Executive Summary

Q2 2026 primary-source materials (8‑K/press release and earnings call) were not available in our document set; therefore, this recap anchors on the most recent reported quarters (Q1–Q3 2025) and S&P Global consensus for Q2 2026, noting limited Street coverage (one estimate)* .
Recent trajectory: revenue grew 17% YoY in Q1 2025 to $84.5M , 13% YoY in Q2 2025 to $78.2M , and 16% YoY in Q3 2025 to $70.3M ; engineering logged “best-ever” quarterly gross profit in both Q2 and Q3 2025, with record 2026 backlog just over $70M as of late October .
Profitability mixed near term: adjusted EBITDA was $7.8M (Q1), $8.1M (Q2), and $5.5M (Q3) as seasonal healthcare softness and $0.8M excess medical claims in Q3 contributed to dip; management reiterated that Q4 2025 should be the strongest of the year .
Management reiterated FY2025 guideposts: at least low double-digit adjusted EBITDA growth and FY cash from operations approximating net income, with Q4 targeted as peak gross profit and adjusted EBITDA; engineering demand/backlog and K‑12 healthcare penetration remain core growth drivers .
Potential stock catalysts into Q2 2026: visibility from record 2026 engineering backlog, continued K‑12 share gains and foreign nurse pipeline progress, normalization of medical claims costs, and delivery of Q4 2025 “peak” profitability commentary .

What Went Well and What Went Wrong

What Went Well
- Engineering momentum: “best engineering gross profit quarter in our entire history” in Q2 and again in Q3; record 2026 energy services backlog “just over $70M” as of late October .
- K‑12 healthcare execution and share gains: school revenue up 21% YoY in Q2; management noted “another dozen or so new contracts” for 2025–2026 school year and confidence in continued share capture .
- Strategic positioning: increased brand visibility, improved talent inflow, and integrated EPC model in energy services; management emphasized secular grid modernization and data center interconnect tailwinds .
What Went Wrong
- Medical cost headwinds: $0.8M over budget in Q3 and $1.8M YTD pressured profitability; management does not expect radical change until 2026 .
- Cash collections timing: Q2 operating cash flow negative ($7.9M) due to delayed payments from two large school clients (since ~80%+ collected shortly after); Q3 operating cash flow also negative ($1.3M) .
- Margin variability: engineering gross margin volatile quarter-to-quarter due to mix and subcontractor pass‑through on EPC work; life sciences/data saw slight year‑over‑year GP pressure in Q3 .

Financial Results

Recent actuals vs S&P Global consensus for Q2 2026 (limited coverage; one estimate)*

Metric	Q1 2025	Q2 2025	Q3 2025	Q2 2026E (S&P Global)
Revenue ($USD Millions)	$84.473	$78.166	$70.289	$88.676*
EPS ($)	$0.54 (GAAP diluted)	$0.50 (GAAP diluted)	$0.30 (GAAP diluted)	$0.68 (Primary EPS)*
Adjusted EPS ($)	$0.63	$0.69	$0.42	—
Gross Margin (%)	26.0% (consolidated)	28.5% (consolidated)	27.6% (consolidated)	—
Adjusted EBITDA ($USD Millions)	$7.780	$8.135	$5.510	$8.393*

Note: Asterisked estimates are from S&P Global; values may reflect limited analyst coverage and are subject to revision. Values retrieved from S&P Global.

Segment breakdown (Revenue and Gross Margin)

Segment	Q1 2025 Revenue ($M)	Q1 2025 GM%	Q2 2025 Revenue ($M)	Q2 2025 GM%	Q3 2025 Revenue ($M)	Q3 2025 GM%
Specialty Health Care	$43.283	28.2%	$42.822	28.7%	$30.000	30.0%
Engineering	$32.142	19.2%	$26.521	24.5%	$31.419	22.0%
Life Sciences, Data & Solutions	$9.048	39.7%	$8.823	39.8%	$8.870	39.5%
Consolidated	$84.473	26.0%	$78.166	28.5%	$70.289	27.6%

KPIs and operating items

KPI	Q1 2025	Q2 2025	Q3 2025
Engineering backlog (next FY)	—	—	“Just over $70M” for 2026 as of late Oct
Medical claims over budget	—	—	$0.8M in Q3; $1.8M YTD
Healthcare School Revenue ($M)	$37.3	$37.2	$24.4
Healthcare Non‑School Revenue ($M)	$6.0	$5.6	$5.6
Healthcare billable hours (first 4 weeks Oct)	—	—	+18% YoY
Days Sales Outstanding (DSO)	~74 days	—	—
Operating Cash Flow ($M)	$16.660	($7.878)	($1.262)

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Adjusted EBITDA growth	FY 2025	“At least low double-digit” adj. EBITDA growth (Q1)	Reiterated in Q2 and Q3	Maintained
Q4 profitability profile	Q4 2025	—	Expect highest quarterly gross profit and adjusted EBITDA of FY 2025	Introduced
Operating cash flow vs NI	FY 2025	—	Expect cash from operations ≈ net income (Q2); reiterated in Q3	Introduced then maintained
Engineering backlog visibility	FY 2026	2025 backlog at this point last year was $21M	Record 2026 backlog just over $70M as of end-October	Raised/Improved

No formal quantitative revenue/EPS margin ranges were issued in the reviewed materials; guidance was directional and qualitative .

