TrueBlue Reports Fourth Quarter and Full-Year 2019 Results

02/05/2020

TACOMA, Wash.--(BUSINESS WIRE)-- TrueBlue (NYSE:TBI) today announced its fourth quarter and full-year results for 2019. Full-year revenue was $2.4 billion, a decrease of 5 percent compared to 2018. Net income per diluted share was $1.61, a decrease of 1 percent compared to 2018. Adjusted net income per diluted share1 was $2.05, a decrease of 10 percent compared to 2018.

Fourth quarter revenue was $591 million, a decrease of 9 percent compared to revenue of $650 million in the fourth quarter of 2018. Net income per diluted share was $0.23, a decrease of 38 percent compared to the fourth quarter of 2018. Adjusted net income per diluted share was $0.39, a decrease of 36 percent compared to the fourth quarter of 2018.

“Clients were conservative in the use of our services during the fourth quarter in light of softness in their own business volumes and continued economic uncertainty, particularly in industries associated with physical goods,” said Patrick Beharelle, CEO of TrueBlue. “I’m pleased with our disciplined focus on cost management and the savings it delivered this quarter. Over the near term, we expect continued challenges in the industrial markets we serve, but we are encouraged by recent improvements in the demand trend for PeopleReady services.

“When I look at TrueBlue’s digital strategy and competitive position, I am pleased by what we have accomplished. We have more clients and workers using our technology than ever before,” Mr. Beharelle continued. “PeopleReady’s JobStack app has filled more than six million shifts since its inception and is currently filling a job every nine seconds. PeopleScout’s Affinix is helping clients improve time to fill, candidate flow and candidate satisfaction. As we move into a new year and decade, I believe our digital strategies provide further opportunity to differentiate our services, capture additional market share and deliver industry-leading growth.”

2020 Outlook

TrueBlue estimates revenue for the first quarter of 2020 will range from $503 million to $528 million. The company also estimates net loss per basic share will range from $0.07 to $0.00 and adjusted net income per diluted sharewill range from $0.04 to $0.11.

Management will discuss fourth quarter and full-year 2019 results on a webcast at 2 p.m. PDT (5 p.m. EDT), today, Wednesday, Feb. 5, 2020. The webcast can be accessed on TrueBlue’s website: www.trueblue.com.

About TrueBlue

TrueBlue (NYSE: TBI) is a leading provider of specialized workforce solutions that help clients achieve business growth and improve productivity. In 2019, TrueBlue connected approximately 724,000 people with work. Its PeopleReady segment offers on-demand, industrial staffing, PeopleManagement offers contingent, on-site industrial staffing and commercial driver services, and PeopleScout offers recruitment process outsourcing (RPO) and managed service provider (MSP) solutions to a wide variety of industries. Learn more at www.trueblue.com.

1 See the financial statements accompanying the release and the company’s website for more information on non-GAAP terms.

Forward-looking statements

This document contains forward-looking statements relating to our plans and expectations, all of which are subject to risks and uncertainties. Such statements are based on management’s expectations and assumptions as of the date of this release and involve many risks and uncertainties that could cause actual results to differ materially from those expressed or implied in our forward-looking statements including: (1) national and global economic conditions, (2) our ability to attract and retain clients, (3) our ability to attract sufficient qualified candidates and employees to meet the needs of our clients, (4) our ability to maintain profit margins, (5) new laws and regulations that could affect our operations or financial results, (6) our ability to successfully complete and integrate acquisitions, (7) our ability to successfully execute on business strategies to further digitize our business model, and (8) any reduction or change in tax credits we utilize, including the Work Opportunity Tax Credit. Other information regarding factors that could affect our results is included in our Securities Exchange Commission (SEC) filings, including the company’s most recent reports on Forms 10-K and 10-Q, copies of which may be obtained by visiting our website at www.trueblue.com under the Investor Relations section or the SEC’s website at www.sec.gov. We assume no obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law. Any other reference to future financial estimates are included for informational purposes only and subject to risk factors discussed in our most recent filings with the SEC.

