DENVER--(BUSINESS WIRE)--Command Center, Inc. (OTCQB: CCNI), a national provider of on-demand and temporary staffing solutions, reported financial results for the first quarter ended March 30, 2018.
First Quarter 2018 Financial Summary vs. Year-Ago Quarter
- Revenue increased slightly to $22.5 million compared to $22.3 million.
- Gross margin was 24.9% compared to 25.7%.
- Net loss was $1.2 million, or $(0.24) per diluted share, compared to net income of $0.2 million, or $0.04 per diluted share.
- Adjusted EBITDA remained at $0.4 million.
“Our first quarter reflected strong revenue across many of our branches, which was offset by some one-time larger national accounts project work in 2017,” said Rick Coleman, president and CEO of Command Center. “While proactively managing our costs remains a priority, we took a substantial non-cash impairment on a workers’ compensation deposit in receivership dating back four years. This deposit did not support any working capital needs of the company and will have essentially no effect on our ongoing financial condition. We also incurred severance-related costs in the quarter associated with the departure of our former CEO. Excluding these non-recurring costs, SG&A expenses were down slightly.
“Since taking over as CEO just over a month ago, it has become clear that Command Center has built a powerful staffing platform well-positioned to not only serve current customers, but also capable of supporting growth, either through organic expansion, strategic acquisitions, or both. In the coming months, as part of our continuing Strategic Alternatives Process, we plan to carefully evaluate multiple opportunities to drive and unlock value for shareholders.
“In September 2017, our Board of Directors authorized a $5.0 million three-year repurchase plan of our common stock. This replaced a previous plan, in place since April 2015. During the first quarter of 2018, we purchased 22,461 shares at an average price of $5.74 per share, and in April, we purchased an additional 36,310 shares at an average price of $5.68. Through April 2018, we have purchased 639,843 shares as part of our capital deployment strategy.”
First Quarter 2018 Financial Results
Revenue in the first quarter of 2018 increased to $22.5 million, compared to $22.3 million in the year-ago quarter. Stronger revenue in many branches was largely offset by large national accounts project work that did not recur in 2018.
Gross margin in the first quarter was 24.9%, compared to 25.7% in the year-ago quarter. The decrease was the result of higher field team wages and increased worker’s compensation expense compared to the year-ago quarter.
Selling, general and administrative (SG&A) expenses in the first quarter were $7.2 million, compared to $5.3 million in the year-ago quarter. The increase was driven by a $1.5 million write-down of the company’s workers’ compensation deposit in receivership with Freestone Insurance Company, which dates back to 2014, and $0.5 million in severance costs associated with the company’s former CEO. Excluding these non-recurring items, SG&A expenses decreased slightly.
Operating loss in the first quarter was $1.7 million, compared to operating income of $0.3 million in the first quarter of 2017. Net loss for the quarter was $1.2 million or $(0.24) per diluted share, compared to net income of $0.2 million or $0.04 per diluted share in the year-ago quarter.
Adjusted EBITDA in the first quarter of 2018 was $0.4 million, unchanged compared to the year-ago quarter.
Cash and cash equivalents at March 30, 2018, was $6.7 million compared to $7.8 million at December 29, 2017. The company carried a $0.2 million balance on its account purchase agreement as of March 30, 2018, compared to $0.9 million at the end of 2017.
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.
Command Center will hold a conference call tomorrow, May 10th, at 10:00 a.m. Eastern time (8:00 a.m. Mountain time) to discuss its first quarter 2018 results.
Date: Thursday, May 10, 2018
Time: 10:00 a.m. Eastern time (8:00 a.m. Mountain time)
Toll-free dial-in number: 1-866-548-4713
International dial-in number: 1-323-794-2093
Conference ID: 1067901
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.
A replay of the conference call will be available after 1:00 p.m. Eastern time on the same day and continue through May 24, 2018.
Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 1067901
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 net (loss) income to EBITDA and Adjusted EBITDA for the periods presented (in thousands):
|Net (loss) income||$||(1,218||)||$||182|
|Provision for income taxes||(497||)||117|
|Depreciation and amortization||93||96|
|Other non-recurring expenses||470||-|
|Reserve for workers' compensation risk pool deposit||1,540||-|
|Command Center, Inc.|
|Consolidated Balance Sheets|
|Accounts receivable, net of allowance for doubtful accounts||9,255,325||9,394,376|
|Prepaid expenses, deposits and other assets||649,907||740,280|
|Prepaid workers' compensation||287,019||167,597|
|Current portion of workers' compensation deposits||99,624||99,624|
|Total current assets||17,037,485||18,183,361|
|Property and equipment, net||400,836||372,145|
|Deferred tax asset||1,218,220||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||4,031,490||4,085,576|
|LIABILITIES AND STOCKHOLDERS' EQUITY|
|Account purchase agreement facility||181,968||853,562|
|Other current liabilities||615,499||898,809|
|Accrued wages and benefits||2,132,880||1,503,688|
|Current portion of workers' compensation claims liability||1,031,500||1,031,500|
|Total current liabilities||4,200,418||4,850,961|
|Workers' compensation claims liability, less current portion||917,497||917,497|
|Preferred stock - $0.001 par value, 416,666 shares authorized; none issued||-||-|
|Common stock - $0.001 par value, 8,333,333 shares authorized; 4,971,211 and 4,993,672 shares issued and outstanding, respectively||4,971||4,994|
|Additional paid-in capital||55,868,750||56,211,837|
|Total stockholders' equity||18,031,679||19,595,789|
|Total liabilities and stockholders' equity||$||23,149,594||$||25,364,247|
|Command Center, Inc.|
|Consolidated Statements of Operations|
|Thirteen weeks ended|
|Cost of staffing services||16,873,331||16,610,015|
|Selling, general and administrative expenses||7,213,620||5,343,607|
|Depreciation and amortization||92,591||95,550|
|Income from operations||(1,712,144||)||299,077|
|Interest expense and other financing expense||2,163||4|
|Net income before income taxes||(1,714,307||)||299,073|
|Provision for income taxes||(496,618||)||116,621|
|Earnings per share:|
|Weighted average shares outstanding:|