Command Center, Inc. (OTCQB: CCNI), a national provider of on-demand and temporary staffing solutions, reported financial results for the first quarter ended March 25, 2016.

First Quarter 2016 Financial Overview vs. Year-Ago Quarter

  • Revenue increased to $19.1 million compared to $19.0 million
  • Revenue excluding branches in North Dakota increased 10%
  • Gross margin was 24.7% compared to 28.3%
  • Operating loss was $(0.5) million compared to operating income of $0.2 million
  • Net loss was $(0.5) million or $(0.01) per diluted share compared to net income of $0.1 million or $0.00 per diluted share
  • EBITDA was $(0.3) million compared to $0.4 million
  • Adjusted EBITDA was $(0.1) million compared to $0.4 million
  • Repurchased 502,837 shares of the company’s common stock at an average price of $0.44 per share

First Quarter 2016 Financial Results

Revenue in the first quarter increased to $19.1 million, compared to $19.0 million in the year-ago quarter. Revenue from branches outside North Dakota increased 10%, offsetting a 43% decline in revenue from the company’s branches in North Dakota, which is a state economically dependent on the health of the oil industry.

Gross margin in the first quarter was 24.7%, compared to 28.3% in the year-ago quarter. During the first quarter of 2015, the company recognized an approximate $400,000 benefit (or approximately 230 basis points) due to an actuarial adjustment associated with the prior year’s workers’ compensation liability. Excluding this benefit, gross margin in the first quarter of 2015 would have been approximately 26.0%. The 130 basis point remaining year-over-year decline was primarily due to the reduction in higher margin revenue from North Dakota, as well as a higher mix of business that did not meet the company’s gross margin target.

Operating loss in the first quarter was $(0.5) million, compared to operating income of $0.2 million in the year-ago quarter. The decrease was due to the reported lower gross margin. Selling, general and administrative expenses in the first quarter of 2016 were $5.2 million, compared to $5.1 million in the year-ago quarter. The slight increase was due to a $250,000 reserve on workers’ compensation collateral deposits.

EBITDA (a non-GAAP term defined below) in the first quarter was $(0.3) million, compared to $0.4 million in the year-ago quarter.

Adjusted EBITDA (a non-GAAP term defined below) in the first quarter was $(0.1) million, compared to $0.4 million in the year-ago quarter.

Net loss in the first quarter was $(0.5) million or $(0.01) per diluted share, compared to net income of $0.1 million or $0.00 per diluted share in the year-ago quarter.

Cash at March 25, 2016 was $5.1 million, compared to $7.7 million at December 25, 2015. During the first quarter, the company repurchased approximately 502,837 shares of its common stock for a total cost of $220,000, or an average price of $0.44 per share. There is approximately $3.4 million remaining under the $5 million plan. During the first quarter of 2016, the company fully paid down its accounts receivable credit facility and is debt free.

In the first quarter of 2016, the company opened three branch locations, ending the quarter with 59 stores operating in 20 states.

Management Commentary

“Sales in our branches excluding North Dakota remained strong in the first quarter, increasing 10%, which underscores the health of the majority of our locations,” said Command Center’s president and CEO, Bubba Sandford. “Excluding the beneficial actuarial adjustment in our first quarter last year, gross margin was down on a year-over-year basis due to the expected reduction in higher margin revenue from North Dakota, as well as a higher mix of lower margin business that did not meet our company’s standards. We have taken swift and proactive measures to correct this mix shift, as margin expansion is one of our three ‘Keys to Success.’

“We continued to use a portion of our cash flow to grow organically, opening three new locations in Dallas, Phoenix and Nashville where we are able to leverage our existing customer bases and infrastructure. We also remained aggressive in our share repurchase program, acquiring over 500,000 shares at an average price of $0.44 per share. Should the market present further opportunities, we are prepared to continue repurchasing our own stock.

“As we move through 2016, we expect North Dakota will represent a smaller portion of our overall revenue and the year-over-year comparisons are expected to ease. We will also look to diversify the clients and industries we service, which we believe will reduce the potential negative impact of an economic downturn in any one industry or region. Our strong balance sheet provides us the ability to deploy cash in a manner that is opportunistic and maximizes shareholder value by increasing same-store revenue and margins, opening new stores, repurchasing the company’s stock and identifying quality acquisition targets.”

Conference Call

The Company will hold a conference call tomorrow (Tuesday) at 11:00 a.m. Eastern time to discuss its first quarter 2016 results.

Date: Tuesday, May 10, 2016
Time: 11:00 a.m. Eastern time (9:00 a.m. Mountain time)
Toll-free dial-in number: 1-800-259-2693
International dial-in number: 1-913-312-6667
Conference ID: 9861349

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 at http://public.viavid.com/index.php?id=119569 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 2:00 p.m. Eastern time on the same day through May 24, 2016.

