Command Center, Inc. (OTCQB:CCNI), a national provider of on-demand and temporary staffing solutions, reported financial results for the third quarter ended September 23, 2016.

Third Quarter 2016 Financial Overview vs. Year-Ago Quarter (where applicable)

  • Revenue up 6.4% to $26.4 million compared to $24.9 million
  • Gross margin was 25.9% compared to 26.1%
  • Net income was $0.8 million or $0.01 per share compared to $0.8 million or $0.01 per share
  • EBITDA was $1.2 million compared to $1.6 million
  • Adjusted EBITDA was $1.1 million compared to $1.8 million
  • Repurchased approximately 1.2 million shares of the company’s common stock at an average price of $0.40 per share

Third Quarter 2016 Financial Results

Revenue in the third quarter increased 6.4% to $26.4 million, compared to $24.9 million in the year-ago quarter. Increase in revenue for the quarter was due to increased revenue from branches outside North Dakota and from the operations of the Hancock Staffing offices purchased in June. The company’s stores outside of North Dakota produced increased revenue of 14.9% over the third quarter of 2015. Conversely, sales in North Dakota declined 30.9% over the same period last year. Revenue from the company’s branches excluding North Dakota and the Hancock Staffing offices was approximately $21.2 million, an increase of $1.0 million or 4.8% from the third quarter of 2015.

Gross margin in the third quarter was 25.9% compared to 26.1% in the year-ago quarter. The 20 basis point decline was largely due to a mix of business in some branches that included lower margin revenue. Compared to the second quarter of 2016, gross margin for the third quarter was up 70 basis points from 25.2%.

Net income in the third quarter was $0.8 million or $0.01 per diluted share, compared to net income of $0.8 million or $0.01 per diluted share in the year-ago quarter. A 10.8% increase in selling, general and administrative expenses was due to increases in payroll tax and workers’ compensation expenses, as well as bad debt expense for aged invoices related to specific customers. A portion of these increased costs are short-term in nature, and the company anticipates cost-cutting measures made earlier this year will result in decreased costs moving forward.

EBITDA (a non-GAAP term defined below) in the third quarter was $1.2 million compared to $1.6 million in the year-ago quarter. Adjusted EBITDA (a non-GAAP term defined below) in the third quarter was $1.1 million compared to $1.8 million in the year-ago quarter.

Cash and restricted cash at September 23, 2016 was $0.6 million compared to $7.6 million at December 25, 2015. During the third quarter, the company repurchased 1,238,919 shares of its common stock for a total cost of approximately $500,000, or an average price of $0.40 per share. There is approximately $2.2 million remaining under the $5 million plan. Also contributing to the reduced cash position was an increased amount of outstanding accounts receivable, which was due, in part, to increased revenue for the period, as well as the acquisition of Hancock Staffing in June for approximately $2.0 million.

Command Center ended the quarter with 61 stores operating in 21 states.

Management Commentary

“Earlier in the year we set out to redirect the negative trends we observed in the first quarter, and we have largely accomplished that by again increasing revenue and gross margins and removing unnecessary costs,” said Command Center’s president and CEO, Bubba Sandford. “We still have work to do, but we feel positive about where we are as a company and where we are headed.

“We continue to see a decline in revenue from our North Dakota offices, but as we have said all along, those branches remain profitable and margins remain relatively high. While revenue from North Dakota was down over 30 percent for the quarter, we increased revenue from stores outside of North Dakota by nearly 15 percent year over year.

“The addition of the Hancock Staffing offices and the people in those offices continues to produce nicely for the company. That purchase was a good use of our cash, and we continue to look for the best use of resources in the future, including opening new stores, repurchasing our stock and identifying other quality acquisition opportunities.

“We hope to continue to see improvements across the company. As is always the concern, finding good people to help us grow profitably and who can manage the autonomy we provide is difficult. That being said, the addition of Colette Pieper as CFO was certainly a positive development in the third quarter, and we are happy to have her on the team.”

Conference Call

Command Center will hold a conference call tomorrow, November 15, at 10:00 a.m. Eastern time (8:00 a.m. Mountain time) to discuss its third quarter 2016 results.

Date: Tuesday, November 15, 2016
Time: 10:00 a.m. Eastern time (8:00 a.m. Mountain time)
Toll-free dial-in number: 1-888-599-8693
International dial-in number: 1-913-312-1430
Conference ID: 2199581

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=121987 and via the investor relations section of Command Center’s website at www.commandonline.com.

Replay of the conference call will be available after 1:00 p.m. Eastern time on the same day and continuing through November 29, 2016.

Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 2199581

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 61 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 (in thousands):

         
Thirteen Weeks Ended Thirty-Nine Weeks Ended
September 23, 2016 September 25, 2015 September 23, 2016     September 25, 2015
EBITDA $ 1,182 $ 1,595 $ 1,428 $ 3,061
Interest expense and other financing expense (1 ) (36 ) (78 ) (149 )
Depreciation and amortization (110 ) (43 ) (211 ) (129 )
Provision for income taxes (282 ) (533 ) (365 ) (931 )
Non-cash compensation   50     (163 )   (196 )   (420 )
Net income (loss) $ 838   $ 820   $ 578   $ 1,432  
 
         
Thirteen Weeks Ended Thirty-Nine Weeks Ended
September 23, 2016 September 25, 2015 September 23, 2016     September 25, 2015
Adjusted EBITDA $ 1,134 $ 1,770 $ 1,630 $ 3,486
Adjustments
Non-cash compensation 50 (163 ) (196 ) (420 )
Non-cash taxes (234 ) (533 ) (317 ) (931 )
Depreciation and amortization (110 ) (43 ) (211 ) (129 )
Interest expense and other financing expense (1 ) (36 ) (78 ) (149 )
Reserve for workers compensation deposit (250 ) (250 )
Reserve for note receivable     (175 )     (175 )
Net Adjustments:   (296 )   (950 )   (1,052 )   (2,054 )
Net income (loss) (GAAP measure) $ 838   $ 820   $ 578   $ 1,432  
 
     
Command Center, Inc.
Consolidated Condensed Balance Sheets
 
September 23, 2016 December 25, 2015
ASSETS (Unaudited)
Current Assets
Cash $ 490,270 $ 7,629,424
Restricted cash 70,819 -
Accounts receivable, net of allowance for doubtful accounts 12,429,688 8,917,933
Prepaid expenses, deposits and other 364,503 292,352
Prepaid workers' compensation 481,944 756,005
Other receivables 89,041 -
Current portion of deferred tax asset 878,085 878,085
Current portion of workers' compensation deposits   406,219     398,319  
Total Current Assets 15,210,569 18,872,118
Property and equipment - net 590,088 408,657
Deferred tax asset, less current portion 1,768,851 2,083,851
Workers' compensation risk pool deposit, less current portion 2,006,814 2,256,814
Goodwill 3,684,622 2,500,000
Intangible assets - net   585,552     -  
Total Assets $ 23,846,496   $ 26,121,439  
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 226,866 $ 304,009
Checks issued and payable 339,418 487,087
Account purchase agreement facility 71,615 479,616
Other current liabilities 320,239 323,222
Accrued wages and benefits 942,816 1,452,558
Current portion of workers' compensation premiums and claims liability   993,622     1,201,703  
Total Current Liabilities 2,894,576 4,248,196
Long-Term Liabilities
Workers' compensation claims liability, less current portion   1,912,705     2,231,735  
Total Liabilities   4,807,281     6,479,931  
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; 61,060,042 and 64,305,288 shares issued and outstanding, respectively

61,060 64,305
Additional paid-in capital 56,575,183 57,752,301
Accumulated deficit   (37,597,028 )   (38,175,098 )
Total Stockholders' Equity   19,039,215     19,641,508  
Total Liabilities and Stockholders' Equity $ 23,846,496   $ 26,121,439  
 
             
Command Center, Inc.
Consolidated Condensed Statements of Income
(Unaudited)
 
Thirteen Weeks Ended Thirty-Nine Weeks Ended
September 23, 2016 September 25, 2015 September 23, 2016 September 25, 2015
Revenue $ 26,433,646 $ 24,856,000 $ 67,171,852 $ 66,639,061
Cost of staffing services   19,596,705   18,364,794   50,194,378   48,590,540
Gross profit 6,836,941 6,491,206 16,977,474 18,048,521
Selling, general and administrative expenses 5,605,680 5,059,098 15,745,533 15,408,104
Depreciation and amortization   110,155   42,611   211,200   128,904
Income from operations 1,121,106 1,389,497 1,020,741 2,511,513
Interest expense and other financing expense   616   36,083   77,671   149,018
Net income before income taxes 1,120,489 1,353,414 943,070 2,362,495
Provision for income taxes   282,259   533,071   365,000   930,549
Net income $ 838,231 $ 820,343 $ 578,070 $ 1,431,946
 
Earnings per share:
Basic $ 0.01 $ 0.01 $ 0.01 $ 0.02
Diluted $ 0.01 $ 0.01 $ 0.01 $ 0.02
 
Weighted average shares outstanding:
Basic 62,009,514 64,995,420 63,048,377 65,546,464
Diluted 62,767,858 66,342,868 63,806,354 66,871,177


Contacts

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