EXHIBIT 99.1
FOR IMMEDIATE RELEASE:
LABOR READY ANNOUNCES FIRST QUARTER 2004 EARNINGS RESULTS
1st Quarter Revenue Growth Accelerates as Demand for Temporary Labor Increases
TACOMA, WA, April 21, 2004—Labor Ready, Inc. (NYSE: LRW) reported revenue for the first quarter ended April 2, 2004 increased 21.3% to $208.9 million compared to revenue of $172.3 million for the first quarter of 2003. Net income for the quarter was $0.7 million or $0.02 per share, as compared to a net loss of $3.2 million or ($0.08) per share for the first quarter of 2003.
Results for the first quarter were favorably impacted by the inclusion of four more billing days this quarter as compared to the first quarter of 2003, which added 7% to revenues and $0.03 to earnings per share. Results were also positively impacted by relatively stronger foreign currencies compared to the first quarter of 2003. On a constant currency basis, revenues increased 20.3%.
“The strong pace we saw at the end of 2003 continued in the first quarter of 2004, across most industries and regions of our operations,” said Labor Ready President and CEO Joe Sambataro. “As small and medium-sized businesses staff for renewed growth, they are relying on contingent labor to manage costs. As the economy improves, we believe demand for a flexible work force will continue to grow.”
Sambataro emphasized the success of Labor Ready’s strategic focus, namely to continue to increase revenue and profitability of existing branches, expand in smaller markets in the U.S. and Canada, and expand operations in the United Kingdom. During the quarter, revenue from branches open 12 months or longer grew approximately 12% over a year earlier. The Company opened 24 branches in the U.S. and three branches in the U.K. during the first quarter, and plans to open four additional branches in the U.S. and three branches in the U.K. in the second quarter. The recent purchase of Spartan Staffing adds an additional 25 branch locations, with two new branches planned for the second quarter.
“Our purchase of Spartan Staffing allows us to expand our market share and is consistent with our commitment to serve the on-demand staffing needs of small and medium-sized businesses,” said Sambataro.
Labor Ready also updated its outlook for 2004 and provided guidance for the second quarter. The Company currently estimates revenue for the year in the range of $1.01 billion to $1.03 billion, 14% higher than 2003 revenues of $891 million, and 7% higher than previously reported expectations. Net income per share for the year is expected to be between $0.55 and $0.58, approximately 40% higher than the $0.41 per share in 2003, and about 12% higher than previously reported expectations. Included in this updated outlook are the results of Spartan Staffing, which are expected to add $0.01 to net income per share for the year. The Company anticipates the Spartan operations will have
operating margins similar to Labor Ready’s existing business, before the amortization of intangible assets related to the purchase. For the second quarter of 2004, the Company estimates revenue in the range of $253 million to $258 million, representing year-over-year growth of 17% to 20%, and net income per share between $0.14 and $0.15.
Management will discuss first quarter 2004 results on a conference call at 8:00 a.m. (PT) Thursday, April 22, 2004. The conference call can be accessed on Labor Ready’s web site at www.laborready.com.
This news release contains forward-looking statements, such as statements about the ranges of revenues and profits anticipated for future periods, increasing demand for services, expansion of business operations, and other factors that may affect our financial results and operations in the future. Our actual results are, however, subject to a number of risks, including: 1) national and global economic conditions; 2) our ability to continue to attract and retain customers and maintain profit margins in the face of new and existing competition; 3) potential new laws and regulations that could have a materially adverse effect on our operations and financial results; 4) significant labor disturbances which could disrupt industries we serve; 5) increased costs and collateral requirements in connection with our insurance obligations, including workers’ compensation insurance; 6) the adequacy of our financial reserves; 7) our continuing ability to comply with financial covenants in our lines of credit and other financing agreements; 8) our ability to attract and retain competent employees in key positions; 9) our ability to successfully complete and integrate acquisitions that we may make from time to time, and (10) other risks described in our filings with the Securities and Exchange Commission, including the Report on Form 10-K filed March 2, 2004.
About Labor Ready
Labor Ready is the nation’s leading provider of temporary manual labor to the light industrial and small business markets. Labor Ready serves more than 275,000 customers by providing a flexible, dependable workforce to such industries as freight handling, warehousing, landscaping, construction and light manufacturing. Annually, Labor Ready puts nearly 600,000 people to work. Labor Ready operates more than 825 locations in the United States, Canada, and the United Kingdom. For additional information, visit Labor Ready’s website at www.laborready.com
For more information, contact:
Steve Cooper, CFO
253-680-8213
Stacey Burke, Director of Public Relations
253-680-8291
LABOR READY, INC.
