RCM TECHNOLOGIES INC

Previous wording

This Management's Discussion and Analysis of Financial Condition and Results of Operations is based on our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenue and expenses during the reporting period. In our consolidated financial statements, estimates are used for, but not limited to, accounts receivable and allowance for doubtful accounts, goodwill, long-lived intangible assets, accounting for stock options and restricted stock awards, insurance liabilities, accounting for income taxes and accrued bonuses.

Current wording

This Management's Discussion and Analysis of Financial Condition and Results of Operations is based on our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenue and expenses during the reporting period. In our consolidated financial statements, estimates are used for, but not limited to, accounts receivable and allowance for doubtful accounts, goodwill, long-lived intangible assets, accounting for stock options and restricted stock awards, insurance liabilities, accounting for income taxes and accrued bonuses. The various estimates and assumptions taken into account include:

Previous wording

Revenue. Revenue increased by $4.8 million for the thirteen weeks ended March 30, 2024 as compared to the thirteen weeks ended April 1, 2023 (the “comparable prior-year period”). Revenue decreased $0.9 million in the Specialty Health Care segment, increased $5.0 million in the Engineering segment and increased $0.7 million in the Life Sciences and Information Technology segment. See more detailed disclosure by segment in our Segment Discussion.

Current wording

Revenue. Revenue increased by $2.1 million for the thirteen weeks ended June 29, 2024 as compared to the thirteen weeks ended July 1, 2023 (the “comparable prior-year period”). Revenue increased $1.4 million in the Specialty Health Care segment, increased $1.5 million in the Engineering segment and decreased $0.8 million in the Life Sciences and Information Technology segment. See more detailed disclosure by segment in our Segment Discussion.

Previous wording

Cost of Services and Gross Profit. Cost of services increased by $3.5 million for the thirteen weeks ended March 30, 2024 as compared to the comparable prior-year period, primarily due to the increase in revenue. Cost of services as a percentage of revenue for the thirteen weeks ended March 30, 2024 and April 1, 2023 was 71.7%. See Segment Discussion for further information regarding changes in cost of services and gross profit.

Current wording

Cost of Services and Gross Profit. Cost of services increased by $0.9 million for the thirteen weeks ended June 29, 2024 as compared to the comparable prior-year period, primarily due to the increase in revenue. Cost of services as a percentage of revenue for the thirteen weeks ended June 29, 2024 and July 1, 2023 was 71.1% and 72.0%, respectively. See Segment Discussion for further information regarding changes in cost of services and gross profit.

Previous wording

Selling, general and administrative (“SGA”) expenses were $14.2 million for the thirteen weeks ended March 30, 2024 as compared to $13.9 million for the comparable prior-year period. As a percentage of revenue, SGA expenses were 19.7% for the thirteen weeks ended March 30, 2024 and 19.9% for the comparable prior-year period. See Segment Discussion for further information on SGA expense changes.

Current wording

Selling, General and Administrative. Selling, general and administrative (“SGA”) expenses were $13.5 million for the thirteen weeks ended June 29, 2024 as compared to $12.7 million for the comparable prior-year period. As a percentage of revenue, SGA expenses were 19.6% for the thirteen weeks ended June 29, 2024 and 18.9% for the comparable prior-year period. See Segment Discussion for further information on SGA expense changes.

Previous wording

Income Tax Expense. The Company recognized $1.5 million of income tax expense for the thirteen weeks ended March 30, 2024 and for the comparable prior-year period. The consolidated effective income tax rate for the current period was 26.9% as compared to 27.6% for the comparable prior-year period. The effective fiscal 2024 income tax rates as of March 30, 2024, were approximately 27.4%, 26.6% and 14.7% in the United States, Canada, and Serbia, respectively. The relative income or loss generated in each jurisdiction can materially impact the overall effective income tax rate of the Company, particularly the ratio of Canadian and Serbian pretax income versus U.S. pretax income. The effective income tax rate can also be impacted by discrete permanent differences affecting any period presented. The primary reason for the decrease in the consolidated effective rate in the current period was due to a permanent tax difference associated with the tax deduction for equity grants in the United States that vested during the thirteen weeks ended March 30, 2024.

