RCM TECHNOLOGIES, INC.

Previous wording

Nonetheless, the Company continues to believe that businesses must implement more advanced life sciences, information technology and engineering solutions to upgrade their systems, applications and processes so that they can maximize their productivity and optimize their performance in order to maintain a competitive advantage. Although working under budgetary, personnel and expertise constraints, companies are driven to support increasingly complex systems, applications and processes of significant strategic value. This has given rise to a demand for outsourcing. The Company believes that its current and prospective clients are continuing to evaluate the potential for outsourcing business critical systems, applications and processes.

Current wording

Nonetheless, the Company continues to believe that businesses must implement more advanced life sciences, information technology, and engineering solutions—including Artificial Intelligence (AI) specifically Agentic AI, Quality by Design (QbD), and process automation—to upgrade their systems, applications, and processes. By leveraging AI, organizations can enhance data-driven decision-making and predictive analytics, while QbD principles ensure that quality is built into every stage of development and operations. Process automation further streamlines workflows, reduces manual intervention, and increases operational efficiency. These integrated approaches enable companies to maximize productivity and optimize performance, maintaining a competitive advantage even when operating under budgetary, personnel, and expertise constraints. As companies are driven to support increasingly complex systems, applications, and processes of significant strategic value, the demand for outsourcing—especially in areas involving AI, QbD, and automation—continues to rise. The Company believes that its current and prospective clients are actively evaluating the potential for outsourcing business-critical systems, applications, and processes that incorporate these advanced methodologies.

Previous wording

**Revenue.**Revenue increased by $9.0 million for the thirteen weeks ended June 28, 2025 as compared to the thirteen weeks ended June 29, 2024 (the “comparable prior-year period”). Revenue increased $5.9 million in the Specialty Health Care segment, increased $4.0 million in the Engineering segment and decreased $0.9 million in the Life Sciences, Data and Solutions segment. See more detailed disclosure by segment in our Segment Discussion.

Current wording

**Revenue.**Revenue increased by $9.9 million for the thirteen weeks ended September 27, 2025 as compared to the thirteen weeks ended September 28, 2024 (the “comparable prior-year period”). Revenue increased $3.4 million in the Specialty Health Care segment, increased $7.3 million in the Engineering segment and decreased $0.8 million in the Life Sciences, Data and Solutions segment. See more detailed disclosure by segment in our Segment Discussion.

Previous wording

**Cost of Services and Gross Profit.**Cost of services increased by $6.7 million for the thirteen weeks ended June 28, 2025 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 28, 2025 and June 29, 2024 was 71.5% and 71.1%, respectively. 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 $8.4 million for the thirteen weeks ended September 27, 2025 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 September 27, 2025 and September 28, 2024 was 72.4% and 70.4%, respectively. See Segment Discussion for further information regarding changes in cost of services and gross profit.

Previous wording

**Selling, General and Administrative.**Selling, general and administrative (“SGA”) expenses were $30.2 million for the twenty-six weeks ended June 28, 2025 as compared to $27.7 million for the comparable prior-year period. As a percentage of revenue, SGA expenses were 18.6% for the twenty-six weeks ended June 28, 2025 and 19.8% 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 $14.9 million for the thirteen weeks ended September 27, 2025 as compared to $13.0 million for the comparable prior-year period. As a percentage of revenue, SGA expense was 21.3% for the thirteen weeks ended September 27, 2025 as compared to 21.6% for the comparable prior-year period. See Segment Discussion for further information on SGA expense changes.

Previous wording

**Other Expense, Net.**Other expense, net consists of interest expense, unused line fees and amortized loan costs on the Company’s line of credit, net of interest income and gains and losses on foreign currency transactions. Other expense, net increased by $0.6 million as compared to the comparable prior year period, due to an increase in interest expense, net of $0.2 million and an increase to losses on foreign currency transactions of $0.4 million. Interest expense increased due to increased borrowing and increased interest rates.

Current wording

**Other Expense, Net.**Other expense, net consists of interest expense, unused line fees and amortized loan costs on the Company’s line of credit, net of interest income and gains and losses on foreign currency transactions. Other expense, net was unchanged as compared to the comparable prior year period. Interest expense increased by $0.1 million due to increased borrowing.

Previous wording

Income Tax Expense. The Company recognized $3.6 million of income tax expense for the twenty-six weeks ended June 28, 2025 as compared to $2.9 million for the comparable prior-year period. The consolidated effective income tax rate for the current period was 31.0% as compared to 27.6% for the comparable prior-year period. The effective income tax rates for the twenty-six weeks ended June 28, 2025, were approximately 31.7%, 25.1%, and 11.8% in the United States, Canada, and Europe, 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 European 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 comparable prior-year period estimated income tax rates were 28.3%, 26.8%, and 15.4% in the United States, Canada, and Europe, respectively. The primary reason for the increase in the consolidated and United States effective rates in the current period is due to increases to permanent tax differences in the United States. The low effective tax rate in Europe during the current period is due to a fixed tax benefit relative to a small pretax loss.

