TRUEBLUE REPORTS 2016 SECOND QUARTER RESULTS
 
TACOMA, WA-July 20, 2016--TrueBlue, Inc. (NYSE:TBI) announced today that revenue for the second quarter of 2016 was $673 million, an increase of seven percent, compared to revenue of $628 million for the second quarter of 2015. Net loss for the second quarter was $64 million or $1.53 per diluted share, compared to net income of $17 million or $0.42 per diluted share for the second quarter of 2015. Adjusted net income* for both the second quarter of 2016 and the second quarter of 2015 was $21 million or $0.51 per diluted shares. Adjusted EBITDA* for both the second quarter of 2016 and the second quarter of 2015 was $37 million.

Included in the results for the second quarter is a non-cash goodwill and intangible charge of $99 million which is equivalent to $80 million after tax or $1.91 per diluted share. The impairment was primarily driven by a change in the scope of services with our largest customer as reported by TrueBlue in April 2016 and other changes in outlook reflecting recent economic and industry conditions.

“Although we reported a net loss in the quarter due to the impairment, adjusted EBITDA results exceeded our expectation,” TrueBlue CEO Steve Cooper said. “Revenue trends have been mixed this year, but we have managed our costs and are pleased with how our teams have continued to improve the spread between our bill rates and pay rates. We are taking the right steps to preserve our profit margin and continue producing long-term growth for shareholders.”

The company also shared it outlook for the third quarter of 2016:
•
Revenue of $717 million to $733 million
•
Net income of $24 million to $26 million ($31 million to $33 million on an adjusted basis)
•
Net income per diluted share of $0.57 to $0.62 ($0.73 to $0.78 on an adjusted basis)
•
Adjusted EBITDA of $51 million to $54 million

Management will discuss second quarter 2016 results on a conference call at 2 p.m. PT (5 p.m. ET), today, Wednesday, July 20. The conference call can be accessed on TrueBlue’s web site: www.trueblue.com

*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 including staffing, large-volume on-site workforce management, and recruitment process outsourcing to fill full-time positions. Based in Tacoma, Wash., TrueBlue serves clients globally and connects as many as 840,000 people to work each year in a wide variety of industries. 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. 25, 2015. 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. 
 
Contacts:
Derrek Gafford, EVP & CFO
253-680-8214






TRUEBLUE, INC.
SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share data)
 
13 Weeks Ended
 
26 Weeks Ended
 
June 24, 2016
 
June 26, 2015
 
June 24, 2016
 
June 26, 2015
Revenue from services
$
672,612

 
$
627,714

 
$
1,318,592

 
$
1,201,029

Cost of services
502,688

 
475,748

 
998,156

 
919,227

Gross profit
169,924

 
151,966

 
320,436

 
281,802

Selling, general and administrative expenses
135,787

 
117,859

 
266,411

 
229,452

Depreciation and amortization
11,694

 
10,397

 
22,983

 
20,917

Goodwill and intangible asset impairment charges (1)
99,269

 
—

 
99,269

 
—

Income (loss) from operations
(76,826
)
—

23,710

—

(68,227
)
—

31,433

Interest and other expense, net
(887
)
 
(202
)
 
(1,906
)
 
(736
)
Income (loss) before tax expense
(77,713
)
 
23,508

 
(70,133
)
 
30,697

Income tax expense (benefit)
(13,978
)
 
6,235

 
(13,366
)
 
7,708

Net income (loss)
$
(63,735
)
 
$
17,273

 
$
(56,767
)
 
$
22,989

 

 

 

 

Net income (loss) per common share:

 

 

 

Basic
$
(1.53
)
 
$
0.42

 
$
(1.36
)
 
$
0.56

Diluted
$
(1.53
)
 
$
0.42

 
$
(1.36
)
 
$
0.55

 

 

 

 

Weighted average shares outstanding:

 

 

 

Basic
41,688

 
41,240

 
41,595

 
41,135

Diluted
41,688

 
41,475

 
41,595

 
41,472


(1)
The goodwill and intangible asset impairment charges for the thirteen weeks ended June 24, 2016, relate to our Staff Management | SMX, Hrx, and PlaneTechs reporting units. The impairment charge of $99 million is equivalent to $80 million after tax or $1.91 per diluted share.




TRUEBLUE, INC.
SEGMENT DATA
(Unaudited, in thousands)

 
13 Weeks Ended
 
26 Weeks Ended
 
June 24, 2016
 
June 26, 2015
 
June 24, 2016
 
June 26, 2015
Revenue from services
 
 
 
 
 
 
 
Staffing Services
$
625,660

 
$
601,103

 
$
1,228,113

 
$
1,150,815

Managed Services
46,952

 
26,611

 
90,479

 
50,214

Total Company
672,612

 
627,714

 
1,318,592

 
1,201,029

 
 
 
 
 
 
 
 
Adjusted EBITDA (1)
 
 
 
 
 
 
 
Staffing Services
$
34,998

 
$
39,299

 
$
54,680

—

$
63,858

Managed Services
12,234

 
4,326

 
21,064

 
7,804

 
47,232

 
43,625

 
75,744

 
71,662

Corporate unallocated
(10,425
)
 
(6,422
)
 
(17,512
)
 
(14,730
)
Adjusted EBITDA
36,807

 
37,203

 
58,232

 
56,932

WOTC processing fees (2)
(351
)
 
(465
)
 
(828
)
 
(795
)
Acquisition and integration costs (3)
(2,319
)
 
(2,631
)
 
(3,379
)
 
(3,787
)
Goodwill and intangible impairment charges (4)
(99,269
)
 
—

 
(99,269
)
 
—

EBITDA
(65,132
)
 
34,107

 
(45,244
)
 
52,350

 
 
 
 
 
 
 
 
Depreciation and amortization
11,694

 
10,397

 
22,983

 
20,917

Interest expense, net
887

 
202

—

1,906

—

736

Income (loss) before tax expense
(77,713
)
—

23,508

—

(70,133
)
—

30,697

Income tax expense (benefit)
(13,978
)
 
6,235

 
(13,366
)
 
7,708

Net income (loss)
$
(63,735
)
 
$
17,273

 
$
(56,767
)
 
$
22,989


(1)
EBITDA and Adjusted EBITDA are non-GAAP financial measures. EBITDA excludes interest, taxes, depreciation and amortization, and goodwill and intangible asset impairment charges from net income. Adjusted EBITDA further excludes from EBITDA costs related to acquisition and integration, and 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)
For the quarter ended June 24, 2016, acquisition and integration costs related to the acquisition of the recruitment process outsourcing business of Aon Hewitt, which was completed on January 4, 2016. For the quarter ended June 26, 2015, these costs related to the acquisition of Seaton, which was completed on June 30, 2014.

(4)
The goodwill and intangible asset impairment charges for the thirteen weeks ended June 24, 2016, relate to our Staff Management | SMX, Hrx, and PlaneTechs reporting units. The impairment charge of $99 million is equivalent to $80 million after tax or $1.91 per diluted share.








TRUEBLUE, INC.
SUMMARY CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)

 
June 24, 2016

December 25, 2015
Assets



Current assets:





Cash and cash equivalents
$
21,772


$
29,781

Accounts receivable, net
353,367


461,476

Other current assets
37,077


51,708

Total current assets
412,216


542,965

Property and equipment, net
60,315


57,530

Restricted cash and investments
204,354


188,412

Goodwill and intangible assets, net
367,510


422,354

Other assets, net
53,362


48,181

Total assets
$
1,097,757


$
1,259,442

 



Liabilities and shareholders' equity



Current liabilities
$
236,658


$
227,976

Long-term debt, less current portion
148,078


243,397

Other long-term liabilities
227,372


252,496

Total liabilities
612,108


723,869

Shareholders' equity
485,649


535,573

Total liabilities and shareholders' equity
$
1,097,757


$
1,259,442





TRUEBLUE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
 
Twenty-six weeks ended
 
June 24, 2016

June 26, 2015
Cash flows from operating activities:



Net income (loss)
$
(56,767
)

$
22,989

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



Depreciation and amortization
22,983


20,917

Goodwill and intangible asset impairment charges
99,269

 
—

Provision for doubtful accounts
4,221


3,976

Stock-based compensation
6,042


5,769

Deferred income taxes
(21,404
)

(1,537
)
Accretion on contingent consideration
1,000

 
—

Other operating activities
1,264


678

Changes in operating assets and liabilities, net of acquisitions:



Accounts receivable
116,112


31,906

Income tax receivable
11,238


5,035

Other assets
425


1,474

Accounts payable and other accrued expenses
754


5,919

Accrued wages and benefits
(10,897
)

2,603

Workers’ compensation claims reserve
7,838


4,463

Other liabilities
2,258


2,506

Net cash provided by operating activities
184,336


106,698

 



Cash flows from investing activities:



Capital expenditures
(11,430
)

(7,459
)
Acquisition of business
(71,863
)

—

Maturities of marketable securities
—


1,500

Change in restricted cash, cash equivalents and investments
(1,265
)

8,227

Purchases of restricted investments
(21,076
)

(12,959
)
Maturities of restricted investments
8,416


7,504

Net cash used in investing activities
(97,218
)

(3,187
)
 



Cash flows from financing activities:



Net proceeds from stock option exercises and employee stock purchase plans
840


837

Common stock repurchases for taxes upon vesting of restricted stock
(2,321
)

(3,183
)
Net change in revolving credit facility
(94,186
)

(98,500
)
Payments on debt
(1,133
)

(1,133
)
Other
25


961

Net cash used in financing activities
(96,775
)

(101,018
)
Effect of exchange rates on cash
1,648


(871
)
Net change in cash and cash equivalents
(8,009
)

1,622

CASH AND CASH EQUIVALENTS, beginning of period
29,781


19,666

CASH AND CASH EQUIVALENTS, end of period
$
21,772


$
21,288






TRUEBLUE, INC.
RECONCILIATION OF GAAP NET INCOME (LOSS) TO ADJUSTED NET INCOME TO ADJUSTED EBITDA
RECONCILIATION OF GAAP NET INCOME (LOSS) PER DILUTED SHARE TO ADJUSTED NET INCOME PER DILUTED SHARE
(Unaudited, in thousands, except for per share data)
 
 
 
 
 
Guidance *
 
13 Weeks Ended
 
13 Weeks Ended
 
June 24, 2016
 
June 26, 2015
 
September 23, 2016
GAAP net income (loss)
$
(63,735
)
 
$
17,273

 
$ 24,000 to $ 26,000
Acquisition and integration costs (4)
2,319

 
2,631

 
2,700
Amortization of intangible assets of acquired businesses (6)
7,112

 
4,575

 
6,800
Goodwill and intangible asset impairment charges (3)
99,269

 
—

 
 
Work Opportunity Tax Credit processing fees (5)
351

 
465

 
500
Tax effect of adjustments to GAAP net income (loss) (7)
(34,896
)
 
(2,455
)
 
(3,200)
Adjust income taxes to a normalized effective tax rate (8)
10,890

 
(1,288
)
 
 
Adjusted net income (2)
21,310

—

21,201

 
 30,700 to 32,700
Depreciation, excluding amortization of intangible assets of acquired businesses
4,982

 
5,822

 
5,300
Interest expense, net
487

 
202

 
500
Acquisition and integration costs (4)
(2,319
)
 
(2,631
)
 
(2,700)
Goodwill and intangible asset impairment charges (3)
(99,269
)
—

—

 
 
Work Opportunity Tax Credit processing fees (5)
(351
)
—

(465
)
 
(500)
Excluding tax effect of adjustments to GAAP net income (loss) (7)
34,896

—

2,455

 
3,200
Excluding adjustment to income taxes to a normalized effective tax rate (8)
(10,890
)
—

1,288

 

Income tax expense (benefit)
(13,978
)
 
6,235

 
11,300 to 12,200
EBITDA (1)
(65,132
)
—

34,107

 
47,900 to 50,900
Goodwill and intangible asset impairment charges (3)
99,269

 
—

 
—
Acquisition and integration costs (4)
2,319

 
2,631

 
2,700
Work Opportunity Tax Credit processing fees (5)
351

 
465

 
500
Adjusted EBITDA (1)
$
36,807

—

$
37,203

 
$ 51,000 to $ 54,000
 

 

 
 
GAAP net income (loss) per diluted share
$
(1.53
)
 
$
0.42

 
$0.57 to $0.62
Goodwill and intangible asset impairment charges (3)
2.38

 
—

 
—
Acquisition and integration costs (4)
0.06

 
0.06

 
0.06
Work Opportunity Tax Credit processing fees (5)
0.01

 
0.01

 
0.01
Amortization of intangible assets of acquired businesses (6)
0.17

 
0.11

 
0.16
Tax effect of adjustments to GAAP net income (loss) (7)
(0.84
)
 
(0.06
)
 
(0.08)
Adjust income taxes to a normalized effective tax rate (8)
0.26

 
(0.03
)
 
 
Adjusted net income per diluted share (9)
$
0.51

 
$
0.51

 
$ 0.73 to $ 0.78
 
 
 
 
 
 
Diluted weighted average shares outstanding
41,688

 
41,475

 
41,791
* Figures may not sum due to rounding

(1)
EBITDA and Adjusted EBITDA are non-GAAP financial measures. EBITDA excludes interest, taxes, depreciation and amortization, and goodwill and intangible asset impairment charges from net income. Adjusted EBITDA further excludes from EBITDA costs related to acquisition and integration, and 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)
Adjusted net income is a non-GAAP financial measure which excludes from Net income (loss) the costs related to acquisition and integration, amortization of intangible assets of acquired businesses, accretion expense related to acquisition earn-out, goodwill and intangible asset impairment charges, and Work Opportunity Tax Credit third-party processing fees, tax effect of each adjustment to GAAP net income (loss), and adjusts income taxes to the expected ongoing effective tax rate. Adjusted net income should not be considered a measure of financial performance in isolation or as an alternative to net income (loss) in the Consolidated Statements of Operations in accordance with GAAP, and may not be comparable to similarly titled measures of other companies.

(3)
The goodwill and intangible asset impairment charges for the thirteen weeks ended June 24, 2016, relate to our Staff Management | SMX, Hrx, and PlaneTechs reporting units. The impairment charge of $99 million is equivalent to $80 million after tax or $1.91 per diluted share.

(4)
For the quarter ended June 24, 2016, acquisition and integration costs related to the acquisition of the recruitment process outsourcing business of Aon Hewitt, which was completed on January 4, 2016. For the quarter ended June 26, 2015, these costs related to the acquisition of Seaton, which was completed on June 30, 2014.

(5)
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.

(6)
Amortization of intangible assets of acquired businesses as well as accretion expense related to acquisition earn-out.

(7)
Total tax effect of each of the adjustments to GAAP net income (loss) per diluted share using the ongoing rate of 32%.

(8)
Adjusts the effective income tax rate to the expected, ongoing rate of 32%.

(9)
Adjusted net income per diluted share is a non-GAAP financial measure which excludes from net income (loss) on a per diluted share basis costs related to goodwill and intangible asset impairment charges, acquisition and integration, Work Opportunity Tax Credit third-party processing fees, amortization of intangibles of acquired businesses, accretion expense related to acquisition earn-out, tax effect of each adjustment to GAAP net income (loss), and adjusts income taxes to the expected ongoing effective tax 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.