HQI - Earnings call transcript Q2 2019

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Operator

Greetings, and welcome to the Command Center, Incorporated Second Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note, this conference is being recorded.

I’ll now turn the conference over to your host, Brett Maas with Hayden IR. you. Thank

begin. may You

Brett Maas

I'd call welcome CEO, today Cory and operator. call. Rick to Hosting CFO, the are Smith. like you, everyone to the Hermanns; Thank Command Center's

expressions that within the would, as of during aware Please our comments operations, Statements Securities may, constitute and meaning of containing should, beliefs future forward-looking include These expectations. and statements believe, will, may cause risks our could, and expect, the made expectations statements be to forward-looking from could our uncertainties that some similar regarding results Laws. differ and anticipate, results call involve about Federal Center's the such management's statements. words Command materially current

the Company's release filings those you cause including limitation which forward-looking the actual results and it’s to without that from earnings SEC, events the risk in with differ reports, periodic may encourage XX-K most identifies on statements Form review specific statements. materially Report described in factors to recent and other Annual the Harbor and We contained Safe risk or factors also

most Company reports to update Copies at Company's the after at conference or SEC's any this or call. XX-Q www.sec.gov. the Company's recent obtained undertake the on website commandcenteronline.com and Forms the at forward-looking statements website may does of not be The XX-K on revise publicly date of

the call, accounting as non-GAAP in discussing the be on United accepted financial are will accordance that to supplement or a information the Company information providing generally GAAP. They note this this prepared Also principles, States with information. in

the reconciliation the to these Company's in a table earnings results find the may You of GAAP metrics reconciliation provided in release. reported

written call starting A consent call everyone remind website will way replay commandcenteronline.com. August of of replay available release, earnings of expressed which will a website Eastern strictly is link today. in without also to be the in P.M. through this X:XX retransmission, any provided call Company's be Center Any also the rebroadcast prohibited. on like would at redistribution, for the is at to the this I available or Command XX,

Now, Rick? over call the I CEO Rick Hermanns. Center, would like of to Command turn to

Rick Hermanns

all I Command my I'm as the to into call pleased XXth us as an of Center, as first staffing for you CEO head Executive Thank year conduct joining industry. and in my

As company-owned most two time most very weeks immediately has completed the combined importantly our branches just Having know, to all companies, integrate process you of converting expenses duplicative franchises. our four this been eliminate our into and of busy a begin company. of for set ago, merger newly we out the

we happy in to have all three I'm that report progress made noteworthy areas.

we into approximately end comprised we locations, locations branches. franchises we've the requirements the portfolio expect the Center’s half First, are is merger. Accordingly, remaining year. of since closing expectations. The to to model the convert to by of historic franchised-owned state Of enter the converted of our expect also and working XXXX with franchise according branches the to operating the going through Command of regulatory integration remaining entire

these know take charges scope of time that complete model and severance want and costs with we this QX to let to non-recurring QX the of approximately and expect associated associated recognized merger will year accounting tasks. second A the this and $XXX,XXX we legal business pivot merger in banking duplicative the Due of eliminating investors to quarter. in and integration transaction, significant completing very personnel, we charges in

rationale Company these changes beneficial merger. we for where to Obviously, this value the long-term and of believe be will the

to in expect $XX between third million. to this certain the preliminary and and While is estimate quarter be of and impacted we non-recurring the by maybe change accounting and $XX timing subject somewhere rules charges million costs,

quarter-to-quarter leaders overnight macroeconomic transformation the factors believe happen we will in which and is and light fully process. our one transition impact which in this The national But to and not changes, direct scale still include the our workers' we accounts. we players expect sometime ability performance is XXXX, win again, comp the performance, in will complete, industrial of Once dispatch be space.

addition, as known, seeking attention brand to In widely gone. open franchisees our of we becomes own to hope potential before they're from more increased have territories their

and Our companies owners we selectively Inorganically, regional we organic current or these that opportunities as evaluate growth acquisition accounts and well. franchise could are buy additional plans include be aggressively there staffing territories. incentivizing pursuing national believe attractive to open targets will

near-term, we In to to there. increase territories existing look are seek our medium their and fill we in looking coverage the are to map. In on term, will the potential presence our that performing gaps below

While the navigate the all cycle. know slowing economy coming that merger to some time, at allowed we companies we across geographies see to point is don't recession diversify industries and successfully this any both a the and signs at of

promise it presents believe do and near-term combination the the a Company. of While and were we we many continue that was for in and challenges rationale expected, to exciting positive time this believe the all Cory? both

