Exhibit 99.1
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LABOR READY®
Dependable Temporary Labor.
2003
ANALYST PRESENTATION
September 17, 2003
New York
We Put People to Work.
Cautionary Note about Forward-Looking Statements
Certain statements made by us in this presentation that are not historical facts or that relate to future plans, events or performances are forward-looking statements within the meaning of the federal securities laws. Our actual results may differ materially from those expressed in any forward-looking statements made by us. Forward-looking statements involve a number of risks of uncertainties including, but not limited to, the risks described in the Companys most recent 10-K and 10-Q filings. All forward-looking statements are qualified by those risk factors.
[LOGO]
Robert Sullivan
Chairman
Mark Beatty
Tom McChesney
Gates McKibbin
Joe Sambataro
Carl Schafer
Bill Steele
Tim Adams
General Counsel
Bob Breen
Director, Strategic Planning & Analysis
Rick Christmas
CIO
Steve Cooper
CFO
John Hopkins
Regional VP, Operations/West
Gary North
Regional VP, Operations/East & U.K.
Tom Stonich
VP Human Resources
2003 ANALYST PRESENTATION AGENDA
Overview
Industry Trends
Labor Ready Value Proposition
Company Goals & Strategies
Key Financial Metrics & Results
Dependable Temporary Labor.
[GRAPHIC]
Labor Ready has 790 offices in the U.S.,
Canada and U.K.
U.S. Help Supply
[CHART]
Cycle Expansions and Contractions: (1) Economic expansion began in November 1982; (2) Economic contraction began in July 1990 and expansion began in March 1991; (3) Economic contraction began in March 2001.
Source: Bureau of Labor Statistics non-seasonally adjusted employment growth for temporary help services (NAICS code 60561320) and total non-farm employment.
Recent reports on the U.S. economy have been optimistic
20002003 OPERATING INCOME GROWTH
Annual Revenue and Operating Income
[CHART]
LABOR READYS VALUE PROPOSITION
[GRAPHIC]
Workers:
Opportunity
Flexibility
Work Today Paid Today
Bridge to Permanent Employment
Safety Training
We Put People To Work.
[LOGO]
Customer:
Flexibility
Eliminates workers compensation and payroll tax exposure
Reduces fixed costs
Quick fill of employment needs
Dependable, temporary labor
Improve branch profitability
Expand in smaller markets in U.S.
Expand in U.K.
Increase same-store sales
Current branches at 50% of capacity
Branch Manager Compensation Program
Improve customer service
Deliver 30 % gross margins
Control costs
Opened 25 new branches in U.S. and Canada in 2003
Close to 300 markets available
Smaller market branch model
Smaller footprint
Different market criteria
Zero impact on existing branches
Opened 15 locations in 2003
Estimated 100 locations available
Currently operating 46 locations
Expanded geographic reach
Sales Trends
Smaller Market Branch Update
U.K. Update
Leverage in Current Operations
Current Year Estimates
Year over Year Sales Growth
[CHART]
Dec. 2002 and Jan. 2003 growth rates shown before year end cut off adjustments.
Same Store Growth
[CHART]
New Store Growth
[CHART]
[GRAPHIC]
Smaller markets
Lower cost model
25 offices so far
Close to 300 office potential for U.S. & Canada
These offices posted losses of $340,000 through August; we expect them to breakeven in 2003
2003 Cumulative Sales
[CHART]
[LOGO]
SMALLER MARKET OFFICE LOCATIONS
[GRAPHIC]
Current Locations
|
|
August 2003 YTD |
|
|
|
|
|
|||||||||
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|
One Year |
|
15 New |
|
YTD All |
|
FY |
|
FY 2002 |
|
|||||
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|
|
|
|
|
|
|
|
|
|
|
|||||
Revenues |
|
$ |
14,400 |
|
$ |
800 |
|
$ |
15,200 |
|
$ |
30,600 |
|
$ |
23,200 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Branch Profit |
|
$ |
1,000 |
|
$ |
(1,100 |
) |
$ |
(100 |
) |
$ |
|
|
$ |
(600 |
) |
in thousands
[GRAPHIC]
Current Locations |
|
[GRAPHIC]
[CHART]
[LOGO]
Gross margin trends
SG&A reduction
Branch Maturation
[CHART]
SELLING, GENERAL & ADMIN. COSTS
Trailing four quarters as a percentage of sales
[CHART]
BRANCH MATURITY DRIVES REVENUE
Current Branch Revenue and Maturity
[CHART]
Average branch age = 5.1 years
Branch Revenue and Maturity Potential
[CHART]
Average branch age in 2005 = 6.9 years
|
|
Sensitivity analysis based on |
|
||||
|
|
|
|
|
|
||
Revenue |
|
$ |
1,100,000 |
|
$ |
1,300,000 |
|
|
|
|
|
|
|
|
|
Gross Profit |
|
330,000 |
|
390,000 |
|
||
Gross Profit Margin |
|
30 |
% |
30 |
% |
||
|
|
|
|
|
|
||
Branch Expenses |
|
200,000 |
|
210,000 |
|
||
As a% of Revenue |
|
18 |
% |
16 |
% |
||
|
|
|
|
|
|
||
Operating Income |
|
$ |
130,000 |
|
$ |
180,000 |
|
Operating Income Margin |
|
12 |
% |
14 |
% |
[LOGO]
OPERATING LEVERAGE DRIVES PROFITS
Earnings Per Share Sensitivity Analysis (a)
[CHART]
Average Revenue per Branch ($ Millions)
(a) Earnings per share sensitivity analysis based on 790 offices, 30% gross profit margin, managements estimates of fixed and variable expenses, regional and back office overhead and related assumptions, at varying levels of per office revenues.
2003 EARNINGS ESTIMATES
|
|
2001 |
|
2002 |
|
2003 |
|
|||
|
|
|
|
|
|
|
|
|||
Revenue |
|
$ |
917 |
M |
$ |
863 |
M |
$865-$875M |
|
|
|
|
|
|
|
|
|
|
|||
EPS |
|
$ |
0.23 |
|
$ |
0.28 |
|
$0.36-$0.39 |
|
|
|
|
|
|
|
|
|
|
|||
Operating Income |
|
$ |
14 |
M |
$ |
21 |
M |
$ |
28 |
M |
a) Based on management guidance issued on September 15, 2003
[LOGO]
Market leader in fragmented industry
Large and growing markets
Diverse customer base
Nearly 600,000 workers
Scalable and flexible model
Strong earnings potential
[GRAPHIC]
Labor Ready is poised to realize
significant operating leverage
as it benefits from an economic recovery and the maturation of
its branch expansion program executed in the 1990s.