TrueBlue Reports Record Fourth Quarter and Year-End 2015 Results

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Organic Growth Accelerates, Two Recent Acquisitions Expand Services

TACOMA, Wash.--(BUSINESS WIRE)-- TrueBlue, Inc. (NYSE:TBI) today announced fourth quarter and full-year 2015 results, including revenue in the fourth quarter of $811 million, up 17 percent from $691 million in the fourth quarter of 2014. Full-year revenue was a record $2.7 billion, an increase of 24 percent compared to 2014.

TrueBlue’s fourth quarter adjusted net income per share* was $0.66, up from $0.62 in the same quarter last year. Full-year adjusted net income per share of $2.02 is an increase of 20 percent compared to 2014. Adjusted EBITDA* also rose to $46 million in the quarter, compared to $44 million for the fourth quarter of 2014. Full-year, adjusted EBITDA increased 23 percent to $147 million.

“I am pleased to report that we achieved 14 percent organic revenue growth for the fourth quarter and seven percent for 2015 compared to the prior year,” said TrueBlue CEO Steve Cooper. “In our core business, we saw widespread growth serving the specialized staffing needs of small- to mid-sized customers. Construction had a strong quarter with double-digit sales growth, and we saw improvement in manufacturing. These overall results confirm that our strategies, which focus on building organic growth and adding value through acquisitions, are working well.”

TrueBlue acquired SIMOS, a leading provider of on premise workforce management solutions, effective Dec. 1, 2015. TrueBlue also acquired Aon Hewitt’s recruitment process outsourcing (RPO) business, which provides scalable permanent recruiting solutions, at the beginning of 2016.

“We continue to invest in business growth and our new acquisitions combine well with our existing business to put us in a strong position as we head into 2016,” Cooper said. “We believe the RPO market has tremendous potential on a worldwide scale, which is why we are so pleased that we could bring the RPO operations of one of the industry’s global leaders to our RPO brand PeopleScout. In addition, the SIMOS acquisition really complements the work Staff Management | SMX is doing to offer businesses large scale, on premise management with a focus on improving productivity.”

Cooper said the company estimates adjusted EBITDA will grow nearly 30 percent in 2016 as a result of these two acquisitions and the increased momentum in organic growth.

TrueBlue estimates revenue in the range of $660 million to $675 million, an increase of 15 to 18 percent, and adjusted net income per diluted share of $0.23 to $0.28, for the first quarter of 2016.

TrueBlue estimates revenue of $3.1 billion, an increase of 16 percent, and adjusted net income per diluted share of $2.65 for the full year 2016.

Management will discuss fourth quarter and full-year 2015 results on a conference call at 2 p.m. PT (5 p.m. ET), today, Wednesday, Feb. 3. The conference call can be accessed on TrueBlue’s website: www.trueblue.com

*The definitions of Adjusted EPS and Adjusted EBITDA have been modified. See the financial statements accompanying the release and the company’s website for more information on non-GAAP terms.

About TrueBlue

TrueBlue (NYSE: TBI) is a leading provider of specialized workforce solutions, helping clients improve growth and performance by providing staffing, workforce management, and recruitment process outsourcing solutions. The company’s specialized workforce solutions meet clients’ needs for a reliable, efficient workforce in a wide variety of industries. TrueBlue connects as many as 750,000 people to work each year. Learn more at www.trueblue.com.

Forward-looking Statements

This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “may,” “will,” “should,” “expects,” “intends,” “projects,” “plans,” “believes,” “estimates,” “targets,” “anticipates,” and similar expressions are used to identify these forward-looking statements. Examples of forward-looking statements include statements relating to our future financial condition and operating results, as well as any other statement that does not directly relate to any historical or current fact. Forward-looking statements are based on our current expectations and assumptions, which may not prove to be accurate. These statements are not guarantees and are subject to risks, uncertainties, and changes in circumstances that are difficult to predict. Many factors could cause actual results to differ materially and adversely from these forward-looking statements. Examples of such factors can be found in our reports filed with the SEC, including the information under the heading ‘Risk Factors’ in our Annual Report on Form 10-K for the fiscal year ended Dec. 26, 2014. Any forward-looking statement speaks only as of the date on which it is made, and 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.