Current wording

Income Tax Expense. The Company recognized $1.1 million of income tax expense for the thirteen weeks ended September 27, 2025 as compared to $1.0 million for the comparable prior-year period. The consolidated effective income tax rate for the current period was 32.0% as compared to 27.1% for the comparable prior-year period. The effective income tax rates for the thirteen weeks ended September 27, 2025, were approximately 33.9%, 28.5%, 25.7%, and 45.3% in the United States, Canada, Europe, and the Philippines, 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 European 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 comparable prior-year period estimated income tax rates were 28.3%, 26.2%, and 13.1% in the United States, Canada, and Europe, respectively. The primary reason for the increase in the consolidated and United States effective rates in the current period was due to increases to permanent tax differences in the United States. The high effective tax rate in the Philippines during the current period is due to a small adjustment in the current quarter.

Previous wording

Specialty Health Care revenue of $42.8 million for the thirteen weeks ended June 28, 2025, increased 15.9%, or $5.9 million, compared to the comparable 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 28, 2025, was $37.2 million as compared to $30.7 million for the comparable prior-year period. The increase to revenue from school contracts was driven by both existing and new clients. Revenue from non-school clients for the thirteen weeks ended June 28, 2025, was $5.6 million as compared to $6.2 million for the comparable prior-year period. The decrease in non-school revenue was primarily driven by the reduction in revenue from a large long-term care group where the Company deliberately reduced services, which generated $0.4 million in the current period as compared to $0.8 million in the comparable prior-year period. Gross profit increased by 15.4%, or $1.6 million, to $12.3 million for the thirteen weeks ended June 28, 2025 as compared to $10.6 million in the comparable prior-year period. Gross profit increased due to an increase in revenue, offset by a decrease in gross profit margin. Gross profit margin for the thirteen weeks ended June 28, 2025, decreased to 28.7% compared to 28.8% for the comparable prior-year period. The decrease in gross profit margin was primarily attributed to normal quarterly fluctuations. Specialty Health Care experienced operating income of $6.1 million for the thirteen weeks ended June 28, 2025, as compared to $5.3 million for the comparable prior-year period. The primary reason for the increase in operating income was the increase to gross profit, offset by an increase in SGA expense to $6.1 million for the thirteen weeks ended June 28, 2025 compared to $5.3 million for the comparable prior-year period. SGA expense increased primarily due to sales and recruiting infrastructure investments to support revenue growth and new school contracts.

Current wording

Specialty Health Care revenue of $30.0 million for the thirteen weeks ended September 27, 2025, increased 13.0%, or $3.4 million, compared to the comparable 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 September 27, 2025, was $24.4 million as compared to $20.2 million for the comparable prior-year period. The increase to revenue from school contracts was driven by both existing and new clients. Revenue from non-school clients for the thirteen weeks ended September 27, 2025, was $5.6 million as compared to $6.4 million for the comparable prior-year period. The decrease in non-school revenue was primarily driven by the reduction in revenue of $0.7 million from a lost contract with a corrections facility and from a large long-term care group where the Company deliberately reduced services, which generated $0.4 million in the current period as compared to $0.7 million in the comparable prior-year period, offset by miscellaneous increases to other non-school clients. Gross profit increased by 8.5%, or $0.7 million, to $9.0 million for the thirteen weeks ended September 27, 2025 as compared to $8.3 million in the comparable prior-year period. Gross profit increased due to an increase in revenue, offset by a decrease in gross profit margin. Gross profit margin for the thirteen weeks ended September 27, 2025, decreased to 30.0% compared to 31.2% for the comparable prior-year period. The decrease in gross profit margin was primarily attributed to normal quarterly fluctuations. Specialty Health Care experienced operating income of $2.7 million for the thirteen weeks ended September 27, 2025, as compared to $3.2 million for the comparable prior-year period. The primary reason for the decrease in operating income was an increase in SGA expense to $6.2 million for the thirteen weeks ended September 27, 2025 compared to $4.9 million for the comparable prior-year period, offset by the increase to gross profit. SGA expense increased primarily due to sales and recruiting infrastructure investments to support revenue growth and new school contracts for the new academic school year starting August and September.

Previous wording

Engineering revenue of $26.5 million for the thirteen weeks ended June 28, 2025, increased 17.8%, or $4.0 million, compared to the comparable prior-year period. The increase in revenue included increases in Energy Services revenue of $0.2 million and Aerospace revenue of $4.4 million, offset by a decrease in Industrial Processing revenue of $0.6 million. Energy Services revenue increased primarily because of increased activity from EPC (Engineering, Procurement and Construction Management) projects. Aerospace revenue increased primarily due to expansion with new clients. The Company believes the decrease in Industrial Processing revenue was mainly due to normal fluctuations. Gross profit increased by 8.8%, or $0.5 million, compared to the comparable prior-year period. Gross profit increased due to the increase in revenue, offset by a decline in the gross profit margin. The gross profit margin of 24.5% for the current period decreased from 26.5% for the comparable prior-year period. The decrease in gross profit margin was primarily due to a change in mix associated with EPC project revenue from the Energy Services group and the increase in lower-margin Aerospace revenue. The Engineering segment experienced operating income of $3.3 million as compared to $3.0 million for the comparable prior year period. The increase in operating income was due to an increase in gross profit, offset by an increase in SGA expense. The Engineering segment’s SGA expense of $3.0 million increased from $2.8 million, primarily due to expense associated with higher revenue.

