Business Wire | Oct 25, 2021 04:05PM EDT

TrueBlue Reports Third Quarter 2021 Results

Oct. 25, 2021

TACOMA, Wash.--(BUSINESS WIRE)--Oct. 25, 2021--TrueBlue (NYSE:TBI) today announced its third quarter results for 2021.

Third quarter revenue was $577 million, an increase of 22 percent compared to revenue of $475 million in the third quarter of 2020. Net income per diluted share was $0.53 compared to net income per diluted share of $0.25 in the third quarter of 2020. Third quarter adjusted net income1 per diluted share was $0.59 compared to adjusted net income per diluted share of $0.24 in the third quarter of 2020.

"Net income per diluted share more than doubled as a result of strong demand combined with gross margin expansion," said Patrick Beharelle, CEO of TrueBlue. "We are seeing businesses of all types turning to flexible workforce solutions as they grapple with worker supply challenges and a variety of uncertainties related to the Covid-19 business environment. PeopleScout exceeded pre-pandemic revenue during the quarter, PeopleManagement new business wins have been exceptionally strong throughout the year and PeopleReady revenue growth accelerated as we entered October.

"Investing in technology remains at the center of our strategy," Mr. Beharelle continued. "Our digital platforms have us well-positioned to create differentiated value for our customers and workers. Given the strength of our strategies as well as a favorable environment for flexible labor solutions, we are increasingly optimistic about our prospects to deliver sustainable long-term growth."

2021 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 2021 results on a webcast at 2:30 p.m. PT (5:30 p.m. ET), today, Monday, Oct. 25, 2021. 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 2020, TrueBlue connected approximately 490,000 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 Refer to the financial statements accompanying this release and the company's website for more information regarding 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 access sufficient capital to finance our operations, including our ability to comply with covenants contained in our revolving credit facility, (4) our ability to attract and retain clients, (5) our ability to attract sufficient qualified candidates and employees to meet the needs of our clients, (6) our ability to maintain profit margins, (7) new laws, regulations, and government incentives that could affect our operations or financial results, (8) our ability to successfully execute on business strategies to further digitalize our business model, and (9) 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, except Sep 26, Sep 27, Sep 26, 2021 Sep 27, 2020per share data) 2021 2020

Revenue from services $ 577,031 $ 474,530 $ 1,551,692 $ 1,327,726

Cost of services 430,529 364,066 1,158,148 1,007,878

Gross profit 146,502 110,464 393,544 319,848

Selling, general andadministrative 118,748 90,100 326,657 304,681 expense

Depreciation and 6,426 7,652 20,405 24,002 amortization

Goodwill andintangible asset - - - 175,189 impairment charge

Income (loss) from 21,328 12,712 46,482 (184,024) operations

Interest expense and 581 (174) 1,880 (323) other income, net

Income (loss) before 21,909 12,538 48,362 (184,347) tax expense (benefit)

Income tax expense 3,267 3,743 6,938 (34,480) (benefit)

Net income (loss) $ 18,642 $ 8,795 $ 41,424 $ (149,867)



Net income (loss) per common share:

Basic $ 0.53 $ 0.25 $ 1.19 $ (4.20)

Diluted $ 0.53 $ 0.25 $ 1.17 $ (4.20)



Weighted average shares outstanding:

Basic 34,873 34,597 34,788 35,643

Diluted 35,475 34,904 35,255 35,643

TRUEBLUE, INC. SUMMARY CONSOLIDATED BALANCE SHEETS (Unaudited)

(in thousands)

Sep 26, 2021

Dec 27, 2020

ASSETS

Cash and cash equivalents

$

49,173

$

62,507

Accounts receivable, net

330,705

278,343

Other current assets

37,631

38,035

Total current assets

417,509

378,885

Property and equipment, net

86,414

71,734

Restricted cash and investments

223,832

240,534

Goodwill and intangible assets, net

118,384

123,802

Other assets, net

163,653

165,622

Total assets

$

1,009,792

$

980,577

LIABILITIES AND SHAREHOLDERS' EQUITY

Accounts payable and other accrued expenses

$

62,706

$

58,447

Accrued wages and benefits

89,870

122,657

Current portion of workers' compensation claims reserve

60,936

66,007

Other current liabilities

25,272

21,856

Total current liabilities

238,784

268,967

Workers' compensation claims reserve, less current portion

197,633

189,486

Other long-term liabilities

87,699

84,934

Total liabilities

524,116

543,387

Shareholders' equity

485,676

437,190

Total liabilities and shareholders' equity

$

1,009,792

$

980,577

TRUEBLUE, INC.SUMMARY CONSOLIDATED BALANCE SHEETS(Unaudited)

