Command Center, Inc. (Nasdaq: CCNI), a national provider of
on-demand and temporary staffing solutions, announced that Richard
K. Coleman, Jr., the Company’s President and Chief Executive
Officer, has published a letter to shareholders.
The text of the letter is below:
Dear Shareholders,
June 29th marked the completion of my first full quarter as
Command Center CEO. During this period, my priority was to evaluate
our organization, determine strengths and opportunities, and ensure
we are focused on our highest priorities. As part of this
initiative, I had the opportunity to visit with many of our
managers, branch staff, and Field Team Members. I can say with
conviction that every member of our organization is committed to
hard work and success, and that our people exhibit tremendous
optimism about Command Center’s future potential.
Our Business
Our business is relatively easy to understand; Command Center
finds jobs for people and people for jobs. We’ve been doing this
since 2006, and we believe we do it better than anyone else. We
serve our Customers through 67 branch offices across 22 states, and
our staff of Field Team Members numbers greater than 33,000. Our
operating model is branch-centric, meaning our headquarters serves
as the support hub for the rest of the organization. Due to our
scale, we have been able to centralize a number of functions that
might otherwise distract our local branches from accomplishing
their primary Customer-focused mission. Centralized support also
means our branch staff have more time to do what fulfills
them—staying close to Customers and Field Team Members. In short,
our operating model provides economic and service quality benefits
without sacrificing the “local touch” that allows our branch staff
to relate to Customers and Field Team Members on a personal
level.
Our Customers and Field Team Members are the core of our
business and the rest of us, including me, are here to serve their
needs. Our most prosperous branches are those that have truly
developed a mission-centric mindset integrating the tenets of our
three Keys to Success:
1. Sell Good Accounts2. Increase Gross
Margins3. Service With Excellence
One of the most striking qualities I witnessed from our branch
staff was their sense of mission—they want to do more than simply
place somebody in a job. They want to make a lasting impact in the
lives of the Field Team Members we hire—some of whom depend on our
employment opportunities from week to week, or even day to day.
It’s not always an easy job, but our branch staff deliver on this
mission day in and day out. In short, they take pride in their
work. When they do their jobs well, the results are reflected in
our bottom line.
Since our inception, Command Center has provided cost effective
solutions for our Customers by meeting their most basic needs to
fill cyclical or temporary jobs and ensuring compliance with
increasingly burdensome federal, state, and local regulations. We
have developed lasting relationships with our Customers, and many
continue to contribute to our growth in multiple branches. Command
Center operates in some of the fastest growing parts of the country
and benefits from both geographic and industrial diversity. In our
second quarter ended June 29th, we generated revenue from the
following light industrial sectors:
Sector
% of Revenue
• Industrial, manufacturing and warehousing
38% • Hospitality 17% • Construction 18% • Transportation
17% • Retail and other 10%
By diversifying the sectors in which we place workers, we are
less susceptible to regional, seasonal, or industry downturns.
Although quarterly revenue often varies, our operating model has
historically been both profitable and resilient. Consequently, we
enjoy strong Customer relationships and our repeat business is
high.
Command Center’s size affords it many strategic advantages over
smaller competitors. For one, local “mom and pop” staffing
companies do not have sufficient scale to achieve favorable rates
on workers compensation insurance, support the infrastructure
necessary to win or manage national accounts, or provide world
class customer support. Our ability to consistently overcome these
challenges supports our industry leading gross margins. We simply
deliver more value to our customers than our competitors. It is
important to understand that value is not entirely driven by price.
We focus on providing the highest quality service offering and on
doing so reliably. Our experience has shown that Customers will pay
more for quality. As we execute on our strategic plan, we will
continue to leverage our scale to expand product and service
offerings while striving to improve profitability.
Labor Commander, our proprietary software platform, is the
backbone of our operations and integrates many of our critical
activities, including Customer management, job ticketing, billing,
and payments. Our branch staff depend on Labor Commander to
facilitate and simplify their daily tasks, and our operating
standards are hard coded to ensure adherence to our internal
financial, operating, and risk management controls, as well as
local, state and federal employment-related laws and
regulations.
