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Exhibit 99.1
Command
Center Publishes Letter to Shareholders
DENVER, Colorado – July 16, 2018 – Command
Center, Inc. (Nasdaq: CCNI), a national provider of on-demand and
temporary staffing solutions, announced that Richard K. Coleman,
Jr., the Company’s President and Chief Executive Officer, has
published a letter to shareholders.
The
text of the letter is below:
Dear Shareholders,
June
29th marked the completion of my first full quarter as Command
Center CEO. During this period, my priority was to evaluate our
organization, determine strengths and opportunities, and ensure we
are focused on our highest priorities. As part of this initiative,
I had the opportunity to visit with many of our managers, branch
staff, and Field Team Members. I can say with conviction that every
member of our organization is committed to hard work and success,
and that our people exhibit tremendous optimism about Command
Center’s future potential.
Our Business
Our
business is relatively easy to understand; Command Center finds
jobs for people and people for jobs. We’ve been doing this
since 2006, and we believe we do it better than anyone else. We
serve our Customers through 67 branch offices across 22 states, and
our staff of Field Team Members numbers greater than 33,000. Our
operating model is branch-centric, meaning our headquarters serves
as the support hub for the rest of the organization. Due to our
scale, we have been able to centralize a number of functions that
might otherwise distract our local branches from accomplishing
their primary Customer-focused mission. Centralized support also
means our branch staff have more time to do what fulfills
them—staying close to Customers and Field Team Members. In
short, our operating model provides economic and service quality
benefits without sacrificing the “local touch” that
allows our branch staff to relate to Customers and Field Team
Members on a personal level.
Our
Customers and Field Team Members are the core of our business and
the rest of us, including me, are here to serve their needs. Our
most prosperous branches are those that have truly developed a
mission-centric mindset integrating the tenets of our three
Keys to
Success:
1. Sell
Good Accounts
2.
Increase Gross Margins
3.
Service With Excellence
One of
the most striking qualities I witnessed from our branch staff was
their sense of mission—they want to do more than simply place
somebody in a job. They want to make a lasting impact in the lives
of the Field Team Members we hire—some of whom depend on our
employment opportunities from week to week, or even day to day.
It’s not always an easy job, but our branch staff deliver on
this mission day in and day out. In short, they take pride in their
work. When they do their jobs well, the results are reflected in
our bottom line.
Since
our inception, Command Center has provided cost effective solutions
for our Customers by meeting their most basic needs to fill
cyclical or temporary jobs and ensuring compliance with
increasingly burdensome federal, state, and local regulations. We
have developed lasting relationships with our Customers, and many
continue to contribute to our growth in multiple branches. Command
Center operates in some of the fastest growing parts of the country
and benefits from both geographic and industrial diversity. In our
second quarter ended June 29th, we generated revenue from the
following light industrial sectors:
Sector
|
% of Revenue
|
● Industrial, manufacturing and
warehousing
|
38%
|
● Hospitality
|
17%
|
● Construction
|
18%
|
● Transportation
|
17%
|
● Retail and
other
|
10%
|
By
diversifying the sectors in which we place workers, we are less
susceptible to regional, seasonal, or industry downturns. Although
quarterly revenue often varies, our operating model has
historically been both profitable and resilient. Consequently, we
enjoy strong Customer relationships and our repeat business is
high.
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Command
Center’s size affords it many strategic advantages over
smaller competitors. For one, local “mom and pop”
staffing companies do not have sufficient scale to achieve
favorable rates on workers compensation insurance, support the
infrastructure necessary to win or manage national accounts, or
provide world class customer support. Our ability to consistently
overcome these challenges supports our industry leading gross
margins. We simply deliver more value to our customers than our
competitors. It is important to understand that value is not
entirely driven by price. We focus on providing the highest quality
service offering and on doing so reliably. Our experience has shown
that Customers will pay more for quality. As we execute on our
strategic plan, we will continue to leverage our scale to expand
product and service offerings while striving to improve
profitability.
Labor
Commander, our proprietary software platform, is the backbone of
our operations and integrates many of our critical activities,
including Customer management, job ticketing, billing, and
payments. Our branch staff depend on Labor Commander to facilitate
and simplify their daily tasks, and our operating standards are
hard coded to ensure adherence to our internal financial,
operating, and risk management controls, as well as local, state
and federal employment-related laws and regulations.