Current wording

Income Tax Expense. The Company recognized $1.5 million of income tax expense for the thirteen weeks ended June 29, 2024 as compared to $1.3 million for the comparable prior-year period. The consolidated effective income tax rate for the current period was 28.3% as compared to 25.3% for the comparable prior-year period. The effective fiscal 2024 income tax rates as of June 29, 2024, were approximately 29.3%, 26.9% and 15.7% in the United States, Canada, and Serbia, respectively. The relative income or loss generated in each jurisdiction can materially impact the overall effective income tax rate of the Company, particularly the ratio of Canadian and Serbian pretax income versus U.S. pretax income. The effective income tax rate can also be impacted by discrete permanent differences affecting any period presented. The primary reason for the decrease in the consolidated effective rate in the current period was due to a permanent tax difference associated with the tax deduction for equity grants in the United States that vested during the thirteen weeks ended June 29, 2024.

Previous wording

Specialty Health Care revenue of $38.2 million for the thirteen weeks ended March 30, 2024, decreased 2.4%, or $0.9 million, compared to the prior-year period. The decrease in revenue was driven by the Company’s non-school clients, offset by an increase in revenue from the Company’s school clients. Revenue from school clients for the thirteen weeks ended March 30, 2024, was $31.9 million as compared to $29.3 million for the comparable prior-year period. Revenue from non-school clients for the thirteen weeks ended March 30, 2024, was $6.3 million as compared to $9.8 million for the comparable prior-year period. The revenue decrease for non-school clients was primarily due to reduced services provided to a significant rehab client in New York City and decreased demand for services associated with COVID-19. Gross profit decreased by 5.1%, or $0.6 million, to $11.1 million as compared to $11.7 million in the prior-year period. Gross profit decreased due to decreases in revenue and gross profit margin. Gross profit margin for the thirteen weeks ended March 30, 2024, decreased to 29.0% compared to 29.8% for the prior-year period. The decrease in gross profit margin is primarily attributed to increased unemployment tax rates in New York. Specialty Health Care experienced operating income of $3.5 million for the thirteen weeks ended March 30, 2024, as compared to $4.3 million for the comparable prior-year period. The primary reasons for the decrease in operating income were the decrease in gross profit and an increase in SGA expenses to $7.5 million compared to $7.2 million for the prior year. SGA expense increased primarily due to sales and recruiting infrastructure investments expected to generate higher growth rates for the 2024/2025 school year.

Current wording

Specialty Health Care revenue of $36.9 million for the thirteen weeks ended June 29, 2024, increased 4.0%, or $1.4 million, compared to the prior-year period. The increase in revenue was driven by the Company’s school clients, offset by a decrease in revenue from the Company’s non-school clients. Revenue from school clients for the thirteen weeks ended June 29, 2024, was $30.9 million as compared to $26.5 million for the comparable prior-year period. Revenue from non-school clients for the thirteen weeks ended June 29, 2024, was $6.0 million as compared to $9.0 million for the comparable prior-year period. The revenue increase for school clients was primarily due to new school clients, offset by no services associated with COVID-19. The decrease in non-school revenue was primarily driven by the reduction in revenue from a large New York City nursing home group. Gross profit increased by 8.6%, or $0.8 million, to $10.6 million as compared to $9.8 million in the prior-year period. Gross profit increased due to increases in revenue and gross profit margin. Gross profit margin for the thirteen weeks ended June 29, 2024, decreased to 28.8% compared to 27.6% for the prior-year period. The increase in gross profit margin was primarily attributed to a greater mix shift to school services as opposed to non-school services, offset by increased unemployment tax rates in New York. Specialty Health Care experienced operating income of $3.3 million for the thirteen weeks ended June 29, 2024, as compared to $3.7 million for the comparable prior-year period. The primary reason for the decrease in operating income was an increase in SGA expenses to $7.2 million compared to $6.0 million for the prior year. SGA expense increased primarily due to sales and recruiting infrastructure investments expected to generate higher growth rates for the 2024/2025 school year.

Previous wording

Engineering revenue of $23.5 million for the thirteen weeks ended March 30, 2024, increased 27.1%, or $5.0 million, compared to the comparable prior-year period. The increase in revenue comprised the following: an increase in Energy Services revenue of $6.0 million, offset by decreases in Aerospace revenue of $0.6 million and Industrial Processing revenue of $0.4 million. Aerospace revenue decreased primarily due to a contract reduction for the Company’s major outsourcing client. The Company believes the decrease in Industrial Processing revenue was mainly due to the irregular timing of large contracts with its Industrial Processing clients. Gross profit increased by 36.0%, or $1.5 million, compared to the prior-year period. Gross profit increased because of the increase in revenue, augmented by an increase in gross profit margin. The gross profit margin of 23.4% for the current period increased from 21.9% for the comparable prior-year period. The increase in gross profit margin was primarily due to better utilization, associated with higher revenue and favorable project revenue from the Energy Services group. The Engineering segment experienced an operating income of $1.2 million for the thirteen weeks ending March 30, 2024, compared to $0.4 million for the comparable prior-year period. The operating income increased due to the increase in gross profit, offset by an increase in SGA expense. The Engineering segment’s SGA expense of $4.2 million increased from $3.9 million, primarily due to increased infrastructure associated with higher revenue.

