Market Overview

TrueBlue Reports Fiscal Second Quarter 2018 Results

Share:

TrueBlue, Inc. (NYSE:TBI) announced today its fiscal second quarter 2018
results.

Revenue was $614 million, an increase of 1 percent, compared to revenue
of $610 million in the fiscal second quarter of 2017. Organic revenue1
excluding the divested PlaneTechs business increased by 2 percent. Net
income per diluted share was $0.44, an increase of 42 percent, compared
to $0.31 in the fiscal second quarter of 2017. Adjusted net income per
diluted share2 was $0.57, an increase of 36 percent, compared
to $0.42 in the fiscal second quarter of 2017.

"We are pleased with this quarter's results which included revenue
growth at PeopleReady, operating margin expansion and strong EPS
growth," TrueBlue CEO Steve Cooper said. "We experienced widespread
revenue improvements in our PeopleReady business driven by a consistent
focus on business development activity. Efforts to reduce our cost of
services across all segments continue to produce value resulting in our
tenth consecutive quarter of gross margin expansion."

"We made strong progress advancing our key strategies. We acquired TMP
Holdings in the United Kingdom, the world's second largest RPO market.
This acquisition increases our ability to win multi-continent
engagements by adding a physical presence in Europe, referenceable
clients and employer branding capabilities. On the technology front,
JobStackTM, our PeopleReady mobile staffing technology, is
transforming how people find work and how businesses find people. AffinixTM,
our PeopleScout proprietary talent acquisition technology, is receiving
praise from customers and a high level of interest from prospective
clients."

2018 Outlook

The company estimates revenue for the fiscal third quarter of 2018 will
range from $662 million to $677 million. It also estimates net income
per diluted share will range from $0.54 to $0.60 and adjusted net income
per diluted share will range from $0.75 to $0.81.

Management will discuss fiscal second quarter 2018 results on a
webcast at 2 p.m. PT (5 p.m. ET), today, Monday, July 30. 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, while connecting approximately 740,000 people with work in
2017. TrueBlue's PeopleReady segment offers industrial staffing
services, PeopleManagement offers contingent and productivity-based
on-site industrial 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 Organic revenue excludes acquired revenue.
2 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 customers, (3) our ability to maintain profit margins, (4) new
laws and regulations that could have a material effect on our operations
or financial results, (5) our ability to successfully complete and
integrate acquisitions (6) our ability to attract sufficient qualified
candidates and employees to meet the needs of our customers, (7) our
ability to successfully execute on business strategies and initiatives
such as the consolidation of our service lines and leveraging of mobile
technology, and (8) uncertainty surrounding the interpretation and
application of the recent 2017 Tax Cuts and Jobs Act and 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 a complete perspective 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     26 Weeks Ended
(in thousands, except per share data)     Jul 1, 2018     Jul 2, 2017 Jul 1, 2018     Jul 2, 2017
Revenue from services $ 614,301     $ 610,122 $ 1,168,689     $ 1,178,366
Cost of services     448,717       454,842 859,837     883,657
Gross profit 165,584 155,280 308,852 294,709
Selling, general and administrative expense 134,207 124,754 259,970 246,598
Depreciation and amortization     10,101       12,287 20,191     23,461
Income from operations 21,276 18,239 28,691 24,650
Interest and other income (expense), net     (968 )     155 1,236     229
Income before tax expense 20,308 18,394 29,927 24,879
Income tax expense     2,576       5,260 3,440     7,071
Net income     $ 17,732       $ 13,134 $ 26,487     $ 17,808
 
Net income per common share:
Basic $ 0.44 $ 0.32 $ 0.66 $ 0.43
Diluted $ 0.44 $ 0.31 $ 0.65 $ 0.43
 
Weighted average shares outstanding:
Basic 40,227 41,579 40,335 41,608
Diluted 40,469 41,856 40,576 41,875
 
 
TRUEBLUE, INC.
SUMMARY CONSOLIDATED BALANCE SHEETS

(Unaudited)

