What changed in this filing

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Item 1. Business

2025-03-13 compared with 2024-03-14 · 138 added, 221 removed, 84 unchanged (81% of the section changed)

BUSINESS (CONTINUED)

Industry Overview (Continued)

In the health care services industry, a shortage of nurses and other medical personnel in the United States has led to increases in business activity for health care service companies, including the Company’s Specialty Health Care group.

Due in part to an aging population and improved medical technology, the demand for selected health care professionals is expected to continue over the next several years, with an emphasis on leveraging technology to expand access to care.

The increased adoption of telemedicine, an area in which the Specialty Health Care group has developed new service offerings, is a primary example.

In addition, public educational institutions are outsourcing their requirements for school nurses, therapists and paraprofessionals to lower their costs and it is expected that this will continue and grow.

Each of these dynamics have been exacerbated by COVID-19.

Various factors, including the pandemic, technological advances and patient habits, have also altered patterns in health care delivery, with newer delivery models gaining traction, namely telemedicine.

Given federal and state regulatory changes as well as private insurer reimbursement methods, utilization of telemedicine services increased significantly.

CDC researchers stated that maintaining the expansion of telehealth remains critical to providing access to care.

It is expected the total addressable market opportunity will continue to expand and grow.

Expanding access to behavioral health and mental well-being is also a priority for public health officials.

Increasing and maintaining access to proper care remains a top priority and the market opportunity for these services is expected to continue to grow.

While the Company believes that the demand for Healthcare related services remains historically high, the Company also believes this demand subsided some as COVID-19 shifted from a pandemic to an endemic.

The Company’s Engineering group remains focused on areas of growth, primarily within the utility/electric power, aerospace, marine and transportation, commercial and industrial, oil and gas, as well as biofuel industries.

Given the current composition of its customer base, the Engineering group’s performance is well balanced between its three segments.

In recent years, many electric utilities have prioritized transitioning their power generation assets to cleaner sources of energy.

Much of this transformation is being driven by investments in renewable energy.

The Energy Information Administration (“EIA”) estimates that 38% of the United States’ electric generation capacity will be comprised of wind and solar assets by 2050.

This expansion will require extensive investment in the nation’s transmission infrastructure to interconnect these renewable resources to the energy grid.

Projects of this scale will require engineering and design expertise, as well as the utilization of integrated design and EPC services.

As the world’s industrial output rebounds from pandemic-related weakness in 2020 and 2021, the Company believes its Process and Industrial group is positioned well to take advantage.

Companies in the chemical industry are reprioritizing spending towards decarbonization technologies, with many U.S.

chemical companies expecting to place an emphasis on renewable feedstocks and new carbon recycling technologies.

The Company believes its process engineering services can play a vital role across this multibillion-dollar opportunity.

Companies must integrate and manage computing environments consisting of multiple computing platforms, operating systems, databases and networking protocols and off-the-shelf software applications to support business objectives.

Companies also need to keep pace with new technology developments, which often rapidly render existing equipment and internal skills obsolete.

At the same time, varied factors have caused many organizations to focus on core competencies and trim workforces in the IT and data management area.

Accordingly, these organizations often lack the quantity, quality and variety of IT skills necessary to design and support IT and data solutions.

IT managers are charged with supporting increasingly complex systems and applications of significant strategic value, while working under budgetary, personnel and expertise constraints within their own organizations.

The Company believes its target market for IT services and data solutions is among middle-market companies, which typically lack the time and technical resources to satisfy all of their IT needs internally.

These companies commonly require sophisticated, experienced IT assistance to achieve their business objectives and often rely on IT service providers to help implement and manage their systems.

RCM is structured to provide middle-market companies a single source for their IT and digitization needs.

BUSINESS (CONTINUED)

Business Strategy

The Company is dedicated to providing solutions to meet its clients’ business needs by delivering specialty health care, engineering, life sciences and information technology services.

The Company’s objective is to remain a recognized leader of specialized professional staffing, consulting services and solutions in major markets throughout North America.

The Company adapts operating strategies to achieve this objective.

The following is a discussion of the key elements of its growth and operating strategies:

Growth Strategy

Promote Full Life Cycle Solution Capability

The Company promotes a full life cycle solution capability to its customers.

The goal of the full life cycle solution strategy is to fully address a client’s project implementation cycle at each stage of its design, development and deployment.

This entails the Company working with its clients from the initial conceptualization of a project through its design and project execution, and extending into ongoing management and support of the delivered product.

RCM’s strategy is to build projects and integrated solutions offerings selectively, utilizing its extensive resource base.

The Company believes that the effective execution of this strategy will generate improved margins on its existing resources.

The completion of this service-offering continuum is intended to afford the Company the opportunity to strengthen long-term client relationships that will further contribute to a more predictable revenue stream.

In addition to a full life cycle solution offering, the Company continues to focus on transitioning into higher value oriented services in an effort to increase its margins on its various service lines and generate revenue that is more sustainable.

