RCM Technologies Inc. (NASDAQ:RCMT) Q3 2019 Earnings Conference Call - Final Transcript

Nov 07, 2019 • 10:00 am ET


RCM Technologies Inc. (NASDAQ:RCMT) Q3 2019 Earnings Conference Call - Final Transcript


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Good morning, everyone. This is Brad Vizi, Executive Chairman of RCM Technologies. Welcome to the RCM Technologies 2019 Third Quarter Earnings Call. I am joined today by Kevin Miller, our Chief Financial Officer. Kevin will begin with the legal disclaimer, and then I will summarize the operating results for each of our business units before opening it up for questions. Kevin?

Kevin D. Miller

Good morning, everyone. Our presentation in this call will contain forward-looking statements. The information contained in the forward-looking statements is based on our beliefs, estimates and 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-K, 10-Q and 8-K that we file with the SEC as well as our press releases that we issue from time to time.

Bradley S. Vizi

Thanks, Kevin. Now I am pleased to highlight the operating performance of our third quarter of fiscal 2019. I will discuss each division separately. Our specialty health care staffing group set a third quarter record with $16.8 million of revenue and $4 million of gross profit. Revenue and gross profit grew by 11% and 20%, respectively, as compared to third quarter 2018.

Growth was principally driven by our schools business. As we enter the fourth quarter, the health care segment is really starting to hit stride. We anticipate revenue of $25 million, exiting 2019 at $100 million run rate. We are pleased to report that we are off to a good start with our new Hawaii RBT contract, with 40 RBTs on assignment as of this week. We expect to see steady sequential growth in this contract over the next several quarters and years to come.

As a reminder, we were recently awarded a three-year contract to place registered behavior technicians, or RBTs, with the Hawaii Department of Education. Under a new mandate passed by the state, the Hawaii DOE is adding RBTs to its contract. An RBT is a certified power professional who practices under the close ongoing supervision of a Board-Certified Behavior Analyst. The RBT is responsible for the direct implementation of behavior analytic services, primarily for autistic kids. The annual value of the contract is anticipated to be $40 million. It is important to note that this new RBT contract with Hawaii is not a sole source contract. However, based on our market share and historical performance with the client, we anticipate the contract will provide material accretion to operating performance in 2020 and beyond.

DOE Hawaii is our first market to embrace the RBT model. We are currently researching the opportunity to leverage our experience to provide a similar solution to other school districts. Growth in behavioral health is significant, and we are working diligently to position ourselves as a leading provider in our education end markets.

We were disappointed with the performance