 
(in thousands)     Jul 1, 2018     Dec 31, 2017
ASSETS        
Cash and cash equivalents $ 33,408 $ 28,780
Accounts receivable, net 370,588 374,273
Other current assets     28,970     25,226
Total current assets 432,966 428,279
Property and equipment, net 57,055 60,163
Restricted cash and investments 239,390 239,231
Goodwill and intangible assets, net 341,455 331,309
Other assets, net     53,354     50,049
Total assets     $ 1,124,220     $ 1,109,031
 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities $ 219,129 $ 212,419
Long-term debt, less current portion 117,199 116,489
Other long-term liabilities     224,591     225,276
Total liabilities 560,919 554,184
Shareholders' equity     563,301     554,847
Total liabilities and shareholders' equity     $ 1,124,220     $ 1,109,031
 
 
TRUEBLUE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 
    26 Weeks Ended
(in thousands)     Jul 1, 2018     Jul 2, 2017
Cash flows from operating activities:    
Net income $ 26,487 $ 17,808
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 20,191 23,461
Provision for doubtful accounts 5,571 3,619
Stock-based compensation 5,983 5,146
Deferred income taxes 1,373 2,975
Other operating activities 102 2,022
Changes in operating assets and liabilities:
Accounts receivable 888 11,925
Income tax receivable (3,641 ) 8,828
Other assets (3,522 ) 5,977
Accounts payable and other accrued expenses 3,767 (13,181 )
Accrued wages and benefits (1,423 ) (4,560 )
Workers' compensation claims reserve (9,235 ) 767
Other liabilities     2,900       (580 )
Net cash provided by operating activities     49,441       64,207  
Cash flows from investing activities:
Capital expenditures (6,468 ) (9,137 )
Acquisition of business (22,742 )
Divestiture of business 8,800
Purchases of restricted investments (10,730 ) (20,712 )
Maturities of restricted investments     13,044       13,546  
Net cash used in investing activities     (18,096 )     (16,303 )
Cash flows from financing activities:
Purchases and retirement of common stock (19,065 ) (15,530 )
Net proceeds from stock option exercises and employee stock purchase
plans
757 858
Common stock repurchases for taxes upon vesting of restricted stock (2,403 ) (2,873 )
Net change in revolving credit facility 21,299 (25,303 )
Payments on debt (22,855 ) (1,133 )
Payment of contingent consideration at acquisition date fair value           (18,300 )
Net cash used in financing activities (22,267 ) (62,281 )
Effect of exchange rate changes on cash, cash equivalents and
restricted cash
    (919 )     (154 )
Net change in cash, cash equivalents, and restricted cash 8,159 (14,531 )
Cash, cash equivalents and restricted cash, beginning of period     73,831       103,222  
Cash, cash equivalents and restricted cash, end of period     $ 81,990       $ 88,691  
 

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 costs.

 

- 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:
-
adjustment to the gain on divestiture,
- amortization of
intangibles of acquired businesses, as well as accretion expense
related to acquisition earn-out,
- acquisition/integration
costs,
- other costs,
- tax effect of each adjustment to
U.S. GAAP net income, and
- adjusted 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 Revenue from services excluding acquired entity revenue. - 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.
 
 
1. RECONCILIATION OF U.S. GAAP NET INCOME TO ADJUSTED NET INCOME
AND ADJUSTED NET INCOME, PER DILUTED SHARE

(Unaudited)

 
    Q2 2018     Q2 2017     Q3 2018 Outlook*
13 Weeks Ended 13 Weeks Ended 13 Weeks Ended
(in thousands, except for per share data)     Jul 1, 2018 Jul 2, 2017 Sep 30, 2018
Net income $ 17,732 $ 13,134 $ 21,700 — $ 24,200
Adjustment to the gain on divestiture (1) 290
Amortization of intangible assets of acquired businesses (2) 5,174 5,742 5,200
Acquisition/integration costs (3) 457 1,600
Other costs (4) 1,264 3,000
Tax effect of adjustments to net income (5) (1,150 ) (1,608 ) (1,600)
Adjustment of income taxes to normalized effective rate (6)     (673 ) 110  
Adjusted net income     $ 23,094   $ 17,378   $ 29,900 — $ 32,400
 
