EX-99.1 2 tbi2019q3pressreleaseexhib.htm TRUEBLUE PRESS RELEASE
TRUEBLUE REPORTS THIRD QUARTER 2019 RESULTS
TACOMA, WASH. - Oct. 28, 2019 -- TrueBlue (NYSE:TBI) today announced its third quarter results for 2019.
Third quarter revenue was $637 million, a decrease of 6 percent, compared to revenue of $680 million in the third quarter of 2018. Net income per diluted share was $0.68, an increase of 11 percent, compared to $0.61 in the third quarter of 2018. Adjusted net income 1 per diluted share was $0.76, a decrease of 4 percent, compared to $0.79 in the third quarter of 2018.
“Strong execution drove better than expected top-line and bottom-line results this quarter,” said Patrick Beharelle, CEO of TrueBlue. “Despite ongoing economic uncertainty, monthly revenue trends were consistent during the quarter and we delivered another quarter of net income per diluted share growth.
“TrueBlue has been driving digital disruption within the staffing industry with our JobStack TM and Affinix TM offerings and we continue to experience favorable employee and customer adoption,” Mr. Beharelle continued. “We remain squarely focused on client expansion and retention, disciplined cost management and investing in our digital strategies to differentiate our service offerings.”
The company also announced that its Board of Directors authorized an additional $100 million of share repurchases. “Our balance sheet is in great shape and the business is producing strong cash flow,” said Derrek Gafford, CFO of TrueBlue. “This authorization reflects our confidence in the long-term outlook for our business and our desire to continue to return capital to shareholders.”
2019 Outlook
TrueBlue estimates revenue for the fourth quarter of 2019 will range from $587 million to $612 million. The company also estimates net income per diluted share will range from $0.18 to $0.28 and adjusted net income per diluted share will range from $0.35 to $0.45.
Management will discuss third quarter 2019 results on a webcast at 2 p.m. PDT (5 p.m. EDT), today, Monday, Oct. 28, 2019. 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 2018, TrueBlue connected approximately 730,000 people with work. Its PeopleReady segment offers industrial staffing services, PeopleManagement offers contingent and productivity-based on-site industrial staffing and driver staffing 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) our ability to attract and retain clients, (3) our ability to attract sufficient qualified candidates and employees to meet the needs of our clients, (4) our ability to maintain profit margins, (5) new laws and regulations that could affect our operations or financial results, (6) our ability to successfully complete and integrate acquisitions, (7) our ability to successfully execute on business strategies to further digitize our business model, and (8) 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 reference 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.

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

TRUEBLUE, INC.
SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

| 13 Weeks Ended |  | 39 Weeks Ended
(in thousands, except per share data) | Sep 29, 2019 | Sep 30, 2018 |  | Sep 29, 2019 | Sep 30, 2018
Revenue from services | $ | 636,793 |  | $ | 680,371 |  |  | $ | 1,777,739 |  | $ | 1,849,060 |
Cost of services | 467,671 |  | 496,053 |  |  | 1,301,924 |  | 1,355,890 |
Gross profit | 169,122 |  | 184,318 |  |  | 475,815 |  | 493,170 |
Selling, general and administrative expense | 131,187 |  | 145,382 |  |  | 388,447 |  | 405,352 |
Depreciation and amortization | 8,749 |  | 10,586 |  |  | 28,528 |  | 30,777 |
Income from operations | 29,186 |  | 28,350 |  |  | 58,840 |  | 57,041 |
Interest and other income (expense), net | 471 |  | (340 | ) |  | 1,851 |  | 896 |
Income before tax expense | 29,657 |  | 28,010 |  |  | 60,691 |  | 57,937 |
Income tax expense | 2,981 |  | 3,630 |  |  | 6,333 |  | 7,070 |
Net income | $ | 26,676 |  | $ | 24,380 |  |  | $ | 54,358 |  | $ | 50,867 |
Net income per common share: |  |  |  |  |
Basic | $ | 0.69 |  | $ | 0.61 |  |  | $ | 1.39 |  | $ | 1.27 |
Diluted | $ | 0.68 |  | $ | 0.61 |  |  | $ | 1.38 |  | $ | 1.26 |
Weighted average shares outstanding: |  |  |  |  |
Basic | 38,741 |  | 39,743 |  |  | 39,090 |  | 40,138 |
Diluted | 39,213 |  | 40,073 |  |  | 39,479 |  | 40,417 |

