EX-99.1 2 tbi2016q3pressreleaseexhib.htm TRUEBLUE PRESS RELEASE
TRUEBLUE REPORTS FISCAL 2016 THIRD QUARTER RESULTS
TACOMA, WA-Oct. 19, 2016--TrueBlue, Inc. (NYSE:TBI) announced today its fiscal third quarter results for the period ending Sept. 23, 2016.
Revenue for the fiscal third quarter of 2016 was $697 million, an increase of two percent, compared to $684 million for the fiscal third quarter of 2015. Net income was $23 million or $0.56 per diluted share, compared to $20 million or $0.48 per diluted share for the fiscal third quarter of 2015. Adjusted net income* was $30 million or $0.70 per diluted share, compared to $26 million or $0.60 per diluted share for the fiscal third quarter of 2015.
"Our team delivered growth in revenue and net income this quarter while sustaining a high level of service quality with our customers," TrueBlue CEO Steve Cooper said. "Given the challenging growth environment, we have maintained a sharp focus on the management of our expenses."
Cooper continued, "Our cost management actions have been decisive and balanced as we remain committed to our long-term technology and growth strategies. We are taking the right steps to preserve our profitability while maintaining our readiness to accelerate growth."
The company also shared its outlook for the fiscal fourth quarter of 2016 on a comparable 13-week basis. The company estimates revenue in the range of $670 million to $686 million and net income per diluted share of $0.40 to $0.45 ($0.54 to $0.59 on an adjusted basis*). The company's fiscal fourth quarter of 2016 will include a 14 th week and the company plans to change its week-ending date from Friday to the following Sunday to better align its week-ending date with that of its customers. This will result in our year-end being the Sunday closest to Dec. 31st every year, with our 2016 fiscal year-end occurring on Jan. 1st, 2017. Further discussion on the financial impact of the additional week and week-ending date can be found in the financial schedules following this release and on the company's website at www.trueblue.com.
Management will discuss fiscal third quarter 2016 results on a conference call at 2 p.m. PT (5 p.m. ET), today, Wednesday, Oct. 19. The conference call can be accessed on TrueBlue’s web site: www.trueblue.com
*See the financial statements accompanying the release and the company’s website for more information on non-GAAP definitions.
About TrueBlue:
TrueBlue (NYSE: TBI) is a leading provider of specialized workforce solutions including staffing, large-volume on-site workforce management, and recruitment process outsourcing to fill full-time positions. Based in Tacoma, Wash., TrueBlue serves clients globally and connects as many as 840,000 people to work each year in a wide variety of industries. Learn more at www.trueblue.com
Forward-looking Statements
This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “may,” “will,” “should,” “expects,” “intends,” “projects,” “plans,” “believes,” “estimates,” “targets,” “anticipates,” and similar expressions are used to identify these forward-looking statements. Examples of forward-looking statements include statements relating to our future financial condition and operating results, as well as any other statement that does not directly relate to any historical or current fact. Forward-looking statements are based on our current expectations and assumptions, which may not prove to be accurate. These statements are not guarantees and are subject to risks, uncertainties, and changes in circumstances that are difficult to predict. Many factors could cause actual results to differ materially and adversely from these forward-looking statements. Examples of such factors can be found in our reports filed with the SEC, including the information under the heading ‘Risk Factors’ in our Annual Report on Form 10-K for the fiscal year ended Dec. 25, 2015. Any forward-looking statement speaks only as of the date on which it is made, and 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.
Contact:
Derrek Gafford, EVP & CFO
253-680-8214

TRUEBLUE, INC.
SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited, in thousands, except per share data)

