Strong execution despite macroeconomic
conditions
TrueBlue (NYSE:TBI) today announced its fourth quarter and
full-year results for 2022.
Fourth quarter revenue was $558 million, a decrease of 10
percent compared to revenue of $622 million in the fourth quarter
of 2021. Net income per diluted share was $0.21 compared to net
income per diluted share of $0.57 in the fourth quarter of 2021.
Fourth quarter adjusted net income1 per diluted share was $0.43
compared to adjusted net income per diluted share of $0.69 in the
fourth quarter of 2021.
Full-year revenue was $2.3 billion, an increase of 4 percent
compared to revenue of $2.2 billion in 2021. Net income per diluted
share was $1.86 compared to net income per diluted share of $1.74
in 2021. Adjusted net income per diluted share was $2.43 compared
to adjusted net income per diluted share of $2.00 in 2021.
“We executed well during the quarter despite macroeconomic
conditions,” said Steve Cooper, CEO of TrueBlue. “Disciplined
pricing, improved worker supply and effective cost management
helped offset a decline in revenue.
“Our services provide appealing solutions for companies in need
of operational and strategic flexibility,” continued Mr. Cooper.
“Our workforce services are well-positioned to assist companies in
overcoming secular shortages of blue-collar labor, while our
recruitment process outsourcing services address talent challenges
across all types of work.”
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 fourth quarter 2022 results on a webcast
at 2:30 p.m. PT (5:30 p.m. ET), today, Wednesday, Feb. 1,
2023. 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 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, 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 attract sufficient qualified candidates and employees to
meet the needs of our clients, (3) our ability to attract and
retain clients, (4) our ability to maintain profit margins, (5) our
ability to successfully execute on business strategies to further
digitalize our business model, (6) 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, (7) new laws,
regulations, and government incentives that could affect our
operations or financial results, (8) our ability to access
sufficient capital to finance our operations, including our ability
to comply with covenants contained in our revolving credit
facility, and (9) 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
52 weeks ended
(in thousands, except per share
data)
Dec 25, 2022
Dec 26, 2021
Dec 25, 2022
Dec 26, 2021
Revenue from services
$
557,695
$
621,930
$
2,254,184
$
2,173,622
Cost of services
409,846
455,154
1,652,040
1,613,302
Gross profit
147,849
166,776
602,144
560,320
Selling, general and administrative
expense
133,733
137,665
500,686
464,322
Depreciation and amortization
7,258
7,151
29,273
27,556
Income from operations
6,858
21,960
72,185
68,442
Interest expense and other income, net
133
3,528
1,231
5,408
Income before tax expense
6,991
25,488
73,416
73,850
Income tax expense (benefit)
(54)
5,278
11,143
12,216
Net income
$
7,045
$
20,210
$
62,273
$
61,634
Net income per common share:
Basic
$
0.22
$
0.58
$
1.89
$
1.77
Diluted
$
0.21
$
0.57
$
1.86
$
1.74
Weighted average shares
outstanding:
Basic
32,486
34,809
32,889
34,798
Diluted
33,014
35,621
33,447
35,434
TRUEBLUE, INC.
SUMMARY CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(in thousands)
Dec 25, 2022
Dec 26, 2021
ASSETS
Cash and cash equivalents
$
72,054
$
49,896
Accounts receivable, net
314,275
353,882
Other current assets
43,883
41,295
Total current assets
430,212
445,073
Property and equipment, net
95,823
88,090
Restricted cash and investments
213,734
221,026
Goodwill and intangible assets, net
109,989
116,749
Other assets, net
169,650
162,288
Total assets
$
1,019,408
$
1,033,226
LIABILITIES AND SHAREHOLDERS’
EQUITY
Accounts payable and other accrued
expenses
$
76,644
$
77,172
Accrued wages and benefits
92,237
100,173
Current portion of workers’ compensation
claims reserve
50,005
61,596
Other current liabilities
23,989
19,605
Total current liabilities
242,875
258,546
Workers’ compensation claims reserve, less
current portion
201,005
194,598
Other long-term liabilities
79,213
87,015
Total liabilities
523,093
540,159
Shareholders’ equity
496,315
493,067
Total liabilities and shareholders’
equity
$
1,019,408
$
1,033,226
TRUEBLUE, INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
52 weeks ended
(in thousands)
Dec 25, 2022
Dec 26, 2021
Cash flows from operating
activities:
Net income
$
62,273
$
61,634
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization
29,273
27,556
Provision for credit losses
4,462
6,493
Stock-based compensation
9,687
13,943
Deferred income taxes
3,933