Toll-free replay number: 1-877-870-5176
International replay number: 1-858-384-5517
Replay ID: 9861349

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 59 field offices, the company provides employment annually for nearly 33,000 field team members working for 3,300 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, the severity and duration of the general economic downturn, 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 the Form 10-K filed with the Securities and Exchange Commission on March 24, 2016, and in other statements filed from time to time with the Securities and Exchange Commission. 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 non-GAAP terms EBITDA and Adjusted EBITDA. EBITDA is defined as earnings before interest, taxes, depreciation and amortization and non-cash compensation. Adjusted EBITDA is defined as earnings before interest, taxes, depreciation and amortization, non-cash compensation and specifically identified one-time expenses. The company uses EBITDA and Adjusted EBITDA as financial measures since management believes investors find these to be useful tools to perform more meaningful comparisons of past, present and future operating results, and as a complement 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 as well as per basic share information (in thousands except per share data):

  Thirteen Weeks Ended
March 25, 2016   March 27, 2015
EBITDA $ (323 ) $ 396
Interest expense and other financing expense (40 ) (41 )
Depreciation and amortization (39 ) (43 )
Provision for income taxes (4 ) (67 )
Non-cash compensation   (132 )   (163 )
Net income (loss) $ (538 ) $ 82  
 
Thirteen Weeks Ended
March 25, 2016   March 27, 2015
Adjusted EBITDA (74 ) 396
Adjustments:
Non-cash compensation (132 ) (163 )
Non-cash taxes (4 ) (67 )
Depreciation and amortization (39 ) (43 )
Interest expense and other financing expense (40 ) (41 )
Reserve for workers compensation deposit   (250 )  
Net Adjustments:   (465 )   (314 )
Net (Loss) Income (GAAP measure) $ (538 ) $ 82  
 
Command Center, Inc.
Consolidated Condensed Balance Sheets
   
March 25, 2016 December 25, 2015
ASSETS (unaudited)
Current Assets
Cash $ 5,091,674 $ 7,629,424
Restricted cash 30,456 -
Accounts receivable, net of allowance for doubtful accounts 9,281,188 8,917,933
Prepaid expenses, deposits and other 332,830 292,352
Prepaid workers' compensation 417,964 756,005
Other receivables 60,000 -
Current portion of deferred tax asset 878,085 878,085
Current portion of workers' compensation deposits 407,435 398,319
Total Current Assets 16,499,632 18,872,118
Property and equipment - net 371,876 408,657
Deferred tax asset, less current portion 2,083,851 2,083,851
Workers' compensation risk pool deposit, less current portion 2,006,814 2,256,814
Goodwill 2,500,000 2,500,000
Total Assets $ 23,462,173 $ 26,121,439
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 248,450 $ 304,009
Checks issued and payable 206,764 487,087
Account purchase agreement facility - 479,616
Other current liabilities 223,034 323,222
Accrued wages and benefits 1,003,556 1,452,558
Current portion of workers' compensation premiums and claims liability 853,513 1,201,703
Total Current Liabilities 2,535,317 4,248,196
Long-Term Liabilities
Workers' compensation claims liability, less current portion 1,912,705 2,231,735
Total Liabilities 4,448,022 6,479,931
Commitments and contingencies - -
Stockholders' Equity
Preferred stock - $0.001 par value, 5,000,000 shares authorized; none issued - -
Common stock - 100,000,000 shares, $0.001 par value, authorized;
63,213,451 and 64,305,288 shares issued and outstanding, respectively 63,213 64,305
Additional paid-in capital 57,664,795 57,752,301
Accumulated deficit (38,713,857) (38,175,098)
Total Stockholders' Equity 19,014,151 19,641,508

Total Liabilities and Stockholders' Equity

$ 23,462,173 $ 26,121,439
 
Command Center, Inc.
Consolidated Condensed Statements of Income
(unaudited)
   
Thirteen Weeks Ended
March 25, 2016 March 27, 2015
Revenue $ 19,066,524 $ 18,978,825
Cost of staffing services   14,349,976     13,610,288  
Gross profit 4,716,548 5,368,547
Selling, general and administrative expenses 5,171,825 5,136,066
Depreciation and amortization   39,334     42,992  
(Loss) income from operations (494,611 ) 189,479
Interest expense and other financing expense   (40,381 )   (41,250 )
Net (loss) income before income taxes (534,992 ) 148,229
Provision for income taxes   (3,769 )   (66,691 )
Net (loss) income $ (538,761 ) $ 81,538  
 
Earnings per share:
Basic $ (0.01 ) $ 0.00  
Diluted $ (0.01 ) $ 0.00  
 
Weighted average shares outstanding:
Basic 63,398,575 65,746,275
Diluted 63,398,575 67,005,044


Contacts

Liolios
Cody Slach, 949-574-3860
CCNI@liolios.com