Command Center Reports Third Quarter Financial Results
November 6, 2018
Net Income of $546,000; Adjusted EBITDA of $912,000
DENVER–(BUSINESS WIRE)–Command Center, Inc. (Nasdaq: CCNI), a national provider of on-demand
and temporary staffing solutions, today reported financial results for
the third quarter and year-to-date periods ended September 28, 2018.
Third Quarter 2018 Financial Summary
-
Revenue of $26.3 million compared to $26.7 million in the year ago
period. - Gross margin of 24.5% compared to 26.9% in the year ago period.
-
Net income of $546,000, or $0.11 per diluted share, compared to
$851,000, or $0.17 per diluted share in the year ago period. -
Adjusted EBITDA (excluding stock-based compensation expense) of
$912,000 compared to $1.8 million in the year ago period. -
Repurchased approximately 164,000 shares of common stock at an
aggregate price of approximately $949,000, at an average price of
$5.80 per share.
Management Commentary
“Command Center delivered another solidly profitable quarter and
returned a record level of capital to shareholders in the form of
repurchased and retired shares,” said Rick Coleman, president and CEO of
Command Center. “In the third quarter we also continued our efforts to
stabilize and strengthen our staffing platform. This will remain our
focus into 2019 and includes comprehensive changes to our hiring,
training, compensation, and benefits practices necessary to support
future revenue growth and enhance profitability. While these efforts
contributed to some margin compression, tight labor markets continue to
present opportunities for staffing firms, and we’re positioning Command
Center to optimize our performance across the country and across all
verticals.”
“In conjunction with the low unemployment rate, we’re also experiencing
increased competition and higher wages for quality temporary workers in
some markets,” Mr. Coleman added. “This also contributes to higher
recruiting and on-boarding costs. We’re addressing these challenges, and
I’m encouraged by our progress in revitalizing the organization. We’ve
raised the bar for branch-level leadership, many of whom are new to the
company, and we’ve set clear expectations for their performance.”
“Given our historical trends and the present business environment, we
anticipate periodic revenue and gross profit fluctuations, but our
geographic and customer diversity, along with a tightly controlled
operating structure, are continuing to drive relatively consistent
profitability,” concluded Mr. Coleman. “Our solid balance sheet
positions us to pursue growth opportunities and capital deployment in
tandem, and during this rebuilding period, our Board of Directors is
actively evaluating a range of strategic alternatives to enhance
shareholder value.”
Third Quarter 2018 Financial Results
Revenue in the third quarter was $26.3 million, compared to $26.7
million in the year-ago quarter. This decrease of $394,000, or 1.5%,
relates in large part to higher than normal turnover in sales positions
within the last year due to increased competition in the labor market.
Gross margin in the third quarter of 2018 was 24.5%, compared to 26.9%
in the year-ago quarter. This decrease was the result of increases in
workers’ compensation cost and field team member wages and related
payroll taxes, which was partially offset by relative decreases in state
unemployment expense.
Selling, general and administrative (SG&A) expenses in the third quarter
were $5.6 million, compared to $5.5 million in the year-ago quarter.
This increase was primarily due to increased recruiting costs and
internal salaries and benefits, which was partially offset by decreases
in bad debt expense and lower legal and professional fees.
Third quarter operating income was $751,000, compared to $1.6 million in
the third quarter of 2017.
Net income in the third quarter of 2018 was $546,000, or $0.11 per
diluted share, compared to $851,000, or $0.17 per diluted share, in the
year-ago quarter.
Adjusted EBITDA in the third quarter was $912,000, compared to $1.8
million in the third quarter of 2017.
Year-to-date 2018 Financial Results
Revenue in the first nine months of 2018 was $73.0 million, compared to
$73.6 million in the year-ago period, a decrease of $603,000, or 0.8%.
Gross margin in the first nine months was 25.1%, compared to 26.4% in
the year-ago period.
Year-to-date SG&A expenses were $18.2 million, compared to $16.0 million
in the year-ago period. This increase is primarily due to $2.2 million
in non-recurring and non-operational items, including impairment of the
company’s workers’ compensation deposit in receivership of approximately
$1.5 million, non-recurring executive severance expenses of
approximately $565,000, and a one-time $100,000 expense related to the
settlement of the recent proxy contest. Other increases in SG&A include
higher stock-based compensation and payroll and payroll related taxes,
which were partially offset by decreased bad debt expense and a $198,000
refund of a workers’ compensation risk pool deposit in excess of what
was recorded.