The Company believes this transition is accomplished by pursuing additional vertical market specific solutions in conjunction or combination with longer-term based solutions, through expansion of its global client relationships and by pursuing strategic alliances and partnerships.

Achieve Internal Growth

The Company continues to promote its internal growth strategies which it designed to better serve the Company’s customers, generate higher revenue and achieve greater operating efficiencies.

Every division of the Company continuously focuses on services and client portfolio diversification.

Business units are collaborating on penetrating and servicing accounts as sales teams are increasing their activity levels.

This enables clients to be supported by specialists in their areas of need while RCM productivity increases.

RCM provides an orientation program in which sales managers and professionals receive relevant information about Company operations.

RCM has adopted an industry-centric approach to sales and marketing.

This initiative contemplates that clients within the same industry sectors tend to have common business challenges.

It therefore allows the Company to present and deliver enhanced value to those clients in the vertical markets in which RCM has assembled the greatest work experience.

RCM’s consultants continue to acquire project experience that offers differentiated awareness of the business challenges that clients in that industry are facing.

This alignment also facilitates and creates additional innovative cross-selling opportunities.

The Company believes this strategy will lead to greater account penetration, strategic partnerships, and enhanced client relationships.

Operational strategies contributing to RCM’s internal productivity include the delineation of certain new solutions practice areas in markets where its clients had historically known the Company as a contract service provider.

The formation of these new practice areas facilitates the flow of project opportunities and the delivery of project-based solutions.

BUSINESS (CONTINUED)

Growth Strategy (Continued)

Pursue Selective Strategic Acquisitions

The industries in which the Company operates continue to be highly fragmented, and the Company plans to continue to selectively assess opportunities to make strategic acquisitions as such opportunities are presented to the Company.

The Company's acquisition strategy is designed to broaden the scope of services and technical competencies and grow its full life cycle solution capabilities.

In considering acquisition opportunities, the Company focuses principally on companies with (i) technologies or market segments RCM has targeted for strategic value enhancement, (ii) margins that are accretive to existing margins, (iii) experienced management personnel, (iv) substantial growth prospects and (v) sellers who desire to join the Company’s management team.

To retain and provide incentives for management of its acquired companies, the Company has generally structured a significant portion of the acquisition price in the form of multi-tiered consideration based on growth of operating profitability of the acquired company over a two-to-four-year period.

Operating Strategy

Develop and Maintain Strong Customer Relationships

The Company seeks to develop and maintain strong cross-functional customer relationships by anticipating and focusing on its customers’ needs.

The Company emphasizes a relationship-oriented and partnership-based approach to business, rather than the transaction or assignment-oriented approach that the Company believes is used by many of its competitors.

This industry-centric strategy is designed to allow RCM to expand further its relationships with clients in RCM’s targeted sectors.

To develop close customer relationships, the Company’s practice managers and/or salespeople regularly meet with both existing and prospective clients to identify areas of need and help design solutions and identify the resources needed to execute their strategies.

The Company’s managers also maintain close communications with their customers during each project and on an ongoing basis after its completion.

The Company believes that this relationship-oriented approach can result in greater customer satisfaction.

Additionally, the Company believes that by collaborating with its customers in designing business solutions, it can generate new opportunities to cross-sell additional services that the Company has to offer.

The Company focuses on providing customers with qualified individuals or teams of experts compatible with the business needs of its customers and makes a concerted effort to follow the progress of such relationships to ensure their continued success.

Attract and Retain Highly Qualified Consultants and Technical Resources

The Company believes it has been successful in attracting and retaining highly qualified consultants and contractors by (i) providing stimulating and challenging work assignments while fostering a culture of innovation, (ii) offering competitive wages, (iii) effectively communicating with its candidates, (iv) providing selective training to maintain and upgrade skills and (v) aligning the needs of its customers with appropriately skilled personnel.

The Company believes it has been successful in retaining these personnel due in part to its use of practice managers who are dedicated to maintaining contact with, and monitoring the satisfaction levels of, the Company’s consultants and contractors while they are on assignment.

BUSINESS (CONTINUED)

Specialty Health Care

The Company’s Specialty Health Care Group specializes in long-term and short-term staffing of medical professionals as well as executive search, international recruitment, and placement solutions for many of the largest healthcare institutions and school districts across the United States.

The segment’s portfolio of services includes, but is not limited to, the following fields:

Allied and Therapy Staffing :

Specializes in recruiting outstanding professionals across the health care industry.

Our allied health care professionals and therapists work in schools, health systems, hospitals, nursing homes, and rehabilitation facilities.

Correctional Healthcare Staffing :

Staffing services for local, state and federal correctional facilities and provide screening, onboarding, and employee assessments as well as employee and inmate vaccination and treatment services.

Health Information Management :

Provide healthcare organizations with experienced medical coding professionals that manage staffing shortages, backlogs, vacation coverage and long-term coding support.

Nursing Services :

Provides nurse placement and staffing services in healthcare facilities, schools, hospitals and correctional facilities.

