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TrueBlue Reports Third Quarter 2023 Results

TrueBlue (NYSE:TBI) today announced its third quarter results for 2023.

Third quarter revenue was $473 million, a decrease of 18 percent compared to revenue of $576 million in the third quarter of 2022. Net loss per diluted share was $0.00 compared to net income per diluted share of $0.63 in the third quarter of 2022. Third quarter adjusted net income1 per diluted share was $0.16 compared to adjusted net income per diluted share of $0.74 in the third quarter of 2022.

“While the operating environment remains soft, we are starting to see signs of potential stabilization in the demand trends for certain parts of our business,” said Taryn Owen, President and CEO of TrueBlue. “We are focused on staying highly engaged with our clients to meet their current needs and to be ready to meet higher demand when business conditions improve.

“We also continue to be disciplined in the pricing of our services and with cost management, while preserving our operational and balance sheet strengths,” continued Ms. Owen. “These actions position us well to achieve strong operating leverage and financial flexibility when demand rebounds.”

2023 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 2023 results on a webcast at 2:30 p.m. PT (5:30 p.m. ET), today, Monday, Oct. 23, 2023. The webcast can be accessed on the Investor Relations section of the TrueBlue website: investor.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 2022, TrueBlue connected approximately 611,000 people with work. Its PeopleReady segment offers on-demand, industrial staffing, PeopleScout offers recruitment process outsourcing (RPO) and managed service provider (MSP) solutions, and PeopleManagement offers contingent, on-site industrial staffing and commercial driver services. Learn more at www.trueblue.com.

1 Refer to the financial statements accompanying this release for more information regarding non-GAAP terms.

Forward-looking statements and non-GAAP financial measures

This document contains forward-looking statements relating to our plans and expectations including, without limitation, statements regarding the future performance and operations of our business, expectations regarding stabilization in demand, and expected growth from our digital investments, 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 which can be negatively impacted by factors such as rising interest rates, inflation, political instability, epidemics and global trade uncertainty, (2) our ability to maintain profit margins, (3) our ability to successfully execute on business strategies and further digitalize our business model, (4) our ability to attract sufficient qualified candidates and employees to meet the needs of our clients, (5) our ability to attract and retain clients, (6) our ability to access sufficient capital to finance our operations, including our ability to comply with covenants contained in our revolving credit facility, (7) new laws, regulations, and government incentives that could affect our operations or financial results, (8) any reduction or change in tax credits we utilize, including the Work Opportunity Tax Credit, and (9) the timing and amount of common stock repurchases, if any, which will be determined at management’s discretion and depend upon several factors, including market and business conditions, the trading price of our common stock and the nature of other investment opportunities. 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 per share data)

Sep 24, 2023

 

Sep 25, 2022

 

Sep 24, 2023

 

Sep 25, 2022

Revenue from services

$

473,196

 

 

$

575,721

 

$

1,414,072

 

 

$

1,696,489

Cost of services

 

349,023

 

 

 

419,802

 

 

1,036,295

 

 

 

1,242,194

Gross profit

 

124,173

 

 

 

155,919

 

 

377,777

 

 

 

454,295

Selling, general and administrative expense

 

120,715

 

 

 

124,351

 

 

364,642

 

 

 

366,953

Depreciation and amortization

 

6,184

 

 

 

7,483

 

 

18,875

 

 

 

22,015

Goodwill and intangible asset impairment charge

 

 

 

 

 

 

9,485

 

 

 

Income (loss) from operations

 

(2,726

)

 

 

24,085

 

 

(15,225

)

 

 

65,327

Interest and other income (expense), net

 

390

 

 

 

703

 

 

1,982

 

 

 

1,098

Income (loss) before tax expense (benefit)

 

(2,336

)

 

 

24,788

 

 

(13,243

)

 

 

66,425

Income tax expense (benefit)

 

(2,326

)

 

 

4,092

 

 

(1,621

)

 

 

11,197

Net income (loss)

$

(10

)

 

$

20,696

 

$

(11,622

)

 

$

55,228

 

 

 

 

 

 

 

 

Net (loss) income per common share:

 

 

 

 

 

 

 

Basic

$

0.00

 

 

$

0.64

 

$

(0.37

)

 

$

1.67

Diluted

$

0.00

 

 

$

0.63

 

$

(0.37

)

 

$

1.65

 

 

 

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

 

 

 

Basic

 

30,932

 

 

 

32,434

 

 

31,397

 

 

 

33,023

Diluted

 

30,932

 

 

 

32,818

 

 

31,397

 

 

 

33,511

 

TRUEBLUE, INC.

