Command Center, Inc. (OTCQB: CCNI), a national provider of on-demand and temporary staffing solutions, is reporting financial results for the fourth quarter and full year ended December 30, 2016.
Fourth Quarter 2016 Financial Overview vs. Year-Ago Quarter
- Revenue up 19.0% to $26.1 million compared to $21.9 million.
- Gross margin increased 30 basis points to 25.7% compared to 25.4%.
- Net income increased to $0.2 million or $0.00 per share, compared to $0.1 million or $0.00 per share.
- EBITDA was $0.7 million compared to $0.5 million.
- Adjusted EBITDA was $0.7 million compared to $0.5 million.
Full Year 2016 Financial Overview vs. 2015 (where applicable)
- Revenue up 5.4% to $93.3 million compared to $88.5 million.
- Gross margin decreased 130 basis points to 25.4% compared to 26.7%.
- Net income was $0.8 million or $0.01 per share, compared to $1.6 million or $0.02 per share.
- EBITDA was $2.1 million compared to $3.5 million.
- Adjusted EBITDA was $2.1 million compared to $3.5 million.
- Repurchased approximately 3.8 million shares of the company’s common stock at an average price of $0.40 per share.
Fourth Quarter 2016 Financial Results
Revenue in the fourth quarter of 2016 increased 19.0% to $26.1 million, compared to $21.9 million in the year-ago quarter. The fourth quarter and the full year of 2016 benefited from an extra week when compared to 2015, which added $1.4 million of revenue to each period. Additionally, the increase was due to higher revenue from branches outside of North Dakota and the contribution from two Hancock Staffing offices, which were acquired in June 2016. Excluding the acquisition, as well as the North Dakota operations, which now comprise under 11% of revenue, total remaining store revenue increased approximately 16% to $21.3 million for the quarter.
Gross margin in the fourth quarter increased 30 basis points to 25.7%, compared to 25.4% in the year-ago quarter. The increase was primarily due to a favorable mix of higher margin revenue across the company.
Selling, general, and administrative expenses in the fourth quarter were $6.0 million, compared to $5.3 million in the year-ago quarter. The increase was driven, in part, by expenses associated with higher revenue, including an extra week of revenue and corresponding payroll and payroll taxes in the fourth quarter of 2016 versus the same quarter of the prior year.
Net income in the fourth quarter increased to $0.2 million, or $0.00 per share, compared to $0.1 million, or $0.00 per share, in the year-ago quarter.
EBITDA (a non-GAAP term defined below) in the fourth quarter was $0.7 million, compared to $0.5 million in the year-ago quarter. Adjusted EBITDA (a non-GAAP term defined below) in the fourth quarter was $0.7 million, compared to $0.5 million in the year-ago quarter. Non-cash compensation is included in the EBITDA calculation.
2016 Financial Results
Revenue in 2016 increased 5.4% to $93.3 million, compared to $88.5 million in 2015. In addition to the extra week of revenue for the year, the increase was primarily due to contributions from the Hancock Staffing offices and a $5.5 million or 8% increase in revenue from stores outside North Dakota.
Gross margin in 2016 decreased 130 basis points to 25.4%, compared to 26.7% in 2015.
Selling, general and administrative expenses in 2016 were $21.8 million, compared to $20.8 million in 2015. The increase was attributable to expenses associated with higher revenue as well as salary, rent, and utility costs from the opening and operating of seven new stores.
Net income in 2016 was $0.8 million or $0.01 per share, compared to $1.6 million or $0.02 per share.
EBITDA in 2016 was $2.1 million, compared to $3.5 million in 2015. Adjusted EBITDA in 2016 was also $2.1 million, compared to $3.5 million in 2015. Non-cash compensation is included in the EBITDA calculation.
During 2016, the company repurchased approximately 3.8 million shares of common stock at an average price of $0.40 per share. Approximately $2.1 million remains under the $5.0 million repurchase plan.