Cory Smith

to Thank the any results the that do related you, non-recurring afternoon, contribution good to I'd I'm everybody to everyone. but transaction. quarter, do include merger, charges closed end which related about this after Rick, few describe remind and weeks of like a the to the include not

an compensation compared quarter margin year-ago was Gross quarter, X.X%. to decrease XXXX increase related year-ago a $XX.X compared $XXX,XXX, workers' in was XX.X% second increase and million, the unemployment lower This or in million primarily quarter. Revenue the to in is in of costs XX.X%, the costs. of $XX.X to

on our in increase wages with quarters, the which for employees, and remains continue offset partially margin this Consistent prior quarter. to gross upward low unemployment temporary put to paid pressure

quarter costs million, from $XXX,XXX fees, non-recurring expenses year. $XXX,XXX. $X.X due in administrative for decreased were transaction-related second expenses. increase approximately to $X.X These excluded and the SG&A last expenses million increase including of primarily approximately general and approximately professional is and This an legal Selling, non-recurring are $XXX,XXX by recruiting

from $XXX,XXX, $X.XX income diluted per of income compared to of compared of $X.XX per We share, $XXX,XXX or in the $XXX,XXX, to year-ago in net share last Net quarter quarter. $XXX,XXX, second operations reported or income was income diluted the from year. operations

Adjusted compared in non-recurring $X.X $X.X to and million the to and million, XXXX non-recurring was quarter Adjusted of the EBITDA $XXX,XXX $XXX,XXX $XXX,XXX second compared in non-cash charges, compensation, quarter. year-ago last compensation in year. non-cash EBITDA $XX,XXX charges in in included in

tender Moving offer on million $X share Command with to the the merger, December balance sheet. XXXX for compared connection Company million $X tender final was cash million, $X.X up for Transfer X.X $X common expenses at Stock accepted by fees stock, count In depository offer, Company, purchase Trust Cash offer. shares approximately and has aggregate for to million, at excluding cost commenced Continental the the our & shares per related of on XX, Center an the self-tender million at June the of other to for based the X.X and to XX, XXXX. approximately equivalents

as approximately of XXXX. in stock common June outstanding of represents X.X% purchase Company's issued the year's This XX,

tender of Following consummation but in not stock could the do of our further at the intend outstanding. repurchase has this Company approximately the time, offer, shares XX to shares million We this future. change

Q&A. the I back for And over like to operator would with turn the to call that,

Operator

[Operator Bruner will Thank you. Instructions] time, we from with be At Barry first a Our is session. question-and-answer conducting question this Stifel.

Barry Bruner

do forward? are the going we companies Can to any guidance get combined going on what

Rick Hermanns

the per Well, organization, will change you'll that would the as be sales obviously issue the Hire revenues, we're se. the sort topline is what not of the simply because I underlying topline the position see in there of only a look, company that a the system. significant is simply Quest not no, franchising say guidance historically on going royalty to our of

next significantly And combined sales as that's so as basis, even on will drop concerned. a year see far you

I a is we to the that the predict and third a as candidly a very why fool's cyclical – what is going to and XXXX. quarter Look, errand are like very choose to cyclical we are company, do be that business of to the offer guidance we mean seasonal a economy and in reason it's not

we decided any making stay so from just like And have to that. prediction away

Barry Bruner

Thank you.

Operator

Monarch from next Our Instructions] Michael question Potter with Capital. [Operator is

Michael Potter

first merger call. Rick. I welcome on the your Congratulations and Hey guess conference getting public done to,

Rick Hermanns

Thank you.

Michael Potter

Hire the of in give guidance, perhaps locations our an gross and are that once to caller, can franchised historically? you fully that of had you prior expect is focused? with not some regards should and it the what's So the historically but you've margins Quest What along metrics you've we had EBITDA lines that us where target

Rick Hermanns

back. that goes guess I Well,

I think the… of sort that's

Michael Potter

achieve That's not Hire what with guidance. back of of those looking and Quest, that to it's the more But think to able in of types metrics? same here you've place achieve you foundation is do been

Rick Hermanns

Okay.

PeopleReady other say So let Unlike specific metrics, say say or let's for here's right. matter, me would avoid that to this historically, I discussion, – Command Center historically say, but let's let's what and is going I'm or tend in brands, any economies widely lot any subject very swing factors, it a scale with economy other is of staffing to right. to but company of given the large

out our doesn't our I in we that a let's see – we quarters, so not in would of significantly bottom. would do that say from change are instance, – store we earnings say smooth forward less topline off – the – great the token, I by going our perspective does, working same say expect sort volatility essence the company-owned just mean the of maybe let's but of So I

company, more staffing than so need most are we because going a temporary let's a a important say company. really even of we than that traditional forward mean, would is, say is, is I franchisor staffing And part I look, the much look, more to so rather

what compelled biggest on things That's really our to profitability. do good will overhead One a keep we're drive our costs. of grip that the is

I would stay encourage I'm really And to what to really in but to And the have be the what to what line integration stay are. it our that ensuring less with work Quest of And line hawk. costs do you is all with, revenues with that's historically. have challenges our historically that guess we like your own – a single so, we the to maintain sure costs one obviously our is I mean, And key to the I Hire is anyway, that's say it would that's make we in have biggest watch in let's because analysis, experienced costs saying. thing.

