Updates Progress on Shift to Franchise Model
DENVER–(BUSINESS WIRE)–Command Center, Inc. (Nasdaq: CCNI), a national provider of on-demand and temporary staffing solutions, today reported financial results for the second quarter ended June 28, 2019. On July 15, subsequent to the end of the quarter, Command Center closed its merger agreement (“Merger Agreement”) with Hire Quest Holdings, LLC, operating as Trojan Labor and Acrux Staffing, a privately held provider of blue collar, light industrial and administrative staffing, in an all-stock transaction.
“We have made significant progress in the few short weeks since the closing of the merger to convert branches to the franchise model,” commented Rick Hermanns, Command Center’s President and Chief Executive Officer. “Approximately half of the Command Center branches have been converted, and the remaining are expected to be converted once state regulatory approval is granted, which is expected before the end of 2019. While good progress is being made with the integration, investors should expect significant expenses and non-recurring charges related to integrating the businesses and rationalizing the footprint of the combined entity. The near-term results will be choppy, but we remain steadfast in our goal to create a stronger and more profitable long-term platform.”
Second Quarter 2019 Financial Summary
- Revenue of $24.8 million compared to $24.2 million in the year-ago period.
- Gross margin of 26.4% compared to 26.0% in the year-ago period.
- Transaction-related expenses of approximately $341,000 in the quarter, primarily related to legal and professional fees, compared to no such non-recurring expenses in the prior-year second quarter.
- Net income of $412,000, or $0.09 per diluted share, compared to net income of $563,000, or $0.11 per diluted share in the year-ago period.
Second Quarter 2019 Financial Results
Revenue in the second quarter of 2019 was $24.8 million, compared to $24.2 million in the year-ago quarter, an increase of $662,000, or 2.7%. Gross margin in the second quarter was 26.4%, compared to 26.0% in the year-ago quarter. This increase is primarily related to a decrease in workers’ compensation costs as well as lower unemployment costs. Continued low unemployment rates resulted in upward pressure on wages and related payroll taxes for field team members, which partially offset the increase in gross margin for the quarter.
Selling, general and administrative (“SG&A”) expense in the second quarter was $5.6 million, an increase of approximately $240,000 from $5.4 million for the second quarter last year. This increase is primarily due to recruiting costs and legal and professional fees, including approximately $341,000 in non-recurring transaction-related expenses. Excluding these non-recurring expenses, SG&A decreased by approximately $101,000.
Command Center reported income from operations of $878,000, compared to income from operations of $820,000 in the second quarter last year.
Net income in the second quarter of 2019 was $412,000, or $0.09 per diluted share, compared to net income of $563,000, or $0.11 per diluted share, in the year-ago quarter.
Adjusted EBITDA in the second quarter was $1.4 million, compared to $1.3 million in the year-ago quarter. Adjusted EBITDA in the second quarter of 2019 included $357,000 in non-recurring charges, and $67,000 in non-cash compensation compared to $195,000 in non-recurring charges and $192,000 in non-cash compensation in the year-ago quarter.
Balance Sheet and Capital Structure
Cash and cash equivalents at June 28, 2019, was $7.0 million, compared to $8.0 million at December 28, 2018.
Conference Call
Command Center will hold a conference call tomorrow, Tuesday, August 13, 2019, at 4:30 p.m. Eastern time (2:30 p.m. Mountain time) to discuss its financial results for the second quarter ended June 30, 2019.
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Date: |
Tuesday, August 13, 2019 |
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Time: |
4:30 p.m. Eastern time (2:30 p.m. Mountain time) |
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Toll-free dial-in number: |
1-877-705-6003 |
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International dial-in number: |
1-201-493-6725 |
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Conference ID: |
13693270 |
Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization.
The conference call will be broadcast live and available for replay at http://public.viavid.com/index.php?id=135673 and via the investor relations section of Command Center’s website at www.commandonline.com.
A replay of the conference call will be available after 7:30 p.m. Eastern time on the same day and continuing through August 27, 2019.
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Toll-free replay number: |
1-844-512-2921 |
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International replay number: |
1-412-317-6671 |
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Replay ID: |
13693270 |
About Command Center
Command Center and its subsidiary Hire Quest, LLC (“Hire Quest”) provide flexible on-demand employment solutions to businesses in the United States, primarily in the areas of construction, light industrial, manufacturing, hospitality and event services. Through more than 150 franchised and corporately-owned field offices in 32 states and the District of Columbia, the Company, through Hire Quest, provides employment annually for approximately 85,000 field team members working for thousands of 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, 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 term Adjusted EBITDA. 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 Adjusted EBITDA as a financial measure as management believes investors find it to be a useful tool 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 this metric is a useful compliment 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.
