Command Center, Inc. (OTCQB: CCNI), a national provider of on-demand and temporary staffing solutions, reported financial results for the first quarter ended March 31, 2017.
First Quarter 2017 Financial Highlights vs. Year-Ago Quarter
- Revenue up 17.2% to $22.3 million compared to $19.1 million.
- Gross margin increased 100 basis points to 25.7% compared to 24.7%.
- Net income improved to $0.2 million or $0.00 per share compared to a net loss of $(0.5) million or $(0.01) per share.
- Adjusted EBITDA increased to $0.4 million compared to $(0.1) million.
First Quarter 2017 Financial Results
Revenue in the first quarter of 2017 increased 17.2% to $22.3 million, compared to $19.1 million in the year-ago quarter. The increase was due to better results from store operations generally, including increased national accounts business, and nearly $1.7 million in revenue contribution from the two Hancock Staffing stores acquired in June of 2016. Excluding revenue from the Hancock Staffing stores, revenue for all other operations increased approximately 8.5% to $20.7 million for the quarter.
Revenue from the company’s North Dakota stores increased 3.3% to almost $2.0 million in the first quarter of 2017, up from approximately $1.9 million in the year-ago quarter. Revenue from North Dakota represented about 9.0% of total revenue for the company for the quarter. Revenue from all stores outside of North Dakota was approximately $20.4 million, which represents an increase of 18.8% when compared to the same year-ago quarter.
Gross margin in the first quarter increased 100 basis points to 25.7%, compared to 24.7% in the year-ago quarter. The increase was primarily due to a favorable mix of higher margin revenue across the company and a decrease in workers’ compensation costs for portions of the company’s business.
Selling, general and administrative expenses in the first quarter were $5.3 million, compared to $5.2 million in the year-ago quarter. As a percentage of revenue, SG&A expenses were 23.9%, compared to 27.1% in the first quarter of 2016. The decline was due to lower salaries, stock-based compensation and office expenses as a percentage of revenue.
Operating income increased $0.8 million, from $(0.5) million in the first quarter of 2016 to $0.3 million for the first quarter of this year. Net income in the first quarter increased to $0.2 million or $0.00 per share, compared to a net loss of $(0.5) million or $(0.01) per share in the year-ago quarter.
EBITDA (a non-GAAP term defined below) in the first quarter was $0.4 million versus $(0.5) million in the same quarter the previous year. Adjusted EBITDA (a non-GAAP term defined below) in the first quarter increased to $0.4 million, compared to $(0.1) million in the year-ago quarter.
Cash, including restricted cash, at March 31, 2017, was $3.8 million, compared to $3.0 million at December 30, 2016. The company continues to hold no debt.
Command Center ended the quarter with 65 stores operating in 21 states.
Management Commentary
“We are pleased to see the momentum generated in the second half of 2016 continue into the first quarter of this year,” said Bubba Sandford, president and CEO of Command Center. “Strong revenue and margin growth enabled us to produce positive earnings in what is historically our weakest quarter of the year. These results were driven in part by continued execution from our stores, which have utilized the coaching, training and development resources received from our training program over the past several months to sell better, higher-margin business.
“Strong revenue growth for the third quarter in a row and increased profitability in the first quarter of this year demonstrates that the decisions we have made regarding deployment of the company’s assets, in terms of both financial and personnel resources, are helping to improve our operations. We believe the steps we have taken will ultimately translate into greater shareholder value in the long term.
“For the remainder of 2017, we anticipate our operational and financial momentum will continue, resulting in sustained revenue growth and consistent profitability. We believe this will allow us to further build our cash balance, which we can use to evaluate accretive capital allocation initiatives, such as possible acquisitions, share repurchases, store openings or any other opportunity that makes good sense for the company. Overall, this year is off to a good start, and we expect to continue executing on the fundamentals of our business operations to produce positive results through the end of the year.”
Conference Call
Command Center will hold a conference call tomorrow, May 16, at 10:00 a.m. Eastern time (8:00 a.m. Mountain time) to discuss its first quarter 2017 results.
Date: Tuesday, May 16, 2017
Time: 10:00 a.m. Eastern time (8:00
a.m. Mountain time)
Toll-free dial-in number: 1-877-856-1969
International
dial-in number: 1-719-325-4785
Conference ID: 7423104
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 here 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 1:00 p.m. Eastern time on the same day and continuing through May 30, 2017.
