Command Center, Inc. (OTCQB: CCNI), a national provider of on-demand and temporary staffing solutions, reported financial results for the first quarter ended March 25, 2016.
First Quarter 2016 Financial Overview vs. Year-Ago Quarter
- Revenue increased to $19.1 million compared to $19.0 million
- Revenue excluding branches in North Dakota increased 10%
- Gross margin was 24.7% compared to 28.3%
- Operating loss was $(0.5) million compared to operating income of $0.2 million
- Net loss was $(0.5) million or $(0.01) per diluted share compared to net income of $0.1 million or $0.00 per diluted share
- EBITDA was $(0.3) million compared to $0.4 million
- Adjusted EBITDA was $(0.1) million compared to $0.4 million
- Repurchased 502,837 shares of the company’s common stock at an average price of $0.44 per share
First Quarter 2016 Financial Results
Revenue in the first quarter increased to $19.1 million, compared to $19.0 million in the year-ago quarter. Revenue from branches outside North Dakota increased 10%, offsetting a 43% decline in revenue from the company’s branches in North Dakota, which is a state economically dependent on the health of the oil industry.
Gross margin in the first quarter was 24.7%, compared to 28.3% in the year-ago quarter. During the first quarter of 2015, the company recognized an approximate $400,000 benefit (or approximately 230 basis points) due to an actuarial adjustment associated with the prior year’s workers’ compensation liability. Excluding this benefit, gross margin in the first quarter of 2015 would have been approximately 26.0%. The 130 basis point remaining year-over-year decline was primarily due to the reduction in higher margin revenue from North Dakota, as well as a higher mix of business that did not meet the company’s gross margin target.
Operating loss in the first quarter was $(0.5) million, compared to operating income of $0.2 million in the year-ago quarter. The decrease was due to the reported lower gross margin. Selling, general and administrative expenses in the first quarter of 2016 were $5.2 million, compared to $5.1 million in the year-ago quarter. The slight increase was due to a $250,000 reserve on workers’ compensation collateral deposits.
EBITDA (a non-GAAP term defined below) in the first quarter was $(0.3) million, compared to $0.4 million in the year-ago quarter.
Adjusted EBITDA (a non-GAAP term defined below) in the first quarter was $(0.1) million, compared to $0.4 million in the year-ago quarter.
Net loss in the first quarter was $(0.5) million or $(0.01) per diluted share, compared to net income of $0.1 million or $0.00 per diluted share in the year-ago quarter.
Cash at March 25, 2016 was $5.1 million, compared to $7.7 million at December 25, 2015. During the first quarter, the company repurchased approximately 502,837 shares of its common stock for a total cost of $220,000, or an average price of $0.44 per share. There is approximately $3.4 million remaining under the $5 million plan. During the first quarter of 2016, the company fully paid down its accounts receivable credit facility and is debt free.
In the first quarter of 2016, the company opened three branch locations, ending the quarter with 59 stores operating in 20 states.
Management Commentary
“Sales in our branches excluding North Dakota remained strong in the first quarter, increasing 10%, which underscores the health of the majority of our locations,” said Command Center’s president and CEO, Bubba Sandford. “Excluding the beneficial actuarial adjustment in our first quarter last year, gross margin was down on a year-over-year basis due to the expected reduction in higher margin revenue from North Dakota, as well as a higher mix of lower margin business that did not meet our company’s standards. We have taken swift and proactive measures to correct this mix shift, as margin expansion is one of our three ‘Keys to Success.’
“We continued to use a portion of our cash flow to grow organically, opening three new locations in Dallas, Phoenix and Nashville where we are able to leverage our existing customer bases and infrastructure. We also remained aggressive in our share repurchase program, acquiring over 500,000 shares at an average price of $0.44 per share. Should the market present further opportunities, we are prepared to continue repurchasing our own stock.
“As we move through 2016, we expect North Dakota will represent a smaller portion of our overall revenue and the year-over-year comparisons are expected to ease. We will also look to diversify the clients and industries we service, which we believe will reduce the potential negative impact of an economic downturn in any one industry or region. Our strong balance sheet provides us the ability to deploy cash in a manner that is opportunistic and maximizes shareholder value by increasing same-store revenue and margins, opening new stores, repurchasing the company’s stock and identifying quality acquisition targets.”
Conference Call
The Company will hold a conference call tomorrow (Tuesday) at 11:00 a.m. Eastern time to discuss its first quarter 2016 results.
| Date: Tuesday, May 10, 2016 |
| Time: 11:00 a.m. Eastern time (9:00 a.m. Mountain time) |
| Toll-free dial-in number: 1-800-259-2693 |
| International dial-in number: 1-913-312-6667 |
| Conference ID: 9861349 |
Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios at 1-949-574-3860.
The conference call will be broadcast live and available for replay at http://public.viavid.com/index.php?id=119569 and via the investor relations section of Command Center’s website at www.commandonline.com.
