TrueBlue Reports Second Quarter 2019 Results

TrueBlue (NYSE:TBI) today announced its second quarter results for 2019.

Second quarter revenue was $589 million, a decrease of 4 percent, compared to revenue of $614 million in the second quarter of 2018. Net income per diluted share was $0.49, an increase of 11 percent, compared to $0.44 in the second quarter of 2018. Adjusted net income1 per diluted share was $0.64, an increase of 12 percent, compared to $0.57 in the second quarter of 2018.

“We experienced a slower pace of demand this quarter, attributable to lower volumes within the businesses of our clients,” said Patrick Beharelle, CEO of TrueBlue. “I’m pleased that we were able to effectively manage costs, resulting in net income and EPS growth, while making progress on our digital growth initiatives.

“The second quarter also marks the five-year anniversary of our acquisition of Seaton and the one-year anniversary of our acquisition of TMP Holdings,” Mr. Beharelle continued. “The Seaton acquisition transformed the company into a diversified workforce solutions company and provided entry into the RPO market that now represents 30 percent of the company’s segment profit.2 The TMP acquisition bolstered our global RPO growth strategy, providing entry into the U.K. and accelerating our ability to compete for multi-continent deals.”

2019 Outlook

TrueBlue estimates revenue for the third quarter of 2019 will range from $613 million to $638 million. The company also estimates net income per diluted share will range from $0.50 to $0.60 and adjusted net income per diluted share will range from $0.61 to $0.71.

Management will discuss second quarter 2019 results on a webcast at 2 p.m. PDT (5 p.m. EDT), today, Monday, Jul. 29, 2019. The webcast can be accessed on TrueBlue’s website: www.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 2018, TrueBlue connected approximately 730,000 people with work. Its PeopleReady segment offers industrial staffing services, PeopleManagement offers contingent and productivity-based on-site industrial staffing services, and PeopleScout offers recruitment process outsourcing (RPO) and managed service provider (MSP) solutions to a wide variety of industries. Learn more at www.trueblue.com.

1 See the financial statements accompanying the release and the company’s website for more information on non-GAAP terms.

2 Segment profit calculations based on the trailing twelve months ended June 2019. Segment profit includes revenue, related cost of services, and ongoing operating expenses directly attributable to the reportable segment. Segment profit excludes goodwill and intangible impairment charges, depreciation and amortization expense, unallocated corporate general and administrative expense, interest, other income and expense, income taxes, and other adjustments not considered to be ongoing.

Forward-looking statements

This document contains forward-looking statements relating to our plans and expectations, 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, (2) our ability to attract and retain clients, (3) our ability to attract sufficient qualified candidates and employees to meet the needs of our clients, (4) our ability to maintain profit margins, (5) new laws and regulations that could affect our operations or financial results, (6) our ability to successfully complete and integrate acquisitions, (7) our ability to successfully execute on business strategies to further digitize our business model, and (8) 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 reference 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.

TRUEBLUE, INC.

SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

13 Weeks Ended

26 Weeks Ended

(in thousands, except per share data)

Jun 30, 2019

Jul 1, 2018

Jun 30, 2019

Jul 1, 2018

Revenue from services

588,594

614,301

1,140,946

1,168,689

Cost of services

430,277

448,717

834,253

859,837

Gross profit

158,317

165,584

306,693

308,852

Selling, general and administrative expense

127,599

134,207

257,260

259,970

Depreciation and amortization

9,827

10,101

19,779

20,191

Income from operations

20,891

21,276

29,654

28,691

Interest and other income (expense), net

827

(968

)

1,380

1,236

Income before tax expense

21,718

20,308

31,034

29,927

Income tax expense

2,312

2,576

3,352

3,440

Net income

19,406

17,732

27,682

26,487

Net income per common share:

Basic

0.50

0.44

0.71

0.66

Diluted

0.49

0.44

0.70

0.65

Weighted average shares outstanding:

Basic

39,163

40,227

39,264

40,335

Diluted

39,554

40,469

39,619

40,576

TRUEBLUE, INC.