| 13 Weeks Ended |  | 39 Weeks Ended
| September 23, 2016 |  | September 25, 2015 |  | September 23, 2016 |  | September 25, 2015
Revenue from services | $ | 697,097 |  |  | $ | 683,918 |  |  | $ | 2,015,689 |  |  | $ | 1,884,947 |
Cost of services | 518,702 |  |  | 515,051 |  |  | 1,516,858 |  |  | 1,434,278 |
Gross profit | 178,395 |  |  | 168,867 |  |  | 498,831 |  |  | 450,669 |
Selling, general and administrative expenses | 134,679 |  |  | 125,117 |  |  | 401,090 |  |  | 354,569 |
Depreciation and amortization | 11,690 |  |  | 10,498 |  |  | 34,673 |  |  | 31,415 |
Goodwill and intangible asset impairment charge (1) | 4,275 |  |  | — |  |  | 103,544 |  |  | — |
Income (loss) from operations | 27,751 |  |  | 33,252 |  |  | (40,476 | ) |  | 64,685 |
Interest and other expense, net | (867 | ) |  | (366 | ) |  | (2,773 | ) |  | (1,102 | )
Income (loss) before tax expense | 26,884 |  |  | 32,886 |  |  | (43,249 | ) |  | 63,583 |
Income tax expense (benefit) | 3,455 |  |  | 12,796 |  |  | (9,911 | ) |  | 20,504 |
Net income (loss) | $ | 23,429 |  |  | $ | 20,090 |  |  | $ | (33,338 | ) |  | $ | 43,079 |
Net income (loss) per common share: |  |  |  |  |  |  |
Basic | $ | 0.56 |  |  | $ | 0.49 |  |  | $ | (0.80 | ) |  | $ | 1.05 |
Diluted | $ | 0.56 |  |  | $ | 0.48 |  |  | $ | (0.80 | ) |  | $ | 1.04 |
Weighted average shares outstanding: |  |  |  |  |  |  |
Basic | 41,762 |  |  | 41,296 |  |  | 41,651 |  |  | 41,189 |
Diluted | 42,056 |  |  | 41,620 |  |  | 41,651 |  |  | 41,546 |

(1) | The goodwill and intangible asset impairment charge for the thirteen weeks ended September 23, 2016, relates to the CLP and Spartan reporting unit trade names/trademarks of $4.3 million that were written-off due to the re-branding to PeopleReady. The goodwill and intangible asset impairment charge for the thirty-nine weeks ended September 23, 2016, further includes $99.3 million of impairment charges recorded in the second quarter of 2016 relating to our Staff Management | SMX, hrX, and PlaneTechs reporting units.

TRUEBLUE, INC.
SUMMARY CONSOLIDATED BALANCE SHEETS
(Unaudited, in thousands)

| September 23, 2016 |  | December 25, 2015
Assets |  |  |
Cash and cash equivalents | $ | 24,781 |  |  | $ | 29,781 |
Accounts receivable, net | 364,618 |  |  | 461,476 |
Other current assets | 46,437 |  |  | 51,708 |
Total current assets | 435,836 |  |  | 542,965 |
Property and equipment, net | 59,898 |  |  | 57,530 |
Restricted cash and investments | 212,968 |  |  | 188,412 |
Goodwill and intangible assets, net | 357,733 |  |  | 422,354 |
Other assets, net | 57,673 |  |  | 48,181 |
Total assets | $ | 1,124,108 |  |  | $ | 1,259,442 |
Liabilities and shareholders' equity |  |  |
Current liabilities | $ | 243,427 |  |  | $ | 227,976 |
Long-term debt, less current portion | 137,111 |  |  | 243,397 |
Other long-term liabilities | 231,095 |  |  | 252,496 |
Total liabilities | 611,633 |  |  | 723,869 |
Shareholders' equity | 512,475 |  |  | 535,573 |
Total liabilities and shareholders' equity | $ | 1,124,108 |  |  | $ | 1,259,442 |