Operating income in the first nine months of 2018 was $(141,000),
inclusive of the approximately $2.2 million in non-recurring expenses
mentioned above, compared to $3.1 million in the year-ago period.
Net loss in the first nine months of 2018 was $(108,000), or $(0.02) per
diluted share, compared to net income of $1.8 million, or $0.35 per
diluted share, in the year-ago period. Adjusted EBITDA in the first nine
months of 2018 was $2.6 million, compared to $3.6 million in the
year-ago period.
Balance Sheet and Capital Structure
Cash and cash equivalents at September 28, 2018, was $6.3 million,
compared to $7.8 million at December 29, 2017.
During the third quarter of 2018, the company purchased approximately
164,000 shares of common stock through its share repurchase program at
an aggregate price of approximately $949,000, resulting in an average
price of $5.80 per share. These shares were subsequently retired.
Approximately $3.0 million remains under the current repurchase program.
Effective December 7, 2017, the company implemented a 1-for-12 reverse
stock split. Approximately 60.6 million shares of common stock were
exchanged for approximately 5.1 million newly issued shares. All stock
prices, per share amounts, and number of shares in the consolidated
financial statements and related notes have been retroactively adjusted
to reflect the reverse stock split.
Conference Call
Command Center will hold a conference call tomorrow, Wednesday, November
7, at 10 a.m. Eastern time (8 a.m. Mountain time) to discuss its third
quarter 2018 results.
| Date: | Wednesday, November 7, 2018 | ||
| Time: | 10 a.m. Eastern time (8 a.m. Mountain time) | ||
| Toll-free dial-in number: | 1-877-705-6003 | ||
| International dial-in number: | 1-201-493-6725 | ||
| Conference ID: | 13683934 | ||
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
Hayden IR at ccni@haydenir.com.
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 p.m. Eastern
time on the same day and continuing through November 21, 2018.
| Toll-free replay number: | 1-844-512-2921 | ||
| International replay number: | 1-412-317-6671 | ||
| Replay ID: | 13683934 | ||
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 67 field offices in
22 states, the company provides employment annually for approximately
33,000 field team members working for over 3,200 clients. For more
information about Command Center, go to 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.
|
Command Center, Inc. Consolidated Balance Sheets |
||||||||
|
September 28, |
December 29, |
|||||||
| ASSETS | (unaudited) | |||||||
| Current assets | ||||||||
| Cash | $ | 6,258,315 | $ | 7,768,631 | ||||
| Restricted cash | 44,400 | 12,853 | ||||||
| Accounts receivable, net of allowance for doubtful accounts | 9,799,977 | 9,394,376 | ||||||
| Prepaid expenses, deposits and other assets | 415,535 | 740,280 | ||||||
| Prepaid workers’ compensation | 299,665 | 167,597 | ||||||
| Current portion of workers’ compensation deposits | – | 99,624 | ||||||
| Total current assets | 16,817,892 | 18,183,361 | ||||||
| Property and equipment, net | 383,375 | 372,145 | ||||||
| Deferred tax asset | 1,131,178 | 721,602 | ||||||
| Workers’ compensation risk pool deposit, less current portion | 178,084 | 201,563 | ||||||
| Workers’ compensation risk pool deposit in receivership, net | 260,000 | 1,800,000 | ||||||
| Goodwill and other intangible assets, net | 3,957,836 | 4,085,576 | ||||||
| Total assets | $ | 22,728,365 | $ | 25,364,247 | ||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 490,823 | $ | 563,402 | ||||
| Account purchase agreement facility | 211,570 | 853,562 | ||||||
