Business Wire | Oct 26, 2020 04:06PM EDT

TrueBlue Reports Third Quarter 2020 Results

Oct. 26, 2020

TACOMA, Wash.--(BUSINESS WIRE)--Oct. 26, 2020--TrueBlue (NYSE:TBI) today announced its third quarter results for 2020.

Third quarter revenue was $475 million, a decrease of 25 percent compared to revenue of $637 million in the third quarter of 2019. Third quarter net income per diluted share was $0.25 compared to a net loss per diluted share of $0.23 in the second quarter of 2020 and net income per diluted share of $0.68 in the third quarter of 2019. Third quarter adjusted net income1 per diluted share was $0.24 compared to an adjusted net loss per diluted share of $0.12 in the second quarter of 2020 and adjusted net income per diluted share of $0.76 in the third quarter of 2019.

"We have taken the right actions to restore profitability and position the company for long-term growth as the economy recovers," said Patrick Beharelle, CEO of TrueBlue. "During the third quarter we saw steady improvements in our revenue trends across most of the industries and geographies we serve. Our cost management actions continue to show meaningful results which helps position us for strong incremental profit margins when revenue growth returns.

"We're adding new features to PeopleReady's JobStack app and refining our process to drive heavy user growth and applicant throughput," Mr. Beharelle continued. "Looking ahead, we see an opportunity to leverage this technology to capture additional market share while reducing our service delivery costs."

"Our balance sheet continues to shine, providing financial and operational flexibility," said Derrek Gafford, CFO of TrueBlue. "Our credit facility provides ample liquidity, and our debt position is at its lowest level since 2012. We also repurchased 9% of our common stock earlier this year."

2020 Outlook

TrueBlue 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 third quarter 2020 results on a webcast at 2 p.m. PDT (5 p.m. EDT), today, Monday, Oct. 26, 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'swebsite 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 39 Weeks Ended

(in thousands, Sep 29,except per share Sep 27, 2020 2019 Sep 27, 2020 Sep 29, 2019data)

Revenue from $ 474,530 $ 636,793 $ 1,327,726 $ 1,777,739 services

Cost of services 364,066 469,058 1,007,878 1,306,626

Gross profit 110,464 167,735 319,848 471,113

Selling, generaland administrative 90,100 129,800 304,681 383,745 expense

Depreciation and 7,652 8,749 24,002 28,528 amortization

Goodwill andintangible asset - - 175,189 - impairment charge

Income (loss) from 12,712 29,186 (184,024 ) 58,840 operations

Interest and otherincome (expense), (174 ) 471 (323 ) 1,851 net

Income (loss)before tax expense 12,538 29,657 (184,347 ) 60,691 (benefit)

Income tax expense 3,743 2,981 (34,480 ) 6,333 (benefit)

Net income (loss) $ 8,795 $ 26,676 $ (149,867 ) $ 54,358



Net income (loss) per common share:

Basic $ 0.25 $ 0.69 $ (4.20 ) $ 1.39

Diluted $ 0.25 $ 0.68 $ (4.20 ) $ 1.38



Weighted average shares outstanding:

Basic 34,597 38,741 35,643 39,090

Diluted 34,904 39,213 35,643 39,479

TRUEBLUE, INC.

SUMMARY CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands)

Sep 27, 2020

Dec 29, 2019

ASSETS

Cash and cash equivalents

$

28,233

$

37,608

Accounts receivable, net

279,812

342,303

Other current assets

42,704

41,822

Total current assets

350,749

421,733

Property and equipment, net

66,994

66,150

Restricted cash and investments

229,815

230,932

Goodwill and intangible assets, net

124,916

311,171

Other assets, net

135,724

106,169

Total assets

$

908,198

$

1,136,155

LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities

$

202,427

$

230,806

Long-term debt, less current portion

1,500

37,100

Other long-term liabilities

280,089

242,276

Total liabilities

484,016

510,182

Shareholders' equity

424,182

625,973

Total liabilities and shareholders' equity

$

908,198

$

1,136,155

TRUEBLUE, INC.

