TrueBlue Reports First Quarter 2021 Results

Broad-based revenue recovery underway across all segments

TACOMA, Wash.--(BUSINESS WIRE)-- TrueBlue (NYSE:TBI) today announced its first quarter results for 2021.

First quarter revenue was $459 million, a decrease of 7 percent compared to revenue of $494 million in the first quarter of 2020. Net income per diluted share was $0.20 compared to net loss per diluted share of $4.04 in the first quarter of 2020. Included in the results for the first quarter of 2020 is a non-cash goodwill and intangible asset impairment charge of $175 million, which is equivalent to $152 million after tax or $4.08 per diluted share. First quarter adjusted net income¹ per diluted share was $0.25 compared to adjusted net loss per diluted share of $0.01 in the first quarter of 2020.

“We had a strong start to the year driven by revenue recovery across all segments and disciplined cost management,” said Patrick Beharelle, CEO of TrueBlue. “We are seeing encouraging new business wins and recovery of existing client volumes, including some of the markets that were hit the hardest last year. Our focus on efficiently managing costs while ensuring we continue to invest in sales resources and digital strategies has allowed us to accelerate our strategic priorities and emerge stronger as the economy begins to shift back to growth.

“Our efforts are producing competitive differentiation and in the case of PeopleReady, JobStack heavy client users continue to show higher revenue growth compared to the rest of the customer base,” Mr. Beharelle continued. “We are excited about our market positioning and ability to increase market share.”

2021 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 first quarter 2021 results on a webcast at 2:30 p.m. PT (5:30 p.m. ET), today, Monday, Apr. 26, 2021. 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 2020, TrueBlue connected approximately 490,000 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.

¹See 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 access sufficient capital to finance our operations, including our ability to comply with covenants contained in our revolving credit facility, (4) our ability to attract and retain clients, (5) our ability to attract sufficient qualified candidates and employees to meet the needs of our clients, (6) our ability to maintain profit margins, (7) new laws, regulations, and government incentives that could affect our operations or financial results, (8) our ability to successfully execute on business strategies to further digitalize our business model, and (9) 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
*(in thousands, except per share data)*	Mar 28, 2021			Mar 29, 2020
Revenue from services	$	458,706		$	494,252
Cost of services		348,132			368,093
Gross profit		110,574			126,159
Selling, general and administrative expense		97,401			117,381
Depreciation and amortization		6,962			9,094
Goodwill and intangible asset impairment charge		—			175,189
Income (loss) from operations		6,211			(175,505	)
Interest expense and other income, net		575			263
Income (loss) before tax expense (benefit)		6,786			(175,242	)
Income tax benefit		(112	)		(24,748	)
Net income (loss)	$	6,898		$	(150,494	)

Net income (loss) per common share:
Basic	$	0.20		$	(4.04	)
Diluted	$	0.20		$	(4.04	)

Weighted average shares outstanding:
Basic		34,674			37,255
Diluted		35,066			37,255

TRUEBLUE, INC.
SUMMARY CONSOLIDATED BALANCE SHEETS
*(Unaudited)*

*(in thousands)*	Mar 28, 2021		Dec 27, 2020
ASSETS
Cash and cash equivalents	$	88,006	$	62,507
Accounts receivable, net	260,108		278,343
Other current assets	35,897		38,035
Total current assets	384,011		378,885
Property and equipment, net	76,109		71,734
Restricted cash and investments	231,178		240,534
Goodwill and intangible assets, net	122,038		123,802
Other assets, net	166,101		165,622
Total assets	$	979,437	$	980,577

LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable and other accrued expenses	$	48,168	$	58,447
Accrued wages and benefits	126,906		122,657
Current portion of workers’ compensation claims reserve	62,005		66,007
Other current liabilities	21,410		21,856
Total current liabilities	258,489		268,967
Workers’ compensation claims reserve, less current portion	191,989		189,486
Other long-term liabilities	83,332		84,934
Total liabilities	533,810		543,387
Shareholders’ equity	445,627		437,190
Total liabilities and shareholders’ equity	$	979,437	$	980,577

