TRUEBLUE REPORTS FISCAL FOURTH QUARTER 2017 RESULTS

TACOMA, WA-February 7, 2018-- TrueBlue, Inc. (NYSE:TBI) announced today its fiscal fourth quarter 2017 results.

Revenue was $670 million, a decrease of 9 percent, compared to revenue of $735 million in the fiscal fourth quarter of 2016. Excluding the previously disclosed reduction in the scope of services provided to the company's former largest customer, revenue declined by 8 percent. Net income per diluted share was $0.40 compared to $0.43 in the fiscal fourth quarter of 2016. Adjusted net income per diluted share1 was $0.51 compared to $0.56 in the fiscal fourth quarter of 2016.

The fiscal fourth quarter of 2016 included a 14th week and two additional days from moving the week-ending date from Friday to Sunday. On a comparable basis,2 revenue for the fiscal fourth quarter declined by 2 percent, or excluding the company's former largest customer, revenue declined by 1 percent.

“We saw improving fundamentals this quarter driven by strong execution across the business,” TrueBlue CEO Steve Cooper said. “The broad-based improvements in the PeopleReady and PeopleManagement third quarter revenue trends continued throughout the fourth quarter, and PeopleScout delivered another quarter of double-digit growth.
“We also made additional progress with our digital strategy. Adoption of JobStackTM, our PeopleReady mobile app, continued to climb, and we also launched AffinixTM in our PeopleScout business, a next generation technology that improves the candidate experience and streamlines the sourcing process.”

2018 Outlook

The company estimates revenue for the fiscal first quarter of 2018 will range from $557 million to $572 million. It also expects net income per diluted share will range from $0.03 to $0.11. Adjusted net income per diluted share is expected to be $0.18 to $0.24.
The company estimates its historical effective income tax rate of 28 percent will drop to roughly 16 percent in fiscal 2018 and 2019 as a result of recent tax reform legislation. The lower rate could extend beyond 2019 if Congress extends the Work Opportunity Tax Credit (WOTC). If the WOTC is not extended beyond 2019, the company estimates its effective income tax rate will return to roughly 28 percent.

Management will discuss fiscal fourth quarter 2017 results on a webcast at 2 p.m. PT (5 p.m. ET), today, Wednesday, Feb. 7. 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 create growth, improve efficiency and increase reliability. TrueBlue connected approximately 740,000 people with work during 2017 in a wide variety of industries through its PeopleReady segment offering industrial staffing services, PeopleManagement segment offering contingent and productivity-based onsite staffing services, and PeopleScout segment offering Recruitment Process Outsourcing (RPO) and Managed Service Provider (MSP) solutions. Learn more at www.trueblue.com.

1 See the financial statements accompanying the release and the company’s website for more information on non-GAAP terms.
2 The comparable period in 2016 excludes the first week (ended Sept. 30) of the fourth quarter and the two additional days associated with the change in week-ending date.

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) our ability to attract and retain customers, (3) our ability to maintain profit margins, (4) new laws and regulations that could have a material effect on our operations or financial results, (5) our ability to successfully complete and integrate acquisitions (6) our ability to attract sufficient qualified candidates and employees to meet the needs of our customers, (7) our ability to successfully execute on new business strategies and initiatives such as the consolidation of our service lines and leveraging of mobile technology, and (8) uncertainty surrounding the interpretation and application of the recent 2017 Tax Cuts and Jobs Act and 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 reference 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 a complete perspective 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.


