Bill Duberstein, Analyst, Stone Oak Capital: Got it. Got it. That’s helpful. And then just bringing back up the cash collections. I know you mentioned it in your opening remarks.

Should we expect receivables to go up at the end of q two because it’s the end of the school year? Or was this quarter sort of were there idiosyncratic factors between those two schools you mentioned?

Kevin Miller, Chief Financial Officer, RCM Technologies: Well, it’s really both. The two schools that we mentioned just frankly ran out of money on their POs and they couldn’t pay us until they got new POs. And that happens, you know, look, we crushed it with those two schools, so they ran out of money to pay us, which happens in the school systems. But that’s okay. We’ll wait for the money and drive the revenue because we always get paid by the schools.

Like, we’d never have write offs or virtually never. And they got the POs in place and we’ve actually been paid about 80% of the money today and I just got a notice yesterday we’re going get the rest of it next week. So yes, I mean, it’s unfortunate that our receivables don’t look great at the end of Q2, but it’s a temporary situation. It’s cyclical and we should see those receivables come down in Q3 most likely. Although depending on how much we’re pushing the envelope with some of these new schools, maybe it will be up.

If it’s up, it will be a good thing.

Bill Duberstein, Analyst, Stone Oak Capital: Got it. That makes a lot of sense. And then finally, in a previous question, think you touched on immigration and that you have a lot of nurses interested in coming to The US. Is immigration and supply a gating factor at all right now? I mean, you guys posted great numbers there, so probably not.

But I was just wondering if it was possible you could have done even more if the supply side opened up more or if that’s just sort of a future Yeah. Factor.

Kevin Miller, Chief Financial Officer, RCM Technologies: Yeah. Let let me let me let me tell you how we look at it, which is pretty simple. We’re going to grow 25 to 26 school year whether immigration opens up or not. We’re very confident in our ability to grow our school business, you know, this school year compared to last school year. If immigration cooperates, it can make the difference between a good year, like a good 2026 and an incredible 2026, right?

So, you know, we’ll see what happens. We can’t obviously predict what’s going to happen with immigration. We may not get any meaningful number of nurses in 2026. We may get 100 or more. It’s really hard you know, to say.

But what we believe is that over time, usually comes around to the conclusion that if you want nurses in this country, you better go get them from somewhere else because they’re just we’re not making enough nurses in this country to satisfy demand. It’s just that simple. And I don’t see that changing anytime soon.

Bill Duberstein, Analyst, Stone Oak Capital: Got it. Great. Hopefully, does open up. And that was all I had. Great job, guys.

Thanks.

Call Moderator: Alright. Seeing no further questions in queue. I’ll remind everyone, you can press star one on your telephone keypad if you would like to ask a question. That is star one on your telephone keypad. All right.

Next up, we have Ben Andrews.

Bill Sutherland, Analyst, Benchmark: Good morning, Ben. Hey,

Ben Andrews, Analyst: guys. How are you?

Brad Veazey, Executive Chairman, RCM Technologies: Hi, Ben. Great.

Ben Andrews, Analyst: I enjoyed the quarter. Thank you very much. Good. I’d like to just make a couple of statements and then just give me feedback on what you can and your thoughts. If I look at RCM and kind of the bigger trends out there, and I think you’ve positioned the company in two areas where the wind seems pretty strong at your back, which is the education and the engineeringT and D.

And those trends seem to looks to me at least to be multi years going forward. And during the last three or so years, our stock has pretty much gone sideways. And I think you guys have done an excellent job before the stock took off and after the stock took off and has essentially gone sideways and fallen out of bed a lot of times to reduce the share float. I think that was incredibly wise and some of the best I’ve seen over my career with management doing that. But and so if I look at those two divisions where I think there’s solid wind at your back, it seems that even though RCM’s businesses can be volatile, it seems that like roughly $2 in EPS going forward per year seems achievable.

It doesn’t seem like you’re going to do $1 or $0.50 or anything like that. It seems like you’re going to be somewhere in a solid area like that. So my thoughts are and I mean, if we look at the stock trading action and stuff in these small cap stocks as well as some of the large cap stocks, I don’t even think there’s humans trading them anymore. I just think it’s this total AI. And so my thoughts are if we instate a dividend, say, $0.80 dividend, which should easily be covered if you’re making a couple of bucks a year in EPS, open the world up to a little different shareholder base.

And the people that own your shares and have been loyal to you for many years get a little bit of a boost. And I just think kind of where you’re positioned now after these work hard work to maneuver some of these divisions and what the divisions can throw off in EPS and kind of where the stock is to where you’ve been buying it back historically. I just think I’m trying to I just think it’s a much better case to implement a dividend.

Brad Veazey, Executive Chairman, RCM Technologies: Yes, Ben. Look, that’s a fair question. That’s something, as you know, takes me out often. We dialogue about it frequently as well. And look, you know, depending on the facts and circumstances at the moment, you know, you might come out on a different side of the ledger.