Physicians and Advanced Practice :

Our national locum tenens (temporary practitioner) practice specializes in placing physicians, physician assistants and nurse practitioners.

School Staffing and Recruitment :

Provides full-time and part-time nurse employment services for school districts across the country.

The Company also offers other health care professionals to perform school evaluations and treat students, including occupational and physical therapists, speech and language pathologists, as well as special education support services and registered behavioral technicians to support students’ individualized education plan and behavioral health needs.

Telepractice :

The Company’s teletherapy solution is an evidence-based service delivery option for students to receive Special Education services such as Speech-Language Therapy, Occupational Therapy, Physical Therapy, Behavioral and Mental Health services and other healthcare services through an online platform.

Maintaining the utilization of telemedicine has become and remains critical to providing necessary access to care.

Expanding access to behavioral health and mental wellness services is also a priority for many public health officials.

The Company’s School Services and Telepractice offerings are well positioned to provide solutions in these areas of priority as the market opportunity for these services is expected to continue to grow.

As of December 30, 2023, the Company assigned approximately 2,780 specialty health care services personnel to its customers.

BUSINESS (CONTINUED)

RCM provides a full range of Engineering services including Project Management Engineering & Design, Engineering Analysis, Engineering-Procurement-Construction, Configuration Management, Hardware/Software Validation & Verification, Quality Assurance, Technical Writing & Publications, Manufacturing Process Planning & Improvement and 3D/BIM Integrated Design.

Engineering services are provided at the site of the client or at the Company’s own facilities.

The Company’s Engineering segment consists of three business units – Energy Services, Aerospace Services and Process & Industrial Services.

Energy Services :

Provides solutions to the utility industry, including power generation and transmission and distribution.

The group has highly technical project experience that encompasses multi-disciplined engineering and design services as well as providing technical support during design, construction and plant operational phases.

The Company believes that the deregulation of the utilities industry and the aging of nuclear power plants offer the Company an opportunity to capture a greater share of professional services and project management requirements of the utilities industry.

Electric utilities have prioritized transitioning their power generation assets to cleaner sources of energy and grid modernization initiatives.

This expansion requires large-scale investment in the nation’s transmission infrastructure to interconnect these renewable resources to the energy grid.

Aerospace Services :

Provides engineering and technical services to the aerospace & defense industry.

According to the Congressional Budget Office (“CBO”), the Department of Defense plans to spend over $1 trillion in procurement-related aviation expenditures over the next three decades.

Given RCM’s customer account relationships with several of the largest defense prime contractors, the Company believes there is ample opportunity for engineering services and technical publication work, including production and procurement engineering services as well as the need for sustainment and development program publication services, data management and digital solutions.

Process & Industrial Services :

Provides engineering services to the industrial, chemical, commercial and oil and gas industries in the United States, Europe and Canada.

With many companies in the chemical industry reprioritizing spending towards decarbonization technologies, many U.S.

chemical companies are expected to place an emphasis on renewable feedstocks and new carbon recycling technologies.

The Company believes its process engineering services and specialized hydrogen capabilities can play a vital role across this multibillion-dollar opportunity.

The Company provides its engineering services through a number of delivery methods.

These include managed tasks and resources, complete project services, outsourcing, both on and off-site, and a full complement of resourcing alternatives.

As of December 30, 2023, the Company assigned approximately 440 engineering and technical personnel to its customers.

BUSINESS (CONTINUED)

Life Sciences and Information Technology

The Company’s Life Sciences and Information Technology segment is an integrated group of business units providing staff supplementation services and project solutions with physical locations in the United States, Canada and Puerto Rico primarily supporting Financial, Technical, Manufacturing, Life Sciences and Distribution applications.

Specialization in project solutions include, but are not limited to, the following areas:

Life Sciences :

Specializes in providing innovative options to pharmaceutical, medical device and biotechnology companies in need of guidance, support or remediation of quality, compliance or business challenges.

The group assists in staffing, solution planning and remediation needs in the areas of automation, compliance, data analytics, technical quality assurance and management, and validation and verification.

IT Services & Solutions :

Global provider of business and technology solutions designed to improve the operational performance of our clients.

Specialties include software development, infrastructure services, data management, and managed IT solutions.

The Company has a 40-year history of providing qualified IT candidates to customers in a timely and cost-effective manner to address their specific business needs.

The Company offers scalable solutions that can provide emerging growth companies with a single qualified resource or an entire project team along with RCM’s project management oversight to Fortune 100 clients.

RCM’s sector knowledge coupled with technical and business process experience enable the Company to provide strategic planning, project execution and management and support services throughout the entire project life cycle.

RCM has successfully completed multimillion-dollar projects in a variety of industry verticals using time-tested methodologies that manage strict budgets, timelines and quality metrics.

The Company believes that its ability to deliver life sciences and information technology solutions across a wide range of technical platforms provides an important competitive advantage.

RCM ensures that its consultants have the expertise and skills needed to keep pace with rapidly evolving information technologies.

