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Edited Transcript of CCNI earnings conference call or presentation 11-Apr-17 2:00pm GMT

Thomson Reuters StreetEvents

Q4 2016 Command Center Inc Earnings Call

POST FALLS Apr 11, 2017 (Thomson StreetEvents) -- Edited Transcript of Command Center Inc earnings conference call or presentation Tuesday, April 11, 2017 at 2:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Bubba Sandford

Command Center, Inc. - CEO & President

* Colette Pieper

Command Center, Inc. - CFO

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Conference Call Participants

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* John Rolfe

Argand Capital Advisors - Analyst

* Mike Donnelly

GVC Capital LLC - Analyst

* Joshua Horowitz

Palm Ventures LLC - Analyst

* Hans Venderberg

Logos IN - Analyst

* Michael Potter

Monarch Capital Group, LLC - Analyst

* Charlie Pine

Van Clemens & Co., Inc. - Analyst

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Presentation

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Operator [1]

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Good morning, everyone. Thank you for your participation in today's conference call to discuss Command Center's financial results for the fourth quarter and full year ended December 30, 2016. Joining us on today's call is Command Center's CEO Bubba Sandford and CFO Colette Pieper.

Please be aware that some of the comments made during our call may include forward-looking statements within the meaning of the federal securities law. Statements about our beliefs and expectations containing words such as may, could, would, will, should, believe, expect, anticipate and similar expressions constitute forward-looking statements.

These statements involve risk and uncertainties regarding our operations and future results that could cause Command Center's results to differ materially from management's current expectations. We encourage you to review the Safe Harbor statement and risk factors contained in our earnings release and in our filings with the Securities and Exchange Commission including, without limitation, our annual report on Form 10-K and our other periodic reports which identify specific risks that also may cause actual results or events to differ materially from those described in the forward-looking statements.

Copies of our most recent reports on Form 10-K and 10-Q may be obtained at our website, www.commandonline.com, or at the SEC's website www.SEC.gov. We do not undertake to publicly update or revise any forward-looking statements after the date of this conference call.

We also note that on the call we will be discussing non-GAAP financial information. We are providing that information as a supplement to information prepared in accordance with accounting principles generally accepted in the United States or GAAP. You can find a reconciliation of these metrics to our reported GAAP results in the reconciliation table provided in our earnings release.

I would like to remind everyone that this call is available for replay through April 25, starting at 1 p.m. Eastern Time today. A link to a webcast replay of this call will be provided in the earnings release which is also available on the Company's website at www.commandonline.com. Any redistribution, retransmission or rebroadcast of this call in any way without the express written consent of Command Center is quickly prohibited.

Now I would like to turn our call over to CEO of Command Center Bubba Sandford. Bubba?

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Bubba Sandford, Command Center, Inc. - CEO & President [2]

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Thank you, Evan. Good morning everyone. I want to thank everyone for your participation in this call and your interest in Command Center. I'd like to start off by briefly discussing our operations and our financial performance.

As we discussed previously, management was not satisfied with the results that we generated in the first half of the year. So we committed ourselves and to our shareholders that we were going to dedicate the resources to remedy this situation. I'm pleased to announce that following Q3 we have continued to improve our financial and operational situation.

In fact, Q4 revenue was up 19% year over year and our gross margin expanded 30 basis points. This is largely due to a wide-ranging plan we implemented starting in Q3, but mainly due to a number of factors, one being that we created and started a comprehensive training program at corporate in Denver, one of the benefits of relocating here, in addition to cutting any extraneous costs or any costs associated with items that were no longer in play here, realigning the organization to maximize our strength and minimize our weaknesses, looking and growing and putting a focused effort on our national accounts and auto auction business and, lastly, and probably one of the most key elements of our business, was an improvement on our coaching, training and developing and holding accountable our branches to certain performance metrics.

As expected, our North Dakota sales declined but as we've previously stated and since my arrival in 2013 it's been our objective to grow beyond North Dakota both in stores and revenue. And as a result of that growth that we have experienced, North Dakota revenue now comprises less than 11% of our overall business. As we continue with our plan that we have shown with results, the effects of North Dakota and anything in the energy industry have a lesser impact on our overall Company.

Before going into further details of our performance, I'd like to turn the call over to our CFO Colette Pieper to discuss our finances.

