Net Income of $546,000; Adjusted EBITDA of
$912,000
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 28,2018
December 29,2017
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 28,2018
September 29,2017
September 28,2018
September 29,2017
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 28,2018
September 29,2017
September 28,2018
September 29,2017
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
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version on businesswire.com: https://www.businesswire.com/news/home/20181106005893/en/
Command Center, Inc.Company
Contact:Cory Smith,
CFO866-464-5844cory.smith@commandonline.comorInvestor Relations Contact:Hayden
IRBrett Maas646-536-7331brett@haydenir.com
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