The Company’s strategy is to maintain expertise and acquire knowledge in multiple technologies so it can offer its clients non-biased technology solutions best suited to their business needs.

The Company provides its life sciences and information technology services through a number of flexible delivery methods.

These include management consulting engagements, project management of client efforts, project implementation of client initiatives, recruiting process outsourcing, both on and off site, and a full complement of human capital management solutions and resourcing alternatives.

As of December 30, 2023, the Company assigned approximately 270 Life Sciences and Information Technology personnel to its customers.

BUSINESS (CONTINUED)

Branch Offices

The Company’s organization consists of 29 branch offices located in the United States, Canada, Germany, Puerto Rico and Serbia.

The locations and services of each of the branch offices are set forth in the table below.

UNITED STATES

Massachusetts

North Carolina

(1) Services provided are abbreviated as follows:

- Engineering

- Specialty Health Care

- Life Sciences and Information Technology

The Company is domiciled in the United States and its segments operate in the United States, Canada, Germany, Puerto Rico and Serbia.

BUSINESS (CONTINUED)

International Operations

The Company operates its business in Canada and, to a less significant extent, in Germany, Puerto Rico and Serbia.

For the fiscal year ended December 30, 2023, approximately 6.3% of the Company’s revenue were generated outside the United States.

There are certain risks inherent in conducting business internationally including:

the imposition of trade barriers, foreign exchange restrictions, longer payment cycles, greater difficulties in accounts receivables collection, difficulties in complying with a variety of foreign laws (including without limitation the U.S.

Foreign Corrupt Practices Act), changes in legal or regulatory requirements, difficulties in staffing and managing foreign operations, complex and uncertain employment environments, political instability and potentially adverse tax consequences.

Our operations in Serbia could be adversely affected by the current conflict between Ukraine and Russia, with which Serbia has substantial ties.

Should sanctions against Russia affect Russia in a way that causes adverse economic consequences to Serbia, or if such sanctions were to be extended to countries that might be considered to be in alignment with Russia, thus could have a negative impact on our employees or operations both within and outside Serbia.

To the extent the Company experiences these risks, the business and results of operations could be adversely affected.

From its headquarters locations in New Jersey, the Company provides its branch offices with centralized administrative, marketing, finance, MIS, human resources and legal support.

Centralized administrative functions and shared services minimize the administrative burdens on branch office managers and allow them to spend more time focusing on sales and marketing, client relations and practice development activities.

Branch offices are primarily located in markets that the Company believes have strong growth prospects for the Company’s services.

The Company’s branches are operated in a decentralized, entrepreneurial manner with most offices operating as independent profit centers.

Sales and Marketing

Sales and marketing efforts are conducted at the local and national level through the Company’s network of branch offices.

Business development and sales activities and productivity are tracked and rankings established and published.

Sales between business units are recognized and financially encouraged.

The Company emphasizes long-term relationships and partnerships with customers that are developed through regular assessment of customer requirements and proactive monitoring of service performance.

The Company’s sales and account management personnel make regular visits to existing and prospective customers.

New customers are obtained through active sales programs and referrals.

The Company encourages its employees to participate in and support national and regional trade associations, economic development agencies, local chambers of commerce and other civic associations.

The Company seeks to develop strategic partnering relationships with its customers by providing comprehensive solutions for all aspects of a customer’s engineering, life sciences, information technology and other professional services needs.

The Company concentrates on providing carefully screened professionals with a range of highly specialized and technical skills in a timely manner and at competitive prices.

The Company regularly monitors the quality of the services provided by its personnel and obtains feedback from its customers as to their satisfaction with the services provided.

The Company serves Fortune 1000 companies and many middle market clients, competing on a national and global scale.

The Company’s relationships with these customers are typically formed at the customers’ local or regional level and from time to time, when appropriate, at the corporate level for national accounts.

BUSINESS (CONTINUED)

Key Customers

The Company has established long-term relationships with many of its customers across each of its business segments.

The Company’s emphasis on client retention has resulted in repeat business from many of its largest strategic accounts.

During the fiscal year ended December 30, 2023, the Company had two customers exceed 10% of consolidated revenue, representing 17.1% and 10.1% of consolidated revenue.

The Company’s five, ten and twenty largest customers accounted for approximately 39.1%, 50.4% and 62.7%, respectively, of the Company’s revenue for the fiscal year ended December 30, 2023.

Other Information

Safeguards - Business, Disaster and Contingency Planning

The Company has implemented a number of safeguards to protect the Company from various system-related risks including Redundant Telecommunications and server systems architecture, multi-tiered server and desktop backup infrastructure, and data center physical and environmental controls.

In addition, the Company has developed disaster recovery / business continuity procedures for all offices.

Given the significant amount of data generated in the Company’s key processes including recruiting, sales, payroll and customer invoicing, the Company has established redundant procedures, functioning on a daily basis, within the Company’s primary data center, which is a third-party Internet Data Center (“IDC”).