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

| 39 Weeks Ended
| September 23, 2016 |  | September 25, 2015
Cash flows from operating activities: |  |  |
Net income (loss) | $ | (33,338 | ) |  | $ | 43,079 |
Adjustments to reconcile net income (loss) to net cash from operating activities: |  |  |
Depreciation and amortization | 34,673 |  |  | 31,415 |
Goodwill and intangible asset impairment charges | 103,544 |  |  | — |
Provision for doubtful accounts | 6,361 |  |  | 4,483 |
Stock-based compensation | 7,443 |  |  | 8,283 |
Deferred income taxes | (23,874 | ) |  | (6,029 | )
Other operating activities | 5,603 |  |  | 20 |
Changes in operating assets and liabilities: |  |  |
Accounts receivable | 102,722 |  |  | (6,597 | )
Income tax receivable | 4,018 |  |  | 9,673 |
Other assets | (3,563 | ) |  | (3,685 | )
Accounts payable and other accrued expenses | (3,764 | ) |  | 17,453 |
Accrued wages and benefits | (3,254 | ) |  | 10,315 |
Workers’ compensation claims reserve | 11,938 |  |  | 10,024 |
Other liabilities | 4,740 |  |  | 1,883 |
Net cash provided by operating activities | 213,249 |  |  | 120,317 |
Cash flows from investing activities: |  |  |
Capital expenditures | (17,766 | ) |  | (12,590 | )
Acquisition of business | (71,863 | ) |  | — |
Sales and maturities of marketable securities | — |  |  | 1,500 |
Change in restricted cash and cash equivalents | 732 |  |  | 13,070 |
Purchases of restricted investments | (35,940 | ) |  | (38,818 | )
Maturities of restricted investments | 12,273 |  |  | 11,047 |
Net cash used in investing activities | (112,564 | ) |  | (25,791 | )
Cash flows from financing activities: |  |  |
Net proceeds from stock option exercises and employee stock purchase plans | 1,183 |  |  | 1,164 |
Common stock repurchases for taxes upon vesting of restricted stock | (2,692 | ) |  | (3,725 | )
Net change in revolving credit facility | (104,586 | ) |  | (85,994 | )
Payments on debt | (1,700 | ) |  | (1,700 | )
Other | 20 |  |  | 1,134 |
Net cash used in financing activities | (107,775 | ) |  | (89,121 | )
Effect of exchange rate changes on cash and cash equivalents | 2,090 |  |  | (1,839 | )
Net change in cash and cash equivalents | (5,000 | ) |  | 3,566 |
CASH AND CASH EQUIVALENTS, beginning of period | 29,781 |  |  | 19,666 |
CASH AND CASH EQUIVALENTS, end of period | $ | 24,781 |  |  | $ | 23,232 |

TRUEBLUE, INC.
SEGMENT DATA
(Unaudited, in thousands)

| 13 Weeks Ended |  | 39 Weeks Ended
| September 23, 2016 |  | September 25, 2015 |  | September 23, 2016 |  | September 25, 2015
Revenue from services |  |  |  |  |  |  |
Staffing Services | $ | 652,617 |  |  | $ | 656,619 |  |  | $ | 1,880,730 |  |  | $ | 1,807,434 |
Managed Services | 44,480 |  |  | 27,299 |  |  | 134,959 |  |  | 77,513 |
Total Company | 697,097 |  |  | 683,918 |  |  | 2,015,689 |  |  | 1,884,947 |
Adjusted EBITDA (1) |  |  |  |  |  |  |
Staffing Services | $ | 47,181 |  |  | $ | 50,437 |  |  | $ | 101,861 |  | — |  | $ | 114,295 |
Managed Services | 9,260 |  |  | 3,175 |  |  | 30,324 |  |  | 10,979 |
| 56,441 |  |  | 53,612 |  |  | 132,185 |  |  | 125,274 |
Corporate unallocated | (7,129 | ) |  | (9,715 | ) |  | (24,641 | ) |  | (24,445 | )
Total company Adjusted EBITDA | 49,312 |  |  | 43,897 |  |  | 107,544 |  |  | 100,829 |
Acquisition and integration costs (2) | (1,410 | ) |  | — |  |  | (4,789 | ) |  | (3,787 | )
Goodwill and intangible asset impairment charge (3) | (4,275 | ) |  | — |  |  | (103,544 | ) |  | — |
Work Opportunity Tax Credit processing fees (4) | (754 | ) |  | (147 | ) |  | (1,582 | ) |  | (942 | )
Other charges (5) | (3,432 | ) |  | — |  |  | (3,432 | ) |  | — |
EBITDA (1) | 39,441 |  |  | 43,750 |  |  | (5,803 | ) |  | 96,100 |
Depreciation and amortization | 11,690 |  |  | 10,498 |  |  | 34,673 |  |  | 31,415 |
Interest and other expense, net | 867 |  |  | 366 |  |  | 2,773 |  |  | 1,102 |
Income (loss) before tax expense | 26,884 |  |  | 32,886 |  |  | (43,249 | ) |  | 63,583 |
Income tax expense (benefit) | 3,455 |  |  | 12,796 |  |  | (9,911 | ) |  | 20,504 |
Net income (loss) | $ | 23,429 |  |  | $ | 20,090 |  |  | $ | (33,338 | ) |  | $ | 43,079 |

