Command Center, Inc. (OTCQB: CCNI), a national provider of on-demand and temporary staffing solutions, reported financial results for the first quarter ended March 27, 2015.
First Quarter 2015 Financial Highlights vs. Same Year-Ago Quarter
- Revenue up 2.8% to $19.0 million
- Gross margins increased 190 basis points to 28.3%
- Operating income was $189,000 compared to operating income of $596,000
- Net income was $82,000 compared to net income of $511,000
- Adjusted EBITDA totaled $396,000 compared to $678,000
“Our first quarter financial results reflect our investment in hiring, training and retaining staff to support our long term focus of increasing shareholder value,” said Bubba Sandford, Command Center’s president and CEO. “A 17% decline in revenue from offices located in the Bakken region was offset by increases in our other locations, reflecting the value of our geographic and industry segment diversification. We achieved these increases through our ongoing programs to improve same store revenue and profitability. Our plan of steady diversified growth with a focus on profitability continues to add value for the company’s shareholders, and we look forward to continuing to deliver positive results through the rest of the year.”
First Quarter 2015 Financial Results
Revenues in the first quarter of 2015 increased approximately 2.8% to $19.0 million compared to $18.5 million in the same year-ago quarter. The increase resulted from the company’s priority of improving revenue and profitability from existing branch locations. Revenue in the first quarter highlighted the value of the company’s strategy of both geographical and product line diversification, as a 17% decline in revenue from branches located in the Bakken Shale region of North Dakota was offset by revenue increases in branches located in other areas of the country.
Gross margins in the first quarter increased 190 basis points to 28.3% from 26.4% in 2014. The increase in margins was driven by lower workers’ compensation costs, which resulted from the company’s ongoing programs to improve employee safety. The lower workers’ compensation cost was partially offset by a decline in gross margins on work performed in the Bakken Shale region.
The company’s operating income for the first quarter of 2015 was $189,000 compared to operating income of $596,000 a year ago. The lower operating income reflects the company’s implementation of programs designed to improve revenue and profitability generated by existing branches. This includes additional employee training and the hiring of new supervisory personnel, as well as greater benefits designed to attract and retain the highest quality people. Also significant, non-cash compensation increased $146,000 in the first quarter of 2015, as the company extended its equity compensation program to include all full time employees.
Net income in the first quarter of 2015 was $82,000 compared to $511,000 in the year-ago quarter. Net income per share in the first quarter of 2015 was $0.00 compared to $0.01 in the first quarter of 2014.
Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, and non-cash compensation) in the first quarter of 2015 was $396,000 or $0.01 per diluted share compared to $678,000 or $0.01 per diluted share in the year-ago period (see discussion about the presentation of adjusted EBITDA, a non-GAAP term, and its reconciliation to the nearest GAAP metric, below).
Cash at March 27, 2015, was $7.9 million compared to $8.6 million at December 26, 2014, with the decrease resulting from the reduction of the company’s liability under its account purchase agreement by $900,000.
In the first quarter of 2015, the company opened two branch locations, ending the quarter with 57 branches operating in 22 states.
In April, the company announced a three year $5 million stock repurchase program. The company plans to repurchase shares to the extent the market does not fully reflect the strength and performance of its business. The share repurchase program will not prevent the company from opening new branches or pursuing acquisition opportunities.
“We are focused on improving our business fundamentals and providing excellent service to our customers,” continued Sandford. “During the quarter, we continued our organic growth with the opening of two new branches in Texas, increasing branch staff training and hiring additional field services personnel. Our emphasis on finding and retaining quality people and providing them with better training and support will continue to generate positive results. Doing this requires investments of both capital and time, but we believe the returns will enhance long term shareholder value.”
About Command Center
Command Center provides flexible on-demand employment solutions to businesses in the United States, primarily in the areas of light industrial, hospitality and event services. Through 57 field offices, the company provides employment annually for more than 32,000 temporary employees working for approximately 3,400 clients. For more information about Command Center, go to www.commandonline.com.
Important Cautions Regarding Forward Looking Statements
This news release contains forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are other than statements of historical facts. These statements are subject to uncertainties and risks including, but not limited to, the severity and duration of the general economic downturn, the availability of workers’ compensation insurance coverage, the availability of capital and suitable financing for the Company's activities, the ability to attract, develop and retain qualified store managers and other personnel, product and service demand and acceptance, changes in technology, the impact of competition and pricing, government regulation, and other risks set forth in the Form 10-K filed with the Securities and Exchange Commission on March 4, 2015, and in other statements filed from time to time with the Securities and Exchange Commission. All such forward-looking statements, whether written or oral, and whether made by or on behalf of the Company, are expressly qualified by these cautionary statements and any other cautionary statements which may accompany the forward-looking statements. In addition, the Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date hereof.
Reconciliation of Non-GAAP Financial Measures
In addition to the results prepared in accordance with generally accepted accounting principles (“GAAP”), the company also presents EBITDA, a non-GAAP term defined as earnings before interest, taxes, depreciation and amortization, and non-cash compensation (the company previously referred to this metric as “EBITDA-D”).
The company uses EBITDA as a financial measure since management believes investors find it a useful tool to perform more meaningful comparisons of past, present and future operating results, and as a complement to net income and other financial performance measures. EBITDA is not intended to represent net income as defined by GAAP, and such information should not be considered as an alternative to net income or any other measure of performance prescribed by GAAP.