Contact:
Derrek Gafford, EVP & CFO
253-680-8214




TRUEBLUE, INC.
SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

 
Q4 2017
Q4 2016
 
2017
2016
 
13 Weeks Ended
14 Weeks Ended (1)
 
52 Weeks Ended
53 Weeks Ended (1)
(in thousands, except per share data)
Dec 31, 2017
Jan 1, 2017
 
Dec 31, 2017
Jan 1, 2017
Revenue from services
$
669,625

$
734,951

 
$
2,508,771

$
2,750,640

Cost of services
501,880

554,064

 
1,874,298

2,070,922

Gross profit
167,745

180,887

 
634,473

679,718

Selling, general and administrative expense
132,644

145,387

 
510,794

546,477

Depreciation and amortization
11,465

12,019

 
46,115

46,692

Goodwill and intangible asset impairment charge
—

—

 
—

103,544

Income (loss) from operations
23,636

23,481

 
77,564

(16,995
)
Interest and other income (expense), net
(24
)
(572
)
 
(14
)
(3,345
)
Income (loss) before tax expense
23,612

22,909

 
77,550

(20,340
)
Income tax expense (benefit)
7,185

4,822

 
22,094

(5,089
)
Net income (loss)
$
16,427

$
18,087

 
$
55,456

$
(15,251
)
 
 
 
 
 
 
Net income (loss) per common share:
 
 
 
 
 
Basic
$
0.41

$
0.43

 
$
1.35

$
(0.37
)
Diluted
$
0.40

$
0.43

 
$
1.34

$
(0.37
)
 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 
Basic
40,545

41,638

 
41,202

41,648

Diluted
40,856

41,980

 
41,441

41,648


(1)
Our fiscal period ends on the Sunday closest to the last day of Dec. In fiscal years consisting of 53 weeks, the final quarter consists of 14 weeks, while in fiscal years consisting of 52 weeks, all quarters consist of 13 weeks.

















TRUEBLUE, INC.
SUMMARY CONSOLIDATED BALANCE SHEETS
(Unaudited)

 
2017
 
2016
(in thousands)
Dec 31, 2017
 
Jan 1, 2017
ASSETS
 
 
 
Cash and cash equivalents
$
28,780

 
$
34,970

Accounts receivable, net
374,273

 
352,606

Other current assets
25,226

 
40,227

Total current assets
428,279

 
427,803

Property and equipment, net
60,163

 
63,998

Restricted cash and investments
239,231

 
231,193

Goodwill and intangible assets, net
331,309

 
349,894

Other assets, net
50,049

 
57,557

Total assets
$
1,109,031

 
$
1,130,445

 
 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
 
Current liabilities
212,419

 
251,135

Long-term debt, less current portion
116,489

 
135,362

Other long-term liabilities
225,276

 
218,769

Total liabilities
554,184

 
605,266

Shareholders' equity
554,847

 
525,179

Total liabilities and shareholders' equity
$
1,109,031

 
$
1,130,445





























TRUEBLUE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
2017
 
2016
 
52 Weeks Ended
 
53 Weeks Ended
(in thousands)
Dec 31, 2017
 
Jan 1, 2017
Cash flows from operating activities:
 
 
 
Net income (loss)
$
55,456

 
$
(15,251
)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
 
 
 
Depreciation and amortization
46,115

 
46,692

Goodwill and intangible asset impairment charge
—

 
103,544

Provision for doubtful accounts
6,808

 
8,308

Stock-based compensation
7,744

 
9,363

Deferred income taxes
2,440

 
(25,355
)
Other operating activities
2,066

 
7,910

Changes in operating assets and liabilities, net of effects of acquisition of business:
 
 
 
Accounts receivable
(28,483
)
 
112,785

Income tax receivable
14,875

 
9,450

Other assets
5,289

 
470

Accounts payable and other accrued expenses
(10,569
)
 
(4,101
)
Accrued wages and benefits
(2,888
)
 
(7,313
)
Workers’ compensation claims reserve
(1,048
)
 
11,070

Other liabilities
2,046

 
4,182

Net cash provided by operating activities
99,851

 
261,754

Cash flows from investing activities:
 
 
 
Capital expenditures
(21,958
)
 
(29,042
)
Acquisition of business
—

 
(72,476
)
Change in restricted cash
21,505

 
(19,773
)
Purchases of restricted investments
(50,601
)
 
(37,173
)
Maturities of restricted investments
20,157

 
15,248

Net cash used in investing activities
(30,897
)
 
(143,216
)
Cash flows from financing activities:
 
 
 
Purchases and retirement of common stock
(36,680
)
 
