TrueBlue (NYSE:TBI) today announced its second quarter results
for 2020.
Second quarter revenue was $359 million, a decrease of 39
percent compared to revenue of $589 million in the second quarter
of 2019. Net loss per diluted share was $0.23 compared to net
income per diluted share of $0.49 in the second quarter of 2019.
Adjusted net loss1 per diluted share was $0.12 compared to adjusted
net income per diluted share of $0.64 in the second quarter of
2019.
“I want to thank our employees, associates, and clients for
their outstanding efforts to safely serve the needs of our
communities and essential businesses over the past several months,”
said Patrick Beharelle, CEO of TrueBlue. “We will continue to face
revenue challenges until the economic recovery from COVID-19 gains
greater momentum and clients are back on their feet.”
“We experienced a significant decline in the demand for our
services during the quarter,” Mr. Beharelle continued. “We saw
moderate demand improvement toward the end of the quarter which
continued into July. Our actions to reduce expenses while
maintaining our operational strengths are paying off. These actions
not only help preserve profitability, but also help maintain our
balance sheet strength and allow us to continue to invest in our
digital strategies.”
2020 Outlook
Due to the uncertainty surrounding COVID-19 and its impact on
the business environment, TrueBlue is not providing customary
quarterly guidance. However, the company is providing certain
forward-looking information to help investors form their own
estimates, which can be found in the quarterly earnings
presentation filed today.
Management will discuss second quarter 2020 results on a webcast
at 2 p.m. PDT (5 p.m. EDT), today, Monday, Jul. 27, 2020. 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 2019, TrueBlue connected approximately
724,000 people with work. Its PeopleReady segment offers on-demand,
industrial staffing, PeopleManagement offers contingent, on-site
industrial staffing and commercial driver 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.
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) the continued impact of COVID-19 and
related economic impact and governmental response, (3) our ability
to successfully reduce operating expenses and otherwise adapt to
the changing economic environment caused by COVID–19, (4) our
ability to access sufficient capital to finance our operations,
including our ability to comply with or obtain waivers for
covenants contained in our revolving credit facility, (5) our
ability to attract and retain clients, (6) our ability to attract
sufficient qualified candidates and employees to meet the needs of
our clients, (7) our ability to maintain profit margins, (8) new
laws and regulations that could affect our operations or financial
results, (9) our ability to successfully execute on business
strategies to further digitize our business model, and (10) 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 references 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 28, 2020
Jun 30, 2019
Jun 28, 2020
Jun 30, 2019
Revenue from services
$
358,944
$
588,594
$
853,196
$
1,140,946
Cost of services
275,719
431,911
643,812
837,568
Gross profit
83,225
156,683
209,384
303,378
Selling, general and administrative
expense
97,200
125,965
214,581
253,945
Depreciation and amortization
7,256
9,827
16,350
19,779
Goodwill and intangible asset impairment
charge
—
—
175,189
—
Income (loss) from operations
(21,231
)
20,891
(196,736
)
29,654
Interest and other income (expense),
net
(412
)
827
(149
)
1,380
Income (loss) before tax expense
(benefit)
(21,643
)
21,718
(196,885
)
31,034
Income tax expense (benefit)
(13,475
)
2,312
(38,223
)
3,352
Net income (loss)
$
(8,168
)
$
19,406
$
(158,662
)
$
27,682
Net income (loss) per common
share:
Basic
$
(0.23
)
$
0.50
$
(4.39
)
$
0.71
Diluted
$
(0.23
)
$
0.49
$
(4.39
)
$
0.70
Weighted average shares
outstanding:
Basic
35,077
39,163
36,166
39,264
Diluted
35,077
39,554
36,166
39,619
TRUEBLUE, INC.