Adjusted net income, per diluted share $ 0.57 $ 0.42 $ 0.75 — $ 0.81
 
Diluted weighted average shares outstanding 40,469 41,856 40,100
 
 
2. RECONCILIATION OF U.S. GAAP NET INCOME TO EBITDA AND ADJUSTED
EBITDA

(Unaudited)

 
    Q2 2018     Q2 2017     Q3 2018 Outlook*
13 Weeks Ended 13 Weeks Ended 13 Weeks Ended
(in thousands)     Jul 1, 2018 Jul 2, 2017 Sep 30, 2018
Net income $ 17,732 $ 13,134 $ 21,700 — $ 24,200
Income tax expense 2,576 5,260 4,100 — 4,600
Interest and other (income) expense, net 968 (155 ) 200
Depreciation and amortization     10,101 12,287   10,400
EBITDA 31,377 30,526 36,500 — 39,500
Work Opportunity Tax Credit processing fees (7) 264 16 200
Acquisition/integration costs (3) 457 1,600
Other costs (4)     1,264   3,000
Adjusted EBITDA     $ 33,362 $ 30,542   $ 41,300 — $ 44,300
* Totals may not sum due to rounding
 
 
3. RECONCILIATION OF U.S. GAAP REVENUE TO ORGANIC REVENUE

(Unaudited)

 
    Q2 2018     Q2 2017
13 Weeks Ended 13 Weeks Ended
(in thousands)     Jul 1, 2018 Jul 2, 2017
Revenue from services $ 614,301 $ 610,122
Acquired entity revenue     (2,851 )
Organic revenue     $ 611,450   $ 610,122
 
(1)     Adjustment to the gain on the divestiture of our PlaneTechs service
line as we continue to finalize actual costs incurred. PlaneTechs
was sold mid-March 2018.
 
(2) Amortization of intangible assets of acquired businesses as well as
accretion expense related to the SIMOS acquisition earn-out.
 
(3) Acquisition/integration costs relate to the acquisition of TMP
Holdings LTD completed on June 12, 2018.
 
(4) Other costs for the 13 weeks ended Jul. 1, 2018 and the Q3 2018
outlook include implementation costs for cloud-based systems. Other
costs included in the Q3 2018 outlook also include accelerated
vesting of stock per the CEO's employment contract associated with
the leadership transition.
 
(5) Total tax effect of each of the adjustments to U.S. GAAP net income
using the expected ongoing rate of 16 percent for 2018, due to the
enacted U.S. Tax Cuts and Jobs Act, and 28 percent for 2017.
 
(6) Adjustment of the effective income tax rate to the expected ongoing
rate of 16 percent for 2018, due to the enacted U.S. Tax Cuts and
Jobs Act, and 28 percent for 2017.
 
(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 and reduce our income taxes.
 
 
TRUEBLUE, INC.
SEGMENT INFORMATION
 
3. SEGMENT DATA

(Unaudited)

 
    13 Weeks Ended
(in thousands)     Jul 1, 2018     Jul 2, 2017
Revenue from services:    
PeopleReady $ 377,460 $ 370,712
PeopleManagement 178,839 192,887
PeopleScout     58,002     46,523
Total company     614,301     610,122
 
Segment profit (1):
PeopleReady $ 23,198 $ 19,170
PeopleManagement 4,712 6,286
PeopleScout     11,320     10,129
Total segment profit 39,230 35,585
Corporate unallocated expense     (5,868)     (5,043)
Total company Adjusted EBITDA 33,362 30,542
Work Opportunity Tax Credit processing fees (2) (264) (16)
Acquisition/integration costs (3) (457)
Other costs (4)     (1,264)    
EBITDA 31,377 30,526
Depreciation and amortization (10,101) (12,287)
Interest and other income (expense), net     (968)     155
Income before tax expense 20,308 18,394
Income tax expense     (2,576)     (5,260)
Net income     $ 17,732     $ 13,134
 
(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 costs not considered to be ongoing
costs of the segment. Segment profit is comparable to segment
adjusted EBITDA amounts reported in prior years.
 
(2) 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.
 
(3) Acquisition/integration costs relate to the acquisition of TMP
Holdings LTD completed on June 12, 2018.
 
(4) Other costs include implementation costs for cloud-based systems.

View Comments and Join the Discussion!