SUMMARY CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
|
|
|
Quarter Ended |
|
||||
|
|
|
April 2, |
|
March 28, |
|
||
|
|
|
|
|
|
|
||
|
Revenue from services |
|
$ |
208,912 |
|
$ |
172,280 |
|
|
Cost of services |
|
148,185 |
|
121,383 |
|
||
|
Gross profit |
|
60,727 |
|
50,897 |
|
||
|
Selling, general and administrative expenses |
|
56,446 |
|
52,719 |
|
||
|
Depreciation and amortization |
|
2,059 |
|
2,071 |
|
||
|
Income (loss) from operations |
|
2,222 |
|
(3,893 |
) |
||
|
Interest and other expense, net |
|
1,005 |
|
1,062 |
|
||
|
Income (loss) before tax expense (benefit) |
|
1,217 |
|
(4,955 |
) |
||
|
Income tax (benefit) |
|
487 |
|
(1,740 |
) |
||
|
Net income (loss) |
|
$ |
730 |
|
$ |
(3,215 |
) |
|
|
|
|
|
|
|
||
|
Net Income (loss) per common share: |
|
|
|
|
|
||
|
Basic |
|
$ |
0.02 |
|
$ |
(0.08 |
) |
|
Diluted |
|
$ |
0.02 |
|
$ |
(0.08 |
) |
|
|
|
|
|
|
|
||
|
Weighted average shares outstanding: |
|
|
|
|
|
||
|
Basic |
|
41,210 |
|
40,402 |
|
||
|
Diluted |
|
42,385 |
|
40,402 |
|
||
LABOR READY, INC.
SUMMARY CONSOLIDATED BALANCE SHEETS
|
|
|
As of |
|
||||
|
|
|
April 2, |
|
Jan 2, |
|
||
|
Assets |
|
|
|
|
|
||
|
Current assets |
|
|
|
|
|
||
|
Cash and cash equivalents |
|
$ |
77,676 |
|
$ |
83,112 |
|
|
Marketable securities |
|
24,258 |
|
25,257 |
|
||
|
Accounts receivable, net |
|
78,510 |
|
79,620 |
|
||
|
Other current assets |
|
18,806 |
|
16,815 |
|
||
|
Total current assets |
|
199,250 |
|
204,804 |
|
||
|
Property and equipment, net |
|
27,590 |
|
28,489 |
|
||
|
Other assets |
|
141,407 |
|
129,735 |
|
||
|
Total assets |
|
$ |
368,247 |
|
$ |
363,028 |
|
|
|
|
|
|
|
|
||
|
Liabilities and shareholders’ equity |
|
|
|
|
|
||
|
Current liabilities |
|
$ |
68,934 |
|
$ |
70,830 |
|
|
Long-term liabilities |
|
141,927 |
|
138,059 |
|
||
|
Total liabilities |
|
210,861 |
|
208,889 |
|
||
|
Shareholders’ equity |
|
157,386 |
|
154,139 |
|
||
|
Total liabilities and shareholders’ equity |
|
$ |
368,247 |
|
$ |
363,028 |
|
LABOR READY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
|
|
|
Quarter Ended |
|
||||
|
|
|
April 2, |
|
March 28, |
|
||
|
Cash Flows from Operating activities: |
|
|
|
|
|
||
|
Net income (loss) |
|
$ |
730 |
|
$ |
(3,215 |
) |
|
Adjustments to reconcile net income (loss)to net cash provided by operating activities: |
|
|
|
|
|
||
|
Depreciation and amortization |
|
2,252 |
|
2,265 |
|
||
|
Provision for doubtful accounts |
|
1,810 |
|
2,223 |
|
||
|
Deferred income taxes |
|
1,573 |
|
(4,200 |
) |
||
|
Other operating activities |
|
647 |
|
17 |
|
||
|
Changes in operating assets and liabilities: |
|
|
|
|
|
||
|
Accounts receivable |
|
(700 |
) |
(1,050 |
) |
||
|
Workers’ compensation claims reserve |
|
5,404 |
|
1,462 |
|
||
|
Other current assets |
|
(1,627 |
) |
(179 |
) |
||
|
Other current liabilities |
|
1,552 |
|
3,089 |
|
||
|
Net cash provided by operating activities |
|
11,641 |
|
412 |
|
||
|
|
|
|
|
|
|
||
|
Cash Flows from Investing activities: |
|
|
|
|
|
||
|
Capital expenditures |
|
(1,251 |
) |
(556 |
) |
||
|
Purchases of marketable securities |
|
(6,722 |
) |
(8,354 |
) |
||
|
Maturities of marketable securities |
|
7,703 |
|
2,910 |
|
||
|
Other assets |
|
(100 |
) |
— |
|
||
|
Restricted cash and other assets |
|
(13,612 |
) |
18,008 |
|
||
|
Net cash provided by (used in) investing activities |
|
(13,982 |
) |
12,008 |
|
||
|
|
|
|
|
|
|
||
|
Cash Flows from Financing activities: |
|
|
|
|
|
||
|
Proceeds from sale of stock through options and employee benefit plans |
|
1,490 |
|
176 |
|
||
|
Payments on debt |
|
(610 |
) |
(573 |
) |
||
|
Payments for offering costs |
|
— |
|
(3 |
) |
||
|
Checks issued against future deposits |
|
(4,197 |
) |
— |
|
||
|
Purchase and retirement of common stock |
|
— |
|
(4,957 |
) |
||
|
Net cash used in financing activities |
|
(3,317 |
) |
(5,357 |
) |
||
|
Effect of exchange rates on cash |
|
222 |
|
307 |
|
||
|
Net change in cash and cash equivalents |
|
(5,436 |
) |
7,370 |
|
||
|
|
|
|
|
|
|
||
|
Cash and cash equivalents, beginning of period |
|
83,112 |
|
69,255 |
|
||
|
Cash and cash equivalents, end of period |
|
$ |
77,676 |
|
$ |
76,625 |
|