Management is providing full-year 2016 guidance on a one-time basis to enhance clarity around recent acquisitions and current expectations for the long-term performance potential of the business. Please refer to the earnings release slides at www.trueblue.com for additional details and disclaimers.

TRUEBLUE, INC.
SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands, except per share data)

 
  13 Weeks Ended   52 Weeks Ended
December 25, 2015   December 26, 2014 December 25, 2015   December 26, 2014
Revenue from services $ 810,733 $ 691,390 $ 2,695,680 $ 2,174,045
Cost of services 625,729   533,152   2,060,007   1,637,066
Gross profit 185,004 158,238 635,673 536,979
Selling, general and administrative expenses 141,419 117,123 495,988 425,777
Depreciation and amortization 10,428   9,347   41,843   29,474
Income from operations 33,157 31,768 97,842 81,728
Interest and other income (expense), net (293 ) (269 ) (1,395 ) 116
Income before tax expense 32,864 31,499 96,447 81,844
Income tax expense 4,696   4,472   25,200   16,169
Net income $ 28,168   $ 27,027   $ 71,247   $ 65,675
 
Net income per common share:
Basic $ 0.68 $ 0.67 $ 1.73 $ 1.61
Diluted $ 0.67 $ 0.65 $ 1.71 $ 1.59
 
Weighted average shares outstanding:
Basic 41,337 40,832 41,226 40,734
Diluted 41,748 41,317 41,622 41,176
 
TRUEBLUE, INC.
SEGMENT DATA

(Unaudited, in thousands)

 
  13 Weeks Ended   52 Weeks Ended
December 25, 2015   December 26, 2014 December 25, 2015   December 26, 2014
Revenue from services
Staffing Services $ 783,732 $ 668,082 $ 2,591,166 $ 2,125,915
Managed Services 27,001   23,308   104,514   48,130  
Total Company $ 810,733   $ 691,390   $ 2,695,680   $ 2,174,045  
 
Adjusted EBITDA, current definition (1)
Staffing Services $ 52,903 $ 46,056 $ 167,198 $ 141,225
Managed Services 1,365   2,215   12,344   5,937  
54,268 48,271 179,542 147,162
Corporate unallocated (7,925 ) (4,598 ) (32,370 ) (27,720 )
Adjusted EBITDA, current definition (1) 46,343 43,673 147,172 119,442
WOTC processing fees (2) (1,410 ) (1,665 ) (2,352 ) (3,020 )
Adjusted EBITDA, as previously defined (3) 44,933 42,008 144,820 116,422
Non-recurring acquisition and integration costs (4) (1,348 ) — (893 ) — (5,135 ) — (5,220 )
EBITDA 43,585 41,115 139,685 111,202
 
Depreciation and amortization 10,428 9,347 41,843 29,474
Interest expense (income), net 293   269   1,395   (116 )
Income before tax expense $ 32,864   $ 31,499   $ 96,447   $ 81,844  

(1) EBITDA and Adjusted EBITDA are non-GAAP financial measures. EBITDA excludes interest, taxes, depreciation and amortization from net income. Adjusted EBITDA further excludes from EBITDA non-recurring costs related to acquisition and integration costs, as well as, Work Opportunity Tax Credit third-party processing fees. EBITDA and Adjusted EBITDA are key measures used by management to evaluate performance. EBITDA and Adjusted EBITDA should not be considered measures of financial performance in isolation or as an alternative to Income from operations in the Consolidated Statements of Operations in accordance with GAAP, and may not be comparable to similarly titled measures of other companies.

(2) 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.

(3) Adjusted EBITDA, as previously defined, included Work Opportunity Tax Credit third-party processing fees.

(4) Non-recurring acquisition and integration costs consist of the acquisition and integration of Seaton, which was completed on June 30, 2014, the first business day of our third quarter of 2014, and the acquisition related costs for SIMOS and the recruitment process outsourcing business of Aon Hewitt, which were completed on December 1, 2015, and January 4, 2016, respectively.

