TrueBlue Reports First Quarter 2023 Results

Operational execution produces results in line with company outlook

TACOMA, Wash.--(BUSINESS WIRE)-- TrueBlue (NYSE:TBI) today announced its first quarter results for 2023.

First quarter revenue was $465 million, a decrease of 16 percent compared to revenue of $552 million in the first quarter of 2022. Net loss per diluted share was $0.13 compared to net income per diluted share of $0.30 in the first quarter of 2022. First quarter adjusted net loss1 per diluted share was $0.06 compared to adjusted net income per diluted share of $0.44 in the first quarter of 2022.

“Given the macroeconomic climate, we are pleased that demand for our services was right in line with our expectation,” said Steve Cooper, CEO of TrueBlue. “Our PeopleReady business is one of the first to feel the impact from a change in macroeconomic conditions given the short duration of job assignments and project-based nature of its services. After experiencing the first signs of slowing demand during the second quarter last year, the underlying revenue trends at PeopleReady have been steady since October. As we expected, our PeopleScout and PeopleManagement businesses followed suit with slower demand trends during the first quarter this year as some clients trimmed their human capital spending due to macroeconomic uncertainty despite many clients having open positions.

“We have taken actions to reduce costs in our PeopleScout and PeopleManagement businesses and our team continues to be successful in pricing our services in a disciplined manner,” continued Mr. Cooper.

“Our balance sheet is in great shape and our business is producing strong cash flow, which provided us with the opportunity to return capital to shareholders,” said Derrek Gafford, CFO of TrueBlue. “We repurchased $25 million of common stock during the quarter leaving $64 million remaining under our authorization.”

2023 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 2023 results on a webcast at 2:30 p.m. PT (5:30 p.m. ET), today, Monday, Apr. 24, 2023. 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 2022, TrueBlue connected approximately 611,000 people with work. Its PeopleReady segment offers on-demand, industrial staffing, PeopleScout offers recruitment process outsourcing (RPO) and managed service provider (MSP) solutions, and PeopleManagement offers contingent, on-site industrial staffing and commercial driver services. Learn more at www.trueblue.com.

1 Refer to the financial statements accompanying this release for more information regarding non-GAAP terms.

Forward-looking statements and non-GAAP financial measures

This document contains forward-looking statements relating to our plans and expectations including, without limitation, statements regarding the future performance and operations of our business, and expected growth from our digital investments, 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 which can be negatively impacted by factors such as rising interest rates, inflation, political instability, epidemics and global trade uncertainty, (2) our ability to attract sufficient qualified candidates and employees to meet the needs of our clients, (3) our ability to attract and retain clients, (4) our ability to maintain profit margins, (5) our ability to successfully execute on business strategies to further digitalize our business model, (6) the timing and amount of common stock repurchases, if any, which will be determined at management’s discretion and depend upon several factors, including market and business conditions, the trading price of our common stock and the nature of other investment opportunities, (7) new laws, regulations, and government incentives that could affect our operations or financial results, (8) our ability to access sufficient capital to finance our operations, including our ability to comply with covenants contained in our revolving credit facility, 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 26, 2023

 

Mar 27, 2022

Revenue from services

$

465,288

 

 

$

551,515

Cost of services

 

342,175

 

 

 

411,670

Gross profit

 

123,113

 

 

 

139,845

Selling, general and administrative expense

 

122,645

 

 

 

120,568

Depreciation and amortization

 

6,411

 

 

 

7,287

Income (loss) from operations

 

(5,943

)

 

 

11,990

Interest expense and other income, net

 

1,014

 

 

 

505

Income (loss) before tax expense

 

(4,929

)

 

 

12,495

Income tax expense (benefit)

 

(640

)

 

 

1,976

Net income (loss)

$

(4,289

)

 

$

10,519

 

 

 

 

Net (loss) income per common share:

 

 

 

Basic

$

(0.13

)

 

$

0.31

Diluted

$

(0.13

)

 

$

0.30

 

 

 

 

Weighted average shares outstanding:

 

 

 

Basic

 

32,292

 

 

 

33,929

Diluted

 

32,292

 

 

 

34,544

 

TRUEBLUE, INC.

SUMMARY CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

(in thousands)

Mar 26, 2023

 

Dec 25, 2022

ASSETS

 

 

 

Cash and cash equivalents

$

47,223

 

$

72,054

Accounts receivable, net

 

282,014

 

 

314,275

Other current assets

 

42,062

 

 

43,883

Total current assets

 

371,299

 

 

430,212

Property and equipment, net

 

97,972

 

 

95,823

Restricted cash and investments

 

212,840

 

 

213,734

Goodwill and intangible assets, net

 

108,731

 

 

109,989

Other assets, net

 

166,271

 

 

169,650

Total assets

$

957,113

 

$

1,019,408

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

Accounts payable and other accrued expenses

$

63,967

 

$

76,644

Accrued wages and benefits

 

81,095

 

 

92,237

Current portion of workers’ compensation claims reserve

 

46,543

 

 

50,005

Other current liabilities

 

23,291

 

 

23,989

Total current liabilities

 

214,896

 

 