In addition, we use several non-GAAP financial measures when presenting our financial results in this document. Please refer to the reconciliations between our GAAP and non-GAAP financial measures in the appendix to this document and on our website at www.trueblue.com under the Investor Relations section for additional information on both current and historical periods. The presentation of these non-GAAP financial measures is used to enhance the understanding of certain aspects of our financial performance. It is not meant to be considered in isolation, superior to, or as a substitute for the directly comparable financial measures prepared in accordance with U.S. GAAP, and may not be comparable to similarly titled measures of other companies.

TRUEBLUE, INC.

SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

 

13 Weeks Ended

 

52 Weeks Ended

(in thousands, except per share data)

Dec 29, 2019

Dec 30, 2018

 

Dec 29, 2019

Dec 30, 2018

Revenue from services

$

591,040

 

$

650,147

 

 

$

2,368,779

 

$

2,499,207

 

Cost of services

440,697

 

477,717

 

 

1,742,621

 

1,833,607

 

Gross profit

150,343

 

172,430

 

 

626,158

 

665,600

 

Selling, general and administrative expense

133,983

 

145,280

 

 

522,430

 

550,632

 

Depreciation and amortization

9,021

 

10,272

 

 

37,549

 

41,049

 

Income from operations

7,339

 

16,878

 

 

66,179

 

73,919

 

Interest and other income (expense), net

2,014

 

848

 

 

3,865

 

1,744

 

Income before tax expense

9,353

 

17,726

 

 

70,044

 

75,663

 

Income tax expense

638

 

2,839

 

 

6,971

 

9,909

 

Net income

$

8,715

 

$

14,887

 

 

$

63,073

 

$

65,754

 

 

 

 

 

 

 

Net income per common share:

 

 

 

 

 

Basic

$

0.23

 

$

0.38

 

 

$

1.63

 

$

1.64

 

Diluted

$

0.23

 

$

0.37

 

 

$

1.61

 

$

1.63

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

Basic

37,843

 

39,528

 

 

38,778

 

39,985

 

Diluted

38,348

 

39,926

 

 

39,179

 

40,275

 

TRUEBLUE, INC.

SUMMARY CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

(in thousands)

Dec 29, 2019

Dec 30, 2018

ASSETS

 

 

Cash and cash equivalents

$

37,608

 

$

46,988

 

Accounts receivable, net

342,303

 

355,373

 

Other current assets

41,822

 

27,466

 

Total current assets

421,733

 

429,827

 

Property and equipment, net

66,150

 

57,671

 

Restricted cash and investments

230,932

 

235,443

 

Goodwill and intangible assets, net

311,171

 

328,695

 

Operating lease right-of-use assets

41,082

 

 

Other assets, net

65,087

 

63,208

 

Total assets

$

1,136,155

 

$

1,114,844

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

Current liabilities

$

230,806

 

$

225,526

 

Long-term debt

37,100

 

80,000

 

Operating lease long-term liabilities

28,849

 

 

Other long-term liabilities

213,427

 

217,879

 

Total liabilities

510,182

 

523,405

 

Shareholders’ equity

625,973

 

591,439

 

Total liabilities and shareholders’ equity

$

1,136,155

 

$

1,114,844

 

TRUEBLUE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

52 Weeks Ended

(in thousands)

Dec 29, 2019

Dec 30, 2018

Cash flows from operating activities:

 

 

Net income

$

63,073

 

$

65,754

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

Depreciation and amortization

37,549

 

41,049

 

Provision for doubtful accounts

7,661

 

10,042

 

Stock-based compensation

9,769

 

13,876

 

Deferred income taxes

1,263

 

(1,929

)

Non-cash lease expense

14,823

 

 

Other operating activities

(1,511

)

5,154

 

Changes in operating assets and liabilities:

 

 

Accounts receivable

5,450

 