Capital Deployment
Command
Center has a strong financial foundation. We ended our first
quarter with $6.7 million in cash on the balance sheet, no
financial debt, and a solid operational platform that continues to
generate cash. We expect our revenue to grow over time, but our
primary objective is to improve earnings per share. We have
routinely considered selected acquisition opportunities and will
continue to do so as they are presented. However, acquisitions are
not the focus of our current capital deployment strategy. In
addition to the risk of integration failure, many potential
acquisition targets are routinely underperforming our financial
expectations. We believe our short-term focus is better directed at
improving current operations, profitability, and branch office
efficiency. We believe there is tremendous operating leverage in
our business, and we intend to consistently unlock it.
Our
management team and board take a systematic approach to capital
allocation, and we strive to invest capital where it will provide
the best long-term risk adjusted return. As a publicly traded
company, we have the benefit of seeing how the market values our
Company every single day. Sometimes, the best return on capital is
to buy back our own shares at a discount to what we believe is the
intrinsic value of the Company. We believe that is the current
situation, and to that end, your Board of Directors authorized a $5
million share buyback program in September 2017. As of March 30,
2018, we have purchased approximately 604,000 shares of our common
stock in the open market at an average price of $5.64 per share,
leaving approximately $4.5 million available for buyback under our
current plan.
Business Risks
Part of
our value proposition to Customers is bearing Employee associated
risks. This means that if a Field Team Member is injured while
working for a Command Center Customer, the liability falls on us.
We mitigate this risk through a number of internal controls, by
being selective about where we deploy our Field Team Members, and
by avoiding high-risk activity. For example, we prohibit working at
heights greater than three feet because data shows the risk of
serious injury increases significantly beyond this threshold. We
also routinely provide safety training, require the use of
appropriate safety equipment, and periodically inspect worksites to
ensure compliance.
Given
our scale we effectively self-insure our worker’s
compensation costs. However, we also maintain a surplus
high-deductible policy with a national AAA rated carrier in case of
a catastrophic accident. To date we have never had to tap that
resource. Every year our Employees suffer accidents, some minor
like a sprained ankle, some more serious, but our risk management
operations are robust and have historically served us
well.
Near-Term Operational Focus
Going
forward, Command Center is poised to execute operational
improvements designed to increase profitability and facilitate
revenue growth. This effort began in late May 2018 with the
introduction of a new organizational structure designed to provide
regional Field Services Managers the opportunity to focus on a
smaller number of branch offices. The realignment increased
regional accountability and was accomplished at no cost through the
redeployment of our existing leadership team. The new structure
allows us to more quickly identify and respond to operational
improvement opportunities. Additional benefits include shorter
Customer response times, more effective local training, and better
Employee retention. We also improved our branch bonus structure,
providing all of our branch staff a realistic opportunity to
benefit financially from Command Center’s growth and
profitability. We are also revising our recruiting strategy to
ensure we more carefully identify prospective branch personnel who
not only have the necessary job skills but also align with our
culture.
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Shareholder Alignment
Command
Center’s Board of Directors and management team are committed
to increasing shareholder value. With almost 10 percent of our
outstanding shares beneficially held by insiders, we are aligned
with the long-term interests of common stockholders. In order to
formalize the process of evaluating strategic alternatives, last
year we established a strategic advisory committee of the Board of
Directors, comprised solely of independent directors. We have also
engaged the services of an investment banking firm to advise the
company as we seek to unlock additional shareholder value. There is
no pre-determined outcome, and there is no guarantee we will
execute on any strategic alternative. Our Board of Directors and
management team take a long-term view of the business and will
continue to pursue operational improvements while driving financial
performance.
In
closing, I would like to express my appreciation to our 227
dedicated Employees and more than 33,000 Field Team Members who are
committed to delivering the best staffing product in the industry.
I would also like to thank you, our shareholders, for your
continued support. On behalf of the Board of Directors, I thank you
for the trust you have placed in us. As Command Center’s
chief executive, you have my steadfast commitment to our goal of
increasing shareholder value.
Sincerely,
Richard
K. Coleman, Jr.
President
and Chief Executive Officer
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.
© 2018 Command Center, Inc. All Rights Reserved. The
Command Center logo, along with the words and phrases Command Center, Command and Real Jobs for Real People are
registered trademarks of Command Center, Inc.
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Important Cautions Regarding Forward-Looking
Statements
This
news release and the letter contain 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.
Contacts
Investor Relations
Hayden
IR
Rob
Fink, (646)
536-7331
ccni@haydenir.com
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