TRUEBLUE, INC.
SUMMARY CONSOLIDATED BALANCE SHEETS
(Unaudited)

(in thousands) | Sep 29, 2019 | Dec 30, 2018
ASSETS |  |
Cash and cash equivalents | $ | 23,557 |  | $ | 46,988 |
Accounts receivable, net | 367,038 |  | 355,373 |
Other current assets | 35,395 |  | 27,466 |
Total current assets | 425,990 |  | 429,827 |
Property and equipment, net | 61,218 |  | 57,671 |
Restricted cash and investments | 227,043 |  | 235,443 |
Goodwill and intangible assets, net | 312,984 |  | 328,695 |
Operating lease right-of-use assets | 36,794 |  | — |
Other assets, net | 67,016 |  | 63,208 |
Total assets | $ | 1,131,045 |  | $ | 1,114,844 |
LIABILITIES AND SHAREHOLDERS’ EQUITY |  |
Current liabilities | $ | 226,479 |  | $ | 225,526 |
Long-term debt | 43,800 |  | 80,000 |
Operating lease long-term liabilities | 24,896 |  | — |
Other long-term liabilities | 215,205 |  | 217,879 |
Total liabilities | 510,380 |  | 523,405 |
Shareholders’ equity | 620,665 |  | 591,439 |
Total liabilities and shareholders’ equity | $ | 1,131,045 |  | $ | 1,114,844 |

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

| 39 Weeks Ended
(in thousands) | Sep 29, 2019 | Sep 30, 2018
Cash flows from operating activities: |  |
Net income | $ | 54,358 |  | $ | 50,867 |
Adjustments to reconcile net income to net cash provided by operating activities: |  |
Depreciation and amortization | 28,528 |  | 30,777 |
Provision for doubtful accounts | 5,997 |  | 10,140 |
Stock-based compensation | 8,119 |  | 9,552 |
Deferred income taxes | 1,058 |  | 2,638 |
Non-cash lease expense | 11,087 |  | — |
Other operating activities | (1,701 | ) | 526 |
Changes in operating assets and liabilities: |  |
Accounts receivable | (17,616 | ) | (17,960 | )
Income tax receivable | (3,982 | ) | (5,389 | )
Other assets | (9,449 | ) | (12,110 | )
Accounts payable and other accrued expenses | (6,970 | ) | 3,179 |
Accrued wages and benefits | (141 | ) | 4,549 |
Workers’ compensation claims reserve | (7,176 | ) | (8,405 | )
Operating lease liabilities | (11,297 | ) | — |
Other liabilities | 1,723 |  | 262 |
Net cash provided by operating activities | 52,538 |  | 68,626 |
Cash flows from investing activities: |  |
Capital expenditures | (18,297 | ) | (10,313 | )
Acquisition of business | — |  | (22,742 | )
Divestiture of business | 215 |  | 10,414 |
Purchases of restricted investments | (22,597 | ) | (11,747 | )
Maturities of restricted investments | 28,976 |  | 17,021 |
Net cash used in investing activities | (11,703 | ) | (17,367 | )
Cash flows from financing activities: |  |
Purchases and retirement of common stock | (31,316 | ) | (24,818 | )
Net proceeds from employee stock purchase plans | 1,023 |  | 1,146 |
Common stock repurchases for taxes upon vesting of restricted stock | (1,934 | ) | (2,539 | )
Net change in revolving credit facility | (36,200 | ) | 12,000 |
Payments on debt | — |  | (22,855 | )
Other | (203 | ) | — |
Net cash used in financing activities | (68,630 | ) | (37,066 | )
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 732 |  | (583 | )
Net change in cash, cash equivalents, and restricted cash | (27,063 | ) | 13,610 |
Cash, cash equivalents and restricted cash, beginning of period | 102,450 |  | 73,831 |
Cash, cash equivalents and restricted cash, end of period | $ | 75,387 |  | $ | 87,441 |