This redundancy should mitigate the risks related to hardware, application and data loss by utilizing the concept of live differential backups of servers and desktops to Storage Area Network (SAN) devices on its backup LAN, culminating in offsite tape storage at an independent facility.

Controls within the data center environment ensure that all systems are proactively monitored and data is properly archived.

Additionally, the Company has contracted and brokered strategic relationships with third-party vendors to meet its recovery objectives in the event of a system disruption.

For example, comprehensive service level agreements for the Company’s data circuits and network devices guarantee minimal outages as well as network redundancy and scalability.

The Company’s ability to protect its data assets against damage from fire, power loss, telecommunications failures, and facility violations is critical.

To address potential cyber security threats, the Company uses a third-party mail management service to filter all emails destined for the RCMT domain before being delivered to the corporate mail servers.

The service has also been deployed to safeguard the enterprise from malicious internet content.

The deployment of virus, spam, and patch management controls extends from the perimeter network to all desktops and is centrally monitored and managed.

In addition to the virus and malware controls, an Intrusion Protection System (IPS) monitors and alerts on changes in network traffic patterns as well as known hostile signatures.

The Company maintains a disaster recovery plan that outlines the recovery time / point objectives (RTO / RPO), organization structure, roles and procedures, including site addendum disaster plans for all of its key operating offices.

Corporate IT personnel regulate the maintenance and integrity of backed-up data throughout the Company.

The IDC provides the Company with a robust data center environment with redundant HVAC, commercial power feeds, ten 2000kW diesel generator sets with five 10,000-gallon, above-ground fuel oil storage tanks to provide standby power and dry pipe fire suppression.

In addition, the IDC provides 24x7 security staffing, closed-circuit monitors, secure-card key access, biometrics scanners, man traps, and alarmed doors.

BUSINESS (CONTINUED)

The market for engineering and Life Sciences and IT services is highly competitive and is subject to rapid change.

The market for Healthcare, Engineering and Life Sciences, Data and Solutions is highly competitive and is subject to rapid change.

As the market demand has shifted, many software companies have adopted tactics to pursue services and consulting offerings making them direct competitors when in the past they may have been alliance partners.

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Such competition may impose additional pricing pressures on the Company.

The Company believes its principal competitive advantages in the engineering and life sciences and information technology services market include:

strong relationships with existing clients, a long-term track record with over 1,000 clients, a broad range of services, technical expertise, knowledge and experience in multiple industry sectors, quality and flexibility of service, responsiveness to client needs and speed in delivering life sciences and information technology solutions.

The Company believes its principal competitive advantages in the healthcare, engineering and life sciences, data and solutions market include:

Additionally, the Company competes for suitable acquisition candidates based on its differentiated acquisition model, its entrepreneurial and decentralized operating philosophy, and its strong corporate-level support and resources.

The Company’s operating results can be affected by the seasonal fluctuations in client expenditures.

Expenditures in the Engineering, Life Sciences and Information Technology segments can be negatively impacted during the first quarter of the year when clients are finalizing their budgets.

Expenditures in the Engineering and Life Sciences, Data and Solutions segments can be negatively impacted during the first quarter of the year when clients are finalizing their budgets.

Quarterly results generally fluctuate depending on, among other things, the number of billing days in a quarter and the seasonality of clients’ businesses.

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Most of the expense for billable salaried employees are included in the Company's direct costs in its income statements.

Billable hourly long-term employees have very high utilization, typically in the 90% to 100%.

Billable hourly long-term employees have very high utilization, typically in the 90% to 100% range.

For most of these employees, our goal is near 100% utilization.

2 unchanged sentences

They are typically hired for one assignment, and upon completion, they terminate.

As of December 30, 2023, our billable workforce comprised approximately 2,780 Specialty Health Care services personnel, 440 Engineering and Technical personnel, and 270 Life Sciences and Information Technology personnel assigned by the Company to work on client projects or assignments for various periods.

As of December 28, 2024, our billable workforce comprised approximately 3,140 Specialty Health Care services personnel, 510 Engineering and Technical personnel, and 200 Life Sciences, Data and Solutions personnel assigned by the Company to work on client projects or assignments for various periods.

None of the Company's employees are party to a collective bargaining agreement.

The Company conducts business globally but is principally concentrated in North America and Europe.

The Company conducts business globally but is principally concentrated in North America, Europe and the Philippines.

As of December 28, 2024, the Company's workforce breaks out as follows:

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approximately 250 nonbillable and 3,710 billable

International (primarily Canada and Europe):

International (Canada, Europe and the Philippines):

approximately 120 nonbillable and 140 billable

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These reports are available as soon as reasonably practicable after such material is electronically filed with or furnished to the SEC.

The Company’s website is ht tp://www.rcmt.com .

The Company’s website is http://www.rcmt.com.

The information contained on the Company’s website, or on other websites linked to the Company’s website, is not part of this document.

