Command Center, Inc. (OTCQB: CCNI), a national provider of on-demand and temporary staffing solutions, reported financial results for the third quarter ended September 25, 2015.
Third Quarter 2015 Financial Highlights vs. Same Year-Ago Quarter
- Revenue was $24.9 million compared to $27.7 million
- Revenue, excluding stores in North Dakota, increased 6.5%
- Gross margins decreased 160 basis points to 26.1%
- Operating income was $1.4 million compared to $2.5 million
- Net income totaled $820,000 compared to $6.0 million
- Adjusted EBITDA totaled $1.6 million compared to $2.9 million
Third Quarter 2015 Financial Results
Revenue in the third quarter of 2015 decreased 10.5% to $24.9 million compared to $27.7 million in the same year-ago quarter. Revenue from branches outside of the state of North Dakota grew by 6.5% compared to the same year-ago period. This increase was offset by the 47% decline from the company’s seven branches located in North Dakota. Revenue from the third quarter of 2014 represented the peak of activity in North Dakota before oil prices began to decline in the fourth quarter of 2014. Despite the decline in revenue from the North Dakota offices this year, operations within the state remain very profitable for the company.
Gross margins in the third quarter decreased 160 basis points to 26.1%, from 27.7% in 2014. Gross margins were affected by the decline in higher-margin revenue in North Dakota. Overall workers’ compensation costs are down on a year-over-year basis to 3.1% of revenue from 4.1% of revenue a year ago. For the third quarter of 2015, workers’ compensation costs were up slightly to 4.4% of revenue from 4.0% in the same year-ago quarter.
The company’s operating income for the third quarter of 2015 was $1.4 million, compared to $2.5 million in the year-ago period. The lower operating income is primarily attributable to lower revenue and gross margin. In addition, the company continues to invest in programs designed to improve revenue and profitability from existing branches. This includes additional employee training and the hiring of new supervisory personnel, as well as greater employment benefits designed to attract and retain high quality people.
Net income in the third quarter of 2015 totaled $820,000 compared to $6.0 million in the year-ago quarter, or $0.01 per share as compared to $0.09 in the year-ago quarter. In the third quarter of 2014, the company recorded a one-time $4.3 million benefit for its NOL tax benefit.
Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, and non-cash compensation) in the third quarter of 2015 was $1.6 million or $0.02 per diluted share as compared to $2.9 million or $0.04 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).
The company’s cash balance at September 25, 2015, was $5.8 million, compared to $8.6 million at December 26, 2014, with the decrease resulting largely from the reduction of the company’s liability under its account purchase agreement by $2.5 million. The company also repurchased 1.8 million shares of common stock for $1.1 million during 2015.
The company ended the third quarter of 2015 with 57 branches operating in 22 states.
Management Commentary
“As we continue to coach and train our branches the tenets of our ‘Keys to Success,’ we see improved customer satisfaction and better business decisions at the branch level. We know this translates into higher revenue and profitability for the company, and we are confident continuing in this process will ultimately lead to greater overall success and shareholder value,” said Command Center’s president and CEO, Bubba Sandford. “The 6.5% increase in revenue for branches outside North Dakota demonstrates the positive impact of our operational strategy. We believe providing excellent service to our customers and continuing to assist our branches to do good business will achieve superior profitability and shareholder returns.
“We currently have the infrastructure in place to expand our operations in areas where we have an existing customer base, and we are confident we can profitably open additional offices in some of these areas within a short time period. We have identified a number of target markets for new or additional branches in the coming months, as we continue to remain focused on profitable operations. In addition, the recent relocation of the corporate office to Denver, while presenting some challenges, will greatly add to the company’s ability to provide quality service to our branches and our customers moving forward.
“We also have engaged in a number of possible acquisition negotiations, but to date, nothing has come to fruition. We continue to look aggressively for acquisition opportunities that are priced appropriately, add profitability and increase value for our shareholders. The market for good acquisition targets meeting these criteria is competitive at this time in our business line.
“In the last five months we have repurchased 1.8 million of the company’s shares, which is almost 3% of the outstanding shares. There is approximately $3.8 million remaining in the stock repurchase plan. We do not believe continuing this share repurchase program will prevent us from opening new branches or pursuing acquisition opportunities. We continue to believe purchasing the company’s shares is a good allocation of our cash and will provide a significant long-term return to shareholders.