(in thousands) Sep 26, 2021 Dec 27, 2020

ASSETS

Cash and cash equivalents $ 49,173 $ 62,507

Accounts receivable, net 330,705 278,343

Other current assets 37,631 38,035

Total current assets 417,509 378,885

Property and equipment, net 86,414 71,734

Restricted cash and investments 223,832 240,534

Goodwill and intangible assets, net 118,384 123,802

Other assets, net 163,653 165,622

Total assets $ 1,009,792 $ 980,577



LIABILITIES AND SHAREHOLDERS' EQUITY

Accounts payable and other accrued expenses $ 62,706 $ 58,447

Accrued wages and benefits 89,870 122,657

Current portion of workers' compensation claims 60,936 66,007 reserve

Other current liabilities 25,272 21,856

Total current liabilities 238,784 268,967

Workers' compensation claims reserve, less current 197,633 189,486 portion

Other long-term liabilities 87,699 84,934

Total liabilities 524,116 543,387

Shareholders' equity 485,676 437,190

Total liabilities and shareholders' equity $ 1,009,792 $ 980,577

TRUEBLUE, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

39 weeks ended

(in thousands)

Sep 26, 2021

Sep 27, 2020

Cash flows from operating activities:

Net income (loss)

$

41,424

$

(149,867)

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

Depreciation and amortization

20,405

24,002

Goodwill and intangible asset impairment charge

-

175,189

Provision for credit losses

2,881

6,582

Stock-based compensation

10,149

6,762

Deferred income taxes

445

(25,955)

Non-cash lease expense

11,173

11,115

Other operating activities

(1,484)

1,944

Changes in operating assets and liabilities:

Accounts receivable

(53,626)

55,408

Income tax receivable

963

(4,928)

Operating lease right-of-use-asset

7,150

-

Other assets

(7,003)

(2,646)

Accounts payable and other accrued expenses

3,212

(12,723)

Other accrued wages and benefits

24,278

(7,395)

Deferred employer payroll taxes

(57,066)

36,312

Workers' compensation claims reserve

3,075

(824)

Operating lease liabilities

(10,017)

(11,410)

Other liabilities

4,598

(2,798)

Net cash provided by operating activities

557

98,768

Cash flows from investing activities:

Capital expenditures

(28,772)

(16,244)

Purchases of restricted available-for-sale investments

(29)

(2,310)

Sales of restricted available-for-sale investments

793

3,212

Purchases of restricted held-to-maturity investments

-

(32,495)

Maturities of restricted held-to-maturity investments

18,346

24,358

Net cash used in investing activities

(9,662)

(23,479)

Cash flows from financing activities:

Purchases and retirement of common stock

-

(52,346)

Net proceeds from employee stock purchase plans

754

734

Common stock repurchases for taxes upon vesting of restricted stock

(3,035)

(2,331)

Net change in revolving credit facility

-

(35,600)

Other

(270)

(1,436)

Net cash used in financing activities

(2,551)

(90,979)

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

(613)

(466)

Net change in cash, cash equivalents, and restricted cash

(12,269)

(16,156)

Cash, cash equivalents and restricted cash, beginning of period

118,612

92,371

Cash, cash equivalents and restricted cash, end of period

$

106,343

$

76,215

TRUEBLUE, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(Unaudited)

39 weeks ended

(in thousands) Sep 26, Sep 27, 2020 2021

Cash flows from operating activities:

Net income (loss) $ 41,424 $ (149,867)

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

Depreciation and amortization 20,405 24,002

Goodwill and intangible asset impairment charge - 175,189

Provision for credit losses 2,881 6,582

Stock-based compensation 10,149 6,762

Deferred income taxes 445 (25,955)

Non-cash lease expense 11,173 11,115

Other operating activities (1,484) 1,944

Changes in operating assets and liabilities:

