RCM (RCMT) ((RCMT)) has held its Q1 earnings call. Read on for the main highlights of the call.
Protect Your Portfolio Against Market Uncertainty
- Discover companies with rock-solid fundamentals in TipRanks' Smart Value Newsletter.
- Receive undervalued stocks, resilient to market uncertainty, delivered straight to your inbox.
The recent earnings call for RCM Technologies (RCMT) conveyed a generally positive sentiment, highlighting robust performance and growth across most of its business segments. Notably, the Health Care, Aerospace, and Engineering sectors demonstrated significant advancements, although challenges were noted in the IT, Life Sciences, and Data Solutions segment, alongside some volatility in Engineering gross margins.
Strong Start for Health Care Segment
RCM’s Health Care segment reported impressive growth, with school revenue increasing by 16.7% for Q1 2025 compared to the same period in 2024. This growth was accompanied by a 10.2% rise in gross profit, driven by strategic expansions in behavioral health and new school contracts.
Life Sciences and Data Solutions Growth
The Life Sciences and Data Solutions division showed promising results with a 40% gross profit and a 23% NOI contribution. This success was bolstered by significant advancements in AI/ML deployments and the acquisition of six new clients in 2025.
Engineering Achievements
The Engineering segment achieved its best gross profit quarter in company history, with a 12.4% increase compared to Q1 2024. This achievement was driven by preferred partner agreements and energy services, despite some volatility in gross margins.
Aerospace and Defense Success
The Aerospace Group outperformed expectations, exceeding Q1 2025 business plan objectives by over 20% on revenue and 19% on EBITDA. The segment reported a 47% increase in revenue and a remarkable 247% increase in EBITDA compared to Q1 2024.
Financial Performance
RCM Technologies reported a consolidated gross profit growth of 7.9% over Q1 2024, marking the highest gross profit in the past 12 quarters. Adjusted EBITDA grew by 14.4%, and adjusted EPS increased by 18.9%, showcasing the company’s strong financial health.
IT, Life Sciences and Data Solutions Decline
Despite the overall positive performance, the IT, Life Sciences, and Data Solutions segment faced challenges, with a 5.3% decline in gross profit for Q1 2025 compared to Q1 2024.
Engineering Gross Margin Volatility
The Engineering segment experienced a decline in gross margin from 23.4% in Q1 2024 to 19.2% in Q1 2025. This was attributed to significant pass-through construction revenue and lower-margin Aerospace growth.
Forward-Looking Guidance
RCM Technologies provided optimistic guidance for the future, indicating strong growth and performance metrics across its business segments for the first quarter of 2025. The company expects to continue delivering at least low double-digit growth in adjusted EBITDA throughout fiscal 2025, with Q4 anticipated to be the highest EBITDA quarter of the year.
In summary, RCM Technologies’ earnings call reflected a positive outlook with strong performance across key segments, despite some challenges in specific areas. The company’s strategic expansions and advancements in technology position it well for continued growth in the coming quarters.