242,875

Workers’ compensation claims reserve, less current portion

 

192,884

 

 

201,005

Other long-term liabilities

 

81,710

 

 

79,213

Total liabilities

 

489,490

 

 

523,093

Shareholders’ equity

 

467,623

 

 

496,315

Total liabilities and shareholders’ equity

$

957,113

 

$

1,019,408

 

TRUEBLUE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

13 weeks ended

(in thousands)

Mar 26, 2023

 

Mar 27, 2022

Cash flows from operating activities:

 

 

 

Net income (loss)

$

(4,289

)

 

$

10,519

 

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

 

 

 

Depreciation and amortization

 

6,411

 

 

 

7,287

 

Provision for credit losses

 

1,382

 

 

 

989

 

Stock-based compensation

 

2,630

 

 

 

3,812

 

Deferred income taxes

 

(47

)

 

 

1,258

 

Non-cash lease expense

 

3,140

 

 

 

3,281

 

Other operating activities

 

20

 

 

 

2,608

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

 

31,025

 

 

 

27,702

 

Income taxes receivable and payable

 

(2,512

)

 

 

(1,252

)

Other assets

 

6,462

 

 

 

4,267

 

Accounts payable and other accrued expenses

 

(11,937

)

 

 

(13,257

)

Accrued wages and benefits

 

(11,143

)

 

 

(19,031

)

Workers’ compensation claims reserve

 

(11,583

)

 

 

168

 

Operating lease liabilities

 

(3,316

)

 

 

(3,319

)

Other liabilities

 

2,908

 

 

 

1,410

 

Net cash provided by operating activities

 

9,151

 

 

 

26,442

 

Cash flows from investing activities:

 

 

 

Capital expenditures

 

(8,081

)

 

 

(5,779

)

Purchases of restricted held-to-maturity investments

 

(2,305

)

 

 

 

Maturities of restricted held-to-maturity investments

 

2,010

 

 

 

6,034

 

Net cash (used in) provided by investing activities

 

(8,376

)

 

 

255

 

Cash flows from financing activities:

 

 

 

Purchases and retirement of common stock

 

(24,718

)

 

 

(36,326

)

Net proceeds from employee stock purchase plans

 

315

 

 

 

319

 

Common stock repurchases for taxes upon vesting of restricted stock

 

(2,377

)

 

 

(3,970

)

Net change in revolving credit facility

 

 

 

 

4,000

 

Other

 

(45

)

 

 

(72

)

Net cash used in financing activities

 

(26,825

)

 

 

(36,049

)

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

 

9

 

 

 

(57

)

Net change in cash, cash equivalents, and restricted cash

 

(26,041

)

 

 

(9,409

)

Cash, cash equivalents and restricted cash, beginning of period

 

135,631

 

 

 

103,185

 

Cash, cash equivalents and restricted cash, end of period

$

109,590

 

 

$

93,776

 

 

TRUEBLUE, INC.

SEGMENT DATA

(Unaudited)

 

 

13 weeks ended

(in thousands)

Mar 26, 2023

 

Mar 27, 2022

Revenue from services:

 

 

 

PeopleReady

$

252,628

 

 

$

305,690

 

PeopleScout

 

69,476

 

 

 

82,006

 

PeopleManagement

 

143,184

 

 

 

163,819

 

Total company

$

465,288

 

 

$

551,515

 

 

 

 

 

Segment profit (loss) (1):

 

 

 

PeopleReady

$

872

 

 

$

16,219

 

PeopleScout

 

8,923

 

 

 

10,972

 

PeopleManagement

 

(202

)

 

 

2,979

 

Total segment profit

 

9,593

 

 

 

30,170

 

Corporate unallocated expense

 

(6,708

)

 

 

(7,298

)

Total company Adjusted EBITDA (2)

 

2,885

 

 

 

22,872

 

Third-party processing fees for hiring tax credits (3)

 

(120

)

 

 

(162

)

Amortization of software as a service assets (4)

 

(868

)

 

 

(747

)

PeopleReady technology upgrade costs (5)

 

(32

)

 

 

(2,550

)

Other adjustments, net (6)

 

(1,397

)

 

 

(136

)

EBITDA (2)

 

468

 

 

 

19,277

 

Depreciation and amortization

 

(6,411

)

 

 

(7,287

)

Interest expense and other income, net

 

1,014

 

 

 

505

 

Income (loss) before tax expense

 

(4,929

)

 

 

12,495

 

Income tax benefit (expense)

 

640

 

 

 

(1,976

)

Net income (loss)

$

(4,289

)

 

$

10,519

 

(1)

 

We evaluate performance based on segment revenue and segment profit (loss). Segment profit (loss) includes revenue, related cost of services, and ongoing operating expenses directly attributable to the reportable segment. Segment profit (loss) 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 hiring tax credits.

 

(4)

 

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

 

(5)

 

Costs associated with upgrading legacy PeopleReady technology.

 

(6)

 

Other adjustments for the 13 weeks ended March 26, 2023 primarily include workforce reduction costs of $1.2 million ($0.2 million in cost of services and $1.0 million in selling, general and administrative expense). Other adjustments for the 13 weeks ended March 27, 2022 primarily include costs of $0.1 million incurred while transitioning to a new third party administrator for workers’ compensation.

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

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,

– amortization of software as a service assets,

– accelerated depreciation,

– PeopleReady technology upgrade costs,

– other adjustments, net, and

– tax effect of each adjustment to U.S. GAAP.

 

 

– 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.

EBITDA and
Adjusted EBITDA

 

EBITDA excludes from net income (loss):

– income tax expense (benefit),

– interest expense and other income, net, and

– depreciation and amortization.

 

Adjusted EBITDA, further excludes:

– third-party processing fees for hiring tax credits,

– amortization of software as a service assets,

– PeopleReady technology upgrade costs,

– 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 SG&A expense

 

Selling, general and administrative expense excluding:

– third-party processing fees for hiring tax credits,

– amortization of software as a service assets,

– PeopleReady technology upgrade costs,

– other adjustments, net.

 

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

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)

Mar 26, 2023

 

Mar 27, 2022

Net income (loss)

$

(4,289

)

 

$

10,519

 

Amortization of intangible assets

 

1,270

 

 

 

1,502

 

Amortization of software as a service assets (1)

 

 

 

 

747

 

Accelerated depreciation (2)

 

 

 

 

516

 

PeopleReady technology upgrade costs (3)

 

32

 

 

 

2,550

 

Other adjustments, net (4)

 

1,397

 

 

 

136

 

Tax effect of adjustments to net income (loss) (5)

 

(351

)

 

 

(862

)

Adjusted net income (loss)

$

(1,941

)

 

$

15,108

 

 

 

 

 

Adjusted net income (loss) per diluted share

$

(0.06

)

 

$

0.44

 

 

 

 

 

Diluted weighted average shares outstanding

 

32,292

 

 

 

34,544

 

 

 

 

 

Margin / % of revenue:

 

 

 

Net income (loss)

 

(0.9

)%

 

 

1.9

%

Adjusted net income (loss)

 

(0.4

)%

 

 

2.7

%

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

 

13 weeks ended

(in thousands)

Mar 26, 2023

 

Mar 27, 2022

Net income (loss)

$

(4,289

)

 

$

10,519

 

Income tax expense (benefit)

 

(640

)

 

 

1,976

 

Interest expense and other (income), net

 

(1,014

)

 

 

(505

)

Depreciation and amortization

 

6,411

 

 

 

7,287

 

EBITDA

 

468

 

 

 

19,277

 

Third-party processing fees for hiring tax credits (6)

 

120

 

 

 

162

 

Amortization of software as a service assets (1)

 

868

 

 

 

747

 

PeopleReady technology upgrade costs (3)

 

32

 

 

 

2,550

 

Other adjustments, net (4)

 

1,397

 

 

 

136

 

Adjusted EBITDA

$

2,885

 

 

$

22,872

 

 

 

 

 

Margin / % of revenue:

 

 

 

Net income (loss)

 

(0.9

)%

 

 

1.9

%

Adjusted EBITDA

 

0.6

%

 

 

4.1

%

3. RECONCILIATION OF U.S. GAAP SELLING, GENERAL AND ADMINISTRATIVE EXPENSE TO ADJUSTED SG&A EXPENSE
(Unaudited)

 

13 weeks ended

(in thousands)

Mar 26, 2023

 

Mar 27, 2022

Selling, general and administrative expense

$

122,645

 

 

$

120,568

 

Third-party processing fees for hiring tax credits (6)

 

(120

)

 

 

(162

)

Amortization of software as a service assets (1)

 

(868

)

 

 

(747

)

PeopleReady technology upgrade costs (3)

 

(32

)

 

 

(2,550

)

Other adjustments, net (4)

 

(1,189

)

 

 

(136

)

Adjusted SG&A expense

$

120,436

 

 

$

116,973

 

 

 

 

 

% of revenue:

 

 

 

Selling, general and administrative expense

 

26.4

%

 

 

21.9

%

Adjusted SG&A expense

 

25.9

%

 

 

21.2

%

(1)

 

Amortization of software as a service assets is reported in selling, general and administrative expense. Note, amortization of software as a service assets was included as an adjustment to net income during transitory periods ending with fiscal 2022 and is only considered an adjustment to EBITDA going forward to be consistent with the treatment of depreciation and amortization.

   

 

(2)

 

Accelerated depreciation for the existing systems being replaced by the upgraded PeopleReady technology platform.

   

 

(3)

 

Costs associated with upgrading legacy PeopleReady technology.

   

 

(4)

 

Other adjustments for the 13 weeks ended March 26, 2023 primarily include workforce reduction costs of $1.2 million ($0.2 million in cost of services and $1.0 million in selling, general and administrative expense). Other adjustments for the 13 weeks ended March 27, 2022 primarily include costs of $0.1 million incurred while transitioning to a new third party administrator for workers’ compensation.

   

 

(5)

 

Total tax effect of each of the adjustments to U.S. GAAP net income using the effective income tax rate for the respective periods.

   

 

(6)

 

These third-party processing fees are associated with generating hiring tax credits.

 

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

Source: TrueBlue