Current wording

Engineering revenue of $31.4 million for the thirteen weeks ended September 27, 2025, increased 30.0%, or $7.3 million, compared to the comparable prior-year period. The increase in revenue included increases in Energy Services revenue of $5.0 million and Aerospace revenue of $3.1 million, offset by a decrease in Industrial Processing revenue of $0.8 million. Energy Services revenue increased primarily because of increased activity from EPC (Engineering, Procurement and Construction Management) projects. Aerospace revenue increased primarily due to expansion with new clients. The Company believes the decrease in Industrial Processing revenue was mainly due to normal fluctuations. Gross profit increased by 17.3%, or $1.0 million, compared to the comparable prior-year period. Gross profit increased due to the increase in revenue, offset by a decline in the gross profit margin. The gross profit margin of 22.0% for the current period decreased from 24.4% for the comparable prior-year period. The decrease in gross profit margin was primarily due to a change in mix associated with EPC project revenue from the Energy Services group and the increase in lower-margin Aerospace revenue. The Engineering segment experienced operating income of $3.8 million as compared to $2.9 million for the comparable prior year period. The increase in operating income was due to an increase in gross profit, offset by a marginal increase in SGA expense. The Engineering segment’s SGA expense of was approximately $2.9 million for both periods presented.

Previous wording

Life Sciences, Data and Solutions revenue of $8.8 million for the thirteen weeks ended June 28, 2025, decreased 9.3%, or $0.9 million, compared to the comparable prior-year period. The Company primarily attributes the decrease in revenue to the timing of large projects and a deemphasis of the Company’s legacy staffing business. Gross profit of $3.5 million for the thirteen weeks ended June 28, 2025, increased 3.4%, or $0.1 million, compared to $3.4 million for the comparable prior-year period. Gross profit increased due to an increase in gross margin, offset by the decrease in revenue. Gross profit margin for the thirteen weeks ended June 28, 2025, was 39.8% as compared to 34.9% for the comparable prior-year period. The Company attributes the gross profit margin increase to an emphasis on high-margin project work. The Life Sciences, Data and Solutions segment experienced operating income of $2.0 million for the thirteen weeks ended June 28, 2025 compared to $1.6 million for the comparable prior-year period. The increase in operating income was due to a decrease in SGA expense of $0.2 million and the increase in gross profit. The Life Sciences, Data and Solutions segment’s SGA expense of $1.5 million decreased from $1.7 million, primarily due to a deliberate effort to gain efficiency on SGA expense.

Current wording

Life Sciences, Data and Solutions revenue of $8.9 million for the thirteen weeks ended September 27, 2025, decreased 8.0%, or $0.8 million, compared to the comparable prior-year period. The Company primarily attributes the decrease in revenue to the timing of large projects and a deemphasis of the Company’s legacy staffing business. Gross profit of $3.5 million for the thirteen weeks ended September 27, 2025, decreased 4.2%, or $0.2 million, compared to $3.7 million for the comparable prior-year period. Gross profit decreased due to the decrease in revenue, offset by an increase to gross profit margin. Gross profit margin for the thirteen weeks ended September 27, 2025, was 39.6% as compared to 38.0% for the comparable prior-year period. The Company attributes the gross profit margin increase to an emphasis on high-margin project work. The Life Sciences, Data and Solutions segment experienced operating income of $2.0 million for the thirteen weeks ended September 27, 2025 compared to $1.9 million for the comparable prior-year period. The increase in operating income was due to a decrease in SGA expense of $0.2 million, offset by the decrease in gross profit. The Life Sciences, Data and Solutions segment’s SGA expense of $1.4 million decreased from $1.6 million, primarily due to a deliberate effort to gain efficiency on SGA expense.

Previous wording

The Company’s corporate SGA expense includes but is not limited to the following costs: public company related, executive compensation, board compensation, directors and officers insurance, SAP ERP infrastructure, numerous centralized functions including accounting and financial management, information technology and cyber security infrastructure, payroll, billing, accounts receivables, and marketing. The corporate segment team primarily operates out of the United States, with limited operations in Serbia and the Philippines. Corporate SGA expense was $4.7 million for the thirteen weeks ended June 28, 2025 as compared to $3.7 million for the comparable prior year period, increasing by $1.0 million. The increase was primarily caused by increases of $0.3 million for medical costs, $0.3 million for executive equity compensation, $0.2 million for software technology, and other general inflationary pressures.