(5,748
)
Net proceeds from stock option exercises and employee stock purchase plans
1,646

 
1,542

Common stock repurchases for taxes upon vesting of restricted stock
(3,127
)
 
(2,851
)
Net change in revolving credit facility
(16,607
)
 
(105,579
)
Payments on debt
(2,267
)
 
(2,456
)
Payment of contingent consideration at acquisition date fair value
(18,300
)
 
—

Other
—

 
(29
)
Net cash used in financing activities
(75,335
)
 
(115,121
)
Effect of exchange rate changes on cash and cash equivalents
191

 
1,772

Net change in cash and cash equivalents
(6,190
)
 
5,189

Cash and cash equivalents, beginning of period
34,970

 
29,781

Cash and cash equivalents, end of period
$
28,780

 
$
34,970









TRUEBLUE, INC.
FISCAL 2016 COMPARABLE 13- AND 52-WEEK PERIODS
(Unaudited)

As previously reported, the company's 2016 fiscal fourth quarter includes a 14th week and two additional days from moving the week-ending date from Friday to Sunday. To facilitate comparison to the current year, the company is providing 13-week and 52-week comparable operating results.
 
Q4 2016
 
2016
 
13-Week Comparable Period (1)
 
52-Week Comparable Period (1)
(in thousands, except per share data)
 
Revenue from services
$
680,709

 
$
2,696,398

Cost of services
512,501

 
2,029,359

Gross profit
168,208

 
667,039

Selling, general and administrative expense
135,435

 
536,525

Depreciation and amortization
11,127

 
45,800

Goodwill and intangible asset impairment charge
—

 
103,544

Income (loss) from operations
21,646

 
(18,830
)
Interest and other income (expense), net
(521
)
 
(3,294
)
Income (loss) before tax expense
21,125

 
(22,124
)
Income tax expense (benefit)
4,334

 
(5,577
)
Net income (loss)
$
16,791

 
$
(16,547
)
 
 
 
 
Net income (loss) per common share:
 
 
 
Basic
$
0.40

 
$
(0.40
)
Diluted
$
0.40

 
$
(0.40
)
 
 
 
 
Weighted average shares outstanding:
 
 
 
Basic
41,638

 
41,648

Diluted
41,980

 
41,648

(1)
The 13-week comparable period represents the 13 weeks ended Jan. 1 2017. The 52-week comparable period represents the sum of the 13 weeks ended Jan. 1, 2017 and the 39 weeks ended Sept. 23, 2016.




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) the effects of:
- interest expense,
- income taxes, and
- depreciation and amortization.

Adjusted EBITDA, further excludes the effects of:
- acquisition/integration and other costs,
- goodwill and intangible asset impairment charge, and
- Work Opportunity Tax Credit third-party processing fees.

 
- 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 by excluding certain non-cash charges.

- 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 the effects of:
- acquisition/integration and other costs,
- goodwill and intangible asset impairment charge,
- 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 (loss), and
- adjusted income taxes to the expected effective tax rate.
 
- 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 by excluding certain non-cash charges.


1.
RECONCILIATION OF U.S. GAAP NET INCOME (LOSS) TO ADJUSTED NET INCOME AND ADJUSTED NET INCOME, PER DILUTED SHARE ON A FISCAL AND COMPARABLE PERIOD BASIS
(Unaudited)
 
Q4 2017
 
Q4 2016
 
Q1 2018 Outlook
 
13 Weeks Ended
 
14 Weeks Ended
13-Week Comparable Period (6)
 
13 Weeks Ended
(in thousands, except for per share data)*
Dec 31, 2017
 
Jan 1, 2017
 
Apr 1, 2018
Net income
$
16,427

 
$
18,087

$
16,791

 
$
1,300

—
$
4,600

Acquisition/integration and other costs (1)
162

 
4,002

4,002

 
2,000
—
1,000

Amortization of intangible assets of acquired businesses (3)
5,331

 
6,391

5,934

 
5,200
Tax effect of adjustments to net income (4)
(1,538
)
 
