Bubba Sandford – CEO Cory Smith – CFO.

Hans van der Burg – Logos Investment Management.

Good morning everyone and thank you for your participating in today's conference call to discuss Command Center's Financial Results for the Second Quarter, which ended June 30, 2017. Joining us today are Command Center’s CEO, Bubba Sandford; and CFO, Cory Smith.

Please be aware that some of the comments made during our call may include forward-looking statements within the meaning of the federal securities laws. 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 risks 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 statements and risk factors contained in the Company's earnings release and in its filings with the Securities and Exchange Commission, including without limitation, our Annual Report on Form 10-K and our other periodic reports, which identifies specific risk factors that also may cause actual results or events to differ materially from those described in forward-looking statements.

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

Also note that on this call the Company will be discussing non-GAAP financial information. We are providing this information as a supplement to information prepared in accordance with accounting principles that are 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 the Company's earnings release. I would like to remind everyone that this call will be available for replay through August 29 starting at 1:00 PM Eastern today.

A link to the website replay of this call was also provided in the earnings release, which is also available on the Company's website at www.commandonline.com. Any redistribution or a retransmission or a rebroadcast of this call in any way without the expressed written consent of Command Center is strictly prohibited.

Now, I'd like to turn our call over to the CEO of Command Center, Bubba Sandford.

Bubba?.

Thank you Sheila and good morning everyone. Thank you everyone for your interest in Command Center and for your participation in this call. In mid-2016, we discussed on a number of calls and embarked on a plan to reverse the trends we were experiencing at that time. We were not satisfied with the results up to that point.

So we put in place and implemented a plan, a comprehensive plan evaluating, everything and anything in the Company. That plan – and we appreciate your patience and support during that time. That plan has generated the following results.

We’ve had four straight quarters of revenue growth, three of which, were double-digit growth, we’ve had three straight quarters of gross margin expansion. Highlighting those successes were our most recent quarters, which was a record for the Company in terms of revenue.

In addition, the Company wide action we took also contributed to the improvements we are experiencing, seen now in our EBITDA and net income. I will discuss more of the details of that plan, what went on and how they are affecting and helping our business presently. But before that I would like to introduce Cory Smith our new CFO.

Cory Smith was with the Company – the management and the Board of Directors are very pleased to have Cory back in the organization. He was with us from 2010 to 2015, the last two years of which he was the Controller.

That experience, which included the preparation of numerous 10-Qs and K’s and an understanding of our business, our operations, our systems, our culture, our philosophy uniquely prepare him for the role of CFO. We're very happy to have him here. With that, I’ll turn the call over of Cory..

Thank you, Bubba. And good morning everyone, I want to start out by saying, it's great to be back at Command Center and I look forward to my role here in our next phase of growth. Get into our 2Q results, revenue in the second quarter increased 13% to a record $24.5 million compared to $21.7 million in the second quarter of last year.

This increase was primarily driven by the revenue contributed from the Hancock Staffing source, which were acquired in June 2016. Excluding the Hancock Staffing stores, revenue was up 5.4% due to our organic growth and improved store operations.

Gross margin in the second quarter increased 130 basis points to 26.5% compared to 25.2% in the second quarter of last year. This increase is attributed to our field personnel executing the training they've received and being able to add value to our customers by providing excellent service.

Selling, general and administrative expenses increased slightly to $5.2 million in the second quarter of 2017 from $5 million in 2016. However SG&A expenses decreased approximately 2% to 21.1% when taken as a percentage of revenue. This relative decline was primarily driven by lower salaries and decreased bad debt expense.

Net income for the second quarter increased $0.7 million to $0.01 per diluted share in 2017 compared to net income of $0.3 million or $0.00 per diluted share in 2016. Adjusted EBITDA also improved in the second quarter of 2017 to $1.3 million compared to $0.5 million in 2016.

The improvement in both net income and adjusted EBITDA was due to increased revenue and improved gross margins. Cash and cash equivalents including restricted cash at June 30, 2017 was $4.1 million compared to $3 million at December 30, 2016.

We carried approximately $800,000 balance on our account purchase agreement at June 30, 2017 compared to having a zero balance at the end of 2016. With that I'll turn the call back over to Bubba.

Bubba?.

Thank you Cory. As I mentioned in our introduction we set out on a plan in mid-2016 to reverse the trends we were experiencing. We took a comprehensive view of looking at the items and everything in the Company, which we could fix and which we can adjust to better maximize shareholder value.

These action are included but we're not limited to getting the right team in place, the corporate field of branches, getting the right culture in place, the right philosophy from corporate all the way down to the branches.