 
TRUEBLUE, INC.
SUMMARY CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands)

 
  December 25, 2015   December 26, 2014
Assets
Current assets:
Cash and cash equivalents $ 31,741 $ 19,666
Marketable securities — 1,500
Accounts receivable, net 467,932 359,903
Other current assets 60,477   34,738
Total current assets 560,150 415,807
Property and equipment, net 57,530 61,392
Restricted cash and investments 187,153 168,426
Goodwill and intangible assets, net 436,313 378,415
Other assets, net 48,181     42,631
Total assets $ 1,289,327   $ 1,066,671
 
Liabilities and shareholders' equity
Current liabilities $ 238,090 $ 187,230
Long-term debt, less current portion 243,397 199,383
Other long-term liabilities 257,591   210,724
Total liabilities 739,078 597,337
Shareholders' equity 550,249   469,334
Total liabilities and shareholders' equity $ 1,289,327   $ 1,066,671
 
TRUEBLUE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

 
  52 Weeks Ended
December 25, 2015   December 26, 2014
Cash flows from operating activities:
Net income $ 71,247 $ 65,675
Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization 41,843 29,474
Provision for doubtful accounts 7,132 11,815
Stock-based compensation 11,103 11,051
Deferred income taxes 5,176 12,663
Other operating activities 446 898
Changes in operating assets and liabilities:
Accounts receivable (95,930 ) (77,629 )
Income tax receivable (16,678 ) (5,696 )
Other assets (6,398 ) (7,361 )
Accounts payable and other accrued expenses 29,979 (8,683 )
Accrued wages and benefits 12,203 12,069
Workers’ compensation claims reserve 14,736 1,579
Other liabilities (827 ) 1,670  
Net cash provided by operating activities 74,032   47,525  
 
Cash flows from investing activities:
Capital expenditures (18,394 ) (16,918 )
Acquisition of businesses, net of cash acquired (67,500 ) (305,876 )
Purchases of marketable securities — (25,057 )
Sales and maturities of marketable securities 1,500 44,167
Change in restricted cash and cash equivalents 18,374 (9,283 )
Purchases of restricted investments (51,516 ) (18,196 )
Maturities of restricted investments 12,510   12,726  
Net cash used in investing activities (105,026 ) (318,437 )
 
Cash flows from financing activities:
Net proceeds from stock option exercises and employee stock purchase plans 1,563 2,191
Common stock repurchases for taxes upon vesting of restricted stock (3,869 ) (3,114 )
Net change in revolving credit facility 46,091 171,994
Payments on debt and other liabilities (2,078 ) (2,267 )
Other 1,079   978  
Net cash provided by financing activities 42,786 169,782
Effect of exchange rate changes on cash and cash equivalents 283     (1,207 )
Net change in cash and cash equivalents 12,075 (102,337 )
CASH AND CASH EQUIVALENTS, beginning of period 19,666   122,003  
CASH AND CASH EQUIVALENTS, end of period $ 31,741   $ 19,666  
 
TRUEBLUE, INC.
RECONCILIATION OF GAAP NET INCOME TO ADJUSTED EBITDA
RECONCILIATION OF GAAP NET INCOME PER DILUTED SHARE TO ADJUSTED NET INCOME PER DILUTED SHARE

(Unaudited, in thousands, except for per share data)

 
  13 Weeks Ended   52 Weeks Ended
December 25, 2015   December 26, 2014 December 25, 2015   December 26, 2014
GAAP net income $ 28,168 $ 27,027 $ 71,247 $ 65,675
Income tax expense 4,696 4,472 25,200 16,169
Interest expense (income), net 293   269   1,395   (116 )
Income from operations 33,157 31,768 97,842 81,728
 
Depreciation and amortization 10,428   9,347   41,843   29,474  
EBITDA (1) 43,585 41,115 139,685 111,202
Non-recurring acquisition and integration costs (2) 1,348   893   5,135   5,220  
Adjusted EBITDA, as previously defined (3) 44,933 42,008 144,820 116,422
Work Opportunity Tax Credit processing fees (4) 1,410   1,665   2,352   3,020  
Adjusted EBITDA, current definition (1) $ 46,343   $ 43,673   $ 147,172   $ 119,442  
 
