TrueBlue Reports Third Quarter 2020 Results

10/26/2020

Company returns to profitability

TACOMA, Wash.--(BUSINESS WIRE)-- TrueBlue (NYSE:TBI) today announced its third quarter results for 2020.

Third quarter revenue was $475 million, a decrease of 25 percent compared to revenue of $637 million in the third quarter of 2019. Third quarter net income per diluted share was $0.25 compared to a net loss per diluted share of $0.23 in the second quarter of 2020 and net income per diluted share of $0.68 in the third quarter of 2019. Third quarter adjusted net income1 per diluted share was $0.24 compared to an adjusted net loss per diluted share of $0.12 in the second quarter of 2020 and adjusted net income per diluted share of $0.76 in the third quarter of 2019.

“We have taken the right actions to restore profitability and position the company for long-term growth as the economy recovers,” said Patrick Beharelle, CEO of TrueBlue. “During the third quarter we saw steady improvements in our revenue trends across most of the industries and geographies we serve. Our cost management actions continue to show meaningful results which helps position us for strong incremental profit margins when revenue growth returns.

“We’re adding new features to PeopleReady’s JobStack app and refining our process to drive heavy user growth and applicant throughput,” Mr. Beharelle continued. “Looking ahead, we see an opportunity to leverage this technology to capture additional market share while reducing our service delivery costs.”

“Our balance sheet continues to shine, providing financial and operational flexibility,” said Derrek Gafford, CFO of TrueBlue. “Our credit facility provides ample liquidity, and our debt position is at its lowest level since 2012. We also repurchased 9% of our common stock earlier this year.”

2020 Outlook

TrueBlue is providing certain forward-looking information to help investors form their own estimates, which can be found in the quarterly earnings presentation filed today.

Management will discuss third quarter 2020 results on a webcast at 2 p.m. PDT (5 p.m. EDT), today, Monday, Oct. 26, 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) the continued impact of COVID-19 and related economic impact and governmental response, (3) our ability to successfully reduce operating expenses and otherwise adapt to the changing economic environment caused by COVID–19, (4) our ability to access sufficient capital to finance our operations, including our ability to comply with or obtain waivers for covenants contained in our revolving credit facility, (5) our ability to attract and retain clients, (6) our ability to attract sufficient qualified candidates and employees to meet the needs of our clients, (7) our ability to maintain profit margins, (8) new laws and regulations that could affect our operations or financial results, (9) our ability to successfully execute on business strategies to further digitize our business model, and (10) 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 references 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

 

39 Weeks Ended

(in thousands, except per share data)

Sep 27, 2020

 

Sep 29, 2019

 

Sep 27, 2020

Sep 29, 2019

Revenue from services

$

474,530

 

 

 

$

636,793

 

 

$

1,327,726

 

 

$

1,777,739

 

Cost of services

364,066

 

 

 

469,058

 

 

1,007,878

 

 

1,306,626

 

Gross profit

110,464

 

 

 

167,735

 

 

319,848

 

 

471,113

 

Selling, general and administrative expense

90,100

 

 

 

129,800

 

 

304,681

 

 

383,745

 

Depreciation and amortization

7,652

 

 

 

8,749

 

 

24,002

 

 

28,528

 

Goodwill and intangible asset impairment charge

 

 

 

 

 

175,189

 

 

 

Income (loss) from operations

12,712

 

 

 

29,186

 

 

(184,024

)

 

58,840

 

Interest and other income (expense), net

(174

)

 

 

471

 

 

(323

)

 

1,851

 

Income (loss) before tax expense (benefit)

12,538

 

 

 

29,657

 

 

(184,347

)

 

60,691

 

Income tax expense (benefit)

3,743

 

 

 

2,981

 

 

(34,480

)

 

6,333

 

Net income (loss)

$

8,795

 

 

 

$

26,676

 

 

$

(149,867

)

 

$

54,358

 

 

 

 

 

 

 

 

Net income (loss) per common share:

 

 

 

 

 

 

Basic

$

0.25

 

 

 

$

0.69

 

 

$

(4.20

)

 

$

1.39

 

Diluted

$

0.25

 

 

 

$

0.68

 

 

$

(4.20

)

 

$

1.38

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

Basic

34,597

 

 

 

38,741

 

 

35,643

 

 

39,090

 

Diluted

34,904

 

 

 

39,213

 

 

35,643

 

 

39,479

 

TRUEBLUE, INC.

