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 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 Vizzi, Executive Chairman, to provide an overview of RCM's operating performance during the quarter.

Thanks, Kevin. Good morning, everyone. As we exit our seasonal third quarter, we are entering Q4 from a position of strength, demonstrating record 2026 engineering backlog as of the end of October and continued momentum in healthcare. Penetration of existing clients continues to increase, while commercial discussions start to crystallize with future flagship clients. I attribute increased traction to growing brand awareness in our end markets, fortified by our employees' commitment to quality and reliable delivery. Also of note, as our visibility increases, so does the strength of our talent pool. We have seen a noticeable change in the number of highly qualified candidates reaching out to RCM, providing further fuel for the flywheel. We will continue to invest behind the business while many of our peers remain on their heels. Despite excess medical costs to the tune of approximately $1.8 million year to date, with Q3 hit particularly hard, our financial results remain resilient. Devon will provide more granularity into our financial performance later in the call, giving further visibility into our fundamental strength led by healthcare and engineering. I will now provide an update on the progress of each of our business units, starting with healthcare. We entered the 2025-2026 school year with momentum, seeing strong growth across our portfolio, driven by our commitment to quality, innovation, and client satisfaction. Our roster of new school partners is expanding, and we are equally encouraged by the commitments from our existing clients to broaden our role in staffing their schools. Though competition in certain markets has increased, it simply has not mattered. Our share in these same markets increased regardless. A testament to the commitment of our team and the trust we have built as preferred provider in the K through 12 end market. To put it differently, doubling down on caring is good for business. Despite tracking to close 2025 with our strongest financial performance outside of COVID, We already have an eye toward 2026 as we anticipate seeing the benefits of a record foreign recruitment pipeline that we have invested heavily in the last several years. The future of RCM healthcare remains bright. Now I will transition to life sciences data and solutions. In life sciences, the industry is seeing a significant shift as it deals with a variety of changes due to tariffs, favor nation drug pricing, and process automation. Each have caused momentum shifts with many of our clients from negative of workforce reductions to positive of capital investment in manufacturing. Structural industry shifts often present opportunity for RCM. We are capitalizing by partnering with an AI-driven computer software validation and equipment qualification company that has allowed us to streamline compliance protocols and reduce turnaround times across manufacturing sites. The creation of a dedicated life sciences engineering group will further differentiate RCM in the market. As it pertains to data and solutions, meaningful progress has been made in AI and analytics, particularly as applied to life sciences. These efforts continue to unlock actionable insights, from predictive forecasting to real-time monitoring. The updates reflect how technology is being leveraged not just to optimize operation, but to fuel innovation at the core of the business. As we move into Q4, we feel that our efforts are positioning us for growth. Life sciences will benefit from ongoing digital transformation, further integration of AI-driven compliance, and scaling of the new engineering group. These efforts are expected to drive efficiency and enhance our value proposition to farmer partners. Data and solutions will continue to expand our managed service offering. We are building the use of AI analytics into our process with a focus on generating deeper insights and supporting innovation across the enterprise. The emphasis will be on predictive capabilities and real-time data to support operational excellence and strategic decision making. HCM will see growth beyond our foundational managed service efforts in building our direct and BPO business as our pipeline continues to mature. Transition to engineering, starting with energy services. Energy services delivered another strong quarter in Q3, in addition to securing record backlog for 2026, reinforcing RCM's leadership in modern grid infrastructure and advanced energy solutions. Our integrated engineering and EPC model continues to gain momentum as utilities and data center developers seek partners with the technical depth, safety, culture, and scalability to execute complex, multidisciplinary projects and tangible client outcomes. We advanced major programs in substation modernization and energy resilient infrastructure with significant contributions from our civil, structural, mechanical, and protection and control teams. We have made great strides growing within our core utility client base. each project reinforcing our reputation for technical precision and execution reliability, solidifying our position as engineer of choice and tier one preferred partner. The business continues to outpace expectations, reflecting the strength of our integrated strategy and increasing market demand. Our engineering teams are designing and executing major programs across North America and internationally. while deepening strategic partnerships with OEMs to strengthen procurement agility and mitigate equipment lead time constraints. In a market challenged by labor availability and resource