Exhibit 99.2
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Labor Ready Analyst Day
[GRAPHIC]
LABOR READY WE PUT PEOPLE TO WORK
Safe Harbor Statement
Cautionary Note about ForwardLooking Statements
Certain statements made by us in this presentation that are not historical facts or that relate to future plans, events or performances are forwardlooking statements within the meaning of the federal securities laws. Our actual results may differ materially from those expressed in any forwardlooking statements made by us. Forward-looking statements involve a number of risks and uncertainties including, but not limited to, the risks described in the Companys most recent 10K and 10Q filings. All forward-looking statements are qualified by those risk factors.
1
Introduction to Directors
Bob Sullivan
Chairman
Keith Grinstein
Gates McKibbin
Joe Sambataro
Bill Steele
2
Management Team
Joe Sambataro
CEO
Steve Cooper
President & CFO
Bob Breen
VP, Strategic Planning
Chris Burger
Regional VP, Operations
Jim Defebaugh
VP & General Counsel
Derrek Gafford
VP, Finance
Yolanda Hubbard
VP, National Sales & Marketing
Wayne Larkin
Regional VP, Operations
Gary North
Regional VP, Operations
Billie Otto
VP, Chief Information Officer
Noel Wheeler
President & CEO, CLP Resources
3
We Put People to Work.
More than 600,000 people employed annually
[LOGO] |
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The largest supplier of ondemand manual labor with branch locations in the U.S., Canada and the U.K. |
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[LOGO] |
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One of the largest companies focusing exclusively on skilled trades staffing. |
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[LOGO] |
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Southeastern supplier of ondemand manual labor with locations in Florida and other Southeastern states. |
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[LOGO] |
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Supplier of light industrial labor to small and midsize businesses with locations in Florida and other Southeastern states. |
4
Investment Highlights
Market leader in fragmented industry
Large and growing market
Favorable demographic trends
Diverse customer base
Scalable and flexible model
Significant capacity for operating margin expansion
Strong management and controls
Labor Ready is realizing significant operating leverage as it benefits from a growing economy and the maturation of its existing branch network.
5
Consolidated Revenues
[CHART]
(E) - Based on management guidance issued on Nov. 16, 2005
6
Average Sales per Branch
[CHART]
(E) - Based on management guidance issued on Nov. 16, 2005
7
Consolidated Net Income %
[CHART]
(E) - Based on management guidance issued on Nov. 16, 2005
8
Diluted Earnings per Share
[CHART]
(E) - Based on management guidance issued on Nov. 16, 2005
9
Return On Assets
[CHART]
(E) - Based on management guidance issued on Nov. 16, 2005
10
Return On Equity
[CHART]
(E) - Based on management guidance issued on Nov. 16, 2005
11
Growth Industry
U.S. staffing market: $131 billion industry (a)
U.S. industrial staffing: $22 billion (a)
Estimated U.S. ondemand labor market: $6$7 billion (b)
On Demand
Labor
Market Breakdown
[CHART]
(a) Staffing Industry Analysts, 2006 Projection
(b) Company research estimates
12
Diversified Customer Base
More than 300,000 customers
Largest customer represents less than 2% of sales
Average yearly sales per customer of $3,900
More than 400 industry classifications
Sales by Industry in 2005
Construction & Landscaping |
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39 |
% |
Manufacturing |
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18 |
% |
Hospitality, Services & Other |
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18 |
% |
Transportation |
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10 |
% |
Wholesale |
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10 |
% |
Retail |
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6 |
% |
[CHART]
13
Branch Office Model
Matching customer and worker needs
Branch Office |
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Work Site |
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Branch Office |
Recruit workers |
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Work performed |
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Workers exchange time card for pay |
Screen and test |
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Customer signs time card |
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Assign work |
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Provide safety equipment and training |
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14
Strong Value Proposition
Attracting customers with:
Outsource the recruiting, screening and hiring of workers
Eliminate hiring and layoff costs
Access to workers on short notice
Management of labor costs
National scale and multiple locations
100% Satisfaction Guarantee
Attracting workers with:
Flexibility
Work Today Paid Today
Access to fulltime employment opportunities
15
Branch Expansion
Quickly developed branch footprint
Acquired 25 branches in 2004; and 50 in 2005
Opening approximately 45 new locations in 2006 (5% of base)
Number of Branch Offices
[CHART]
16
Temporary Employee Penetration
Temporary employees make up a small but growing share of total employment in the U.S.
