Command Center, Inc. (OTCQB: CCNI), a national provider of on-demand and temporary staffing solutions, reported financial results for the second quarter ended June 30, 2017.
Second Quarter 2017 Financial Highlights vs. Year-Ago Quarter
- Revenue up 13.0% to a record $24.5 million compared to $21.7 million.
- Gross margin increased 130 basis points to 26.5% compared to 25.2%.
- Net income improved to $0.7 million or $0.01 per diluted share, compared to $0.3 million or $0.00 per diluted share.
- Adjusted EBITDA increased to $1.3 million compared to $0.5 million.
Second Quarter 2017 Financial Results
Revenue in the second quarter of 2017 increased 13.0% to a record $24.5 million, compared to $21.7 million in the year-ago quarter. The increase was driven in large part by revenue contribution from the Hancock Staffing stores that were acquired in June of 2016. Excluding the Hancock Staffing stores, revenue was up 5.4% due to generally stronger results from operations company-wide.
Gross margin in the second quarter increased 130 basis points to 26.5%, compared to 25.2% in the year-ago quarter. The increase was the result of the company’s continued emphasis on coaching and training field personnel to produce increased margins based on the value of the services provided to customers.
Selling, general and administrative expenses in the second quarter were $5.2 million, compared to $5.0 million in the year-ago quarter. As a percentage of revenue, SG&A expenses were 21.1%, compared to 23.2% in the second quarter of 2016. The decline was primarily due to lower salaries and bad debt expense as a percentage of revenue.
Operating income in the second quarter increased to $1.2 million, compared to $0.4 million in the second quarter of 2016. Net income increased to $0.7 million or $0.01 per share, compared to net income of $0.3 million or $0.00 per share in the year-ago quarter.
Adjusted EBITDA (a non-GAAP term defined below) in the second quarter increased to $1.3 million compared to $0.5 million in the year-ago quarter.
Cash, including restricted cash, at June 30, 2017 was $4.1 million compared to $3.0 million at December 30, 2016. The company carried a $0.1 million balance on its account purchase agreement at June 30, 2017 compared to no debt at the end of 2016.
Command Center ended the quarter with 66 stores operating in 22 states.
Management Commentary
“Since taking significant actions to improve operations in the second quarter of 2016, we have generated four straight quarters of considerable revenue growth and three straight quarters of gross margin expansion,” said Bubba Sandford, president and CEO of Command Center. “Our record second quarter results continued to be driven by our ‘Keys to Success,’ which are defined by selling to good customers, increasing margins whenever possible and servicing both our customers and our employees with excellence. Strong improvements in EBITDA, net income and cash are further evidence that our actions are having the intended effect.
“As demonstrated by the second quarter financials, the company continues to head in the right direction. As always, we will focus on sensible capital allocation as we move through the end of the year. This will include re-engaging our stock repurchase program and opportunistically examining possible acquisitions and additional store openings. 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, August 15, at 10:00 a.m. Eastern time (8:00 a.m. Mountain time) to discuss its second quarter 2017 results.
Date: Tuesday, August 15, 2017
Time: 10:00 a.m. Eastern time (8:00
a.m. Mountain time)
Toll-free dial-in number: 1-888-468-2440
International
dial-in number: 1-719-457-2642
Conference ID: 9418168
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 August 29, 2017.