Current wording

Engineering revenue of $22.5 million for the thirteen weeks ended June 29, 2024, increased 7.1%, or $1.5 million, compared to the comparable prior-year period. The increase in revenue comprised the following: an increase in Energy Services revenue of $2.6 million, offset by decreases in Aerospace revenue of $0.9 million and Industrial Processing revenue of $0.2 million. Aerospace revenue decreased primarily due to a contract reduction for the Company’s major outsourcing client. The Company believes the decrease in Industrial Processing revenue was mainly due to the irregular timing of large contracts with its Industrial Processing clients. Gross profit increased by 23.7%, or $1.1 million, compared to the prior-year period. Gross profit increased because of the increase in revenue, augmented by an increase in gross profit margin. The gross profit margin of 26.5% for the current period increased from 22.9% for the comparable prior-year period. The increase in gross profit margin was primarily due to better utilization, associated with higher revenue and favorable project revenue from the Energy Services group. The Engineering segment experienced operating income of $1.8 million for the thirteen weeks ended June 29, 2024, compared to $0.3 million for the comparable prior-year period. Operating income increased due to the increase in gross profit and a decrease in SGA expense. The Engineering segment’s SGA expense of $4.0 million decreased from $4.4 million, primarily due to deliberate reductions to gain better efficiency.

Previous wording

Life Sciences and Information Technology revenue of $10.3 million for the thirteen weeks ended March 30, 2024, increased by 7.9%, or $0.7 million, compared to $9.5 million for the comparable prior-year period. The increase in revenue was primarily derived from the Life Sciences, Data Solutions and HCM practices. Gross profit of $3.8 million for the thirteen weeks ended March 30, 2024, increased 14.7%, or $0.5 million, compared to $3.3 million for the comparable prior-year period. The Life Sciences and Information Technology gross profit margin for the thirteen weeks ended March 30, 2024, was 37.0% as compared to 34.8% for the comparable prior-year period. The Company attributes the gross profit margin increase to a concerted effort to increase gross profit margin through its managed service offerings. The Life Sciences and Information Technology segment experienced operating income of $1.2 million compared to $1.0 million for the prior-year end. The increase in operating income was primarily due to an increase in gross profit, offset by an increase in SGA expense. SGA expense increased to $2.5 million compared to $2.3 million in the prior-year period. The increase in SGA expense was primarily due to investments in sales infrastructure.

Current wording

Life Sciences and Information Technology revenue was $20.0 million for both the twenty-six weeks ended June 29, 2024, and the comparable prior-year period. Gross profit of $7.2 million for the twenty-six weeks ended June 29, 2024, decreased 3.4%, or $0.2 million, compared to $7.4 million for the comparable prior-year period. The Life Sciences and Information Technology gross profit margin for the twenty-six weeks ended June 29, 2024, was 36.0% as compared to 37.2% for the comparable prior-year period. The Company attributes the gross profit margin decrease to fluctuations in high margin project work. The Company also believes the gross margin for the current period is a more normalized rate. The Life Sciences and Information Technology segment experienced operating income of $2.2 million compared to $2.7 million for the prior-year period. The decrease in operating income was primarily due to a decrease in gross profit, and an increase in SGA expense. SGA expense increased to $4.8 million compared to $4.6 million in the prior-year period. The increase in SGA expense was primarily due to investments in sales infrastructure.

Previous wording

The following unaudited table presents the Company’s GAAP net income and the corresponding adjustments used to calculate Adjusted operating income, EBITDA and Adjusted EBITDA for the thirteen ended March 30, 2024 and April 1, 2023.

Current wording

The following unaudited table presents the Company’s GAAP net income and the corresponding adjustments used to calculate Adjusted operating income, EBITDA and Adjusted EBITDA for the thirteen and twenty-six weeks ended June 29, 2024 and July 1, 2023.