Right? So what I’ll say, you know, where we sit today is, you know, the company is in a really good spot. And I think that the ability to put a dividend in place with a completely debt free balance sheet having reduced, call it, 45% of the share count, maybe have a small net cash position, it probably makes as much sense as ever. So and it’s something that we’ll continue to evaluate. And as that day gets closer, it could become more of a reality.

That being said, there’s some great things going on in the business right now. I agree with your assessment with respect to the transformation of the capital markets, particularly in our segment of the marketplace. The flip side of that is when you have a lot less shares outstanding and a relatively limited supply of high quality companies in this segment of the market. You could be the prettiest girl or guy at the dance, right? And having a clean balance sheet as growth accelerates with a lot less shares.

As you know, this is something that hasn’t changed in the last twenty or thirty years. These things can happen overnight in terms of stock appreciation. So in the meantime, appreciate the patience. We’re in the trenches every single day, working towards building the business and making it stronger. Know?

But the good news is is we’re not just getting stronger on absolute basis, we’re getting stronger on a relative basis and increasingly attractive. Also, you know, when you think about the funnel of opportunities, right, I think this is an area where our size is an advantage. As you continue to distinguish yourself, right, as a little you know, I almost think of it as a a little big company. Right? You know, we’re a company that has a lot of big things, big attributes, but the reality is our size is relatively small from a valuation perspective.

As bigger outcomes start to come to fruition, right, they have a disproportionate impact on the p and l. Like, for example, I appreciate, you know, your $2 earnings figure, but I gotta tell you, I’m gonna be pretty disappointed if we’re only at $2 of earnings twenty four months from now. You know, we very much think of the company as a growth company, you know, especially when you start to think about our performance relative to our peer peer base of all sizes really.

Bill Sutherland, Analyst, Benchmark: You

Brad Veazey, Executive Chairman, RCM Technologies: know, we’ve significantly outperformed on a relative basis, and we are anticipate attractive performance on an absolute basis. So, the valuation will take care of itself. Mean, just to sum it up.

Ben Andrews, Analyst: Yes. Yes. I agree. I agree. And I and I agree with your assessment that usually, can put in work for years, and then all of a sudden, your valuation comes all within thirty days, even though you’re sitting around thirty six months waiting for it.

That usually is what happens, especially with these smaller cap stocks. The reason I kind of threw that $2 out there because I think it’s a pretty solid number by me just looking at your divisions. And you certainly don’t want to overreach when you put in a dividend. And if you put in a zero eight zero dollars dividend, then you still got money to still pay down debt. You still got money to do some IP acquisitions.

I think where we’re aligned in conversations in the past is I think it’s wise to spend money to buy IP and so it can be assimilated into your company rather than doing some huge acquisition that often ends up blowing up in your face twenty four months later. So that was the thought where money is spent more evenly across a couple of areas rather than just one area. But I appreciate your thoughts, and I appreciate how you guys

Kevin Miller, Chief Financial Officer, RCM Technologies: have built this company. So thank you.

Brad Veazey, Executive Chairman, RCM Technologies: Yes. And then one more thing I just inserted in there, Ben, right? And just to emphasize, working towards a clean balance sheet that we think our balance sheet is well within the range of very comfortable in our target range, I’ll call it loosely defined, is as you think about the potential outcomes that exist for a company our size, particularly to the upside, right, in this dynamic of an environment. Right? So, you know, having a clean balance sheet is really it’s it’s almost a strategic asset in a lot of ways because, you know, some of these partnership dialogues, right?

I mean, they could be obviously material. And ultimately, that’s why we refer to them and we move them forward. They oftentimes, they start off on solid footing and then they grow every single year. And you wake up a few years down the road, they’re very sizable. But look, I mean, sometimes they can go very, very rapidly too.

Again, we’re in dynamic markets. We’ve got we’ve positioned ourselves really well. We’ve got some really talented folks. We have discussions. Right?

And, ultimately, you know, how those mature. Right? There’s there’s unknown aspects of that. But, you know, we want to position the company so we can, you know, maximize the value of those discussions, right, you know, when when that moment comes. So in other words, those opportunities for step function growth, we’re not constrained in any manner, frankly.

Ben Andrews, Analyst: Understood, Brad. And you’re a people business. And I think levering up people businesses is not a great move. You can get lucky. But if you don’t get lucky, then you’re in a world of hurt.

So I’d rather see a clean balance sheet. I agree with you.

Bill Duberstein, Analyst, Stone Oak Capital: This does

Call Moderator: conclude today’s Q and A session. Speakers, I’ll turn it over to you for concluding remarks.

Brad Veazey, Executive Chairman, RCM Technologies: Thank you for attending our Q2 conference call. We look forward to our next update in November.

Kevin Miller, Chief Financial Officer, RCM Technologies: Bye, everyone.

Call Moderator: All right, ladies and gentlemen, this does conclude your call. You may now disconnect your lines, and thank you again for joining us

Kevin Miller, Chief Financial Officer, RCM Technologies: today.

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