SUMMARY CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands) Sep 27, 2020 Dec 29, 2019

ASSETS

Cash and cash equivalents $ 28,233 $ 37,608

Accounts receivable, net 279,812 342,303

Other current assets 42,704 41,822

Total current assets 350,749 421,733

Property and equipment, net 66,994 66,150

Restricted cash and investments 229,815 230,932

Goodwill and intangible assets, net 124,916 311,171

Other assets, net 135,724 106,169

Total assets $ 908,198 $ 1,136,155



LIABILITIES AND SHAREHOLDERS' EQUITY

Current liabilities $ 202,427 $ 230,806

Long-term debt, less current portion 1,500 37,100

Other long-term liabilities 280,089 242,276

Total liabilities 484,016 510,182

Shareholders' equity 424,182 625,973

Total liabilities and shareholders' equity $ 908,198 $ 1,136,155

TRUEBLUE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

39 Weeks Ended

(in thousands)

Sep 27, 2020

Sep 29, 2019

Cash flows from operating activities:

Net income (loss)

$

(149,867

)

$

54,358

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization

24,002

28,528

Goodwill and intangible asset impairment charge

175,189

-

Provision for doubtful accounts

6,582

5,997

Stock-based compensation

6,762

8,119

Deferred income taxes

(25,955

)

1,058

Non-cash lease expense

11,115

11,087

Other operating activities

1,944

(1,701

)

Changes in operating assets and liabilities:

Accounts receivable

55,408

(17,616

)

Income tax receivable

(4,928

)

(3,982

)

Other assets

(2,646

)

(9,449

)

Accounts payable and other accrued expenses

(12,723

)

(6,970

)

Accrued wages and benefits

(7,395

)

(141

)

Workers' compensation claims reserve

(824

)

(7,176

)

Operating lease liabilities

(11,410

)

(11,297

)

Deferred employer payroll taxes

36,312

-

Other liabilities

(2,798

)

1,723

Net cash provided by operating activities

98,768

52,538

Cash flows from investing activities:

Capital expenditures

(16,244

)

(18,297

)

Divestiture of business

-

215

Purchases of restricted available-for-sale investments

(2,310

)

(5,299

)

Sales of restricted available-for-sale investments

3,212

3,881

Purchases of restricted held-to-maturity investments

(32,495

)

(17,298

)

Maturities of restricted held-to-maturity investments

24,358

25,095

Net cash used in investing activities

(23,479

)

(11,703

)

Cash flows from financing activities:

Purchases and retirement of common stock

(52,346

)

(31,316

)

Net proceeds from employee stock purchase plans

734

1,023

Common stock repurchases for taxes upon vesting of restricted stock

(2,331

)

(1,934

)

Net change in revolving credit facility

(35,600

)

(36,200

)

Other

(1,436

)

(203

)

Net cash used in financing activities

(90,979

)

(68,630

)

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

(466

)

732

Net change in cash, cash equivalents, and restricted cash

(16,156

)

(27,063

)

Cash, cash equivalents and restricted cash, beginning of period

92,371

102,450

Cash, cash equivalents and restricted cash, end of period

$

76,215

$

75,387

TRUEBLUE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

39 Weeks Ended

(in thousands) Sep 27, 2020 Sep 29, 2019

Cash flows from operating activities:

Net income (loss) $ (149,867 ) $ 54,358

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization 24,002 28,528

Goodwill and intangible asset impairment charge 175,189 -

Provision for doubtful accounts 6,582 5,997

Stock-based compensation 6,762 8,119

Deferred income taxes (25,955 ) 1,058

Non-cash lease expense 11,115 11,087

Other operating activities 1,944 (1,701 )

Changes in operating assets and liabilities:

Accounts receivable 55,408 (17,616 )

Income tax receivable (4,928 ) (3,982 )

Other assets (2,646 ) (9,449 )

Accounts payable and other accrued expenses (12,723 ) (6,970 )

Accrued wages and benefits (7,395 ) (141 )

Workers' compensation claims reserve (824 ) (7,176 )

Operating lease liabilities (11,410 ) (11,297 )

Deferred employer payroll taxes 36,312 -

Other liabilities (2,798 ) 1,723

Net cash provided by operating activities 98,768 52,538

Cash flows from investing activities:

Capital expenditures (16,244 ) (18,297 )

