TRUEBLUE REPORTS THIRD QUARTER 2019 RESULTS

TACOMA, WASH. - Oct. 28, 2019 -- TrueBlue (NYSE:TBI) today announced its third quarter results for 2019.

Third quarter revenue was $637 million, a decrease of 6 percent, compared to revenue of $680 million in the third quarter of 2018. Net income per diluted share was $0.68, an increase of 11 percent, compared to $0.61 in the third quarter of 2018. Adjusted net income1 per diluted share was $0.76, a decrease of 4 percent, compared to $0.79 in the third quarter of 2018.

“Strong execution drove better than expected top-line and bottom-line results this quarter,” said Patrick Beharelle, CEO of TrueBlue. “Despite ongoing economic uncertainty, monthly revenue trends were consistent during the quarter and we delivered another quarter of net income per diluted share growth.
“TrueBlue has been driving digital disruption within the staffing industry with our JobStackTM and AffinixTM offerings and we continue to experience favorable employee and customer adoption,” Mr. Beharelle continued. “We remain squarely focused on client expansion and retention, disciplined cost management and investing in our digital strategies to differentiate our service offerings.”

The company also announced that its Board of Directors authorized an additional $100 million of share repurchases. “Our balance sheet is in great shape and the business is producing strong cash flow,” said Derrek Gafford, CFO of TrueBlue. “This authorization reflects our confidence in the long-term outlook for our business and our desire to continue to return capital to shareholders.”

2019 Outlook

TrueBlue estimates revenue for the fourth quarter of 2019 will range from $587 million to $612 million. The company also estimates net income per diluted share will range from $0.18 to $0.28 and adjusted net income per diluted share will range from $0.35 to $0.45.

Management will discuss third quarter 2019 results on a webcast at 2 p.m. PDT (5 p.m. EDT), today, Monday, Oct. 28, 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 and driver 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 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
 
39 Weeks Ended
(in thousands, except per share data)
Sep 29, 2019
Sep 30, 2018
 
Sep 29, 2019
Sep 30, 2018
Revenue from services
$
636,793

$
680,371

 
$
1,777,739

$
1,849,060

Cost of services
467,671

496,053

 
1,301,924

1,355,890

Gross profit
169,122

184,318

 
475,815

493,170

Selling, general and administrative expense
131,187

145,382

 
388,447

405,352

Depreciation and amortization
8,749

10,586

 
28,528

30,777

Income from operations
29,186

28,350

 
58,840

57,041

Interest and other income (expense), net
471

(340
)
 
1,851

896

Income before tax expense
29,657

28,010

 
60,691

57,937

Income tax expense
2,981

3,630

 
6,333

7,070

Net income
$
26,676

$
24,380

 
$
54,358

$
50,867

 
 
 
 
 
 
Net income per common share:
 
 
 
 
 
Basic
$
0.69

$
0.61

 
$
1.39

$
1.27

Diluted
$
0.68

$
0.61

 
$
1.38

$
1.26

 
 
 
 
 
 
Weighted average shares outstanding:
 
 
 
 
 
Basic
38,741

39,743

 
39,090

40,138

Diluted
39,213

40,073

 
39,479

40,417





TRUEBLUE, INC.
SUMMARY CONSOLIDATED BALANCE SHEETS
(Unaudited)

(in thousands)
Sep 29, 2019
Dec 30, 2018
ASSETS
 
 
Cash and cash equivalents
$
23,557

$
46,988

Accounts receivable, net
367,038

355,373

Other current assets
35,395

27,466

Total current assets
425,990

429,827

Property and equipment, net
61,218

57,671

Restricted cash and investments
227,043

235,443

Goodwill and intangible assets, net
312,984

328,695

Operating lease right-of-use assets
36,794

—

Other assets, net
67,016

63,208

Total assets
$
1,131,045

$
1,114,844

 
 
 
LIABILITIES AND SHAREHOLDERS’ EQUITY
 
 
Current liabilities
$
226,479

$
225,526

Long-term debt
43,800

80,000

Operating lease long-term liabilities
24,896

—

Other long-term liabilities
215,205

217,879

Total liabilities
510,380

523,405

Shareholders’ equity
620,665

591,439

Total liabilities and shareholders’ equity
$
1,131,045

$
1,114,844





























TRUEBLUE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
39 Weeks Ended
(in thousands)
Sep 29, 2019
Sep 30, 2018
Cash flows from operating activities:
 