SUMMARY CONSOLIDATED BALANCE SHEETS

(Unaudited)

 

(in thousands)

Sep 24, 2023

 

Dec 25, 2022

ASSETS

 

 

 

Cash and cash equivalents

$

47,113

 

$

72,054

Accounts receivable, net

 

276,233

 

 

314,275

Other current assets

 

36,260

 

 

43,883

Total current assets

 

359,606

 

 

430,212

Property and equipment, net

 

102,809

 

 

95,823

Restricted cash and investments

 

198,829

 

 

213,734

Goodwill and intangible assets, net

 

96,576

 

 

109,989

Other assets, net

 

157,211

 

 

169,650

Total assets

$

915,031

 

$

1,019,408

 

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

 

Accounts payable and other accrued expenses

$

48,879

 

$

76,644

Accrued wages and benefits

 

87,080

 

 

92,237

Current portion of workers’ compensation claims reserve

 

44,091

 

 

50,005

Other current liabilities

 

20,524

 

 

23,989

Total current liabilities

 

200,574

 

 

242,875

Workers’ compensation claims reserve, less current portion

 

173,361

 

 

201,005

Other long-term liabilities

 

84,470

 

 

79,213

Total liabilities

 

458,405

 

 

523,093

Shareholders’ equity

 

456,626

 

 

496,315

Total liabilities and shareholders’ equity

$

915,031

 

$

1,019,408

 

TRUEBLUE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

39 weeks ended

(in thousands)

Sep 24, 2023

 

Sep 25, 2022

Cash flows from operating activities:

 

 

 

Net income (loss)

$

(11,622

)

 

$

55,228

 

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

 

 

 

Depreciation and amortization

 

18,875

 

 

 

22,015

 

Goodwill and intangible asset impairment charge

 

9,485

 

 

 

 

Provision for credit losses

 

3,254

 

 

 

3,352

 

Stock-based compensation

 

10,219

 

 

 

7,675

 

Deferred income taxes

 

(3,344

)

 

 

2,046

 

Non-cash lease expense

 

9,449

 

 

 

9,694

 

Other operating activities

 

(1,661

)

 

 

8,772

 

Changes in operating assets and liabilities:

 

 

 

Accounts receivable

 

34,790

 

 

 

21,388

 

Income taxes receivable and payable

 

(3,001

)

 

 

186

 

Other assets

 

26,795

 

 

 

(564

)

Accounts payable and other accrued expenses

 

(26,879

)

 

 

(22,935

)

Accrued wages and benefits

 

(5,156

)

 

 

(10,277

)

Workers’ compensation claims reserve

 

(33,558

)

 

 

(4,304

)

Operating lease liabilities

 

(9,498

)

 

 

(9,673

)

Other liabilities

 

1,421

 

 

 

(2,529

)

Net cash provided by operating activities

 

19,569

 

 

 

80,074

 

Cash flows from investing activities:

 

 

 

Capital expenditures

 

(23,095

)

 

 

(22,685

)

Payments for company-owned life insurance

 

(2,347

)

 

 

 

Proceeds from company-owned life insurance

 

1,662

 

 

 

 

Purchases of restricted held-to-maturity investments

 

(26,894

)

 

 

(4,950

)

Maturities of restricted held-to-maturity investments

 

24,118

 

 

 

23,697

 

Net cash used in investing activities

 

(26,556

)

 

 

(3,938

)

Cash flows from financing activities:

 

 

 

Purchases and retirement of common stock

 

(34,178

)

 

 

(60,939

)

Net proceeds from employee stock purchase plans

 

704

 

 

 

780

 

Common stock repurchases for taxes upon vesting of restricted stock

 

(3,759

)

 

 

(4,347

)

Other

 

(96

)

 

 

(203

)

Net cash used in financing activities

 

(37,329

)

 

 

(64,709

)

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

 

(757

)

 

 

(2,482

)

Net change in cash, cash equivalents, and restricted cash

 

(45,073

)

 

 

8,945

 

Cash, cash equivalents and restricted cash, beginning of period

 

135,631

 

 

 

103,185

 

Cash, cash equivalents and restricted cash, end of period

$

90,558

 

 

$

112,130

 

 

TRUEBLUE, INC.

