COMMAND CENTER INC CCNI
December 02, 2015 - 2:33pm EST by
castor13
2015 2016
Price: 0.52 EPS 0 0
Shares Out. (in M): 66 P/E 0 0
Market Cap (in $M): 34 P/FCF 0 0
Net Debt (in $M): -6 EBIT 0 0
TEV ($): 29 TEV/EBIT 0 0

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Description

Command Center supplies short-term manual labor for the hospitality (25% of revenue), retail (20%), construction (20%), warehousing (20%) and transportation /auto auctions (15%) industries and has traded off significantly this year as Bakken-based revenue has weighed on revenue growth.  It currently trades at 6x LTM EBITDA and at a steep discount to peers.  The Company employs over 32k workers and owns/operates 57 on-demand labor stores in 22 states to serve as flex capacity for businesses that need to adjust staffing levels to meet sudden shifts in production or temporarily replace full-time employees.  Its top 10 customers accounted for 27% of 2014 revenue.

Staffing companies primarily compete on price and availability.  The industry is highly fragmented (a significant proportion have fewer than 5 locations) and entry barrier are minimal, although onerous working capital demands - particularly in the spring/summer - can hamper growth for smaller players.  There are some local scale economics in the form of better matching staffing with client need and training costs, but not much.  According to the Company, in the US there are 100 large, national staffing companies and 10,000 that operate at the local level.  CCNI sizes the total U.S. staffing market at $100bn with light industrial/blue-collar (CCNI’s market) representing 28% of that.  Laborers are typically paid on the same day services are performed while customers typically pay CCNI after 30-days.  The Company has a full recourse factoring agreement in which Wells Fargo pays 90% of face value for eligible accounts that goes through April 2016.    

In 2006 the Company acquired 57 stores from former franchisees and opened an additional 20 additional, shifting its focus from franchising to operating on-demand staffing stores.  The Company really misfired after that, investing heavily in infrastructure to support its goal of hitting 100 stores by 2008 just as the economy turned.  Revenue was cut by almost have in 2008 and 2009 and the Company scrambled to cut costs and close stores.     

In February 2013, the founder/CEO Glenn Welstad was deposed and replaced by Frederick “Bubba” Sanford (a former Navy SEAL/consultant/serial entrepreneur), who refocused the Company on profitability.  During his first two years, things progressed nicely - redundant costs were cut, unprofitable branches closed, working capital rationalized.  Unfortunately, CCNI also pushed into oil/gas tethered regions and the subsequent stress in the energy sector has precipitated depressed economic conditions in the Bakken region (where the Company has 5 offices), decimating a > company-average margin source of revenue and catalyzing a ~30% sell-off in CCNI shares since January.  But outside of the Bakken, things are pretty swell…revenue growth in branches outside of North Dakota has grown 11.4% YTD, even as CCNI’s Bakken branches have declined by 36.6%. 

Still, I think the sell-off excessive.  I estimate that the Company has about $15mn in annual revenue from Bakken.  If we assume that Bakken revenue declines another 50% from here (mind you, the LTM numbers already reflect most of the selloff) while the balance comps at +hsd (as it has been), we’re probably looking at a $1.5mn hit to LTM EBITDA, bringing it to around low $3’s million.  CCNI shares are currently trading at ~9x-9.5x that number, which is still a discount to peers who trade around 10x (BGSF – 8.7x; KELYA – 12.8x; KFRC – 10.9x; MAN – 9.5x; ASGN – 16.6x; TBI – 9.4x).  Also significantly, CCNI has continued to generate about 8c in FCFE/share LTM (15% of the current share price). 

In a bear case scenario in which Bakken revenue falls another 50% and non-Bakken comps down 20% (similar to CCNI’s comp in 2009), the EBITDA burn might be around $2.5mn-$3mn (assuming no reactionary cost cuts), which, given the Company’s strong balance sheet, is hardly devastating.  At 0.2x that revenue (where the Company traded in 2009), this is a $0.20 stock.

It doesn’t seem to unreasonable to suppose that NTM Bakken revenues stay flat from today while the rest of Command comps msd/hsd, in which case we might be looking at $6.5mn in EBITDA.  This is a mediocre business that probably isn’t worth more than 7x….but still, with that, plus say another 8c in interim cash build, we’re at nearly 90c in per share value…..and there’s further upside from branch openings and acquisitions. 

But until that time comes, management is focused on improving same store sales, branch growth, acquisitions and share buybacks (authorization for ~14% of dso) in that order.  The returns on new branches are quite attractive – I think they can probably do $110k in EBITDA per branch at maturity (~2 year ramp; hsd margins) and working capital requirements should be rather minimal, maybe $250k-$300k, because of its factoring facility with Wells Fargo; but the Company tells me that finding store managers remains the key binding constraint.  Wrt acquisitions, the CCNI will typically pay a seller’s multiple of 2.5x-3.5x EBITDA on smaller fold-ins and up to 4x on larger ones where it can find some overhead synergies.  In any case - large or small, synergies or no - the returns well exceed its capital costs.  I think that the buyback authorization, while big at 14% of shares, will be tough to fully execute given the illiquid nature of the stock.

