Good morning. And thank you for joining us. This is Kevin Miller, Chief Financial Officer of RCM technologies. I am joined today by Brad Vizi, 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, and 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 Vizi, Executive Chairman, to provide an overview of RCM’s operating performance during the quarter.

Thanks, Kevin. Our progress towards becoming a world-class services organization continues. We understood early on that to choose our vision we would need a solid foundation from which we could build years into the future. With that end in mind, we had been laser-focused on laying the internal groundwork to support the next phase of the company's life cycle. And I am pleased to announce that our first quarter results demonstrate some of the progress we have made thus far. Three core pillars, underpin the RCM foundation, and each will help support our next phase of growth. The first pillar is a sound balance sheet that affords us the ability to play both defense and offense. The first quarter is a great example. With our strong operating performance during the first quarter, we not only maintained full compliance with our covenants, but we were also able to invest in our future. Given the continued growth we experienced sequentially most of the increase in debt during the quarter was related to investments in working capital as we ramp new accounts. This increase includes investing in human capital to ensure we would be able to support RCM’s growth in the future. The second pillar in our foundation centers on our commitment to the process. Great processes create the framework to generate great results that are consistent and scalable. The key words being consistent and scalable. At RCM, we are adopting a structured approach to incorporate more rigor into driving, not only the overall level of the business, but how efficiently we can execute once we have won the business. Our healthcare division is an excellent case in point. Despite the continued impact of COVID-19 on our school clients, we are still delivering outstanding results. For reference, in Q1 2020. COVID-19 impacted only…

Thank you, Brad. Regarding our consolidated results, I am pleased with our team's performance during the first quarter of 2021. Revenue grew sequentially by over $3.3 million, compared to Q4 2020 and despite having a full quarters impact of COVID-19 in Q1 2021, compared to only three weeks in Q1 2020. RCM’s revenue base remained resilient essentially flat on a year-over-year basis. Adjusted EBITDA in Q1 2021 of $1.8 million, increased 194% from $0.6 million in the first quarter of 2020. SG&A expense decreased by $1.2 million or about 12% from $10.2 million to $9.0 million. Turning to our health care division. Despite the continued impact of COVID-19 on our school clients, current revenue of $21.1 million in the first quarter of 2021 only declined by about $1.1 million versus $22.2 million in Q1 2020. We experienced another healthy sequential increase of 14% in Q1, 2021 as compared to $8.6 million in Q4 of 2020. We continue to see incremental gains in our school revenue. Q1 of 2021 was $13.3 million. Q4 of 2020 was $10.3 million. Q3 of 2020 was $3.8 million which compared to Q3 of 2019 was about $10.4 million. As many of you know, we have a considerable seasonality in Q3. And then Q2 of 2020 was only $5.7 million. Non-school revenue was $7.8 million in the first quarter of 2021, as compared to $4.7 million in the first quarter of 2020. Our non-school revenue was $8.3 million in the fourth quarter of 2020. As mentioned, our IT division had a great quarter with revenue and profitability both up sequentially and year-over-year. On revenue, we generated $8.9 million in the first quarter of 2021, compared to $8.7 million in the first quarter of 2020, and $8.2 million in the fourth of 2020. Since the early decrease…

[Operator Instructions] Okay. Our first question comes from Bill Sutherland. Your line is open.

Thank you. Good morning, Brad and Kevin.

Good morning.

I wanted to just – thanks for the detail on the segments, Kevin. The engineering group, are you – when you talked about just most on the last part on the P&I, the several awards on the ethanol upgrade types of projects. How should I think – how should we think about the aggregate impact of that? In other words, these size wise, just an order of magnitude, sounds like a lot of business potentially.

Thanks for the question, Bill. In terms of magnitude, projects could range materially from several $100,000 up to multiple millions of dollars. What's exciting about where we're at in that business is when you look at our pipeline in aggregate? So the potential is quite substantial. The downside is very project oriented. So time it could be a challenge to gauge. However, we are at various stages of the process in multiple projects. And so our competence factor is increasing with respect to timing as we enter the second half.

Okay. Our next question comes from Alex Rygiel. [B. Riley Securities] Alex, your line is open.

Okay. Thank you. Good morning, gentlemen. Nice quarter.

Thank you.

Kevin, can, you run back through, what were those non-school revenue numbers in the specialty healthcare business?

Yes, sure. Hold on. Let me just – we were at $7.8 million in Q1 of 2021 this current quarter and $8.3 million in Q4 of last year. And we were – year-over-year, we were $4.7 in Q1 of last year, Q1 of 2020.

Okay. It looks like we have another question from Bill Sutherland. Bill, your line is open.

