TrueBlue (NYSE:TBI) today announced its first quarter results
for 2020.
First quarter revenue was $494 million, a decrease of 11 percent
compared to revenue of $552 million in the first quarter of 2019.
Net loss per diluted share was $4.04 compared to net income per
diluted share of $0.21 in the first quarter of 2019. Adjusted net
loss1 per diluted share was $0.01 compared to adjusted net income
per diluted share of $0.27 in the first quarter of 2019.
Included in the results for the first quarter is a non-cash
goodwill and intangible asset impairment charge of $175 million
which is equivalent to $152 million after tax or $4.08 per diluted
share. The impairment was driven by a weaker economic outlook in
connection with the impact of the COVID-19 pandemic.
“We experienced improving revenue trends during January and
February, which reversed course in March,” said Patrick Beharelle,
CEO of TrueBlue. “The second half of March saw a significant drop
in demand associated with government and societal actions to
address the COVID-19 threat. In response, we have taken actions to
reduce our operating expenses by approximately $100 million this
year while preserving key strengths of our business, such as our
branch footprint and technology innovation, to be prepared when
business conditions improve.”
“We entered 2020 from a position of strength given our balance
sheet that included only $37 million of debt and a similar amount
of cash,” said Derrek Gafford, CFO of TrueBlue. “In March, we
extended our existing $300 million revolving credit facility for
five years and drew substantially all of the remaining availability
to further enhance our liquidity position.”
“As a key provider of services to other essential businesses,
we’re still very much open for business,” said Mr. Beharelle. “We
are keenly focused on preserving capital and leveraging our digital
app, JobStack, to facilitate safe interactions with our clients and
associates. At times like these, TrueBlue’s underlying mission –
connecting people with work – is even more crucial, and as a
company we remain focused on helping the workers and clients we
serve get back on their feet.”
2020 Outlook
The COVID-19 pandemic is creating a material impact on the
demand for our services. Given the uncertainty of future societal
and business restrictions, TrueBlue is not providing customary
quarterly guidance. However, the company is providing an assortment
of historical and forward-looking information to help investors
form their own estimates, which can be found in the quarterly
earnings presentation filed today.
Management will discuss first quarter 2020 results on a webcast
at 2 p.m. PDT (5 p.m. EDT), today, Monday, May 4, 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
(in thousands, except per share
data)
Mar 29, 2020
Mar 31, 2019
Revenue from services
$
494,252
$
552,352
Cost of services
368,093
405,657
Gross profit
126,159
146,695
Selling, general and administrative
expense
117,381
127,980
Depreciation and amortization
9,094
9,952
Goodwill and intangible asset impairment
charge
175,189
—
Income (loss) from operations
(175,505
)
8,763
Interest and other income (expense),
net
263
553
Income (loss) before tax expense
(benefit)
(175,242
)
9,316
Income tax expense (benefit)
(24,748
)
1,040
Net income (loss)
$
(150,494
)
$
8,276
Net income (loss) per common
share:
Basic
$
(4.04
)
$
0.21
Diluted
$
(4.04
)
$
0.21
Weighted average shares
outstanding:
Basic
37,255
39,366
Diluted
37,255
39,735
TRUEBLUE, INC.
SUMMARY CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(in thousands)
Mar 29, 2020
Dec 29, 2019
ASSETS
Cash and cash equivalents
$
265,260
$
37,608
Accounts receivable, net
292,988
342,303
Other current assets
35,156
41,822
Total current assets
593,404
421,733
Property and equipment, net
67,036
66,150
Restricted cash and investments
218,907
230,932
Goodwill and intangible assets, net
127,920
311,171
Other assets, net
127,878
106,169
Total assets
$
1,135,145
$
1,136,155
LIABILITIES AND SHAREHOLDERS’
EQUITY
Current liabilities
$
187,049
$
230,806
Long-term debt
293,500
37,100
Other long-term liabilities
238,654
242,276
Total liabilities
719,203
510,182
Shareholders’ equity
415,942
625,973
Total liabilities and shareholders’
equity
$
1,135,145
$
1,136,155
TRUEBLUE, INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
13 Weeks Ended
(in thousands)
Mar 29, 2020
Mar 31, 2019
Cash flows from operating
activities:
Net income (loss)
$
(150,494
)
$
8,276
Adjustments to reconcile net income
(loss) to net cash provided by operating activities:
Depreciation and amortization
9,094
9,952
Goodwill and intangible asset impairment
charge
175,189
—
Provision for doubtful accounts
3,289
1,778
Stock-based compensation
1,508
3,606
Deferred income taxes
(23,432
)
3,209
Non-cash lease expense
3,763
3,565
Other operating activities
5,375
(1,841
)
Changes in operating assets and
liabilities:
Accounts receivable
45,407
26,558
Income tax receivable
435
(3,645
)
Other assets
5,958
(5,274
)
Accounts payable and other accrued
expenses
(28,443
)
(9,878
)
Accrued wages and benefits
(11,733
)
(10,266
)
Workers’ compensation claims reserve
(2,163
)
(4,380
)
Operating lease liabilities
(3,811
)
(3,414
)
Other liabilities
(2,334
)
3,268
Net cash provided by operating
activities
27,608
21,514
Cash flows from investing
activities:
Capital expenditures
(7,028
)
(5,862
)
Purchases of restricted available-for-sale
investments
(1,149
)
(3,070
)
Sales of restricted available-for-sale
investments
1,269
1,886
Maturities of restricted held-to-maturity
investments
6,168
8,451
Net cash provided by (used in)
investing activities
(740
)
1,405
Cash flows from financing
activities:
Purchases and retirement of common
stock
(52,348
)
(5,303
)
Net proceeds from employee stock purchase
plans
323
380
Common stock repurchases for taxes upon
vesting of restricted stock
(1,792
)
(1,438
)
Net change in Revolving Credit
Facility
256,400
(37,800
)
Other
(508
)
(69
)
Net cash provided by (used in)
financing activities
202,075
(44,230
)
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
(1,738
)
314
Net change in cash, cash equivalents,
and restricted cash
227,205
(20,997
)
Cash, cash equivalents and restricted
cash, beginning of period
92,371
102,450
Cash, cash equivalents and restricted
cash, end of period
$
319,576
$
81,453
TRUEBLUE, INC.