[CHART]
* Source: Bureau of Labor Statistics
17
Construction Employment Growth
Construction Employment Growth
(Year over year growth in total permanent employees)
39% of Sales
[CHART]
Source: Bureau of Labor Statistics. Measured on a trailing 12 month basis. Not seasonally adjusted.
18
Manufacturing Employment Growth
Manufacturing Employment Growth
(Year over year growth in total permanent employees)
18% of Sales
[CHART]
Source: Bureau of Labor Statistics. Measured on a trailing 12 month basis. Not seasonally adjusted.
19
Transportation Employment Growth
Transportation Employment Growth
(Year over year growth in total permanent employees)
9% of Sales
[CHART]
Source: Bureau of Labor Statistics. Measured on a trailing 12 month basis. Not seasonally adjusted.
20
Wholesale Employment Growth
Wholesale Trade Employment Growth
(Year over year growth in total permanent employees)
9% of Sales
[CHART]
Source: Bureau of Labor Statistics. Measured on a trailing 12 month basis. Not seasonally adjusted.
21
Retail Employment Growth
Retail Employment Growth
(Year over year growth in total permanent employees)
6% of Sales
[CHART]
Source: Bureau of Labor Statistics. Measured on a trailing 12 month basis. Not seasonally adjusted.
22
Help Supply Employment Growth
Help Supply Employment Growth
(Year over year growth in total employees)
[CHART]
Source: Bureau of Labor Statistics. Measured on a trailing 12 month basis. Not seasonally adjusted.
23
Favorable Demographic Trends
Temporary Employment
expected to be the fifth fastest growing industry over the next decade with nearly 1.8 million new jobs by 2012*
Unskilled Jobs
expected to make up 70% of the top 20 fastest growing occupations*
Construction
expected to be the only U.S. goodsproducing industry with employment growth during the next decade*
TEMPORARY EMPLOYMENT
A GROWTH INDUSTRY
[CHART]
* Source: Bureau of Labor Statistics, 2012 Projections
24
Business
Strategies
and
Financial Update
Key Business Strategies
Grow same branch revenues and profits |
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Expand into new markets |
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Diversify services and brands |
25
Grow Same Branch Revenues & Profits
Sales
Branches currently at 50% of optimal capacity
Comprehensive sales training launched in 2005
CRM System deployed in 2005
New sales force incentive plan slated for 2006
Customer Service
Improved tenure rates of branch teams
Expanded customer call center operations
Expanded services for multibranch customers
Leadership Development
Experienced Sr. Management Team driving strategy
Tenure rates of operations leadership team at all-time high
26
Regional Results
Excludes acquired locations from Spartan Staffing and CLP Resources
[GRAPHIC]
27
Branch Profit Potential
|
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SENSITIVITY ANALYSIS BASED ON |
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Revenue |
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$ |
1,400,000 |
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$ |
1,600,000 |
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$ |
1,800,000 |
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|||
Gross Profit |
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420,000 |
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480,000 |
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540,000 |
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|||
Gross Profit Margin |
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30.0 |
% |
30.0 |
% |
30.0 |
% |
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Branch Expenses |
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216,000 |
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230,000 |
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244,000 |
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As a % of Revenue |
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15.4 |
% |
14.4 |
% |
13.6 |
% |
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Operating Income |
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$ |
204,000 |
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$ |
250,000 |
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$ |
296,000 |
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Operating Income Margin |
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14.6 |
% |
15.6 |
% |
16.4 |
% |
28
Targeted Incremental Profit %
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Percentage of |
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Incremental |
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Same Branch |
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Sales |
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Revenue |
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100 |
% |
Gross Profit |
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30 |
% |
Variable Operating Costs(A) |
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14 |
% |
Income before Taxes |
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16 |
% |
Net Income after Taxes |
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10 |
% |
2005(E) Net Income After Taxes Is Expected to be 5.0% as a percentage of revenues.