SUMMARY CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands)

Jun 30, 2019

Dec 30, 2018

ASSETS

Cash and cash equivalents

23,124

46,988

Accounts receivable, net

335,488

355,373

Other current assets

33,730

27,466

Total current assets

392,342

429,827

Property and equipment, net

58,647

57,671

Restricted cash and investments

222,556

235,443

Goodwill and intangible assets, net

318,484

328,695

Operating lease right-of-use assets

37,978

—

Other assets, net

64,880

63,208

Total assets

1,094,887

1,114,844

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities

212,718

225,526

Long-term debt

24,700

80,000

Operating lease long-term liabilities

25,995

—

Other long-term liabilities

216,467

217,879

Total liabilities

479,880

523,405

Shareholders’ equity

615,007

591,439

Total liabilities and shareholders’ equity

1,094,887

1,114,844

TRUEBLUE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

26 Weeks Ended

(in thousands)

Jun 30, 2019

Jul 1, 2018

Cash flows from operating activities:

Net income

27,682

26,487

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

19,779

20,191

Provision for doubtful accounts

3,761

5,571

Stock-based compensation

5,260

5,983

Deferred income taxes

2,393

1,373

Non-cash lease expense

6,934

—

Other operating activities

(2,072

)

102

Changes in operating assets and liabilities:

Accounts receivable

16,162

888

Income tax receivable

(6,347

)

(3,641

)

Other assets

(4,472

)

(3,522

)

Accounts payable and other accrued expenses

(16,542

)

3,468

Accrued wages and benefits

(4,667

)

(1,528

)

Workers’ compensation claims reserve

(7,109

)

(9,235

)

Operating lease liabilities

(6,957

)

—

Other liabilities

3,174

3,304

Net cash provided by operating activities

36,979

49,441

Cash flows from investing activities:

Capital expenditures

(11,064

)

(6,468

)

Acquisition of business

—

(22,742

)

Divestiture of business

—

8,800

Purchases of restricted investments

(11,315

)

(10,730

)

Maturities of restricted investments

19,685

13,044

Net cash used in investing activities

(2,694

)

(18,096

)

Cash flows from financing activities:

Purchases and retirement of common stock

(9,077

)

(19,065

)

Net proceeds from employee stock purchase plans

700

757

Common stock repurchases for taxes upon vesting of restricted stock

(1,631

)

(2,403

)

Net change in revolving credit facility

(55,300

)

21,300

Payments on debt

—

(22,856

)

Other

(119

)

—

Net cash used in financing activities

(65,427

)

(22,267

)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

560

(919

)

Net change in cash, cash equivalents, and restricted cash

(30,582

)

8,159

Cash, cash equivalents and restricted cash, beginning of period

102,450

73,831

Cash, cash equivalents and restricted cash, end of period

71,868

81,990

TRUEBLUE, INC.

SEGMENT DATA

(Unaudited)

13 Weeks Ended

(in thousands)

Jun 30, 2019

Jul 1, 2018

Revenue from services:

PeopleReady

369,261

377,460

PeopleManagement

153,530

178,839

PeopleScout

65,803

58,002

Total company

588,594

614,301

Segment profit (1):

PeopleReady

21,795

23,198

PeopleManagement

4,128

4,712

PeopleScout

11,223

11,320

37,146

39,230

Corporate unallocated expense

(3,634

)

(5,868

)

Total company Adjusted EBITDA (2)

33,512

33,362

Work Opportunity Tax Credit processing fees (3)

(240

)

(264

)

Acquisition/integration costs (4)

(673

)

(457

)

Other adjustments (5)

(1,881

)

(1,264

)

EBITDA (2)

30,718

31,377

Depreciation and amortization

(9,827

)

(10,101

)

Interest and other income (expense), net

827

(968

)

Income before tax expense

21,718

20,308

Income tax expense

(2,312

)

(2,576

)

Net income

19,406

17,732

(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 goodwill and intangible impairment charges, depreciation and amortization expense, unallocated corporate general and administrative expense, interest, other income and expense, 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 the Work Opportunity Tax Credits, which are designed to encourage employers to hire workers from certain targeted groups with higher than average unemployment rates.

(4)

Acquisition/integration costs relate to the acquisition of TMP Holdings LTD completed on June 12, 2018.

(5)

Other adjustments for the 13 weeks ended June 30, 2019 include implementation costs for cloud-based systems of $1.1 million, amortization of software as a service assets of $0.5 million which is reported in selling, general and administrative expense, a workforce reduction charge primarily associated with employee reductions in the PeopleReady business of $0.5 million, and reduced costs associated with the CEO transition of $0.2 million. Other adjustments for the 13 weeks ended July 1, 2018 include implementation costs for cloud-based systems of $1.3 million.

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 Measure

Definition

Purpose of Adjusted Measures

EBITDA and Adjusted EBITDA

EBITDA excludes from net income:

- interest and other income (expense), net,

- income taxes, and

- depreciation and amortization.

Adjusted EBITDA, further excludes:

- Work Opportunity Tax Credit third-party processing fees,

- acquisition/integration costs and

- other adjustments.