system-wide sort and look, but – it's data and also going do more system-wide presented, to is as robust to stated and in more we're the frankly now is grow And that important. by want in I then we going have the a we national is, the obviously clearly, So basically that bringing would again, accounts revenues branch I focusing network. presentation, forward on far and say revenue of underlying mean a

looking amount of low sort also in selective industry is again by for of incentivize accounts national And which standards. our

Manpower of some they that, like the to things Kelly off us compared you If feast of accounts. and sort – of national

has Command nor Quest done neither Hire Historically, that.

is may part of is other And feel so the there's as and in our capitalism point the will I'm believer the we team a a the rest be relatively be And there growth people of structured. big who that management is as And expectation manager historically a with compensation that. in Quest. Hire that fixed that

the to they those of they with make see levels, versus open to Now how really a say begin much to they see and that They'll higher not with difference revenues. will to sort them will incentivize between one stay branches. being encourage money begin how revenues quickly, additional as at moderate also branch but good only sales them, let's extra

your question. question. answers that that hope hope answers your I So I

Michael Potter

in could financially. and to right the presentation enough understand trying at recent right look XXXX? website degree, you presentation? a I'm suggest I of the Well my would is presentation? is thing mean what know some more One get Is your do from I there do, to to the on we now to information I year work I'm answer, mentioned half Because to December that

Rick Hermanns

of Presentation what?

Michael Potter

the Of Company.

would I like plan? investor, what understand the is an As strategic to

Rick Hermanns

if it obviously out. quarter is XX – Well there's because the comes November and nothing when so – answer you'll see else the third really or it October no, hasn't been,

Michael Potter

Right.

Okay.

ready time present the So you'll numbers quarter the to plan strategic a shareholders? by to third have the come out,

Rick Hermanns

a plan and strategic we I said guess different strategic – the has of mean everybody plan. I no, obviously a what definition Well,

Michael Potter

really greater by a you more did There's national are is these we're as well as achieve right. a strategic really here, achieve go said to base. together. leverage after companies what Right, as more, revenue trying you why accounts Well, to what it, trying We is we putting a reason plan here. to both lot can geographically

sort have you're vision some You to what of trying of achieve?

Rick Hermanns

GDP again drops our could could we'll it not double in. recognizing where if Well, that's But of wanting to true, I X.X% certainly could provide again, but back tread water. from lucky to in accounts. national to execute flawlessly, as guidance We growth, right. simply, part to X.X% everything We go be get we growth

Michael Potter

course. Of

not to it's not continues looking one's for that how offline. now, Of certain no be with right course, achieve? does grow but assuming, at we're argumentative the But or meant written We'll at just look? guidance. assumptions stays to it to is And This how I'm probably it all. blood. is that things take in it economy looking trying not I'm this what least company for is –

Rick Hermanns

I a right. before, in key simply that but a key a going the was maybe we explicit, key. right. little of the – what here's here's guess at it Is aren't that said So I typically which to to or be I'll more again look exponentially, is sort implicit grow things,

say if a be very just the just words, at branch Well, going to In right. X, branch breakeven Xx it maybe to X.Xx getting for not over X, it's make let's it's builds, builds going be very, a example individual an might week to It's X. other $XX,XXX point. level, sensitive $XX,XXX that

not as we are are We a really – that way. not or franchise

I from revenues other in go And is words, up of up we're supposed simply, we're if so doing would the to one we're is, our doing. to going our to X%, we're say be – go if going That's system not X%. earnings go not what things

follow You me.

X% before our we revenues two costs, into income. control One growth system saying I'm is X% in of that of a why to translates that's main so So responsibilities. have keep growth a

grab the we by to happen. drive Again, won't sales. token, we're going But the won't that X% have It can efficiencies we line, of happen. can lot don't what same XX% growth a on sales make that into turn to bottom we just those to obviously do the

industry Now in believe above revenue capitalism kick and as far as – increases. us like that again I said, will do give will that, I results

says hanging accounts that. well I $X.X PeopleReady, I the than staffing with of is, direct as think say space, I it's say? In the smaller through filling I improve. run, or branch think to long total Ready a certainly also were strongly a and revenues our fruit, believe there's It again like that Well, does and we That's network that be would it what room their billion. what I Labor lot low the very to growth. should national stuff that thing dispatch we're grow for like us mean able our only so the lot in right. within

Michael Potter

right. get Thank back Okay, I'll in queue. the you.

Operator

the we time Center [indiscernible] gentlemen, today's Command and session Ladies question-and-answer have reached the end for your and participation. of time thanks call. your for

disconnect You may your this time. lines at

HireQuest (HQI) 13 Aug 192019 Q2 Earnings call transcript