 
Net income
$
54,358

$
50,867

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
Depreciation and amortization
28,528

30,777

Provision for doubtful accounts
5,997

10,140

Stock-based compensation
8,119

9,552

Deferred income taxes
1,058

2,638

Non-cash lease expense
11,087

—

Other operating activities
(1,701
)
526

Changes in operating assets and liabilities:
 
 
Accounts receivable
(17,616
)
(17,960
)
Income tax receivable
(3,982
)
(5,389
)
Other assets
(9,449
)
(12,110
)
Accounts payable and other accrued expenses
(6,970
)
3,179

Accrued wages and benefits
(141
)
4,549

Workers’ compensation claims reserve
(7,176
)
(8,405
)
Operating lease liabilities
(11,297
)
—

Other liabilities
1,723

262

Net cash provided by operating activities
52,538

68,626

Cash flows from investing activities:
 
 
Capital expenditures
(18,297
)
(10,313
)
Acquisition of business
—

(22,742
)
Divestiture of business
215

10,414

Purchases of restricted investments
(22,597
)
(11,747
)
Maturities of restricted investments
28,976

17,021

Net cash used in investing activities
(11,703
)
(17,367
)
Cash flows from financing activities:
 
 
Purchases and retirement of common stock
(31,316
)
(24,818
)
Net proceeds from employee stock purchase plans
1,023

1,146

Common stock repurchases for taxes upon vesting of restricted stock
(1,934
)
(2,539
)
Net change in revolving credit facility
(36,200
)
12,000

Payments on debt
—

(22,855
)
Other
(203
)
—

Net cash used in financing activities
(68,630
)
(37,066
)
Effect of exchange rate changes on cash, cash equivalents and restricted cash
732

(583
)
Net change in cash, cash equivalents, and restricted cash
(27,063
)
13,610

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

73,831

Cash, cash equivalents and restricted cash, end of period
$
75,387

$
87,441










TRUEBLUE, INC.
SEGMENT DATA
(Unaudited)


 
13 Weeks Ended
(in thousands)
Sep 29, 2019
 
Sep 30, 2018
Revenue from services:
 
 
 
PeopleReady
$
413,132

 
$
428,665

PeopleManagement
159,315

 
181,199

PeopleScout
64,346

 
70,507

Total company
$
636,793

 
$
680,371

 
 
 
 
Segment profit (1):
 
 
 
PeopleReady
$
30,878

 
$
31,230

PeopleManagement
3,381

 
6,169

PeopleScout
10,774

 
12,478


45,033

 
49,877

Corporate unallocated expense
(5,769
)
 
(6,469
)
Total company Adjusted EBITDA (2)
39,264

 
43,408

Work Opportunity Tax Credit processing fees (3)
(240
)
 
(241
)
Acquisition/integration costs (4)
(362
)
 
(1,226
)
Other adjustments (5)
(727
)
 
(3,005
)
EBITDA (2)
37,935

 
38,936

Depreciation and amortization
(8,749
)
 
(10,586
)
Interest and other income (expense), net
471

 
(340
)
Income before tax expense
29,657

 
28,010

Income tax expense
(2,981
)
 
(3,630
)
Net income
$
26,676

 
$
24,380

(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 September 29, 2019 primarily include implementation costs for cloud-based systems of $0.4 million and amortization of software as a service assets of $0.4 million, which is reported in selling, general and administrative expense. Other adjustments for the 13 weeks ended September 30, 2018 include implementation costs for cloud-based systems of $1.5 million and accelerated vesting of stock associated with the CEO transition of $1.5 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)
 
