Command Center, Inc. (OTCQB:CCNI), a national provider of on-demand and temporary staffing solutions, reported financial results for the third quarter ended September 23, 2016.
Third Quarter 2016 Financial Overview vs. Year-Ago Quarter (where applicable)
- Revenue up 6.4% to $26.4 million compared to $24.9 million
- Gross margin was 25.9% compared to 26.1%
- Net income was $0.8 million or $0.01 per share compared to $0.8 million or $0.01 per share
- EBITDA was $1.2 million compared to $1.6 million
- Adjusted EBITDA was $1.1 million compared to $1.8 million
- Repurchased approximately 1.2 million shares of the company’s common stock at an average price of $0.40 per share
Third Quarter 2016 Financial Results
Revenue in the third quarter increased 6.4% to $26.4 million, compared to $24.9 million in the year-ago quarter. Increase in revenue for the quarter was due to increased revenue from branches outside North Dakota and from the operations of the Hancock Staffing offices purchased in June. The company’s stores outside of North Dakota produced increased revenue of 14.9% over the third quarter of 2015. Conversely, sales in North Dakota declined 30.9% over the same period last year. Revenue from the company’s branches excluding North Dakota and the Hancock Staffing offices was approximately $21.2 million, an increase of $1.0 million or 4.8% from the third quarter of 2015.
Gross margin in the third quarter was 25.9% compared to 26.1% in the year-ago quarter. The 20 basis point decline was largely due to a mix of business in some branches that included lower margin revenue. Compared to the second quarter of 2016, gross margin for the third quarter was up 70 basis points from 25.2%.
Net income in the third quarter was $0.8 million or $0.01 per diluted share, compared to net income of $0.8 million or $0.01 per diluted share in the year-ago quarter. A 10.8% increase in selling, general and administrative expenses was due to increases in payroll tax and workers’ compensation expenses, as well as bad debt expense for aged invoices related to specific customers. A portion of these increased costs are short-term in nature, and the company anticipates cost-cutting measures made earlier this year will result in decreased costs moving forward.
EBITDA (a non-GAAP term defined below) in the third quarter was $1.2 million compared to $1.6 million in the year-ago quarter. Adjusted EBITDA (a non-GAAP term defined below) in the third quarter was $1.1 million compared to $1.8 million in the year-ago quarter.
Cash and restricted cash at September 23, 2016 was $0.6 million compared to $7.6 million at December 25, 2015. During the third quarter, the company repurchased 1,238,919 shares of its common stock for a total cost of approximately $500,000, or an average price of $0.40 per share. There is approximately $2.2 million remaining under the $5 million plan. Also contributing to the reduced cash position was an increased amount of outstanding accounts receivable, which was due, in part, to increased revenue for the period, as well as the acquisition of Hancock Staffing in June for approximately $2.0 million.
Command Center ended the quarter with 61 stores operating in 21 states.
Management Commentary
“Earlier in the year we set out to redirect the negative trends we observed in the first quarter, and we have largely accomplished that by again increasing revenue and gross margins and removing unnecessary costs,” said Command Center’s president and CEO, Bubba Sandford. “We still have work to do, but we feel positive about where we are as a company and where we are headed.
“We continue to see a decline in revenue from our North Dakota offices, but as we have said all along, those branches remain profitable and margins remain relatively high. While revenue from North Dakota was down over 30 percent for the quarter, we increased revenue from stores outside of North Dakota by nearly 15 percent year over year.
“The addition of the Hancock Staffing offices and the people in those offices continues to produce nicely for the company. That purchase was a good use of our cash, and we continue to look for the best use of resources in the future, including opening new stores, repurchasing our stock and identifying other quality acquisition opportunities.
“We hope to continue to see improvements across the company. As is always the concern, finding good people to help us grow profitably and who can manage the autonomy we provide is difficult. That being said, the addition of Colette Pieper as CFO was certainly a positive development in the third quarter, and we are happy to have her on the team.”