Toll-free replay number: 1-844-512-2921
International replay
number: 1-412-317-6671
Replay ID: 9418168
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 66 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) | $ | 735 | $ | 275 | ||
| Adjustments: | ||||||
| Interest expense and other financing expense | 1 | 24 | ||||
| Depreciation and amortization | 96 | 62 | ||||
| Provision for income taxes | 496 | 60 | ||||
| EBITDA | 1,328 | 421 | ||||
| Non-cash compensation | 8 | 114 | ||||
| Reserve for workers compensation deposit | - | - | ||||
| Adjusted EBITDA | $ | 1,336 | $ | 535 | ||
| Command Center, Inc. | ||||||||
| Consolidated Condensed Balance Sheets | ||||||||
| June 30, 2017 | December 30, 2016 | |||||||
| (Unaudited) | ||||||||
| Assets | ||||||||
| Current Assets | ||||||||
| Cash | $ | 4,104,622 | $ | 3,022,741 | ||||
| Restricted cash | - | 24,676 | ||||||
| Accounts receivable, net of allowance for doubtful accounts of $357,283 and $899,395, respectively | 10,518,653 | 10,287,456 | ||||||
| Prepaid expenses, deposits, and other | 730,313 | 631,873 | ||||||
| Prepaid workers’ compensation | 724,203 | 745,697 | ||||||
| Other receivables | 1,742 | 115,519 | ||||||
| Current portion of workers’ compensation risk pool deposits | 402,645 | 404,327 | ||||||
| Total Current Assets | 16,482,178 | 15,232,289 | ||||||
| Property and equipment, net | 452,595 | 432,857 | ||||||
| Deferred tax asset | 1,704,206 | 2,316,774 | ||||||
| Workers’ compensation risk pool deposit, less current portion, net | 2,001,563 | 2,006,813 | ||||||
| Goodwill and other intangible assets, net | 4,196,593 | 4,307,611 | ||||||
| Total Assets | $ | 24,837,135 | $ | 24,296,344 | ||||
| Liabilities and Stockholders’ Equity | ||||||||
| Current Liabilities | ||||||||
| Accounts payable | $ | 685,267 | $ | 762,277 | ||||
| Checks issued and payable | 98,837 | 98,837 | ||||||
| Account purchase agreement facility | 108,906 | - | ||||||
| Other current liabilities | 297,824 | 297,089 | ||||||
| Accrued wages and benefits | 1,779,487 | 1,567,585 | ||||||
| Current portion of workers’ compensation premiums and claims liability | 930,209 | 1,101,966 | ||||||
| Total Current Liabilities | 3,900,530 | 3,827,754 | ||||||
| Long-Term Liabilities | ||||||||
| Workers’ compensation claims liability, less current portion | 1,137,615 | 1,604,735 | ||||||
| Total Liabilities | 5,038,145 | 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; 60,619,649 shares issued and outstanding, respectively | 60,619 | 60,634 | ||||||
| Additional paid-in-capital | 56,392,427 | 56,374,625 | ||||||
| Accumulated deficit | ($36,654,056 | ) | (37,571,404 | ) | ||||
| Total Stockholders’ Equity | 19,798,990 | 18,863,855 | ||||||
| Total Liabilities and Stockholders’ Equity | $ | 24,837,135 | $ | 24,296,344 | ||||
| Command Center, Inc. | ||||||
| Consolidated Condensed Statements of Income | ||||||
(Unaudited) | ||||||
Thirteen Weeks Ended | Thirteen Weeks Ended | |||||
| (Unaudited) | (Unaudited) | |||||
| Revenue | $ | 24,503,660 | $ | 21,675,874 | ||
| Cost of staffing services | 18,010,803 | 16,223,788 | ||||
| Gross profit | 6,492,857 | 5,452,086 | ||||
| Selling, general, and administrative expenses | 5,164,512 | 5,030,975 | ||||
| Depreciation and amortization | 96,277 | 61,712 | ||||
| Income (loss) from operations | 1,232,068 | 359,399 | ||||
| Interest expense and other financing expense | 1,225 | 24,547 | ||||
| Net income (loss) before income taxes | 1,230,843 | 334,852 | ||||
| Provision for income taxes | 495,947 | 60,000 | ||||
| Net income (loss) | $ | 734,896 | $ | 274,852 | ||
| Earnings per share: | $ | 0.01 | $ | 0.00 | ||
| Basic | $ | 0.01 | $ | 0.00 | ||
| Diluted | ||||||
| Weighted average shares outstanding: | ||||||
| Basic | 60,308,111 | 63,558,745 | ||||
| Diluted | 60,959,626 | 64,317,089 | ||||
View source version on businesswire.com: http://www.businesswire.com/news/home/20170814005926/en/
Contacts:
Liolios
Cody Slach, 949-574-3860
CCNI@liolios.com