Current wording

The Company’s corporate SGA expense includes but is not limited to the following costs: public company related, executive compensation, board compensation, directors and officers insurance, SAP ERP infrastructure, numerous centralized functions including accounting and financial management, information technology and cyber security infrastructure, payroll, billing, accounts receivables, and marketing. The corporate segment team primarily operates out of the United States, with limited operations in Serbia and the Philippines. Corporate SGA expense was $4.4 million for the thirteen weeks ended September 27, 2025 as compared to $3.6 million for the comparable prior year period. The increase was primarily caused by increases of $0.8 million for medical costs, $0.2 million for executive equity compensation, and other general inflationary pressures, offset by other miscellaneous decreases.

Previous wording

A summary of operating results for the twenty-six weeks ended June 28, 2025 and June 29, 2024 is as follows (in thousands):

Current wording

A summary of operating results for the thirty-nine weeks ended September 27, 2025 and September 28, 2024 is as follows (in thousands):

Previous wording

The Company follows a 52/53 week fiscal reporting calendar ending on the Saturday closest to December 31. The fiscal quarters ended June 28, 2025 and June 29, 2024 consisted of twenty-six weeks each.

Current wording

The Company follows a 52/53 week fiscal reporting calendar ending on the Saturday closest to December 31. The fiscal periods ended September 27, 2025 and September 28, 2024 consisted of thirty-nine weeks each.

Previous wording

**Revenue.**Revenue increased by $21.5 million for the twenty-six weeks ended June 28, 2025 as compared to the twenty-six weeks ended June 29, 2024 (the “comparable prior-year period”). Revenue increased $11.0 million in the Specialty Health Care segment, increased $12.6 million in the Engineering segment and decreased $2.1 million in the Life Sciences, Data and Solutions segment. See more detailed disclosure by segment in our Segment Discussion.

Current wording

**Revenue.**Revenue increased by $31.4 million for the thirty-nine weeks ended September 27, 2025 as compared to the thirty-nine weeks ended September 28, 2024 (the “comparable prior-year period”). Revenue increased $14.4 million in the Specialty Health Care segment, increased $19.9 million in the Engineering segment and decreased $2.9 million in the Life Sciences, Data and Solutions segment. See more detailed disclosure by segment in our Segment Discussion.

Previous wording

**Cost of Services and Gross Profit.**Cost of services increased by $17.6 million for the twenty-six weeks ended June 28, 2025 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 twenty-six weeks ended June 28, 2025 and June 29, 2024 was 72.8% and 71.4%, respectively. 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 $26.0 million for the thirty-nine weeks ended September 27, 2025 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 thirty-nine weeks ended September 27, 2025 and September 28, 2024 was 72.7% and 71.1%, respectively. See Segment Discussion for further information regarding changes in cost of services and gross profit.

Previous wording

**Selling, General and Administrative.**Selling, general and administrative (“SGA”) expenses were $15.3 million for the thirteen weeks ended June 28, 2025 as compared to $13.5 million for the comparable prior-year period. As a percentage of revenue, SGA expenses were 19.6% for both the thirteen weeks ended June 28, 2025 and 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 $45.2 million for the thirty-nine weeks ended September 27, 2025 as compared to $40.8 million for the comparable prior-year period. As a percentage of revenue, SGA expenses were 19.4% for the thirty-nine weeks ended September 27, 2025 and 20.3% for the comparable prior-year period. See Segment Discussion for further information on SGA expense changes.

Previous wording

In the thirteen weeks ended June 29, 2024, the Company filed a Registration Statement on Form S-3 (the Registration Statement) with the Securities and Exchange Commission for an offering of up to $100.0 million of various securities. The Company also entered an At Market Issuance Sales Agreement under which the Company may sell, under the Registration Statement, up to $50.0 million worth of shares of the Company’s common stock. The Company incurred total expenses of $259 related to these transactions. The Company did not incur any similar costs during the thirteen weeks ended June 28, 2025.

Current wording

Potential Stock Issuance and Financing Transactions. In the thirty-nine weeks ended September 28, 2024, the Company filed a Registration Statement on Form S-3 (the Registration Statement) with the Securities and Exchange Commission for an offering of up to $100.0 million of various securities. The Company also entered an At Market Issuance Sales Agreement under which the Company may sell, under the Registration Statement, up to $50.0 million worth of shares of the Company’s common stock. The Company incurred total expenses of $259 related to these transactions.

Previous wording

**Other Expense, Net.**Other expense, net consists of interest expense, unused line fees and amortized loan costs on the Company’s line of credit, net of interest income and gains and losses on foreign currency transactions. Other expense, net increased by $0.4 million as compared to the comparable prior year period, due to an increase in interest expense, net of $0.1 million and an increase to losses on foreign currency transactions of $0.3 million. Interest expense increased due to increased borrowing and increased interest rates.

Current wording

**Other Expense, Net.**Other expense, net consists of interest expense, unused line fees and amortized loan costs on the Company’s line of credit, net of interest income and gains and losses on foreign currency transactions. Other expense, net increased by $0.6 million as compared to the comparable prior year period due to an increase in interest expense, net of $0.3 million and an increase to losses on foreign currency transactions of $0.3 million. Interest expense increased due to increased borrowing.

