Command Center Reports Third Quarter Financial Results
DENVER--(BUSINESS WIRE)--Nov 6, 2018--Command Center, Inc. (Nasdaq: CCNI), a national provider of on-demand and temporary staffing solutions, today reported financial results for the third quarter and year-to-date periods ended September 28, 2018.
Third Quarter 2018 Financial SummaryRevenue of $26.3 million compared to $26.7 million in the year ago period. Gross margin of 24.5% compared to 26.9% in the year ago period. Net income of $546,000, or $0.11 per diluted share, compared to $851,000, or $0.17 per diluted share in the year ago period. Adjusted EBITDA (excluding stock-based compensation expense) of $912,000 compared to $1.8 million in the year ago period. Repurchased approximately 164,000 shares of common stock at an aggregate price of approximately $949,000, at an average price of $5.80 per share.
“Command Center delivered another solidly profitable quarter and returned a record level of capital to shareholders in the form of repurchased and retired shares,” said Rick Coleman, president and CEO of Command Center. “In the third quarter we also continued our efforts to stabilize and strengthen our staffing platform. This will remain our focus into 2019 and includes comprehensive changes to our hiring, training, compensation, and benefits practices necessary to support future revenue growth and enhance profitability. While these efforts contributed to some margin compression, tight labor markets continue to present opportunities for staffing firms, and we’re positioning Command Center to optimize our performance across the country and across all verticals.”
“In conjunction with the low unemployment rate, we’re also experiencing increased competition and higher wages for quality temporary workers in some markets,” Mr. Coleman added. “This also contributes to higher recruiting and on-boarding costs. We’re addressing these challenges, and I’m encouraged by our progress in revitalizing the organization. We’ve raised the bar for branch-level leadership, many of whom are new to the company, and we’ve set clear expectations for their performance.”
“Given our historical trends and the present business environment, we anticipate periodic revenue and gross profit fluctuations, but our geographic and customer diversity, along with a tightly controlled operating structure, are continuing to drive relatively consistent profitability,” concluded Mr. Coleman. “Our solid balance sheet positions us to pursue growth opportunities and capital deployment in tandem, and during this rebuilding period, our Board of Directors is actively evaluating a range of strategic alternatives to enhance shareholder value.”
Third Quarter 2018 Financial Results
Revenue in the third quarter was $26.3 million, compared to $26.7 million in the year-ago quarter. This decrease of $394,000, or 1.5%, relates in large part to higher than normal turnover in sales positions within the last year due to increased competition in the labor market.
Gross margin in the third quarter of 2018 was 24.5%, compared to 26.9% in the year-ago quarter. This decrease was the result of increases in workers’ compensation cost and field team member wages and related payroll taxes, which was partially offset by relative decreases in state unemployment expense.
Selling, general and administrative (SG&A) expenses in the third quarter were $5.6 million, compared to $5.5 million in the year-ago quarter. This increase was primarily due to increased recruiting costs and internal salaries and benefits, which was partially offset by decreases in bad debt expense and lower legal and professional fees.
Third quarter operating income was $751,000, compared to $1.6 million in the third quarter of 2017.
Net income in the third quarter of 2018 was $546,000, or $0.11 per diluted share, compared to $851,000, or $0.17 per diluted share, in the year-ago quarter.
Adjusted EBITDA in the third quarter was $912,000, compared to $1.8 million in the third quarter of 2017.
Year-to-date 2018 Financial Results
Revenue in the first nine months of 2018 was $73.0 million, compared to $73.6 million in the year-ago period, a decrease of $603,000, or 0.8%.
Gross margin in the first nine months was 25.1%, compared to 26.4% in the year-ago period.
Year-to-date SG&A expenses were $18.2 million, compared to $16.0 million in the year-ago period. This increase is primarily due to $2.2 million in non-recurring and non-operational items, including impairment of the company’s workers’ compensation deposit in receivership of approximately $1.5 million, non-recurring executive severance expenses of approximately $565,000, and a one-time $100,000 expense related to the settlement of the recent proxy contest. Other increases in SG&A include higher stock-based compensation and payroll and payroll related taxes, which were partially offset by decreased bad debt expense and a $198,000 refund of a workers’ compensation risk pool deposit in excess of what was recorded.
Operating income in the first nine months of 2018 was $(141,000), inclusive of the approximately $2.2 million in non-recurring expenses mentioned above, compared to $3.1 million in the year-ago period.
Net loss in the first nine months of 2018 was $(108,000), or $(0.02) per diluted share, compared to net income of $1.8 million, or $0.35 per diluted share, in the year-ago period. Adjusted EBITDA in the first nine months of 2018 was $2.6 million, compared to $3.6 million in the year-ago period.
Balance Sheet and Capital Structure
Cash and cash equivalents at September 28, 2018, was $6.3 million, compared to $7.8 million at December 29, 2017.
During the third quarter of 2018, the company purchased approximately 164,000 shares of common stock through its share repurchase program at an aggregate price of approximately $949,000, resulting in an average price of $5.80 per share. These shares were subsequently retired. Approximately $3.0 million remains under the current repurchase program.
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, Wednesday, November 7, at 10 a.m. Eastern time (8 a.m. Mountain time) to discuss its third quarter 2018 results.
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 Hayden IR at firstname.lastname@example.org.
A replay of the conference call will be available after 1 p.m. Eastern time on the same day and continuing through November 21, 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 22 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 income (loss) to EBITDA and Adjusted EBITDA for the periods presented (in thousands):
View source version on businesswire.com:https://www.businesswire.com/news/home/20181106005893/en/
CONTACT: Command Center, Inc.
Cory Smith, CFO
Investor Relations Contact:
KEYWORD: UNITED STATES NORTH AMERICA COLORADO
INDUSTRY KEYWORD: SMALL BUSINESS PROFESSIONAL SERVICES HUMAN RESOURCES OTHER PROFESSIONAL SERVICES
SOURCE: Command Center
Copyright Business Wire 2018.
PUB: 11/06/2018 04:15 PM/DISC: 11/06/2018 04:15 PM