Divestiture of business - 215

Purchases of restricted available-for-sale (2,310 ) (5,299 ) investments

Sales of restricted available-for-sale 3,212 3,881 investments

Purchases of restricted held-to-maturity (32,495 ) (17,298 ) investments

Maturities of restricted held-to-maturity 24,358 25,095 investments

Net cash used in investing activities (23,479 ) (11,703 )

Cash flows from financing activities:

Purchases and retirement of common stock (52,346 ) (31,316 )

Net proceeds from employee stock purchase plans 734 1,023

Common stock repurchases for taxes upon vesting (2,331 ) (1,934 ) of restricted stock

Net change in revolving credit facility (35,600 ) (36,200 )

Other (1,436 ) (203 )

Net cash used in financing activities (90,979 ) (68,630 )

Effect of exchange rate changes on cash, cash (466 ) 732 equivalents and restricted cash

Net change in cash, cash equivalents, and (16,156 ) (27,063 ) restricted cash

Cash, cash equivalents and restricted cash, 92,371 102,450 beginning of period

Cash, cash equivalents and restricted cash, end $ 76,215 $ 75,387 of period

TRUEBLUE, INC.

SEGMENT DATA

(Unaudited)

13 Weeks Ended

(in thousands)

Sep 27, 2020

Sep 29, 2019

Revenue from services:

PeopleReady

$

293,546

$

413,132

PeopleManagement

147,241

159,315

PeopleScout

33,743

64,346

Total company

$

474,530

$

636,793

Segment profit (1):

PeopleReady

$

18,714

$

30,878

PeopleManagement

4,574

3,381

PeopleScout

349

10,774

Total segment profit

23,637

45,033

Corporate unallocated expense

(5,968

)

(5,769

)

Total company Adjusted EBITDA (2)

17,669

39,264

Work Opportunity Tax Credit processing fees (3)

(174

)

(240

)

Acquisition/integration costs (4)

-

(362

)

Other adjustments (5)

2,869

(727

)

EBITDA (2)

20,364

37,935

Depreciation and amortization

(7,652

)

(8,749

)

Interest and other income (expense), net

(174

)

471

Income before tax expense

12,538

29,657

Income tax expense

(3,743

)

(2,981

)

Net income

$

8,795

$

26,676

TRUEBLUE, INC.

SEGMENT DATA

(Unaudited)

13 Weeks Ended

(in thousands) Sep 27, 2020 Sep 29, 2019

Revenue from services:

PeopleReady $ 293,546 $ 413,132

PeopleManagement 147,241 159,315

PeopleScout 33,743 64,346

Total company $ 474,530 $ 636,793



Segment profit (1):

PeopleReady $ 18,714 $ 30,878

PeopleManagement 4,574 3,381

PeopleScout 349 10,774

Total segment profit 23,637 45,033

Corporate unallocated expense (5,968 ) (5,769 )

Total company Adjusted EBITDA (2) 17,669 39,264

Work Opportunity Tax Credit processing fees (3) (174 ) (240 )

Acquisition/integration costs (4) - (362 )

Other adjustments (5) 2,869 (727 )

EBITDA (2) 20,364 37,935

Depreciation and amortization (7,652 ) (8,749 )

Interest and other income (expense), net (174 ) 471

Income before tax expense 12,538 29,657

Income tax expense (3,743 ) (2,981 )

Net income $ 8,795 $ 26,676

(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 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 September 27, 2020 primarily include $4.1 million in COVID-19 government subsidies which are partially offset by amortization of software as a service assets of $0.6 million, which is reported in selling, general and administrative expense, workforce reduction costs of $0.3 million and implementation costs for cloud-based systems of $0.1 million. Other adjustments for the 13 weeks ended September 29, 2019 primarily include amortization of software as a service assets of $0.4 million and implementation costs for cloud-based systems of $0.4 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.

We evaluate performance based on segment revenue and segment profit. Segment profit includes revenue, related cost of services, and ongoing(1) operating expenses directly attributable to the reportable segment. Segment profit 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.

These third-party processing fees are associated with generating the Work(3) 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.

