RCM Technologies, Inc.

Good morning, and thank you for joining us. This is Kevin Miller, Chief Financial Officer of RCM Technologies. I'm 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 file 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. Third quarter growth was led by healthcare and engineering as both businesses continue to ramp in their respective end markets. Though Q3 should always be considered the lens of seasonality, the breadth of progress in each of our businesses is inspiring as we continue to land new clients while maintaining and expanding existing ones. Sustainable progress never comes in a straight line. However, the resilience of our platform and commitment of our people across several continents has allowed for consistent progress throughout the cycle in the ever-evolving world. Our strategic construct allows us to not just deliver over the short term, but to provide a sustainable long-term path for the company. It is our philosophy throughout the organization to aim to evaluate the impact of today's decisions many years into the future. As we head into the final corner of 2024, RCN Healthcare is positioned to close the year on a high note with all operating units demonstrating momentum. Our K through 12 client roster continues to grow with new partnerships already yielding strong results. The K-12 staffing marketplace presents an evolving landscape with heightened demand for behavioral health support and specialized services that meet the diverse needs of today's students. This growth is a testament to our team's commitment to delivering high quality providers and addressing children's unique requirements across our partner districts. Additionally, our OPWDD division has demonstrated extraordinary potential providing a long runway for expansion in the years ahead. Looking forward, we are excited by the robust pipeline of international nurses waiting on priority dates. Once cleared, present a strategic pillar to accelerate growth as we meet increasing demands across our healthcare and education clients. With these developments and the continued success of our recruitment team within the corrections space, We are confident in our trajectory toward a record 2025, reinforcing our standing as a leader in healthcare and education staffing solutions. In Q3, our Life Sciences, Data, and Solutions Division demonstrated strong performance, characterized by robust client engagement, successful project completions, and a strategic focus on expanding our service offerings. Performance in the quarter was supported by effective cost management and increased operational efficiencies. Continued investment in technology and process improvement has allowed us to optimize resource allocation as we continue to build the business. During the quarter, we welcomed several new clients across the pharmaceutical and biotech sectors and in our RPC group, underscoring our reputation as a trusted advisor in navigating complex market dynamics. Our focus on delivering high-quality, tailored solutions resulted in a 99% retention rate among existing clients. Feedback indicates strong satisfaction with our strategic insights and execution. We continue to deliver successfully on our managed solution initiatives and have started two new projects. Our HCM team successfully implemented and went live with the most modules since its inception. The demand for our consulting services in life sciences, specifically in the area of data integrity, has accelerated as clients increasingly seek data-driven insights to inform decision-making. We are proactively expanding our capabilities in these areas to align with market needs. As we approach Q4, we remain committed to our strategic goals. We plan to invest further in our sales team and training to enhance our capabilities and support our growth trajectory. Additionally, we will continue to monitor industry trends closely to anticipate client needs and maintain our competitive edge. Overall, our Q3 performance reflects a solid foundation and a positive outlook for the remainder of the year. By leveraging our strengths and addressing emerging challenges, We are well-positioned to continue delivering exceptional value to our clients and stakeholders in the life sciences sector. Transitioning to engineering, starting with energy services. After a strong Q3, energy services is on pace to exceed 2024 budgeted revenue EBITDA numbers. In the U.S., we have been awarded another major substation project on the East Coast that will contribute to New York's grid modernization as part of the renewable energy build-out. In Europe, we were awarded an additional project contributing to the energy transition in Germany. Finally, in Puerto Rico, we have a robust pipeline of significant projects in 2025. As a result of our strong performance executing turnkey projects among the largest utilities in the world, the EPC group developed strong relations with some of the largest construction companies, affording us the opportunity to further build the business through a new channel. In addition, the evaluation of possible partners in Europe and LATAM is in progress to fuel growth in energy services for many years to come. Also of note, at this year's SIGRA Paris session, energy services presented together with a large U.S. utility an innovative technical paper of a future-oriented microgrid substation and demonstrated the latest