Previous wording

Operating activities provided $6.4 million of cash for the thirteen weeks ended March 30, 2024 as compared to using $0.8 million in the comparable prior-year period. The major components of cash provided by operating activities in the thirteen weeks ended March 30, 2024 and the comparable prior-year period are as follows: net income, and changes in accounts receivable, the net of transit accounts payable and transit accounts receivable, prepaid expenses and other current assets, accounts payable, accrued expenses and accrued payroll and related costs, and deferred revenue.

Current wording

Operating activities provided $12.2 million of cash for the twenty-six weeks ended June 29, 2024 as compared to providing $16.5 million in the comparable prior-year period. The major components of cash provided by operating activities in the twenty-six weeks ended June 29, 2024 and the comparable prior-year period are as follows: net income, and changes in accounts receivable, the net of transit accounts payable and transit accounts receivable, prepaid expenses and other current assets, accounts payable, accrued expenses and accrued payroll and related costs, and deferred revenue.

Previous wording

For the thirteen weeks ended March 30, 2024, the Company experienced net income of $3.9 million as compared to $3.8 million for the comparable prior-year period. An increase in accounts receivables in the thirteen weeks ended March 30, 2024 used $3.0 million of cash as compared to using $8.0 million in the comparable prior-year period. The Company primarily attributes this increase in accounts receivables for the thirteen weeks ended March 30, 2024 to normal fluctuations in accounts receivable relative to revenue.

Current wording

For the twenty-six weeks ended June 29, 2024, the Company experienced net income of $7.7 million as compared to $7.8 million for the comparable prior-year period. A decrease in accounts receivables in the twenty-six weeks ended June 29, 2024 provided $3.8 million of cash as compared to using $10.9 million in the comparable prior-year period. The Company primarily attributes this decrease in accounts receivables for the twenty-six weeks ended June 29, 2024 to normal fluctuations in accounts receivable relative to revenue.

Previous wording

While highly variable, the Company’s transit accounts payable typically exceeds the Company’s transit accounts receivable, but absolute amounts and differences fluctuate significantly from quarter to quarter in the normal course of business. The net of transit accounts payable and transit accounts receivable was a net payable of $22.0 million as of March 30, 2024 and a net payable of $22.2 million as of December 30, 2023, using $0.2 million of cash during the thirteen weeks ended March 30, 2024. The net of transit accounts payable and transit accounts receivable was a net payable of $8.0 million as of April 1, 2023 and a net payable of $6.5 million as of December 31, 2022, providing $1.5 million of cash during the thirteen weeks ended April 1, 2023. The decrease to net transit payable as of March 30, 2024 was due to normal fluctuations associated with several large, multiyear EPC (Engineering, Procurement and Construction) projects. In a typical EPC contract, the Company receives significant cash upfront to fund equipment procurement and construction subcontractors throughout the project.

Current wording

While highly variable, the Company’s transit accounts payable typically exceeds the Company’s transit accounts receivable, but absolute amounts and differences fluctuate significantly from quarter to quarter in the normal course of business. The net of transit accounts payable and transit accounts receivable was a net payable of $21.5 million as of June 29, 2024 and a net payable of $22.2 million as of December 30, 2023, using $0.7 million of cash during the twenty-six weeks ended June 29, 2024. The net of transit accounts payable and transit accounts receivable was a net payable of $27.3 million as of July 1, 2023 and a net payable of $6.5 million as of December 31, 2022, providing $20.8 million of cash during the twenty-six weeks ended July 1, 2023. The decrease to net transit payable as of June 29, 2024 was due to normal fluctuations associated with several large, multiyear EPC (Engineering, Procurement and Construction) projects. In a typical EPC contract, the Company receives significant cash upfront to fund equipment procurement and construction subcontractors throughout the project.

Previous wording

Prepaid expenses and other current assets provided cash of $0.1 million for the thirteen weeks ended March 30, 2024 as compared to providing $1.0 million of cash for the comparable prior-year period. The Company attributes changes to prepaid expenses and other current assets, if any, to general timing of payments in the normal course of business. Since certain expenses are paid before a fiscal year concludes and are amortized over the next fiscal year, prepaid expenses and other current assets generally tend to increase at the end of a fiscal year and decrease during the first three quarters of the following fiscal year.

Current wording

Prepaid expenses and other current assets used cash of $0.8 million for the twenty-six weeks ended June 29, 2024 as compared to providing $0.3 million of cash for the comparable prior-year period. The Company attributes changes to prepaid expenses and other current assets, if any, to general timing of payments in the normal course of business. Since certain expenses are paid before a fiscal year concludes and are amortized over the next fiscal year, prepaid expenses and other current assets generally tend to increase at the end of a fiscal year and decrease during the first three quarters of the following fiscal year.

