Market Overview

Command Center Reports Second Quarter Financial Results

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Net Income of $563,000; Adjusted EBITDA of $1.3 Million

Command Center, Inc. (NASDAQ:CCNI), a national provider of
on-demand and temporary staffing solutions, today reported financial
results for the second quarter and year-to-date periods ended June 29,
2018.

Second Quarter 2018 Financial Summary

  • Revenue of $24.2 million compared to $24.5 million in the year ago
    period.
  • Gross margin of 26.0% compared to 26.5% in the year ago period.
  • Net income of $563,000, or $0.11 per diluted share, compared to
    $735,000, or $0.14 per diluted share in the year ago period.
  • Adjusted EBITDA (which excludes certain non-recurring expenses) of
    $1.3 million in the second quarters of both 2018 and 2017.
  • Repurchased approximately 104,000 shares of common stock at an
    aggregate price of approximately $590,000, at an average price of
    $5.69 per share.

Management Commentary

"During the second quarter we began to identify and implement
operational improvements to increase profitability and facilitate
revenue growth," said Rick Coleman, president and CEO of Command Center.
"Our efforts, which began in late May, include strengthening our field
management team, clarifying reporting structures, and adjusting bonus
parameters for positions having a direct impact on both the company's
revenue and bottom line. Although our operating results will continue to
fluctuate by location, industry, and period, Command Center continues to
operate profitably and generate cash. We believe the steps we've taken,
combined with other planned measures, will enhance our service delivery
capability and allow us to generate even stronger long-term results."

Coleman continued, "Our balance sheet remains strong and debt-free with
more than $5.8 million in cash. Excluding non-recurring and
non-operational items, over the last 12 months we generated
approximately $4.6 million in Adjusted EBITDA. This consistent
performance, combined with the health of our balance sheet and the
minimal capital investment needed to operate our business, enables us to
return capital to our shareholders through our share repurchase program.
During the second quarter of 2018, we purchased and retired
approximately 104,000 shares of our common stock, leaving approximately
$3.9 million available under the repurchase program."

Second Quarter 2018 Financial Results

Revenue in the second quarter of 2018 was $24.2 million, compared to
$24.5 million in the year-ago quarter. This modest decrease of $328,000,
or 1.3%, is due to higher than normal turnover in sales positions as a
result of increased competition in the job market related to low
unemployment rates.

Gross margin in the second quarter of 2018 was 26.0%, compared to 26.5%
in the year-ago quarter. The slight decline was the result of increases
in workers' compensation costs and field team member wages and related
payroll taxes, which were partially offset by relative decreases in
state unemployment expense, per diem, and transportation costs.

Selling, general and administrative (SG&A) expenses in the second
quarter of 2018 were $5.4 million, compared to $5.2 million in the
year-ago quarter. The increase was primarily due to increased internal
salaries and benefits and increased stock-based compensation, which were
partially offset by decreased contract labor costs at the corporate
office and a refund of the company's workers' compensation risk pool
deposit with its former insurer in excess of what was recorded. Also
included in SG&A in the second quarter of 2018 are one-time expenses of
$100,000 related to settlement of the company's recent proxy contest and
$95,000 of severance expense.

Operating income in the second quarter of 2018, including the $100,000
proxy contest expense and $95,000 of severance expense, was $820,000,
compared to $1.2 million in the second quarter of 2017.

Net income in the second quarter of 2018, including the $100,000 proxy
contest expense and $95,000 severance expense, was $563,000, or $0.11
per diluted share, compared to $735,000, or $0.14 per diluted share, in
the year-ago quarter.

Adjusted EBITDA in the second quarter of 2018 was $1.3 million,
unchanged from the year-ago quarter.

Year-to-date 2018 Financial Results

Revenue in the first six months of 2018 was $46.6 million, compared to
$46.9 million in the year-ago period, a decrease of $209,000, or 0.4%.
Gross margin in the first six months of 2018 was 25.5%, compared to
26.1% in the year-ago period. SG&A expenses in the first six months of
2018 were $12.6 million, compared to $10.5 million in the year-ago
period. This increase is primarily due to $2.2 million in non-recurring
and non-operational items, including a write down of the company's risk
pool deposit, severance related to former employees, and costs related
to settlement of the company's recent proxy contest.

Operating loss in the first six months of 2018 was $892,000, inclusive
of the approximately $2.2 million in non-recurring expenses mentioned
above, compared to operating income of $1.5 million in the year-ago
period. Net loss in the first six months of 2018 was $654,000, or
$(0.13) per diluted share, compared to net income of $917,000, or $0.18
per diluted share, in the year-ago period. Adjusted EBITDA in the first
six months of 2018 was $1.7 million, unchanged from the prior-year
period.

