EXHIBIT 99.1
FOR IMMEDIATE RELEASE:
LABOR READY REPORTS RECORD ANNUAL REVENUES AND NET INCOME
Net Income for the Fourth Quarter 2004 Increased 100 Percent
TACOMA, WA, February 2, 2005—Labor Ready, Inc. (NYSE: LRW) reported that revenue for the 13-week fourth quarter ended Dec. 31, 2004 increased 9.4 percent to $272.1 million from $248.7 million for the 14-week fourth quarter of 2003. On a comparable 13-week basis, revenue for the fourth quarter of 2004 increased 19.2 percent compared to the fourth quarter of 2003. Net income for the quarter improved 100 percent to $10.4 million, or $0.21 per share, from $5.2 million, or $0.12 per share, a year earlier.
Revenue for 2004 increased 17.2 percent to $1,044 million from $891 million in 2003. Net income improved 110 percent to $36.8 million, or $0.76 per share, from $17.5 million, or $0.41 per share, for fiscal 2003.
“The strength of our operations team has continued to build throughout our 15 year history,” said Labor Ready President and CEO Joe Sambataro. “Our results in 2004 reflected solid top line growth, higher gross margins, and strong cost controls. We continue to focus on our strategies of increasing revenue and profitability of our existing branches, penetrating new markets in the U.S., Canada and the United Kingdom, and diversifying our service offerings for our customers.”
Gross margin for the fourth quarter of 2004 was 31.4 percent compared to 29.7 percent in the fourth quarter 2003, a 1.7 percent improvement. Operating expenses for the fourth quarter 2004 decreased by 0.9 percent of revenue.
According to Sambataro, approximately 1.1 percent of the improvement in gross margin was attributable to increased pricing and improved safety trends. An additional 0.6 percent of the margin improvement resulted from certain adjustments in connection with the company’s workers’ compensation costs.
“We have been working diligently to expand our safety procedures in regard to our temporary workers and reduce risk exposure through better client selection,” said Sambataro. “I am pleased to report that we are making significant progress in reducing our overall workers’ compensation expense through these programs. With the improvements in safety and reduced risk exposure, claim frequency has dropped approximately 10 percent from 2003 levels. We expect these trends to continue and estimate gross margin will average 30.5 percent in 2005.”
The Spartan and Workforce branches the company acquired at the beginning of the second quarter of 2004 provided 6 percent of Labor Ready’s year-over-year revenue growth during the fourth quarter and continued to make a positive contribution to the company’s quarterly and year-to-date net income results. Labor Ready anticipates opening 35 new branch locations in 2005, including 15 Spartan branches, 15 branches in smaller markets in the U.S. and Canada, and five branches in the United Kingdom.
For the first quarter of 2005, the company estimates revenue in the range of $240 million to $245 million, with net income per share for the quarter between $0.09 and $0.11. Based on current trends, revenue for the year 2005 is estimated to be in the range of $1,140 million to $1,160 million, with net income per share for the year in the range of $0.90 to $0.95. These estimates have been calculated taking into consideration the impact of expensing stock options in accordance with FAS 123R, Share Based Payment, for the last half of 2005.
Management will discuss fourth quarter 2004 results on a conference call at 8:00 a.m. (PT) Thursday, Feb. 3, 2005. 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, gross margins and net income anticipated for future periods, improvements in safety and workers’ compensation claims and costs, strategies for increasing revenue and net income, 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 without limitation the following: 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-Q filed Nov. 15, 2004.
About Labor Ready
Labor Ready is the nation’s leading provider of temporary manual labor, serving more than 300,000 customers by providing a flexible, dependable workforce to such industries as freight handling, warehousing, landscaping, construction and light manufacturing. Annually, Labor Ready puts more than 600,000 people to work. Labor Ready operates more than 800 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)
|
|
|
Thirteen Weeks Ended |
|
Year Ended |
|
||||||||
|
|
|
December 31, |
|
Jan 2, |
|
December 31, |
|
Jan 2, |
|
||||
|
|
|
|
|
|
|
|
|
|
|
||||
|
Revenue from services |
|
$ |
272,134 |
|
$ |
248,730 |
|
$ |
1,044,236 |
|
$ |
891,191 |
|
|
Cost of services |
|
186,811 |
|
174,842 |
|
727,059 |
|
624,878 |
|
||||
|
Gross profit |
|
85,323 |
|
73,888 |
|
317,177 |
|
266,313 |
|
||||
|
Selling, general and administrative expenses |
|
65,515 |
|
62,171 |
|
244,906 |
|
226,019 |
|
||||
|
Depreciation and amortization |
|
2,473 |
|
2,143 |
|
9,012 |
|
8,395 |
|
||||
|
Income from operations |
|
17,335 |
|
9,574 |
|
63,259 |
|
31,899 |
|
||||
|
Interest and other expense, net |
|
562 |
|
1,048 |
|
2,599 |
|
4,332 |
|
||||
|
Income before tax expense |
|
16,773 |
|
8,526 |
|
60,660 |
|
27,567 |
|
||||
|
Income tax |
|
6,395 |
|
3,350 |
|
23,852 |
|
10,036 |
|
||||
|
Net income |
|
$ |
10,378 |
|
$ |
5,176 |
|
$ |
36,808 |
|
$ |
17,531 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Net Income per common share: |
|
|
|
|
|
|
|
|
|
||||
|
Basic |
|
$ |
0.25 |
|
$ |
0.13 |
|
$ |
0.88 |
|
$ |
0.43 |
|
|
Diluted |
|
$ |
0.21 |
|
$ |
0.12 |
|
$ |
0.76 |
|
$ |
0.41 |
|
|
|
|
|
|
|
|
|
|
|
|
||||
|
Weighted average shares outstanding: |
|
|
|
|
|
|
|
|
|
||||
|
Basic |
|
42,082 |
|
40,737 |
|
41,674 |
|
40,387 |
|
||||
|
Diluted |
|
52,827 |
|
51,738 |
|
52,289 |
|
50,916 |
|
||||
LABOR READY, INC.