 

Finally, there’s been some meaningful insider buying from a director in September in the high-50c range and by Bubba in August at around the current price. 

I do not hold a position with the issuer such as employment, directorship, or consultancy.
I and/or others I advise do not hold a material investment in the issuer's securities.

Catalyst

None

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    Description

    Command Center supplies short-term manual labor for the hospitality (25% of revenue), retail (20%), construction (20%), warehousing (20%) and transportation /auto auctions (15%) industries and has traded off significantly this year as Bakken-based revenue has weighed on revenue growth.  It currently trades at 6x LTM EBITDA and at a steep discount to peers.  The Company employs over 32k workers and owns/operates 57 on-demand labor stores in 22 states to serve as flex capacity for businesses that need to adjust staffing levels to meet sudden shifts in production or temporarily replace full-time employees.  Its top 10 customers accounted for 27% of 2014 revenue.

    Staffing companies primarily compete on price and availability.  The industry is highly fragmented (a significant proportion have fewer than 5 locations) and entry barrier are minimal, although onerous working capital demands - particularly in the spring/summer - can hamper growth for smaller players.  There are some local scale economics in the form of better matching staffing with client need and training costs, but not much.  According to the Company, in the US there are 100 large, national staffing companies and 10,000 that operate at the local level.  CCNI sizes the total U.S. staffing market at $100bn with light industrial/blue-collar (CCNI’s market) representing 28% of that.  Laborers are typically paid on the same day services are performed while customers typically pay CCNI after 30-days.  The Company has a full recourse factoring agreement in which Wells Fargo pays 90% of face value for eligible accounts that goes through April 2016.    

    In 2006 the Company acquired 57 stores from former franchisees and opened an additional 20 additional, shifting its focus from franchising to operating on-demand staffing stores.  The Company really misfired after that, investing heavily in infrastructure to support its goal of hitting 100 stores by 2008 just as the economy turned.  Revenue was cut by almost have in 2008 and 2009 and the Company scrambled to cut costs and close stores.     

    In February 2013, the founder/CEO Glenn Welstad was deposed and replaced by Frederick “Bubba” Sanford (a former Navy SEAL/consultant/serial entrepreneur), who refocused the Company on profitability.  During his first two years, things progressed nicely - redundant costs were cut, unprofitable branches closed, working capital rationalized.  Unfortunately, CCNI also pushed into oil/gas tethered regions and the subsequent stress in the energy sector has precipitated depressed economic conditions in the Bakken region (where the Company has 5 offices), decimating a > company-average margin source of revenue and catalyzing a ~30% sell-off in CCNI shares since January.  But outside of the Bakken, things are pretty swell…revenue growth in branches outside of North Dakota has grown 11.4% YTD, even as CCNI’s Bakken branches have declined by 36.6%. 

    Still, I think the sell-off excessive.  I estimate that the Company has about $15mn in annual revenue from Bakken.  If we assume that Bakken revenue declines another 50% from here (mind you, the LTM numbers already reflect most of the selloff) while the balance comps at +hsd (as it has been), we’re probably looking at a $1.5mn hit to LTM EBITDA, bringing it to around low $3’s million.  CCNI shares are currently trading at ~9x-9.5x that number, which is still a discount to peers who trade around 10x (BGSF – 8.7x; KELYA – 12.8x; KFRC – 10.9x; MAN – 9.5x; ASGN – 16.6x; TBI – 9.4x).  Also significantly, CCNI has continued to generate about 8c in FCFE/share LTM (15% of the current share price). 

    In a bear case scenario in which Bakken revenue falls another 50% and non-Bakken comps down 20% (similar to CCNI’s comp in 2009), the EBITDA burn might be around $2.5mn-$3mn (assuming no reactionary cost cuts), which, given the Company’s strong balance sheet, is hardly devastating.  At 0.2x that revenue (where the Company traded in 2009), this is a $0.20 stock.

    It doesn’t seem to unreasonable to suppose that NTM Bakken revenues stay flat from today while the rest of Command comps msd/hsd, in which case we might be looking at $6.5mn in EBITDA.  This is a mediocre business that probably isn’t worth more than 7x….but still, with that, plus say another 8c in interim cash build, we’re at nearly 90c in per share value…..and there’s further upside from branch openings and acquisitions. 