TRUEBLUE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
*(Unaudited)*

	13 weeks ended
*(in thousands)*	Mar 28, 2021			Mar 29, 2020
Cash flows from operating activities:
Net income (loss)	$	6,898		$	(150,494	)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		6,962			9,094
Goodwill and intangible asset impairment charge		—			175,189
Allowance for credit losses		207			3,289
Stock-based compensation		3,343			1,508
Deferred income taxes		(5,002	)		(23,432	)
Non-cash lease expense		3,920			3,763
Other operating activities		(438	)		5,375
Changes in operating assets and liabilities:
Accounts receivable		18,025			45,407
Income tax receivable		4,910			435
Operating lease right-of-use-asset		3,501			—
Other assets		(4,578	)		5,958
Accounts payable and other accrued expenses		(9,633	)		(28,443	)
Accrued wages and benefits		4,249			(11,733	)
Workers’ compensation claims reserve		(1,499	)		(2,163	)
Operating lease liabilities		(3,320	)		(3,811	)
Other liabilities		338			(2,334	)
Net cash provided by operating activities		27,883			27,608
Cash flows from investing activities:
Capital expenditures		(10,003	)		(7,028	)
Purchases of restricted available-for-sale investments		(14	)		(1,149	)
Sales of restricted available-for-sale investments		452			1,269
Maturities of restricted held-to-maturity investments		6,371			6,168
Net cash used in investing activities		(3,194	)		(740	)
Cash flows from financing activities:
Purchases and retirement of common stock		—			(52,348	)
Net proceeds from employee stock purchase plans		255			323
Common stock repurchases for taxes upon vesting of restricted stock		(2,555	)		(1,792	)
Net change in revolving credit facility		—			256,400
Other		(94	)		(508	)
Net cash provided by (used in) financing activities		(2,394	)		202,075
Effect of exchange rate changes on cash, cash equivalents and restricted cash		262			(1,738	)
Net change in cash, cash equivalents, and restricted cash		22,557			227,205
Cash, cash equivalents and restricted cash, beginning of period		118,612			92,371
Cash, cash equivalents and restricted cash, end of period	$	141,169		$	319,576

TRUEBLUE, INC.
SEGMENT DATA
*(Unaudited)*

	13 weeks ended
*(in thousands)*	Mar 28, 2021			Mar 29, 2020
Revenue from services:
PeopleReady	$	260,392		$	299,294
PeopleManagement		151,754			141,614
PeopleScout		46,560			53,344
Total company	$	458,706		$	494,252

Segment profit (loss) (1):
PeopleReady	$	11,860		$	7,655
PeopleManagement		3,116			(314	)
PeopleScout		4,037			2,508
Total segment profit		19,013			9,849
Corporate unallocated expense		(5,619	)		(5,209	)
Total company Adjusted EBITDA (2)		13,394			4,640
Work Opportunity Tax Credit processing fees (3)		(135	)		(135	)
Amortization of software as a service assets (4)		(673	)		(552	)
Goodwill and intangible asset impairment charge		—			(175,189	)
Workforce reduction costs (5)		(70	)		(1,308	)
COVID-19 government subsidies		1,743			—
Other adjustments, net (6)		(1,086	)		6,133
EBITDA (2)		13,173			(166,411	)
Depreciation and amortization		(6,962	)		(9,094	)
Interest expense and other income, net		575			263
Income (loss) before tax benefit		6,786			(175,242	)
Income tax benefit		112			24,748
Net income (loss)	$	6,898		$	(150,494	)

(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 expense, other income, 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)		Amortization of software as a service assets is reported in selling, general and administrative expense.

