TRUEBLUE REPORTS SECOND QUARTER 2023 RESULTS

TACOMA, WASH. - Jul. 24, 2023 -- TrueBlue (NYSE:TBI) today announced its second quarter results for 2023.

Second quarter revenue was $476 million, a decrease of 16 percent compared to revenue of $569 million in the second quarter of 2022. Net loss per diluted share was $0.24 compared to net income per diluted share of $0.72 in the second quarter of 2022. Second quarter adjusted net income1 per diluted share was $0.17 compared to adjusted net income per diluted share of $0.82 in the second quarter of 2022.

Included in the net loss for the second quarter is a non-cash goodwill and intangible asset impairment charge of $9 million after tax or $0.30 per diluted share.

“Our results reflect an environment of softening demand,” said Steve Cooper, CEO of TrueBlue. “Given the tight labor market, clients continue to focus on retaining employees, but they are also increasingly focused on reducing costs. As a result, clients are becoming more selective on which jobs they choose to fill.”

“We maintained pricing discipline in our staffing segments and took additional actions to reduce costs,” said Taryn Owen, President & COO of TrueBlue. “We remain highly engaged with our clients and are well positioned to support their current and future workforce needs.”

2023 Outlook

TrueBlue is providing certain forward-looking information to help investors form their own estimates, which can be found in the quarterly earnings presentation filed today.

Management will discuss second quarter 2023 results on a webcast at 2:30 p.m. PT (5:30 p.m. ET), today, Monday, Jul. 24, 2023. The webcast can be accessed on the Investor Relations section of the TrueBlue website: investor.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 2022, TrueBlue connected approximately 611,000 people with work. Its PeopleReady segment offers on-demand, industrial staffing, PeopleScout offers recruitment process outsourcing (RPO) and managed service provider (MSP) solutions, and PeopleManagement offers contingent, on-site industrial staffing and commercial driver services. Learn more at www.trueblue.com.

1 Refer to the financial statements accompanying this release for more information regarding non-GAAP terms.

Forward-looking statements and non-GAAP financial measures

This document contains forward-looking statements relating to our plans and expectations including, without limitation, statements regarding the future performance and operations of our business, and expected growth from our digital investments, 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 which can be negatively impacted by factors such as rising interest rates, inflation, political instability, epidemics and global trade uncertainty, (2) our ability to attract sufficient qualified candidates and employees to meet the needs of our clients, (3) our ability to attract and retain clients, (4) our ability to maintain profit margins, (5) our ability to successfully execute on business strategies to further digitalize our business model, (6) the timing and amount of common stock repurchases, if any, which will be determined at management’s discretion and depend upon several factors, including market and business conditions, the trading price of our common stock and the nature of other investment opportunities, (7) new laws, regulations, and government incentives that could affect our operations or financial results, (8) our ability to access sufficient capital to finance our operations, including our ability to comply with covenants contained in our revolving credit facility, and (9) 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 references 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 25, 2023Jun 26, 2022Jun 25, 2023Jun 26, 2022
Revenue from services$475,588 $569,253 $940,876 $1,120,768 
Cost of services345,097 410,722 687,272 822,392 
Gross profit130,491 158,531 253,604 298,376 
Selling, general and administrative expense121,282 122,034 243,927 242,602 
Depreciation and amortization6,280 7,245 12,691 14,532 
Goodwill and intangible asset impairment charge9,485 — 9,485 — 
Income (loss) from operations(6,556)29,252 (12,499)41,242 
Interest and other income (expense), net578 (110)1,592 395 
Income (loss) before tax expense(5,978)29,142 (10,907)41,637 
Income tax expense1,345 5,129 705 7,105 
Net income (loss)$(7,323)$24,013 $(11,612)$34,532 
Net (loss) income per common share:
Basic$(0.24)$0.73 $(0.37)$1.04 
Diluted$(0.24)$0.72 $(0.37)$1.02 
Weighted average shares outstanding:
Basic30,966 32,707 31,629 33,318 
Diluted30,966 33,149 31,629 33,832 


TRUEBLUE, INC.
SUMMARY CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands)Jun 25, 2023Dec 25, 2022
ASSETS
Cash and cash equivalents$49,653 $72,054 
Accounts receivable, net267,949 314,275 
Other current assets36,232 43,883 
Total current assets353,834 430,212 
Property and equipment, net100,277 95,823 
Restricted cash and investments206,106 213,734 
Goodwill and intangible assets, net98,210 109,989 
Other assets, net166,430 169,650 
Total assets$924,857 $1,019,408 
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable and other accrued expenses$48,555 $76,644 
Accrued wages and benefits82,961 92,237 
Current portion of workers’ compensation claims reserve44,840 50,005 
Other current liabilities22,847 23,989 
Total current liabilities199,203 242,875 
Workers’ compensation claims reserve, less current portion186,271 201,005 
Other long-term liabilities85,338 79,213 
Total liabilities470,812 523,093 
Shareholders’ equity454,045 496,315 
Total liabilities and shareholders’ equity$924,857 $1,019,408 


