Cash and restricted cash at December 30, 2016 was $3.1 million, compared to $7.6 million at December 25, 2015. The decline was due, in part, to the acquisition of Hancock Staffing and the company’s stock repurchase initiative. The company ended the year with no debt compared to $0.5 million at the end of 2015.
Command Center ended the year with 64 stores operating in 21 states.
Management Commentary
“After the end of the third quarter, we emphasized to shareholders that our primary goal continued to be the reversal of the negative trends the company experienced during the first half of 2016,” said Bubba Sandford, president and CEO of Command Center. “In the fourth quarter, we saw the continued results of these efforts through significant revenue growth, gross margin expansion and increased net income. These improvements were driven by the implementation of new training programs, greater accountability at the branch level, an increase in our national accounts business, and the results of the Hancock Staffing acquisition. We believe the positive trends we saw in the third and fourth quarters of 2016 will continue into 2017 on a year-over-year basis.
“As expected, North Dakota sales remained in decline for both the year and fourth quarter. But as we have previously stated, our goal has always been to increase revenue in other regions, while simultaneously reducing our exposure to fluctuations in energy prices and the related activities in North Dakota. As a result, our operations in North Dakota now comprise less than 11% of our overall business. As our store count and sales in other regions continue to improve, we expect North Dakota’s impact on our bottom line will continue to lessen proportionately.
“For the remainder of 2017, we expect to continue driving these financial and operational improvements in our business. We are also looking at new store openings in our current markets, and as we rebuild our cash position, we expect that our increased liquidity will enable us to be opportunistic in seeking additional acquisitions. We continue to believe these strategies are the most optimal for driving long-term shareholder value.”
Conference Call
Command Center will hold a conference call tomorrow, April 11, at 10:00 a.m. Eastern time (8:00 a.m. Mountain time) to discuss its fourth quarter and full year 2016 results.
Date: Tuesday, April 11, 2017
Time: 10:00 a.m. Eastern time (8:00
a.m. Mountain time)
Toll-free dial-in number: 1-877-719-9810
International
dial-in number: 1-719-325-4870
Conference ID: 3338559
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=123660 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 April 25, 2017.
Toll-free replay number: 1-844-512-2921
International replay
number: 1-412-317-6671
Replay ID: 3338559
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 65 field offices, the company provides employment annually for approximately 34,000 field team members working for over 3,200 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, national, regional and local economic conditions, 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 our most recent reports on Forms 10-K and 10-Q filed with the Securities and Exchange Commission, copies of which are available on our website at www.commandonline.com and the SEC website at www.sec.gov. 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 to net income for the periods presented (in thousands):
| Fifty-Three | Fifty-Two | |||||||||
| Weeks Ended | Weeks Ended | |||||||||
| December 30, 2016 | December 25, 2015 | |||||||||
| EBITDA | $ | 2,051 | 3,482 | |||||||
| Interest expense and other financing expense | (25 | ) | (82 | ) | ||||||
| Depreciation and amortization | (298 | ) | (172 | ) | ||||||
| Provision for income taxes | (822 | ) | (999 | ) | ||||||
| Non-cash compensation | (147 | ) | (672 | ) | ||||||
| Net income | $ | 759 | $ | 1,557 | ||||||
| Fourteen Weeks Ended | Thirteen Weeks Ended | |||||||||