Accounts receivable (53,626) 55,408

Income tax receivable 963 (4,928)

Operating lease right-of-use-asset 7,150 -

Other assets (7,003) (2,646)

Accounts payable and other accrued expenses 3,212 (12,723)

Other accrued wages and benefits 24,278 (7,395)

Deferred employer payroll taxes (57,066) 36,312

Workers' compensation claims reserve 3,075 (824)

Operating lease liabilities (10,017) (11,410)

Other liabilities 4,598 (2,798)

Net cash provided by operating activities 557 98,768

Cash flows from investing activities:

Capital expenditures (28,772) (16,244)

Purchases of restricted available-for-sale (29) (2,310) investments

Sales of restricted available-for-sale investments 793 3,212

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

Maturities of restricted held-to-maturity 18,346 24,358 investments

Net cash used in investing activities (9,662) (23,479)

Cash flows from financing activities:

Purchases and retirement of common stock - (52,346)

Net proceeds from employee stock purchase plans 754 734

Common stock repurchases for taxes upon vesting of (3,035) (2,331) restricted stock

Net change in revolving credit facility - (35,600)

Other (270) (1,436)

Net cash used in financing activities (2,551) (90,979)

Effect of exchange rate changes on cash, cash (613) (466) equivalents and restricted cash

Net change in cash, cash equivalents, and (12,269) (16,156) restricted cash

Cash, cash equivalents and restricted cash, 118,612 92,371 beginning of period

Cash, cash equivalents and restricted cash, end of $ 106,343 $ 76,215 period

TRUEBLUE, INC. SEGMENT DATA (Unaudited)

13 weeks ended

(in thousands)

Sep 26, 2021

Sep 27, 2020

Revenue from services:

PeopleReady

$

349,056

$

293,546

PeopleManagement

157,789

147,241

PeopleScout

70,186

33,743

Total company

$

577,031

$

474,530

Segment profit (1):

PeopleReady

$

24,690

$

18,714

PeopleManagement

2,360

4,574

PeopleScout

9,778

349

Total segment profit

36,828

23,637

Corporate unallocated expense

(7,667)

(5,968)

Total company Adjusted EBITDA (2)

29,161

17,669

Third-party processing fees for hiring tax credits (3)

(419)

(174)

Amortization of software as a service assets (4)

(670)

(575)

Workforce reduction costs (5)

(110)

(270)

COVID-19 government subsidies

92

4,071

Other adjustments, net (6)

(300)

(357)

EBITDA (2)

27,754

20,364

Depreciation and amortization

(6,426)

(7,652)

Interest expense and other income, net

581

(174)

Income before tax expense

21,909

12,538

Income tax expense

(3,267)

(3,743)

Net income

$

18,642

$

8,795

TRUEBLUE, INC.SEGMENT DATA(Unaudited)

13 weeks ended

(in thousands) Sep 26, Sep 27, 2021 2020

Revenue from services:

PeopleReady $ 349,056 $ 293,546

PeopleManagement 157,789 147,241

PeopleScout 70,186 33,743

Total company $ 577,031 $ 474,530



Segment profit (1):

PeopleReady $ 24,690 $ 18,714

PeopleManagement 2,360 4,574

PeopleScout 9,778 349

Total segment profit 36,828 23,637

Corporate unallocated expense (7,667) (5,968)

Total company Adjusted EBITDA (2) 29,161 17,669

Third-party processing fees for hiring tax credits (419) (174) (3)

Amortization of software as a service assets (4) (670) (575)

Workforce reduction costs (5) (110) (270)

COVID-19 government subsidies 92 4,071

Other adjustments, net (6) (300) (357)

EBITDA (2) 27,754 20,364

Depreciation and amortization (6,426) (7,652)

Interest expense and other income, net 581 (174)

Income before tax expense 21,909 12,538

Income tax expense (3,267) (3,743)

Net income $ 18,642 $ 8,795

(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 expense, other income, 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 hiring tax credits.

(4)

Amortization of software as a service assets is reported in selling, general and administrative expense.

(5)

Workforce reduction costs for the 13 weeks ended September 27, 2020 were primarily due to employee reductions as part of our cost management actions in response to COVID-19 ($0.2 million in cost of services and $0.1 million in selling, general and administrative expense).