Q3 2019
 
Q3 2018
 
Q4 2019 Outlook
 
13 Weeks Ended
 
13 Weeks Ended
 
13 Weeks Ended
(in thousands, except for per share data)
Sep 29, 2019
 
Sep 30, 2018
 
Dec 29, 2019
Net income
$
26,676

 
$
24,380

 
$
7,000

—
$
10,900

Gain on divestiture (1)
—

 
385

 
—
Amortization of intangible assets of acquired businesses (2)
3,858

 
5,193

 
4,000
Acquisition/integration costs (3)
362

 
1,226

 
400
Other adjustments (4)
727

 
3,005

 
3,200
Tax effect of adjustments to net income (5)
(692
)
 
(1,569
)
 
(1,100)
Adjustment of income taxes to normalized effective rate (6)
(1,171
)
 
(852
)
 
—
Adjusted net income
$
29,760

 
$
31,768

 
$
13,500

—
$
17,400

 
 
 
 
 
 
 
 
Adjusted net income, per diluted share
$
0.76

 
$
0.79

 
$
0.35

—
$
0.45

 
 
 
 
 
 
 
 
Diluted weighted average shares outstanding
39,213

 
40,073

 
38,400




2.
RECONCILIATION OF U.S. GAAP NET INCOME TO EBITDA AND ADJUSTED EBITDA
(Unaudited)
 
Q3 2019
 
Q3 2018
 
Q4 2019 Outlook*
 
13 Weeks Ended
 
13 Weeks Ended
 
13 Weeks Ended
(in thousands)
Sep 29, 2019
 
Sep 30, 2018
 
Dec 29, 2019
Net income
$
26,676

 
$
24,380

 
$
7,000

—
$
10,900

Income tax expense
2,981

 
3,630

 
1,100

—
1,800

Interest and other (income) expense, net
(471
)
 
340

 
(1,600)
Depreciation and amortization
8,749

 
10,586

 
8,900
EBITDA
37,935

 
38,936

 
15,400

—
19,900

Work Opportunity Tax Credit processing fees (7)
240

 
241

 
200
Acquisition/integration costs (3)
362

 
1,226

 
400
Other adjustments (4)
727

 
3,005

 
3,200
Adjusted EBITDA
$
39,264

 
$
43,408

 
$
19,200

—
$
23,700

* Totals may not sum due to rounding
 
 
 
 
 
 
 
3.
RECONCILIATION OF U.S. GAAP REVENUE TO ORGANIC REVENUE
(Unaudited)
 
Q3
 
Q2
 
2019
 
2018
 
2019
 
2018
 
13 Weeks Ended
 
13 Weeks Ended
 
13 Weeks Ended
 
13 Weeks Ended
(in thousands)
Sep 29, 2019
 
Sep 30, 2018
 
Jun 30, 2019
 
Jul 1, 2018
Revenue from services
$
636,793

 
$
680,371

 
$
588,594

 
$
614,301

Acquisition revenue excluded (3)
—

 
—

 
(10,324
)
 
—

Organic revenue
$
636,793

 
$
680,371

 
$
578,270

 
$
614,301

4.
RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOWS
(Unaudited)
 
Q3 2019
 
2018
 
2017
 
2016
 
39 Weeks Ended
 
52 Weeks Ended
 
52 Weeks Ended
 
53 Weeks Ended
(in thousands)
Sep 29, 2019
 
Dec 30, 2018
 
Dec 31, 2017
 
Jan 1, 2017
Net cash provided by operating activities
$
52,538

 
$
125,692

 
$
100,134

 
$
260,703

Capital expenditures
(18,297
)
 
(17,054
)
 
(21,958
)
 
(29,042
)
Free cash flows
$
34,241

 
$
108,638

 
$
78,176

 
$
231,661


(1)
Adjustment to the gain on the divestiture of our PlaneTechs business due to the finalization of costs incurred. PlaneTechs was 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 September 29, 2019 primarily include implementation costs for cloud-based systems of $0.4 million and amortization of software as a service assets of $0.4 million which is reported in selling, general and administrative expense. Other adjustments for the 13 weeks ended September 30, 2018 include implementation costs for cloud-based systems of $1.5 million and accelerated vesting of stock associated with the CEO transition of $1.5 million. Other adjustments for the 13 weeks ended December 29, 2019 include estimated workforce reduction costs associated with employee reductions in the PeopleReady business of $2.3 million, implementation costs for cloud-based systems of $0.4 million and amortization of software as a service assets of $0.5 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.