Balance Sheet and Capital Structure

Cash and cash equivalents at June 29, 2018, was $5.8 million, compared
to $7.8 million at December 29, 2017.

During the second quarter of 2018, the company purchased approximately
104,000 shares of common stock through its share repurchase program at
an aggregate price of approximately $590,000, resulting in an average
price of $5.69 per share. These shares were subsequently retired. There
is approximately $3.9 million remaining under the 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, Tuesday, August 14,
at 10 a.m. Eastern time (8 a.m. Mountain time) to discuss its second
quarter 2018 results.

Date:     Tuesday, August 14, 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: 13682139

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 continue through August 28, 2018.

Toll-free replay number:     1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 13682139

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
 
June 29, 2018 December 29, 2017
ASSETS (unaudited)
Current assets
Cash $ 5,759,456 $ 7,768,631
Restricted cash 57,868 12,853
Accounts receivable, net of allowance for doubtful accounts 9,450,198 9,394,376
Prepaid expenses, deposits and other assets 739,692 740,280
Prepaid workers' compensation 481,465 167,597
Other receivables 239,852 -
Current portion of workers' compensation deposits   -     99,624  
Total current assets 16,728,531 18,183,361
Property and equipment, net 363,467 372,145
Deferred tax asset 1,111,571 721,602
Workers' compensation risk pool deposit, less current portion 201,563 201,563
Workers' compensation risk pool deposit in receivership, net 260,000 1,800,000
Goodwill and other intangible assets, net   3,984,773     4,085,576  
Total assets $ 22,649,905   $ 25,364,247  
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 290,396 $ 563,402
Account purchase agreement facility - 853,562
Other current liabilities 533,310 898,809
Accrued wages and benefits 1,629,525 1,503,688
Current portion of workers' compensation claims liability   998,419     1,031,500  
Total current liabilities 3,451,650 4,850,961
Workers' compensation claims liability, less current portion   1,001,208     917,497  
Total liabilities   4,452,858     5,768,458  
Commitments and contingencies
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;
4,878,592 and 4,993,672 shares issued and outstanding, respectively
4,878 4,994
Additional paid-in capital 55,470,964 56,211,837
Accumulated deficit   (37,278,795 )   (36,621,042 )
Total stockholders' equity   18,197,047     19,595,789  
Total liabilities and stockholders' equity $ 22,649,905   $ 25,364,247  
 
     
Command Center, Inc.
Consolidated Statements of Income
(unaudited)
 
Thirteen weeks ended Twenty-six weeks ended
June 29, 2018     June 30, 2017 June 29, 2018     June 30, 2017
Revenue $ 24,175,985 $ 24,503,660 $ 46,643,383 $ 46,851,909
Cost of staffing services   17,898,665   18,010,803   34,771,996     34,620,818
Gross profit 6,277,320 6,492,857 11,871,387 12,231,091
Selling, general and administrative expenses 5,368,908 5,164,512 12,582,528 10,508,119
Depreciation and amortization   87,926   96,277   180,517     191,827
Income (loss) from operations 820,486 1,232,068 (891,658 ) 1,531,145
Interest expense and other financing expense   267   1,225   2,430     1,229
Net income (loss) before income taxes 820,219 1,230,843 (894,088 ) 1,529,916
Provision (benefit) for income taxes   256,972   495,947   (239,646 )   612,568
Net income (loss) $ 563,247 $ 734,896 $ (654,442 ) $ 917,348
 
Earnings (loss) per share:
Basic $ 0.11 $ 0.15 $ (0.13 ) $ 0.18
Diluted $ 0.11 $ 0.14 $ (0.13 ) $ 0.18
 
Weighted average shares outstanding:
Basic 4,924,245 5,025,676 4,953,701 5,025,532
Diluted 4,931,201 5,079,969 4,953,701 5,083,434
 

The following tables present a reconciliation of net income (loss) to
EBITDA and Adjusted EBITDA for the periods presented (in thousands):

     
Thirteen weeks ended Twenty-six weeks ended
June 29, 2018     June 30, 2017 June 29, 2018     June 30, 2017
Net income (loss) $ 563 $ 735 $ (654 ) $ 917
Interest expense - 1 2 1
Provision for income taxes 257 496 (240 ) 613
Depreciation and amortization   88   96   181     192
EBITDA 908 1,328 (711 ) 1,723
Non-cash compensation 192 8 218 18
Reserve for workers' compensation deposit - - 1,540 -
Proxy settlement 100 - 100 -
Executive severance   95   -   565     -
Adjusted EBITDA $ 1,295 $ 1,336 $ 1,712   $ 1,741
 

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