Author Topic: CCNI -- Command Center  (Read 8046 times)

Foreign Tuffett

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Re: CCNI -- Command Center
« Reply #10 on: January 12, 2018, 08:51:14 AM »
I just got done reading Seeking Alpha's Q4 2016 conference call transcript. Assuming the transcript accurately captures what was said it was a complete trainwreck. One of the worst single CC transcripts I've ever read.

- Management appeared to attempted to obfuscate SSS. CEO: "We include the new stores in the same stores calculation." When pressed later in the call they were unable to provide the actual SSS numbers.

- Despite repeated questions, the CFO was unable to coherently explain the difference between the company's EBITDA and adjusted EBITDA metrics

- The Annual Shareholder's Meeting was pushed back from May so the company could focus on "operational performance." 

- These quotes from Joshua Horowitz with Palm Ventures:

"Obviously, youíve revised your 2015 results, if I look at last year's full year release from this time, net income was listed at $1.7 million and the release that you published last night, net income is $1.5 million. Operating income was $2.9 million in the last year's release, its $2.6 million today. So, I guess where did the $300,000 go? I donít think I've ever in my investing [career] seen a company revise its prior year earnings without even the courtesy of an explanation or reconciliation of that difference to the shareholders."

"I mean even your explanation of EBITDA and adjusted EBITDA, I mean even that doesnít make any sense it's just an installed think and careless discrimination of your financial information. And I think it's indicative of an object lack of oversight and candor. The only way to arrest this making operation is for shareholders to exercise their rights and to seek dramatic Board change. I think I speak for a lot of folks."

- The conference call was in early April 2017, but the CEO was unwilling to say if they would be opening any new stores in their fiscal Q2. It came off as the CEO going out of his way to be as vague and "black box-ey" as possible.

I'm aware that the company has since replace the CFO, but the transcript makes me question the CEO's ability to cogently explain and present what, at the end of the day, is a fairly straightforward business.



DTEJD1997

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Re: CCNI -- Command Center
« Reply #11 on: January 12, 2018, 10:10:08 AM »
I just got done reading Seeking Alpha's Q4 2016 conference call transcript. Assuming the transcript accurately captures what was said it was a complete trainwreck. One of the worst single CC transcripts I've ever read.

- Management appeared to attempted to obfuscate SSS. CEO: "We include the new stores in the same stores calculation." When pressed later in the call they were unable to provide the actual SSS numbers.

- Despite repeated questions, the CFO was unable to coherently explain the difference between the company's EBITDA and adjusted EBITDA metrics

- The Annual Shareholder's Meeting was pushed back from May so the company could focus on "operational performance." 

- These quotes from Joshua Horowitz with Palm Ventures:

"Obviously, youíve revised your 2015 results, if I look at last year's full year release from this time, net income was listed at $1.7 million and the release that you published last night, net income is $1.5 million. Operating income was $2.9 million in the last year's release, its $2.6 million today. So, I guess where did the $300,000 go? I donít think I've ever in my investing [career] seen a company revise its prior year earnings without even the courtesy of an explanation or reconciliation of that difference to the shareholders."

"I mean even your explanation of EBITDA and adjusted EBITDA, I mean even that doesnít make any sense it's just an installed think and careless discrimination of your financial information. And I think it's indicative of an object lack of oversight and candor. The only way to arrest this making operation is for shareholders to exercise their rights and to seek dramatic Board change. I think I speak for a lot of folks."

- The conference call was in early April 2017, but the CEO was unwilling to say if they would be opening any new stores in their fiscal Q2. It came off as the CEO going out of his way to be as vague and "black box-ey" as possible.

I'm aware that the company has since replace the CFO, but the transcript makes me question the CEO's ability to cogently explain and present what, at the end of the day, is a fairly straightforward business.

Now you know why I sold for a loss and went to better opportunities...

KJP

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Re: CCNI -- Command Center
« Reply #12 on: January 12, 2018, 10:28:50 AM »
In case you have not yet seen these:

Minority shareholder initiates proxy fight for control of board:  https://www.sec.gov/Archives/edgar/data/1140102/000089706917000497/cg978.htm 

Company responds:  https://www.sec.gov/Archives/edgar/data/1140102/000165495417011037/ccni_pre14a.htm

Minority shareholder replies:  https://www.sec.gov/Archives/edgar/data/1140102/000089706917000573/cg998.htm

Also, here are the brief bios of two people added to the board in 2016:

Steven Bathgate, age 63, has over 35 years of security industry experience, particularly with microcap companies. He was appointed to our Board of Directors in April 2016. In 1995 he founded GVC Capital LLC and he is the Senior Managing Partner of that firm. GVC Capital is an investment banking firm located in Denver, Colorado, focusing primarily on providing comprehensive investment banking services to undervalued microcap companies.  Prior to founding GVC Capital, Mr. Bathgate was CEO of securities firm Cohig & Associates in Denver from 1985 to 1995 and was previously Managing Partner, Equity Trading, at Wall Street West. He currently is also a director for Bluebook International, Inc. and a former director for Global Healthcare REIT. Mr. Bathgate received a Bachelor of Science in Finance from the University of Colorado, Leeds School of Business.