SEGMENT DATA
(Unaudited)
13 Weeks Ended
(in thousands)
Mar 29, 2020
Mar 31, 2019
Revenue from services:
PeopleReady
$
299,294
$
326,868
PeopleManagement
141,614
158,044
PeopleScout
53,344
67,440
Total company
$
494,252
$
552,352
Segment profit (loss) (1):
PeopleReady
$
7,655
$
11,470
PeopleManagement
(314
)
2,306
PeopleScout
2,508
10,427
9,849
24,203
Corporate unallocated expense
(5,209
)
(7,277
)
Total company Adjusted EBITDA
(2)
4,640
16,926
Work Opportunity Tax Credit processing
fees (3)
(135
)
(240
)
Acquisition/integration costs (4)
—
(577
)
Goodwill and intangible asset impairment
charge (5)
(175,189
)
—
Other adjustments (6)
4,273
2,606
EBITDA (2)
(166,411
)
18,715
Depreciation and amortization
(9,094
)
(9,952
)
Interest and other income (expense),
net
263
553
Income (loss) before tax expense
(benefit)
(175,242
)
9,316
Income tax expense (benefit)
24,748
(1,040
)
Net income (loss)
$
(150,494
)
$
8,276
(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 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)
The goodwill and intangible asset
impairment charge for the 13 weeks ended March 29, 2020 relates to
our PeopleManagement and PeopleScout reportable segments.
(6)
Other adjustments for the periods
presented primarily include implementation costs for cloud-based
systems and amortization of software as a service assets, which is
reported in selling, general and administrative expense. Other
adjustments for the 13 weeks ended March 29, 2020, also include
$1.3 million in workforce reduction costs. These other cost
adjustments were offset by a $6.3 million benefit from a reduction
in expected costs to comply with the Affordable Care Act, which
were recorded in prior fiscal years. For the 13 weeks ended March
31, 2019, the aforementioned other costs were partially offset by
$3.9 million of workers’ compensation benefit related to additional
insurance coverage associated with former workers’ compensation
carriers that are in liquidation.
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,
- goodwill and intangible asset impairment
charge, 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 (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,
- goodwill and intangible asset impairment
charge,
- other adjustments,
- tax effect of each adjustment to U.S.
GAAP net income (loss), and
- adjust income taxes to our normalized
long-term expected 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.
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)
Mar 29, 2020
Mar 31, 2019
Net income (loss)
$
(150,494
)
$
8,276
Amortization of intangible assets of
acquired businesses (1)
4,004
5,081
Acquisition/integration costs (2)
—
577
Goodwill and intangible asset impairment
charge (3)
175,189
—
Other adjustments (4)
(4,273
)
(2,606
)
Tax effect of adjustments to net income
(loss) (5)
(20,990
)
(427
)
Adjustment of income taxes to normalized
effective rate (6)
(3,719
)
(264
)
Adjusted net income (loss)
$
(283
)
$
10,637
Adjusted net income (loss) per diluted
share
$
(0.01
)
$
0.27
Diluted weighted average shares
outstanding
37,255
39,735
2.
RECONCILIATION OF U.S. GAAP NET INCOME
(LOSS) TO EBITDA AND ADJUSTED EBITDA
(Unaudited)
13 Weeks Ended
(in thousands)
Mar 29, 2020
Mar 31, 2019
Net income (loss)
$
(150,494
)
$
8,276
Income tax expense
(24,748
)
1,040
Interest and other (income) expense,
net
(263
)
(553
)
Depreciation and amortization
9,094
9,952
EBITDA
(166,411
)
18,715
Work Opportunity Tax Credit processing
fees (7)
135
240
Acquisition/integration costs (2)
—
577
Goodwill and intangible asset impairment
charge (3)
175,189
—
Other adjustments (4)
(4,273
)
(2,606
)
Adjusted EBITDA
$
4,640
$
16,926
(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)
The goodwill and intangible asset
impairment charge for the 13 weeks ended March 29, 2020 relates to
our PeopleManagement and PeopleScout reportable segments.
(4)
Other adjustments for the periods
presented primarily include implementation costs for cloud-based
systems and amortization of software as a service assets, which is
reported in selling, general and administrative expense. Other
adjustments for the 13 weeks ended March 29, 2020, also include
$1.3 million in workforce reduction costs. These other cost
adjustments were offset by a $6.3 million benefit from a reduction
in expected costs to comply with the Affordable Care Act, which
were recorded in prior fiscal years. For the 13 weeks ended March
31, 2019, the aforementioned other costs were partially offset by
$3.9 million of workers’ compensation benefit related to additional
insurance coverage associated with former workers’ compensation
carriers that are in liquidation.
(5)
Total tax effect of each of the
adjustments to U.S. GAAP net income using the expected, long-term
ongoing rate of 12 percent relative to 14 percent for 2019.
(6)
Adjustment of the effective income tax
rate to the expected long-term ongoing rate of 12 percent relative
to 14 percent for 2019.
(7)
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/20200504005655/en/
Derrek Gafford, Executive Vice President and CFO
253-680-8214
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