    But until that time comes, management is focused on improving same store sales, branch growth, acquisitions and share buybacks (authorization for ~14% of dso) in that order.  The returns on new branches are quite attractive – I think they can probably do $110k in EBITDA per branch at maturity (~2 year ramp; hsd margins) and working capital requirements should be rather minimal, maybe $250k-$300k, because of its factoring facility with Wells Fargo; but the Company tells me that finding store managers remains the key binding constraint.  Wrt acquisitions, the CCNI will typically pay a seller’s multiple of 2.5x-3.5x EBITDA on smaller fold-ins and up to 4x on larger ones where it can find some overhead synergies.  In any case - large or small, synergies or no - the returns well exceed its capital costs.  I think that the buyback authorization, while big at 14% of shares, will be tough to fully execute given the illiquid nature of the stock.

     

    Finally, there’s been some meaningful insider buying from a director in September in the high-50c range and by Bubba in August at around the current price. 

    I do not hold a position with the issuer such as employment, directorship, or consultancy.
    I and/or others I advise do not hold a material investment in the issuer's securities.

    Catalyst

    None

    Messages


    SubjectFew questions to start discussing going
    Entry12/03/2015 03:28 AM
    MemberAres

    Castor13, thank you for the write up. 

    Let me ask you a few questions. 

    1. Operating margin.  What's your view on an operating margin going forward? 

    2. Workers comp and insurance.  The deductible per incident is pretty high as far as I recall. Are you concerned?

    3. Where are we in the cycle.  We have a very low unemployment rate in the U.S. now.  This would benefit temp staffing companies.  Do you think you may be buying at the peak of the cycle in terms of earnings?

    Tnx in advance.

    Ares 


    SubjectRe: Few questions to start discussing going
    Entry12/03/2015 05:07 PM
    Membercastor13

    thanks for your questions.

     
    re: operating margins
     
    close to 90% of costs vary with revenue, so not a lot of operating leverage in either direction, which keeps operating margins within fairly constrained bands.  in an industry like this, with no sustainable competitive advantages, the best any company can really do is operate as efficiently as possible and on that front, I think Bubba & co. perform admirably relative to peers...the company's decentralized model comes w/ little overhead and a meaningful proportion of branch manager comp is tied to store level profitability...with respect to cost cuts/operating efficiencies, the low hanging fruit has been mostly picked at this point and the focus now is same store sales growth and safety.  i would expect no better than high-single-digit EBITDA margins (7%-8%) for a company like this and you're probably averaging about 6% through a business cycle.    
     
    re: worker's comp
     
    it's a trade-off right?  so, they're exposed to some more risk but they get a break on premiums; thus far, they've done a very fine job containing wc costs (before Bubba got there, it was running around 6-7% of rev, now it's down to < 3%).  i could be wrong, but moving the deductible from 250 to 500 doesn't seem to me like that big of a deal in the context of the company's cash generation, and overall, management strikes me as pretty conservative/risk averse.....i'm sure they carefully ran through the saved premiums vs. expected claims payout calculus and decided in-housing was more economical.
     
    re: employment cycle / peak earnings
     
    i think you have to look at their revenue by industry (they're pretty well diversified) and sort of go down the line. i think assuming 08/09 as a downside case is sufficiently onerous...everyone can assign probabilities as they will.  i feel you though, big picture, it does sort of feel like demand is generally waning across multiple sectors (based on the conference calls of various companies i listened to last quarter), so size appropriately.

    SubjectRe: Re: Few questions to start discussing going
    Entry12/03/2015 05:38 PM
    MemberAres

    Thank you for your responses, Castor.  

    When I spoke with CFO and asked about Co's target / goal / long-term vision on operating margins (not EBITDA margins, but different is small given low D&A), he gave me a very broad range of 5% to 8%.  My reaction was "you are already doing that. Shouldn't you aim higher?"

    I have done some work on the name, run the valuation, etc.  It seems cheap.  But there is just smth that does not make me comfortable to put it as a long (it of course does not mean that it is a bad long whatsoever!).  Maybe it is a lack of any sustainable competitive advantage.  

    Let me ask you smth else.  It looks like the industry is consolidating.  Have you looked at potential M&A scenarios?  Who do you think can become acquirers?  I have not done much work on this angle so would appreciate your thoughts.  

     


    SubjectRe: Re: Re: Re: Few questions to start discussing going
    Entry12/09/2015 06:20 AM
    MemberAres

    Thank you, Castor.  Appreciate your thoughts.  I was actully thinking more along the lines of CCNI being acquired by someone else instead of CCNI going on a buying spree.  


    SubjectRe: Re: Re: Re: Re: Few questions to start discussing going
    Entry12/14/2015 07:31 AM
    Memberjm671

    Too bad Bubba has done such a terrible job on IR, which has really hurt the stock price.  Hopefully he has learned a painful lesson.  Who knew a former navy seal would be scared of a bunch of microcap investors!!


