RCM Technologies, Inc.

Good morning, and thank you for joining us. This is Kevin Miller, Chief Financial Officer of RCM Technologies. I am joined today by Brad Veazey, RCM's Executive Chairman. Our presentation in this call will contain forward-looking statements. The information contained in the forward-looking statements is based on our beliefs, estimates, 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 follow with the SEC, as well as our press releases that we issue from time to time. I will now turn the call over to Brad Veazey, Executive Chairman to provide an overview of RCM's operating performance during the quarter.

Thanks, Kevin. Good morning, everyone. We finished 2023 at the high end of expectation. More important, we believe the fourth quarter demonstrates a COVID-free picture of our progress and traction against our smart growth strategy with all three businesses generating healthy EBITDA growth. Our platform of high-value capabilities in critical end markets clearly resonates. Our ability to leverage points of collaboration amongst groups continues to gain traction. Whether providing facility design solutions for a key client in aerospace or delivering technical solutions to the K-12 market, the synergy of the platform continues to grow as we provide increasing value to our world-class client base. further differentiating ourselves in the marketplace. Since we last spoke, progress has been made across each of our divisions that I am excited to discuss in more detail, starting with healthcare. As many of you are aware, we take considerable pride in our leadership in the K-12N market. One of our key strategic focuses is to leverage that leadership to expand our K-12 client base. In healthcare, caring is paramount. And given our commitment to the nation's most precious assets, we believe RCM has developed an intangible asset of its own that will afford us expanding opportunity to do what we do best. In addition to building our esteemed roster of clients nationwide, the success of our approach is evident as we effectively convert low revenue new schools into greater economic opportunities. This progression is a testament to our high-performance standards and the delivery of exceptional care to students. Regarding overall business performance, we are delighted to report growth across all business units. This comprehensive expansion underscores the resilience and adaptability of our business model. We are particularly excited about the robust pipeline of opportunities, indicating a promising trajectory for the healthcare group. As we move through the upcoming year, we remain steadfast in our commitment to innovation, client satisfaction, and sustainable growth. We are confident that our strategic initiatives will contribute to the continued success of the healthcare division. Now moving to life sciences, data, and solutions. The results of 2023 demonstrate the economic horsepower of our team strategy and revolves around value and solution selling. This can be seen from improvement in every financial measurement, revenue, GP, GP%, NOI, and NOI%. GP% improved by 430 basis points, while EBITDA contribution improved over 375 basis points. Nearly 70 cents of every dollar of revenue increased from 2022 to 2023 converted to EBITDA. Managed service and turnkey software implementations led our growth. I take tremendous pride in this group's clear commitment to operational excellence. As we look forward toward 2024, we continue to see strong growth led by life sciences through our managed service, commercialization, data integrity, and quality improvement programs. Continued strength in our HCM practice will further drive results. 2023 was a year of strong performance from energy services. Revenue and profit targets were achieved, exceeding the previous year's profit contribution by 66%. Energy services successfully executed grid modernization substation projects for large utilities and OEMs in North America and Europe. These projects included engineering services for a large-scale infrastructure project in the New York area that will be a critical interconnection point for delivering increasingly renewable power from offshore wind parks. In 2023, Energy Services opened an office in Germany to expand its global footprint and become a preferred partner for the energy transition in Europe. Within the first year of its German operation, Energy Services was awarded two EPC projects from one of the most innovative German transmission system operators. This PSO sent a delegation to the U.S. to visit several projects Energy Services had successfully executed. The trip was concluded with the award of the second project between our two firms and commitment toward a long-term partnership. Also of note, Energy Services further developed its technical capabilities to offer our own proprietary digital solution for 3D BIM and digital data management applications to support utilities in enhancing their efficiencies from planning to construction and operation. The monetization of our application is a major step in our productization efforts. consistent with our strategy to position ourselves as thought leaders and strategic partners with clients, broadening our competitive moat and delivering more value to client partnerships. RCM Thermal Kinetics has several active equipment and engineering contracts for projects in zero-carbon chemical manufacturing, carbon capture, and sustainable aviation fuel markets. The projects employ a variety of technologies designed by the engineering team, including distillation, evaporation, and crystallization technologies. These contracts are with dynamic customers who are growing as established leaders in their respective markets and have standardized on the RCM Thermokinetics process design and equipment supply. The new RCM Thermokinetics testing lab has been fully utilized in 2024 due to customer tests, project support, and product profiling related to new equipment proposal development. The test lab has added a new glass crystallization system and has fully commissioned the unit. This unit is also being used to support active crystallizer projects. Future expansion plans include a 30-gallon crystallization pilot plant. Engineering for the pilot plant crystallizer is scheduled for completion at the end of Q1. The aerospace and defense group experienced a steady recovery in Q4, 2023. Though we did add clients and headcount during the quarter, it is worth noting that our client's outlook is more focused on 2024. Regardless, we did recognize the receipt of additional workload with existing clients and new clients to expand our model-based expertise, digital conversion, software and systems employee base in 2024. Aerospace and Defense has now become a trusted provider of a new service involving rectifying quality and production issues within the supply base of our clients. Our approach and solution has been modeled from within our management team, informed by decades of industry knowledge and background they possess in this arena. Since the supply base for many OEMs has experienced issues globally, such as part shortages and material availability. We are in the process of deploying teams to help solve these challenges and have received interest across multiple OEMs. We continue to expand our teams within our workforce solutions, software, systems, and highly technical areas, especially in the air mobility sector, which has become a draw for many candidates. I will turn the call to Kevin to discuss the Q4 2023 financial results in more detail.

Thank you, Brad. Regarding our consolidated results, consolidated gross profit for the fourth quarter grew by 5.7% from 20.5 million to 21.6 million. Adjusted EBITDA for the fourth quarter grew by 18.5% from 7.5 million to 8.9 million. Adjusted diluted EPS grew by 37.5% from 52 cents to 71 cents. As for segment performance in the fourth quarter of 2023, healthcare gross profit was essentially flat. If we remove the impact of COVID on the consolidated revenue and compare to the fourth quarter in 2022, we estimate that 2023 gross profit grew by 4.4%. However, Our school revenue after normalizing for COVID grew by over 28% Q4 to Q4. Life sciences data and solutions gross profit grew by 19% in Q4 23 compared to Q4 22. Largely behind the energy services group, engineering gross profit grew by 8.6% in Q4 23 compared to Q4 22. As for fiscal 2024, We anticipate that we will see at least low double-digit consolidated adjusted EBITDA growth as compared to fiscal 2023, with a similar quarterly cadence when compared to fiscal 2023. This concludes our prepared remarks.