Earnings Call Themes & Trends

Topic	Q1 2025 (prior‑2)	Q2 2025 (prior‑1)	Q3 2025 (current last reported)	Trend
AI/technology initiatives	LS/IT: accelerating AI/ML deployments; strong 40% GP; building offshore; 6 new clients	AI-driven equipment qualification; data integrity; analytics in LS; HCM expansion	Continued AI analytics, managed services expansion; digitalization in engineering/EPC	Building
Supply chain / lead times	Early EPC pass-through mix and subcontractor impacts on margins	Margin volatility from subs mix; EPC ramp	OEM partnerships to mitigate equipment lead times; hybrid resourcing	Improving processes
Tariffs/macro	Neutral; focus on secular themes; macro not a key worry	—	LS commentary on tariffs/favored nation pricing driving shifts; resilience noted	Watch LS dynamics
Product/segment performance	Healthcare K‑12 momentum; Aerospace surge	Healthcare school +21% YoY; engineering best GP quarter	Engineering “best ever” GP; healthcare seasonal softness but strong Sept/Oct ramp	Positive
Regulatory/visa	—	Intl nurse pipeline 15–20 near-term; 500 candidates; visa retrogression gating	If visa dates move, 50–60 near-term; 300+ ready; broader pipeline larger	Optionality
Medical claims	—	—	$0.8M Q3, $1.8M YTD over budget; actions likely to impact 2026	Headwind (near-term)
Capital allocation	Repurchases continued; net debt cut $12M in Q1	—	Dividend discussed; clean balance sheet as “strategic asset”; mindful of float	Flexible

Management Commentary

“Our best engineering gross profit quarter in our entire history” (Q2), with record 2026 energy services backlog “just over $70 million” by late October (Q3) .
“We’ve added another dozen or so new [K‑12] contracts… half… with meaningful impact to revenue for the 2025–2026 school year” .
“We expect Q4 [2025] will yield our highest quarterly gross profit and adjusted EBITDA” .
On dividend and capital allocation: “With a completely debt free balance sheet… it probably makes as much sense as ever… it’s something we’ll continue to evaluate,” while preserving flexibility for large opportunities .

Q&A Highlights

Engineering margins and mix: Management reiterated normalized engineering GM range 22–26% and explained variability from subcontractor pass‑through and mix; focus remains on gross profit dollars .
K‑12 healthcare growth and training: Company runs internal training programs to scale qualified staff; pipeline robust; intent to take share from competitors while market itself grows .
Foreign nurse pipeline: Visa retrogression is gating; 50–60 could arrive if dates move modestly, 300+ fully ready, 500+ broader pipeline; uplift could turn a “good 2026” into “incredible” .
Cash collections & seasonality: Q2 CFO hit by PO timing from school districts (since largely collected); Q3 seasonally soft due to summer; expect FY CFO ≈ NI .
Capital returns: Discussion around potential dividend introduction versus maintaining low share count and strategic balance sheet flexibility; buyback track record noted .

Estimates Context

Q2 2026 S&P Global consensus (limited coverage: one estimate): revenue $88.68M*, EPS $0.68*, EBITDA $8.39M*. Values may change as coverage updates. Values retrieved from S&P Global.
FY 2026 S&P Global consensus: revenue $339.36M*, EBITDA $32.05M*, EPS $2.565*, target price $31 (2 estimates)*. Values retrieved from S&P Global.

Key Takeaways for Investors

Engineering is the primary multi‑year engine: record 2026 backlog and tier‑one utility/data‑center interconnect positioning support continued revenue/GP growth .
K‑12 healthcare remains durable with rising penetration; watch FY Q4 ramp into the 2025–2026 school year and training-led capacity additions .
Near‑term profitability swing factors: medical claims ($0.8M Q3; $1.8M YTD) and EPC/subcontractor mix; Q4 2025 guided as peak profitability .
Cash flow timing improves as school PO issues clear; mgmt expects FY 2025 CFFO ≈ net income .
Optionality from international nurse pipeline could amplify 2026 healthcare growth if visa retrogression eases .
Capital allocation remains shareholder‑friendly and flexible (historical repurchases; evaluating dividend), with emphasis on a “clean balance sheet” as a strategic asset for larger opportunities .
For Q2 2026, given limited Street coverage*, watch for delivery vs consensus (rev ~$88.7M*, EPS ~$0.68*) and qualitative updates on backlog conversion, K‑12 contract wins, and medical cost normalization. Values retrieved from S&P Global.

Sources and notes:

Q1 2025: 8‑K and call .
Q2 2025: 8‑K/press release and call .
Q3 2025: press and 8‑K and call .
Index inclusion (context): Russell 2000/3000 addition (July 2025) .
Q2 2026 primary-source docs were not available in the document set searched (no 2026 8‑K/press release/transcript returned). We will update this recap when those are released .
S&P Global consensus estimates marked with an asterisk (*) and accompanied by this disclaimer: Values retrieved from S&P Global.

RCM TECHNOLOGIES, INC. (RCMT)·Q2 2026 Earnings Summary