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 27, 2013.

Fourth Quarter 2013 Financial Highlights vs. Year-Ago Quarter

  • Revenues decreased 8% to $24.6 million, with net income up 121% to $1.2 million or $0.02 per diluted share
  • Operating income up 231% to $1.4 million
  • Adjusted EBITDA up 189% to $1.5 million

Fourth Quarter 2013 Financial Results

Revenues in the fourth quarter of 2013 decreased 8% to $24.6 million compared to $26.7 million in the fourth quarter of 2012. The decrease in revenue is attributable to no large scale disaster relief projects occurring in Q4 2013, as compared to 2012 with the impact of Hurricane Sandy recovery work. Excluding revenue from disaster recovery work, revenue increased 8% in the fourth quarter of 2013 as compared to the year-ago quarter.

Net income in the fourth quarter increased 121% to $1.2 million compared to $556,000 in the year-ago quarter, resulting in diluted earnings per share in the fourth quarter of 2013 at $0.02 compared to $0.00 in the year-ago quarter.

Operating income was up 231% to $1.4 million versus $435,000 in the year-ago quarter.

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization, and the change in fair value of derivative liabilities) was up 189% to $1.5 million from $521,000 in the year-ago quarter (see discussion about the presentation of adjusted EBITDA, a non-GAAP term, below).

Full Year 2013 Financial Results

Revenue totaled $93.7 million, declining 5% from $98.4 million in 2012. Excluding revenue from disaster recovery work, revenue increased 8% in 2013.

This revenue decrease was offset by the company’s greater focus on higher margin business while lowering its cost structure, which resulted in net income increasing 89% to $2.9 million compared to $1.6 million in 2012.

Diluted earnings per share increased to $0.05 per diluted share from $0.02 in 2012.

Operating income was up 76% to $4.4 million versus $2.5 million in 2012.

Same store revenues increased approximately 8% to $92.9 million in 2013 compared to $86.0 million in 2012. The increase in same store sales is primarily attributable to attracting new, high quality clients, strengthening existing client relationships, and encouraging existing client growth. Same store revenues are measured by taking revenue from locations that were operational during the majority of both operating periods. In 2013, the company closed four stores and opened one, ending the year with 56 stores operating in 23 states, and serving more than 3,600 customers with more than 33,000 temporary employees.

Cost of staffing services decreased to 74.1% of revenue in 2013 compared to 74.7% of revenue in 2012 yielding gross margins of 25.9% and 25.3%, respectively. The decrease in staffing cost is primarily due to decreased per diem cost and efforts to increase margins.

Cash at December 27, 2013 totaled $5.8 million, up more than $4.0 million compared to $1.6 million at December 28, 2012. The increase in cash is due to improved cash generation from operations.

Further details about the company’s results in 2013 are available in its Annual Report Form 10-K, accessible in the investor relations section of the company’s website at www.commandonline.com.

Management Commentary

“2013 represented a year of restructuring and refocusing of Command Center, which delivered almost immediate positive results,” said president and CEO, Bubba Sandford. “Changes we implemented in the first half of 2013 shortly after I joined the company are reflected in our third and fourth quarter numbers. Profitability is up while SG&A is down significantly. These results reflect our ongoing efforts to realign our corporate culture with our branch offices and focus more on higher-margin business.

“The decline in revenues reflects the absence of large disaster relief projects in 2013, which has historically been a low-margin, high-risk business and one which we expect to limit in the future. In fact, as our fourth quarter results demonstrate, we operate more profitably without participating in the recovery efforts for major national disasters, and we expect this trend to continue.

“In all, we’ve achieved the goals we set out in the beginning of 2013, which included solidifying our base in terms of the company and our customers. As we begin the new fiscal year, we’ve never been in a stronger financial position or enjoyed a more cohesive team of people working towards commons goals. This has set the stage for growth in 2014 and beyond. We see the potential for solid growth across all of our business units, based upon continued increases in same store sales, new offices at selected locations and favorable opportunities for acquisitions. As we expand our business, we expect to continue the positive trends we established in 2013, while remaining focused on improving shareholder value.”

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 53 field offices, the company provides employment for nearly 33,000 field team members working for 3,600 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 worker's 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 20, 2014 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 adjusted EBITDA, a non-GAAP term defined as earnings before interest, taxes, depreciation and amortization, and the change in fair value of derivative liabilities. (Please note, the company previously referred to this metric as “EBITDA-D.”)

