Command Center, Inc. (OTCQB: CCNI), a national provider of on-demand and temporary staffing solutions, reported financial results for the fourth quarter and full year ended December 29, 2017.

Fourth Quarter 2017 Financial Summary vs. Year-Ago Quarter

  • Revenue was $24.5 million compared to $26.1 million (revenue was up 1.2% after normalizing for the extra week in 2016).
  • Gross margin was 24.5% compared to 25.7%.
  • Net loss was $0.1 million, or $(0.02) per diluted share, compared to a loss of $22,000, or $(0.00) per diluted share.
  • Adjusted EBITDA increased to $0.7 million versus $0.1 million.

Full Year 2017 Financial Highlights vs. 2016

  • Revenue increased 5.2% to $98.1 million from $93.3 million.
  • Gross margin up 50 basis points to 25.9% versus 25.4%.
  • Net income increased significantly to $1.7 million, or $0.33 per diluted share, compared to $0.6 million, or $0.11 per diluted share.
  • Adjusted EBITDA increased 174% to $4.2 million compared to $1.5 million.
  • Cash and cash equivalents grew significantly to $7.8 million compared to $3.0 million.
  • Repurchased approximately 68,600 shares of common stock at an aggregate price of roughly $374,000, or $5.45 per share.

Management Commentary

“For Command Center, 2017 was a positive year,” said Bubba Sandford, president and CEO of Command Center. “For the year, all crucial metrics were up—most notably, revenue, cash, net income and adjusted EBITDA. Adding to the positive operational and financial aspects, we were able to institute a reverse split of our stock and we intend to complete our uplisting to the Nasdaq market soon. The company is in a good position, and the board of directors is focused on transitioning the CEO position to add strong talent in order to maintain momentum. An announcement regarding the new CEO should come very soon.”

Fourth Quarter 2017 Financial Results

Revenue in the fourth quarter of 2017 was $24.5 million, compared to $26.1 million in the year-ago quarter. The fourth quarter and the full year of 2016 benefited from an extra week when compared to 2017. An average week of revenue for the fourth quarter of 2016 was nearly $1.9 million. Reducing total 2016 fourth quarter revenue by $1.9 million demonstrates an increase in revenue of approximately 1.2% for the fourth quarter of 2017 on a normalized basis.

Gross margin in the fourth quarter was 24.5%, compared to 25.7% in the year-ago quarter. The decrease was the result of increased worker’s compensation expense compared to the year-ago quarter.

Selling, general and administrative expenses in the fourth quarter declined to $5.4 million, compared to $6.5 million in the year-ago quarter. The decline was primarily due to lower payroll expenses and a decrease in bad debt expense. As a percentage of revenue, SG&A expenses declined 310 basis points to 21.8%, compared to 24.9%.

Operating income in the fourth quarter increased to $0.6 million, compared to $0.1 million in the fourth quarter of 2016. Net loss for the quarter was $0.1 million or $(0.02) per diluted share, compared to a net loss of $22,000 or $(0.00) per diluted share in the year-ago quarter.

Adjusted EBITDA in the fourth quarter increased considerably to $0.7 million, compared to $0.1 million in the year-ago quarter.

Cash and cash equivalents at December 29, 2017, increased significantly to $7.8 million, compared to $3.0 million at December 30, 2016. The company carried a $0.9 million balance on its account purchase agreement as of December 29, 2017, compared to $0.4 million at the end of 2016.

During the fourth quarter, the company implemented a 1-for-12 reverse stock split of common and preferred stock, effective December 7, 2017. 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.

2017 Financial Results

Revenue in 2017 increased 5.2% to $98.1 million, compared to $93.3 million in 2016. Adjusting for the additional week in fiscal year 2016 demonstrates an increase in revenue for 2017 of 7.3% over the prior year. The increase was primarily due to an increase in projects, as well as increases in contributions from larger local and national accounts.

Gross margin in 2017 increased over 50 basis points to 25.9%, compared to 25.4% in 2016.

Selling, general and administrative expenses in 2017 declined to $21.3 million, compared to $22.3 million in 2016. The decrease was attributable to lower internal salary expenses along with decreases in both consulting and recruiting expenses.

Operating income in 2017 increased significantly to $3.7 million, compared to $1.1 million in 2016. Net income in 2017 also increased markedly to $1.7 million or $0.33 per share, compared to $0.6 million or $0.11 per share.