SUMMARY CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(in thousands)
Jun 28, 2020
Dec 29, 2019
ASSETS
Cash and cash equivalents
$
92,051
$
37,608
Accounts receivable, net
224,078
342,303
Other current assets
43,772
41,822
Total current assets
359,901
421,733
Property and equipment, net
67,447
66,150
Restricted cash and investments
217,844
230,932
Goodwill and intangible assets, net
126,617
311,171
Other assets, net
131,192
106,169
Total assets
$
903,001
$
1,136,155
LIABILITIES AND SHAREHOLDERS’
EQUITY
Current liabilities
$
220,025
$
230,806
Long-term debt, less current portion
17,949
37,100
Other long-term liabilities
252,266
242,276
Total liabilities
490,240
510,182
Shareholders’ equity
412,761
625,973
Total liabilities and shareholders’
equity
$
903,001
$
1,136,155
TRUEBLUE, INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
26 Weeks Ended
(in thousands)
Jun 28, 2020
Jun 30, 2019
Cash flows from operating
activities:
Net income (loss)
$
(158,662
)
$
27,682
Adjustments to reconcile net income
(loss) to net cash provided by operating activities:
Depreciation and amortization
16,350
19,779
Goodwill and intangible asset impairment
charge
175,189
—
Provision for doubtful accounts
5,923
3,761
Stock-based compensation
4,345
5,260
Deferred income taxes
(27,049
)
2,393
Non-cash lease expense
7,454
6,934
Other operating activities
2,669
(2,072
)
Changes in operating assets and
liabilities:
Accounts receivable
111,803
16,162
Income tax receivable
(7,291
)
(6,347
)
Other assets
4,682
(4,472
)
Accounts payable and other accrued
expenses
(22,197
)
(16,542
)
Accrued wages and benefits
4,921
(4,667
)
Workers’ compensation claims reserve
(5,668
)
(7,109
)
Operating lease liabilities
(7,643
)
(6,957
)
Other liabilities
(1,344
)
3,174
Net cash provided by operating
activities
103,482
36,979
Cash flows from investing
activities:
Capital expenditures
(11,641
)
(11,064
)
Purchases of restricted available-for-sale
investments
(1,739
)
(4,295
)
Sales of restricted available-for-sale
investments
2,581
2,435
Purchases of restricted held-to-maturity
investments
(11,458
)
(7,020
)
Maturities of restricted held-to-maturity
investments
16,190
17,250
Net cash used in investing
activities
(6,067
)
(2,694
)
Cash flows from financing
activities:
Purchases and retirement of common
stock
(52,346
)
(9,077
)
Net proceeds from employee stock purchase
plans
536
700
Common stock repurchases for taxes upon
vesting of restricted stock
(1,956
)
(1,631
)
Net change in Revolving Credit
Facility
7,900
(55,300
)
Other
(1,344
)
(119
)
Net cash used in financing
activities
(47,210
)
(65,427
)
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
(736
)
560
Net change in cash, cash equivalents,
and restricted cash
49,469
(30,582
)
Cash, cash equivalents and restricted
cash, beginning of period
92,371
102,450
Cash, cash equivalents and restricted
cash, end of period
$
141,840
$
71,868
TRUEBLUE, INC.
SEGMENT DATA
(Unaudited)
13 Weeks Ended
(in thousands)
Jun 28, 2020
Jun 30, 2019
Revenue from services:
PeopleReady
$
209,151
$
369,261
PeopleManagement
118,661
153,530
PeopleScout
31,132
65,803
Total company
$
358,944
$
588,594
Segment profit (loss) (1):
PeopleReady
$
633
$
21,795
PeopleManagement
1,803
4,128
PeopleScout
(2,782
)
11,223
Total segment profit (loss)
(346
)
37,146
Corporate unallocated expense
(4,929
)
(3,634
)
Total company Adjusted EBITDA
(2)
(5,275
)
33,512
Work Opportunity Tax Credit processing
fees (3)
—
(240
)
Acquisition/integration costs (4)
—
(673
)
Other adjustments (5)
(8,700
)
(1,881
)
EBITDA (2)
(13,975
)
30,718
Depreciation and amortization
(7,256
)
(9,827
)
Interest and other income (expense),
net
(412
)
827
Income (loss) before tax expense
(benefit)
(21,643
)
21,718
Income tax benefit (expense)
13,475
(2,312
)
Net income (loss)
$
(8,168
)
$
19,406
(1)
We evaluate performance based on
segment revenue and segment profit. Segment profit (loss) includes
revenue, related cost of services, and ongoing operating expenses
directly attributable to the reportable segment. Segment profit
(loss) excludes 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 28, 2020 and June 30, 2019 primarily include
workforce reduction costs of $11.0 million ($3.0 million in cost of
services and $8.0 million in selling, general and administrative
expense) and $0.5 million (in selling, general and administrative
expense), respectively, implementation costs for cloud-based
systems of $0.1 million and $1.1 million, respectively and
amortization of software as a service assets of $0.6 million and
$0.5 million, respectively, which is reported in selling, general
and administrative expense. For the 13 weeks ended June 28, 2020,
these costs were slightly offset by $3.1 million in COVID-19
government subsidies.