Previous wording

An increase in accounts payable and accrued expenses used cash of $1.3 million for the thirteen weeks ended March 30, 2024 as compared to using $1.7 million for the comparable prior-year period. The Company attributes these changes to typical fluctuations in the normal course of business.

Current wording

An increase in accounts payable and accrued expenses provided cash of $0.7 million for the twenty-six weeks ended June 29, 2024 as compared to using $1.0 million for the comparable prior-year period. The Company attributes these changes to typical fluctuations in the normal course of business.

Previous wording

Changes in accrued payroll and related costs provided $1.0 million for the thirteen weeks ended March 30, 2024 as compared to providing $2.4 million for the comparable prior-year period. There are four primary factors that generally impact accrued payroll and related costs: 1) there is a general correlation to operating expenses as payroll and related costs is the Company’s largest expense group, so as operating costs increase or decrease, absent all other factors, so will the accrued payroll and related costs; 2) the Company pays the majority of its payroll every two weeks and normally has thirteen weeks in a fiscal quarter, which means that the Company normally has a major payroll on the last business day of every other quarter; 3) the timing of various payroll related payments varies in the normal course of business; and 4) most of the Company’s senior management participate in annual incentive plans and while progress advances are sometimes made during the fiscal year, these accrued bonus balances, to the extent they are projected to be achieved, generally accumulate throughout the year. A significant portion of these incentive plan accruals are typically paid at the beginning of one fiscal year, pertaining to the prior fiscal year. The Company’s last major payroll for the thirteen weeks ended March 30, 2024 was paid on March 22, 2024.

Current wording

Changes in accrued payroll and related costs used $1.5 million for the twenty-six weeks ended June 29, 2024 as compared to using $1.2 million for the comparable prior-year period. There are four primary factors that generally impact accrued payroll and related costs: 1) there is a general correlation to operating expenses as payroll and related costs is the Company’s largest expense group, so as operating costs increase or decrease, absent all other factors, so will the accrued payroll and related costs; 2) the Company pays the majority of its payroll every two weeks and normally has twenty-six weeks in a fiscal quarter, which means that the Company normally has a major payroll on the last business day of every other quarter; 3) the timing of various payroll related payments varies in the normal course of business; and 4) most of the Company’s senior management participate in annual incentive plans and while progress advances are sometimes made during the fiscal year, these accrued bonus balances, to the extent they are projected to be achieved, generally accumulate throughout the year. A significant portion of these incentive plan accruals are typically paid at the beginning of one fiscal year, pertaining to the prior fiscal year. The Company’s last major payroll for the twenty-six weeks ended June 29, 2024 was paid on June 28, 2024.

Previous wording

The Company’s deferred revenue balance as of March 30, 2024 was $3.5 million, compared to $1.9 million as of December 30, 2023, providing cash from operations of $1.6 million for the thirteen weeks ended March 30, 2024. The increase was associated with upfront payments for future labor associated with the Company’s EPC contracts.

Current wording

The Company’s deferred revenue balance as of June 29, 2024 was $2.7 million, compared to $1.9 million as of December 30, 2023, providing cash from operations of $0.8 million for the twenty-six weeks ended June 29, 2024. The increase was associated with upfront payments for future labor associated with the Company’s EPC contracts.

Previous wording

Investing activities used $0.7 million for the purchase of property and equipment in the current period as compared to using $0.3 million in the comparable prior-year period. The primary reason for the increase was the continued implementation of the Company’s new ERP software system.

Current wording

Investing activities used $1.1 million for the purchase of property and equipment in the current period as compared to using $0.6 million in the comparable prior-year period. The primary reason for the increase was the continued implementation of the Company’s new ERP software system.

Previous wording

Financing activities used $9.7 million of cash for the thirteen weeks ended March 30, 2024, compared to providing $2.4 million in the comparable prior-year period. The Company made net payments under its line of credit of $8.6 million during the thirteen weeks ended March 30, 2024 as compared to making net borrowings of $10.4 million in the comparable prior-year period. During the thirteen weeks ended March 30, the Company used $1.3 million to retire 44,567 shares associated with equity grants that vested for Brad Vizi, the Company’s Chairman and CEO. The Company did not purchase treasury shares during the thirteen week period ended March 30, 2024, but did use $8.2 million to repurchase shares of its common stock in the comparable prior-year period. The Company generated cash of $0.3 million from sales of shares from its employee stock purchase plan for both periods presented.