SEGMENT DATA

(Unaudited)

 

 

13 weeks ended

(in thousands)

Sep 24, 2023

 

Sep 25, 2022

Revenue from services:

 

 

 

PeopleReady

$

283,187

 

 

$

334,639

 

PeopleScout

 

52,944

 

 

 

77,464

 

PeopleManagement

 

137,065

 

 

 

163,618

 

Total company

$

473,196

 

 

$

575,721

 

 

 

 

 

Segment profit (1):

 

 

 

PeopleReady

$

9,656

 

 

$

28,732

 

PeopleScout

 

6,272

 

 

 

10,707

 

PeopleManagement

 

2,134

 

 

 

4,463

 

Total segment profit

 

18,062

 

 

 

43,902

 

Corporate unallocated expense

 

(8,122

)

 

 

(9,396

)

Total company Adjusted EBITDA (2)

 

9,940

 

 

 

34,506

 

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

 

(90

)

 

 

(162

)

Amortization of software as a service assets (4)

 

(1,064

)

 

 

(729

)

PeopleReady technology upgrade costs (5)

 

(696

)

 

 

(1,858

)

Executive leadership transition (6)

 

(2,492

)

 

 

 

Other adjustments, net (7)

 

(2,140

)

 

 

(189

)

EBITDA (2)

 

3,458

 

 

 

31,568

 

Depreciation and amortization

 

(6,184

)

 

 

(7,483

)

Interest and other income (expense), net

 

390

 

 

 

703

 

Income (loss) before tax benefit (expense)

 

(2,336

)

 

 

24,788

 

Income tax benefit (expense)

 

2,326

 

 

 

(4,092

)

Net income (loss)

$

(10

)

 

$

20,696

 

(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)

Costs associated with upgrading legacy PeopleReady technology.

(6)

Cost associated with our CEO transition, primarily related to accelerated vesting of stock awards.

(7)

Other adjustments for the 13 weeks ended September 24, 2023 primarily include workforce reduction costs of $1.5 million ($0.8 million in cost of services and $0.7 million in selling, general and administrative expense) and adjustments to COVID-19 government subsidies of $0.5 million. Other adjustments for the 13 weeks ended September 25, 2022 include costs of $0.2 million incurred while transitioning to a new third party administrator for workers’ compensation.

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

Adjusted net income and

Adjusted net income per diluted share

 

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

– amortization of intangibles,

– amortization of software as a service assets,

– goodwill and intangible asset impairment charge,

– accelerated depreciation,

– PeopleReady technology upgrade costs,

– executive leadership transition,

– other adjustments, net, and

– tax effect of the adjustments to U.S. GAAP.

 

 

– 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.

EBITDA and

Adjusted EBITDA

 

EBITDA excludes from net income (loss):

– income tax expense (benefit),

– interest and other (income) expense, net, and

– depreciation and amortization.

 

Adjusted EBITDA, further excludes:

– third-party processing fees for hiring tax credits,

– amortization of software as a service assets,

– goodwill and intangible asset impairment charge,

– PeopleReady technology upgrade costs,

– executive leadership transition,

– other adjustments, net.

 

 

– 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 SG&A expense

 

Selling, general and administrative expense excluding:

– third-party processing fees for hiring tax credits,

– amortization of software as a service assets,

– PeopleReady technology upgrade costs,

– executive leadership transition,

– other adjustments, net.

 

– Enhances comparability on a consistent basis and provides investors with useful insight into the underlying trends of the business.