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Command Center, Inc. Consolidated Balance Sheets |
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June 28, 2019 |
December 28, 2018 |
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ASSETS |
(unaudited) |
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Current assets |
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Cash |
$ 6,909,551 |
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$ 7,934,287 |
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Restricted cash |
105,700 |
69,423 |
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Accounts receivable, net of allowance for doubtful accounts |
10,230,897 |
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9,041,361 |
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Prepaid expenses, deposits, and other assets |
175,361 |
380,930 |
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Prepaid workers’ compensation |
538,063 |
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212,197 |
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Total current assets |
17,959,572 |
17,638,198 |
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Property and equipment, net |
284,960 |
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329,255 |
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Right-of-use assets |
1,580,546 |
– |
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Deferred tax asset |
1,083,360 |
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1,079,908 |
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Workers’ compensation risk pool deposit, less current portion, net |
– |
193,984 |
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Workers’ compensation risk pool deposit in receivership, net |
260,000 |
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260,000 |
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Goodwill and other intangible assets, net |
3,877,027 |
3,930,900 |
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Total assets |
$ 25,045,465 |
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$ 23,432,245 |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities |
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Accounts payable |
$ 528,949 |
$ 219,945 |
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Account purchase agreement facility |
526,142 |
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398,894 |
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Other current liabilities |
448,266 |
821,142 |
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Accrued wages and benefits |
1,623,135 |
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1,218,699 |
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Current portion of lease liabilities |
878,725 |
– |
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Current portion of workers’ compensation claims liability |
939,081 |
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1,003,643 |
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Total current liabilities |
4,944,298 |
3,662,323 |
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Lease liabilities, less current portion |
745,736 |
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– |
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Workers’ compensation claims liability, less current portion |
854,372 |
878,455 |
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Total liabilities |
6,544,406 |
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4,540,778 |
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Commitments and contingencies |
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Stockholders’ equity |
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Preferred stock – $0.001 par value, 416,666 shares authorized; none issued |
– |
– |
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Common stock – $0.001 par value, 8,333,333 shares authorized; 4,629,331 and 4,680,871 shares issued and outstanding, respectively |
4,629 |
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4,681 |
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Additional paid-in capital |
54,479,010 |
54,536,852 |
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Accumulated deficit |
(35,982,580) |
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(35,650,066) |
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Total stockholders’ equity |
18,501,059 |
18,891,467 |
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Total liabilities and stockholders’ equity |
$ 25,045,465 |
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$ 23,432,245 |
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Command Center, Inc. Consolidated Statements of Operations (unaudited) |
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Thirteen weeks ended |
Twenty-six weeks ended |
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June 28, 2019 |
June 29, 2018 |
June 28, 2019 |
June 29, 2018 |
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Revenue |
$ 24,838,463 |
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$ 24,175,985 |
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$ 46,593,361 |
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$ 46,643,383 |
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Cost of staffing services |
18,288,855 |
17,898,665 |
34,411,490 |
34,771,996 |
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Gross profit |
6,549,608 |
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6,277,320 |
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12,181,871 |
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11,871,387 |
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Selling, general and administrative expenses |
5,609,401 |
5,368,908 |
12,159,413 |
12,582,528 |
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Depreciation and amortization |
62,728 |
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87,926 |
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130,545 |
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180,517 |
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Income (loss) from operations |
877,479 |
820,486 |
(108,087) |
(891,658) |
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Interest expense (income) and other financing expense |
(33) |
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267 |
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47 |
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2,430 |
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Net income (loss) before income taxes |
877,512 |
820,219 |
(108,134) |
(894,088) |
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Provision (benefit) for income taxes |
466,004 |
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256,972 |
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224,380 |
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(239,646) |
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Net income (loss) |
$ 411,508 |
$ 563,247 |
$ (332,514) |
$ (654,442) |
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Earnings (loss) per share: |
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Basic |
$ 0.09 |
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$ 0.11 |
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$ (0.07) |
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$ (0.13) |
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Diluted |
$ 0.09 |
$ 0.11 |
$ (0.07) |
$ (0.13) |
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Weighted average shares outstanding: |
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Basic |
4,629,492 |
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4,924,245 |
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4,645,883 |
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4,953,701 |
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Diluted |
4,631,299 |
4,931,201 |
4,645,883 |
4,953,701 |
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Contacts
Company Contact:
Command Center, Inc.
Cory Smith, CFO
(866) 464-5844
Email: [email protected]
Investor Relations Contact:
Hayden IR
Brett Maas
646-536-7331
Email: [email protected]