“As we continue to implement our strategy for enhancing shareholder value, we are confident we will remain profitable and continue to generate cash for investing in additional opportunities. We look forward to discussing our operations and plans at the Benchmark Company Micro Cap Discovery Conference in Chicago on December 10, 2015, where we are scheduled to meet with institutional investors and analysts who are following our story.”
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 | Thirty-nine Weeks Ended | |||||||||||||||||||
| 25-Sep-15 | 26-Sep-14 | 25-Sep-15 | 25-Sep-14 | |||||||||||||||||
| EBITDA-D | $ | 1,595 | $ | 2,947 | $ | 3,061 | $ | 5,398 | ||||||||||||
| Interest expense and other financing expense | (36 | ) | (46 | ) | (149 | ) | (210 | ) | ||||||||||||
| Depreciation and amortization | (43 | ) | (1,172 | ) | (129 | ) | (1,305 | ) | ||||||||||||
| Provision for income taxes | (533 | ) | 4,308 | (931 | ) | 4,246 | ||||||||||||||
| Non-cash compensation | (162 | ) | (36 | ) | (420 | ) | (122 | ) | ||||||||||||
| Net income (loss) | $ | 820 | $ | 6,000 | $ | 1,432 | $ | 8,007 | ||||||||||||
| Thirteen Weeks Ended | Thirty-nine Weeks Ended | |||||||||||||||||||
| 25-Sep-15 | 26-Sep-14 | 25-Sep-15 | 25-Sep-14 | |||||||||||||||||
| EBITDA-D | $ | 0.02 | $ | 0.05 | $ | 0.05 | $ | 0.08 | ||||||||||||
| Interest expense and other financing expense | (0.00 | ) | (0.00 | ) | (0.00 | ) | (0.00 | ) | ||||||||||||
| Depreciation and amortization | (0.00 | ) | (0.02 | ) | (0.00 | ) | (0.02 | ) | ||||||||||||
| Provision for income taxes | (0.01 | ) | 0.07 | (0.01 | ) | 0.07 | ||||||||||||||
| Non-cash compensation | (0.00 | ) | (0.00 | ) | (0.01 | ) | (0.00 | ) | ||||||||||||
| Net income (loss) | 0.01 | 0.09 | 0.02 | 0.12 | ||||||||||||||||
| Command Center, Inc. | ||||||||||
| Consolidated Condensed Balance Sheets | ||||||||||
| September 25, 2015 | December 26, 2014 | |||||||||
| ASSETS | (unaudited) | |||||||||
| Current Assets | ||||||||||
| Cash | $ | 5,779,322 | $ | 8,600,249 | ||||||
| Restricted cash | - | - | ||||||||
| Accounts receivable, net of allowance for doubtful accounts | 10,138,443 | 9,029,347 | ||||||||
| Notes Receivable | 175,000 | - | ||||||||
| Prepaid expenses, deposits and other | 532,087 | 260,242 | ||||||||
| Prepaid workers' compensation | 1,096,541 | 581,355 | ||||||||
| Other receivables | 59,865 | 7,949 | ||||||||
| Current portion of deferred tax asset | 910,000 | 1,760,000 | ||||||||
| Current portion of workers' compensation deposits | 980,000 | 1,114,000 | ||||||||
| Total Current Assets | 19,671,258 | 21,353,143 | ||||||||
| Property and equipment - net | 370,834 | 430,987 | ||||||||
| Deferred tax asset, less current portion | 2,158,410 | 2,126,000 | ||||||||
| Workers' compensation risk pool deposit, less current portion | 1,712,241 | 1,790,633 | ||||||||
| Goodwill | 2,500,000 | 2,500,000 | ||||||||
| Intangible assets - net | - | - | ||||||||
| Total Assets | $ | 26,412,742 | $ | 28,200,763 | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||
| Current Liabilities | ||||||||||
| Accounts payable | $ | 414,977 | $ | 546,247 | ||||||
| Checks issued and payable | 403,810 | 255,532 | ||||||||
| Account purchase agreement facility | 369,395 | 2,900,104 | ||||||||
| Other current liabilities | 406,634 | 249,445 | ||||||||