11,640

 

Income tax receivable

(6,480

)

(996

)

Other assets

(11,642

)

(12,928

)

Accounts payable and other accrued expenses

6,921

 

3,029

 

Accrued wages and benefits

(9,494

)

(1,613

)

Workers’ compensation claims reserve

(10,828

)

(7,877

)

Operating lease liabilities

(15,178

)

 

Other liabilities

3,166

 

491

 

Net cash provided by operating activities

94,542

 

125,692

 

Cash flows from investing activities:

 

 

Capital expenditures

(28,119

)

(17,054

)

Acquisition of business

 

(22,742

)

Divestiture of business

215

 

10,587

 

Purchases of restricted investments

(28,659

)

(12,941

)

Maturities of restricted investments

31,481

 

21,635

 

Net cash used in investing activities

(25,082

)

(20,515

)

Cash flows from financing activities:

 

 

Purchases and retirement of common stock

(38,826

)

(34,818

)

Net proceeds from employee stock purchase plans

1,329

 

1,503

 

Common stock repurchases for taxes upon vesting of restricted stock

(2,222

)

(3,404

)

Net change in revolving credit facility

(42,900

)

(15,900

)

Payments on debt

 

(22,397

)

Other

(296

)

 

Net cash used in financing activities

(82,915

)

(75,016

)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

935

 

(1,542

)

Net change in cash, cash equivalents, and restricted cash

(12,520

)

28,619

 

Cash, cash equivalents and restricted cash, beginning of period

102,450

 

73,831

 

Cash, cash equivalents and restricted cash, end of period

$

89,930

 

$

102,450

 

TRUEBLUE, INC.

SEGMENT DATA

(Unaudited)

 

 

13 Weeks Ended

 

52 Weeks Ended

(in thousands)

Dec 29, 2019

 

Dec 30, 2018

 

Dec 29, 2019

 

Dec 30, 2018

Revenue from services:

 

 

 

 

 

 

 

PeopleReady

$

364,801

 

 

$

399,116

 

 

$

1,474,062

 

 

$

1,522,076

 

PeopleManagement

171,344

 

 

184,324

 

 

642,233

 

 

728,254

 

PeopleScout

54,895

 

 

66,707

 

 

252,484

 

 

248,877

 

Total company

$

591,040

 

 

$

650,147

 

 

$

2,368,779

 

 

$

2,499,207

 

 

 

 

 

 

 

 

 

Segment profit (1):

 

 

 

 

 

 

 

PeopleReady

$

17,963

 

 

$

22,045

 

 

$

82,106

 

 

$

85,998

 

PeopleManagement

2,778

 

 

5,097

 

 

12,593

 

 

21,627

 

PeopleScout

5,407

 

 

11,680

 

 

37,831

 

 

47,383

 

 

26,148

 

 

38,822

 

 

132,530

 

 

155,008

 

Corporate unallocated expense

(5,190

)

 

(6,065

)

 

(21,870

)

 

(26,066

)

Total company Adjusted EBITDA (2)

20,958

 

 

32,757

 

 

110,660

 

 

128,942

 

Work Opportunity Tax Credit processing fees (3)

(240

)

 

(285

)

 

(960

)

 

(985

)

Acquisition/integration costs (4)

50

 

 

(989

)

 

(1,562

)

 

(2,672

)

Gain on deferred compensation assets (5)

(495

)

 

 

 

(495

)

 

 

Other adjustments (6)

(3,913

)

 

(4,333

)

 

(3,915

)

 

(10,317

)

EBITDA (2)

16,360

 

 

27,150

 

 

103,728

 

 

114,968

 

Depreciation and amortization

(9,021

)

 

(10,272

)

 

(37,549

)

 

(41,049

)

Interest and other income (expense), net

2,014

 

 

848

 

 

3,865

 

 

1,744

 

Income before tax expense

9,353

 

 

17,726

 

 

70,044

 

 

75,663

 

Income tax expense

(638

)

 

(2,839

)

 

(6,971

)

 

(9,909

)

Net income

$

8,715

 

 

$

14,887

 

 

$

63,073

 

 

$

65,754

 

(1)

We evaluate performance based on segment revenue and segment profit. Segment profit includes revenue, related cost of services, and ongoing operating expenses directly attributable to the reportable segment. Segment profit excludes goodwill and intangible impairment charges, depreciation and amortization expense, unallocated corporate general and administrative expense, interest, other income and expense, income taxes, and other adjustments not considered to be ongoing.
 