SUMMARY CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

(in thousands)

Sep 27, 2020

 

Dec 29, 2019

ASSETS

 

 

 

Cash and cash equivalents

$

28,233

 

 

$

37,608

 

Accounts receivable, net

279,812

 

 

342,303

 

Other current assets

42,704

 

 

41,822

 

Total current assets

350,749

 

 

421,733

 

Property and equipment, net

66,994

 

 

66,150

 

Restricted cash and investments

229,815

 

 

230,932

 

Goodwill and intangible assets, net

124,916

 

 

311,171

 

Other assets, net

135,724

 

 

106,169

 

Total assets

$

908,198

 

 

$

1,136,155

 

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

Current liabilities

$

202,427

 

 

$

230,806

 

Long-term debt, less current portion

1,500

 

 

37,100

 

Other long-term liabilities

280,089

 

 

242,276

 

Total liabilities

484,016

 

 

510,182

 

Shareholders’ equity

424,182

 

 

625,973

 

Total liabilities and shareholders’ equity

$

908,198

 

 

$

1,136,155

 

TRUEBLUE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

39 Weeks Ended

(in thousands)

Sep 27, 2020

 

Sep 29, 2019

Cash flows from operating activities:

 

 

 

Net income (loss)

$

(149,867

)

 

 

$

54,358

 

 

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

 

 

 

Depreciation and amortization

24,002

 

 

 

28,528

 

 

Goodwill and intangible asset impairment charge

175,189

 

 

 

 

 

Provision for doubtful accounts

6,582

 

 

 

5,997

 

 

Stock-based compensation

6,762

 

 

 

8,119

 

 

Deferred income taxes

(25,955

)

 

 

1,058

 

 

Non-cash lease expense

11,115

 

 

 

11,087

 

 

Other operating activities

1,944

 

 

 

(1,701

)

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

55,408

 

 

 

(17,616

)

 

Income tax receivable

(4,928

)

 

 

(3,982

)

 

Other assets

(2,646

)

 

 

(9,449

)

 

Accounts payable and other accrued expenses

(12,723

)

 

 

(6,970

)

 

Accrued wages and benefits

(7,395

)

 

 

(141

)

 

Workers’ compensation claims reserve

(824

)

 

 

(7,176

)

 

Operating lease liabilities

(11,410

)

 

 

(11,297

)

 

Deferred employer payroll taxes

36,312

 

 

 

 

 

Other liabilities

(2,798

)

 

 

1,723

 

 

Net cash provided by operating activities

98,768

 

 

 

52,538

 

 

Cash flows from investing activities:

 

 

 

Capital expenditures

(16,244

)

 

 

(18,297

)

 

Divestiture of business

 

 

 

215

 

 

Purchases of restricted available-for-sale investments

(2,310

)

 

 

(5,299

)

 

Sales of restricted available-for-sale investments

3,212

 

 

 

3,881

 

 

Purchases of restricted held-to-maturity investments

(32,495

)

 

 

(17,298

)

 

Maturities of restricted held-to-maturity investments

24,358

 

 

 

25,095

 

 

Net cash used in investing activities

(23,479

)

 

 

(11,703

)

 

Cash flows from financing activities:

 

 

 

Purchases and retirement of common stock

(52,346

)

 

 

(31,316

)

 

Net proceeds from employee stock purchase plans

734

 

 

 

1,023

 

 

Common stock repurchases for taxes upon vesting of restricted stock

(2,331

)

 

 

(1,934

)

 

Net change in revolving credit facility

(35,600

)

 

 

(36,200

)

 

Other

(1,436

)

 

 

(203

)

 

Net cash used in financing activities

(90,979

)

 

 

(68,630

)

 

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

(466

)

 

 

732

 

 

Net change in cash, cash equivalents, and restricted cash

(16,156

)

 

 

(27,063

)

 

Cash, cash equivalents and restricted cash, beginning of period

92,371

 

 

 

102,450

 

 

Cash, cash equivalents and restricted cash, end of period

$

76,215

 

 

 

$

75,387

 

 

TRUEBLUE, INC.

SEGMENT DATA

(Unaudited)

 

 

13 Weeks Ended

(in thousands)

Sep 27, 2020

 

Sep 29, 2019

Revenue from services:

 

 

 

PeopleReady

$

293,546

 

 

 

$

413,132

 

 

PeopleManagement

147,241

 

 

 

159,315

 

 

PeopleScout

33,743

 

 

 

64,346

 

 

Total company

$

474,530

 

 

 

$

636,793

 

 

 

 

 

 

Segment profit (1):

 

 

 

PeopleReady

$

18,714

 

 

 

$

30,878

 

 

PeopleManagement

4,574

 

 

 

3,381

 

 

PeopleScout

349

 

 

 

10,774

 

 

Total segment profit

23,637

 

 

 

45,033

 

 

Corporate unallocated expense

(5,968

)

 

 

(5,769

)

 

Total company Adjusted EBITDA (2)

17,669

 

 

 

39,264

 

 

Work Opportunity Tax Credit processing fees (3)

(174

)

 

 

(240

)

 

Acquisition/integration costs (4)

 

 

 

(362

)

 

Other adjustments (5)

2,869

 

 

 

(727

)

 