(6)

Other adjustments for the 13 weeks ended September 26, 2021 primarily include costs of $0.2 million incurred while transitioning into our new Chicago office and implementation costs for cloud-based systems of $0.1 million. Other adjustments for the 13 weeks ended September 27, 2020 primarily include lease exit costs of $0.2 million and implementation costs for cloud-based systems of $0.1 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 expense, other income, 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 hiring tax credits.

(4) Amortization of software as a service assets is reported in selling, general and administrative expense.

Workforce reduction costs for the 13 weeks ended September 27, 2020 were(5) primarily due to employee reductions as part of our cost management actions in response to COVID-19 ($0.2 million in cost of services and $0.1 million in selling, general and administrative expense).

Other adjustments for the 13 weeks ended September 26, 2021 primarily include costs of $0.2 million incurred while transitioning into our new(6) Chicago office and implementation costs for cloud-based systems of $0.1 million. Other adjustments for the 13 weeks ended September 27, 2020 primarily include lease exit costs of $0.2 million and implementation costs for cloud-based systems of $0.1 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 expense and other income, net,

- income taxes, and - Enhances comparability on a consistent basis and provides - depreciation and investors with useful insight into amortization. the underlying trends of the business. Adjusted EBITDA,EBITDA and further excludes: - Used by management to assess performance and effectiveness of ourAdjusted EBITDA - third-party business strategies. processing fees for hiring tax credits,

- amortization of - Provides a measure, among others, software as a service used in the determination of assets, incentive compensation for management. - workforce reductions costs,

- COVID-19 government subsidies, and

- other adjustments, net.

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 - amortization of investors with useful insight intoAdjusted net software as a service the underlying trends of theincome and assets, business.Adjusted net income per diluted - workforce reduction share costs, - Used by management to assess - COVID-19 government performance and effectiveness of our subsidies business strategies.

- other adjustments, net, and

- tax effect of each adjustment to U.S. GAAP.

1. RECONCILIATION OF U.S. GAAP NET INCOME TO ADJUSTED NET INCOME AND ADJUSTED NET INCOME PER DILUTED SHARE (Unaudited)

13 weeks ended

(in thousands, except for per share data) Sep 26, Sep 27, 2020 2021

Net income $ 18,642 $ 8,795

Amortization of intangible assets of acquired 1,506 2,041 businesses

Amortization of software as a service assets (1) 670 575

Workforce reduction costs (2) 110 270

COVID-19 government subsidies (92) (4,071)

Other adjustments, net (3) 300 357

Tax effect of adjustments to net income (loss) (4) (372) 247

Adjusted net income $ 20,764 $ 8,214



Adjusted net income per diluted share $ 0.59 $ 0.24



Diluted weighted average shares outstanding 35,475 34,904

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

13 weeks ended

(in thousands) Sep 26, Sep 27, 2021 2020

Net income $ 18,642 $ 8,795

Income tax expense 3,267 3,743

Interest expense and other (income), net (581) 174

Depreciation and amortization 6,426 7,652

EBITDA 27,754 20,364

Third-party processing fees for hiring tax credits 419 174 (5)

Amortization of software as a service assets (1) 670 575

Workforce reduction costs (2) 110 270

COVID-19 government subsidies (92) (4,071)

Other adjustments, net (3) 300 357

Adjusted EBITDA $ 29,161 $ 17,669

(1)Amortization of software as a service assets is reported in selling, general and administrative expense.

(2)Workforce reduction costs for the 13 weeks ended September 27, 2020 were primarily due to employee reductions as part of our cost management actions in response to COVID-19 ($0.2 million in cost of services and $0.1 million in selling, general and administrative expense).

(3)Other adjustments for the 13 weeks ended September 26, 2021 primarily include costs of $0.2 million incurred while transitioning into our new Chicago office and implementation costs for cloud-based systems of $0.1 million. Other adjustments for the 13 weeks ended September 27, 2020 primarily include lease exit costs of $0.2 million and implementation costs for cloud-based systems of $0.1 million.

(4)Total tax effect of each of the adjustments to U.S. GAAP net income (loss) using the expected income tax rate of 14 percent for 2021 and the effective income tax rate of 30 percent for Q3 2020.

(5)These third-party processing fees are associated with generating hiring tax credits.

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