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RCM Technologies Inc. Reports Operating Results (10-Q)

August 11, 2009 | About:

RCM Technologies Inc. (RCMT) filed Quarterly Report for the period ended 2009-06-27.

RCM Technologies Inc. is a national provider of Business Technology and resource solutions in information technology and professional engineering to customers in corporate and government sectors. The company has grown its information technology competencies in the areas of resource augmentation e-business Enterprise Resource Planning support network and infrastructure support and knowledge management. RCM\'s engineering expertise is in the form of technical design field engineering field support procedures development and project and program management. RCM Technologies Inc. has a market cap of $31.3 million; its shares were traded at around $2.44 with a P/E ratio of 17.4 and P/S ratio of 0.1.

Highlight of Business Operations:

Revenues. Revenues decreased 14.2%, or $7.8 million, for the thirteen week period ended June 27, 2009 as compared to the same period in the prior year (the “comparable prior year period”). Revenues decreased $6.2 million in the Information Technology segment, increased $1.2 million in the Engineering segment, and decreased $2.8 million in the Commercial segment. Management attributes the overall decrease to a weakening of the general economy. The Company completed two acquisitions in its Information Technology segment in 2008 prior to the start of the thirteen week period ended June 28, 2008. Management expects revenues for the remainder of fiscal 2009 to remain generally consistent with the revenues for the thirteen week period ended June 27, 2009.

Bad Debt - Note Receivable. On February 26, 2008, the Company accepted a promissory note from a customer for $7.4 million in payment of a like amount of accounts receivable from that customer. The customer paid $1.3 million through April 30, 2008 at which point management of the Company concluded that the customer was going to default on its May 1, 2008 installment payment. During the thirteen week period ended March 29, 2008, the Company determined that the note receivable was not collectible and reserved for the note. During the thirteen week period ended September 27, 2008, the Company wrote-off the note receivable.

Depreciation and Amortization. Depreciation and amortization was $0.4 million for the thirteen week period ended June 27, 2009 as compared to $0.6 million for the comparable prior year period.

Information Technology Information Technology revenues of $21.8 million in 2009 decreased $6.2 million, or 22.1%, as compared to the comparable prior year period. The decrease in revenue was primarily attributable to a weakening of the general economy and reduced demand for the Company\'s Information Technology services. The Information Technology segment operating loss was $1.0 million as compared to operating income of $0.6 million for the comparable prior year period. The decrease in operating income was primarily due to weakness in overall demand for information technology services and increased unbilled labor costs for consultants.

Engineering revenues of $15.3 million in 2009 increased $1.2 million, or 8.8%, as compared to the comparable prior year period. The increase in revenue was primarily attributable to increases in revenues from several major customers as compared to the comparable prior year period. The Engineering segment operating income was $0.7 million as compared to $0.8 million for the comparable prior year period. The decrease in operating income was primarily due to a higher allocation of corporate selling, general and administrative costs as compared to the comparable prior year period.

Commercial revenues of $10.1 million in 2009 decreased $2.8 million, or 22.0%, as compared to the comparable prior year period. The decrease in revenues was principally attributable to decreased demand for the Company’s light industrial and clerical staffing services. The Commercial segment operating income was $0.5 million as compared to $1.0 million for the comparable prior year period. The decrease in operating income was primarily due to the decrease in revenues.

Read the The complete Report

Rating: 3.0/5 (3 votes)

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