Conference Call
Command Center will hold a conference call tomorrow, November 15, at 10:00 a.m. Eastern time (8:00 a.m. Mountain time) to discuss its third quarter 2016 results.
Date: Tuesday, November 15, 2016
Time: 10:00 a.m. Eastern time
(8:00 a.m. Mountain time)
Toll-free dial-in number: 1-888-599-8693
International
dial-in number: 1-913-312-1430
Conference ID: 2199581
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 athttp://public.viavid.com/index.php?id=121987 and via the investor relations section of Command Center’s website at www.commandonline.com.
Replay of the conference call will be available after 1:00 p.m. Eastern time on the same day and continuing through November 29, 2016.
Toll-free replay number: 1-844-512-2921
International replay
number: 1-412-317-6671
Replay ID: 2199581
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 61 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 (in thousands):
| Thirteen Weeks Ended | Thirty-Nine Weeks Ended | ||||||||||||||||||
| September 23, 2016 | September 25, 2015 | September 23, 2016 | September 25, 2015 | ||||||||||||||||
| EBITDA | $ | 1,182 | $ | 1,595 | $ | 1,428 | $ | 3,061 | |||||||||||
| Interest expense and other financing expense | (1 | ) | (36 | ) | (78 | ) | (149 | ) | |||||||||||
| Depreciation and amortization | (110 | ) | (43 | ) | (211 | ) | (129 | ) | |||||||||||
| Provision for income taxes | (282 | ) | (533 | ) | (365 | ) | (931 | ) | |||||||||||
| Non-cash compensation | 50 | (163 | ) | (196 | ) | (420 | ) | ||||||||||||
| Net income (loss) | $ | 838 | $ | 820 | $ | 578 | $ | 1,432 | |||||||||||
| Thirteen Weeks Ended | Thirty-Nine Weeks Ended | ||||||||||||||||||
| September 23, 2016 | September 25, 2015 | September 23, 2016 | September 25, 2015 | ||||||||||||||||
| Adjusted EBITDA | $ | 1,134 | $ | 1,770 | $ | 1,630 | $ | 3,486 | |||||||||||
| Adjustments | |||||||||||||||||||
| Non-cash compensation | 50 | (163 | ) | (196 | ) | (420 | ) | ||||||||||||
| Non-cash taxes | (234 | ) | (533 | ) | (317 | ) | (931 | ) | |||||||||||
| Depreciation and amortization | (110 | ) | (43 | ) | (211 | ) | (129 | ) | |||||||||||
| Interest expense and other financing expense | (1 | ) | (36 | ) | (78 | ) | (149 | ) | |||||||||||
| Reserve for workers compensation deposit | (250 | ) | (250 | ) | |||||||||||||||
| Reserve for note receivable | (175 | ) | (175 | ) | |||||||||||||||
| Net Adjustments: | (296 | ) | (950 | ) | (1,052 | ) | (2,054 | ) | |||||||||||
| Net income (loss) (GAAP measure) | $ | 838 | $ | 820 | $ | 578 | $ | 1,432 | |||||||||||
| Command Center, Inc. | |||||||||
| Consolidated Condensed Balance Sheets | |||||||||
| September 23, 2016 | December 25, 2015 | ||||||||
| ASSETS | (Unaudited) | ||||||||
| Current Assets | |||||||||
| Cash | $ | 490,270 | $ | 7,629,424 | |||||
| Restricted cash | 70,819 | - | |||||||
| Accounts receivable, net of allowance for doubtful accounts | 12,429,688 | 8,917,933 | |||||||
| Prepaid expenses, deposits and other | 364,503 | 292,352 | |||||||
| Prepaid workers' compensation | 481,944 | 756,005 | |||||||
| Other receivables | 89,041 | - | |||||||
| Current portion of deferred tax asset | 878,085 | 878,085 | |||||||
| Current portion of workers' compensation deposits | 406,219 | 398,319 | |||||||