- 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 net income and Adjusted net income, per diluted share

Net income and net income per diluted share, excluding:

- amortization of intangibles of acquired businesses,

- acquisition/integration costs,

- gain on divestiture,

- other adjustments,

- tax effect of each adjustment to U.S. GAAP net income, and

- adjust income taxes to the expected effective tax rate.

- 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.

Organic revenue

Organic revenue excludes the first 12 months of operations of acquired businesses.

Free cash flow

Net cash provided by operating activities, minus cash purchases for property and equipment.

- Used by management to assess cash flows.

1. RECONCILIATION OF U.S. GAAP NET INCOME TO ADJUSTED NET INCOME AND ADJUSTED NET INCOME, PER DILUTED SHARE

(Unaudited)

Q2 2019

Q2 2018

Q3 2019 Outlook*

13 Weeks Ended

(in thousands, except for per share data)

Jun 30, 2019

Jul 1, 2018

Sep 29, 2019

Net income

19,406

17,732

$ 19,800 — $ 23,700

Gain on divestiture (1)

—

290

—

Amortization of intangible assets of acquired businesses (2)

4,957

5,174

3,900

Acquisition/integration costs (3)

673

457

400

Other adjustments (4)

1,881

1,264

700

Tax effect of adjustments to net income (5)

(1,052

)

(1,150

)

(700)

Adjustment of income taxes to normalized effective rate (6)

(729

)

(673

)

—

Adjusted net income

25,136

23,094

$ 24,100 — $ 28,000

Adjusted net income, per diluted share

0.64

0.57

$ 0.61 — $ 0.71

Diluted weighted average shares outstanding

39,554

40,469

39,400

*Totals may not sum due to rounding

2. RECONCILIATION OF U.S. GAAP NET INCOME TO EBITDA AND ADJUSTED EBITDA

(Unaudited)

Q2 2019

Q2 2018

Q3 2019 Outlook*

13 Weeks Ended

(in thousands)

Jun 30, 2019

Jul 1, 2018

Sep 29, 2019

Net income

19,406

17,732

$ 19,800 — $ 23,700

Income tax expense

2,312

2,576

3,200 — 3,900

Interest and other (income) expense, net

(827

)

968

(700)

Depreciation and amortization

9,827

10,101

8,700

EBITDA

30,718

31,377

31,100 — 35,600

Work Opportunity Tax Credit processing fees (7)

240

264

200

Acquisition/integration costs (3)

673

457

400

Other adjustments (4)

1,881

1,264

700

Adjusted EBITDA

33,512

33,362

$ 32,400 — $ 36,900

* Totals may not sum due to rounding

3. RECONCILIATION OF U.S. GAAP REVENUE TO ORGANIC REVENUE

(Unaudited)

Total company

PeopleScout

Q2 2019

Q2 2018

Q2 2019

Q2 2018

13 Weeks Ended

(in thousands)

Jun 30, 2019

Jul 1, 2018

Jun 30, 2019

Jul 1, 2018

Revenue from services

588,594

614,301

65,803

58,002

Acquisition revenue excluded (3)

(10,324

)

—

(10,324

)

—

Organic revenue

578,270

614,301

55,479

58,002

4. RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOWS

(Unaudited)

Q2 2019

2018

2017

2016

26 Weeks Ended

52 Weeks Ended

53 Weeks Ended

(in thousands)

Jun 30, 2019

Dec 30, 2018

Dec 31, 2017

Jan 1, 2017

Net cash provided by operating activities

36,979

125,692

100,134

260,703

Capital expenditures

(11,064

)

(17,054

)

(21,958

)

(29,042

)

Free cash flows

25,915

108,638

78,176

231,661

(1)

Gain on the divestiture of our PlaneTechs business sold mid-March 2018.

(2)

Amortization of intangible assets of acquired businesses.

(3)

Acquisition/integration costs for the acquisition of TMP Holding LTD ("TMP") completed on June 12, 2018. Organic revenue excludes the first 12 months of operations of TMP.

(4)

(5)

Total tax effect of each of the adjustments to U.S. GAAP net income using the expected ongoing rate of 14 percent for 2019 and 16 percent for 2018.

(6)

Adjustment of the effective income tax rate to the expected ongoing rate of 14 percent for 2019 and 16 percent for 2018.

(7)

View source version on businesswire.com: https://www.businesswire.com/news/home/20190729005608/en/

Derrek Gafford, Executive Vice President and CFO 253-680-8214

TrueBlue (NYSE:TBI)
Historical Stock Chart
From Mar 2024 to Apr 2024