Company returns to profitability
TrueBlue (NYSE:TBI) today announced its third quarter results
for 2020.
Third quarter revenue was $475 million, a decrease of 25 percent
compared to revenue of $637 million in the third quarter of 2019.
Third quarter net income per diluted share was $0.25 compared to a
net loss per diluted share of $0.23 in the second quarter of 2020
and net income per diluted share of $0.68 in the third quarter of
2019. Third quarter adjusted net income1 per diluted share was
$0.24 compared to an adjusted net loss per diluted share of $0.12
in the second quarter of 2020 and adjusted net income per diluted
share of $0.76 in the third quarter of 2019.
“We have taken the right actions to restore profitability and
position the company for long-term growth as the economy recovers,”
said Patrick Beharelle, CEO of TrueBlue. “During the third quarter
we saw steady improvements in our revenue trends across most of the
industries and geographies we serve. Our cost management actions
continue to show meaningful results which helps position us for
strong incremental profit margins when revenue growth returns.
“We’re adding new features to PeopleReady’s JobStack app and
refining our process to drive heavy user growth and applicant
throughput,” Mr. Beharelle continued. “Looking ahead, we see an
opportunity to leverage this technology to capture additional
market share while reducing our service delivery costs.”
“Our balance sheet continues to shine, providing financial and
operational flexibility,” said Derrek Gafford, CFO of TrueBlue.
“Our credit facility provides ample liquidity, and our debt
position is at its lowest level since 2012. We also repurchased 9%
of our common stock earlier this year.”
2020 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 2020 results on a webcast
at 2 p.m. PDT (5 p.m. EDT), today, Monday, Oct. 26, 2020. 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 2019, TrueBlue connected approximately
724,000 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 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) the continued impact of COVID-19 and
related economic impact and governmental response, (3) our ability
to successfully reduce operating expenses and otherwise adapt to
the changing economic environment caused by COVID–19, (4) our
ability to access sufficient capital to finance our operations,
including our ability to comply with or obtain waivers for
covenants contained in our revolving credit facility, (5) our
ability to attract and retain clients, (6) our ability to attract
sufficient qualified candidates and employees to meet the needs of
our clients, (7) our ability to maintain profit margins, (8) new
laws and regulations that could affect our operations or financial
results, (9) our ability to successfully execute on business
strategies to further digitize our business model, and (10) 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 per share
data)
Sep 27, 2020
Sep 29, 2019
Sep 27, 2020
Sep 29, 2019
Revenue from services
$
474,530
$
636,793
$
1,327,726
$
1,777,739
Cost of services
364,066
469,058
1,007,878
1,306,626
Gross profit
110,464
167,735
319,848
471,113
Selling, general and administrative
expense
90,100
129,800
304,681
383,745
Depreciation and amortization
7,652
8,749
24,002
28,528
Goodwill and intangible asset impairment
charge
—
—
175,189
—
Income (loss) from operations
12,712
29,186
(184,024
)
58,840
Interest and other income (expense),
net
(174
)
471
(323
)
1,851
Income (loss) before tax expense
(benefit)
12,538
29,657
(184,347
)
60,691
Income tax expense (benefit)
3,743
2,981
(34,480
)
6,333
Net income (loss)
$
8,795
$
26,676
$
(149,867
)
$
54,358
Net income (loss) per common
share:
Basic
$
0.25
$
0.69
$
(4.20
)
$
1.39
Diluted
$
0.25
$
0.68
$
(4.20
)
$
1.38
Weighted average shares
outstanding:
Basic
34,597
38,741
35,643
39,090
Diluted
34,904
39,213
35,643
39,479
TRUEBLUE, INC.