A replay of the conference call will be available after 2:00 p.m. Eastern time on the same day through May 24, 2016.
| Toll-free replay number: 1-877-870-5176 |
| International replay number: 1-858-384-5517 |
| Replay ID: 9861349 |
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 59 field offices, the company provides employment annually for nearly 33,000 field team members working for 3,300 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 24, 2016, 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 non-GAAP terms EBITDA and Adjusted EBITDA. EBITDA is defined as earnings before interest, taxes, depreciation and amortization and non-cash compensation. Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization, non-cash compensation and specifically identified one-time expenses. The company uses EBITDA and Adjusted EBITDA as financial measures since management believes investors find these to be useful tools 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 and Adjusted EBITDA are 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 and Adjusted 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 25, 2016 | March 27, 2015 | |||||||
| EBITDA | $ | (323 | ) | $ | 396 | |||
| Interest expense and other financing expense | (40 | ) | (41 | ) | ||||
| Depreciation and amortization | (39 | ) | (43 | ) | ||||
| Provision for income taxes | (4 | ) | (67 | ) | ||||
| Non-cash compensation | (132 | ) | (163 | ) | ||||
| Net income (loss) | $ | (538 | ) | $ | 82 | |||
| Thirteen Weeks Ended | ||||||||
| March 25, 2016 | March 27, 2015 | |||||||
| Adjusted EBITDA | (74 | ) | 396 | |||||
| Adjustments: | ||||||||
| Non-cash compensation | (132 | ) | (163 | ) | ||||
| Non-cash taxes | (4 | ) | (67 | ) | ||||
| Depreciation and amortization | (39 | ) | (43 | ) | ||||
| Interest expense and other financing expense | (40 | ) | (41 | ) | ||||
| Reserve for workers compensation deposit | (250 | ) | ||||||
| Net Adjustments: | (465 | ) | (314 | ) | ||||
| Net (Loss) Income (GAAP measure) | $ | (538 | ) | $ | 82 | |||
| Command Center, Inc. | ||||
| Consolidated Condensed Balance Sheets | ||||
| March 25, 2016 | December 25, 2015 | |||
| ASSETS | (unaudited) | |||
| Current Assets | ||||
| Cash | $ 5,091,674 | $ 7,629,424 | ||
| Restricted cash | 30,456 | - | ||
| Accounts receivable, net of allowance for doubtful accounts | 9,281,188 | 8,917,933 | ||
| Prepaid expenses, deposits and other | 332,830 | 292,352 | ||
| Prepaid workers' compensation | 417,964 | 756,005 | ||
| Other receivables | 60,000 | - | ||
| Current portion of deferred tax asset | 878,085 | 878,085 | ||
| Current portion of workers' compensation deposits | 407,435 | 398,319 | ||
| Total Current Assets | 16,499,632 | 18,872,118 | ||
| Property and equipment - net | 371,876 | 408,657 | ||
| Deferred tax asset, less current portion | 2,083,851 | 2,083,851 | ||
| Workers' compensation risk pool deposit, less current portion | 2,006,814 | 2,256,814 | ||
| Goodwill | 2,500,000 | 2,500,000 | ||
| Total Assets | $ 23,462,173 | $ 26,121,439 | ||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||
| Current Liabilities | ||||
| Accounts payable | $ 248,450 | $ 304,009 | ||
| Checks issued and payable | 206,764 | 487,087 | ||
| Account purchase agreement facility | - | 479,616 | ||
| Other current liabilities | 223,034 | 323,222 | ||
| Accrued wages and benefits | 1,003,556 | 1,452,558 | ||
| Current portion of workers' compensation premiums and claims liability | 853,513 | 1,201,703 | ||
| Total Current Liabilities | 2,535,317 | 4,248,196 | ||
| Long-Term Liabilities | ||||
| Workers' compensation claims liability, less current portion | 1,912,705 | 2,231,735 | ||
| Total Liabilities | 4,448,022 | 6,479,931 | ||
| 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; | ||||
| 63,213,451 and 64,305,288 shares issued and outstanding, respectively | 63,213 | 64,305 | ||
| Additional paid-in capital | 57,664,795 | 57,752,301 | ||
| Accumulated deficit | (38,713,857) | (38,175,098) | ||
| Total Stockholders' Equity | 19,014,151 | 19,641,508 | ||
Total Liabilities and Stockholders' Equity | $ 23,462,173 | $ 26,121,439 | ||
| Command Center, Inc. | ||||||||
| Consolidated Condensed Statements of Income | ||||||||
| (unaudited) | ||||||||
| Thirteen Weeks Ended | ||||||||
| March 25, 2016 | March 27, 2015 | |||||||
| Revenue | $ | 19,066,524 | $ | 18,978,825 | ||||
| Cost of staffing services | 14,349,976 | 13,610,288 | ||||||
| Gross profit | 4,716,548 | 5,368,547 | ||||||
| Selling, general and administrative expenses | 5,171,825 | 5,136,066 | ||||||
| Depreciation and amortization | 39,334 | 42,992 | ||||||
| (Loss) income from operations | (494,611 | ) | 189,479 | |||||
| Interest expense and other financing expense | (40,381 | ) | (41,250 | ) | ||||
| Net (loss) income before income taxes | (534,992 | ) | 148,229 | |||||
| Provision for income taxes | (3,769 | ) | (66,691 | ) | ||||
| Net (loss) income | $ | (538,761 | ) | $ | 81,538 | |||
| Earnings per share: | ||||||||
| Basic | $ | (0.01 | ) | $ | 0.00 | |||
| Diluted | $ | (0.01 | ) | $ | 0.00 | |||
| Weighted average shares outstanding: | ||||||||
| Basic | 63,398,575 | 65,746,275 | ||||||
| Diluted | 63,398,575 | 67,005,044 | ||||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20160509006783/en/
Contacts:
Cody Slach, 949-574-3860
CCNI@liolios.com
