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Command Center Q1 revenue falls 3%

May 14, 2019

Command Center Inc. (NASD: CCNI) reported first-quarter revenue fell 3.2%. The industrial staffing provider attributed the decrease primarily to a “significant” revenue decline from a large customer, poor weather in parts of the country, and the loss of key salespeople.

The Lakewood, Colorado-headquartered firm reported net loss narrowed from the year-ago period and gross margin improved. The gross margin improvement was primarily due 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.

  Q1 2019 Q1 2018 % change
Revenue $21,754,898 $22,467,398 -3.2%
Gross profit $5,632,263 $5,594,067 0.7%
Gross margin percentage 25.9% 24.9%  
Net loss ($744,023) ($1,217,659) nm

Command Center last month announced plans to combine with Hire Quest Holdings LLC. The deal would enable Command Center to transition to a franchise model, which Hire Quest already follows. Hire Quest’s brands include Trojan Labor and Acrux Staffing.

The agreement calls for Command Center to issue 9.8 million new common shares to Hire Quest owners, giving them 68% ownership of Command Center’s 14.5 million shares after the deal. Hire Quest CEO Rick Hermanns would take over as CEO of the combined company, and Command Center would change its name to Hire Quest. The transaction is expected to close in the second quarter, or shortly thereafter, and is subject to standard closing conditions, including shareholder approval.


“Command Center was impacted by typical seasonality in the first quarter, and along with a significant reduction in services from one large customer for the period, we experienced lower revenue and recorded a loss from operations,” said President and CEO Rick Coleman. “During the quarter, we recognized approximately $659,000 in non-recurring expenses related to our pending merger with Hire Quest Holdings LLC and also approximately $249,000 in bonus payments and accruals for bonuses earned at the end of 2018. These expenses contributed significantly to our operating and net losses, and absent these charges, we would have been profitable.”

Coleman also said the company is “working closely with the team at Hire Quest to facilitate a smooth integration of our two businesses anticipating the finalization of the merger. We continue to believe this combination will provide meaningful benefits and result in significant shareholder value.”

Share price and market cap

Command Center shares were down 0.74% to $5.38 at 1:13 p.m. Eastern time today; the company had a market cap of $25.09 million, according to FT.com.


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