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
(loss):
- 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,
- 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 (loss) and Adjusted
net income (loss) per diluted share
Net income (loss) and net income (loss)
per diluted share, excluding:
- amortization of intangibles of acquired
businesses,
- acquisition/integration costs,
- other adjustments,
- tax effect of each adjustment to U.S.
GAAP net income (loss), and
- adjustment of income taxes to our
normalized long-term expected tax rate for periods prior to Q2
2020.
- 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.
1. RECONCILIATION OF U.S. GAAP NET
INCOME (LOSS) TO ADJUSTED NET INCOME (LOSS) AND ADJUSTED NET INCOME
(LOSS) PER DILUTED SHARE
(Unaudited)
13 Weeks Ended
(in thousands, except for per share
data)
Jun 28, 2020
Jun 30, 2019
Net income (loss)
$
(8,168
)
$
19,406
Amortization of intangible assets of
acquired businesses (1)
2,071
4,957
Acquisition/integration costs (2)
—
673
Other adjustments (3)
8,700
1,881
Tax effect of adjustments to net income
(loss) (4)
(6,706
)
(1,052
)
Adjustment of income taxes to normalized
effective rate (5)
—
(729
)
Adjusted net income (loss)
$
(4,103
)
$
25,136
Adjusted net income (loss) per diluted
share
$
(0.12
)
$
0.64
Diluted weighted average shares
outstanding
35,077
39,554
2. RECONCILIATION OF U.S. GAAP NET
INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDA
(Unaudited)
13 Weeks Ended
(in thousands)
Jun 28, 2020
Jun 30, 2019
Net income (loss)
$
(8,168
)
$
19,406
Income tax expense (benefit)
(13,475
)
2,312
Interest and other (income) expense,
net
412
(827
)
Depreciation and amortization
7,256
9,827
EBITDA
(13,975
)
30,718
Work Opportunity Tax Credit processing
fees (6)
—
240
Acquisition/integration costs (2)
—
673
Other adjustments (3)
8,700
1,881
Adjusted EBITDA
$
(5,275
)
$
33,512
(1)
Amortization of intangible assets
of acquired businesses.
(2)
Acquisition/integration costs for
the acquisition of TMP Holding LTD completed on June 12, 2018.
(3)
Other adjustments for the 13
weeks ended June 28, 2020 and June 30, 2019 primarily include
workforce reduction costs of $11.0 million ($3.0 million in cost of
services and $8.0 million in selling, general and administrative
expense) and $0.5 million (in selling, general and administrative
expense), respectively, implementation costs for cloud-based
systems of $0.1 million and $1.1 million, respectively and
amortization of software as a service assets of $0.6 million and
$0.5 million, respectively, which is reported in selling, general
and administrative expense. For the 13 weeks ended June 28, 2020,
these costs were slightly offset by $3.1 million in COVID-19
government subsidies.
(4)
Total tax effect of each of the
adjustments to U.S. GAAP net income (loss) using the effective rate
of 62 percent for Q2 2020 relative to the expected long-term
ongoing rate of 14 percent for Q2 2019.
(5)
Adjustment of the effective
income tax rate to the expected long-term ongoing rate of 14
percent for Q2 2019. Beginning in Q2 2020, we will not be adjusting
our GAAP tax rate in our adjusted net income calculation until our
profitability rises to a more substantial level.
(6)
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200727005616/en/
Derrek Gafford, Executive Vice President and CFO
253-680-8214
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