    Subjectnew Board Member / continued buyback
    Entry04/12/2016 11:10 AM
    Membermrsox977

    Command Center announced a new Board member today, Rimmy Malhotra.

    http://finance.yahoo.com/news/command-center-appoints-rimmy-malhotra-110000562.html

    This should be a big positive for the Company as Rimmy is known as an astute value investor.  We hope that he will continue to push for an increased share buyback.

    We see no reason that CCNI can't earn a consistent $4-$5m in EBITDA as the oil regions stabilize.  Their non oil regions are growing nicely and there are big tailwinds for temporary employment.

    This cash flow stream plus the NOL is worth substantially more than the current share price and we hope that Rimmy can help close that gap.


    SubjectRe: new Board Member / continued buyback
    Entry04/12/2016 12:06 PM
    Memberzzz007

    mrsox,

    Hope you're right. What are you basing your assesment of him as an "astute value investor" on? Resume seems thin to me, but limited info admittedly available.

    zzz


    SubjectRe: Re: new Board Member / continued buyback
    Entry04/12/2016 03:47 PM
    Membermrsox977

    Rimmy worked at Spencer for a number of years and had great training there.  Spencer Capital has an excellent reputation for deep value investing and (occasional) activism.


    Subjectbuyback - note from 8K that included new BOD member announcement
    Entry04/13/2016 12:09 PM
    Membermrsox977

    Prior to joining the Board, Mr. Malhotra executed and there is currently in effect a “10b-5 plan” as prescribed by Rule 10b5-1(c)(1) of the Securities Exchange Act of 1934, as amended, for the purchase of Command Center common shares.


    SubjectForm 3 shows new Director owns over 1.2m shares
    Entry04/13/2016 02:42 PM
    Membermrsox977

    Form 3 just hit the tape showing the new director owns 1.286m shares, or roughly 2% of the Company.  This should truly help align Board and Shareholder interests.


    SubjectCCNI buys competitor for 2.4x EBITDA - shares undervalued by 50-60%
    Entry06/07/2016 04:21 PM
    Membermrsox977

    CCNI announced the acquisition of Hancock Staffing yesterday.  The 8-K was not filed until today.  According to the 8-K, The business that CCNI bought had the following results for the year ended Dec 31 2015:

    Sales: $8.2m

    Gross Profit: $1.92m

    EBIT: $0.54m

    Adj EBITDA (includes addbacks): $0.92m

    We have attempted to make a guess on what the addbacks could be given the info in the 8-K and come to the following guess:

    Addbacks:

    Salaries: 190k

    Payroll tax: 20k

    Acct & Legal: 40k

    Health Ins: 20k

    Total Addbacks: 270k

    CCNI paid roughly $2m for this business + another 200k in earnout.

    At $2.2m / 920k this equates to 2.4x EBITDA

    Pro Forma, we think that core CCNI is capable of modest growth this year (5%) and EBITDA margins of at least 5%

    Core CCNI:

    Sales: $93m

    EBITDA: $4.6 - $5.0m

    If we add the $920k in acquired EBITDA (assumes no growth and that our addbacks are very modest), we get to:

    total CCNI EBITDA range: $5.5m - $6.0m

    Since CCNI has no debt and has a fair amount of NOLs, we can assume that EBIT approximates Net Income.

    EBITDA: $5.5 - $6.0m

    less D&A: $0.3m

    Net Income: $5.2 - $5.7m

    eps: $0.08 - $0.09

    This puts CCNI at 5x earnings.

    At 8x earnings, a discount to where True Blue (TBI) trades, the stock is worth $0.68, or 60% more than the current price today.


    SubjectRe: CCNI buys competitor for 2.4x EBITDA - shares undervalued by 50-60%
    Entry09/21/2016 01:49 PM
    MemberAres

    mrsox977,

    Have you revised your Core CCNI estimates or are you sticking to those you posted on June 7, 2016?  

    LTM Adj EBITDA / LTM EBIT do not look too inspiring.  Hence, I was wondering what I am missing. 

    Thank you in advance!

    Ares


    SubjectFrom 2016 10-K...
    Entry04/12/2017 08:36 AM
    Memberzzz007

    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.


    SubjectRe: From 2016 10-K...
    Entry04/12/2017 10:39 AM
    Membermrsox977

    Was anybody on the call yesterday?  Lots of angry investors.  My sense is that one of two things happen.  1. The Company gets sold  2. The Board finally realizes that the CEO has to go.  He was a great turn-around guy, but clearly cannot run the business.  CCNI should be able to do $5-$6m in EBITDA before any synergies and public company cost savings.  The EV is around $20m.  Am I alone in thinking $0.75c-$1.00 per share is possible in a sale?