4 unchanged sentences

If the Company makes any amendments to either of these Codes (other than technical, administrative, or other non-substantive amendments), or waives (explicitly or implicitly) any provision of the Code of Ethics to the benefit of its Chief Executive Officer, Chief Financial Officer or Controller, it intends to disclose the nature of the amendment or waiver, its effective date and to whom it applies in the investor relations portion of the website, or in a report on Form 8-K filed with the SEC.

The Company ’ s business involves a number of risks, some of which are beyond its control.

The risk and uncertainties described below are not the only ones the Company faces.

Set forth below is a discussion of the risks and uncertainties that management believes to be material to the Company.

Economic Trends

Adverse global economic conditions, when they occur, may create conditions such as increases in inflation, higher interest rates, a general tightening in the credit markets, lower levels of liquidity, increases in the rates of default and bankruptcy, and volatility in credit, equity and fixed income markets.

Any or all of these developments can negatively affect the Company’s business, operating results or financial condition in a number of ways.

For example, current or potential customers may be unable to fund capital spending programs, new product launches of other similar endeavors whereby they might procure services from the Company, and therefore delay, decrease or cancel purchases of services or not pay or delay paying for previously purchased services.

In addition, these conditions may cause the Company to incur increased expenses or make it more difficult either to utilize existing debt capacity or otherwise obtain financing for operations, investing activities (including the financing of any future acquisitions), or financing activities, all of which could adversely affect the Company’s business, financial condition and results of operations.

Government Regulations

Staffing firms and employment service providers are generally subject to one or more of the following types of government regulation:

(1) regulation of the employer/employee relationship between a firm and its employees, including tax withholding or reporting, social security or retirement, benefits, workplace compliance, wage and hour, anti-discrimination, immigration and workers’ compensation;

(2) registration, licensing, record keeping and reporting requirements;

and (3) federal contractor compliance.

Failure to comply with these regulations could result in the Company incurring penalties and other liabilities, monetary and otherwise.

Highly Competitive Business

The staffing services and outsourcing markets are highly competitive and have limited barriers to entry.

The Company competes in global, national, regional, and local markets with numerous temporary staffing and permanent placement companies.

Price competition in the staffing industry is significant and pricing pressures from competitors and customers are increasing.

In addition, there is increasing pressure on companies to outsource certain areas of their business to low cost offshore outsourcing firms.

The Company expects that the level of competition will remain high in the future, which could limit the Company’s ability to maintain or increase its market share or profitability.

Our inability to compete successfully with our competitors could adversely affect the Company’s business, financial condition and results of operations.

Seasonality of Business

As described in “Item 1.

Business,” our operating results are subject to seasonal fluctuations, with reduced demand often occurring during the first quarter of the year when clients are finalizing their engineering and life sciences, data and solutions budgets, and also during periods in which there are a substantial amount of holidays and season vacations.

In particular, one of the largest customers in our Specialty Health Care group, the New York City Department of Education, significantly reduces activity during the third quarter, when schools are closed for summer recess.

Our operating results for any given period may fluctuate as a result of the timing of holidays, vacations and other events, and if we were to experience unfavorable performance during periods in which we would otherwise expect to have high seasonal demand, we may have limited ability to make up for such performance during periods of seasonally lower demand.

RISK FACTORS (CONTINUED)

Events Affecting Significant Customers

As disclosed in “Item 1.

Business,” during the fiscal year ended December 28, 2024, the Company had two customers exceed 10% of consolidated revenue, representing 19.5% and 14.1% of consolidated revenue.

The Company’s five, ten and twenty largest customers accounted for approximately 48.5%, 60.1% and 70.6%, respectively, of the Company’s revenue for the fiscal year ended December 28, 2024.

The Company’s customers may be affected by the current state of the economy or developments in the credit markets or may engage in mergers or similar transactions.

In addition, customers may choose to reduce the business they do with the Company for other reasons or no reason.

The Company could also be materially impacted by actions of prime contractors whereby the Company derives revenue through a subcontractor relationship.

Should any significant customers experience a downturn in their business that weakens their financial condition or merge with another company or otherwise cease independent operation, or limit their relationship with us, it is possible that the business that the customer does with the Company would be reduced or eliminated, which could adversely affect the Company’s business, financial condition and results of operations.

Subcontractors, Transit Accounts Receivable and Transit Accounts Payables Related to Construction Management Contracts

The Company’s Engineering segment has entered into arrangements to provide construction management and engineering services to customers under which arrangements the Company then engages subcontractors to provide the construction services.

Ultimately, as a primary contractor, the Company is responsible for the nonperformance or negligence of its subcontractors, whom the Company requires to be adequately insured and to issue performance bonds for their assignment.

Should a subcontractor not perform or act negligently and should there be inadequate insurance or performance bonds in place, the Company might not be able to mitigate its primary liability to the customer, and the Company’s business, financial condition and results of operations could be materially adversely affected.

In addition, while payments to subcontractors typically are due from the Company only after the Company receives payment from the ultimate customer, the Company faces the risk that, should a customer not pay the Company, or should a subcontractor demand payment from the Company prior to the Company’s receipt of payment from its customer, the Company’s business, financial condition and results of operations could be materially adversely affected.