| December 30, 2016 | December 25, 2015 | |||||||||
| EBITDA | $ | 647 | $ | 514 | ||||||
| Interest expense and other financing expense | 28 | (28 | ) | |||||||
| Depreciation and amortization | (87 | ) | (43 | ) | ||||||
| Provision for income taxes | (457 | ) | (69 | ) | ||||||
| Non-cash compensation | 50 | (248 | ) | |||||||
| Net income | $ | 181 | $ | 126 | ||||||
| Command Center, Inc. | ||||||||||
| Consolidated Balance Sheet | ||||||||||
| December 30, 2016 | December 25, 2015 | |||||||||
| ASSETS | (Revised) | |||||||||
| Current Assets | ||||||||||
| Cash | $ | 3,022,741 | $ | 7,629,424 | ||||||
| Restricted cash | 24,676 | - | ||||||||
| Accounts receivable, net of allowance for doubtful accounts | 10,287,456 | 8,917,933 | ||||||||
| Prepaid expenses, deposits, and other | 631,873 | 292,352 | ||||||||
| Prepaid workers’ compensation | 745,697 | 756,005 | ||||||||
| Other receivables | 115,519 | - | ||||||||
| Current portion of workers’ compensation deposits | 404,327 | 398,319 | ||||||||
| Total Current Assets | 15,232,289 | 17,994,033 | ||||||||
| Property and equipment, net | 432,857 | 408,657 | ||||||||
| Deferred tax asset | 2,316,774 | 3,063,256 | ||||||||
| Workers’ compensation risk pool deposit, less current portion | 2,006,813 | 2,256,814 | ||||||||
| Goodwill and other intangible assets, net | 4,307,611 | 2,500,000 | ||||||||
| Total Assets | $ | 24,296,344 | $ | 26,222,760 | ||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||||
| Current Liabilities | ||||||||||
| Accounts payable | $ | 762,277 | $ | 560,961 | ||||||
| Checks issued and payable | 98,837 | 487,087 | ||||||||
| Account purchase agreement facility payable | - | 479,616 | ||||||||
| Other current liabilities | 297,089 | 323,224 | ||||||||
| Accrued wages and benefits | 1,567,585 | 1,452,558 | ||||||||
| Current portion of workers’ compensation premiums and claims liability | 1,101,966 | 1,201,703 | ||||||||
| Total Current Liabilities | 3,827,754 | 4,505,149 | ||||||||
| Long-Term Liabilities | ||||||||||
| Workers’ compensation claims liability, less current portion | 1,604,735 | 2,231,735 | ||||||||
| Total Liabilities | 5,432,489 | 6,736,884 | ||||||||
| 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; | 60,634 | 64,305 | ||||||||
| 60,634,650 and 64,305,288 shares issued and outstanding | ||||||||||
| Additional paid-in-capital | 56,374,625 | 57,752,301 | ||||||||
| Accumulated deficit | (37,571,404 | ) | (38,330,730 | ) | ||||||
| Total Stockholders’ Equity | 18,863,855 | 19,485,876 | ||||||||
| Total Liabilities and Stockholders’ Equity | $ | 24,296,344 | $ | 26,222,760 | ||||||
| Command Center, Inc. | ||||||||||
| Consolidated Statements of Income | ||||||||||
| Fifty-Three | Fifty-Two | |||||||||
| Weeks Ended | Weeks Ended | |||||||||
| December 30, 2016 | December 15, 2015 | |||||||||
| (Revised) | ||||||||||
| Revenue | $ | 93,259,508 | $ | 88,498,943 | ||||||
| Cost of staffing services | 69,580,410 | 64,892,648 | ||||||||
| Gross profit | 23,679,098 | 23,606,295 | ||||||||
| Selling, general, and administrative expenses | 21,774,419 | 20,795,777 | ||||||||
| Depreciation and amortization | 298,300 | 171,511 | ||||||||
| Income from operations | 1,606,379 | 2,639,007 | ||||||||
| Interest expense and other financing expense | (25,018 | ) | (82,167 | ) | ||||||
| Net income before income taxes | 1,581,361 | 2,556,840 | ||||||||
| Provision for income taxes | (822,035 | ) | (999,313 | ) | ||||||
| Net income | $ | 759,326 | $ | 1,557,527 | ||||||
| Earnings per share: | ||||||||||
| Basic | $ | 0.01 | $ | 0.02 | ||||||
| Diluted | $ | 0.01 | $ | 0.02 | ||||||
| Weighted average shares outstanding: | ||||||||||
| Basic | 62,317,651 | 65,139,449 | ||||||||
| Diluted | 63,062,425 | 66,095,168 | ||||||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20170410006305/en/
Contacts:
Liolios
Cody Slach, 949-574-3860
CCNI@liolios.com