TRUEBLUE, INC.
SEGMENT DATA
(Unaudited)

| 13 Weeks Ended
(in thousands) | Sep 29, 2019 |  | Sep 30, 2018
Revenue from services: |  |  |
PeopleReady | $ | 413,132 |  |  | $ | 428,665 |
PeopleManagement | 159,315 |  |  | 181,199 |
PeopleScout | 64,346 |  |  | 70,507 |
Total company | $ | 636,793 |  |  | $ | 680,371 |
Segment profit (1): |  |  |
PeopleReady | $ | 30,878 |  |  | $ | 31,230 |
PeopleManagement | 3,381 |  |  | 6,169 |
PeopleScout | 10,774 |  |  | 12,478 |
| 45,033 |  |  | 49,877 |
Corporate unallocated expense | (5,769 | ) |  | (6,469 | )
Total company Adjusted EBITDA (2) | 39,264 |  |  | 43,408 |
Work Opportunity Tax Credit processing fees (3) | (240 | ) |  | (241 | )
Acquisition/integration costs (4) | (362 | ) |  | (1,226 | )
Other adjustments (5) | (727 | ) |  | (3,005 | )
EBITDA (2) | 37,935 |  |  | 38,936 |
Depreciation and amortization | (8,749 | ) |  | (10,586 | )
Interest and other income (expense), net | 471 |  |  | (340 | )
Income before tax expense | 29,657 |  |  | 28,010 |
Income tax expense | (2,981 | ) |  | (3,630 | )
Net income | $ | 26,676 |  |  | $ | 24,380 |

(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 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) | Other adjustments for the 13 weeks ended September 29, 2019 primarily include implementation costs for cloud-based systems of $0.4 million and amortization of software as a service assets of $0.4 million, which is reported in selling, general and administrative expense. Other adjustments for the 13 weeks ended September 30, 2018 include implementation costs for cloud-based systems of $1.5 million and accelerated vesting of stock associated with the CEO transition of $1.5 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 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 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 and Adjusted net income, per diluted share | Net income and net income per diluted share, excluding: - amortization of intangibles of acquired businesses, - acquisition/integration costs, - gain on divestiture, - other adjustments, - tax effect of each adjustment to U.S. GAAP net income, and - adjust income taxes to the expected effective 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.
Organic revenue | Organic revenue excludes the first 12 months of operations of acquired businesses. |  | - 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.
Free cash flow | Net cash provided by operating activities, minus cash purchases for property and equipment. |  | - Used by management to assess cash flows.

1. | RECONCILIATION OF U.S. GAAP NET INCOME TO ADJUSTED NET INCOME AND ADJUSTED NET INCOME, PER DILUTED SHARE

(Unaudited)

| Q3 2019 |  | Q3 2018 |  | Q4 2019 Outlook
| 13 Weeks Ended |  | 13 Weeks Ended |  | 13 Weeks Ended
(in thousands, except for per share data) | Sep 29, 2019 |  | Sep 30, 2018 |  | Dec 29, 2019
Net income | $ | 26,676 |  |  | $ | 24,380 |  |  | $ | 7,000 |  | — | $ | 10,900 |
Gain on divestiture (1) | — |  |  | 385 |  |  | —
Amortization of intangible assets of acquired businesses (2) | 3,858 |  |  | 5,193 |  |  | 4,000
Acquisition/integration costs (3) | 362 |  |  | 1,226 |  |  | 400
Other adjustments (4) | 727 |  |  | 3,005 |  |  | 3,200
Tax effect of adjustments to net income (5) | (692 | ) |  | (1,569 | ) |  | (1,100)
Adjustment of income taxes to normalized effective rate (6) | (1,171 | ) |  | (852 | ) |  | —
Adjusted net income | $ | 29,760 |  |  | $ | 31,768 |  |  | $ | 13,500 |  | — | $ | 17,400 |
Adjusted net income, per diluted share | $ | 0.76 |  |  | $ | 0.79 |  |  | $ | 0.35 |  | — | $ | 0.45 |
Diluted weighted average shares outstanding | 39,213 |  |  | 40,073 |  |  | 38,400