| Other current liabilities | 562,309 | 898,809 | ||||||
| Accrued wages and benefits | 1,566,522 | 1,503,688 | ||||||
| Current portion of workers’ compensation claims liability | 1,013,238 | 1,031,500 | ||||||
| Total current liabilities | 3,844,462 | 4,850,961 | ||||||
| Workers’ compensation claims liability, less current portion | 1,001,208 | 917,497 | ||||||
| Total liabilities | 4,845,670 | 5,768,458 | ||||||
| Commitments and contingencies (Note 9) | ||||||||
| Stockholders’ equity | ||||||||
|
Preferred stock – $0.001 par value, 416,666 shares authorized; none issued |
– | – | ||||||
|
Common stock – $0.001 par value, 8,333,333 shares authorized; 4,714,924 and 4,993,672 shares issued and outstanding, respectively |
4,715 | 4,994 | ||||||
| Additional paid-in capital | 54,610,425 | 56,211,837 | ||||||
| Accumulated deficit | (36,732,445) | (36,621,042) | ||||||
| Total stockholders’ equity | 17,882,695 | 19,595,789 | ||||||
| Total liabilities and stockholders’ equity | $ | 22,728,365 | $ | 25,364,247 | ||||
|
Command Center, Inc. Consolidated Statements of Operations (unaudited) |
||||||||||||||||
| Thirteen weeks ended | Thirty-nine weeks ended | |||||||||||||||
|
September 28, |
September 29, |
September 28, |
September 29, |
|||||||||||||
| Revenue | $ | 26,309,035 | $ | 26,703,266 | $ | 72,952,418 | $ | 73,555,175 | ||||||||
| Cost of staffing services | 19,855,146 | 19,513,757 | 54,627,143 | 54,134,575 | ||||||||||||
| Gross profit | 6,453,889 | 7,189,509 | 18,325,275 | 19,420,600 | ||||||||||||
| Selling, general and administrative expenses | 5,630,260 | 5,483,857 | 18,212,788 | 15,991,976 | ||||||||||||
| Depreciation and amortization | 72,548 | 96,368 | 253,065 | 288,195 | ||||||||||||
| Income (loss) from operations | 751,081 | 1,609,284 | (140,578) | 3,140,429 | ||||||||||||
| Interest (income) expense and other financing expense | (553) | 6,263 | 1,876 | 7,492 | ||||||||||||
| Net income (loss) before income taxes | 751,634 | 1,603,021 | (142,454) | 3,132,937 | ||||||||||||
| Provision (benefit) for income taxes | 205,284 | 752,223 | (34,362) | 1,364,791 | ||||||||||||
| Net income (loss) | $ | 546,350 | $ | 850,798 | $ | (108,092) | $ | 1,768,146 | ||||||||
| Earnings (loss) per share: | ||||||||||||||||
| Basic | $ | 0.11 | $ | 0.17 | $ | (0.02) | $ | 0.35 | ||||||||
| Diluted | $ | 0.11 | $ | 0.17 | $ | (0.02) | $ | 0.35 | ||||||||
| Weighted average shares outstanding: | ||||||||||||||||
| Basic | 4,808,698 | 5,051,960 | 4,905,367 | 5,051,745 | ||||||||||||
| Diluted | 4,812,908 | 5,108,104 | 4,905,367 | 5,108,539 | ||||||||||||
The following tables present a reconciliation of net income (loss) to
EBITDA and Adjusted EBITDA for the periods presented (in thousands):
| Thirteen weeks ended | Thirty-nine weeks ended | |||||||||||||||
|
September 28, |
September 29, |
September 28, |
September 29, |
|||||||||||||
| Net income (loss) | $ | 546 | $ | 851 | $ | (108) | $ | 1,768 | ||||||||
| Interest (income) expense | (0) | 6 | 1 | 7 | ||||||||||||
| Provision for income taxes | 205 | 752 | (34) | 1,365 | ||||||||||||
| Depreciation and amortization | 73 | 96 | 253 | 288 | ||||||||||||
| EBITDA | 824 | 1,705 | 112 | 3,428 | ||||||||||||
| Non-cash compensation | 88 | 104 | 307 | 122 | ||||||||||||
| Reserve for workers’ compensation deposit | – | – | 1,540 | – | ||||||||||||
| Other non-recurring expense | – | – | 665 | – | ||||||||||||
| Adjusted EBITDA | $ | 912 | $ | 1,809 | $ | 2,624 | $ | 3,550 | ||||||||
Contacts
Command Center, Inc.
Company Contact:
Cory
Smith, CFO
866-464-5844
cory.smith@commandonline.com
or
Investor
Relations Contact:
Hayden IR
Brett Maas
646-536-7331
brett@haydenir.com