(A) - Includes managements estimate of variable branch, region, and corporate costs as a percentage of incremental revenue.
(E) - Based on management guidance issued on Nov. 16, 2005
29
Branch Maturity Drives Revenue
Branch Revenue and Maturity (2002 2004 Avg.)
[CHART]
AVERAGE BRANCH AGE = 6.8 YEARS
Excludes acquired locations from Spartan Staffing and CLP Resources.
30
Operating Leverage Drives Profits
Earnings Per Share Sensitivity Analysis (a)
[CHART]
(a) Earnings per share sensitivity analysis based on consistent gross profit margins, managements estimates of fixed and variable expenses, regional and back office overhead and related assumptions, at varying levels of per office revenues.
(E) - - Based on management guidance issued on Nov. 16, 2005
31
Expand into New Markets
Holding New Branch Openings to 5% of Base
Limits dilution to current earnings
Modest number of new branch openings keeps field management focused on growing our existing branches
Avoids overinvestment in the event of economic downturn
Consistent approach to levels of investment for new operations
32
Resource Allocation:
How We Decide Where to Expand
Market potential and return on investment
Human capital availability and readiness
Speed to breakeven
Track record of successful new branch expansion
33
Brand Distinctions
[LOGO] |
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[LOGO] |
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[LOGO] |
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ON DEMAND |
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LIGHT INDUSTRIAL |
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SKILLED TRADES |
Short Assignments |
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Longer Assignments |
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Longer Assignments |
All Industries |
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Manufacturing & Warehousing |
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Construction |
$6$7 per Hour Wage Rate Daily Pay |
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$7$8 per Hour Wage Rate Weekly Pay |
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$12$18 per Hour Wage Rate Weekly Pay |
90% of Marketing |
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Marketing Efforts Split 50/50 |
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Marketing Efforts Split 50/50 |
Focused on Customers |
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Between Customers and Workers |
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Between Customers and Workers |
Small-Medium Customers |
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SmallMedium Customers |
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SmallMedium Customers |
34
New Branch Economics
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[LOGO] |
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[LOGO] |
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[LOGO] |
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Capital Expenditure Costs |
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$ |
35,000 |
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$ |
50,000 |
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$ |
70,000 |
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Revenue Expectations |
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[CHART] |
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[CHART] |
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[CHART] |
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(in thousands) |
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Gross Margins |
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30-32 |
% |
22-24 |
% |
28-30 |
% |
|||
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Initial Expense Structure |
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$ |
12,000 per Mo. |
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$ |
15,000 per Mo. |
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$ |
25,000 per Mo. |
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Targeted Breakeven Period |
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12 Months |
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15 Months |
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19 Months |
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Mature Branch Profitability (a) |
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12 |
% |
12 |
% |
12 |
% |
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Targeted After-tax Return on Investment |
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35 |
% |
35 |
% |
35 |
% |
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(a)Targeted branch-level profitability as a percentage of revenues in the fourth year of operation. Excludes regional and corporate costs, depreciation, amortization, interest and taxes.
35
2006 Labor Ready Expansion Plans
2025 New Labor Ready Locations
Disbursed throughout North America
No New Locations Planned for UK in 2006
[GRAPHIC]
36
2006 Spartan Expansion Plans
10 New locations in 2006 [LOGO]
Areas of Expansion Focus:
Adjacent Markets
[GRAPHIC]
37
2006 CLP Expansion Plans
12 New Locations in 2006 [LOGO]
Areas of Expansion Focus:
Texas and Florida
[GRAPHIC]
38
Diversify Services & Brands
Rationale
Common customer base
Leverage recruiting resources
Channel synergies
Opportunity to create a growth platform
Opportunity to leverage management and systems
Constraints
Fit and culture
Financial capital / investment return
Human capital
Speed of integration
39
Significant Growth Opportunities
Available Through Diversification
Executing a strategy to build the dominant national provider in the fragmented temporary light industrial and skilled trades staffing industries, serving small- and mid-sized companies.