technologies for digital project management to improve client cost position to increase project execution quality. In process and industrial, the RCM Thermal Kinetics Office has delivered the first of two modular evaporation systems for a zero-carbon chemical manufacturing customer. The engineering team is completing two ethanol plant optimization and expansion studies that integrate the RCM TK patented energy and integration design enabling clients to lower their carbon intensity score. The need for ethanol plants to expand has evolved into a marketing campaign that employs engineering and equipment designs not typically used in the ethanol space. TK engineers bring a wealth of petroleum engineering knowledge, which has become the basis for the launch of the TK Next campaign, new ethanol expansion technology. The office expects its first equipment order from the campaign in November, expanding a plant from 85 million gallons per year to 105 million gallons per year. The project will have a 12 to 18 month ROI, providing a compelling value proposition to the client. The team has completed a detailed process design and firm proposal for a planned SAF facility for a US-based customer. This project has a tentative Q1 equipment order schedule. A large engineering order is utilizing engineering and lab resources to develop novel solution chemistry for a customer-planned lithium facility in the US. The equipment for this facility is scheduled for purchase in late Q1. This project is a good example of the strength of the TK team and the supporting test center. Two major customers are in the final stages of either exclusivity or partnership agreements with TK. One client has used TK exclusively to support the proprietary CO2 capture conversion plants for seven years. The test center continues to exhibit strong utilization through the end of 2024 and into 2025. The team remains focused on continuation of their emergence as a market leader in responsible and sustainable chemical process design. Within aerospace and defense, the engineering business is thriving as we continue to build our infrastructure within the three new clients we secured in Q2 of 2024. Headcount has more than doubled in two of these new clients in Q3. Our estimate of realizing a significant increase in gross profit for 2024 compared to 2023 still holds true, and the revenue run rate has now increased at well over $100,000 per week. The RFIs, RFQs, and MSAs expected were finalized, and therefore we have experienced an aggressive increase in headcount, revenue, and profit, which we expect to continue to grow through Q4 2024. We have realized much anticipated increases in customer requirements in Q3. Our world-class trusted recruitment team continues to successfully execute, which has allowed us to experience twice the amount of new hires in Q3 compared to Q2. As anticipated, we have been awarded a new multi-year contract in Q3 with one of the largest aerospace and defense OEMs. This award will allow us to drive and expand our model-based expertise, software systems, logistics, mechanical, and avionic expertise throughout 2020. 24, 2025, and 2026. We have also been awarded a large contract with another eVTOL manufacturer in our aftermarket arena, which is expected to help the group recover and deliver a strong 2025. We also continue to build within our current client base due to challenges they are facing with expansion in their direct workforce because caused by smaller and shorter timeframe contracts. The first three quarters of 2024 set us up for a much improved Q4 and beyond. Now, I will return the call to Kevin to discuss the Q3 2024 financial results in more detail.

Thank you, Brad. Regarding our consolidated results, consolidated gross profits in the third quarter of 2024 grew by 3.2 percent as compared to 2023. from 17.3 million to 17.8 million. Consolidated gross profit for the third quarter year to date grew by 5.7 percent as compared to 2023, from 55.1 million to 58.2 million. Adjusted EBITDA for the third quarter grew by 9.5 percent, from 5.1 million to 5.6 million. Adjusted EBITDA for the third quarter year to date grew by 10.5 percent, from 17.7 million to 19.6 million. As for our segment performance in the third quarter of 2024, healthcare gross profit grew by 11.1%, engineering gross profit increased by 5.1%, life sciences, data and solutions gross profit decreased by 13.1%. As for healthcare or healthcare third quarter revenue, school revenue grew by 16.3% from 17.3 million to 20.2 million. On our last call, we talked about a record number of new school contracts heading into 2024-2025. While we're pleased with 16.3% growth, several new contracts started slow and have demonstrated a steepening ramp as the year progresses. We remain optimistic that school revenue for the 2024-2025 school year ending in June 2025 will yield growth in the neighborhood of 20%. Non-school revenue was $6.4 million as compared to $7.6 million. However, if we remove a large long-term care group where we deliberately reduced services, revenue was flat at $5.6 million in both periods. We do expect a healthy sequential growth to non-school revenue in the fourth quarter of 2024. As for the fourth quarter of fiscal 2024 consolidated results, We remain optimistic that we will see attractive, consolidated, adjusted EBITDA growth as compared to fiscal 2023. This concludes our prepared remarks.