It looks like we're going to have to go one question at a time here. I was just going to follow up with engineering on the gross margin in the quarter, just a little color, because it came down quite significantly?

Yes, Bill. That's primarily a function of mix. As Kevin alluded to in our prepared remarks we had a very material contract in size. I started to ramp up in the first quarter and we will continue to ramp into the second. The contribution margin is attractive of the business, but the gross margin is dilutive on a consolidated basis. Kevin, do you want to add to that?

Yes. No. It's lower than our normal margins, but it's a sizeable contract that we won that was competitive bid. The important thing is it's very accretive to our contribution margin just to unfortunately dilutive to our gross margin. But it's a fantastic contract to have. We're really excited about it. Other than that, there's just, the normal gyrations that you see from quarter-to-quarter. Utilization is probably off a little bit in Q1, in terms of where we'd like to see it. So those are the two factors. But we expect to see some improvement in the gross margin going forward.

Okay. It doesn’t look like there is any more questions. [Operator Instructions] And Alex Rygiel. Your line is open.

Thank you. Kevin, can you quantify what the year-over-year revenue decline was in the school business and in a normal operating environment, we expect all that to come back?

Sure. Well. I'll just give you the school revenues, so that you have them. The school revenues in the first quarter of this year was $13.3 million. In the fourth quarter of last year, they were $10.3 million. If you look at the first quarter of last year, we were at $17.5. And if you look at the fourth quarter of 2019, we were at $19.4. So the fourth quarter of 2019 was our highest school revenue point. That's when we were really peaking before we were impacted by COVID in Q1. As you may recall in early March of last year, all the schools shut down. So, in the first quarter of last year, I think, we would have been – we would have beaten the fourth quarter of 2019 if it was not for COVID. In terms of what the expectation should be, going forward, I think, if you assume the same number of school days, which we don't have in Q2, we probably would be up in Q2. But we do lose the month of June in Hawaii because they closed at the end of May and then they pick up again in early August. So, in terms of school revenue in Q2, probably be somewhere around where we are in Q1, give or take a little bit. And then as far as looking into Q4, which I'm sure you're interested in, it's hard for us to really say whether – because we just don't know if the schools are going to be back to every kid in the school every day. But certainly, we expect to continue to see significant progress in the school revenue in Q4. We just don't know how it's going to compare to sort of Q4s of the past at this point.

Okay, Bill Sutherland your line is now open again.

Following-up on that discussion on the schools, Kevin do you have any…

If I could just interrupt you for a second, the operator is listening, it's okay for these guys to ask multiple questions on one run here. So, we don't need to cut them off after one question, please. Thank you.

Okay.

Go ahead Bill.

Actually, I think, I just have one or two at this point. But thanks again.

Just go for it then.

So, anything that is material developing in your pipeline for school expansions or additions as you look ahead?

We have a lot developing. We've won several new contracts, whether they're going to be material or not remains to be seen. We've won about probably a half a dozen new school contracts that are starting, either the end of this year, which if you get into a school towards the end of the school year, you're typically not adding a lot. You're sort of gearing up for the next school year. But we've added about a half a dozen new schools in various states. But I can't tell you yet if they're going to be material. Certainly, we don't expect them to be anywhere near the big three. But on aggregate they could make an impact. And the reason why I hesitate to tell you this is we often just don't know until we get in there and start trying to please people and get orders. We've won contracts in the past with big school districts that just didn't turn out to be big contracts. So, we're always a little hesitant to say, oh well, this particular city is going to be a big contract because we just don't know. But we are excited that one, the number of contracts that we've won. I can tell you that we have not headed into a new school year with the number of new contracts that we've won this year. And hopefully, they'll turn out very well.

Right. And are these, kind of typical positions or more paraprofessionals?

They are across the board therapists. None of them are pure power professionals, but we've won some nursing, we've won some therapy. Nursing and therapy, nothing in the pure paraprofessional area.

Okay.

But we like to win some of those as well. But we’ll see.

And then last, I just noticed the SG&A improved a lot. I’m wondering kind of what's behind that or what sustainable?

We expect to grow the SG&A just because we want to continue to invest in sales. And hopefully, as the year hopefully improves, we'll need to accrue more for incentive compensation as well. So, what's driving is just a hyper-focused on getting efficiency from our labor. We made a lot of cuts last year, we've brought some of that expense back, but we just haven't brought all of it back. But we do continue – we do expect to continue to invest, so that we can continue to grow the top line and grow gross profit dollars. But we will remain vigilant, and focused and efficient.

Got it. Okay. That's it for me. Thanks.

Okay. Doesn't look like there's any more questions in the queue.

Thank you for attending RCM’s first quarter conference call. We look forward to our next update in August.

Bye everyone.

This concludes your call. You may now disconnect.