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Colette Pieper, Command Center, Inc. - CFO [3]

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Thank you, Bubba, and good morning everyone. The focus of my commentary will be on our fourth-quarter results and analysis of our full-year results was presented in yesterday's earnings release.

But before I begin I would like to emphasize that as a public Company we are committed to timely filing of our annual and quarterly reports with the SEC. As the new CFO with a new Controller we have taken great strides in improving our financial record-keeping and believe we are in a position to meeting our deadlines in the future.

Our revenue in the fourth quarter increased 19% to $26.1 million compared to the fourth quarter last year. Please recall the fourth quarter of 2016 benefited from an extra week when compared to 2015 or approximately $1.4 million of incremental revenue. The increase was also driven by higher revenues from our stores outside of North Dakota and contribution from Hancock Staffing which we acquired in June 2016.

Excluding the acquisition as well as the North Dakota operations, the total remaining store revenue increased 16% to $21.3 million. As Bubba stated earlier it's worth noting that North Dakota represented about 11% of our overall revenues, down considerably from approximately 25% during the peak of the oil boom in 2014 and the 16% that we represented in the fourth quarter last year.

Our gross margin in the fourth quarter increased 30 basis points to 25.7% compared to 25.4% in the same period last year. The increase was primarily due to greater efficiency during the second half of the year on increasing margins and obtaining higher margin work across the Company which resulted in a favorable mix of higher margin revenue.

Our selling, general and administrative expenses in the fourth quarter increased to $6 million compared to $5.3 million in the year-ago quarter. The increase was driven by expenses associated with our increased revenue, particularly increases in salaries and related payroll tax expenses offset by decreases in bad debt expense, stock compensation expense, insurance expense and contract labor.

Net income in the fourth quarter increased to $181,000 compared to $126,000 last year due to the increase in revenue and gross margin. EBITDA and adjusted EBITDA as we define it in the fourth quarter were $0.7 million compared to $0.5 million in the year-ago quarter.

Cash and restricted cash at December 30, 2016 was $3 million compared to $7.6 million at December 25, 2015. The decline was due in part to the acquisition of Hancock Staffing and our share repurchase initiative.

During 2016 we repurchased approximately 3.8 million shares of common stock at an average price of $0.40 per share. Approximately $2.1 million remain under the $5 million repurchase plan.

During the fourth quarter we repurchased 418,000 shares of stock at an average price of $0.36 per share. At the end of the fourth quarter we temporarily suspended our repurchase plan in order to rebuild our cash balance.

However, we remain committed to the repurchase plan and expect to be opportunistic in acquiring our own stock when we believe it is the best use of our capital. Finally, we ended the year debt free compared to $0.5 million in debt at the end of 2015.

With that I will turn the call back over to Bubba.

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Bubba Sandford, Command Center, Inc. - CEO & President [4]

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Thanks, Colette. I'd like to return now to talk about our primary operational highlights from the quarter and full year as well as the outlook for 2017.

I'd like to also point out that since our last talk a lot has transpired. We committed on the Q3 call to a plan to remedy and reverse the trend and we've been dedicated to that and the results of those efforts are showing.

We are happy with our improvement. We know we can do better. Finishing the year as we did was a significant, we think, achievement given our slow start.

So we know our plan will work. It is working. And we will continue on this.

On our previous call we also talked about our keys to success, which we talk about regularly. And this is essential to our success in our business. With a renewed interest and focus on this debt for our branches, these drove some of the results for our Q4, ending with double-digit revenue, expansion on the gross margin and improvement in net income.

Again, a lot of this was derived from the plan we put in place which was the training program for our branch managers, cutting any extraneous cost and realigning the organization, booking it to grow our national accounts and auto auction business and an improvement in our field services and our coaching, training, development holding the branches accountable to metrics. Specifically for the fourth quarter, our revenue growth was attributed to three initiatives. A subset of that overall comprehensive training program we have for the branches is a sales training program.

This comprises approximately 30% of the overall training program. We have now had six classes, through here in Denver with approximately 59 personnel receiving the training.

Next, we placed a high emphasis on growing our national accounts and auto auction business. We see an opportunity there and we have the team, the ability to execute and we will continue that.