TRUEBLUE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
26 weeks ended
(in thousands)Jun 25, 2023Jun 26, 2022
Cash flows from operating activities:
Net income (loss)$(11,612)$34,532 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization12,691 14,532 
Goodwill and intangible asset impairment charge9,485 — 
Provision for credit losses2,408 2,572 
Stock-based compensation5,294 4,487 
Deferred income taxes(22)2,117 
Non-cash lease expense6,249 6,518 
Other operating activities(1,099)6,752 
Changes in operating assets and liabilities:
Accounts receivable43,915 12,524 
Income taxes receivable and payable(3,039)(3,549)
Other assets15,053 (8,486)
Accounts payable and other accrued expenses(26,968)(10,629)
Accrued wages and benefits(9,277)(14,638)
Workers’ compensation claims reserve(19,899)11,404 
Operating lease liabilities(6,295)(6,441)
Other liabilities3,980 1,407 
Net cash provided by operating activities20,864 53,102 
Cash flows from investing activities:
Capital expenditures(15,738)(13,992)
Payments for company-owned life insurance(2,347)— 
Purchases of restricted held-to-maturity investments(9,955)(4,950)
Maturities of restricted held-to-maturity investments15,613 17,826 
Net cash used in investing activities(12,427)(1,116)
Cash flows from financing activities:
Purchases and retirement of common stock(34,200)(60,939)
Net proceeds from employee stock purchase plans509 536 
Common stock repurchases for taxes upon vesting of restricted stock(2,514)(4,132)
Other(91)(147)
Net cash used in financing activities(36,296)(64,682)
Effect of exchange rate changes on cash, cash equivalents and restricted cash(20)(494)
Net change in cash, cash equivalents, and restricted cash(27,879)(13,190)
Cash, cash equivalents and restricted cash, beginning of period135,631 103,185 
Cash, cash equivalents and restricted cash, end of period$107,752 $89,995 



TRUEBLUE, INC.
SEGMENT DATA
(Unaudited)

13 weeks ended
(in thousands)Jun 25, 2023Jun 26, 2022
Revenue from services:
PeopleReady$275,318 $317,943 
PeopleScout59,710 89,372 
PeopleManagement140,560 161,938 
Total company$475,588 $569,253 
Segment profit (1):
PeopleReady$8,158 $20,325 
PeopleScout8,817 20,593 
PeopleManagement2,250 4,228 
Total segment profit19,225 45,146 
Corporate unallocated expense(8,215)(6,531)
Total company Adjusted EBITDA (2)
11,010 38,615 
Third-party processing fees for hiring tax credits (3)(110)(162)
Amortization of software as a service assets (4)(952)(699)
Goodwill and intangible asset impairment charge(9,485)— 
PeopleReady technology upgrade costs (5)(174)(1,748)
Other adjustments, net (6)(565)491 
EBITDA (2)
(276)36,497 
Depreciation and amortization (6,280)(7,245)
Interest and other income (expense), net578 (110)
Income (loss) before tax expense(5,978)29,142 
Income tax expense(1,345)(5,129)
Net income (loss)$(7,323)$24,013 
(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 depreciation and amortization expense, unallocated corporate general and administrative expense, interest expense, other income, 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 hiring tax credits.
(4)Amortization of software as a service assets is reported in selling, general and administrative expense.
(5)Costs associated with upgrading legacy PeopleReady technology.
(6)Other adjustments for the 13 weeks ended June 25, 2023 primarily include workforce reduction costs of $0.6 million ($0.2 million in cost of services and $0.4 million in selling, general and administrative expense). Other adjustments for the 13 weeks ended June 26, 2022 primarily include a benefit of $1.4 million from forfeited stock awards associated with the CEO transition that were expensed in prior years, partially offset by $0.8 million of costs incurred while transitioning to a new third party administrator for workers’ compensation.


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 measureDefinitionPurpose of adjusted measures
Adjusted net income and
Adjusted net income per diluted share
Net income (loss) and net income (loss) per diluted share, excluding:
–amortization of intangibles,
–amortization of software as a service assets,
–goodwill and intangible asset impairment charge,
–accelerated depreciation,
–PeopleReady technology upgrade costs,
–other adjustments, net, and
–tax effect of each adjustment to U.S. GAAP.