Dependence Upon Personnel

The Company’s operations depend on the continued efforts of its officers and other executive management.

The loss of key officers and members of executive management may cause a significant disruption to the Company’s business.

The Company also depends on the performance and productivity of its local managers and field personnel.

The Company’s ability to attract and retain new business is significantly affected by local relationships and the quality of service rendered.

The loss of key managers and field personnel may also jeopardize existing client relationships with businesses that continue to use the Company’s services based upon past relationships with local managers and field personnel.

In order to fulfill the requirements of the Company’s customers, the Company must be able to recruit and retain appropriate personnel for client assignments.

RISK FACTORS (CONTINUED)

Revolving Credit Facility and Liquidity

If the Company were unable to borrow under its Revolving Credit Facility (see “Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations – Liquidity and Capital Resources – Financing Activities”), it may adversely affect the Company’s liquidity, results of operations and financial condition.

The Company’s liquidity depends on its ability to generate sufficient cash flows from operations and, from time to time, borrowings under the Revolving Credit Facility with the Company’s agent lender Citizens Bank of Pennsylvania.

The Company believes that Citizens Bank is liquid and is not aware of any current risk that they will become illiquid.

However, should Citizens Bank experience limitations on its liquidity, our access to capital and thus our own liquidity could be adversely affected.

At December 28, 2024, the Company had $35.0 million in borrowings under the Revolving Credit Facility outstanding and $7.4 million outstanding under letters of credit, with availability for additional borrowings under the Revolving Credit Facility of $22.6 million.

Borrowings under the Revolving Credit Facility bear interest at one of two alternative rates, as selected by the Company at each incremental borrowing.

These alternatives are:

(i) SOFR (Secured Overnight Financing Rate), plus applicable margin or (ii) the agent bank’s prime rate generally borrowed over shorter durations.

The Company also pays unused line fees based on the amount of the Revolving Credit Facility that is not drawn.

Unused line fees are recorded as interest expense.

All borrowings under the Fifth Amended and Restated Loan Agreement remain collateralized with substantially all of the Company’s assets, as well as the capital stock of its subsidiaries.

The Revolving Credit Facility also contains various financial and non-financial covenants, such as a covenant that restricts the Company’s ability to borrow in order to pay dividends.

As of December 28, 2024, the Company was in compliance with all covenants contained in the Revolving Credit Facility.

The Company believes that it will maintain compliance with its financial covenants for the foreseeable future.

Foreign Currency Fluctuations and Changes in Exchange Rates

The Company is exposed to risks associated with foreign currency fluctuations and changes in exchange rates.

The Company’s exposure to foreign currency fluctuations relates to operations in Canada, Germany and Serbia, principally conducted through its Canadian, German and Serbian subsidiaries.

Exchange rate fluctuations affect the United States dollar value of reported earnings derived from the foreign operations as well as the carrying value of the Company’s investment in the net assets related to these operations.

The Company does not engage in hedging activities with respect to foreign operations.

Changes in Tax Laws

At any time, United States federal tax laws or the administrative interpretations of those laws may be changed.

As a result, changes in United States federal tax laws could negatively impact our operating results, financial condition and business operations, and adversely impact the Company’s shareholders.

At any time, tax laws in the Company’s other jurisdictions, Canada, Germany, Philippines, Puerto Rico and Serbia, may also change.

These tax law changes may have a material impact on the Company’s income tax expense.

Workers ’ Compensation and Employee Medical Insurance

The Company self-insures a portion of the exposure for losses related to workers’ compensation and employees’ medical insurance.

The Company has established reserves for workers’ compensation and employee medical insurance claims based on historical loss statistics and periodic independent actuarial valuations.

Significant differences in actual experience or significant changes in assumptions may materially affect the Company’s future financial results.

RISK FACTORS (CONTINUED)

Improper Activities of Temporary Professionals Could Result in Damage to Business Reputation, Discontinuation of Client Relationships and Exposure to Liability

The Company may be subject to claims by clients related to errors and omissions, misuse of proprietary information, discrimination and harassment, theft and other criminal activity, malpractice, and other claims stemming from the improper activities or alleged activities of temporary professionals.

There can be no assurance that current liability insurance coverage will be adequate or will continue to be available in sufficient amounts to cover damages or other costs associated with such claims.

Claims raised by clients stemming from the improper actions of temporary professionals, even if without merit, could cause the Company to incur significant expense associated with rework costs or other damages related to such claims.

Furthermore, such claims by clients could damage the Company’s business reputation and result in the discontinuation of client relationships.

Acquisitions May Not Succeed

The Company reviews prospective acquisitions as an element of its growth strategy.

The failure of any acquisition to meet the Company’s expectations, whether due to a failure to successfully integrate any future acquisition or otherwise, may result in damage to the Company’s financial performance and/or divert management’s attention from its core operations or could negatively affect the Company’s ability to meet the needs of its customers promptly.

International Operations

The Company operates its business in Canada, Germany, Philippines, Puerto Rico and Serbia.