Last, again, was a significant improvement in the personnel in who and how we go about coaching, training and developing and holding accountable the branches. We've made significant strides in this and that's a key element for our business.

During the year we opened seven new stores, bringing our total store for the year to 64. We will continue to evaluate our capital allocation in this manner, looking to open stores in areas where we have concentration, with previous pre-existing brand recognition be able to have greater geographic coverage in that area to maximize the economies of sale, the field personnel and anyone else traveling there as well as looking to open stores, possibly in new geographic areas that pose potential for us.

Likewise, in terms of our capital allocation we will continue to evaluate strategic acquisitions similar to Hancock which contributed $1.9 million to our Q4 revenue. That acquisition is proving financially successful for us. It added revenue to our business without us adding any infrastructure making it highly accretive and we will continue to look for strategic acquisitions in a similar manner.

One of the items we mentioned in our plan to remedy the stalled results in the first half of the year was cutting any extraneous cost or cost associated with items that were no longer necessary with the transition to Denver or other strategic opportunities we were looking at. As a result, we have improved our balance sheet and our cash position has improved.

Going forward, we know our plan has worked. We will continue on this plan. We have made improvements but we know we can do better and we are committed to doing better.

We will continue to improve the financial and operational performance in the Company with a relentless focus on reducing SG&A and any costs that are not necessary for the Company. We will continue to deploy our capital in the most cost-efficient manner, looking at either new store, strategic acquisitions, different verticals, always with the objective in mind of maximizing shareholder value.

With that, that concludes the presentation portion of this call. I will turn it back over to our operator, Evan.

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Questions and Answers

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Operator [1]

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(Operator Instructions) John Rolfe, Argand Capital.

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John Rolfe, Argand Capital Advisors - Analyst [2]

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Hey guys, a couple of clarifications. First, did you say that excluding Hancock and North Dakota that the same-store sales were up 16%?

Or, I guess, that would include the new location, as well. So what was the same-store sales and then how much was from new locations open during 4Q?

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Bubba Sandford, Command Center, Inc. - CEO & President [3]

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We include the new stores into the same-stores calculation.

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John Rolfe, Argand Capital Advisors - Analyst [4]

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Okay. And that number was up 16%, 1-6, is that correct?

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Colette Pieper, Command Center, Inc. - CFO [5]

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Yes, that is correct.

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John Rolfe, Argand Capital Advisors - Analyst [6]

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Okay. And what was the decline in the Bakken locations for the quarter?

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Colette Pieper, Command Center, Inc. - CFO [7]

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The decline was $700,000.

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John Rolfe, Argand Capital Advisors - Analyst [8]

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Okay, what would that represent on the base from a year ago? (multiple speakers)

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Colette Pieper, Command Center, Inc. - CFO [9]

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A decline of 19.7%.

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John Rolfe, Argand Capital Advisors - Analyst [10]

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Okay. My last question, it looked like in the press release the verbiage was that for the year your EBITDA and adjusted EBITDA were both $2.1 million. So can you reconcile that for me?

I didn't see any reconciliation in the press release itself, but I think you had 150,000 share-based comp expense, which I would have thought would have driven the difference between EBITDA and adjusted EBITDA. Was there some sort of offset?

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Colette Pieper, Command Center, Inc. - CFO [11]

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Yes, I can comment on that. Yes, as the Company defines EBITDA we do exclude non-cash compensation. That is how we present it in our 10-K disclosures.

But if you wanted the more traditional EBITDA, for the year it would have been $1.9 million compared to $2.8 million a year ago. And for the quarter it was the same number, $700,000 compared to $300,000 for the quarter a year ago.

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John Rolfe, Argand Capital Advisors - Analyst [12]

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Okay. So then what is -- if you define EBITDA as excluding share-based comp, then what is the difference between EBITDA and adjusted EBITDA if share-based comp is excluded from both those? Is it other nonrecurring expenses?

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Colette Pieper, Command Center, Inc. - CFO [13]

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Well, the traditional EBITDA, of course, excludes interest expense, depreciation and amortization provision for income taxes. And then the Company chooses to also exclude non-cash compensation. But the reconciliation that I just gave you, we do have the non-cash compensation not included in a more traditional EBITDA, and then our version of adjusted EBITDA excludes non-cash compensation.