SUMMARY CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(in thousands)
Sep 27, 2020
Dec 29, 2019
ASSETS
Cash and cash equivalents
$
28,233
$
37,608
Accounts receivable, net
279,812
342,303
Other current assets
42,704
41,822
Total current assets
350,749
421,733
Property and equipment, net
66,994
66,150
Restricted cash and investments
229,815
230,932
Goodwill and intangible assets, net
124,916
311,171
Other assets, net
135,724
106,169
Total assets
$
908,198
$
1,136,155
LIABILITIES AND SHAREHOLDERS’
EQUITY
Current liabilities
$
202,427
$
230,806
Long-term debt, less current portion
1,500
37,100
Other long-term liabilities
280,089
242,276
Total liabilities
484,016
510,182
Shareholders’ equity
424,182
625,973
Total liabilities and shareholders’
equity
$
908,198
$
1,136,155
TRUEBLUE, INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
39 Weeks Ended
(in thousands)
Sep 27, 2020
Sep 29, 2019
Cash flows from operating
activities:
Net income (loss)
$
(149,867
)
$
54,358
Adjustments to reconcile net income
(loss) to net cash provided by operating activities:
Depreciation and amortization
24,002
28,528
Goodwill and intangible asset impairment
charge
175,189
—
Provision for doubtful accounts
6,582
5,997
Stock-based compensation
6,762
8,119
Deferred income taxes
(25,955
)
1,058
Non-cash lease expense
11,115
11,087
Other operating activities
1,944
(1,701
)
Changes in operating assets and
liabilities:
Accounts receivable
55,408
(17,616
)
Income tax receivable
(4,928
)
(3,982
)
Other assets
(2,646
)
(9,449
)
Accounts payable and other accrued
expenses
(12,723
)
(6,970
)
Accrued wages and benefits
(7,395
)
(141
)
Workers’ compensation claims reserve
(824
)
(7,176
)
Operating lease liabilities
(11,410
)
(11,297
)
Deferred employer payroll taxes
36,312
—
Other liabilities
(2,798
)
1,723
Net cash provided by operating
activities
98,768
52,538
Cash flows from investing
activities:
Capital expenditures
(16,244
)
(18,297
)
Divestiture of business
—
215
Purchases of restricted available-for-sale
investments
(2,310
)
(5,299
)
Sales of restricted available-for-sale
investments
3,212
3,881
Purchases of restricted held-to-maturity
investments
(32,495
)
(17,298
)
Maturities of restricted held-to-maturity
investments
24,358
25,095
Net cash used in investing
activities
(23,479
)
(11,703
)
Cash flows from financing
activities:
Purchases and retirement of common
stock
(52,346
)
(31,316
)
Net proceeds from employee stock purchase
plans
734
1,023
Common stock repurchases for taxes upon
vesting of restricted stock
(2,331
)
(1,934
)
Net change in revolving credit
facility
(35,600
)
(36,200
)
Other
(1,436
)
(203
)
Net cash used in financing
activities
(90,979
)
(68,630
)
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
(466
)
732
Net change in cash, cash equivalents,
and restricted cash
(16,156
)
(27,063
)
Cash, cash equivalents and restricted
cash, beginning of period
92,371
102,450
Cash, cash equivalents and restricted
cash, end of period
$
76,215
$
75,387
TRUEBLUE, INC.
SEGMENT DATA
(Unaudited)
13 Weeks Ended
(in thousands)
Sep 27, 2020
Sep 29, 2019
Revenue from services:
PeopleReady
$
293,546
$
413,132
PeopleManagement
147,241
159,315
PeopleScout
33,743
64,346
Total company
$
474,530
$
636,793
Segment profit (1):
PeopleReady
$
18,714
$
30,878
PeopleManagement
4,574
3,381
PeopleScout
349
10,774
Total segment profit
23,637
45,033
Corporate unallocated expense
(5,968
)
(5,769
)
Total company Adjusted EBITDA
(2)
17,669
39,264
Work Opportunity Tax Credit processing
fees (3)
(174
)
(240
)
Acquisition/integration costs (4)
—
(362
)
Other adjustments (5)
2,869
(727
)
EBITDA (2)
20,364
37,935
Depreciation and amortization
(7,652
)
(8,749
)
Interest and other income (expense),
net
(174
)
471
Income before tax expense
12,538
29,657
Income tax expense
(3,743
)
(2,981
)
Net income
$
8,795
$
26,676
(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, 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 27, 2020 primarily include $4.1 million in COVID-19
government subsidies which are partially offset by amortization of
software as a service assets of $0.6 million, which is reported in
selling, general and administrative expense, workforce reduction
costs of $0.3 million and implementation costs for cloud-based
systems of $0.1 million. Other adjustments for the 13 weeks ended
September 29, 2019 primarily include amortization of software as a
service assets of $0.4 million and implementation costs for
cloud-based systems of $0.4 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
(loss):
- 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,
- 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 (loss) and Adjusted
net income (loss) per diluted share
Net income (loss) and net income (loss)
per diluted share, excluding:
- amortization of intangibles of acquired
businesses,
- acquisition/integration costs,
- other adjustments,
- tax effect of each adjustment to U.S.
