Labor SMART went public around May 20, 2011. I believe the initial shares were sold for .05 cents. This is when the company had nothing more than a business model and a plan. That same year, they opened 2 branches and had revenues of $165,000
Since then, Labor Smart has grown to 30 branches located in 13 states, serving a client base over 1,000 while employing over 3,000 day laborer's on a daily basis. Last year they did $16.1 million and are projecting $25 million this year and $40 million in 2015 for already established and matured branches. Their losses are made up primarily of non-cash write-offs and their percentage loss to revenue continues to go down.
The company has consistently shown triple digit growth, record revenues, increasing gross profit margins (15 to 25% and growing) and have recently shown positive EBITDA.
Has it been a smooth ride?
Well, no it hasn't. This is a start-up aggressive growth company with only 3 years of ground floor operations. I often wonder why I see people attempting to hold Labor SMART to the same standards as a well established business trading on a larger exchange? It's not, and to that end, mistakes will be made. However, without mistakes a company can never truly succeed.
This company has had challenges and continues to be victimized as an OTC company. This means no credible forms of financing, no broker/dealer or true retail market support, no institutional or mutual fund attention. That is what the OTC market has become through no fault of LTNC. This company should eventually apply for a listing to a larger exchange. They just need to grow a little more.
The lack of funding forced the company to raise capital through convertible notes. One particular note holder was a very, very aggressive seller and that started a domino effect.
I believe the company has now resided to allow shares to come into the market in order to eliminate the notes. Once the notes are gone this company should be able to start showing net income.
At last count, there were about 44 million shares outstanding with about 30 million in the float. A ridiculous shares structure for a stock trading under .02 cents a share.
So why do I think this will work???
Labor SMART's largest competitor Labor Ready now True blue (NYSE TBI) started as a penny stock in 1995. They have very similar business models and LTNC's first 3 years of operations show that it works.
The previous COO of True Blue, Matt Rodgers, sits on Labor SMART's Advisory Board and consults with the company. Labor SMART has 6 executive level and 10 mid and low level management executives who are previous executives from True Blue.
Mr. Rodgers alone was responsible for growing True Blue from 300 to 900 branches with close to a billion dollars in revenues. All other executives are experts in their field with proven track records of growing an on-demand labor company. Their experience and ability to meet and exceed expectations will be the key to the success of this company.
So where is the bottom? I don't know. I do know that LTNC is greatly undervalued, but the recent dilution and lack of true market support doesn't allow the company to trade in parity with its operations. However, wherever the bottom is, it will not even be close to where the top is going to be, as this company continues to grow.
AI
