Author Topic: CCNI -- Command Center  (Read 3401 times)

brendanb22

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CCNI -- Command Center
« on: July 10, 2016, 07:15:35 PM »
Microcap stock in the blue collar staffing industry. Quite levered to the oil industry so the stock has sold off recently, but they have an extremely strong balance sheet and management team that has been strategically strengthening their positioning. Additionally just made an acquisition that will increase sales by ~10% and help to burn up NOL's

Would love to get everyone's thoughts. Writeup below

http://seekingalpha.com/article/3358195-command-center-under-followed-micro-cap-with-100-percent-upside
« Last Edit: July 11, 2016, 06:12:38 PM by brendanb22 »


randomep

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Re: CCNI
« Reply #1 on: July 10, 2016, 11:44:05 PM »
Hi, thanks for bringing this to our attention. I like microcaps. However, I don't understand what is the big deal about this one.  They lost money last quarter. And they are dependent on oil?

The seeking alpha article is from 2014 and things haven't panned out, as least as far as I can tell from my 15min of cursory analysis.


brendanb22

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Re: CCNI
« Reply #2 on: July 11, 2016, 06:12:11 PM »
1. They are exposed to oil in the Bakken region, but increasingly less so -- only about 10% of their current revenue.
2. They are making significant margin improvements and are on track to gain a few gross margin + opex % points
3. Mgmt has opportunistically acquired businesses during the downturn and just acquired Hancock staffing which helps their diversification and increased sales volume
4. Large cash + NOL position and are increasingly buying back shares

KJP

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Re: CCNI -- Command Center
« Reply #3 on: September 12, 2017, 10:35:14 AM »
The business appears to have turned the corner over the last year, but the share price hasn't budged.  After accounting for cash and DTAs, this is a company on the upswing now trading around 7 p/e.  Also, the company is using its excess cash to buy back shares.  Nobody would confuse this with a great business, but if you can collect enough companies like it at valuations like this, I think you will do well.

Quick math:
Rev: $100 million
GM: 26%
GP: $26 million
SG&A:  $22 million
EBIT: $4 million
Tax Rate: 37.5%
NI: $2.5 million

Shares: 61 million
Share Price: $0.37
Market Cap:  $22.5 million
Cash + DTAs: $5 million
EV: $17.5 milion

EV/NI = 7

DTEJD1997

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Re: CCNI -- Command Center
« Reply #4 on: September 12, 2017, 10:42:24 AM »
Hey all:

I had been invested in this one for a while, but sold out (for a loss).  A couple/few quarters ago...they had some type of kerfluffle with their earnings report.  I lost faith in management after that.

The valuation is indeed not too bad...but the stock is down tremendously...they simply can't seem to overcome their past difficulties/declines.

KJP

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Re: CCNI -- Command Center
« Reply #5 on: September 12, 2017, 11:43:29 AM »
Hey all:

I had been invested in this one for a while, but sold out (for a loss).  A couple/few quarters ago...they had some type of kerfluffle with their earnings report.  I lost faith in management after that.


There was an accounting issue.  The CFO recently "resigned":  http://filings.irdirect.net/data/1140102/000165495417006926/ccni_8k.pdf

Management has also been publicly flogged about, among other things, the downturn in performance in 2016 and the accounting restatement.  See, in particular, the Q4 2016 conference call:  https://seekingalpha.com/article/4061773-command-centers-ccni-ceo-bubba-sandford-q4-2016-results-earnings-call-transcript?part=single

Here's a note from page 39 in the 2016 10-K:
Special Committees: In February 2017, our Board established the Strategic Alternatives Committee as a special committee and appointed John Schneller, JD
Smith, Rimmy Malhotra and Steven Bathgate to serve on the committee. Subsequently, the Strategic Alternatives Committee appointed Rimmy Malhotra as
chair. The Committee is empowered to identify and evaluate strategic opportunities available to the Company. We anticipate that the Committee will engage the
services of an investment banking firm to assist the Committee in fulfilling this assignment. Each of the members of the Strategic Alternatives Committee meets
the independence standards for independent directors under NASDAQ Listing Rules.

I think a strategic buyer could easily cut out at least $1 million in SG&A from board fees and redundant executive comp.

The valuation is indeed not too bad...but the stock is down tremendously...they simply can't seem to overcome their past difficulties/declines.

