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RCM revenue falls 8.5%, net income drops

August 13, 2015

RCM Technologies Inc. (NASD GM: RCMT) — a provider of engineering, IT and healthcare staffing — reported revenue fell 8.5% to $45.3 million in its second quarter ended July 4.

Net income at the Pennsauken, N.J.-based firm also fell to $689,000 from $2.0 million in the same quarter of last year.

RCM attributed the declines primarily to decreases from a large project worked on by its Canadian engineering group. It made staffing adjustments for the second half of fiscal 2015 and looks to secure a master services agreement with a major client in Canada.

RCM this month acquired Substation Design Services LLC, a Pennsylvania-based engineering firm specializing in design services for substation projects. And in June, RCM’s specialty healthcare division landed a four-year, $30 million contract to manage hiring, staffing and training of nurses for Chicago Public Schools.

(US$ thousands) Q2 2015 Q2 2014 % growth
Revenue $45,286 $49,509 -8.5%
Gross profit $12,090 $12,955 -6.7%
Gross profit margin 26.7% 26.2% --
Net income $689 $2,017 -65.8%

Quote

“We are obviously disappointed with the decline in revenues in the second quarter of fiscal 2015 versus last year’s second quarter,” said CFO Kevin Miller. “The primary reason for the decrease was an $8.0 million reduction in revenues from work performed, as a subcontractor or directly, for a large engineering client in Canada. While we do not foresee any near term material expansion of work for this client, we do have a robust pipeline across all three segments of our business and expect to see improvement in operating income for the second half of fiscal 2015 as compared to the first half of the year.”

Share price and market cap

Shares in RCM fell 8.63% in early afternoon trading to $4.55; RCM has a market cap of $57.84 million, according to Yahoo!