RCM TECHNOLOGIES, INC.

Recommendation history

• Q2 2025BuyBuy: RCM delivered a strong Q2, with gross profit of $22.3 million (+11.4%), adjusted EBITDA of $8.1 million (+12.9%), and adjusted EPS of $0.69 (+21.1%); school revenue rose 21.1% to $37.2 million. Healthcare contract wins, aerospace outperformance, and accelerating energy/data-center demand support continued growth, while management expects at least low-double-digit adjusted EBITDA growth in 2H 2025. The main tension is execution quality: Engineering margins remain mix-sensitive, cash conversion was temporarily weak, and management offered ambitious growth commentary without quantified earnings guidance.
• Q1 2025BuyBuy: RCM delivered strong operating momentum, with Q1 adjusted EBITDA up 14.4% to $7.8 million and adjusted EPS up 18.9% to $0.63, while operating cash flow reached $16.7 million and net debt fell $12.0 million to $18.2 million. The strongest catalysts are aerospace growth, healthcare school contracts, and energy/data-center demand; the key tension is engineering gross margin at 19.2% versus the company’s normalized 22%-26% range, alongside limited formal guidance beyond at least low-double-digit EBITDA growth in 2025.
• Q4 2024HoldHold: RCM exited 2024 with solid revenue and gross-profit momentum, but profitability was weaker than the headline growth suggests—full-year adjusted EBITDA fell to $25.9 million from $26.6 million and adjusted EPS was essentially flat at $2.03 versus $2.04. Management targets at least low-double-digit adjusted EBITDA growth in 2025, but provided no formal revenue or earnings guidance; execution on margin recovery and receivables remains the key test.
• Q3 2024HoldHold: RCM delivered solid but uneven Q3, with adjusted EBITDA up 9.5% to $5.6 million and year-to-date EBITDA up 10.5% to $19.6 million, while consolidated gross profit rose only 3.2% to $17.8 million. Healthcare and Engineering are accelerating—school revenue grew 16.3% and management expects roughly 20% school-year growth—but Life Sciences, Data & Solutions gross profit fell 13.1%, and elevated receivables and roughly $30 million of debt keep the risk/reward from being a clean buy.
• Q2 2024HoldRCM delivered a solid Q2, with gross profit up 6.6% to $20.0 million, adjusted EBITDA up 10.8% to $7.2 million, and adjusted diluted EPS up 12.0% to $0.56. Engineering momentum and a strong school-district pipeline support the bull case, but management still only committed to low-double-digit FY2024 adjusted EBITDA growth while Life Sciences declined 17.9% and SG&A continued rising; the setup is positive but not compelling enough for a fresh buy.
• Q1 2024HoldHold: RCM delivered a solid Q1, with gross profit up 7.1% to $20.4 million, adjusted EBITDA up 11.1% to $6.8 million, and adjusted diluted EPS up 30.4% to $0.53. The school pipeline, healthcare normalization, and aerospace recovery support at least low-double-digit adjusted EBITDA growth in FY2024, but the investment case still depends on converting that pipeline and reducing an elevated 93-day DSO; management provided no revenue or EPS outlook.
• Q2 2023HoldHold: RCM delivered $67.0 million of Q2 revenue, flat sequentially, with 28.0% consolidated gross margin and an excellent 39.4% Life Sciences/IT margin. The shift toward higher-margin managed services—now just under half of that segment versus roughly 5% previously—and expected sequential growth in Engineering and Life Sciences/IT support the bull case, but a roughly 32% increase in receivables, absent DSO detail, and heavy school exposure leave the recovery insufficiently de-risked for a fresh buy.