(2,910
)
(2,782
)
 
(1,200)
—
(1,000
)
Adjust income taxes to normalized effective rate (5)
574

 
(1,593
)
(1,581
)
 
—
Adjusted net income
$
20,956

 
$
23,977

$
22,364

 
$
7,300

—
$
9,800

 
 
 
 
 
 
 
 
 
Adjusted net income, per diluted share
$
0.51

 
$
0.56

$
0.52

 
$
0.18

—
$
0.24

 
 
 
 
 
 
 
 
 
Diluted weighted average shares outstanding
40,856

 
41,980

41,980

 
40,600
* Totals may not sum due to rounding
 
 
 
 
 
 
 
 




 
2017
 
2016
 
52 Weeks Ended
 
53 Weeks Ended
52-Week
(in thousands, except for per share data)*
Dec 31, 2017
 
Jan 1, 2017
Comparable Period (6)
Net income (loss)
$
55,456

 
$
(15,251
)
$
(16,547
)
Acquisition/integration and other costs (1)
162

 
12,223

12,223

Goodwill and intangible asset impairment charge (2)
—

 
103,544

103,544

Amortization of intangible assets of acquired businesses (3)
22,290

 
27,069

26,612

Tax effect of adjustments to net income (4)
(6,287
)
 
(39,994
)
(39,866
)
Adjust income taxes to normalized effective rate (5)
380

 
606

618

Adjusted net income
$
72,001

 
$
88,197

$
86,584

 
 
 
 
 
Adjusted net income, per diluted share
$
1.74

 
$
2.10

$
2.06

 
 
 
 
 
Diluted weighted average shares outstanding
41,441

 
41,968

41,968

* Totals may not sum due to rounding
 
 
 
 

2.
RECONCILIATION OF U.S. GAAP NET INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDA ON A FISCAL AND COMPARABLE PERIOD BASIS
(Unaudited)
 
Q4 2017
 
Q4 2016
 
Q1 2018 Outlook
 
13 Weeks Ended
 
14 Weeks Ended
13-Week Comparable Period (6)
 
13 Weeks Ended
(in thousands)*
Dec 31, 2017
 
Jan 1, 2017
 
Apr 1, 2018
Net income
$
16,427

 
$
18,087

$
16,791

 
$
1,300

—
$
4,600

Income tax expense
7,185

 
4,822

4,334

 
200

—
900

Interest and other income (expense), net
24

 
572

521

 
(200)
Depreciation and amortization
11,465

 
12,019

11,127

 
11,000
EBITDA
35,101

 
35,500

32,773

 
12,300

—
16,300

Acquisition/integration and other costs (1)
162

 
4,002

4,002

 
2,000
—
1,000

Work Opportunity Tax Credit processing fees (7)
337

 
276

276

 
200
Adjusted EBITDA
$
35,600

 
$
39,778

$
37,051

 
$
14,500

—
$
17,500

* Totals may not sum due to rounding
 
 
 
 
 
 
 
 
 
2017
 
2016
 
52 Weeks Ended
 
53 Weeks Ended
52-Week
(in thousands)*
Dec 31, 2017
 
Jan 1, 2017
Comparable Period (6)
Net income (loss)
$
55,456

 
$
(15,251
)
$
(16,547
)
Income tax expense (benefit)
22,094

 
(5,089
)
(5,577
)
Interest and other income (expense), net
14

 
3,345

3,294

Depreciation and amortization
46,115

 
46,692

45,800

EBITDA
123,679

 
29,697

26,970

Acquisition/integration and other costs (1)
162

 
12,223

12,223

Goodwill and intangible asset impairment charge (2)
—

 
103,544

103,544

Work Opportunity Tax Credit processing fees (7)
805

 
1,858

1,858

Adjusted EBITDA
$
124,646

 
$
147,322

$
144,595

* Totals may not sum due to rounding
 
 
 
 
3.
RECONCILIATION OF U.S. GAAP REVENUE TO REVENUE EXCLUDING THE COMPANY'S FORMER LARGEST CUSTOMER ON A FISCAL AND COMPARABLE PERIOD BASIS
(Unaudited)
Due to a previously announced reduction in the scope of services with its former largest customer, the company is providing results excluding this customer to help investors assess the company's underlying results with prior periods.