–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.
EBITDA and
Adjusted EBITDA
EBITDA excludes from net income (loss):
–income tax expense,
–interest expense and other income, net, and
–depreciation and amortization.

Adjusted EBITDA, further excludes:
–third-party processing fees for hiring tax credits,
–amortization of software as a service assets,
–goodwill and intangible asset impairment charge,
–PeopleReady technology upgrade costs,
–other adjustments, net.
–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 SG&A expense
Selling, general and administrative expense excluding:
–third-party processing fees for hiring tax credits,
–amortization of software as a service assets,
–PeopleReady technology upgrade costs,
–other adjustments, net.
–Enhances comparability on a consistent basis and provides investors with useful insight into the underlying trends of the business.


1.RECONCILIATION OF U.S. GAAP NET INCOME (LOSS) TO ADJUSTED NET INCOME AND ADJUSTED NET INCOME PER DILUTED SHARE
(Unaudited)
13 weeks ended
(in thousands, except for per share data)Jun 25, 2023Jun 26, 2022
Net income (loss)$(7,323)$24,013 
Amortization of intangible assets1,274 1,495 
Amortization of software as a service assets (1)— 699 
Goodwill and intangible asset impairment charge9,485 — 
Accelerated depreciation (2)— 540 
PeopleReady technology upgrade costs (3)174 1,748 
Other adjustments, net (4)565 (491)
Tax effect of adjustments to net income (loss) (5)1,203 (749)
Adjusted net income$5,378 $27,255 
Adjusted net income per diluted share$0.17 $0.82 
Diluted weighted average shares outstanding31,185 33,149 
Margin / % of revenue:
Net income (loss)(1.5)%4.2%
Adjusted net income1.1%4.8%
2.RECONCILIATION OF U.S. GAAP NET INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDA
(Unaudited)
13 weeks ended
(in thousands)Jun 25, 2023Jun 26, 2022
Net income (loss)$(7,323)$24,013 
Income tax expense1,345 5,129 
Interest and other (income) expense, net(578)110 
Depreciation and amortization6,280 7,245 
EBITDA(276)36,497 
Third-party processing fees for hiring tax credits (6)110 162 
Amortization of software as a service assets (1)952 699 
Goodwill and intangible asset impairment charge9,485 — 
PeopleReady technology upgrade costs (3)174 1,748 
Other adjustments, net (4)565 (491)
Adjusted EBITDA $11,010 $38,615 
Margin / % of revenue:
Net income (loss)(1.5)%4.2%
Adjusted EBITDA 2.3%6.8%


3.RECONCILIATION OF U.S. GAAP SELLING, GENERAL AND ADMINISTRATIVE EXPENSE TO ADJUSTED SG&A EXPENSE
(Unaudited)
13 weeks ended
(in thousands)Jun 25, 2023Jun 26, 2022
Selling, general and administrative expense$121,282 $122,034 
Third-party processing fees for hiring tax credits (6)(110)(162)
Amortization of software as a service assets (1)(952)(699)
PeopleReady technology upgrade costs (3)(174)(1,748)
Other adjustments, net (4)(390)491 
Adjusted SG&A expense$119,656 $119,916 
% of revenue:
Selling, general and administrative expense25.5%21.4%
Adjusted SG&A expense25.2%21.1%

(1)Amortization of software as a service assets is reported in selling, general and administrative expense. Note, amortization of software as a service assets was included as an adjustment to net income during transitory periods ending with fiscal 2022 and is only considered an adjustment to EBITDA going forward to be consistent with the treatment of depreciation and amortization.

(2)Accelerated depreciation for the existing systems being replaced by the upgraded PeopleReady technology platform.

(3)Costs associated with upgrading legacy PeopleReady technology.

(4)Other adjustments for the 13 weeks ended June 25, 2023 primarily include workforce reduction costs of $0.6 million ($0.2 million in cost of services and $0.4 million in selling, general and administrative expense). Other adjustments for the 13 weeks ended June 26, 2022 primarily include a benefit of $1.4 million from forfeited stock awards associated with the CEO transition that were expensed in prior years, partially offset by $0.8 million of costs incurred while transitioning to a new third party administrator for workers’ compensation.

(5)Total tax effect of each of the adjustments to U.S. GAAP net income using the effective income tax rate for the respective periods.

(6)These third-party processing fees are associated with generating hiring tax credits.