(1) | EBITDA and Adjusted EBITDA are non-GAAP financial measures. EBITDA excludes interest, taxes, depreciation and amortization. Adjusted EBITDA further excludes from EBITDA, costs related to acquisition and integration, goodwill and intangible asset impairment charges, other charges, and Work Opportunity Tax Credit third-party processing fees. EBITDA and Adjusted EBITDA are key measures used by management to assess performance and, in our opinion, enhance comparability and provide investors with useful insight into the underlying trends of the business. EBITDA and Adjusted EBITDA should not be considered measures of financial performance in isolation or as an alternative to Income from operations in the Consolidated Statements of Operations in accordance with U.S. GAAP, and may not be comparable to similarly titled measures of other companies.

(2) | Acquisition and integration costs relate to the acquisition of the recruitment process outsourcing business of Aon Hewitt, which was completed on January 4, 2016.

(3) | The goodwill and intangible asset impairment charge for the thirteen weeks ended September 23, 2016, relates to the CLP and Spartan reporting unit trade names/trademarks of $4.3 million that were written-off due to the re-branding to PeopleReady. The goodwill and intangible asset impairment charge for the thirty-nine weeks ended September 23, 2016, further includes $99.3 million of impairment charges recorded in the second quarter of 2016 relating to our Staff Management | SMX, hrX, and PlaneTechs reporting units.

(4) | 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 and reduce our income taxes.

(5) | These charges primarily consist of branch signage write-offs of $1.6 million due to our re-branding to PeopleReady as well as costs of $1.8 million associated with our exit from the Amazon delivery business.

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

| 13 Weeks Ended
| September 23, 2016 |  | September 25, 2015
(Unaudited, in thousands, except for per share data) | Amount |  | Per Diluted Share |  | Amount |  | Per Diluted Share
Net income | $ | 23,429 |  |  | $ | 0.56 |  |  | $ | 20,090 |  |  | $ | 0.48 |
Acquisition and integration costs (1) | 1,410 |  |  | 0.03 |  |  | — |  |  | — |
Goodwill and intangible asset impairment charge (2) | 4,275 |  |  | 0.10 |  |  | — |  |  | — |
Other charges (3) | 3,432 |  |  | 0.08 |  |  | — |  |  | — |
Work Opportunity Tax Credit processing fees (4) | 754 |  |  | 0.02 |  |  | 147 |  |  | — |
Amortization of intangible assets of acquired businesses (5) | 6,831 |  |  | 0.16 |  |  | 4,593 |  |  | 0.11 |
Tax effective of adjustments to net income (6) | (5,345 | ) |  | (0.13 | ) |  | (1,517 | ) |  | (0.04 | )
Adjust income taxes to normalized effective rate (7) | (5,148 | ) |  | (0.12 | ) |  | 2,272 |  |  | 0.05 |
Adjusted net income (8) | $ | 29,638 |  |  | $ | 0.70 |  |  | $ | 25,585 |  |  | $ | 0.60 |
Diluted weighted average shares outstanding | 42,056 |  |  |  |  | 41,620 |  |  |

| Outlook *
| 13 Weeks Ended
| December 25, 2016
(Unaudited, in thousands, except for per share data) | Amount |  | Per Diluted Share
Net income | $ | 17,000 |  | — | $ | 19,000 |  |  | $ | 0.40 |  | — | $ | 0.45 |
Acquisition and integration costs (1) | 1,800 |  | 0.04
Work Opportunity Tax Credit processing fees (4) | 300 |  | 0.01
Amortization of intangible assets of acquired businesses (5) | 6,200 |  | 0.15
Tax effective of adjustments to net income (6) | (2,700) |  | (0.06)
Adjusted net income (8) | $ | 22,600 |  | — | $ | 24,700 |  |  | $ | 0.54 |  | — | $ | 0.59 |
Diluted weighted average shares outstanding | 42,100 |  |  |  |