 
Q4 2017
 
Q4 2016
 
13 Weeks Ended
 
14 Weeks Ended
13-Week Comparable Period (6)
(in thousands)
Dec 31, 2017
 
Jan 1, 2017
Revenue from services
$
669,625

 
$
734,951

$
680,709

Former largest customer revenue
(24,052
)
 
(33,603
)
(31,687
)
Revenue excluding former largest customer
$
645,573

 
$
701,348

$
649,022

 
2017
 
2016
 
52 Weeks Ended
 
53 Weeks Ended
52-Week
(in thousands)
Dec 31, 2017
 
Jan 1, 2017
Comparable Period (6)
Revenue from services
$
2,508,771

 
$
2,750,640

$
2,696,398

Former largest customer revenue
(53,435
)
 
(171,164
)
(169,248
)
Revenue excluding former largest customer
$
2,455,336

 
$
2,579,476

$
2,527,150

4.
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOWS
(Unaudited)
 
2017
 
2016
 
52 Weeks Ended
 
53 Weeks Ended
(in thousands)
Dec 31, 2017
 
Jan 1, 2017
Net cash provided by operating activities
$
99,851

 
$
261,754

Capital expenditures
(21,958
)
 
(29,042
)
Free cash flows
$
77,893

 
$
232,712


(1)
Other charges for the 13 weeks and 52 weeks ended Dec. 31, 2017, include a workforce reduction charge of $2.5 million primarily associated with employee reductions in the PeopleReady business, offset by $2.3 million of workers' compensation benefit. The workers' compensation benefit is associated with the favorable settlement of insurance coverage associated with a former insurance company and other items not considered part of our core operations. For the prior year periods, acquisition/integration costs related to the acquisition of the recruitment process outsourcing business of Aon Hewitt, which was completed on Jan. 4, 2016. In addition, other charges include costs associated with our exit from the Amazon delivery business of $1.8 million, and branch signage write-offs of $1.6 million due to our re-branding to PeopleReady in the fiscal third quarter of 2016. Other charges included in the Q1 2018 outlook primarily relate to cloud-based financial system upgrades.

(2)
The goodwill and intangible asset impairment charge in the prior year included the write-off of the CLP and Spartan reporting unit trade names/trademarks of $4.3 million due to our re-branding to PeopleReady during the fiscal third quarter of 2016, and $99.3 million of impairment charges recorded in the fiscal second quarter of 2016 relating to our Staff Management | SMX, hrX and PlaneTechs reporting units. Note, our PeopleScout and hrX service lines were combined during fiscal 2016 and now represent a single operating unit (PeopleScout).

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

(4)
Total tax effect of each of the adjustments to U.S. GAAP net income (loss) per diluted share using the expected rate of 28 percent for 2017 and 2016. We expect the tax rate to be 16 percent in Q1 2018 due to the enacted U.S. Tax Cuts and Job Act.

(5)
Adjusts the effective income tax rate to the expected rate of 28 percent for 2017 and 2016. We expect the tax rate to be 16 percent in Q1 2018 due to the enacted U.S. Tax Cuts and Job Act.

(6)
Our fiscal period ends on the Sunday closest to the last day of Dec. In fiscal years consisting of 53 weeks, the final quarter consists of 14 weeks, while in fiscal years consisting of 52 weeks, all quarters consist of 13 weeks. The 13-week comparable period represents the 13 weeks ended Jan. 1 2017. The 52-week comparable period represents the sum of the 13 weeks ended Jan. 1, 2017 and the 39 weeks ended Sept. 23, 2016.
(7)
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.