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John Rolfe, Argand Capital Advisors - Analyst [14]

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Okay, I'm sorry (multiple speakers)

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Colette Pieper, Command Center, Inc. - CFO [15]

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But that's the only difference.

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John Rolfe, Argand Capital Advisors - Analyst [16]

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I'm confused. So your definition of EBITDA excludes non-cash comp or includes non-cash comp?

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Colette Pieper, Command Center, Inc. - CFO [17]

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It excludes it.

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John Rolfe, Argand Capital Advisors - Analyst [18]

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As does adjusted EBITDA? Correct?

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Colette Pieper, Command Center, Inc. - CFO [19]

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That is correct. That is the way the Company has defined it

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John Rolfe, Argand Capital Advisors - Analyst [20]

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Yes. So my question is what is the difference between EBITDA and adjusted EBITDA if they both exclude non-cash comp?

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Colette Pieper, Command Center, Inc. - CFO [21]

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Well, there is no difference the way the Company looks at it. But, again, as I was saying, EBITDA in the more traditional sense as other companies define was just excluding interest depreciation and taxes. For the year 2016 would have been $1.9 million and for 2015 would have been $2.8 million and the difference is our non-cash compensation.

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John Rolfe, Argand Capital Advisors - Analyst [22]

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Okay, thanks very much.

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Colette Pieper, Command Center, Inc. - CFO [23]

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You're welcome.

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Operator [24]

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Mike Donnelly, GVC Capital.

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Mike Donnelly, GVC Capital LLC - Analyst [25]

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My question was in regard to adjusted EBITDA and EBITDA, what you just discussed. I think there is a mistake in the press release because both EBITDA and adjusted EBITDA are the same.

So I think you explained the difference. But I think there is a mistake in your press release. So that's my question.

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Colette Pieper, Command Center, Inc. - CFO [26]

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Well, again, as I explained we at Command Center define EBITDA to exclude non-cash compensation. And so the explanation that I just gave you is comparing it to the traditional sense.

So our definition of EBITDA excludes non-cash compensation. And that is the way the Company has presented it in the past. But we will make sure that we are more clearly definitive in the future.

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Mike Donnelly, GVC Capital LLC - Analyst [27]

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Great, thank you.

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Operator [28]

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Joshua Horowitz, Palm Global Fund.

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Joshua Horowitz, Palm Ventures LLC - Analyst [29]

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Hi, thank you. I still have not received my proxy statement for the May shareholder meeting. Is the Company still having the shareholder meeting in May as you previously announced and if so when is the Company mailing the proxy out?

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Bubba Sandford, Command Center, Inc. - CEO & President [30]

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We announced that we may have a proxy, I mean, a Board meeting in May but we have not defined or determined the actual date. But it will not be May.

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Joshua Horowitz, Palm Ventures LLC - Analyst [31]

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Is there a reason that that has been pushed back?

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Bubba Sandford, Command Center, Inc. - CEO & President [32]

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Our focus of this Company is the operational performance of the Company. That was, I guess, an objective we put out. But we will have the annual shareholders meeting later in the year.

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Joshua Horowitz, Palm Ventures LLC - Analyst [33]

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Well, the focus of every Company should be the operational performance of the Company. Yet companies also should have shareholder meetings.

Anyway moving on, obviously you 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. In the release that you published last night net income is $1.5 million.

Operating income was $2.9 million in last year's release. It's $2.6 million today. So, I guess, where did the $300,000 ago? I don't think I have ever in my investment career seen a company revise its prior-year earnings without even the courtesy of an explanation or a reconciliation of that difference to the shareholders.

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Colette Pieper, Command Center, Inc. - CFO [34]

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Yes, I will answer that. So during the fourth quarter of 2016 we identified certain immaterial amounts of certain cost of sales and general and administrative expenses were misstated at December 25, 2015. And so as a result the cost of sales and general and administrative expenses were under-accrued by $257,000, which was $155,000 net of income tax benefit at the end of the prior year, December 25, 2015.

These adjustments were 10% or less the net income before income taxes and net income after-tax last year in 2015. But the misstatements would have been material to the 2016 financial statement, so we did revise the 2015 financial statements for comparative purposes. And we do have an explanation and a reconciliation table in the 10-K that explains the differences and the before and after numbers.

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Joshua Horowitz, Palm Ventures LLC - Analyst [35]

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I will have to look at that. Thank you for that.