    SubjectActors invovled
    Entry04/12/2017 04:10 PM
    MemberAres

    I wanted to ask those who have been following it closely over the years and would appreciate your input.  Michael Potter of Monarch Capital Group referred to an adversarial relationship between Bubba, some BoD members and some large shareholders.  Any color that you can share who does not like and opposes whom?  Big thanks in advance.  Ares


    SubjectRe: Re: Re: From 2016 10-K...
    Entry04/13/2017 12:50 AM
    Membermrsox977

    Modest same store sales growth at core CCNI should yield $94m in sales this yr.

    This business should be able to earn 26% Gross Margins, or $24.4m

    At $20m of SG&A you get $4.4m in EBITDA

    Hancock is good for another 1m in EBITDA

    total = 5.4m in EBITDA


    SubjectRe: Re: Re: Re: From 2016 10-K...
    Entry04/13/2017 01:35 PM
    MemberAres

    Thank you.  Appreciate you sharing your math.  Ares


    SubjectRe: Re: Re: Re: From 2016 10-K...
    Entry04/13/2017 08:28 PM
    Memberjm671

    2016 revenue pro Forma a full year of Hancock acquisition was $97 million 


    SubjectRe: Re: Re: Re: Re: From 2016 10-K...
    Entry04/14/2017 02:50 AM
    Membermrsox977

    There are strong synergies that an acquirer could pick up.

    - Executive salaries eliminated

    - Workers Comp savings

    - Public Company Costs (legal/accounting)

    - Investor Relations / Board Fees / Listing Fees

    All told, with modest growth this year CCNI is a $95-$97m busines that can do 25-26% gross margins.  They should build another 2-3m in cash by end of year.  Investors are thus paying $17m in EV for a business with ~$25m in gross profit.  If SG&A were brought in and the above synergies are added up, the $25m in gross profit is easily $5-$7m in EBITDA.  At 7x the midpoint of that number its a 75c-80c stock.


    SubjectHurricane Disaster Recovery Services
    Entry08/29/2017 01:52 PM
    Membermrsox977

    Do these guys still have a disaster recovery unit?  I recall in the aftermath of Hurricane Sandy they provided workers to help with the clean-up.  EBITDA margins were 5% in the year that followed.  Any idea?  thx


    Subject$5m buyback announced (more than 20% of company) still following?
    Entry09/15/2017 09:33 AM
    Membermrsox977
    From: Business Wire
    Sep-15-2017 7:00 AM (58 minutes ago)

    DENVER--(BUSINESS WIRE)--
    The board of directors of Command Center, Inc. (OTCQB: CCNI), a national
    provider of on-demand and temporary staffing solutions,has
    authorized a new three-year, $5.0 million stock repurchase program,
    effective September 5, 2017.


    The program replaces the company’s prior three-year, $5.0 million
    repurchase program, which was put into place on April 20, 2015. Under
    the prior plan, approximately 6.1 million shares were purchased and
    retired for $2.9 million, or approximately $0.47 per share. During the
    fourth quarter of 2016, the company suspended purchases under the prior
    2015 repurchase plan, and no shares have been purchased subsequent to
    that time. As of the effective date of the current 2017 repurchase plan,
    the prior 2015 plan is no longer in effect.


    “Share repurchases have and will continue to be an important component
    of our capital allocation strategy,” said Bubba Sandford, president and
    CEO of Command Center. “Our strong financial results for the past
    several quarters have strengthened our balance sheet, providing not only
    the flexibility to opportunistically repurchase our own shares but also
    allowing us to continue evaluating additional store openings and
    potential acquisitions. We continue to believe these strategies are
    optimal for driving long-term shareholder value.”


    The shares authorized to be repurchased under the new repurchase program
    may be purchased from time to time at prevailing market prices, through
    open market or in negotiated transactions, depending upon market
    conditions. Activity in the repurchase program will begin immediately
    and will be funded using the company’s working capital. There is no
    guarantee as to the exact number of shares that will be repurchased by
    the company or the timeframe within which they may be purchased. The
    company may discontinue repurchases under the plan if management
    determines additional repurchases are not warranted.

     

    SubjectRe: Re: $5m buyback announced (more than 20% of company) still following?
    Entry09/15/2017 10:02 AM
    Membermrsox977

    I can only think of a few reasons.... all guesses.

    1. we don't know the parameters of the old plan -- the new plan could give them more latitude on price etc

    2. their SEC filings indicated that a Strategic Alternatives Committee had been formed in Feb 2017 -- even though this was not press released.  Perhaps the conclusion of this Committee's work is that they are better off buying back their own shares.  That committee could have suggested that the best way to memorialize their conclusion was by enacting a new plan to replace the old plan.  Necessary? Probably not but probably cleaner from a governance standpoint.