TRUEBLUE, INC.
SEGMENT INFORMATION


1.SEGMENT DATA
(Unaudited)
 
Q4 2017
Q4 2016
 
2017
2016
 
13 Weeks Ended
14 Weeks Ended
 
52 Weeks Ended
53 Weeks Ended
(in thousands)
Dec 31, 2017
Jan 1, 2017
 
Dec 31, 2017
Jan 1, 2017
Revenue from services:
 
 
 
 
 
PeopleReady
$
393,029

$
431,388

 
$
1,511,360

$
1,629,455

PeopleManagement
225,865

257,848

 
807,273

940,453

PeopleScout
50,731

45,715

 
190,138

180,732

Total company
669,625

734,951

 
2,508,771

2,750,640

 
 
 
 
 
 
Adjusted Segment EBITDA (1):
 
 
 
 
 
PeopleReady
$
21,128

$
26,348

 
$
79,044

$
109,063

PeopleManagement
8,457

11,903

 
27,216

27,557

PeopleScout
10,283

6,589

 
39,354

34,285

Total Adjusted Segment EBITDA
39,868

44,840

 
145,614

170,905

Corporate unallocated expense
(4,268
)
(5,062
)
 
(20,968
)
(23,583
)
Total company Adjusted EBITDA
35,600

39,778

 
124,646

147,322

Acquisition/integration and other costs (2)
(162
)
(4,002
)
 
(162
)
(12,223
)
Goodwill and intangible asset impairment charge (3)
—

—

 
—

(103,544
)
Work Opportunity Tax Credit processing fees (4)
(337
)
(276
)
 
(805
)
(1,858
)
EBITDA
35,101

35,500

 
123,679

29,697

Depreciation and amortization
(11,465
)
(12,019
)
 
(46,115
)
(46,692
)
Interest and other income (expense), net
(24
)
(572
)
 
(14
)
(3,345
)
Income (loss) before tax expense
23,612

22,909

 
77,550

(20,340
)
Income tax (expense) benefit
(7,185
)
(4,822
)
 
(22,094
)
5,089

Net income (loss)
$
16,427

$
18,087

 
$
55,456

$
(15,251
)

2.RECONCILIATION OF SEGMENT EBITDA TO ADJUSTED SEGMENT EBITDA
(Unaudited)
 
Q4 2017
 
Q4 2016
 
13 Weeks Ended
 
14 Weeks Ended
 
Dec 31, 2017
 
Jan 1, 2017
(in thousands)
PeopleReady
PeopleManagement
PeopleScout
 
PeopleReady
PeopleManagement
PeopleScout
Segment EBITDA (1)
$
20,924

$
8,284

$
10,161

 
$
26,072

$
9,766

$
6,589

Acquisition/integration and other costs (2)
(133
)
173

122

 
—

2,137

—

Work Opportunity Tax Credit processing fees (4)
337

—

—

 
276

—

—

Adjusted Segment EBITDA (1)
$
21,128

$
8,457

$
10,283

 
$
26,348

$
11,903

$
6,589





 
2017
 
2016
 
52 Weeks Ended
 
53 Weeks Ended
 
Dec 31, 2017
 
Jan 1, 2017
(in thousands)
PeopleReady
PeopleManagement
PeopleScout
 
PeopleReady
PeopleManagement
PeopleScout
Segment EBITDA (1)
$
78,372

$
27,043

$
39,232

 
$
101,270

$
(60,452
)
$
19,116

Acquisition/integration and other costs (2)
(133
)
173

122

 
1,660

3,909

—

Goodwill and intangible asset impairment charge (3)
—

—

—

 
4,275

84,100

15,169

Work Opportunity Tax Credit processing fees (4)
805

—

—

 
1,858

—

—

Adjusted Segment EBITDA (1)
$
79,044

$
27,216

$
39,354

 
$
109,063

$
27,557

$
34,285


3.SEGMENT DATA FOR FISCAL 2016 COMPARABLE 13- AND 52-WEEK PERIODS
(Unaudited)
As previously reported, the company's 2016 fiscal fourth quarter includes a 14th week and two additional days from moving the week-ending date from Friday to Sunday. To facilitate comparison to the current year, the company is providing 13-week and 52-week comparable operating results.
 