(2)

See the Non-GAAP Financial Measures table on the next page for definitions of EBITDA and Adjusted EBITDA.
 

(3)

These third-party processing fees are associated with generating the Work Opportunity Tax Credits, which are designed to encourage employers to hire workers from certain targeted groups with higher than average unemployment rates.
 

(4)

Acquisition/integration costs relate to the acquisition of TMP Holdings LTD completed on June 12, 2018.
 

(5)

Gain realized on sale of deferred compensation mutual funds to purchase corporate owned life insurance policies during the 13 weeks ended December 29, 2019.
 

(6)

Other adjustments for the 13 weeks and 52 weeks ended December 29, 2019 primarily include implementation costs for cloud-based systems of $0.6 million and $3.2 million, respectively, workforce reduction costs primarily associated with employee reductions in the PeopleReady business of $2.9 million and $3.3 million, respectively and amortization of software as a service assets of $0.5 million and $1.6 million, respectively, which is reported in selling, general and administrative expense. These other cost adjustments for the 52 weeks ended December 29, 2019 were slightly offset by $3.9 million of workers’ compensation benefit related to additional insurance coverage associated with former workers’ compensation carriers that are in liquidation. Other adjustments for the 13 weeks and 52 weeks ended December 30, 2018 include implementation costs for cloud-based systems of $2.2 million and $6.7 million, respectively, and accelerated vesting of stock associated with the CEO transition of $2.1 million and $3.6 million, respectively.

TRUEBLUE, INC.

NON-GAAP FINANCIAL MEASURES AND NON-GAAP RECONCILIATIONS

In addition to financial measures presented in accordance with U.S. GAAP, we monitor certain non-GAAP key financial measures. The presentation of these non-GAAP financial measures is used to enhance the understanding of certain aspects of our financial performance. It is not meant to be considered in isolation, superior to, or as a substitute for the directly comparable financial measures prepared in accordance with U.S. GAAP, and may not be comparable to similarly titled measures of other companies.

Non-GAAP Measure

Definition

 

Purpose of Adjusted Measures

EBITDA and
Adjusted EBITDA

EBITDA excludes from net income:

- interest and other income (expense), net,

- income taxes, and

- depreciation and amortization.

 

Adjusted EBITDA, further excludes:

- Work Opportunity Tax Credit third-party processing fees,

- acquisition/integration costs

- gain on deferred compensation assets, and

- other adjustments.

 

- Enhances comparability on a consistent basis and provides investors with useful insight into the underlying trends of the business.

 

- Used by management to assess performance and effectiveness of our business strategies.

 

- Provides a measure, among others, used in the determination of incentive compensation for management.

Adjusted net income and Adjusted net income, per diluted share

Net income and net income per diluted share, excluding:

- amortization of intangibles of acquired businesses,

- acquisition/integration costs,

- gain on divestiture,

- other adjustments,

- tax effect of each adjustment to U.S. GAAP net income, and

- adjust income taxes to the expected effective tax rate.

 

- Enhances comparability on a consistent basis and provides investors with useful insight into the underlying trends of the business.

- Used by management to assess performance and effectiveness of our business strategies.

Free cash flow

Net cash provided by operating activities, minus cash purchases for property and equipment.

 

- Used by management to assess cash flows.

 

1.