I guess, you can hear it on the call, there are no shortage of Command Center shareholders that are absolutely exhausted with the dreadful performance of the Company and the continuously collapsing stock price. We've had a soaring stock market, the lowest unemployment numbers in a generation and this has just been a horrible experience for everybody.

To add to it, I mean even your explanation of the EBITDA and adjusted EBITDA, I mean, even that doesn't make any sense. It's just an insulting and careless dissemination of your financial information.

And I think it's indicative if of an abject lack of oversight and candor. The only way to arrest this Mickey Mouse operation is for shareholders to exercise their rights and to seek dramatic Board change. I think I speak for a lot of folks.

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Bubba Sandford, Command Center, Inc. - CEO & President [36]

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Thank you, Josh.

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Operator [37]

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[Hans Venderberg, Logos IN].

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Hans Venderberg, Logos IN - Analyst [38]

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Hi, good morning guys. I had a question about in your press release you noted that (technical difficulty) 11% revenue (technical difficulty) North Dakota. I just want to clarify where as 11% of Q4 or 11% of 2016 of full year, could you clarify this, please?

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Bubba Sandford, Command Center, Inc. - CEO & President [39]

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Q4, Hans.

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Hans Venderberg, Logos IN - Analyst [40]

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Okay, thanks. And what would that be for the whole year?

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Colette Pieper, Command Center, Inc. - CFO [41]

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Just one minute, please. We'll get you that number. It was $15.4 million for the year.

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Hans Venderberg, Logos IN - Analyst [42]

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Okay. $15.4 million --

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Colette Pieper, Command Center, Inc. - CFO [43]

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(multiple speakers) 15.5 (multiple speakers)

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Hans Venderberg, Logos IN - Analyst [44]

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Thank you very much, Colette. Thank you.

And then I had another one on SG&A. In the last-quarter conference call and also in your statements you said that you did some cost-cutting and you have taken some measures.

And I remember from the last call that you said that it could take a while before these measures will trickle through the system and influence your SG&A line. And I was wondering if you could help me certify a little bit what these measures will mean for next year's SG&A run rate compared to this year. So what do you expect that these measures will save you compared to this year?

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Bubba Sandford, Command Center, Inc. - CEO & President [45]

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Well, as I mentioned we will have a relentless focus on minimizing any SG&A and any costs. Our mantra has always been operational necessity, meaning if we need it we will have to spend it and if we don't we won't spend it. So we will continue to focus on growing the top line, growing our margins while trying to maintain the same infrastructure, thereby increasing the net.

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Hans Venderberg, Logos IN - Analyst [46]

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But given that you had at least that's what you remember from the third call that you said you had taken some specific measures which you expected to deliver something in the next year or at least not right away but in say one or two quarters, so maybe in 2017. If that's hard to define or is it possible to say, well, we expect maybe I'm just guessing here but $200,000, $300,000 decrease on the baseline projection or is it too difficult to define?

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Bubba Sandford, Command Center, Inc. - CEO & President [47]

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Well, it's somewhat difficult to define. We have shown some improvement on our net as a result of some of the costs we've made. Colette and her team have done a great job coming on board and getting everything up to speed.

So as the business is relatively dynamic and as we see opportunities to improve the business and grow the business sometimes that includes spending money. To make money we have to spend some. To improve things we sometimes have to spend money.

So it's a little bit difficult to pin down exactly and also requires us to have some flexibility in terms of being able to capture opportunity where it exists. But we will remain focused on only spending whatever is necessary for us to grow the business and maximize shareholder value.

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Hans Venderberg, Logos IN - Analyst [48]

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Yes, right, okay thanks that's helpful. Moving on to taxes, I note that at least your GAAP tax rate was sort of high this quarter. Is there a specific reason for that, what's the tax rate you expect to incur going forward?

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Colette Pieper, Command Center, Inc. - CFO [49]

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Well, the quarter posted the year-end adjustment accrual for the year and so that's why it is so high. Our tax rate is factored at 34% federal and 3.53% state adjusted after-tax benefit. But, again, that is the issue when you have fourth-quarter year-end accruals that you do book additional tax expense in the fourth quarter. (multiple speakers) full-year provision proper.

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Hans Venderberg, Logos IN - Analyst [50]

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Very clear. Thanks.