Previous wording

Income Tax Expense. The Company recognized $1.9 million of income tax expense for the thirteen weeks ended June 28, 2025 as compared to $1.5 million for the comparable prior-year period. The consolidated effective income tax rate for the current period was 33.3% as compared to 28.3% for the comparable prior-year period. The effective income tax rates for the thirteen weeks ended June 28, 2025, were approximately 34.0%, 23.7, and 8.5% in the United States, Canada, and Europe, 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 European 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 comparable prior-year period estimated income tax rates were 29.3%, 26.9%, and 15.7% in the United States, Canada, and Europe, respectively. The primary reason for the increase in the consolidated and United States effective rates in the current period is due to increases to permanent tax differences in the United States. The low effective tax rate in Europe during the current period is due to a fixed tax benefit relative to a small pretax loss.

Current wording

Income Tax Expense. The Company recognized $4.7 million of income tax expense for the thirty-nine weeks ended September 27, 2025 as compared to $4.0 million for the comparable prior-year period. The consolidated effective income tax rate for the current period was 31.3% as compared to 27.5% for the comparable prior-year period. The effective income tax rates for the thirty-nine weeks ended September 27, 2025, were approximately 32.1%, 26.2%, 68.1%, and 24.4% in the United States, Canada, Europe, and the Philippines, 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 European 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 comparable prior-year period estimated income tax rates were 28.3%, 26.2%, and 13.1% in the United States, Canada, and Europe, respectively. The primary reason for the increase in the consolidated and United States effective rates in the current period is due to increases to permanent tax differences in the United States. The high effective tax rate in Europe during the current period is due to low pretax income and certain fixed taxes.

Previous wording

Specialty Health Care revenue of $86.1 million for the twenty-six weeks ended June 28, 2025, increased 14.6%, or $11.0 million, compared to the comparable 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 twenty-six weeks ended June 28, 2025, was $74.5 million as compared to $62.7 million for the comparable prior-year period. The increase to revenue from school contracts was driven by both existing and new clients. Revenue from non-school clients for the twenty-six weeks ended June 28, 2025, was $11.6 million as compared to $12.4 million for the comparable prior-year period. The decrease in non-school revenue was primarily driven by the reduction in revenue from a large long-term care group where the Company deliberately reduced services, which generated $0.9 million in the current period as compared to $2.0 million in the comparable prior-year period. Gross profit increased by 12.8%, or $2.8 million, to $24.5 million for the twenty-six weeks ended June 28, 2025 as compared to $21.7 million in the comparable prior-year period. Gross profit increased due to an increase in revenue, offset by a decrease in gross profit margin. Gross profit margin for the twenty-six weeks ended June 28, 2025, decreased to 28.4% compared to 28.9% for the comparable prior-year period. The decrease in gross profit margin was primarily attributed to a greater mix shift to lower-margin services. Specialty Health Care experienced operating income of $12.3 million for the twenty-six weeks ended June 28, 2025, as compared to $10.8 million for the comparable prior-year period. The primary reason for the increase in operating income was the increase to gross profit, offset by an increase in SGA expense to $12.0 million for the twenty-six weeks ended June 28, 2025 compared to $10.8 million for the comparable prior-year period. SGA expense increased primarily due to sales and recruiting infrastructure investments to support revenue growth.

Current wording

Specialty Health Care revenue of $116.1 million for the thirty-nine weeks ended September 27, 2025, increased 14.2%, or $14.4 million, compared to the comparable 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 thirty-nine weeks ended September 27, 2025, was $98.9 million as compared to $82.9 million for the comparable prior-year period. The increase to revenue from school contracts was driven by both existing and new clients. Revenue from non-school clients for the thirty-nine weeks ended September 27, 2025, was $17.2 million as compared to $18.8 million for the comparable prior-year period. The decrease in non-school revenue was primarily driven by the reduction in revenue of $0.7 million from a lost contract with a corrections facility and from a large long-term care group where the Company deliberately reduced services, which generated $1.4 million in the current period as compared to $2.7 million in the comparable prior-year period, offset by miscellaneous increases to other non-school clients. Gross profit increased by 11.6%, or $3.5 million, to $33.4 million for the thirty-nine weeks ended September 27, 2025 as compared to $30.0 million in the comparable prior-year period. Gross profit increased due to an increase in revenue, offset by a decrease in gross profit margin. Gross profit margin for the thirty-nine weeks ended September 27, 2025, decreased to 28.8% compared to 29.5% for the comparable prior-year period. The decrease in gross profit margin was primarily attributed to normal quarterly fluctuations. Specialty Health Care experienced operating income of $15.0 million for the thirty-nine weeks ended September 27, 2025, as compared to $14.0 million for the comparable prior-year period. The primary reason for the increase in operating income was the increase to gross profit, offset by an increase in SGA expense to $18.2 million for the thirty-nine weeks ended September 27, 2025 compared to $15.7 million for the comparable prior-year period. SGA expense increased primarily due to sales and recruiting infrastructure investments to support revenue growth.