(5)		Workforce reduction costs for the 13 weeks ended March 31, 2020 were primarily due to employee reductions as part of our cost management actions in response to COVID-19.

(6)		Other adjustments for the 13 weeks ended March 28, 2021 primarily include lease expense of $0.8 million incurred during the build-out phase of our Chicago office and implementation costs for cloud-based systems of $0.1 million. Other adjustments for the 13 weeks ended March 31, 2020 primarily include implementation costs for cloud-based systems of $0.5 million, offset by a $6.3 million benefit from a reduction in expected costs to comply with the Affordable Care Act.

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 expense and other income, net, - income taxes, and - depreciation and amortization. Adjusted EBITDA, further excludes: - Work Opportunity Tax Credit third-party processing fees, - amortization of software as a service assets, - goodwill and intangible asset impairment charge, - workforce reductions costs, - COVID-19 government subsidies, and - other adjustments, net.	- 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, - amortization of software as a service assets, - goodwill and intangible asset impairment charge, - workforce reduction costs, - COVID-19 government subsidies - other adjustments, net, - 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 AND ADJUSTED NET INCOME PER DILUTED SHARE
	*(Unaudited)*

		13 weeks ended
	*(in thousands, except for per share data)*	Mar 28, 2021			Mar 29, 2020
	Net income (loss)	$	6,898		$	(150,494	)
	Amortization of intangible assets of acquired businesses	1,885			4,004
	Amortization of software as a service assets (1)	673			552
	Goodwill and intangible asset impairment charge	—			175,189
	Workforce reduction costs (2)	70			1,308
	COVID-19 government subsidies	(1,743		)	—
	Other adjustments, net (3)	1,086			(6,133		)
	Tax effect of adjustments to net income (loss) (4)	33			(20,990		)
	Adjustment of income taxes to normalized effective rate (5)	—			(3,719		)
	Adjusted net income (loss)	$	8,902		$	(283	)

	Adjusted net income (loss) per diluted share	$	0.25		$	(0.01	)

	Diluted weighted average shares outstanding	35,066			37,255

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

		13 weeks ended
	*(in thousands)*	Mar 28, 2021		Mar 29, 2020
	Net income (loss)	$	6,898	$	(150,494)
	Income tax benefit	(112)		(24,748)
	Interest expense and other (income), net	(575)		(263)
	Depreciation and amortization	6,962		9,094
	EBITDA	13,173		(166,411)
	Work Opportunity Tax Credit processing fees (6)	135		135
	Amortization of software as a service assets (1)	673		552
	Goodwill and intangible asset impairment charge	—		175,189
	Workforce reduction costs (2)	70		1,308
	COVID-19 government subsidies	(1,743)		—
	Other adjustments, net (3)	1,086		(6,133)
	Adjusted EBITDA	$	13,394	$	4,640

(1)		Amortization of software as a service assets is reported in selling, general and administrative expense.

(2)		Workforce reduction costs for the 13 weeks ended March 31, 2020 were primarily due to employee reductions as part of our cost management actions in response to COVID-19.

(3)		Other adjustments for the 13 weeks ended March 28, 2021 primarily include lease expense of $0.8 million incurred during the build-out phase of our Chicago office and implementation costs for cloud-based systems of $0.1 million. Other adjustments for the 13 weeks ended March 31, 2020 primarily include implementation costs for cloud-based systems of $0.5 million, offset by a $6.3 million benefit from a reduction in expected costs to comply with the Affordable Care Act.

(4)		Total tax effect of each of the adjustments to U.S. GAAP net income (loss) using the effective income tax rate benefit of 2 percent for Q1 2021 and the expected long-term ongoing income tax rate expense of 12 percent for Q1 2020.

(5)		Adjustment of the effective income tax rate to the expected long-term ongoing rate of 12 percent for Q1 2020. 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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210426005715/en/

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

Source: TrueBlue

Released April 26, 2021

TrueBlue Reports First Quarter 2021 Results

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