TEAMING UP WITH LABOR READY
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Diversification of |
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Expansion into |
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Cross-selling |
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Recruiting |
Attractive |
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Attractive Industry Dynamics |
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40
Targeted Diversification
[GRAPHIC]
41
Spartan Group Acquisition
Acquired April 1, 2004
2003 Revenues of $50 Million
2003 Cash Flow* of $2.3 Million
$9.8 Million Purchase Price
Accretive: Projected 2005 Cash Flow* of $3.9 Million
[LOGO]
Revenues
[CHART]
Cash Flow*
[CHART]
*Defined as net income before interest, taxes, depreciation and amortization measured over the trailing 12 months ended September 2005. Includes acquired branches only.
42
CLP Resources Acquisition
Acquired May 27, 2005
2004 Revenues of $114 Million
2004 Cash Flow* of $7.5 Million
$46 Million Purchase Price
Accretive: Projected 2005
Cash Flow* of $6.5 Million
[LOGO]
CLP Resources Sales Growth
[CHART]
*Defined as net income before interest, taxes, depreciation and amortization.
43
Speed of Integration
Integration Phases
1. Culture
2. Policies and Systems
3. Cross Selling and Employee Referrals
44
Financial Highlights
Improving revenue and profitability
Strong gross margins
Controlled operating costs
Significant operating leverage
Strong balance sheet
45
Long-Term Growth
Annual Revenue and Operating Income (in $M)
[CHART]
|
(E) - Based on management guidance issued on Nov. 16, 2005 |
46
Monthly Sales Growth Trends
[CHART]
47
Consistent Gross Margin
Gross Margin as a Percentage of Revenue
[CHART]
|
(E) - Based on management guidance issued on Nov. 16, 2005 |
48
Selling, General & Admin. Costs
Trailing four quarters as a percentage of revenue
[CHART]
|
(E) - Based on management guidance issued on Nov. 16, 2005 |
49
Net Income
Trailing four quarters as a percentage of revenue
[CHART]
|
(E) - Based on management guidance issued on Nov. 16, 2005 |
50
2005(E) Net Income Growth
[CHART]
|
(E) - Based on management guidance issued on Nov. 16, 2005 |
51
Strong Balance Sheet
|
|
Q3 2005 |
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Q4 2004 |
|
||
Cash and investments |
|
$ |
130M |
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$ |
141M |
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Current ratio |
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3.0 |
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3.2 |
|
||
Restricted cash |
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$ |
147M |
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$ |
129M |
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Workers compensation reserve |
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$ |
168M |
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$ |
136M |
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Long term debt |
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$ |
2M |
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$ |
73M |
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Shareholders equity |
|
$ |
330M |
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$ |
202M |
|
52
Financial Outlook
|
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2003 |
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2004 |
|
2005(E) |
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2006 Forecast(E) |
|
||
Revenues |
|
$ |
891 |
|
$ |
1044 |
|
$1,225 - 1,230 |
|
$1,370 - $1,390 |
|
Organic Growth |
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3 |
% |
12 |
% |
9 - 10 |
% |
7 - 9 |
% |
||
Acquisition Growth |
|
0 |
% |
5 |
% |
8 |
% |
4 |
% |
||
Total Revenue Growth |
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3 |
% |
17 |
% |
17 - 18 |
% |
11 - 13 |
% |
||
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||
Net Income |
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$ |
18 |
|
$ |
39 |
|
$59 - $60 |
|
$71 - $74 |
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Net Income Growth |
|
51 |
% |
107 |
% |
54 - 57 |
% |
18 - 23 |
% |
||
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Share-based Payments |
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$0.02 |
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$0.06 |
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Earnings per Share |
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$ |
0.41 |
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$ |
0.75 |
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$1.13$1.15 |
|
$1.30$1.35 |
|
|
Amounts in millions of U.S. dollars, except per share amounts. |
|
(E) - Based on management guidance issued on Nov. 16, 2005 |
53
Investment Highlights
Market leader in fragmented industry
Large and growing market
Favorable demographic trends
Diverse customer base
Scalable and flexible model
Significant capacity for operating margin expansion
Strong management and controls
Labor Ready is realizing significant
operating leverage as it benefits from
a growing economy and the
maturation of its existing branch network.
54