GAAP net income (loss), and
- adjustment of income taxes to our
normalized long-term expected tax rate for periods prior to Q2
2020.
- 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 (LOSS) TO ADJUSTED
NET INCOME (LOSS) AND ADJUSTED NET INCOME (LOSS) PER DILUTED SHARE
(Unaudited)
13 Weeks Ended
(in thousands, except for per share
data)
Sep 27, 2020
Jun 28, 2020
Sep 29, 2019
Net income (loss)
$
8,795
$
(8,168
)
$
26,676
Amortization of intangible assets of
acquired businesses (1)
2,041
2,071
3,858
Acquisition/integration costs (2)
—
—
362
Other adjustments (3)
(2,869
)
8,700
727
Tax effect of adjustments to net income
(loss) (4)
247
(6,706
)
(692
)
Adjustment of income taxes to normalized
effective rate (5)
—
—
(1,171
)
Adjusted net income (loss)
$
8,214
$
(4,103
)
$
29,760
Adjusted net income (loss) per diluted
share
$
0.24
$
(0.12
)
$
0.76
Diluted weighted average shares
outstanding
34,904
35,077
39,213
2. RECONCILIATION OF U.S. GAAP NET INCOME (LOSS) TO EBITDA
AND ADJUSTED EBITDA (Unaudited)
13 Weeks Ended
(in thousands)
Sep 27, 2020
Jun 28, 2020
Sep 29, 2019
Net income (loss)
$
8,795
$
(8,168
)
$
26,676
Income tax expense (benefit)
3,743
(13,475
)
2,981
Interest and other (income) expense,
net
174
412
(471
)
Depreciation and amortization
7,652
7,256
8,749
EBITDA
20,364
(13,975
)
37,935
Work Opportunity Tax Credit processing
fees (6)
174
—
240
Acquisition/integration costs (2)
—
—
362
Other adjustments (3)
(2,869
)
8,700
727
Adjusted EBITDA
$
17,669
$
(5,275
)
$
39,264
(1)
Amortization of intangible assets of acquired businesses.
(2)
Acquisition/integration costs for the acquisition of TMP Holding
LTD completed on June 12, 2018.
(3)
Other adjustments for the 13 weeks ended September 27, 2020
primarily include $4.1 million in COVID-19 government subsidies
which are partially offset by amortization of software as a service
assets of $0.6 million, which is reported in selling, general and
administrative expense, workforce reduction costs of $0.3 million
and implementation costs for cloud-based systems of $0.1 million.
Other adjustments for the 13 weeks ended June 28, 2020 primarily
include workforce reduction costs of $11.0 million and amortization
of software as a service assets of $0.6 million, partially offset
by $3.1 million in COVID-19 government subsidies. Other adjustments
for the 13 weeks ended September 29, 2019 primarily include
amortization of software as a service assets of $0.4 million and
implementation costs for cloud-based systems of $0.4 million.
(4)
Total tax effect of each of the adjustments to U.S. GAAP net
income (loss) using the effective rate of 30 percent for Q3 2020,
the effective rate of 62 percent for Q2 2020 and the expected
long-term ongoing rate of 14 percent for Q3 2019.
(5)
Adjustment of the effective income tax rate to the expected
long-term ongoing rate of 14 percent for Q3 2019. Beginning in Q2
2020, we decided not to adjust our GAAP tax rate in our adjusted
net income (loss) calculation until our profitability rises to a
more substantial level.
(6)
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201026005764/en/
Derrek Gafford, Executive Vice President and CFO
253-680-8214
TrueBlue (NYSE:TBI)
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