    3. the stock has gone nowhere despite improved operating results and shareholders are getting frustrated -- this is the positive headline motivation you suggest.

    all speculation on our part - but we will take it


    SubjectAmen
    Entry09/27/2017 08:08 AM
    Membermrsox977
    Ephraim Fields Criticizes Command Center's Board of Directors for Bylaw Amendment
     
     
     
    From: ACCESSWIRE (Canada)
    Sep-27-2017 8:01 AM (4 minutes ago)

     

    NEW YORK, NY / ACCESSWIRE / September 27, 2017 / Earlier today, Ephraim Fields, of Echo Lake Capital, issued the following letter to certain members of the Board of Directors of Command Center Inc.:

    To:

    John D. Stewart - Board Director of Investors Real Estate Trust
    Frederick Bubba Sandford - CEO of Command Center
    John M. Schneller - Town Councilor for Bedford, New Hampshire
    J.D. Smith - Owner of Real Estate Investment Consultants, LLC
    Richard Finlay - CFO of BNB Builders, Inc.

    As longtime shareholders of Command Center Inc. (OTCQB: CCNI), we are disappointed, but not surprised, that you have once again taken steps to further entrench yourselves and protect your generous paychecks while further limiting the rights of CCNI's shareholders.

    Recently, you amended the company's bylaws to make it even more onerous for shareholders to submit Stockholder Proposals. Among other things, the amendment provided shareholders only approximately one week to submit a proposal for the 2017 shareholder meeting. We fail to see why this amendment was necessary or why it was in the best interests of all shareholders. We also note that in what we consider to be a cowardly, inexcusable and non-transparent move, you waited three days to publicly file the amended bylaws, which made it even more difficult (but clearly not impossible) for shareholders to submit a proposal for the 2017 meeting.

    Your decision to amend the bylaws follows your decision earlier this year to cancel the annual shareholder meeting that had been scheduled for May. As we noted in our April 13, 2017 letter to you, we find it inexcusable that you canceled the meeting and, to make matters worse, provided shareholders no justification for your actions.

    Considering how poorly CCNI's stock price has performed during your tenure, don't you have better things to do with your time (and shareholders' money) than to take steps that further limit shareholders' rights and further entrench your positions?

    We believe you have repeatedly failed to uphold your fiduciary responsibility to act in the best interests of shareholders. In addition, we believe you lack the appropriate industry and public company board experience. Furthermore, we find it disgraceful that despite your many years of Board service, most of you own very little CCNI shares (besides those that were given to you as compensation) so your financial incentives are clearly not aligned with those of other CCNI shareholders.

    Based on CCNI's poor performance, we wonder what exactly each of you has accomplished and contributed during your tenure as a Director and why you think shareholders should support your continued service. We believe any reasonable person would agree that a more qualified and incentivized Board of Directors could easily create significant shareholder value at CCNI. Your failures at CCNI (and elsewhere) deserve further scrutiny.

    Sincerely,

    Ephraim Fields

    Contact:

    ef@echolakecapital.com

    SOURCE:Echo Lake Capital


    Subjectinsider buying
    Entry10/04/2017 01:48 PM
    Memberjm671

    Chairman just bought 115,000 shares at 45c which is the largest insider purchase a while. 


    SubjectActivist calls on Chairman to resign
    Entry10/10/2017 08:39 AM
    Membermrsox977
    Ephraim Fields Calls for Resignation of John D. Stewart from Board of Command Center
     
     
     
    From: ACCESSWIRE (Canada)
    Oct-10-2017 8:01 AM (31 minutes ago)

     

    NEW YORK, NY / ACCESSWIRE / October 10, 2017 / Earlier today, Ephraim Fields of Echo Lake Capital issued the following letter to John D. Stewart, Board Chairman of Command Center Inc.:

    To: John D. Stewart - Board Director of Investors Real Estate Trust, Minot, North Dakota

    As one the company's largest shareholders, we believe you lack the skill set necessary to effectively serve as the Chairman of the Board of Command Center Inc. (OTCQB: CCNI) and that you have repeatedly failed to act in the best interests of shareholders. Considering how poorly CCNI and its stock have performed during your board tenure, we believe it is in the best interests of all shareholders if you resign immediately. In addition, we find it distasteful that during your four years as a CCNI director you have received over $260,000(1) in board fees while CCNI's stock price has performed poorly.


    1) POOR STOCK PERFORMANCE DURING YOUR TENURE(2)

    Since you joined the Board on November 7, 2013, CCNI's stock price has increased only 11.7%, while the Russell 2000 has increased 36.9%. This dramatic underperformance is especially infuriating considering the tremendous job growth that has occurred during this time in the USA, which CCNI has apparently failed to capitalize on.