Previous wording

Engineering revenue of $58.7 million for the twenty-six weeks ended June 28, 2025, increased 27.5%, or $12.6 million, compared to the comparable prior-year period. The increase in revenue included increases in Energy Services revenue of $3.4 million, Aerospace revenue of $8.4 million, and Industrial Processing revenue of $0.9 million. Energy Services revenue increased primarily because of increased activity from EPC projects. Aerospace revenue increased primarily due to expansion with new clients. The Company believes the increase in Industrial Processing revenue was mainly due to normal fluctuation in project revenue. Gross profit increased by 10.5%, or $1.2 million, compared to the comparable prior-year period. Gross profit increased due to the increase in revenue, offset by a decline in the gross profit margin. The gross profit margin of 21.6% for the current period decreased from 24.9% for the comparable prior-year period. The decrease in gross profit margin was primarily due to a change in mix associated with EPC project revenue from the Energy Services group and Aerospace revenue. The Engineering segment experienced operating income of $6.2 million as compared to $5.4 million for the comparable prior year period. Operating income increased due to the increase in gross profit, offset by an increase in SGA expense. The Engineering segment’s SGA expense of $6.2 million increased from $5.8 million, primarily due to expense associated with efforts to grow revenue and gross profit.

Current wording

Engineering revenue of $90.1 million for the thirty-nine weeks ended September 27, 2025, increased 28.4%, or $19.9 million, compared to the comparable prior-year period. The increase in revenue included increases in Energy Services revenue of $8.4 million, Aerospace revenue of $11.5 million, with Industrial Processing revenue essentially unchanged. Energy Services revenue increased primarily because of increased activity from EPC projects. Aerospace revenue increased primarily due to expansion with new clients. Gross profit increased by 12.8%, or $2.2 million, compared to the comparable prior-year period. Gross profit increased due to the increase in revenue, offset by a decline in the gross profit margin. The gross profit margin of 21.7% for the current period decreased from 24.7% for the comparable prior-year period. The decrease in gross profit margin was primarily due to a change in mix associated with EPC project revenue from the Energy Services group and Aerospace revenue. The Engineering segment experienced operating income of $9.9 million as compared to $8.2 million for the comparable prior year period. Operating income increased due to the increase in gross profit, offset by an increase in SGA expense. The Engineering segment’s SGA expense of $9.1 million increased from $8.7 million, primarily due to expense associated with efforts to grow revenue and gross profit.

Previous wording

Life Sciences, Data and Solutions revenue of $17.9 million for the twenty-six weeks ended June 28, 2025, decreased 10.5%, or $2.1 million, compared to the comparable prior-year period. The Company primarily attributes the decrease in revenue to the timing of large projects and a deemphasis on the Company’s legacy staffing business. Gross profit of $7.1 million for the twenty-six weeks ended June 28, 2025, decreased 1.3%, or $0.1 million, compared to $7.2 million for the comparable prior-year period. Gross profit decreased due to the decrease in revenue, offset by an increase in gross margin. Gross profit margin for the twenty-six weeks ended June 28, 2025, was 39.7% as compared to 36.0% for the comparable prior-year period. The Company attributes the gross profit margin increase to an emphasis on high-margin project work. The Life Sciences, Data and Solutions segment experienced operating income of $4.1 million for the twenty-six weeks ended June 28, 2025 compared to $3.3 million for the comparable prior-year period. The increase in operating income was primarily due a decrease in SGA expense from $2.9 million for the twenty-six weeks ended June 28, 2025 as compared to $3.7 million in the comparable prior year period, offset by the decrease in gross profit.

Current wording

Life Sciences, Data and Solutions revenue of $26.7 million for the thirty-nine weeks ended September 27, 2025, decreased 9.7%, or $2.9 million, compared to the comparable prior-year period. The Company primarily attributes the decrease in revenue to the timing of large projects and a deemphasis on the Company’s legacy staffing business. Gross profit of $10.6 million for the thirty-nine weeks ended September 27, 2025, decreased 2.2%, or $0.2 million, compared to $10.8 million for the comparable prior-year period. Gross profit decreased due to the decrease in revenue, offset by an increase in gross margin. Gross profit margin for the thirty-nine weeks ended September 27, 2025, was 39.7% as compared to 36.6% for the comparable prior-year period. The Company attributes the gross profit margin increase to an emphasis on high-margin project work. The Life Sciences, Data and Solutions segment experienced operating income of $6.2 million for the thirty-nine weeks ended September 27, 2025 compared to $5.2 million for the comparable prior-year period. The increase in operating income was primarily due a decrease in SGA expense to $4.3 million for the thirty-nine weeks ended September 27, 2025 as compared to $5.4 million in the comparable prior year period, offset by the decrease in gross profit.

Previous wording

The Company’s corporate SGA expense includes but is not limited to the following costs: public company related, executive compensation, board compensation, directors and officers insurance, SAP ERP infrastructure, numerous centralized functions including accounting and financial management, information technology and cyber security infrastructure, payroll, billing, accounts receivables, and marketing. The corporate segment team primarily operates out of the United States, with limited operations in Serbia and the Philippines. Corporate SGA expense was $9.1 million for the twenty-six weeks ended June 28, 2025 as compared to $7.4 million for the comparable prior year period, increasing by $1.7 million. The increase was primarily caused by increases of $0.3 million for increased medical costs, $0.5 million for executive equity compensation, $0.4 million for software technology, and other general inflationary pressures.