Adjusted EBITDA in 2017 increased considerably to $4.2 million, compared to $1.5 million in 2016, or 174%.

Due to the present transition in management, the company will not hold an earnings call at this time. However, the company expects to resume quarterly earnings calls with the filing of the company’s first quarter results of 2018.

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 23 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.

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

Thirteen weeks ended
December 29, 2017

 

Fourteen weeks ended
December 30, 2016

 

Fifty-two weeks ended
December 29, 2017

 

Fifty-three weeks ended
December 30, 2016

EBITDA (in thousands)
Net income $ (89 ) $ (22 ) $ 1,679 $ 557
Adjustments:
Interest expense (4 ) 28 (12 ) (25 )
Depreciation and amortization (98 ) (87 ) (386 ) (298 )
Prevision for income taxes   (641 )   (158 )   (2,006 )   (522 )
EBITDA 654 196 4,083 1,402
Non-cash compensation   (35 )   49     (157 )   (147 )
Adjusted EBITDA $ 689   $ 147   $ 4,240   $ 1,549  
 
Command Center, Inc.
Consolidated Condensed Balance Sheets
   
December 29, 2017 December 30, 2016
ASSETS
Current Assets
Cash $ 7,768,631 $ 3,022,741
Restricted cash 12,853 24,676
Accounts receivable, net of allowance for doubtful accounts 9,394,376 10,287,456
Prepaid expenses, deposits, and other assets 740,280 633,615
Prepaid workers' compensation 167,597 745,697
Current portion of workers' compensation deposits   99,624     106,527  
Total Current Assets 18,183,361 14,820,712
Property and equipment, net 372,145 432,857
Deferred tax asset 721,602 2,387,645
Workers' compensation risk pool deposit, less current portion 201,563 206,813
Workers' compensation risk pool deposit in receivership, net 1,800,000 1,800,000
Goodwill and other intangible assets, net   4,085,576     4,307,611  
Total Assets $ 25,364,247   $ 23,955,638  
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 563,402 $ 762,277
Account purchase agreement facility 853,562 388,280
Other current liabilities 898,809 395,926
Accrued wages and benefits 1,503,688 1,567,585
Current portion of workers' compensation premiums and claims liability   1,031,500     1,101,966  
Total Current Liabilities 4,850,961 4,216,034
Workers' compensation claims liability, less current portion   917,497     1,604,735  
Total Liabilities   5,768,458     5,820,769  
Commitments and contingencies
Stockholders' Equity
Preferred stock - $0.001 par value, 416,666 shares authorized; none issued - -

Common stock - 8,333,333 shares, $0.001 par value, authorized; 4,993,672 and 5,052,887 shares issued and outstanding, respectively

4,994 5,053
Additional paid-in capital 56,211,837 56,430,206
Accumulated deficit   (36,621,042 )   (38,300,390 )
Total Stockholders' Equity   19,595,789     18,134,869  
Total Liabilities and Stockholders' Equity $ 25,364,247   $ 23,955,638  
 
Command Center, Inc.
Consolidated Condensed Statements of Income
       

Thirteen weeks ended
December 29, 2017

Fourteen weeks ended
December 30, 2016

Fifty-two weeks ended
December 29, 2017

Fifty-three weeks ended
December 30, 2016

Revenue $ 24,517,023 $ 26,087,656 $ 98,072,198 $ 93,259,508
Cost of staffing services   18,507,034     19,386,032     72,641,609   69,580,410
Gross profit 6,009,989 6,701,624 25,430,589 23,679,098
Selling, general and administrative expenses 5,355,705 6,505,991 21,347,681 22,276,476
Depreciation and amortization   98,218     87,100     386,413   298,300
Income from operations 556,066 108,533 3,696,495 1,104,322
Interest expense and other financing expense   4,127     (27,701 )   11,619   25,018
Net income before income taxes 551,939 136,234 3,684,876 1,079,304
Provision for income taxes   640,737     157,751     2,005,528   522,751
Net income $ (88,798 ) $ (21,517 ) $ 1,679,348 $ 556,553
 
Earnings per share:
Basic $ (0.02 ) $ (0.00 ) $ 0.33 $ 0.11
Diluted $ (0.02 ) $ (0.00 ) $ 0.33 $ 0.11
 
Weighted average shares outstanding:
Basic 5,051,745 5,254,031 5,043,254 5,195,890
Diluted 5,108,539 5,317,196 5,105,006 5,257,955


Contacts

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