Current wording

Financing activities used $13.5 million of cash for the twenty-six weeks ended June 29, 2024, compared to using $15.2 million in the comparable prior-year period. The Company made net payments under its line of credit of $6.9 million during the twenty-six weeks ended June 29, 2024 as compared to making net borrowings of $6.1 million in the comparable prior-year period. During the twenty-six weeks ended June 29, 2024 the Company used $1.3 million to retire 44,567 shares associated with equity grants that vested for Brad Vizi, the Company’s Chairman and CEO. The Company used $5.4 million to repurchase shares of its common stock during the twenty-six weeks ended June 29, 2024 as compared to using $21.1 million to in the comparable prior-year period. The Company generated cash of $0.4 million from sales of shares from its equity plans for the current period and $0.3 million for the comparable prior-year period.

Previous wording

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) (which replaced LIBOR (London Interbank Offered Rate) upon the phasing out of LIBOR), plus applicable margin, typically borrowed in fixed 30-day increments, plus applicable margin, typically borrowed in fixed 30-day increments 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. The effective weighted average interest rate, including unused line fees, for the thirteen weeks ended March 30, 2024 and April 1, 2023 was 6.8% and 6.0%, respectively.

Current wording

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) (which replaced LIBOR (London Interbank Offered Rate) upon the phasing out of LIBOR), plus applicable margin, typically borrowed in fixed 30-day increments, plus applicable margin, typically borrowed in fixed 30-day increments 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. The effective weighted average interest rate, including unused line fees, for the twenty-six weeks ended June 29, 2024 and July 1, 2023 was 6.8% and 6.3%, respectively.

Previous wording

Borrowings under the line of credit as of March 30, 2024 and December 30, 2023 were $20.2 million and $30.8 million, respectively. There were letters of credit outstanding at March 30, 2024 and December 30, 2023 for $3.7 million and $2.0 million, respectively. At March 30, 2024 and December 30, 2023, the Company had availability for additional borrowings under the Revolving Credit Facility of $21.1 million and $12.1 million, respectively.

Current wording

Borrowings under the line of credit as of June 29, 2024 and December 30, 2023 were $23.9 million and $30.8 million, respectively. There were letters of credit outstanding at June 29, 2024 and December 30, 2023 for $5.0 million and $2.0 million, respectively. At June 29, 2024 and December 30, 2023, the Company had availability for additional borrowings under the Revolving Credit Facility of $16.1 million and $12.1 million, respectively.

Previous wording

The Company’s liquidity and capital resources as of March 30, 2024, included accounts receivable and total current asset balances of $73.5 million and $89.8 million, respectively. Current liabilities were $62.8 million as of March 30, 2024 and were exceeded by total current assets by $27.0 million.

Current wording

The Company’s liquidity and capital resources as of June 29, 2024, included accounts receivable and total current asset balances of $66.9 million and $85.3 million, respectively. Current liabilities were $57.6 million as of June 29, 2024 and were exceeded by total current assets by $27.7 million.

Previous wording

The Company is exposed to various asserted claims as of March 30, 2024, where the Company believes it has a probability of loss. Additionally, the Company is exposed to other asserted claims whereby an amount of loss has not been declared, and the Company cannot determine the potential loss. Any of these various claims could result in an unfavorable outcome or settlement that exceeds the accrued amounts. However, the Company believes that such matters will not, either individually or in the aggregate, have a material adverse effect on its business, consolidated financial position, results of operations, or cash flows. As of March 30, 2024, the Company has accrued $2.6 million for asserted claims.

Current wording

The Company is exposed to various asserted claims as of June 29, 2024, where the Company believes it has a probability of loss. Additionally, the Company is exposed to other asserted claims whereby an amount of loss has not been declared, and the Company cannot determine the potential loss. Any of these various claims could result in an unfavorable outcome or settlement that exceeds the accrued amounts. However, the Company believes that such matters will not, either individually or in the aggregate, have a material adverse effect on its business, consolidated financial position, results of operations, or cash flows. As of June 29, 2024, the Company has accrued $2.5 million for asserted claims.

Previous wording

The Company utilizes SAP software for its financial reporting and accounting system which was implemented in 1999 and has not undergone significant upgrades since its initial implementation. The Company is currently implementing an upgrade of its current system and expects to go live in 2024.

Current wording

The Company utilizes SAP software for its financial reporting and accounting system which was implemented in 1999 and has not previously undergone significant upgrades since its initial implementation. The Company is currently implementing an upgrade of its current system, which went live in April 2024.