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

| 13 Weeks Ended
(Unaudited, in thousands) | September 23, 2016 |  | September 25, 2015
Net income | $ | 23,429 |  |  | $ | 20,090 |
Income tax expense | 3,455 |  |  | 12,796 |
Interest expense, net | 867 |  |  | 366 |
Depreciation and amortization | 11,690 |  |  | 10,498 |
EBITDA (9) | 39,441 |  |  | 43,750 |
Acquisition and integration costs (1) | 1,410 |  |  | — |
Goodwill and intangible asset impairment charge (2) | 4,275 |  |  | — |
Other charges (3) | 3,432 |  |  | — |
Work Opportunity Tax Credit processing fees (4) | 754 |  |  | 147 |
Adjusted EBITDA (9) | $ | 49,312 |  |  | $ | 43,897 |

| Outlook*
| 13 Weeks Ended
(Unaudited, in thousands) | December 25, 2016
Net income | $ | 17,000 |  | — | $ | 19,000 |
Income tax expense | 8,000 |  | — | 9,000 |
Interest expense, net | 900
Depreciation and amortization | 10,000
EBITDA (9) | 35,900 |  | — | 38,900 |
Acquisition and integration costs (1) | 1,800
Work Opportunity Tax Credit processing fees (4) | 300
Adjusted EBITDA (9) | $ | 38,000 |  | — | $ | 41,000 |

* Neutral impact on profit due to low seasonal volume for the 14th week ending January 1, 2017. Figures may not sum due to rounding.

(1) | Acquisition and integration costs relate to the acquisition of the recruitment process outsourcing business of Aon Hewitt, which was completed on January 4, 2016.

(2) | The intangible asset impairment charge for the thirteen weeks ended September 23, 2016, relates to the CLP and Spartan reporting unit trade names/trademarks which were written-off due to the re-branding to PeopleReady.

(3) | These charges primarily consist of branch signage write-offs of $1.6 million due to our re-branding to PeopleReady as well as costs of $1.8 million associated with our exit from the Amazon delivery business.

(4) | 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 and reduce our income taxes.

(5) | Amortization of intangible assets of acquired businesses as well as accretion expense related to acquisition earn-out.

(6) | Total tax effect of each of the adjustments to U.S. GAAP net income per diluted share using the ongoing rate of 32%.

(7) | Adjusts the effective income tax rate to the expected, ongoing rate of 32%.

(8) | Adjusted net income and adjusted net income per diluted share are non-GAAP financial measures which exclude from net income and net income on a per diluted share basis costs related to acquisition and integration, goodwill and intangible asset impairment charges, other charges, Work Opportunity Tax Credit third-party processing fees, amortization of intangibles of acquired businesses as well as accretion expense related to acquisition earn-out, tax effect of each adjustment to U.S. GAAP net income, and adjusts income taxes to the expected ongoing effective tax rate. Adjusted net income and adjusted net income per diluted share are key measures used by management to assess performance and, in our opinion, enhance comparability and provide investors with useful insight into the underlying trends of the business. Adjusted net income and adjusted net income per diluted share should not be considered measures of financial performance in isolation or as an alternative to net income or net income per diluted share in the Consolidated Statements of Operations in accordance with U.S. GAAP, and may not be comparable to similarly titled measures of other companies.

(9) | EBITDA and Adjusted EBITDA are non-GAAP financial measures. EBITDA excludes interest, taxes, depreciation and amortization. Adjusted EBITDA further excludes from EBITDA, costs related to acquisition and integration, goodwill and intangible asset impairment charges, other charges, and Work Opportunity Tax Credit third-party processing fees. EBITDA and Adjusted EBITDA are key measures used by management to assess performance and, in our opinion, enhance comparability and provide investors with useful insight into the underlying trends of the business. EBITDA and Adjusted EBITDA should not be considered measures of financial performance in isolation or as an alternative to Income from operations in the Consolidated Statements of Operations in accordance with U.S. GAAP, and may not be comparable to similarly titled measures of other companies.