TRUEBLUE REPORTS FISCAL THIRD QUARTER 2018 RESULTS

TACOMA, WASH. -- Nov. 5, 2018 -- TrueBlue (NYSE:TBI) today announced its fiscal third quarter 2018 results.

Revenue was $680 million, an increase of 3 percent, compared to revenue of $661 million in the fiscal third quarter of 2017. Net income per diluted share was $0.61, an increase of 20 percent, compared to $0.51 in the fiscal third quarter of 2017. Adjusted net income per diluted share1 was $0.79, an increase of 32 percent, compared to $0.60 in the fiscal third quarter of 2017.

“Our team delivered another quarter of revenue growth, gross margin expansion and strong EPS growth,” said Patrick Beharelle, CEO of TrueBlue. “PeopleReady produced its second consecutive quarter of revenue growth, and PeopleScout achieved its fifth consecutive quarter of double-digit organic revenue growth. Our top line growth, gross margin expansion and share repurchases, combined with a lower income tax rate, are all contributing to strong EPS growth.”

“TrueBlue’s digital strategies are creating differentiation with clients and candidates. JobStackTM, our PeopleReady mobile staffing technology, is transforming how people find work and how businesses find people. AffinixTM, our PeopleScout proprietary talent acquisition technology, is receiving praise from current and prospective customers.”

2018 Outlook

The company estimates revenue for the fiscal fourth quarter of 2018 will range from $642 million to $659 million. The company also estimates net income per diluted share will range from $0.34 to $0.41 and adjusted net income per diluted share will range from $0.55 to $0.62.
Management will discuss fiscal third quarter 2018 results on a webcast at 2 p.m. PST (5 p.m. EST), today, Monday, Nov. 5. 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, while connecting approximately 740,000 people with work in 2017. TrueBlue's PeopleReady segment offers industrial staffing services, PeopleManagement offers contingent and productivity-based on-site industrial staffing 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.

1 See 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) 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 business strategies and initiatives such as the consolidation of our businesses 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, Executive Vice President and CFO
253-680-8214




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

 
13 Weeks Ended
 
39 Weeks Ended
(in thousands, except per share data)
Sep 30, 2018
Oct 1, 2017
 
Sep 30, 2018
Oct 1, 2017
Revenue from services
$
680,371

$
660,780

 
$
1,849,060

$
1,839,146

Cost of services
496,053

488,761

 
1,355,890

1,372,418

Gross profit
184,318

172,019

 
493,170

466,728

Selling, general and administrative expense
145,382

131,552

 
405,352

378,150

Depreciation and amortization
10,586

11,189

 
30,777

34,650

Income from operations
28,350

29,278

 
57,041

53,928

Interest and other income (expense), net
(340
)
(219
)
 
896

10

Income before tax expense
28,010

29,059

 
57,937

53,938

Income tax expense
3,630

7,838

 
7,070

14,909

Net income
$
24,380

$
21,221

 
$
50,867

$
39,029

 
 
 
 
 
 
Net income per common share:
 
 
 
 
 
Basic
$
0.61

$
0.52

 
$
1.27

$
0.94

Diluted
$
0.61

$
0.51

 
$
1.26

$
0.94

 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 
Basic
39,743

41,046

 
40,138

41,420

Diluted
40,073

41,276

 
40,417

41,671





TRUEBLUE, INC.
SUMMARY CONSOLIDATED BALANCE SHEETS
(Unaudited)

(in thousands)
Sep 30, 2018
Dec 31, 2017
ASSETS
 
 
Cash and cash equivalents
$
34,736

$
28,780

Accounts receivable, net
384,867

374,273

Other current assets
33,520

25,226

Total current assets
453,123

428,279

Property and equipment, net
55,803

60,163

Restricted cash and investments
240,634

239,231

Goodwill and intangible assets, net
335,510

331,309

Other assets, net
56,543

50,049

Total assets
$
1,141,613

$
1,109,031

 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
Current liabilities
$
223,681