For the fiscal year ended December 28, 2024, approximately 7.8% of the Company’s revenue were generated outside the United States.

There are certain risks inherent in conducting business internationally including:

the imposition of trade barriers, the enactment of tariffs, foreign exchange restrictions, longer payment cycles, greater difficulties in accounts receivables collection, difficulties in complying with a variety of foreign laws (including without limitation the U.S.

Foreign Corrupt Practices Act), changes in legal or regulatory requirements, including as to laws and regulations governing economic and trade sanctions, difficulties in staffing and managing foreign operations, complex and uncertain employment environments, political instability and potentially adverse tax consequences.

Our operations in Serbia could be adversely affected by the current conflict between Ukraine and Russia, with which Serbia has substantial ties.

Should sanctions against Russia affect Russia in a way that causes adverse economic consequences to Serbia, or if such sanctions were to be extended to countries that might be considered to be in alignment with Russia, this could have a negative impact on our employees or operations both within and outside Serbia.

To the extent the Company experiences these risks, the business and results of operations could be adversely affected.

Tariffs or Other Restrictions Imposed on Foreign Imports by the U.S.

and Related Countermeasures

If significant tariffs or other restrictions are imposed on foreign businesses by the U.S.

and related countermeasures are taken by impacted foreign countries, our business and results of operations could be adversely affected.

During the first months of President Trump's second term, the U.S.

announced the imposition of additional substantial tariffs on imports from various countries, including China, Canada and Mexico, and the subject countries indicated their intention to impose counter measures.

Factors relating to these disputes could reduce demand for our services, result in the loss of customers and harm our competitive position in key markets.

Additionally, ongoing trade tensions and uncertainty regarding future trade policies could negatively impact global economic conditions and consumer confidence, further affecting our business and results of operations.

RISK FACTORS (CONTINUED)

Global Epidemics

As was the case with the COVID-19 pandemic and endemic, and associated initiatives to reduce its spread, any other global pandemics or endemics that may occur in the future could adversely affect the Company’s business and financial position.

For example, public and private sector policies and initiatives to reduce the transmission of a highly transmissible disease, such as closures of schools, businesses and manufacturing facilities, the promotion of social distancing, the adoption of working from home by companies and institutions, and travel restrictions could adversely affect demand for our services and present challenges to us in delivering these services.

These impacts on our business could have an adverse effect on our liquidity position and access to capital, including our ability to access our line of credit.

These factors, in addition to delays in payment, could continue result in significant bad debts in the near future.

Additionally, our operating results would be adversely affected if unexpected increases in the costs of labor and labor related costs, materials, supplies and equipment used in performing services could not be passed on to our clients.

In addition, we believe that to maintain or improve our financial performance we must continue to obtain service agreements with new clients, retain and provide new services to existing clients, achieve modest price increases on current service agreements with existing clients and/or maintain internal cost reduction strategies at our various operational levels.

Furthermore, we believe that our ability to sustain the internal development of managerial personnel is an important factor impacting future operating results and the successful execution of our projected growth strategies.

A future pandemic could make these objective more difficult to attain.

Management believes the RCM Technologies, Inc.

name is extremely valuable and important to its business.

The Company endeavors to protect its intellectual property rights and maintain certain trademarks, trade names, service marks and other intellectual property rights, including The Source of Smart Solutions® and Industries of Tomorrow, Today™ with a trademark application submitted for the use of the latter.

The Company is not currently aware of any infringing uses or other conditions that would be reasonably likely to materially and adversely affect the Company’s use of its proprietary rights.

The Company’s success depends on its ability to successfully obtain and maintain, and prevent misappropriation or infringement of, its intellectual property, maintain trade secret protection, and conduct operations without violating or infringing on the intellectual property rights of third parties.

Intellectual property litigation is expensive and time-consuming, and it is often difficult, if not impossible, to predict the outcome of such litigation.

If the Company is involved in intellectual property litigation, its business, financial condition and results of operations could be materially adversely affected.

Data Center Capacity and Telecommunication Links

Uninterruptible Power Supply (UPS), card key access, fire suppression, and environmental control systems protect the Company’s datacenter.

All systems are monitored on a 24/7 basis with alerting capabilities via voice or email.

The telecommunications architecture at the Company utilizes managed private circuits from AT&T, which encompasses provisioning redundancy and diversity.

The Company’s ability to protect its data center against damage from fire, power loss, telecommunications failure and other disasters is critical to business operations.

In order to provide many of its services, the Company must be able to store, retrieve, process and manage large databases and periodically expand and upgrade its capabilities.

Any damage to the Company’s data centers or any failure of the Company’s telecommunication links that interrupts its operations or results in an inadvertent loss of data could adversely affect the Company’s ability to meet its customers’ needs and their confidence in utilizing the Company for future services.

The Company’s ability to protect its data, provide services and safeguard its installations, as it relates to the IT infrastructure, is in part dependent on several outside vendors with whom the Company maintains service level agreements.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business