Current wording

The Company’s corporate SGA expense includes but is not limited to the following costs: public company related, executive compensation, board compensation, directors and officers insurance, SAP ERP infrastructure, numerous centralized functions including accounting and financial management, information technology and cyber security infrastructure, payroll, billing, accounts receivables, and marketing. The corporate segment team primarily operates out of the United States, with limited operations in Serbia and the Philippines. Corporate SGA expense was $13.5 million for the thirty-nine weeks ended September 27, 2025 as compared to $11.0 million for the comparable prior year period. The increase was primarily caused by increases of $1.1 million for increased medical costs, $0.7 million for executive equity compensation, $0.4 million for software technology, and other general inflationary pressures.

Previous wording

The following unaudited tables present the Company's GAAP net income and GAAP operating income and the corresponding adjustments used to calculate Adjusted operating income, EBITDA, Adjusted EBITDA, Adjusted net income and Adjusted diluted net earnings per share for the thirteen and twenty-six weeks ended June 28, 2025 and June 29, 2024.

Current wording

The following unaudited tables present the Company's GAAP net income and GAAP operating income and the corresponding adjustments used to calculate Adjusted operating income, EBITDA, Adjusted EBITDA, Adjusted net income and Adjusted diluted net earnings per share for the thirteen and thirty-nine weeks ended September 27, 2025 and September 28, 2024.

Previous wording

Operating activities provided $8.7 million of cash for the twenty-six weeks ended June 28, 2025 as compared to providing $12.2 million in the comparable prior-year period. The major components of cash provided by operating activities in the twenty-six weeks ended June 28, 2025 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, contract assets, prepaid expenses and other current assets, accounts payable, accrued expenses and accrued payroll and related costs, and deferred revenue.

Current wording

Operating activities provided $7.5 million of cash for the thirty-nine weeks ended September 27, 2025 as compared to providing $7.8 million in the comparable prior-year period. The major components of cash provided by operating activities in the thirty-nine weeks ended September 27, 2025 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, contract assets, prepaid expenses and other current assets, accounts payable, accrued expenses and accrued payroll and related costs, and deferred revenue.

Previous wording

For the twenty-six weeks ended June 28, 2025, the Company experienced net income of $8.0 million compared to $7.7 million for the comparable prior-year period. An increase in accounts receivables and contract assets in the twenty-six weeks ended June 28, 2025, used $5.8 million of cash compared to providing $3.8 million in the comparable prior-year period. The Company primarily attributes this increase in accounts receivables for the twenty-six weeks ended June 28, 2025, to normal fluctuations in the Company’s EPC projects and procedural delays in payment from two of the Company’s school clients in its Healthcare segment.

Current wording

For the thirty-nine weeks ended September 27, 2025, the Company experienced net income of $10.2 million compared to $10.5 million for the comparable prior-year period. An increase in accounts receivables and contract assets in the thirty-nine weeks ended September 27, 2025, used $5.2 million of cash, after also using also $5.2 million in the comparable prior-year period. Accounts receivables for the thirty-nine weeks ended September 27, 2025, experienced normal fluctuations in the Company’s EPC projects and procedural delays in payment from two of the Company’s school clients in its Healthcare segment.

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 $14.9 million as of June 28, 2025 and a net payable of $16.6 million as of December 28, 2024, using $1.7 million of cash during the twenty-six weeks ended June 28, 2025. 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 decrease to net transit payable as of June 28, 2025 was due to normal fluctuations associated with several large, multiyear EPC 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 $7.2 million as of September 27, 2025 and a net payable of $16.5 million as of December 28, 2024, using $9.3 million of cash during the thirty-nine weeks ended September 27, 2025. The net of transit accounts payable and transit accounts receivable was a net payable of $21.9 million as of September 28, 2024 and a net payable of $22.2 million as of December 30, 2023, using $0.3 million of cash during the thirty-nine weeks ended September 28, 2024. The decrease to net transit payable as of September 27, 2025 was due to normal fluctuations associated with several large, multiyear EPC 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 $3.0 million for the twenty-six weeks ended June 28, 2025 as compared to using $0.8 million of cash for the comparable prior-year period. The Company typically 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 provided cash of $2.9 million for the thirty-nine weeks ended September 27, 2025 as compared to using $0.5 million of cash for the comparable prior-year period. The Company typically 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

A decrease in accounts payable and accrued expenses used cash of $3.4 million for the twenty-six weeks ended June 28, 2025 as compared to providing $0.7 million for the comparable prior-year period. The Company attributes these changes to typical fluctuations in the normal course of business and a reduction in its litigation accrual by $1.4 million.

Current wording

A decrease in accounts payable and accrued expenses used cash of $0.1 million for the thirty-nine weeks ended September 27, 2025 as compared to using $0.8 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 $0.4 million for the twenty-six weeks ended June 28, 2025 as compared to using $1.5 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 twenty-six weeks ended June 28, 2025 was paid on June 27, 2025.