The company uses adjusted EBITDA as a financial measure since management believes investors find it a useful tool to perform more meaningful comparisons of past, present and future operating results, and as a complement to net income and other financial performance measures. Adjusted EBITDA is 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 adjusted EBITDA to net income for the periods presented:

(in thousands)

        Fifty-two Weeks Ended
December 27, 2013         December 28, 2012
Total Operating Revenue $ 93,748     $ 98,432    
Cost of Staffing Services   69,501   74.1 %   73,539   74.7 %
Gross profit 24,247 25.9 % 24,893 25.3 %
Selling, general and administrative expenses 19,528 20.8 % 22,043 22.4 %
Depreciation and amortization   351   0.4 %   371   0.4 %
Income from operations 4,368 4.7 % 2,479 2.5 %
Interest expense and other financing expense (504 ) -0.5 % (804 ) -0.8 %
Change in fair value of warrant liability   (786 ) -0.8 %   842   0.9 %
Net income before income taxes 3,078 3.3 % 2,517 2.6 %
Provision for income taxes   (137 ) 0.1 %   (958 ) -1.0 %
Net income $ 2,941   3.2 % $ 1,559   1.6 %
Non-GAAP Data
Adjusted EBITDA $ 4,719 5.0 % $ 2,850 2.9 %
 
 

(in thousands)

        Fifty-two Weeks Ended
December 27, 2013         December 28, 2012
Adjusted EBITDA $ 4,719 $ 2,850

Interest expense and other financing expense

(504 ) (804 )
Depreciation and amortization (351 ) (371 )
Change in fair value of warrant liability (786 ) 842
Provision for income taxes   (137 )   (958 )
Net income (loss) $ 2,941   $ 1,559  
 
 
Command Center, Inc.
Consolidated Balance Sheets
               
December 27, 2013 December 28, 2012
ASSETS
Current Assets
Cash $ 5,820,309 $ 1,632,993
Restricted cash 25,619 21,295
Accounts receivable, net of allowance for doubtful accounts 10,577,250 13,701,396
Prepaid expenses, deposits and other 328,920 409,547
Prepaid workers' compensation 28,044 22,852
Other receivables 27,933 17,618
Current portion of workers' compensation deposits   1,113,000     1,200,000  
Total Current Assets 17,921,075 17,005,701
Property and equipment – net 350,767 609,772
Workers' compensation risk pool deposit, less current portion 1,783,112 506,196
Goodwill 3,306,786 3,306,786
Intangible assets – net   386,956     522,535  
Total Assets $ 23,748,696   $ 21,950,990  
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Accounts payable $ 402,672 $ 722,150
Checks issued and payable 189,830 511,105
Account purchase agreement facility 8,050,633 9,051,999
Other current liabilities 326,319 507,122
Contingent liability - 322,874
Accrued wages and benefits 1,717,235 1,713,480

Current portion of workers' compensation premiums and claims liability

  1,648,058     2,005,579  
Total Current Liabilities 12,334,747 14,834,309

 

Long-Term Liabilities

Warrant liabilities 1,386,088 599,473
Workers' compensation claims liability, less current portion   2,613,871     2,510,687  
Total Liabilities   16,334,706     17,944,469  
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; 59,711,242 and 59,611,242 shares issued and outstanding, respectively 59,711 59,611
Additional paid-in capital 56,099,875 55,633,377
Accumulated deficit   (48,745,596 )   (51,686,467 )
Total Stockholders' Equity   7,413,990     4,006,521  
Total Liabilities and Stockholders' Equity $ 23,748,696   $ 21,950,990  
 
 
Command Center, Inc.
Consolidated Statements of Income
       
Fifty-two Weeks Ended
December 27, 2013         December 28, 2012
Revenue $ 93,748,261 $ 98,432,059
Cost of staffing services   69,500,997     73,538,819  
Gross profit 24,247,264 24,893,240
Selling, general and administrative expenses 19,527,784 22,043,268
Depreciation and amortization   351,240     370,768  
Income from operations 4,368,240 2,479,204
Interest expense and other financing expense (503,626 ) (804,036 )
Change in fair value of derivative liabilities   (786,615 )   842,256  
Net income before income taxes 3,077,999 2,517,424
Provision for income taxes   (137,128 )   (958,147 )
Net income $ 2,940,871   $ 1,559,277  
 
Earnings' per share:
Basic $ 0.05   $ 0.03  
Diluted $ 0.05   $ 0.02  
 
Weighted average shares outstanding:
Basic 59,613,989 59,235,990
Diluted 61,307,455 63,124,705


Contacts

Liolios Group, Inc.
Chris Tyson, 949-574-3860
Investor Relations
CCNI@liolios.com