13-Week Comparable Period (5)
52-Week Comparable Period (5)
(in thousands)
Revenue from services:
 
 
PeopleReady
$
395,643

$
1,593,710

PeopleManagement
240,989

923,594

PeopleScout
44,077

179,094

Total company
680,709

2,696,398

 
 
 
Adjusted Segment EBITDA (1):
 
 
PeopleReady
$
23,636

$
106,351

PeopleManagement
11,299

26,953

PeopleScout
6,621

34,317

Total Adjusted Segment EBITDA
$
41,556

$
167,621

4.
RECONCILIATION OF SEGMENT EBITDA TO ADJUSTED SEGMENT EBITDA FOR FISCAL 2016 COMPARABLE 13- AND 52-WEEK PERIODS
(Unaudited)
 
Q4 2016
 
2016
 
13-Week
 
52-Week
 
Comparable Period (5)
 
Comparable Period (5)
(in thousands)
PeopleReady
PeopleManagement
PeopleScout
 
PeopleReady
PeopleManagement
PeopleScout
Segment EBITDA (1)
$
23,360

$
9,162

$
6,621

 
$
98,558

$
(61,056
)
$
19,148

Acquisition/integration and other costs (2)
—

2,137

—

 
1,660

3,909

—

Goodwill and intangible asset impairment charge (3)
—

—

—

 
4,275

84,100

15,169

Work Opportunity Tax Credit processing fees (4)
276

—

—

 
1,858

—

—

Adjusted Segment EBITDA (1)
$
23,636

$
11,299

$
6,621

 
$
106,351

$
26,953

$
34,317






(1)
Segment earnings before interest, taxes, depreciation and amortization ("Segment EBITDA") is a primary measure of segment performance. Segment EBITDA includes net sales to third parties, related cost of sales, selling, general and administrative expenses, and goodwill and intangible asset impairment charge directly attributable to the reportable segment together with certain allocated corporate general and administrative expenses. Segment EBITDA excludes unallocated corporate general and administrative expenses. Adjusted Segment EBITDA is a non-GAAP financial measure and further excludes acquisition/integration and other costs, goodwill and intangible asset impairment charge, and Work Opportunity Tax Credit third-party processing fees. Adjusted Segment EBITDA is a key measure used by management to assess performance and, in our opinion, enhances comparability and provides investors with useful insight into the underlying trends of the business. 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.

(2)
Other charges for the 13 weeks and 52 weeks ended Dec. 31, 2017, include a workforce reduction charge of $2.5 million primarily associated with employee reductions in the PeopleReady business, offset by $2.3 million of workers' compensation benefit. The workers' compensation benefit is associated with the favorable settlement of insurance coverage associated with a former insurance company and other items not considered part of our core operations. For the prior year periods, acquisition/integration costs related to the acquisition of the recruitment process outsourcing business of Aon Hewitt, which was completed on Jan. 4, 2016. In addition, other charges include costs associated with our exit from the Amazon delivery business of $1.8 million, and branch signage write-offs of $1.6 million due to our re-branding to PeopleReady in the fiscal third quarter of 2016.

(3)
The goodwill and intangible asset impairment charge in the prior year included the write-off of the CLP and Spartan reporting unit trade names/trademarks of $4.3 million due to our re-branding to PeopleReady during the fiscal third quarter of 2016, and $99.3 million of impairment charges recorded in the fiscal second quarter of 2016 relating to our Staff Management | SMX, hrX and PlaneTechs reporting units. Note, our PeopleScout and hrX service lines were combined during fiscal 2016 and now represent a single operating unit (PeopleScout).

(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)
Our fiscal period ends on the Sunday closest to the last day of Dec. In fiscal years consisting of 53 weeks, the final quarter consists of 14 weeks, while in fiscal years consisting of 52 weeks, all quarters consist of 13 weeks. The 13-week comparable period represents the 13 weeks ended Jan. 1 2017. The 52-week comparable period represents the sum of the 13 weeks ended Jan. 1, 2017 and the 39 weeks ended Sept. 23, 2016.