R. Rimmy Malhotra, age 41, was appointed to our Board of Directors on April 6, 2016. From 2013 to the present, Mr. Malhotra has served as the Managing Member and Portfolio Manager for the Nicoya Fund LP, a private investment partnership. Previously, from 2008-2013 he served as portfolio manager of the Gratio Values Fund, a mutual fund registered under the Investment Act of 1940. Prior to this, he was an Investment Analyst at a New York based hedge fund. He earned an MBA in Finance from The Wharton School and a Masterís degree in International Relations from the University of Pennsylvania where he was a Lauder Fellow. Mr. Malhotra holds undergraduate degrees in Computer Science and Economics from Johns Hopkins University.

They each own, or represent funds that own, about 2% of the company.

KJP

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Re: CCNI -- Command Center
« Reply #13 on: January 25, 2018, 01:15:16 PM »

KJP

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Re: CCNI -- Command Center
« Reply #14 on: January 26, 2018, 02:14:30 PM »
Now two board seats open:  https://www.sec.gov/Archives/edgar/data/1140102/000165495418000762/ccni_ex991.htm

I expect the proxy fight to be resolved by the activist (Ephraim Fields) receiving a few seats on the Board. 

KJP

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Re: CCNI -- Command Center
« Reply #15 on: February 07, 2018, 01:35:54 PM »

JayGatsby

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Re: CCNI -- Command Center
« Reply #16 on: February 07, 2018, 03:07:07 PM »
Met him once. Seemed like a very strong CEO in my opinion. Seems like a really tough business/industry. Very hard to find strong talent for a company of this size/nature, as evidenced by their struggles finding a CFO. Loss for the company in my opinion.

DTEJD1997

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Re: CCNI -- Command Center
« Reply #17 on: February 07, 2018, 06:53:53 PM »
CEO has now resigned:  https://www.sec.gov/Archives/edgar/data/1140102/000165495418001177/ccni_8k.htm

Two board members AND THE CEO IS OUT?  Put a fork in them, they are done....

KJP

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Re: CCNI -- Command Center
« Reply #18 on: February 08, 2018, 07:11:56 AM »
CEO has now resigned:  https://www.sec.gov/Archives/edgar/data/1140102/000165495418001177/ccni_8k.htm

Two board members AND THE CEO IS OUT?  Put a fork in them, they are done....

Earlier you said you sold because, among other things, the CEO seemed dishonest or incompetent.  Now you say that that CEO's resignation is a big negative.  How can both be true?

There's obviously alot going on behind the scenes here.  We know there is pressure from an activist campaign and looming proxy contest, the board has formed a "strategic alternatives" committee led by a new board addition who has a financial background and an ownership stake in the company, the annual meeting's been delayed, and two old-guard board members and the CEO have recently resigned.  Meanwhile, the company's operations have turned the corner, it's got ~20% of its market cap in net cash on the balance sheet and it's generating more cash every quarter. 

Perhaps I'm missing something, but I think the facts above suggest the activist campaign is having its effect behind the scenes and there's likely a transaction of some form in the offing.  If there are other inferences to draw from the facts noted above (or any others), it would be great to hear what they are and discuss them.

EDIT:  Three more points:

1.  The only recent insider activity has been a small (~$50k) purchase by a fund controlled by one of the directors:  https://www.sec.gov/Archives/edgar/data/1140102/000165495418000051/xslF345X03/section16.xml

2.  According to the most recent proxy statement, the now former CEO Bubba Sandford would have received $1.1 million in change-of-control payments if a change of control occurred on his watch.  It's unlikely he would just resign and give that up for nothing if a sale was actually in the offing.

3.  One way to manipulate earnings for a company like this is through worker's comp reserves/accruals.  Anyone interested in that can review the disclosures about that topic.
« Last Edit: February 08, 2018, 07:35:00 AM by KJP »

Tim Eriksen

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Re: CCNI -- Command Center
« Reply #19 on: February 08, 2018, 08:26:06 AM »
1. The insider activity was for board compensation.
2. Typically majority change in the Board can trigger change in control.  So it is strange to resign before any board change.  Of course new Boards don't like to pay change in control so they will look into possible justification of termination for cause.  Maybe he didn't want that to happen.