RCM Technologies , Inc. (NASDAQ:RCMT), a provider of business and technology solutions with a market capitalization of $186 million and annual revenue of $272.5 million, has entered into a Fifth Amended and Restated Loan Agreement with Citizens Bank, N.A., expanding its credit facility to $65 million with an option to increase it by an additional $20 million. According to InvestingPro analysis, the company maintains a strong financial health score, making it well-positioned for this expansion. This agreement, effective as of Monday, replaces the previous loan agreement dated April 24, 2023.
With this new agreement, the company has access to increased financial flexibility through December 3, 2029. The credit facility is secured by substantially all of RCM Technologies’ assets and the capital stock of its subsidiaries.
RCM Technologies must adhere to specific covenants under the agreement, which include maintaining certain leverage and interest coverage ratios. The agreement also imposes restrictions on activities such as dividends, mergers, asset sales, debt incurrence, and capital expenditures.
Furthermore, the company is obligated to pay a monthly fee on the undrawn portion of the credit facility, which varies based on its debt to EBITDA ratio. In the event of default, the lender has the right to demand immediate payment of all outstanding amounts.
This financial arrangement demonstrates RCM Technologies' commitment to securing the resources necessary to support its operations and strategic initiatives, with the company maintaining a moderate debt-to-equity ratio of 1.26 and generating $25.42 million in EBITDA over the last twelve months.
In other recent news, RCM Technologies has been the focus of positive analyst attention, with Benchmark upgrading the company's stock target from $33.00 to $37.00, maintaining a Buy rating. This follows strong third-quarter results and a promising forecast for its business segments. RCM Technologies reported a 4% growth in revenue and a 10% growth in Adjusted EBITDA, in line with expectations.
The company's Specialty Healthcare segment, in particular, is expected to see a 20% revenue increase during the 2024-25 school year due to expansions in school districts.
Moreover, the company secured over 20 new school district contracts, each potentially contributing an average of $500,000. Non-school revenue is also predicted to rise significantly in Q4 2024. Despite a decline in the Life Sciences, Data & Solutions division, RCM Technologies is investing in technology and sales to bolster its capabilities.
The company anticipates sustained growth in both Healthcare and Engineering sectors, backed by a robust pipeline of projects and clients leading into 2025.
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