Current wording

Changes in accrued payroll and related costs provided $2.9 million for the thirty-nine weeks ended September 27, 2025 as compared to providing $0.4 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 thirty-nine weeks ended September 27, 2025 was paid on September 19, 2025.

Previous wording

The Company’s deferred revenue balance as of June 28, 2025 was $9.1 million, compared to $4.1 million as of December 28, 2024, providing cash from operations of $5.0 million for the twenty-six weeks ended June 28, 2025. 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 September 27, 2025 was $6.2 million, compared to $4.1 million as of December 28, 2024, providing cash from operations of $2.1 million for the thirty-nine weeks ended September 27, 2025. The increase was associated with upfront payments for future labor associated with the Company’s EPC contracts.

Previous wording

Investing activities used $0.9 million for the purchase of property and equipment in the current period as compared to using $1.1 million in the comparable prior-year period. The primary reason for the decrease was the nearly completed implementation of the Company’s new ERP software system.

Current wording

Investing activities used $1.4 million for the purchase of property and equipment in the current period as compared to using $1.6 million in the comparable prior-year period. The primary reason for the decrease was the nearly completed implementation of the Company’s new ERP software system.

Previous wording

Financing activities used $7.1 million of cash for the twenty-six weeks ended June 28, 2025, compared to using $13.5 million in the comparable prior-year period. The Company made net payments under its line of credit of $1.0 million during the twenty-six weeks ended June 28, 2025 as compared to making net payments of $6.9 million in the comparable prior-year period. The Company used $5.1 million to purchase shares of its common stock during the twenty-six weeks ended June 28, 2025 as compared to using $5.4 million during the twenty-six week period ended June 29, 2024. During the twenty-six weeks ended June 28, 2025, the Company used $0.9 million to retire shares of vested equity grants, the proceeds of which were used to pay withholding taxes upon the vesting of equity grants, as compared to using $1.3 million in the comparable prior year period. The Company generated cash of $0.3 million from sales of shares from its equity plans for the current period and $0.4 million for the comparable prior-year period.

Current wording

Financing activities used $9.5 million of cash for the thirty-nine weeks ended September 27, 2025, compared to using $9.1 million in the comparable prior-year period. The Company made net payments under its line of credit of $3.4 million during the thirty-nine weeks ended September 27, 2025 as compared to making net payments of $0.3 million in the comparable prior-year period. The Company used $5.1 million to purchase shares of its common stock during the thirty-nine weeks ended September 27, 2025 as compared to using $7.8 million during the thirty-nine week period ended September 28, 2024. During the thirty-nine weeks ended September 27, 2025, the Company used $0.9 million to retire shares of vested equity grants, the proceeds of which were used to pay withholding taxes upon the vesting of equity grants, as compared to using $1.3 million in the comparable prior year period. The Company generated cash of $0.6 million from sales of shares from its equity plans for the current period and $0.7 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), 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. The effective weighted average interest rate, including unused line fees, for the twenty-six weeks ended June 28, 2025 and June 29, 2024 were 6.2% and 6.8%, 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), 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. The effective weighted average interest rate, including unused line fees, for the thirty-nine weeks ended September 27, 2025 and September 28, 2024 were 6.2% and 6.8%, respectively.

Previous wording

Borrowings under the line of credit as of June 28, 2025 and December 28, 2024 were $34.0 million and $35.0 million, respectively. There were letters of credit outstanding at June 28, 2025 and December 28, 2024 for $10.2 million and $7.4 million, respectively. At June 28, 2025 and December 28, 2024, the Company had availability for additional borrowings under the Revolving Credit Facility of $20.8 million and $22.6 million, respectively.

Current wording

Borrowings under the line of credit as of September 27, 2025 and December 28, 2024 were $31.5 million and $35.0 million, respectively. There were letters of credit outstanding at September 27, 2025 and December 28, 2024 for $13.1 million and $7.4 million, respectively. At September 27, 2025 and December 28, 2024, the Company had availability for additional borrowings under the Revolving Credit Facility of $20.4 million and $22.6 million, respectively.

Previous wording

The Company’s liquidity and capital resources as of June 28, 2025, included accounts receivable and contract assets and total current asset balances of $83.7 million and $100.7 million, respectively. Current liabilities were $54.5 million as of June 28, 2025 and were exceeded by total current assets by $46.2 million.

Current wording

The Company’s liquidity and capital resources as of September 27, 2025, included accounts receivable and contract assets and total current asset balances of $83.2 million and $94.9 million, respectively. Current liabilities were $48.0 million as of September 27, 2025 and were exceeded by total current assets by $46.9 million.

Previous wording

The Company is exposed to various asserted claims as of June 28, 2025, 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 28, 2025, the Company had accrued $1.1 million for asserted claims.

Current wording

The Company is exposed to various asserted claims as of September 27, 2025, 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 September 27, 2025, the Company had accrued $0.4 million for asserted claims.