Capital Deployment
Command Center has a strong financial foundation. We ended our
first quarter with $6.7 million in cash on the balance sheet, no
financial debt, and a solid operational platform that continues to
generate cash. We expect our revenue to grow over time, but our
primary objective is to improve earnings per share. We have
routinely considered selected acquisition opportunities and will
continue to do so as they are presented. However, acquisitions are
not the focus of our current capital deployment strategy. In
addition to the risk of integration failure, many potential
acquisition targets are routinely underperforming our financial
expectations. We believe our short-term focus is better directed at
improving current operations, profitability, and branch office
efficiency. We believe there is tremendous operating leverage in
our business, and we intend to consistently unlock it.
Our management team and board take a systematic approach to
capital allocation, and we strive to invest capital where it will
provide the best long-term risk adjusted return. As a publicly
traded company, we have the benefit of seeing how the market values
our Company every single day. Sometimes, the best return on capital
is to buy back our own shares at a discount to what we believe is
the intrinsic value of the Company. We believe that is the current
situation, and to that end, your Board of Directors authorized a $5
million share buyback program in September 2017. As of March 30,
2018, we have purchased approximately 604,000 shares of our common
stock in the open market at an average price of $5.64 per share,
leaving approximately $4.5 million available for buyback under our
current plan.
Business Risks
Part of our value proposition to Customers is bearing Employee
associated risks. This means that if a Field Team Member is injured
while working for a Command Center Customer, the liability falls on
us. We mitigate this risk through a number of internal controls, by
being selective about where we deploy our Field Team Members, and
by avoiding high-risk activity. For example, we prohibit working at
heights greater than three feet because data shows the risk of
serious injury increases significantly beyond this threshold. We
also routinely provide safety training, require the use of
appropriate safety equipment, and periodically inspect worksites to
ensure compliance.
Given our scale we effectively self-insure our workers’
compensation costs. However, we also maintain a surplus
high-deductible policy with a national AAA rated carrier in case of
a catastrophic accident. To date we have never had to tap that
resource. Every year our Employees suffer accidents, some minor
like a sprained ankle, some more serious, but our risk management
operations are robust and have historically served us well.
Near-Term Operational Focus
Going forward, Command Center is poised to execute operational
improvements designed to increase profitability and facilitate
revenue growth. This effort began in late May 2018 with the
introduction of a new organizational structure designed to provide
regional Field Services Managers the opportunity to focus on a
smaller number of branch offices. The realignment increased
regional accountability and was accomplished at no cost through the
redeployment of our existing leadership team. The new structure
allows us to more quickly identify and respond to operational
improvement opportunities. Additional benefits include shorter
Customer response times, more effective local training, and better
Employee retention. We also improved our branch bonus structure,
providing all of our branch staff a realistic opportunity to
benefit financially from Command Center’s growth and profitability.
We are also revising our recruiting strategy to ensure we more
carefully identify prospective branch personnel who not only have
the necessary job skills but also align with our culture.
Shareholder Alignment
Command Center’s Board of Directors and management team are
committed to increasing shareholder value. With almost 10 percent
of our outstanding shares beneficially held by insiders, we are
aligned with the long-term interests of common stockholders. In
order to formalize the process of evaluating strategic
alternatives, last year we established a strategic advisory
committee of the Board of Directors, comprised solely of
independent directors. We have also engaged the services of an
investment banking firm to advise the company as we seek to unlock
additional shareholder value. There is no pre-determined outcome,
and there is no guarantee we will execute on any strategic
alternative. Our Board of Directors and management team take a
long-term view of the business and will continue to pursue
operational improvements while driving financial performance.
In closing, I would like to express my appreciation to our 227
dedicated Employees and more than 33,000 Field Team Members who are
committed to delivering the best staffing product in the industry.
I would also like to thank you, our shareholders, for your
continued support. On behalf of the Board of Directors, I thank you
for the trust you have placed in us. As Command Center’s chief
executive, you have my steadfast commitment to our goal of
increasing shareholder value.
Sincerely,
Richard K. Coleman, Jr.President and Chief Executive Officer
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.
© 2018 Command Center, Inc. All Rights Reserved. The
Command Center logo, along with the words and phrases Command
Center, Command and Real Jobs for Real People are registered
trademarks of Command Center, Inc.
Important Cautions Regarding Forward-Looking
Statements
This news release and the letter contain 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.
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version on businesswire.com: https://www.businesswire.com/news/home/20180716005900/en/
Investor RelationsHayden IRRob Fink,
646-536-7331ccni@haydenir.com
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