Other adjustments for the 13 weeks ended September 27, 2020 primarily include $4.1 million in COVID-19 government subsidies which are partially offset by amortization of software as a service assets of $0.6 million, which is reported in selling, general and administrative expense,(5) workforce reduction costs of $0.3 million and implementation costs for cloud-based systems of $0.1 million. Other adjustments for the 13 weeks ended September 29, 2019 primarily include amortization of software as a service assets of $0.4 million and implementation costs for cloud-based systems of $0.4 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 excludes from net income (loss):

- interest and other - Enhances comparability on a income (expense), net, consistent basis and provides investors with useful insight - income taxes, and into the underlying trends of the business. - depreciation and amortization.

EBITDA and - Used by management to assessAdjusted EBITDA performance and effectiveness Adjusted EBITDA, further of our business strategies. excludes: - Work Opportunity Tax Credit third-party - Provides a measure, among processing fees, others, used in the determination of incentive - acquisition/integration compensation for management. costs,

- other adjustments.

Net income (loss) and net income (loss) per diluted share, excluding:

- amortization of intangibles of acquired businesses, - Enhances comparability on a consistent basis and provides - acquisition/integration investors with useful insightAdjusted net income costs, into the underlying trends of(loss) and Adjusted the business.net income (loss) - other adjustments,per diluted share - Used by management to assess - tax effect of each performance and effectiveness adjustment to U.S. GAAP of our business strategies. net income (loss), and

- adjustment of income taxes to our normalized long-term expected tax rate for periods prior to Q2 2020.

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 Sep 27, Jun 28, 2020 Sep 29, 2019data) 2020

Net income (loss) $ 8,795 $ (8,168 ) $ 26,676

Amortization of intangible assets of 2,041 2,071 3,858 acquired businesses (1)

Acquisition/integration costs (2) - - 362

Other adjustments (3) (2,869 ) 8,700 727

Tax effect of adjustments to net income 247 (6,706 ) (692 ) (loss) (4)

Adjustment of income taxes to normalized - - (1,171 ) effective rate (5)

Adjusted net income (loss) $ 8,214 $ (4,103 ) $ 29,760



Adjusted net income (loss) per diluted $ 0.24 $ (0.12 ) $ 0.76 share



Diluted weighted average shares 34,904 35,077 39,213 outstanding

2. RECONCILIATION OF U.S. GAAP NET INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDA (Unaudited)

13 Weeks Ended

(in thousands) Sep 27, 2020 Jun 28, 2020 Sep 29, 2019

Net income (loss) $ 8,795 $ (8,168 ) $ 26,676

Income tax expense (benefit) 3,743 (13,475 ) 2,981

Interest and other (income) expense, 174 412 (471 ) net

Depreciation and amortization 7,652 7,256 8,749

EBITDA 20,364 (13,975 ) 37,935

Work Opportunity Tax Credit processing 174 - 240 fees (6)

Acquisition/integration costs (2) - - 362

Other adjustments (3) (2,869 ) 8,700 727

Adjusted EBITDA $ 17,669 $ (5,275 ) $ 39,264

(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 September 27, 2020 primarily include $4.1 million in COVID-19 government subsidies which are partially offset by amortization of software as a service assets of $0.6 million, which is reported in selling, general and administrative expense, workforce reduction costs of $0.3 million and implementation costs for cloud-based systems of $0.1 million. Other adjustments for the 13 weeks ended June 28, 2020 primarily include workforce reduction costs of $11.0 million and amortization of software as a service assets of $0.6 million, partially offset by $3.1 million in COVID-19 government subsidies. Other adjustments for the 13 weeks ended September 29, 2019 primarily include amortization of software as a service assets of $0.4 million and implementation costs for cloud-based systems of $0.4 million.

(4)

Total tax effect of each of the adjustments to U.S. GAAP net income (loss) using the effective rate of 30 percent for Q3 2020, the effective rate of 62 percent for Q2 2020 and the expected long-term ongoing rate of 14 percent for Q3 2019.

(5)

Adjustment of the effective income tax rate to the expected long-term ongoing rate of 14 percent for Q3 2019. Beginning in Q2 2020, we decided not to adjust our GAAP tax rate in our adjusted net income (loss) 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/20201026005764/en/

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