Toll-free replay number: 1-844-512-2921
International replay
number: 1-412-317-6671
Replay ID: 7423104
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 the non-GAAP terms of EBITDA and Adjusted EBITDA. EBITDA is defined as earnings before interest, taxes, depreciation and amortization. Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization, non-cash compensation and certain non-recurring expenses, including reserve for workers’ compensation deposits. The company uses EBITDA and Adjusted EBITDA as financial measures as management believes investors find them to be useful tools to perform more meaningful comparisons of past, present and future operating results, and as a means to evaluate our results of operations. The company believes these metrics are useful compliments 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 | Thirteen Weeks Ended | ||||||
| (Unaudited) | (Unaudited) | ||||||
| EBITDA (in thousands) | |||||||
| Net income (loss) | $ | 182 | $ | (539 | ) | ||
| Adjustments: | |||||||
| Interest expense and other financing expense | - | 40 | |||||
| Depreciation and amortization | 96 | 40 | |||||
| Provision for income taxes | 117 | 4 | |||||
| EBITDA | 395 | (455 | ) | ||||
| Non-cash compensation 6540 & 6545 | 10 | 132 | |||||
| Reserve for workers compensation deposit | - | 250 | |||||
| Adjusted EBITDA | $ | 405 | $ | (73 | ) | ||
Command Center, Inc. | |||||||||
| Consolidated Condensed Balance Sheets | |||||||||
| March 31, 2017 | December 30, 2016 | ||||||||
(Unaudited) | |||||||||
| Assets | |||||||||
| Current Assets | |||||||||
| Cash | $ | 3,751,904 | $ | 3,022,741 | |||||
| Restricted cash | 1,469 | 24,676 | |||||||
| Accounts receivable, net of allowance for doubtful accounts of $918,270 and $899,395, respectively | 9,467,745 | 10,287,456 | |||||||
| Prepaid expenses, deposits, and other | 571,633 | 631,873 | |||||||
| Prepaid workers’ compensation | 280,790 | 745,697 | |||||||
| Other receivables | 705,050 | 115,519 | |||||||
| Current portion of workers’ compensation deposits | 404,312 | 404,327 | |||||||
| Total Current Assets | 15,182,903 | 15,232,289 | |||||||
| Property and equipment, net | 399,432 | 432,857 | |||||||
| Deferred tax asset | 2,200,153 | 2,316,774 | |||||||
| Workers’ compensation risk pool deposit, less current portion, net | 2,006,813 | 2,006,813 | |||||||
| Goodwill and other intangible assets, net | 4,252,102 | 4,307,611 | |||||||
| Total Assets | $ | 24,041,403 | $ | 24,296,344 | |||||
| Liabilities and Stockholders’ Equity | |||||||||
| Current Liabilities | |||||||||
| Accounts payable | $ | 398,955 | $ | 762,277 | |||||
| Checks issued and payable | 98,837 | 98,837 | |||||||
| Other current liabilities | 482,403 | 297,089 | |||||||
| Accrued wages and benefits | 1,428,349 | 1,567,585 | |||||||
| Current portion of workers’ compensation premiums and claims liability | 1,050,205 | 1,101,966 | |||||||
| Total Current Liabilities | 3,458,749 | 3,827,754 | |||||||
| Long-Term Liabilities | |||||||||
| Workers’ compensation claims liability, less current portion | 1,526,441 | 1,604,735 | |||||||
| Total Liabilities | 4,985,190 | 5,432,489 | |||||||
| Commitments and Contingencies (See Note 10) | |||||||||
| Stockholders’ Equity | |||||||||
| Preferred stock - $0.001 par value, 5,000,000 shares authorized, none issued and outstanding | - | - | |||||||
| Common stock - 100,000,000 shares, $0.001 par value, authorized; 60,634,650 shares issued and outstanding | 60,634 | 60,634 | |||||||
| Additional paid-in-capital | 56,384,531 | 56,374,625 | |||||||
| Accumulated deficit | ($37,388,952 | ) | (37,571,404 | ) | |||||
| Total Stockholders’ Equity | 19,056,213 | 18,863,855 | |||||||
| Total Liabilities and Stockholders’ Equity | $ | 24,041,403 | $ | 24,296,344 | |||||
Command Center, Inc. | ||||||||
| Consolidated Condensed Statements of Income | ||||||||
Thirteen Weeks Ended | Thirteen Weeks Ended | |||||||
| (Unaudited) | (Unaudited) | |||||||
| Revenue | $ | 22,348,249 | $ | 19,066,524 | ||||
| Cost of staffing services | 16,610,015 | 14,349,976 | ||||||
| Gross profit | 5,738,234 | 4,716,548 | ||||||
| Selling, general, and administrative expenses | 5,343,607 | 5,171,825 | ||||||
| Depreciation and amortization | 95,550 | 39,334 | ||||||
| Income (loss) from operations | 299,077 | ($494,611 | ) | |||||
| Interest expense and other financing expense | 4 | 40,381 | ||||||
| Net income (loss) before income taxes | 299,073 | ($534,992 | ) | |||||
| Provision for income taxes | 116,621 | 3,769 | ||||||
| Net income (loss) | $ | 182,452 | ($538,761 | ) | ||||
| Earnings per share: | $ | 0.00 | ($0.01 | ) | ||||
| Basic | $ | 0.00 | ($0.01 | ) | ||||
| Diluted | ||||||||
| Weighted average shares outstanding: | ||||||||
| Basic | 60,634,650 | 64,169,712 | ||||||
| Diluted | 61,365,419 | 64,169,712 | ||||||
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Contacts:
Investor Relations:
Liolios
Cody
Slach, 949-574-3860
CCNI@liolios.com