| Total Current Assets | 15,210,569 | 18,872,118 | |||||||
| Property and equipment - net | 590,088 | 408,657 | |||||||
| Deferred tax asset, less current portion | 1,768,851 | 2,083,851 | |||||||
| Workers' compensation risk pool deposit, less current portion | 2,006,814 | 2,256,814 | |||||||
| Goodwill | 3,684,622 | 2,500,000 | |||||||
| Intangible assets - net | 585,552 | - | |||||||
| Total Assets | $ | 23,846,496 | $ | 26,121,439 | |||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||
| Current Liabilities | |||||||||
| Accounts payable | $ | 226,866 | $ | 304,009 | |||||
| Checks issued and payable | 339,418 | 487,087 | |||||||
| Account purchase agreement facility | 71,615 | 479,616 | |||||||
| Other current liabilities | 320,239 | 323,222 | |||||||
| Accrued wages and benefits | 942,816 | 1,452,558 | |||||||
| Current portion of workers' compensation premiums and claims liability | 993,622 | 1,201,703 | |||||||
| Total Current Liabilities | 2,894,576 | 4,248,196 | |||||||
| Long-Term Liabilities | |||||||||
| Workers' compensation claims liability, less current portion | 1,912,705 | 2,231,735 | |||||||
| Total Liabilities | 4,807,281 | 6,479,931 | |||||||
| 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; 61,060,042 and 64,305,288 shares issued and outstanding, respectively | 61,060 | 64,305 | |||||||
| Additional paid-in capital | 56,575,183 | 57,752,301 | |||||||
| Accumulated deficit | (37,597,028 | ) | (38,175,098 | ) | |||||
| Total Stockholders' Equity | 19,039,215 | 19,641,508 | |||||||
| Total Liabilities and Stockholders' Equity | $ | 23,846,496 | $ | 26,121,439 | |||||
| Command Center, Inc. | |||||||||||||||
| Consolidated Condensed Statements of Income | |||||||||||||||
| (Unaudited) | |||||||||||||||
| Thirteen Weeks Ended | Thirty-Nine Weeks Ended | ||||||||||||||
| September 23, 2016 | September 25, 2015 | September 23, 2016 | September 25, 2015 | ||||||||||||
| Revenue | $ | 26,433,646 | $ | 24,856,000 | $ | 67,171,852 | $ | 66,639,061 | |||||||
| Cost of staffing services | 19,596,705 | 18,364,794 | 50,194,378 | 48,590,540 | |||||||||||
| Gross profit | 6,836,941 | 6,491,206 | 16,977,474 | 18,048,521 | |||||||||||
| Selling, general and administrative expenses | 5,605,680 | 5,059,098 | 15,745,533 | 15,408,104 | |||||||||||
| Depreciation and amortization | 110,155 | 42,611 | 211,200 | 128,904 | |||||||||||
| Income from operations | 1,121,106 | 1,389,497 | 1,020,741 | 2,511,513 | |||||||||||
| Interest expense and other financing expense | 616 | 36,083 | 77,671 | 149,018 | |||||||||||
| Net income before income taxes | 1,120,489 | 1,353,414 | 943,070 | 2,362,495 | |||||||||||
| Provision for income taxes | 282,259 | 533,071 | 365,000 | 930,549 | |||||||||||
| Net income | $ | 838,231 | $ | 820,343 | $ | 578,070 | $ | 1,431,946 | |||||||
| Earnings per share: | |||||||||||||||
| Basic | $ | 0.01 | $ | 0.01 | $ | 0.01 | $ | 0.02 | |||||||
| Diluted | $ | 0.01 | $ | 0.01 | $ | 0.01 | $ | 0.02 | |||||||
| Weighted average shares outstanding: | |||||||||||||||
| Basic | 62,009,514 | 64,995,420 | 63,048,377 | 65,546,464 | |||||||||||
| Diluted | 62,767,858 | 66,342,868 | 63,806,354 | 66,871,177 | |||||||||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20161114006593/en/
Contacts:
Cody Slach, 949-574-3860
CCNI@liolios.com