$
212,419

Long-term debt, less current portion
107,900

116,489

Other long-term liabilities
224,877

225,276

Total liabilities
556,458

554,184

Shareholders’ equity
585,155

554,847

Total liabilities and shareholders’ equity
$
1,141,613

$
1,109,031





























TRUEBLUE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
39 Weeks Ended
(in thousands)
Sep 30, 2018
Oct 1, 2017
Cash flows from operating activities:
 
 
Net income
$
50,867

$
39,029

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation and amortization
30,777

34,650

Provision for doubtful accounts
10,140

6,321

Stock-based compensation
9,552

6,161

Deferred income taxes
2,638

4,890

Other operating activities
526

2,724

Changes in operating assets and liabilities:
 
 
Accounts receivable
(17,960
)
(34,198
)
Income tax receivable
(5,389
)
12,788

Other assets
(12,110
)
6,306

Accounts payable and other accrued expenses
1,624

(784
)
Accrued wages and benefits
4,724

(176
)
Workers’ compensation claims reserve
(8,405
)
1,985

Other liabilities
1,642

1,086

Net cash provided by operating activities
68,626

80,782

Cash flows from investing activities:
 
 
Capital expenditures
(10,313
)
(16,303
)
Acquisition of business
(22,742
)
—

Divestiture of business
10,414

—

Purchases of restricted investments
(11,747
)
(36,015
)
Maturities of restricted investments
17,021

15,042

Net cash used in investing activities
(17,367
)
(37,276
)
Cash flows from financing activities:
 
 
Purchases and retirement of common stock
(24,818
)
(29,371
)
Net proceeds from stock option exercises and employee stock purchase plans
1,146

1,179

Common stock repurchases for taxes upon vesting of restricted stock
(2,539
)
(2,956
)
Net change in revolving credit facility
12,000

(1,099
)
Payments on debt
(22,855
)
(1,700
)
Payment of contingent consideration at acquisition date fair value
—

(18,300
)
Net cash used in financing activities
(37,066
)
(52,247
)
Effect of exchange rate changes on cash, cash equivalents and restricted cash
(583
)
364

Net change in cash, cash equivalents, and restricted cash
13,610

(8,377
)
Cash, cash equivalents and restricted cash, beginning of period
73,831

103,222

Cash, cash equivalents and restricted cash, end of period
$
87,441

$
94,845









TRUEBLUE, INC.
SEGMENT DATA
(Unaudited)


 
13 Weeks Ended
(in thousands)
Sep 30, 2018
Oct 1, 2017
Revenue from services:
 
 
PeopleReady
$
428,665

$
414,995

PeopleManagement
181,199

196,835

PeopleScout
70,507

48,950

Total company
$
680,371

$
660,780

 
 
 
Segment profit (1):
 
 
PeopleReady
$
31,230

$
28,752

PeopleManagement
6,169

6,940

PeopleScout
12,478

10,277

Total segment profit
49,877

45,969

Corporate unallocated expense
(6,469
)
(5,322
)
Total company Adjusted EBITDA
43,408

40,647

Work Opportunity Tax Credit processing fees (2)
(241
)
(180
)
Acquisition/integration costs (3)
(1,226
)
—

Other costs (4)
(3,005
)
—

EBITDA
38,936

40,467

Depreciation and amortization
(10,586
)
(11,189
)
Interest and other income (expense), net
(340
)
(219
)
Income before tax expense
28,010

29,059

Income tax expense
(3,630
)
(7,838
)
Net income
$
24,380

$
21,221

(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 goodwill and intangible impairment charges, depreciation and amortization expense, unallocated corporate general and administrative expense, interest, other income and expense, income taxes, and costs not considered to be ongoing costs of the segment. Segment profit is comparable to segment adjusted EBITDA amounts reported in prior years.

(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 and reduce our income taxes.

(3)
Acquisition/integration costs relate to the acquisition of TMP Holdings LTD completed on June 12, 2018.

(4)
Other costs include implementation costs for cloud-based systems and accelerated vesting of stock per the CEO’s employment contract associated with the leadership transition.




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:
- interest and other income (expense), net,
- income taxes, and
- depreciation and amortization.

Adjusted EBITDA, further excludes:
- Work Opportunity Tax Credit third-party processing fees,
- acquisition/integration costs and
- other costs.