    2) YOUR BOARD COMPENSATION

    We estimate you have received over $260,000 in compensation for your board service over the past four years. We consider this amount to be wildly excessive considering how poorly the company and its stock have performed and how small of a company CCNI is. As a frame of reference, your $260,000 of compensation equals one-third of CCNI's net income for all of 2016.


    3) QUESTIONABLE BOARD ACTIONS

    We believe that as the Board Chairman you have failed to act in the best interests of shareholders on many occasions and that your actions (or failure to act) have significantly harmed shareholders. In particular, we note that during your tenure CCNI has:

    • (i) Experienced disappointing revenue and earnings growth
    • (ii) Had 3 different CFOs in the past 13 months
    • (iii) Granted increased compensation to the CEO and general counsel, despite their questionable performance
    • (iv) Frequently failed to report quarterly results on time
    • (v) Suffered poor employee morale
    • (vi) Potentially failed to take appropriate write downs related to Freestone Insurance
    • (vii) Taken steps we consider to be unfriendly to shareholders including:
      - a. Postponing a previously scheduled annual shareholder meeting
      - b. Changing the corporate bylaws to make it more difficult for shareholders to submit Stockholder Proposals

    4) YOUR SKILL SET

    We wonder what skills you have that make you an appropriate Chairman for CCNI. Your bio indicates you have extensive experience in real estate as the president of a private multi-family residential and commercial real estate company. However, we fail to understand how that background is in anyway helpful for CCNI, a staffing company that owns no real estate. We also feel you lack the appropriate public company board experience. While we understand you are Vice Chairman (whatever that entails) of Investors Real Estate Trust (IRET), that company is in a completely different industry and the company and its stock face vastly different challenges than do CCNI. We note that IRET's stock price is down 25% over the past five years and down 13% this year alone.

    Finally, if you think we are the only shareholders who are disappointed with your performance, we remind you that at CCNI's last shareholder meeting:

    1. Of the seven directors who were up for election, you received one of the fewest votes in favor of your board candidacy
    2. More than 50% of the shares that could have voted in favor of your board candidacy did not do so

    Sincerely,

    Ephraim Fields

     


    SubjectActivist proposes new slate of directors
    Entry10/11/2017 08:13 AM
    Membermrsox977
    Ephraim Fields Proposes Alternate Slate for Command Center Board of Directors
     
     
     
    From: ACCESSWIRE (Canada)
    Oct-11-2017 8:00 AM (3 minutes ago)

     

    NEW YORK, NY / ACCESSWIRE / October 11, 2017 / Mr. Ephraim Fields of Echo Lake Capital, the beneficial owner of approximately 4.3% of the shares of Command Center Inc. (OTCQB: CCNI), today announced plans to nominate an alternate slate of five directors at CCNI's next annual shareholder meeting. Seven CCNI directors are scheduled to be elected at the shareholder meeting. Mr. Fields had previously nominated an alternate slate of directors in March 2017, but the Board of Directors (the "Board") postponed the shareholder meeting (without providing shareholders an explanation) that had been scheduled for May 2017.

    CCNI's stock price is virtually unchanged from where it was four years ago, and Mr. Fields believes it has dramatically underperformed numerous benchmarks, especially considering the tremendous job growth that has occurred in recent years. Mr. Fields, who personally owns more than twice as much stock as any CCNI Board member, believes CCNI's stock price is undervalued and that CCNI is in urgent need of new leadership at the board level to maximize long-term shareholder value.  Mr. Fields is concerned that CCNI's Board is not acting in the best interests of shareholders, as demonstrated by the stagnant share price.

    Mr. Fields believes his slate of directors has a broad range of highly relevant operational, capital markets and public company experience, as well as a level of credibility and motivation that would be a welcome addition to the Board.  Mr. Fields believes his slate will work hard to increase both CCNI's profitability and the multiple at which its stock trades, thereby creating a meaningful benefit to all shareholders. If elected,  Mr. Fields' directors intend to examine strategic alternatives for the company, including, without limitation, initiatives to: (i) improve the company's existing operations and morale among its workforce, (ii) grow the company to lever its existing infrastructure, (iii) enhance the company's credibility among the investment community, and (iv) examine the potential sale of the company.

    Mr. Fields commented, "Most of CCNI's directors have served on the Boardfor many years, and I fail to understand how they can justify their performance or their compensation in light of the stagnant share price. As a long-term shareholder, I have watched the Board continue to take (what I consider to be) excessive compensation, not buy much stock personally, approve compensation for senior management that does not appear justified in light of the stagnant share price, and oversee a revolving door of CFOs."

    Below are the names, ages and biographies for the five directors that Mr. Fields nominated to CCNI's Board of Directors.