bottlenecks, RCN leverages our hybrid resourcing model to mine domestic expertise with global engineering design excellence centers, best-in-class digitalization and 3D BIM to ensure continuity, scalability, and cost-effective execution. This flexible approach enables the company to mobilize skilled manpower quickly for time-sensitive and mission-critical infrastructure projects. RCM's combination of specialized expertise, visual innovation, and operational discipline is positioning the business for sustained growth. Our teams are designing and delivering infrastructure that enhances grid reliability integrates renewables, and builds resilience into the critical systems powering our communities. Our guiding philosophy remains constant, engineering excellence that sets the standard in energy infrastructure. Aerospace and defense continues to gain momentum and existing program support and increased demand across new clients primarily in engineering, manufacturing, and supply chain areas. When compared to Q3 2024 year-to-date, revenue has grown almost 45%, gross profit by approximately 49%, and EBITDA by 110%. The third quarter is historically slower when compared to other quarters due to increased PTO and headcount continue to increase through Q3 2025. As projected, we have realized an increase in gross margin and EBITDA in Q3 2025 and subsequently quarter over quarter throughout the entire year. Our vertical left and technology innovator customers doing business with the U.S. government continue to spearhead our progress thus far in 2025 with multiple opportunities on the horizon in 2026 and beyond. As anticipated, success in our new service areas and expertise in supply chain manufacturing and quality engineering with current and new clients has impacted 2025 with a positive outlook for 2026. The awards in our aftermarket arena with two existing customers at the start of 2025 continue to contribute to our success in delivering to our aftermarket clients. RCN Aerospace and Defense attributes our latest award as Bell Flights, best new supplier in 2025 to our sales and recruitment team, which continues to build trusted, valued relationships throughout the client and candidate base. Our investment in new schools and technologies continues to keep our team at the forefront as the go-to stated publicly by many of our clients when they are having challenges with quality resources. Credit to our operations team for helping build a client We added to the portfolio in 2024 into one of our largest clients in 2025. This is just one example of our ability to land and expand quickly, leveraging our core capabilities within RCM. We anticipate growth to continue as we close 2025 and more opportunities are realized with the aerospace and defense environment vying for American companies who can hold clearances up to the secret and top secret level. Where we sit today, we believe many of the aerospace and defense programs are in their infancy, and we look forward to setting a new baseline in 2026. Now, I will return the call to Kevin to discuss the Q3 2025 financial results in more detail.

Thanks, Brad. Regarding our consolidated results, consolidated gross profit for the third quarter of 2025 was $19.4 million, which grew 8.8% over Q3 2024. Adjusted EBITDA for Q3-25 was $5.5 million as compared to $5.6 million for Q3-24 for a slight decline of 1.4%. Adjusted EPS was $0.42 for both comparable quarters. As for our segment performance in the third quarter of 2025 in healthcare, gross profit for Q3-25 was $9.0 million compared to $8.3 million for Q3 2024, growing 8.5%. Gross margin for Q3 2025 was 30.0% as compared to 31.2% for Q3 2024. School revenue for Q3 2025 was $24.4 million compared to $20.2 million for Q3 2024, growing 20.7%. Non-school revenue for Q3 2025 was $5.6 million compared to $6.4 million for Q3-24, declining 11.3%. Our healthcare group experienced a slow start to Q3 due to lower summer session revenue than we normally see. However, our September gross profit for all of healthcare grew over 20% September versus September 2025 versus 2024. Furthermore, Billable hours for the first four weeks of October 2025 increased by 18% as compared to the same period in 2024. So we're off to a nice start in Q4, and we're excited to see how those results come in. In engineering, gross profit for Q3 2025 was $6.9 million compared to $5.9 million for Q3 2024, growing 17.3%. and our best engineering gross profit quarter in our history. Gross margin for Q3 25 was 22.0% compared to 24.4% for Q3 24. We are very excited about where our energy services backlog stands. At this time, last year in 2024, our backlog for 2025 was 21 million. Our backlog today for 2026 is just over 70 million. While we are still growing our 2026 backlog, we are now very focused on 2027 and beyond. In our IT life sciences and data solutions group, gross profit for Q3 2025 was 3.5 million compared to 3.7 million for Q3 2024, decreasing by 4.2%. Gross margin for Q3 2025 was 39.5% compared to 38.0% for Q3 2024. It is worth noting that our SG&A expense includes $800,000 of costs for medical claims over budget in the third quarter alone and $1.8 million year-to-date. Regarding our balance sheet, frankly, we were disappointed with cash flow from operations in Q3 2025, We again experienced administrative collection issues with two of our large school clients. We are optimistic we will see good cash flow in Q4 and expected cash flow from operations for fiscal 25 will approximate net income. We reiterate that we expect Q4 to yield our highest quarterly gross profit and our highest adjusted EBITDA in fiscal 2025. We believe we have strong momentum heading into 2026. This concludes our prepared remarks. At this time, we will open the call for questions.