 
- 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 and Adjusted net income, per diluted share
Net income and net income per diluted share, excluding:
- adjustment to the gain on divestiture,
- amortization of intangibles of acquired businesses,
- acquisition/integration costs,
- other costs,
- tax effect of each adjustment to U.S. GAAP net income, and
- adjust 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.

Organic revenue
Revenue from services excluding acquired entity revenue.
 
- 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 TO ADJUSTED NET INCOME AND ADJUSTED NET INCOME, PER DILUTED SHARE
(Unaudited)
 
Q3 2018
 
Q3 2017
 
Q4 2018 Outlook*
 
13 Weeks Ended
 
13 Weeks Ended
 
13 Weeks Ended
(in thousands, except for per share data)
Sep 30, 2018
 
Oct 1, 2017
 
Dec 30, 2018
Net income
$
24,380

 
$
21,221

 
$ 13,800 — $ 16,300
Adjustment to the gain on divestiture (1)
385

 
—

 
—
Amortization of intangible assets of acquired businesses
5,193

 
5,353

 
5,200
Acquisition/integration costs (2)
1,226

 
—

 
1,500
Other costs (3)
3,005

 
—

 
3,200
Tax effect of adjustments to net income (4)
(1,569
)
 
(1,499
)
 
(1,600)
Adjustment of income taxes to normalized effective rate (5)
(852
)
 
(299
)
 
—
Adjusted net income
$
31,768

 
$
24,776

 
$ 22,100 — $ 24,600
 
 
 
 
 
 
Adjusted net income, per diluted share
$
0.79

 
$
0.60

 
$ 0.55 — $ 0.62
 
 
 
 
 
 
Diluted weighted average shares outstanding
40,073

 
41,276

 
40,000

2.
RECONCILIATION OF U.S. GAAP NET INCOME TO EBITDA AND ADJUSTED EBITDA
(Unaudited)
 
Q3 2018
 
Q3 2017
 
Q4 2018 Outlook*
 
13 Weeks Ended
 
13 Weeks Ended
 
13 Weeks Ended
(in thousands)
Sep 30, 2018
 
Oct 1, 2017
 
Dec 30, 2018
Net income
$
24,380

 
$
21,221

 
$ 13,800 — $ 16,300
Income tax expense
3,630

 
7,838

 
2,600 — 3,100
Interest and other (income) expense, net
340

 
219

 
(400)
Depreciation and amortization
10,586

 
11,189

 
10,100
EBITDA
38,936

 
40,467

 
26,200 — 29,200
Work Opportunity Tax Credit processing fees (6)
241

 
180

 
200
Acquisition/integration costs (2)
1,226

 
—

 
1,500
Other costs (3)
3,005

 
—

 
3,200
Adjusted EBITDA
$
43,408

 
$
40,647

 
$ 31,100 — $ 34,100
* Totals may not sum due to rounding
 
 
 
 
 
3.
RECONCILIATION OF U.S. GAAP REVENUE TO ORGANIC REVENUE
(Unaudited)
 
Q3 2018
 
Q3 2017
 
13 Weeks Ended
 
13 Weeks Ended
(in thousands)
Sep 30, 2018
 
Oct 1, 2017
Revenue from services
$
680,371

 
$
660,780

Acquired entity revenue
(15,032
)
 
—

Organic revenue
$
665,339

 
$
660,780

(1)
Adjustment to the gain on the divestiture of our PlaneTechs business as we continue to finalize actual costs incurred. PlaneTechs was sold mid-March 2018.

(2)
Acquisition/integration costs relate to the acquisition of TMP Holdings LTD completed on June 12, 2018.

(3)
Other costs include implementation costs for cloud-based systems and accelerated vesting of stock associated with the CEO transition.

(4)
Total tax effect of each of the adjustments to U.S. GAAP net income using the expected ongoing rate of 16 percent for 2018, due to the enacted U.S. Tax Cuts and Jobs Act, and 28 percent for 2017.





(5)
Adjustment of the effective income tax rate to the expected ongoing rate of 16 percent for 2018, due to the enacted U.S. Tax Cuts and Jobs Act, and 28 percent for 2017.

(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 and reduce our income taxes.