TRUEBLUE REPORTS SECOND QUARTER 2019 RESULTS

TACOMA, WASH. - Jul. 29, 2019 -- TrueBlue (NYSE:TBI) today announced its second quarter results for 2019.

Second quarter revenue was $589 million, a decrease of 4 percent, compared to revenue of $614 million in the second quarter of 2018. Net income per diluted share was $0.49, an increase of 11 percent, compared to $0.44 in the second quarter of 2018. Adjusted net income1 per diluted share was $0.64, an increase of 12 percent, compared to $0.57 in the second quarter of 2018.

“We experienced a slower pace of demand this quarter, attributable to lower volumes within the businesses of our clients,” said Patrick Beharelle, CEO of TrueBlue. “I’m pleased that we were able to effectively manage costs, resulting in net income and EPS growth, while making progress on our digital growth initiatives.
“The second quarter also marks the five-year anniversary of our acquisition of Seaton and the one-year anniversary of our acquisition of TMP Holdings,” Mr. Beharelle continued. “The Seaton acquisition transformed the company into a diversified workforce solutions company and provided entry into the RPO market that now represents 30 percent of the company’s segment profit.2 The TMP acquisition bolstered our global RPO growth strategy, providing entry into the U.K. and accelerating our ability to compete for multi-continent deals.”

2019 Outlook

TrueBlue estimates revenue for the third quarter of 2019 will range from $613 million to $638 million. The company also estimates net income per diluted share will range from $0.50 to $0.60 and adjusted net income per diluted share will range from $0.61 to $0.71.

Management will discuss second quarter 2019 results on a webcast at 2 p.m. PDT (5 p.m. EDT), today, Monday, Jul. 29, 2019. 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 2018, TrueBlue connected approximately 730,000 people with work. Its 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.
2 Segment profit calculations based on the trailing twelve months ended June 2019. 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 other adjustments not considered to be ongoing.

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 clients, (3) our ability to attract sufficient qualified candidates and employees to meet the needs of our clients, (4) our ability to maintain profit margins, (5) new laws and regulations that could affect our operations or financial results, (6) our ability to successfully complete and integrate acquisitions, (7) our ability to successfully execute on business strategies to further digitize our business model, and (8) 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 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.

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




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

 
13 Weeks Ended
 
26 Weeks Ended
(in thousands, except per share data)
Jun 30, 2019
Jul 1, 2018
 
Jun 30, 2019
Jul 1, 2018
Revenue from services
$
588,594

$
614,301

 
$
1,140,946

$
1,168,689

Cost of services
430,277

448,717

 
834,253

859,837

Gross profit
158,317

165,584

 
306,693

308,852

Selling, general and administrative expense
127,599

134,207

 
257,260

259,970

Depreciation and amortization
9,827

10,101

 
19,779

20,191

Income from operations
20,891

21,276

 
29,654

28,691

Interest and other income (expense), net
827

(968
)
 
1,380

1,236

Income before tax expense
21,718

20,308

 
31,034

29,927

Income tax expense
2,312

2,576

 
3,352

3,440

Net income
$
19,406

$
17,732

 
$
27,682

$
26,487

 
 
 
 
 
 
Net income per common share:
 
 
 
 
 
Basic
$
0.50

$
0.44

 
$
0.71

$
0.66

Diluted
$
0.49

$
0.44

 
$
0.70

$
0.65

 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 
Basic
39,163

40,227

 
39,264

40,335

Diluted
39,554

40,469

 
39,619

40,576





TRUEBLUE, INC.
SUMMARY CONSOLIDATED BALANCE SHEETS
(Unaudited)

(in thousands)
Jun 30, 2019
Dec 30, 2018
ASSETS
 
 
Cash and cash equivalents
$
23,124

$
46,988

Accounts receivable, net
335,488

355,373

Other current assets
33,730

27,466

Total current assets
392,342

429,827

Property and equipment, net
58,647

57,671

Restricted cash and investments
222,556

235,443

Goodwill and intangible assets, net
318,484

328,695

Operating lease right-of-use assets
37,978

—

Other assets, net
64,880

63,208

Total assets
$
1,094,887

$
1,114,844

 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
Current liabilities
$
212,718

$
225,526

Long-term debt
24,700

80,000

Operating lease long-term liabilities
25,995

—

Other long-term liabilities
216,467

217,879

Total liabilities
479,880

523,405

Shareholders’ equity
615,007

591,439

Total liabilities and shareholders’ equity
$
1,094,887

$
1,114,844





























TRUEBLUE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
26 Weeks Ended
(in thousands)
Jun 30, 2019
Jul 1, 2018
Cash flows from operating activities:
 
 
Net income
$
27,682

$
26,487

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation and amortization
19,779