Last one then maybe, already Bubba I heard you talking about plans for maybe opening some additional stores. Is there a defined plan that you expect to open say an X number of stores in 2017 that you already are planning on? Or is it not so much planned as of today and will you more look at it what opportunities come your way so that it's not really defined how much additional stores you are opening this year?

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Bubba Sandford, Command Center, Inc. - CEO & President [51]

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Well, it's a combination of all those. We are constantly evaluating the opportunities that are out there and whether we can capture those opportunities and whether we should deploy our capital in opening stores or acquisitions.

So our biggest impediment, as we've mentioned and I'm sure other companies have the same impediment, is finding the right branch staff. We give our branches a lot of autonomy. Their compensation is based on how well they do and with that autonomy comes a lot of responsibility.

And this is a significant portion of our training that we take them through. So it's our key piece to finding the correct personnel that can run that branch in that autonomy and succeed and deliver the results.

So it's a combination of what opportunity is there, can we backfill that with national accounts, is there possibly an acquisition, what is their cash position, what is the recruiting pipeline. It's a moving target that management is always evaluating.

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Hans Venderberg, Logos IN - Analyst [52]

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Okay, thanks guys for today. Thanks.

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Operator [53]

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Michael Potter, Monarch Capital Group.

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Michael Potter, Monarch Capital Group, LLC - Analyst [54]

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Hey guys. A couple of follow-up questions.

I am just trying to back in to the same store sales growth, so for Q4. And so if we take out the acquisition what was, and we take out the stores that were open for less than one year, what was the same store sales growth for Q4 and for the year?

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Colette Pieper, Command Center, Inc. - CFO [55]

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We have not calculated that information. But I can certainly follow up with you. We don't have that metric available right now at this call.

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Michael Potter, Monarch Capital Group, LLC - Analyst [56]

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Okay, please do because I'm assuming the Board looks at that on a if not weekly, certainly on a monthly basis. I'm assuming that's one of the KPIs that the Board is asking for.

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Colette Pieper, Command Center, Inc. - CFO [57]

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Yes, that is something -- go ahead.

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Michael Potter, Monarch Capital Group, LLC - Analyst [58]

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Go ahead. I'm sorry. I didn't mean to cut you off.

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Colette Pieper, Command Center, Inc. - CFO [59]

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No, I was just saying we have all sorts of specifics. And so I will get your name and information and give that to you.

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Michael Potter, Monarch Capital Group, LLC - Analyst [60]

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Okay. How much is left under the share buyback program?

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Colette Pieper, Command Center, Inc. - CFO [61]

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About $2.1 million.

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Michael Potter, Monarch Capital Group, LLC - Analyst [62]

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Okay. And, Bubba, I'm assuming well we opened seven new stores in 2016 and we closed two. Is that correct? So there was a net of five?

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Bubba Sandford, Command Center, Inc. - CEO & President [63]

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I'm not sure if I fully follow -- we opened seven in 2016 and we opened one since the end of the year.

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Michael Potter, Monarch Capital Group, LLC - Analyst [64]

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So we had a new store opening in 2017?

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Bubba Sandford, Command Center, Inc. - CEO & President [65]

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Yes.

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Michael Potter, Monarch Capital Group, LLC - Analyst [66]

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Okay. So in 2016 we had, there were seven new stores open. How many closed, how many branch offices closed?

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Bubba Sandford, Command Center, Inc. - CEO & President [67]

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Three.

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Michael Potter, Monarch Capital Group, LLC - Analyst [68]

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Hello?

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Bubba Sandford, Command Center, Inc. - CEO & President [69]

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Yes, three.

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Michael Potter, Monarch Capital Group, LLC - Analyst [70]

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Three. Okay, I'm sorry, Bubba.

I couldn't hear you. So we had net new store openings of four?

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Bubba Sandford, Command Center, Inc. - CEO & President [71]

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Part of the issue is some of the stores we have opened we have reopened. We've had they were mothballed and we reopened them. So for a total of if you include everything we had eight stores that we opened and then three that we closed.

The move, the opening of stores and closing of stores is similar to what we talked about with Mr. Vandenberg is that it's pretty dynamic. You take a number of things into account.