| Contingent liability | - | - | ||||||||
| Accrued wages and benefits | 1,642,765 | 1,665,697 | ||||||||
| Current portion of workers' compensation premiums and claims liability | 1,575,115 | 1,305,248 | ||||||||
| Total Current Liabilities | 4,812,696 | 6,922,273 | ||||||||
| Long-Term Liabilities | ||||||||||
| Warrant liabilities | - | - | ||||||||
| Workers' compensation claims liability, less current portion | 2,280,159 | 2,514,302 | ||||||||
| Total Liabilities | 7,092,854 | 9,436,575 | ||||||||
| Commitments and contingencies | - | - | ||||||||
| Stockholders' Equity | ||||||||||
| Preferred stock - $0.001 par value, 5,000,000 shares authorized; none issued | - | - | ||||||||
Common stock - 100,000,000 shares, $0.001 par value, authorized; 64,106,530 and 65,632,868 shares issued and outstanding, respectively | 64,106 | 65,633 | ||||||||
| Additional paid-in capital | 57,712,092 | 58,318,396 | ||||||||
| Accumulated deficit | (38,456,311 | ) | (39,619,842 | ) | ||||||
| Total Stockholders' Equity | 19,319,888 | 18,764,188 | ||||||||
| Total Liabilities and Stockholders' Equity | $ | 26,412,742 | $ | 28,200,763 | ||||||
| Command Center, Inc. | |||||||||||||||||||||||||
| Consolidated Condensed Statements of Income | |||||||||||||||||||||||||
| (unaudited) | |||||||||||||||||||||||||
| Thirteen Weeks Ended | Thirty-nine Weeks Ended | ||||||||||||||||||||||||
| September 25, 2015 | September 26, 2014 | September 25, 2015 | September 26, 2014 | ||||||||||||||||||||||
| Revenue | $ | 24,856,000 | $ | 27,698,843 | $ | 66,639,061 | $ | 67,819,186 | |||||||||||||||||
| Cost of staffing services | 18,364,794 | 20,020,317 | 48,590,540 | 49,424,797 | |||||||||||||||||||||
| Gross profit | 6,491,206 | 26.1 | % | 7,678,526 | 27.7 | % | 18,048,521 | 18,394,389 | |||||||||||||||||
| Selling, general and administrative expenses | 5,059,098 | 4,767,840 | 15,408,104 | 13,117,834 | |||||||||||||||||||||
| Depreciation and amortization | 42,611 | 364,809 | 128,904 | 498,614 | |||||||||||||||||||||
| Income from operations | 1,389,497 | 2,545,877 | 2,511,513 | 4,777,941 | |||||||||||||||||||||
| Interest expense and other financing expense | (36,083 | ) | (46,237 | ) | (149,018 | ) | (209,592 | ) | |||||||||||||||||
| Impairment of goodwill | - | (806,786 | ) | - | (806,786 | ) | |||||||||||||||||||
| Change in fair value of derivative liabilities | - | - | - | 87 | |||||||||||||||||||||
| Net income before income taxes | 1,353,414 | 1,692,854 | 2,362,495 | 3,761,650 | |||||||||||||||||||||
| Provision for income taxes | (533,071 | ) | 4,307,642 | (930,549 | ) | 4,245,611 | |||||||||||||||||||
| Net income | $ | 820,343 | $ | 6,000,496 | $ | 1,431,946 | $ | 8,007,261 | |||||||||||||||||
| Earnings per share: | |||||||||||||||||||||||||
| Basic | $ | 0.01 | $ | 0.09 | $ | 0.02 | $ | 0.13 | |||||||||||||||||
| Diluted | $ | 0.01 | $ | 0.09 | $ | 0.02 | $ | 0.12 | |||||||||||||||||
| Weighted average shares outstanding: | |||||||||||||||||||||||||
| Basic | 64,995,420 | 65,365,148 | 65,546,464 | 63,282,191 | |||||||||||||||||||||
| Diluted | 66,342,868 | 67,101,779 | 66,871,177 | 64,895,172 | |||||||||||||||||||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20151116005563/en/
Contacts:
Liolios Group, Inc.
Chris
Tyson, 949-574-3860
CCNI@liolios.com