20,191

Provision for doubtful accounts
3,761

5,571

Stock-based compensation
5,260

5,983

Deferred income taxes
2,393

1,373

Non-cash lease expense
6,934

—

Other operating activities
(2,072
)
102

Changes in operating assets and liabilities:
 
 
Accounts receivable
16,162

888

Income tax receivable
(6,347
)
(3,641
)
Other assets
(4,472
)
(3,522
)
Accounts payable and other accrued expenses
(16,542
)
3,468

Accrued wages and benefits
(4,667
)
(1,528
)
Workers’ compensation claims reserve
(7,109
)
(9,235
)
Operating lease liabilities
(6,957
)
—

Other liabilities
3,174

3,304

Net cash provided by operating activities
36,979

49,441

Cash flows from investing activities:
 
 
Capital expenditures
(11,064
)
(6,468
)
Acquisition of business
—

(22,742
)
Divestiture of business
—

8,800

Purchases of restricted investments
(11,315
)
(10,730
)
Maturities of restricted investments
19,685

13,044

Net cash used in investing activities
(2,694
)
(18,096
)
Cash flows from financing activities:
 
 
Purchases and retirement of common stock
(9,077
)
(19,065
)
Net proceeds from employee stock purchase plans
700

757

Common stock repurchases for taxes upon vesting of restricted stock
(1,631
)
(2,403
)
Net change in revolving credit facility
(55,300
)
21,300

Payments on debt
—

(22,856
)
Other
(119
)
—

Net cash used in financing activities
(65,427
)
(22,267
)
Effect of exchange rate changes on cash, cash equivalents and restricted cash
560

(919
)
Net change in cash, cash equivalents, and restricted cash
(30,582
)
8,159

Cash, cash equivalents and restricted cash, beginning of period
102,450

73,831

Cash, cash equivalents and restricted cash, end of period
$
71,868

$
81,990










TRUEBLUE, INC.
SEGMENT DATA
(Unaudited)


 
13 Weeks Ended
(in thousands)
Jun 30, 2019
 
Jul 1, 2018
Revenue from services:
 
 
 
PeopleReady
$
369,261

 
$
377,460

PeopleManagement
153,530

 
178,839

PeopleScout
65,803

 
58,002

Total company
$
588,594

 
$
614,301

 
 
 
 
Segment profit (1):
 
 
 
PeopleReady
$
21,795

 
$
23,198

PeopleManagement
4,128

 
4,712

PeopleScout
11,223

 
11,320


37,146

 
39,230

Corporate unallocated expense
(3,634
)
 
(5,868
)
Total company Adjusted EBITDA (2)
33,512

 
33,362

Work Opportunity Tax Credit processing fees (3)
(240
)
 
(264
)
Acquisition/integration costs (4)
(673
)
 
(457
)
Other adjustments (5)
(1,881
)
 
(1,264
)
EBITDA (2)
30,718

 
31,377

Depreciation and amortization
(9,827
)
 
(10,101
)
Interest and other income (expense), net
827

 
(968
)
Income before tax expense
21,718

 
20,308

Income tax expense
(2,312
)
 
(2,576
)
Net income
$
19,406

 
$
17,732

(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 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 the Work Opportunity Tax Credits, which are designed to encourage employers to hire workers from certain targeted groups with higher than average unemployment rates.

(4)
Acquisition/integration costs relate to the acquisition of TMP Holdings LTD completed on June 12, 2018.

(5)
Other adjustments for the 13 weeks ended June 30, 2019 include implementation costs for cloud-based systems of $1.1 million, amortization of software as a service assets of $0.5 million which is reported in selling, general and administrative expense, a workforce reduction charge primarily associated with employee reductions in the PeopleReady business of $0.5 million, and reduced costs associated with the CEO transition of $0.2 million. Other adjustments for the 13 weeks ended July 1, 2018 include implementation costs for cloud-based systems of $1.3 million.




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 adjustments.
 
- 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:
- amortization of intangibles of acquired businesses,
- acquisition/integration costs,
- gain on divestiture,
- other adjustments,
- 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
Organic revenue excludes the first 12 months of operations of acquired businesses.
 
- 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.
Free cash flow
Net cash provided by operating activities, minus cash purchases for property and equipment.
 