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

(Unaudited)

| Q3 2019 |  | Q3 2018 |  | Q4 2019 Outlook*
| 13 Weeks Ended |  | 13 Weeks Ended |  | 13 Weeks Ended
(in thousands) | Sep 29, 2019 |  | Sep 30, 2018 |  | Dec 29, 2019
Net income | $ | 26,676 |  |  | $ | 24,380 |  |  | $ | 7,000 |  | — | $ | 10,900 |
Income tax expense | 2,981 |  |  | 3,630 |  |  | 1,100 |  | — | 1,800 |
Interest and other (income) expense, net | (471 | ) |  | 340 |  |  | (1,600)
Depreciation and amortization | 8,749 |  |  | 10,586 |  |  | 8,900
EBITDA | 37,935 |  |  | 38,936 |  |  | 15,400 |  | — | 19,900 |
Work Opportunity Tax Credit processing fees (7) | 240 |  |  | 241 |  |  | 200
Acquisition/integration costs (3) | 362 |  |  | 1,226 |  |  | 400
Other adjustments (4) | 727 |  |  | 3,005 |  |  | 3,200
Adjusted EBITDA | $ | 39,264 |  |  | $ | 43,408 |  |  | $ | 19,200 |  | — | $ | 23,700 |
* Totals may not sum due to rounding |  |  |  |  |  |  |

3. | RECONCILIATION OF U.S. GAAP REVENUE TO ORGANIC REVENUE

(Unaudited)

| Q3 |  | Q2
| 2019 |  | 2018 |  | 2019 |  | 2018
| 13 Weeks Ended |  | 13 Weeks Ended |  | 13 Weeks Ended |  | 13 Weeks Ended
(in thousands) | Sep 29, 2019 |  | Sep 30, 2018 |  | Jun 30, 2019 |  | Jul 1, 2018
Revenue from services | $ | 636,793 |  |  | $ | 680,371 |  |  | $ | 588,594 |  |  | $ | 614,301 |
Acquisition revenue excluded (3) | — |  |  | — |  |  | (10,324 | ) |  | — |
Organic revenue | $ | 636,793 |  |  | $ | 680,371 |  |  | $ | 578,270 |  |  | $ | 614,301 |

4. | RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOWS

(Unaudited)

| Q3 2019 |  | 2018 |  | 2017 |  | 2016
| 39 Weeks Ended |  | 52 Weeks Ended |  | 52 Weeks Ended |  | 53 Weeks Ended
(in thousands) | Sep 29, 2019 |  | Dec 30, 2018 |  | Dec 31, 2017 |  | Jan 1, 2017
Net cash provided by operating activities | $ | 52,538 |  |  | $ | 125,692 |  |  | $ | 100,134 |  |  | $ | 260,703 |
Capital expenditures | (18,297 | ) |  | (17,054 | ) |  | (21,958 | ) |  | (29,042 | )
Free cash flows | $ | 34,241 |  |  | $ | 108,638 |  |  | $ | 78,176 |  |  | $ | 231,661 |

(1) | Adjustment to the gain on the divestiture of our PlaneTechs business due to the finalization of costs incurred. PlaneTechs was sold mid-March 2018.

(2) | Amortization of intangible assets of acquired businesses.

(3) | Acquisition/integration costs for the acquisition of TMP Holding LTD (“TMP”) completed on June 12, 2018. Organic revenue excludes the first 12 months of operations of TMP.

(4) | Other adjustments for the 13 weeks ended September 29, 2019 primarily include implementation costs for cloud-based systems of $0.4 million and amortization of software as a service assets of $0.4 million which is reported in selling, general and administrative expense. Other adjustments for the 13 weeks ended September 30, 2018 include implementation costs for cloud-based systems of $1.5 million and accelerated vesting of stock associated with the CEO transition of $1.5 million. Other adjustments for the 13 weeks ended December 29, 2019 include estimated workforce reduction costs associated with employee reductions in the PeopleReady business of $2.3 million, implementation costs for cloud-based systems of $0.4 million and amortization of software as a service assets of $0.5 million.

(5) | Total tax effect of each of the adjustments to U.S. GAAP net income using the expected ongoing rate of 14 percent for 2019 and 16 percent for 2018.

(6) | Adjustment of the effective income tax rate to the expected ongoing rate of 14 percent for 2019 and 16 percent for 2018.

(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.