We look to improve and enhance our coaching, training, and development of our key to success, to better coach the branches on selling revenue and good revenue and driving market share. We will be cutting any cost, eliminating or reducing any cost that weren’t directly attributable or aiding or helping us drive the keys to success.

We align the organization to maximize our strength, now created a comprehensive training program, corporate and we made adjustments in our store bonus plans. So these are not the only items, but they were the most significant items.

And these all resulted in as we've said four straight quarters of revenue growth and double-digit growth and gross margin expansion. So we've seen our plan work and we are going to continue in this plan. We've demonstrated the ability to allocate our capital in a manner that generates results for our shareholders.

I want to talk more about how we continue in allocating our capital going forward some examples. In addition to our Q2 being a record in terms of revenue, we also opened one store. This store is a good example of how we try to open stores, in areas where we have brand recognition, strong management, long tenure.

This store is Council Bluffs you will see it on our map that’s located near Omaha Nebraska this will expand our geographic footprint in that area. Again economies of scale, efficiencies and traveling there and our resources dedicated there.

We’ll continue to evaluate, opening new stores, any areas where we can do this, we’ll also continue evaluating all stores, as we have always done. In terms of whether the value of those stores exceed the resources associated with that store.

As a result, from time-to-time we may shutter a store or close a store until we can get that store back-up with the correct personnel, national accounts all the items associated with generating the correct returns. So the traditional metric of opening stores for us may be a dynamic as a result of that.

Another example how we continue to allocate our capital is acquisitions. We made an acquisition previously from Hancock that has been very beneficial for us. It has generated revenue and gross margin without us having to add any infrastructures, highly accretive acquisitions.

We are going to continue to look to deploy our capital and acquisition in a similar manner. Additionally, we’re re-initiating our stock buyback. We feel this is an excellent use of our capital as well. And lastly, we’ll look at making investments in our infrastructure.

Investment meaning, investing in areas that will build up our resources, that directly help coach train and develop the branches in selling and growing the business and growing it well. So we've shown, we've been able to balance this.

The past couple quarters, we have continued in this manner, this approach generated $1 million in incremental cash, we're going to deploy that cash in a manner that maximizes shareholder value. Again looking at the stock buyback, acquisitions, new stores and investments in our infrastructure.

We believe these strategies are the most optimal in driving long-term shareholder value. This concludes the presentation portion of our call, I’ll now turn it back over to Sheila..

[Operator Instructions] Our first question comes from Hans van der Burg with Logos Investment Management. Your line is open..

Hi guys. Good morning..

Good morning Hans..

Before, apologize if I ask anything that has already been discussed, I was thrown out of the call so I missed a little bit of it. But to get to the questions I noticed that there was a significant change in your allowance for doubtful accounts this quarter.

And I was wondering was cash actually received on these previously written down receivables and if not what caused you to reverse the provision on these receivable?.

No, we had some write-offs related to some large BMS clients of about $518,000..

Okay, that was previously written-off right because I thought they were reversed or did I see that incorrectly. .

There was an allowance previously set-up but we wrote-them off as bad debt allowance. So we're no longer pursuing them..

Okay and was that related to a single client or were multiple companies..

It was primarily related to two large clients..

Right and by the way, first of all I was in a little bit in a hurry here, but congratulations on a great quarter, that was well done. I have another one, on the Freestone situation and I read in the 10-K that or sorry in the 10-Q that the jury is still out on the outcome of this particular case.

But I was just wondering if there would be potentially any consequences in case the outcome of his situation is unfortunate then, for example you would not receive any of your deposit back, would that lead to for example a mandatory top-up collateral at your current insurer, or is there no relation to your current insurer at all..

No, there's no relation to our current insurer. For the Freestone whatever that outcome is, it does not affect our cash balance now and does not affect our business operations..

Understood, good to hear. Last one from me. It's also nice operating momentum. Good to see that and I was wondering with a couple of weeks in the quarter already under the belt without giving specific quarterly guidance are you generally seeing this momentum continuing or are you seeing different trends emerging..

We're seeing the momentum continue Q3, is historically our strongest quarter. It’s obviously competitive market out there, but we've seen our plan succeed. We’ll continue on that plan.

Our margins are extremely high and it is always a trade-off on margins and revenue but we're going to continue with this plan with the hope that the momentum continues on..

Well, great day. And congratulations on a good quarter and keep up the good work..

Thank you. Thank you Hans..

[Operator Instructions] And there are no further questions, I will now turn the call back to management for additional or closing remarks..

Thanks Sheila. We are pleased to continue this positive momentum in the second quarter. We expect these positive trends continue in the third quarter, which is historically our strongest quarter. Thank you everyone for your participation and support during this time. Thank you.

Sheila?.

That concludes today’s conference. Thank you for your participation you may now disconnect..