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

(Unaudited)

 

13 weeks ended

(in thousands, except for per share data)

Sep 24, 2023

 

Sep 25, 2022

Net income (loss)

$

(10

)

 

$

20,696

 

Amortization of intangible assets

 

1,276

 

 

 

1,484

 

Amortization of software as a service assets (1)

 

 

 

 

729

 

Accelerated depreciation (2)

 

 

 

 

602

 

PeopleReady technology upgrade costs (3)

 

696

 

 

 

1,858

 

Executive leadership transition costs (4)

 

2,492

 

 

 

 

Other adjustments, net (5)

 

2,140

 

 

 

189

 

Tax effect of adjustments to net income (loss) (6)

 

(1,717

)

 

 

(1,264

)

Adjusted net income

$

4,877

 

 

$

24,294

 

 

 

 

 

Adjusted net income per diluted share

$

0.16

 

 

$

0.74

 

 

 

 

 

Diluted weighted average shares outstanding

 

31,239

 

 

 

32,818

 

 

 

 

 

Margin / % of revenue:

 

 

 

Net income (loss)

 

%

 

 

3.6

%

Adjusted net income

 

1.0

%

 

 

4.2

%

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

(Unaudited)

 

13 weeks ended

(in thousands)

Sep 24, 2023

 

Sep 25, 2022

Net income (loss)

$

(10

)

 

$

20,696

 

Income tax expense (benefit)

 

(2,326

)

 

 

4,092

 

Interest and other (income) expense, net

 

(390

)

 

 

(703

)

Depreciation and amortization

 

6,184

 

 

 

7,483

 

EBITDA

 

3,458

 

 

 

31,568

 

Third-party processing fees for hiring tax credits (7)

 

90

 

 

 

162

 

Amortization of software as a service assets (1)

 

1,064

 

 

 

729

 

PeopleReady technology upgrade costs (3)

 

696

 

 

 

1,858

 

Executive leadership transition costs (4)

 

2,492

 

 

 

 

Other adjustments, net (5)

 

2,140

 

 

 

189

 

Adjusted EBITDA

$

9,940

 

 

$

34,506

 

 

 

 

 

Margin / % of revenue:

 

 

 

Net income (loss)

 

%

 

 

3.6

%

Adjusted EBITDA

 

2.1

%

 

 

6.0

%

3. RECONCILIATION OF U.S. GAAP SELLING, GENERAL AND ADMINISTRATIVE EXPENSE TO ADJUSTED SG&A EXPENSE

(Unaudited)

 

13 weeks ended

(in thousands)

Sep 24, 2023

 

Sep 25, 2022

Selling, general and administrative expense

$

120,715

 

 

$

124,351

 

Third-party processing fees for hiring tax credits (7)

 

(90

)

 

 

(162

)

Amortization of software as a service assets (1)

 

(1,064

)

 

 

(729

)

PeopleReady technology upgrade costs (3)

 

(696

)

 

 

(1,858

)

Executive leadership transition costs (4)

 

(2,492

)

 

 

 

Other adjustments, net (5)

 

(1,320

)

 

 

(189

)

Adjusted SG&A expense

$

115,053

 

 

$

121,413

 

 

 

 

 

% of revenue:

 

 

 

Selling, general and administrative expense

 

25.5

%

 

 

21.6

%

Adjusted SG&A expense

 

24.3

%

 

 

21.1

%

(1)

Amortization of software as a service assets is reported in selling, general and administrative expense. Note, amortization of software as a service assets was included as an adjustment to net income during transitory periods ending with fiscal 2022 and is only considered an adjustment to EBITDA going forward to be consistent with the treatment of depreciation and amortization.

(2)

Accelerated depreciation for the existing systems being replaced by the upgraded PeopleReady technology platform.

(3)

Costs associated with upgrading legacy PeopleReady technology.

(4)

Cost associated with our CEO transition, primarily related to accelerated vesting of stock awards.

(5)

Other adjustments for the 13 weeks ended September 24, 2023 primarily include workforce reduction costs of $1.5 million ($0.8 million in cost of services and $0.7 million in selling, general and administrative expense) and adjustments to COVID-19 government subsidies of $0.5 million. Other adjustments for the 13 weeks ended September 25, 2022 include costs of $0.2 million incurred while transitioning to a new third party administrator for workers’ compensation.

(6)

Tax effect of the adjustments to U.S. GAAP net income (loss). The tax effect includes the application of our statutory rate of 26% to all taxable / deductible adjustments. Note, prior periods were reported using the effective rate for the respective period and have been recast to conform to the current presentation for comparability. Please refer to the reconciliations on the financial results page under the investor relations section of our website for additional information on comparable historical periods.

(7)

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

 

Contacts

Derrek Gafford, Executive Vice President and CFO

253-680-8214

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