EBITDA (2)

20,364

 

 

 

37,935

 

 

Depreciation and amortization

(7,652

)

 

 

(8,749

)

 

Interest and other income (expense), net

(174

)

 

 

471

 

 

Income before tax expense

12,538

 

 

 

29,657

 

 

Income tax expense

(3,743

)

 

 

(2,981

)

 

Net income

$

8,795

 

 

 

$

26,676

 

 

(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 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)

Other adjustments for the 13 weeks ended September 27, 2020 primarily include $4.1 million in COVID-19 government subsidies which are partially offset by amortization of software as a service assets of $0.6 million, which is reported in selling, general and administrative expense, workforce reduction costs of $0.3 million and implementation costs for cloud-based systems of $0.1 million. Other adjustments for the 13 weeks ended September 29, 2019 primarily include amortization of software as a service assets of $0.4 million and implementation costs for cloud-based systems of $0.4 million.

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 (loss):

- 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,

- 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 (loss) and Adjusted net income (loss) per diluted share

Net income (loss) and net income (loss) per diluted share, excluding:

- amortization of intangibles of acquired businesses,

- acquisition/integration costs,

- other adjustments,

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

- adjustment of income taxes to our normalized long-term expected tax rate for periods prior to Q2 2020.

 

- 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.

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

 

 

13 Weeks Ended

(in thousands, except for per share data)

Sep 27, 2020

 

Jun 28, 2020

 

Sep 29, 2019

Net income (loss)

$

8,795

 

 

 

$

(8,168

)

 

 

$

26,676

 

 

Amortization of intangible assets of acquired businesses (1)

2,041

 

 

 

2,071

 

 

 

3,858

 

 

Acquisition/integration costs (2)

 

 

 

 

 

 

362

 

 

Other adjustments (3)

(2,869

)

 

 

8,700

 

 

 

727

 

 

Tax effect of adjustments to net income (loss) (4)

247

 

 

 

(6,706

)

 

 

(692

)

 

Adjustment of income taxes to normalized effective rate (5)

 

 

 

 

 

 

(1,171

)

 

Adjusted net income (loss)

$

8,214

 

 

 

$

(4,103

)

 

 

$

29,760

 

 

 

 

 

 

 

 

Adjusted net income (loss) per diluted share

$

0.24

 

 

 

$

(0.12

)

 

 

$

0.76

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding

34,904

 

 

 

35,077

 

 

 

39,213

 

 

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

 

13 Weeks Ended

(in thousands)

Sep 27, 2020

 

Jun 28, 2020

 

Sep 29, 2019

Net income (loss)

$

8,795

 

 

 

$

(8,168

)

 

 

$

26,676

 

 

Income tax expense (benefit)

3,743

 

 

 

(13,475

)

 

 

2,981

 

 

Interest and other (income) expense, net

174

 

 

 

412

 

 

 

(471

)

 

Depreciation and amortization

7,652

 

 

 

7,256

 

 

 

8,749

 

 

EBITDA

20,364

 

 

 

(13,975

)

 

 

37,935

 

 

Work Opportunity Tax Credit processing fees (6)

174

 

 

 

 

 

 

240

 

 

Acquisition/integration costs (2)

 

 

 

 

 

 

362

 

 

Other adjustments (3)

(2,869

)

 

 

8,700

 

 

 

727

 

 

Adjusted EBITDA

$

17,669

 

 

 

$

(5,275

)

 

 

$

39,264

 

 

(1) 

 

Amortization of intangible assets of acquired businesses.

 

(2) 

 

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

 

(3) 

 

Other adjustments for the 13 weeks ended September 27, 2020 primarily include $4.1 million in COVID-19 government subsidies which are partially offset by amortization of software as a service assets of $0.6 million, which is reported in selling, general and administrative expense, workforce reduction costs of $0.3 million and implementation costs for cloud-based systems of $0.1 million. Other adjustments for the 13 weeks ended June 28, 2020 primarily include workforce reduction costs of $11.0 million and amortization of software as a service assets of $0.6 million, partially offset by $3.1 million in COVID-19 government subsidies. Other adjustments for the 13 weeks ended September 29, 2019 primarily include amortization of software as a service assets of $0.4 million and implementation costs for cloud-based systems of $0.4 million.

 

(4) 

 

Total tax effect of each of the adjustments to U.S. GAAP net income (loss) using the effective rate of 30 percent for Q3 2020, the effective rate of 62 percent for Q2 2020 and the expected long-term ongoing rate of 14 percent for Q3 2019.

 

(5)

 

Adjustment of the effective income tax rate to the expected long-term ongoing rate of 14 percent for Q3 2019. Beginning in Q2 2020, we decided not to adjust our GAAP tax rate in our adjusted net income (loss) calculation until our profitability rises to a more substantial level.

 

(6) 

 

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.

 

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.