    Ephraim Fields (51):

    Mr. Ephraim Fields is the founder of Echo Lake Capital, a value-oriented investment firm which invests in publicly traded U.S. equities. Prior to founding Echo Lake, Ephraim was the founder and portfolio manager of Clarus Capital, a value-oriented investment fund which invested primarily in small cap and microcap U.S. listed stocks. Earlier in his career, Ephraim was an investment banker at  Credit Suisse First Boston, Donaldson, Lufkin and Jenrette, and Wasserstein Perella. Ephraim has an MBA from the Wharton School at the University of Pennsylvania and a BSBA from Washington University in St. Louis. Ephraim has extensive experience in private equity investing, mergers and acquisitions, debt and equity capital markets and microcap stocks.

    Lawrence Hagenbuch (50):

    Mr. Lawrence Hagenbuch is currently the Chief Operating Officer and Chief Financial Officer for J. Hilburn, Inc., a custom clothier for men. Mr. Hagenbuch has been with J. Hilburn since May 2010. Mr. Hagenbuchserved on the board of directors and the audit and compensation committees of the publicly traded Remy International from 2008 until 2015, when it was sold for $1.2 billion. He currently serves on the board of directors of the publicly traded Arotech Corp. (ARTX) where he serves on the Executive and Finance Committee, the Compensation Committee, and the Nominating Committee. Mr. Hagenbuch has served in senior management positions for Suntx Capital partners, Alix Partners, GE / GEcapital, and American National Can. Mr. Hagenbuch began his professional career in the  United States Navy. He served for four years as the Weapons Officer onboard USS Reuben James (FFG-57) in the Pacific Fleet. Mr. Hagenbuch earned an undergraduate in engineering degree from Vanderbilt University on a full Navy ROTC scholarship. He later earned an MBA from the Wharton School of the  University of Pennsylvania. Mr. Hagenbuch currently serves as a founding board member of the veteran's service charity, Soldiers Who Salsa. Mr. Hagenbuch has extensive experience in operations, marketing, and strategic planning.

    Randall Bort (52):

    Mr. Randall Bort has recently served on the board of directors of two publicly traded entities (Gores Holdings I and Gores Holdings II) sponsored by the Gores Group, an investment firm which currently has approximately $2.5 billion in assets under management.  Mr. Bort is a Co-Founder of SandTree Holdings, LLC, a private investment firm. Previously, Mr. Bort was an investment banker at Drexel Burnham Lambert, BT Securities, Donaldson, Lufkin & Jenrette, Credit Suisse First Boston, The Mercanti Group, and Imperial Capital. Mr. Bort has significant financial, transactional, and capital markets experience across multiple industries and has worked both domestically and in Asia. Mr. Bort earned a B.A. in Economics and Mathematics from Claremont McKenna College and an M.B.A. in Finance and Entrepreneurial Management from The Wharton School of the University of  Pennsylvania.

    Keith Rosenbloom (49):

    Mr. Keith Rosenbloom is the co-founder of Cruiser Capital Advisors, LLC, which acts as the investment advisor to pooled investment vehicles (the "Cruiser Portfolios") on a discretionary basis. He has managed the Cruiser Portfolios since inception. Mr. Rosenbloom has over 25 years of investing experience with an emphasis on applying traditional value oriented private equity techniques to public and private special situations. Prior to founding Cruiser Capital, Keith co-founded and managed the CARE Capital Group, an investment company focused on investing in hedge funds and creating alternative investment opportunities, where he served as Portfolio Manager of the CARE Fund and CARE Market Neutral Fund. Prior to CARE Capital, Keith co-managed Comvest Venture Partners, a private equity and bridge loan fund, and served as Director of Merchant Banking for Commonwealth Associates. Keith acts as an advisor to two family offices on their alternative investment portfolios. Keith graduated cum laude from Yale University. Keith has extensive experience in corporate finance, mergers and acquisitions, and public market and private equity investing.

    Sean Gelston (48):

    Mr. Sean Gelston is a portfolio manager and chief operating officer at Victori Capital, an investment firm based in Stamford, CT, where he also manages a long/short equity fund. Previously he was a partner and co-portfolio manager at the Iroquois Energy Fund. He has also held analyst positions at Castleton Commodities International,  Clarus Capital, and the Dreyfus Corporation and, prior to his coming to Wall Street, was employed as an engineer at Ford Motor Company. He holds a B.S. in Mechanical Engineering from the Massachusetts Institute of Technology, an M.S. in Mechanical Engineering from the University of Michigan, and an M.B.A. from the University of Michigan. He has been a CFA charter holder since 2003.

    Contact:

    ef@echolakecapital.com

    SOURCE: Echo Lake Capital


    Subjectwhat am I missing? best quarter / bal sheet in a long time..
    Entry11/14/2017 01:42 PM
    Membermrsox977

    - $7.2m run rate EBITDA

    - buyback in place

    - activist putting up a slate of Directors

    - almost $5.5m net cash

    - Company still engaged in a strategic process

     

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