GAAP net income per diluted share $ 0.67 $ 0.65 $ 1.71 $ 1.59
Non-recurring acquisition and integration costs, net of tax (2) 0.02 0.01 0.08 0.09
Work Opportunity Tax Credit processing fees, net of taxes (4) 0.02 0.03 0.04 0.05
Amortization of intangible assets of acquired businesses, net of tax (5) 0.09 0.07 0.33 0.20
Adjust income taxes to a normalized effective tax rate (6) (0.14 ) (0.14 ) (0.14 ) (0.24 )
Adjusted net income per diluted share, current definition (7) $ 0.66   $ 0.62   $ 2.02   $ 1.69  
Adjusted net income per diluted share, as previously defined (8) $ 0.57   $ 0.52   $ 1.75   $ 1.45  
 
Diluted weighted average shares outstanding 41,748 41,317 41,622 41,176

(1) EBITDA and Adjusted EBITDA are non-GAAP financial measures. EBITDA excludes interest, taxes, depreciation and amortization from net income. Adjusted EBITDA further excludes from EBITDA non-recurring costs related to acquisition and integration costs, as well as, Work Opportunity Tax Credit third-party processing fees. EBITDA and Adjusted EBITDA are key measures used by management to evaluate performance. EBITDA and Adjusted EBITDA should not be considered measures of financial performance in isolation or as an alternative to Income from operations in the Consolidated Statements of Operations in accordance with GAAP, and may not be comparable to similarly titled measures of other companies.

(2) Non-recurring acquisition and integration costs consist of the acquisition and integration of Seaton, which was completed on June 30, 2014, the first business day of our third quarter of 2014, and the acquisition related costs for SIMOS and the recruitment process outsourcing business of Aon Hewitt, which were completed on December 1, 2015, and January 4, 2016, respectively.

(3) Adjusted EBITDA, as previously defined, included Work Opportunity Tax Credit third-party processing fees.

(4) 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.

(5) Amortization of intangible assets of acquired businesses, as well as, accretion expense related to acquisition earn-out.

(6) Adjusts the effective income tax rate to the expected, ongoing rate of 32% including annual Work Opportunity Tax Credit benefits and excluding any discreet or unique items.

(7) Adjusted net income per diluted share is a non-GAAP financial measure which excludes from net income on a per diluted share basis non-recurring costs related to acquisition and integration costs, net of tax, amortization of intangibles of acquired businesses, net of tax, accretion expense related to acquisition earn-out, net of tax, Work Opportunity Tax Credit third-party processing fees, net of tax, and adjusts income taxes to the expected ongoing effective rate. Adjusted net income per diluted share is a key measure used by management to evaluate performance and communicate comparable results. Adjusted net income per diluted share should not be considered a measure of financial performance in isolation or as an alternative to net income per diluted share in the Consolidated Statements of Operations in accordance with GAAP, and may not be comparable to similarly titled measures of other companies.

(8) Adjusted net income per diluted share, calculated as previously defined, was tax adjusted using a marginal tax rate of 40% and included the third-party processing fees associated with generating Work Opportunity Tax Credits.

   
13 Weeks Ended 52 Weeks Ended
December 25, 2015   December 26, 2014 December 25, 2015   December 26, 2014
GAAP net income per diluted share $ 0.67 $ 0.65 $ 1.71 $ 1.59
Non-recurring acquisition and integration costs, net of tax 0.02 0.01 0.07 0.08
Amortization of intangible assets of acquired businesses, net of tax 0.08 0.06 0.29 0.18
Adjust income taxes to a marginal tax rate (0.20 ) (0.20 ) (0.32 ) (0.40 )
Adjusted net income per diluted share, as previously defined $ 0.57   $ 0.52   $ 1.75   $ 1.45  
 
Diluted weighted average shares outstanding 41,748 41,317 41,622 41,176

TrueBlue, Inc.
EVP & CFO
Derrek Gafford, 253-680-8214

Source: TrueBlue, Inc.

Released February 3, 2016