The following tables present a reconciliation of EBITDA to net income for the periods presented as well as per basic share information (in thousands except per share data):
| Thirteen Weeks Ended | ||||||||||
| March 27, 2015 | March 28, 2014 | |||||||||
| EBITDA | $ | 396 | $ | 678 | ||||||
| Interest expense and other financing expense | (41 | ) | (53 | ) | ||||||
| Depreciation and amortization | (43 | ) | (65 | ) | ||||||
| Provision for income taxes | (67 | ) | (32 | ) | ||||||
| Non-cash compensation | (163 | ) | (17 | ) | ||||||
| Net income | $ | 82 | $ | 511 | ||||||
| EBITDA per share | $ | 0.01 | $ | 0.01 | ||||||
| Interest expense and other financing expense per share | (0.00 | ) | (0.00 | ) | ||||||
| Depreciation and amortization per share | (0.00 | ) | (0.00 | ) | ||||||
| Provision for income taxes per share | (0.00 | ) | (0.00 | ) | ||||||
| Net income per share | $ | 0.00 | $ | 0.01 | ||||||
| Command Center, Inc. | ||||||||||
| Consolidated Condensed Balance Sheets | ||||||||||
| March 27, 2015 | December 26, 2014 | |||||||||
| ASSETS | (unaudited) | |||||||||
| Current Assets | ||||||||||
| Cash | $ | 7,945,397 | $ | 8,600,249 | ||||||
| Restricted cash | 43,197 | - | ||||||||
| Accounts receivable, net of allowance for doubtful accounts | 8,472,174 | 9,029,347 | ||||||||
| Prepaid expenses, deposits and other | 174,600 | 260,242 | ||||||||
| Prepaid workers' compensation | 680,482 | 581,355 | ||||||||
| Other receivables | 2,106 | 7,949 | ||||||||
| Current portion of deferred tax asset | 1,250,000 | 1,490,000 | ||||||||
| Current portion of workers' compensation deposits | 980,000 | 1,114,000 | ||||||||
| Total Current Assets | 19,547,956 | 21,083,142 | ||||||||
| Property and equipment – net | 426,310 | 430,987 | ||||||||
| Deferred tax asset, less current portion | 2,648,000 | 2,396,000 | ||||||||
| Workers' compensation risk pool deposit, less current portion | 1,926,069 | 1,790,633 | ||||||||
| Goodwill | 2,500,000 | 2,500,000 | ||||||||
| Total Assets | $ | 27,048,335 | $ | 28,200,762 | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||
| Current Liabilities | ||||||||||
| Accounts payable | $ | 414,078 | $ | 546,247 | ||||||
| Checks issued and payable | 408,854 | 255,532 | ||||||||
| Account purchase agreement facility | 1,970,108 | 2,900,104 | ||||||||
| Other current liabilities | 507,192 | 249,445 | ||||||||
| Accrued wages and benefits | 1,164,376 | 1,665,697 | ||||||||
| Current portion of workers' compensation premiums and claims liability | 1,124,948 | 1,305,248 | ||||||||
| Total Current Liabilities | 5,589,556 | 6,922,273 | ||||||||
| Long-Term Liabilities | ||||||||||
| Workers' compensation claims liability, less current portion | 2,609,543 | 2,514,302 | ||||||||
| Total Liabilities | 8,199,099 | 9,436,575 | ||||||||
| Commitments and contingencies | - | - | ||||||||
| Stockholders' Equity | ||||||||||
| Preferred stock - $0.001 par value, 5,000,000 shares authorized; none issued | - | - | ||||||||
Common stock – 99,511,972 and 100,000,000 shares, $0.001 par value, authorized, respectively; 65,943,840 and 65,632,868 shares issued and outstanding, respectively | 65,944 | 65,633 | ||||||||
| Additional paid-in capital | 58,590,011 | 58,318,396 | ||||||||
| Accumulated deficit | (39,806,719 | ) | (39,619,842 | ) | ||||||
| Total Stockholders' Equity | 18,849,236 | 18,764,187 | ||||||||
| Total Liabilities and Stockholders' Equity | $ | 27,048,335 | $ | 28,200,762 | ||||||
| Command Center, Inc. | ||||||||||
| Consolidated Condensed Statements of Income | ||||||||||
| (unaudited) | ||||||||||
| Thirteen Weeks Ended | ||||||||||
| March 27, 2015 | March 28, 2014 | |||||||||
| Revenue | $ | 18,978,825 | $ | 18,458,178 | ||||||
| Cost of staffing services | 13,610,288 | 13,580,173 | ||||||||
| Gross profit | 5,368,537 | 4,878,005 | ||||||||
| Selling, general and administrative expenses | 5,136,066 | 4,217,207 | ||||||||
| Depreciation and amortization | 42,992 | 64,841 | ||||||||
| Income from operations | 189,479 | 595,957 | ||||||||
| Interest expense and other financing expense | (41,250 | ) | (53,129 | ) | ||||||
| Net income before income taxes | 148,229 | 542,828 | ||||||||
| Provision for income taxes | (66,691 | ) | (32,119 | ) | ||||||
| Net income | $ | 81,538 | $ | 510,709 | ||||||
| Earnings per share: | ||||||||||
| Basic | $ | 0.00 | $ | 0.01 | ||||||
| Diluted | $ | 0.00 | $ | 0.01 | ||||||
| Weighted average shares outstanding: | ||||||||||
| Basic | 65,746,275 | 59,711,242 | ||||||||
| Diluted | 67,005,043 | 61,584,038 | ||||||||
Contacts:
Chris Tyson, 949-574-3860
Liolios
Group, Inc. Investor Relations
CCNI@liolios.com