One is whether there is national accounts, whether there is potential future business there, whether there is recruiting pipeline, what's our cash balance, what's the extent of the lease there. So it's a lot of pieces that go into play. And so we never have -- we want to be as opportunistic and flexible as we can to capture any potential revenue.

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Michael Potter, Monarch Capital Group, LLC - Analyst [72]

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Okay, I understand, but I just, it's difficult especially with a Company like this to try and understand. I'm trying to understand the growth where the growth is coming from.

So if we have opened, it sounds like we opened four or five net new stores for 2016. You opened up one additional location in 2017. Am I correct so far?

Okay. How many additional new stores you anticipate opening in 2017?

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Bubba Sandford, Command Center, Inc. - CEO & President [73]

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Similar to what I said to Mr. Vandenberg, that is something we evaluate on a regular basis depending on our cash position, depending upon the opportunity that we get from the field and other information that's in areas depending upon the recruitment available. So it's a number of factors, and there may be acquisitions out there that is a better use of our cash.

An example of this, Hancock. That was excellent acquisition for us, it took us time to do. So we are constantly evaluating what is the best use of shareholder capital in terms of do we want to open stores or do we want to look at acquisitions.

So we will remain committed to deploying the capital in the most cost efficient manner. And that for us is what is key. We are stewards of the capital and we take it seriously. So we don't want to commit to something, thereby eliminating a potential strategic acquisition for us.

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Michael Potter, Monarch Capital Group, LLC - Analyst [74]

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Okay. But I am assuming there is some sort of capital budget for 2017, right?

We are in April at this point, so we are a third of the way through the year. And I'm assuming there is some sort of plan that you would like to open potentially one or two additional stores in X region because demand is strong there at this point. I'm assuming you are not opening these locations on a whim.

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Bubba Sandford, Command Center, Inc. - CEO & President [75]

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You are correct. There is a lot of analysis and evaluation that goes on.

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Michael Potter, Monarch Capital Group, LLC - Analyst [76]

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Right. And typically what is the lead time to open up a new location?

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Bubba Sandford, Command Center, Inc. - CEO & President [77]

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That we've discussed that in the past. That can vary depending upon how successful the branch manager, the new branch manager is, depending upon the geographic location, depending upon whether there is already existing business there and we have brand recognition, whether we can backfill it with national accounts.

Some can ramp up relatively quick and some can take a lot longer. It's a challenging market out there. It's competitive business.

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Michael Potter, Monarch Capital Group, LLC - Analyst [78]

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We understand that. Again, I want to understand the decision-making process here. Obviously, as other people have conveyed I'm concerned, too.

It's been several years now, our stock is at a multiyear low at this point and continuing to fall further. There is an adversarial relationship between certainly yourself, some members of the Board and some of the larger shareholders and we still have a communication and transparency issue. And I don't understand why.

It's not that complicated of a business, that's for sure. And I don't understand why, I guess, you and our Chairmen have chosen to go down this road. I would love to know what the strategic plan is for 2017.

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Bubba Sandford, Command Center, Inc. - CEO & President [79]

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Well, we don't issue a strategic plan. But our goal has been and always been is to maximize the capital allocation, to maximize shareholder value. That is our goal.

It is something that we live and breathe on a 24/7 basis, constantly evaluating existing stores. And one of the things I've put out constantly is I reserve the right to shut any store or shutter any asset whose value does not exceed the cost associated with that. And that I think is a very prudent course of action for management to take.

And shareholders should feel comfortable that we are going to shutter assets where those resources could be better allocated and get a better return. And we have a management team here that is absolutely dedicated to that. We will continue to do that, and we have shown with our plan that we can improve the Company and we will continue to improve the Company.

And 2017 looks very promising. Q1 all the trends are going in the correct direction.

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Michael Potter, Monarch Capital Group, LLC - Analyst [80]

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Okay. Is our stock price going in the correct direction?

Are we maximizing shareholder value at this point in 2016, so far in 2017 or the trend in 2015? How are we going to break out of this trend?

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Bubba Sandford, Command Center, Inc. - CEO & President [81]

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Well, we are going to continue on a plan. Obviously, we have mentioned before first steps first. We admitted and I took responsibility in Q1 and Q2 we didn't deliver the results we thought we wanted to and could and we committed to fixing it and dedicated the resources. And we have and to get there we have to start on the process.