RECONCILIATION OF U.S. GAAP NET INCOME (LOSS) TO ADJUSTED NET INCOME AND ADJUSTED NET INCOME,
PER DILUTED SHARE
(Unaudited)

 

Q4 2019

 

Q4 2018

 

Q1 2020 Outlook*

 

13 Weeks Ended

 

13 Weeks Ended

 

13 Weeks Ended

(in thousands, except for per share data)

Dec 29, 2019

 

Dec 30, 2018

 

Mar 29, 2020

Net income (loss)

$

8,715

 

 

$

14,887

 

 

$

(2,500

)

$

100

 

Amortization of intangible assets of acquired businesses (2)

4,003

 

 

5,162

 

 

4,000

Acquisition/integration costs (3)

(50

)

 

989

 

 

Other adjustments (4)

3,913

 

 

4,333

 

 

600

Tax effect of adjustments to net income (5)

(1,102

)

 

(1,468

)

 

(600)

Adjustment of income taxes to normalized effective rate (6)

(671

)

 

357

 

 

Adjusted net income

$

14,808

 

 

$

24,260

 

 

$

1,500

 

$

4,000

 

 

 

 

 

 

 

 

 

Adjusted net income, per diluted share

$

0.39

 

 

$

0.61

 

 

$

0.04

 

$

0.11

 

 

 

 

 

 

 

 

 

Basic weighted average shares outstanding

37,843

 

 

39,528

 

 

37,800

Diluted weighted average shares outstanding

38,348

 

 

39,926

 

 

38,400

*Totals may not sum due to rounding

 

 

 

 

 

 

 

2019

 

2018

 

52 Weeks Ended

 

52 Weeks Ended

(in thousands, except for per share data)

Dec 29, 2019

 

Dec 30, 2018

Net income

$

63,073

 

 

$

65,754

 

Gain on divestiture (1)

 

 

(718

)

Amortization of intangible assets of acquired businesses (2)

17,899

 

 

20,750

 

Acquisition/integration costs (3)

1,562

 

 

2,672

 

Other adjustments (4)

3,915

 

 

10,317

 

Tax effect of adjustments to net income (5)

(3,273

)

 

(5,074

)

Adjustment of income taxes to normalized effective rate (6)

(2,835

)

 

(1,843

)

Adjusted net income

$

80,341

 

 

$

91,858

 

 

 

 

 

Adjusted net income, per diluted share

$

2.05

 

 

$

2.28

 

 

 

 

 

Diluted weighted average shares outstanding

39,179

 

 

40,275

 

2.

RECONCILIATION OF U.S. GAAP NET INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDA
(Unaudited)

 

Q4 2019

 

Q4 2018

 

Q1 2020 Outlook*

 

13 Weeks Ended

 

13 Weeks Ended

 

13 Weeks Ended

(in thousands)

Dec 29, 2019

 

Dec 30, 2018

 

Mar 29, 2020

Net income (loss)

$

8,715

 

 

$

14,887

 

 

$

(2,500

)

$

100

 

Income tax expense

638

 

 

2,839

 

 

(300

)

 

Interest and other (income) expense, net

(2,014

)

 

(848

)

 

(900)

Depreciation and amortization

9,021

 

 

10,272

 

 

9,000

EBITDA

16,360

 

 

27,150

 

 

5,200

 

8,200

 

Work Opportunity Tax Credit processing fees (7)

240

 

 

285

 

 

200

Acquisition/integration costs (3)

(50

)

 

989

 

 

Gain on deferred compensation assets (8)

495

 

 

 

 

Other adjustments (4)

3,913

 

 

4,333

 

 

600

Adjusted EBITDA

$

20,958

 

 

$

32,757

 

 

$

6,000

 

$

9,000

 

* Totals may not sum due to rounding

 

 

 

 

 

 

 

 

2019

 

2018

 

52 Weeks Ended

 

52 Weeks Ended

(in thousands)

Dec 29, 2019

 

Dec 30, 2018

Net income

$

63,073

 

 

$

65,754

 

Income tax expense

6,971

 

 

9,909

 

Interest and other (income) expense, net

(3,865

)

 

(1,744

)

Depreciation and amortization

37,549

 

 

41,049

 

EBITDA

103,728

 

 

114,968

 

Work Opportunity Tax Credit processing fees (7)

960

 

 

985

 

Acquisition/integration costs (3)

1,562

 

 

2,672

 

Gain on deferred compensation assets (8)

495

 

 

 

Other adjustments (4)

3,915

 

 

10,317

 

Adjusted EBITDA

$

110,660

 

 

$

128,942

 

3.

RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOWS
(Unaudited)

 

2019

 

2018

 

2017

 

2016

 

52 Weeks Ended

 

52 Weeks Ended

 

52 Weeks Ended

 

53 Weeks Ended

(in thousands)

Dec 29, 2019

 

Dec 30, 2018

 

Dec 31, 2017

 

Jan 1, 2017

Net cash provided by operating activities

$

94,542

 

 

$

125,692

 

 

$

100,134

 

 

$

260,703

 

Capital expenditures

(28,119

)

 

(17,054

)

 

(21,958

)

 

(29,042

)

Free cash flows

$

66,423

 

 

$

108,638

 

 

$

78,176

 

 

$

231,661

 

(1)

Gain on the divestiture of our PlaneTechs business sold mid-March 2018.
 

(2)

Amortization of intangible assets of acquired businesses.
 

(3)

Acquisition/integration costs for the acquisition of TMP Holding LTD completed on June 12, 2018.
 

(4)

Other adjustments for the 13 weeks and 52 weeks ended December 29, 2019 primarily include implementation costs for cloud-based systems of $0.6 million and $3.2 million, respectively, workforce reduction costs primarily associated with employee reductions in the PeopleReady business of $2.9 million and $3.3 million, respectively and amortization of software as a service assets of $0.5 million and $1.6 million, respectively, which is reported in selling, general and administrative expense. These other cost adjustments for the 52 weeks ended December 29, 2019 were slightly offset by $3.9 million of workers’ compensation benefit related to additional insurance coverage associated with former workers’ compensation carriers that are in liquidation. Other adjustments for the 13 weeks and 52 weeks ended December 30, 2018 include implementation costs for cloud-based systems of $2.2 million and $6.7 million, respectively, and accelerated vesting of stock associated with the CEO transition of $2.1 million and $3.6 million, respectively. Other adjustments for the 13 weeks ended March 29, 2020 include implementation costs for cloud-based systems of $0.3 million and amortization of software as a service assets of $0.3 million.
 

(5)

Total tax effect of each of the adjustments to U.S. GAAP net income using the expected ongoing rate of 12 percent for 2020 and 14 percent for all other periods presented.
 

(6)

Adjustment of the effective income tax rate to the expected ongoing rate of 12 percent for 2020 and 14 percent for all other periods presented.
 

(7)

These third-party processing fees are associated with generating the Work Opportunity Tax Credits, which are designed to encourage employers to hire workers from certain targeted groups with higher than average unemployment rates.
 

(8)

Gain realized on sale of deferred compensation mutual funds to purchase corporate owned life insurance policies during the 13 weeks ended December 29, 2019.

 

Derrek Gafford, Executive Vice President and CFO
253-680-8214

Source: TrueBlue

IR CONTACT

Derrek Gafford

Chief Financial Officer

Phone: 1-253-680-8214

InvestorRelations@TrueBlue.com

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About TrueBlue

TrueBlue (NYSE: TBI) is a leading provider of specialized workforce solutions that help clients achieve business growth and improve productivity. In 2019, TrueBlue connected approximately 724,000 people with work. Its PeopleReady segment offers on-demand, industrial staffing, PeopleManagement offers contingent, on-site industrial staffing and commercial driver services, and PeopleScout offers recruitment process outsourcing (RPO) and managed service provider (MSP) solutions to a wide variety of industries.