What do you mean by "they simply can't seem to overcome their past difficulties/declines"?  Are you referring to the stock price or the operating performance?
« Last Edit: September 12, 2017, 11:51:23 AM by KJP »

DTEJD1997

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Re: CCNI -- Command Center
« Reply #6 on: September 12, 2017, 06:10:50 PM »

What do you mean by "they simply can't seem to overcome their past difficulties/declines"?  Are you referring to the stock price or the operating performance?

I am referring to both.  The stock price has done NOTHING but go down for years...

Their operating performance, while initially better under Bubba, seems to have cratered (closely related to oil price collapse) and now they are scratching & clawing their way back.  Only problem is that the improvements they make are just so minimal.

I also seem to have read that they had $500k in bad debt expense related to two companies.  How in the heck do they allow 2 customers to ring up a 500K bad debt?

I suppose somebody MIGHT do ok with this IF they got into the stock at ROCK BOTTOM levels (under $.31) and they hold it for a few years, AND there is some continued improvements....but I just don't see it.

I took my money & attention elsewhere, to "greener fields".

Good luck if you are still in it!

KJP

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Re: CCNI -- Command Center
« Reply #7 on: November 13, 2017, 02:16:37 PM »
10-Q out:  https://www.sec.gov/Archives/edgar/data/1140102/000165495417010482/ccni_10q.htm

$1.6 million in EBIT for the quarter. 

And this from the subsequent events disclosure:
"On November 11, 2017, our Board approved a 1-for-12 reverse stock split with an anticipated effective date of December 7, 2017. This reverse split becoming
effective on that date is contingent upon us filing Articles of Amendment with the state of Washington and receiving approval from the Financial Industry
Regulatory Authority. As of November 13, 2017, these contingencies have not been met. If this reverse split becomes effective, it will reduce future common and
preferred stock amounts and stock options, and increase common stock per share amounts, by a factor of twelve. Our Board approved this reverse split in order
for us to meet the minimum share price requirement in connection with our pending application for listing on the NASDAQ Capital Market. However, there can be
no assurance that our listing application will be approved by NASDAQ."
« Last Edit: November 14, 2017, 12:00:21 PM by KJP »

Foreign Tuffett

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Re: CCNI -- Command Center
« Reply #8 on: January 12, 2018, 08:04:09 AM »

What do you mean by "they simply can't seem to overcome their past difficulties/declines"?  Are you referring to the stock price or the operating performance?

I am referring to both.  The stock price has done NOTHING but go down for years...

Their operating performance, while initially better under Bubba, seems to have cratered (closely related to oil price collapse) and now they are scratching & clawing their way back.  Only problem is that the improvements they make are just so minimal.

I also seem to have read that they had $500k in bad debt expense related to two companies.  How in the heck do they allow 2 customers to ring up a 500K bad debt?

I suppose somebody MIGHT do ok with this IF they got into the stock at ROCK BOTTOM levels (under $.31) and they hold it for a few years, AND there is some continued improvements....but I just don't see it.

I took my money & attention elsewhere, to "greener fields".

Good luck if you are still in it!

I've been on the other side of these temp labor situations a few times, so I may have a little insight on the bad debt issue. Temporary manual labor staffing is fiercely competitive in most markets, so companies often feel pressured to chase business and/or be as flexible as possible to preserve existing relationships. This can result in payment terms and conditions that are quite favorable to the customer.

Also, they are active in energy driven-markets, especially the Bakken, so some of their customers may have gone from "hero to zero" quickly. Often the credit departments of service companies are slow to adjust for their changing industry conditions. That may have been the case here. 

KJP

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Re: CCNI -- Command Center
« Reply #9 on: January 12, 2018, 08:09:18 AM »

I've been on the other side of these temp labor situations a few times, so I may have a little insight on the bad debt issue. Temporary manual labor staffing is fiercely competitive in most markets, so companies often feel pressured to chase business and/or be as flexible as possible to preserve existing relationships. This can result in payment terms and conditions that are quite favorable to the customer.

Also, they are active in energy driven-markets, especially the Bakken, so some of their customers may have gone from "hero to zero" quickly. Often the credit departments of service companies are slow to adjust for their changing industry conditions. That may have been the case here.

A good reminder that Command Center is not a "good" business, i.e., it likely has no significant competitive advantages.  Instead, any investment case likely must rest on a mean-reversion, "average business selling at well below average price" argument.