We have built a good foundation. The trends, I mean we were up 19% in Q4. We ended up 5% over the year which is a pretty good achievement given our start.

And we are going to continue on that plan. And we are seeing that plan deliver and we feel the market will reflect that as we continue delivering those results. Thank you.

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Operator [82]

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(Operator Instructions) Charlie Pine, Van Clemens & Co.

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Charlie Pine, Van Clemens & Co., Inc. - Analyst [83]

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Good morning. I have a couple of things. I have just a few things.

First one is a bit of a housekeeping issue and it has to do with the presentation of your of the fourth-quarter release. I think in the future it would certainly be a lot more helpful for all of us that are shareholders and people that are money managers if you would please have a separate fourth-quarter income statement presentation. Can you do that for the fourth quarter of 2017?

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Colette Pieper, Command Center, Inc. - CFO [84]

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Certainly. We will adjust this yes, thank you.

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Charlie Pine, Van Clemens & Co., Inc. - Analyst [85]

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I'm kind of baffled as to why you didn't do it. That just seems to me accounting 101.

From what I'm gathering by reading through the verbiage, I guess I will be able to look at it when I read through the K, but reading through the verbiage that the, some of the comparisons even with the longer one extra week should have been better, by looking at it the optics should have been better on the numbers when presented in a table. And for the average person that's taking a look at that they are going to want to look at these tables and if they can't see them they are not going to necessarily do a deeper dive. And that isn't, you are not putting your best foot forward by not making that presentation of your financials that way.

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Colette Pieper, Command Center, Inc. - CFO [86]

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Okay, that's duly noted. Thank you.

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Charlie Pine, Van Clemens & Co., Inc. - Analyst [87]

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Okay. Let's move on.

I wanted to clarify something. Did I hear correctly that you have opened one store in the quarter that ended in March 2017? Is that correct?

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Bubba Sandford, Command Center, Inc. - CEO & President [88]

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Yes.

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Charlie Pine, Van Clemens & Co., Inc. - Analyst [89]

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All right. Do you have any planned store openings at this point for the second quarter? We are already at about half way through Q2 at this point, so I think it's a fair question to ask.

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Bubba Sandford, Command Center, Inc. - CEO & President [90]

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It is. We don't disclose our store openings publicly. We haven't done that in the past.

One of the main reasons is competitive advantages. We don't necessarily want to tip our hat publicly to competition to where we are going. (multiple speakers)

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Charlie Pine, Van Clemens & Co., Inc. - Analyst [91]

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Well, I am not asking you where you are planning to open one. I am just asking you do you have any -- is it in your budgeting for Q2 and are you, in the process do you anticipate that you will have any stores, your stores location that will be open in the second quarter?

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Bubba Sandford, Command Center, Inc. - CEO & President [92]

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Well, we are in the process of evaluating store openings for 2017. And we will evaluate, we are evaluating them that on a daily basis as well as I mentioned the capital allocation in terms of whether new stores, different verticals or strategic acquisitions, what makes the best sense in terms of our capital allocation.

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Charlie Pine, Van Clemens & Co., Inc. - Analyst [93]

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Okay. I will take that to be pretty much a non-answer then.

The other thing I'd like to ask about, you made a big point of stressing that you have emphasized that one of the things that has been helping to apparently improve efficiencies is a revamped training program. And you mentioned the number of people that have gone through this training program, and I believe I heard 59. When will -- how far are you along in this process?

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Bubba Sandford, Command Center, Inc. - CEO & President [94]

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This process is never-ending. This is very similar to any college or professional team. We are adjusting the training regularly.

As we get everyone through we will look at doing different training. We are in the process right now. I've just got from our trainer the next training agenda.

It's completely different, focuses on one of our other verticals, one of our other lines of business. We will continue this training throughout the year and every year. There is a lot to learning to run a store and we will probably never be done sharing all the information and coaching and training, development, holding them accountable.

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Operator [95]

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At this time, this concludes our question-and-answer session. I would now like to turn the call back over to Mr. Sandford for closing remarks.

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Bubba Sandford, Command Center, Inc. - CEO & President [96]

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Well, I'd like to thank everyone for participating and listening to today's call and look forward to speaking with you next quarter. Thank you again for joining us.

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Operator [97]

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Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation.