TRUEBLUE REPORTS FISCAL 2016 THIRD QUARTER RESULTS
 


TACOMA, WA-Oct. 19, 2016--TrueBlue, Inc. (NYSE:TBI) announced today its fiscal third quarter results for the period ending Sept. 23, 2016.

Revenue for the fiscal third quarter of 2016 was $697 million, an increase of two percent, compared to $684 million for the fiscal third quarter of 2015. Net income was $23 million or $0.56 per diluted share, compared to $20 million or $0.48 per diluted share for the fiscal third quarter of 2015. Adjusted net income* was $30 million or $0.70 per diluted share, compared to $26 million or $0.60 per diluted share for the fiscal third quarter of 2015.

"Our team delivered growth in revenue and net income this quarter while sustaining a high level of service quality with our customers," TrueBlue CEO Steve Cooper said. "Given the challenging growth environment, we have maintained a sharp focus on the management of our expenses."

Cooper continued, "Our cost management actions have been decisive and balanced as we remain committed to our long-term technology and growth strategies. We are taking the right steps to preserve our profitability while maintaining our readiness to accelerate growth."

The company also shared its outlook for the fiscal fourth quarter of 2016 on a comparable 13-week basis. The company estimates revenue in the range of $670 million to $686 million and net income per diluted share of $0.40 to $0.45 ($0.54 to $0.59 on an adjusted basis*). The company's fiscal fourth quarter of 2016 will include a 14th week and the company plans to change its week-ending date from Friday to the following Sunday to better align its week-ending date with that of its customers. This will result in our year-end being the Sunday closest to Dec. 31st every year, with our 2016 fiscal year-end occurring on Jan. 1st, 2017. Further discussion on the financial impact of the additional week and week-ending date can be found in the financial schedules following this release and on the company's website at www.trueblue.com.

Management will discuss fiscal third quarter 2016 results on a conference call at 2 p.m. PT (5 p.m. ET), today, Wednesday, Oct. 19. 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 definitions.
 
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. 
 
Contact:
Derrek Gafford, EVP & CFO
253-680-8214






TRUEBLUE, INC.
SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share data)
 
13 Weeks Ended
 
39 Weeks Ended
 
September 23, 2016
 
September 25, 2015
 
September 23, 2016
 
September 25, 2015
Revenue from services
$
697,097

 
$
683,918

 
$
2,015,689

 
$
1,884,947

Cost of services
518,702

 
515,051

 
1,516,858

 
1,434,278

Gross profit
178,395


168,867


498,831


450,669

Selling, general and administrative expenses
134,679

 
125,117

 
401,090

 
354,569

Depreciation and amortization
11,690

 
10,498

 
34,673

 
31,415

Goodwill and intangible asset impairment charge (1)
4,275

 
—

 
103,544

 
—

Income (loss) from operations
27,751


33,252


(40,476
)

64,685

Interest and other expense, net
(867
)
 
(366
)
 
(2,773
)
 
(1,102
)
Income (loss) before tax expense
26,884

 
32,886

 
(43,249
)
 
63,583

Income tax expense (benefit)
3,455

 
12,796

 
(9,911
)
 
20,504

Net income (loss)
$
23,429


$
20,090


$
(33,338
)

$
43,079

 
 
 
 
 
 
 
 
Net income (loss) per common share:
 
 
 
 
 
 
 
Basic
$
0.56

 
$
0.49

 
$
(0.80
)
 
$
1.05

Diluted
$
0.56

 
$
0.48

 
$
(0.80
)
 
$
1.04

 
 
 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 
 
 
Basic
41,762

 
41,296

 
41,651

 
41,189

Diluted
42,056

 
41,620

 
41,651

 
41,546


(1)
The goodwill and intangible asset impairment charge for the thirteen weeks ended September 23, 2016, relates to the CLP and Spartan reporting unit trade names/trademarks of $4.3 million that were written-off due to the re-branding to PeopleReady. The goodwill and intangible asset impairment charge for the thirty-nine weeks ended September 23, 2016, further includes $99.3 million of impairment charges recorded in the second quarter of 2016 relating to our Staff Management | SMX, hrX, and PlaneTechs reporting units.




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




 
September 23, 2016
 
December 25, 2015
Assets
 
 
 
Cash and cash equivalents
$
24,781

 
$
29,781

Accounts receivable, net
364,618

 
461,476

Other current assets
46,437

 
51,708

Total current assets
435,836

 
542,965

Property and equipment, net
59,898

 
57,530

Restricted cash and investments
212,968

 
188,412

Goodwill and intangible assets, net
357,733

 
422,354

Other assets, net
57,673

 
48,181

Total assets
$
1,124,108

 
$
1,259,442

 
 
 
 
Liabilities and shareholders' equity
 
 
 
Current liabilities
$
243,427

 
$
227,976

Long-term debt, less current portion
137,111

 
243,397

Other long-term liabilities
231,095

 
252,496

Total liabilities
611,633

 
723,869

Shareholders' equity
512,475

 
535,573

Total liabilities and shareholders' equity
$
1,124,108

 
$
1,259,442







TRUEBLUE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited, in thousands)
 
39 Weeks Ended
 
September 23, 2016
 
September 25, 2015
Cash flows from operating activities:
 
 
 
Net income (loss)
$
(33,338
)
 
$
43,079

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

 

Depreciation and amortization
34,673

 
31,415

Goodwill and intangible asset impairment charges
103,544

 
—

Provision for doubtful accounts
6,361

 
4,483

Stock-based compensation
7,443

 
8,283

Deferred income taxes
(23,874
)
 
(6,029
)
Other operating activities
5,603

 
20

Changes in operating assets and liabilities:
 
 
 
Accounts receivable
102,722

 
(6,597
)
Income tax receivable
4,018

 
9,673

Other assets
(3,563
)
 
(3,685
)
Accounts payable and other accrued expenses
(3,764
)
 
17,453

Accrued wages and benefits
(3,254
)
 
10,315

Workers’ compensation claims reserve
11,938

 
10,024

Other liabilities
4,740

 
1,883

Net cash provided by operating activities
213,249

 
120,317

 
 
 
 
Cash flows from investing activities:
 
 
 
Capital expenditures
(17,766
)
 
(12,590
)
Acquisition of business
(71,863
)
 
—

Sales and maturities of marketable securities
—

 
1,500

Change in restricted cash and cash equivalents
732

 
13,070

Purchases of restricted investments
(35,940
)
 
(38,818
)
Maturities of restricted investments
12,273

 
11,047

Net cash used in investing activities
(112,564
)
 
(25,791
)
 
 
 
 
Cash flows from financing activities:
 
 
 
Net proceeds from stock option exercises and employee stock purchase plans
1,183

 
1,164

Common stock repurchases for taxes upon vesting of restricted stock
(2,692
)
 
(3,725
)
Net change in revolving credit facility
(104,586
)
 
(85,994
)
Payments on debt
(1,700
)
 
(1,700
)
Other
20

 
1,134

Net cash used in financing activities
(107,775
)
 
(89,121
)
Effect of exchange rate changes on cash and cash equivalents
2,090

 
(1,839
)
Net change in cash and cash equivalents
(5,000
)
 
3,566

CASH AND CASH EQUIVALENTS, beginning of period
29,781

 
19,666

CASH AND CASH EQUIVALENTS, end of period
$
24,781

 
$
23,232








TRUEBLUE, INC.
SEGMENT DATA
(Unaudited, in thousands)
 
13 Weeks Ended
 
39 Weeks Ended
 
September 23, 2016
 
September 25, 2015
 
September 23, 2016
 
September 25, 2015
Revenue from services
 
 
 
 
 
 
 
Staffing Services
$
652,617

 
$
656,619

 
$
1,880,730

 
$
1,807,434

Managed Services
44,480

 
27,299

 
134,959

 
77,513

Total Company
697,097

 
683,918

 
2,015,689

 
1,884,947

 
 
 
 
 
 
 
 
Adjusted EBITDA (1)
 
 
 
 
 
 
 
Staffing Services
$
47,181

 
$
50,437

 
$
101,861

—

$
114,295

Managed Services
9,260

 
3,175

 
30,324

 
10,979

 
56,441

 
53,612

 
132,185

 
125,274

Corporate unallocated
(7,129
)
 
(9,715
)
 
(24,641
)
 
(24,445
)
Total company Adjusted EBITDA
49,312

 
43,897

 
107,544

 
100,829

Acquisition and integration costs (2)
(1,410
)
 
—

 
(4,789
)
 
(3,787
)
Goodwill and intangible asset impairment charge (3)
(4,275
)
 
—

 
(103,544
)
 
—

Work Opportunity Tax Credit processing fees (4)
(754
)
 
(147
)
 
(1,582
)
 
(942
)
Other charges (5)
(3,432
)
 
—

 
(3,432
)
 
—

EBITDA (1)
39,441


43,750


(5,803
)

96,100

Depreciation and amortization
11,690

 
10,498

 
34,673

 
31,415

Interest and other expense, net
867

 
366

 
2,773

 
1,102

Income (loss) before tax expense
26,884

 
32,886

 
(43,249
)
 
63,583

Income tax expense (benefit)
3,455

 
12,796

 
(9,911
)
 
20,504

Net income (loss)
$
23,429

 
$
20,090

 
$
(33,338
)
 
$
43,079


(1)
EBITDA and Adjusted EBITDA are non-GAAP financial measures. EBITDA excludes interest, taxes, depreciation and amortization. Adjusted EBITDA further excludes from EBITDA, costs related to acquisition and integration, goodwill and intangible asset impairment charges, other charges, and Work Opportunity Tax Credit third-party processing fees. EBITDA and Adjusted EBITDA are key measures used by management to assess performance and, in our opinion, enhance comparability and provide investors with useful insight into the underlying trends of the business. 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 U.S. GAAP, and may not be comparable to similarly titled measures of other companies.

(2)
Acquisition and integration costs relate to the acquisition of the recruitment process outsourcing business of Aon Hewitt, which was completed on January 4, 2016.

(3)
The goodwill and intangible asset impairment charge for the thirteen weeks ended September 23, 2016, relates to the CLP and Spartan reporting unit trade names/trademarks of $4.3 million that were written-off due to the re-branding to PeopleReady. The goodwill and intangible asset impairment charge for the thirty-nine weeks ended September 23, 2016, further includes $99.3 million of impairment charges recorded in the second quarter of 2016 relating to our Staff Management | SMX, hrX, and PlaneTechs reporting units.

(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 and reduce our income taxes.





(5)
These charges primarily consist of branch signage write-offs of $1.6 million due to our re-branding to PeopleReady as well as costs of $1.8 million associated with our exit from the Amazon delivery business.





TRUEBLUE, INC.
RECONCILIATION OF U.S. GAAP NET INCOME TO ADJUSTED NET INCOME AND
RECONCILIATION OF U.S. GAAP NET INCOME PER DILUTED SHARE TO ADJUSTED NET INCOME PER DILUTED SHARE
 
13 Weeks Ended
 
September 23, 2016
 
September 25, 2015
(Unaudited, in thousands, except for per share data)
Amount
 
Per Diluted Share
 
Amount
 
Per Diluted Share
Net income
$
23,429

 
$
0.56

 
$
20,090

 
$
0.48

Acquisition and integration costs (1)
1,410

 
0.03

 
—

 
—

Goodwill and intangible asset impairment charge (2)
4,275

 
0.10

 
—

 
—

Other charges (3)
3,432

 
0.08

 
—

 
—

Work Opportunity Tax Credit processing fees (4)
754

 
0.02

 
147

 
—

Amortization of intangible assets of acquired businesses (5)
6,831

 
0.16

 
4,593

 
0.11

Tax effective of adjustments to net income (6)
(5,345
)
 
(0.13
)
 
(1,517
)
 
(0.04
)
Adjust income taxes to normalized effective rate (7)
(5,148
)
 
(0.12
)
 
2,272

 
0.05

Adjusted net income (8)
$
29,638

 
$
0.70

 
$
25,585

 
$
0.60

 
 
 
 
 
 
 
 
Diluted weighted average shares outstanding
42,056

 
 
 
41,620

 
 
 
Outlook *
 
13 Weeks Ended
 
December 25, 2016
(Unaudited, in thousands, except for per share data)
Amount
 
Per Diluted Share
Net income
$
17,000

—
$
19,000

 
$
0.40

—
$
0.45

Acquisition and integration costs (1)
1,800
 
0.04
Work Opportunity Tax Credit processing fees (4)
300
 
0.01
Amortization of intangible assets of acquired businesses (5)
6,200
 
0.15
Tax effective of adjustments to net income (6)
(2,700)
 
(0.06)
Adjusted net income (8)
$
22,600

—
$
24,700

 
$
0.54

—
$
0.59

 
 
 
 
 
 
 
 
Diluted weighted average shares outstanding
42,100
 
 
 
 

RECONCILIATION OF U.S. GAAP NET INCOME TO EBITDA AND ADJUSTED EBITDA
 
13 Weeks Ended
(Unaudited, in thousands)
September 23, 2016
 
September 25, 2015
Net income
$
23,429

 
$
20,090

Income tax expense
3,455

 
12,796

Interest expense, net
867

 
366

Depreciation and amortization
11,690

 
10,498

EBITDA (9)
39,441

 
43,750

Acquisition and integration costs (1)
1,410

 
—

Goodwill and intangible asset impairment charge (2)
4,275

 
—

Other charges (3)
3,432

 
—

Work Opportunity Tax Credit processing fees (4)
754

 
147

Adjusted EBITDA (9)
$
49,312

 
$
43,897






 
Outlook*
 
13 Weeks Ended
(Unaudited, in thousands)
December 25, 2016
Net income
$
17,000

—
$
19,000

Income tax expense
8,000

—
9,000

Interest expense, net
900
Depreciation and amortization
10,000
EBITDA (9)
35,900

—
38,900

Acquisition and integration costs (1)
1,800
Work Opportunity Tax Credit processing fees (4)
300
Adjusted EBITDA (9)
$
38,000

—
$
41,000

* Neutral impact on profit due to low seasonal volume for the 14th week ending January 1, 2017. Figures may not sum due to rounding.

(1)
Acquisition and integration costs relate to the acquisition of the recruitment process outsourcing business of Aon Hewitt, which was completed on January 4, 2016.

(2)
The intangible asset impairment charge for the thirteen weeks ended September 23, 2016, relates to the CLP and Spartan reporting unit trade names/trademarks which were written-off due to the re-branding to PeopleReady.

(3)
These charges primarily consist of branch signage write-offs of $1.6 million due to our re-branding to PeopleReady as well as costs of $1.8 million associated with our exit from the Amazon delivery business.

(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 and reduce our income taxes.

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

(6)
Total tax effect of each of the adjustments to U.S. GAAP net income per diluted share using the ongoing rate of 32%.

(7)
Adjusts the effective income tax rate to the expected, ongoing rate of 32%.

(8)
Adjusted net income and adjusted net income per diluted share are non-GAAP financial measures which exclude from net income and net income on a per diluted share basis costs related to acquisition and integration, goodwill and intangible asset impairment charges, other charges, Work Opportunity Tax Credit third-party processing fees, amortization of intangibles of acquired businesses as well as accretion expense related to acquisition earn-out, tax effect of each adjustment to U.S. GAAP net income, and adjusts income taxes to the expected ongoing effective tax rate. Adjusted net income and adjusted net income per diluted share are key measures used by management to assess performance and, in our opinion, enhance comparability and provide investors with useful insight into the underlying trends of the business. Adjusted net income and adjusted net income per diluted share should not be considered measures of financial performance in isolation or as an alternative to net income or net income per diluted share in the Consolidated Statements of Operations in accordance with U.S. GAAP, and may not be comparable to similarly titled measures of other companies.

(9)
EBITDA and Adjusted EBITDA are non-GAAP financial measures. EBITDA excludes interest, taxes, depreciation and amortization. Adjusted EBITDA further excludes from EBITDA, costs related to acquisition and integration, goodwill and intangible asset impairment charges, other charges, and Work Opportunity Tax Credit third-party processing fees. EBITDA and Adjusted EBITDA are key measures used by management to assess performance and, in our opinion, enhance comparability and provide investors with useful insight into the underlying trends of the business. 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 U.S. GAAP, and may not be comparable to similarly titled measures of other companies.