- Used by management to assess cash flows.
1.
RECONCILIATION OF U.S. GAAP NET INCOME TO ADJUSTED NET INCOME AND ADJUSTED NET INCOME, PER DILUTED SHARE
(Unaudited)
 
Q2 2019
 
Q2 2018
 
Q3 2019 Outlook*
 
13 Weeks Ended
 
13 Weeks Ended
 
13 Weeks Ended
(in thousands, except for per share data)
Jun 30, 2019
 
Jul 1, 2018
 
Sep 29, 2019
Net income
$
19,406

 
$
17,732

 
$ 19,800 — $ 23,700
Gain on divestiture (1)
—

 
290

 
—
Amortization of intangible assets of acquired businesses (2)
4,957

 
5,174

 
3,900
Acquisition/integration costs (3)
673

 
457

 
400
Other adjustments (4)
1,881

 
1,264

 
700
Tax effect of adjustments to net income (5)
(1,052
)
 
(1,150
)
 
(700)
Adjustment of income taxes to normalized effective rate (6)
(729
)
 
(673
)
 
—
Adjusted net income
$
25,136

 
$
23,094

 
$ 24,100 — $ 28,000
 
 
 
 
 
 
Adjusted net income, per diluted share
$
0.64

 
$
0.57

 
$ 0.61 — $ 0.71
 
 
 
 
 
 
Diluted weighted average shares outstanding
39,554

 
40,469

 
39,400
*Totals may not sum due to rounding
 
 
 
 
 




2.
RECONCILIATION OF U.S. GAAP NET INCOME TO EBITDA AND ADJUSTED EBITDA
(Unaudited)
 
Q2 2019
 
Q2 2018
 
Q3 2019 Outlook*
 
13 Weeks Ended
 
13 Weeks Ended
 
13 Weeks Ended
(in thousands)
Jun 30, 2019
 
Jul 1, 2018
 
Sep 29, 2019
Net income
$
19,406

 
$
17,732

 
$ 19,800 — $ 23,700
Income tax expense
2,312

 
2,576

 
3,200 — 3,900
Interest and other (income) expense, net
(827
)
 
968

 
(700)
Depreciation and amortization
9,827

 
10,101

 
8,700
EBITDA
30,718

 
31,377

 
31,100 — 35,600
Work Opportunity Tax Credit processing fees (7)
240

 
264

 
200
Acquisition/integration costs (3)
673

 
457

 
400
Other adjustments (4)
1,881

 
1,264

 
700
Adjusted EBITDA
$
33,512

 
$
33,362

 
$ 32,400 — $ 36,900
* Totals may not sum due to rounding
 
 
 
 
 
3.
RECONCILIATION OF U.S. GAAP REVENUE TO ORGANIC REVENUE
(Unaudited)
 
Total company
 
PeopleScout

Q2 2019
 
Q2 2018
 
Q2 2019
 
Q2 2018
 
13 Weeks Ended
 
13 Weeks Ended
 
13 Weeks Ended
 
13 Weeks Ended
(in thousands)
Jun 30, 2019
 
Jul 1, 2018
 
Jun 30, 2019
 
Jul 1, 2018
Revenue from services
$
588,594

 
$
614,301

 
$
65,803

 
$
58,002

Acquisition revenue excluded (3)
(10,324
)
 
—

 
(10,324
)
 
—

Organic revenue
$
578,270

 
$
614,301

 
$
55,479

 
$
58,002

4.
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOWS
(Unaudited)
 
Q2 2019
 
2018
 
2017
 
2016
 
26 Weeks Ended
 
52 Weeks Ended
 
52 Weeks Ended
 
53 Weeks Ended
(in thousands)
Jun 30, 2019
 
Dec 30, 2018
 
Dec 31, 2017
 
Jan 1, 2017
Net cash provided by operating activities
$
36,979

 
$
125,692

 
$
100,134

 
$
260,703

Capital expenditures
(11,064
)
 
(17,054
)
 
(21,958
)
 
(29,042
)
Free cash flows
$
25,915

 
$
108,638

 
$
78,176

 
$
231,661


(1)
Gain on the divestiture of our PlaneTechs business sold mid-March 2018.

(2)
Amortization of intangible assets of acquired businesses.

(3)
Acquisition/integration costs for the acquisition of TMP Holding LTD ("TMP") completed on June 12, 2018. Organic revenue excludes the first 12 months of operations of TMP.

(4)
Other adjustments for the 13 weeks ended June 30, 2019 include implementation costs for cloud-based systems of $1.1 million, amortization of software as a service assets of $0.5 million which is reported in selling, general and administrative expense, a workforce reduction charge primarily associated with employee reductions in the PeopleReady business of $0.5 million, and reduced costs associated with the CEO transition of $0.2 million. Other adjustments for the 13 weeks ended July 1, 2018 include implementation costs for cloud-based systems of $1.3 million. Other adjustments for the 13 weeks ended September 29, 2019 include estimated implementations costs for cloud-based systems of $0.4 million and amortization of software as a service assets of $0.3 million.

(5)
Total tax effect of each of the adjustments to U.S. GAAP net income using the expected ongoing rate of 14 percent for 2019 and 16 percent for 2018.





(6)
Adjustment of the effective income tax rate to the expected ongoing rate of 14 percent for 2019 and 16 percent for 2018.

(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.