SUMMARY CONSOLIDATED BALANCE SHEETS
|
|
|
As of |
|
||||
|
|
|
December 31, |
|
Jan 2, |
|
||
|
Assets |
|
|
|
|
|
||
|
Current assets |
|
|
|
|
|
||
|
Cash and cash equivalents |
|
$ |
128,817 |
|
$ |
83,112 |
|
|
Marketable securities |
|
11,947 |
|
25,257 |
|
||
|
Accounts receivable, net |
|
94,313 |
|
79,620 |
|
||
|
Other current assets |
|
24,719 |
|
16,815 |
|
||
|
Total current assets |
|
259,796 |
|
204,804 |
|
||
|
Property and equipment, net |
|
26,289 |
|
28,489 |
|
||
|
Other assets |
|
158,471 |
|
140,424 |
|
||
|
Total assets |
|
$ |
444,556 |
|
$ |
373,717 |
|
|
|
|
|
|
|
|
||
|
Liabilities and shareholders’ equity |
|
|
|
|
|
||
|
Current liabilities |
|
$ |
76,462 |
|
$ |
70,830 |
|
|
Long-term liabilities |
|
165,205 |
|
148,748 |
|
||
|
Total liabilities |
|
241,667 |
|
219,578 |
|
||
|
Shareholders’ equity |
|
202,889 |
|
154,139 |
|
||
|
Total liabilities and shareholders’ equity |
|
$ |
444,556 |
|
$ |
373,717 |
|
LABOR READY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
In Thousands
(Unaudited)
|
|
|
52 and 53 Weeks Ended |
|
||||
|
|
|
December 31, |
|
Jan 2, |
|
||
|
Cash Flows from Operating activities: |
|
|
|
|
|
||
|
Net income |
|
$ |
36,808 |
|
$ |
17,531 |
|
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|
|
||
|
Depreciation and amortization |
|
9,787 |
|
9,276 |
|
||
|
Provision for doubtful accounts |
|
9,599 |
|
10,129 |
|
||
|
Deferred income taxes |
|
13,572 |
|
(2,099 |
) |
||
|
Other operating activities |
|
2,788 |
|
1,957 |
|
||
|
Changes in operating assets and liabilities: |
|
|
|
|
|
||
|
Accounts receivable |
|
(24,292 |
) |
(22,762 |
) |
||
|
Workers’ compensation claims reserve |
|
23,454 |
|
14,905 |
|
||
|
Income taxes |
|
(13,783 |
) |
(1,762 |
) |
||
|
Other assets |
|
259 |
|
429 |
|
||
|
Other current liabilities |
|
5,529 |
|
6,193 |
|
||
|
Net cash provided by operating activities |
|
63,721 |
|
33,797 |
|
||
|
|
|
|
|
|
|
||
|
Cash Flows from Investing activities: |
|
|
|
|
|
||
|
Purchases of marketable securities |
|
(15,379 |
) |
(29,562 |
) |
||
|
Maturities of marketable securities |
|
28,639 |
|
25,606 |
|
||
|
Capital expenditures |
|
(5,247 |
) |
(4,417 |
) |
||
|
Purchase of Spartan Staffing, Inc. |
|
(9,890 |
) |
— |
|
||
|
Other Assets |
|
(196 |
) |
(167 |
) |
||
|
Restricted cash and other assets |
|
(17,805 |
) |
(15,491 |
) |
||
|
Proceeds from sale of property and equipment |
|
43 |
|
— |
|
||
|
Net cash used in investing activities |
|
(19,835 |
) |
(24,031 |
) |
||
|
|
|
|
|
|
|
||
|
Cash Flows from Financing activities: |
|
|
|
|
|
||
|
Proceeds from sale of stock through options and employee benefit plans |
|
7,370 |
|
5,542 |
|
||
|
Payments on debt |
|
(2,750 |
) |
(2,435 |
) |
||
|
Payments for offering costs |
|
— |
|
(22 |
) |
||
|
Checks issued against future deposits |
|
(4,197 |
) |
4,197 |
|
||
|
Purchase and retirement of common stock |
|
— |
|
(4,957 |
) |
||
|
Net cash provided by financing activities |
|
423 |
|
2,325 |
|
||
|
Effect of exchange rates on cash |
|
1,396 |
|
1,766 |
|
||
|
|
|
|
|
|
|
||
|
Net change in cash and cash equivalents |
|
45,705 |
|
13,857 |
|
||
|
|
|
|
|
|
|
||
|
Cash and cash equivalents, beginning of period |
|
83,112 |
|
69,255 |
|
||
|
Cash and cash equivalents, end of period |
|
$ |
128,817 |
|
$ |
83,112 |
|