752
Non-cash lease expense
12,920
14,446
Other operating activities
7,862
(1,968)
Changes in operating assets and
liabilities:
Accounts receivable
34,765
(81,616)
Income taxes receivable and payable
(2,665)
1,602
Operating lease right-of-use-asset
118
8,080
Other assets
(16,142)
(13,715)
Accounts payable and other accrued
expenses
(1,501)
16,425
Accrued wages and benefits
(7,938)
34,581
Deferred employer payroll taxes
—
(57,065)
Workers’ compensation claims reserve
(5,184)
701
Operating lease liabilities
(13,052)
(13,457)
Other liabilities
1,692
2,048
Net cash provided by operating
activities
120,503
20,440
Cash flows from investing
activities:
Capital expenditures
(30,626)
(35,006)
Payments for company-owned life
insurance
—
(4,000)
Proceeds from company-owned life
insurance
—
832
Purchases of restricted available-for-sale
investments
—
(43)
Sales of restricted available-for-sale
investments
—
7,333
Purchases of restricted held-to-maturity
investments
(18,031)
(9,411)
Maturities of restricted held-to-maturity
investments
27,712
23,935
Other
—
140
Net cash used in investing
activities
(20,945)
(16,220)
Cash flows from financing
activities:
Purchases and retirement of common
stock
(60,939)
(16,678)
Net proceeds from employee stock purchase
plans
980
1,135
Common stock repurchases for taxes upon
vesting of restricted stock
(4,480)
(3,238)
Other
(253)
(345)
Net cash used in financing
activities
(64,692)
(19,126)
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
(2,420)
(521)
Net change in cash, cash equivalents,
and restricted cash
32,446
(15,427)
Cash, cash equivalents and restricted
cash, beginning of period
103,185
118,612
Cash, cash equivalents and restricted
cash, end of period
$
135,631
$
103,185
TRUEBLUE, INC.
SEGMENT DATA
(Unaudited)
13 weeks ended
52 weeks ended
(in thousands)
Dec 25, 2022
Dec 26, 2021
Dec 25, 2022
Dec 26, 2021
Revenue from services:
PeopleReady
$
314,580
$
362,164
$
1,272,852
$
1,270,928
PeopleScout
68,676
81,924
317,518
262,953
PeopleManagement
174,439
177,842
663,814
639,741
Total company
$
557,695
$
621,930
$
2,254,184
$
2,173,622
Segment profit (1):
PeopleReady
$
22,467
$
27,411
$
87,743
$
82,398
PeopleScout
2,499
11,491
44,771
36,163
PeopleManagement
4,141
4,499
15,811
13,196
Total segment profit
29,107
43,401
148,325
131,757
Corporate unallocated expense
(8,101)
(7,344)
(31,326)
(27,937)
Total company Adjusted EBITDA
(2)
21,006
36,057
116,999
103,820
Third-party processing fees for hiring tax
credits (3)
(108)
(150)
(594)
(734)
Amortization of software as a service
assets (4)
(810)
(720)
(2,985)
(2,709)
Gain on deferred compensation assets
(5)
—
(2,897)
—
(2,897)
PeopleReady technology upgrade costs
(6)
(1,779)
(1,300)
(7,935)
(1,300)
COVID-19 government subsidies
—
91
—
4,222
Other adjustments, net (7)
(4,193)
(1,970)
(4,027)
(4,404)
EBITDA (2)
14,116
29,111
101,458
95,998
Depreciation and amortization
(7,258)
(7,151)
(29,273)
(27,556)
Interest expense and other income, net
133
3,528
1,231
5,408
Income before tax expense
6,991
25,488
73,416
73,850
Income tax (expense) benefit
54
(5,278)
(11,143)
(12,216)
Net income
$
7,045
$
20,210
$
62,273
$
61,634
(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)
Gain realized on sale of deferred
compensation mutual funds to purchase corporate owned life
insurance policies.
(6)
Costs associated with upgrading
legacy PeopleReady technology.
(7)
Other adjustments for the 13 and
52 weeks ended December 25, 2022 primarily include $4.2 million in
accelerated software costs. The 52 weeks ended December 25, 2022
also includes a benefit of $1.4 million from forfeited stock awards
associated with the CEO transition that were expensed in prior
years, partially offset by costs of $1.1 million incurred to
transition to a new third-party claims administrator for workers’
compensation. Other adjustments for the 13 and 52 weeks ended
December 26, 2021 primarily include workforce reductions costs of
$1.8 million and $2.0 million, respectively, costs incurred while
transitioning into our new Chicago office of $0.1 million and $1.8
million, respectively and other technology implementation
costs.
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 and net income per diluted
share, excluding:
– amortization of intangibles,
– amortization of software as a service
assets,
– accelerated depreciation,
– PeopleReady technology upgrade
costs,
– COVID-19 government subsidies,
– other adjustments, net, and
– tax effect of each adjustment 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:
– income taxes,
– interest expense and other income, net,
and
– depreciation and amortization.
Adjusted EBITDA, further excludes:
– third-party processing fees for hiring
tax credits,
– amortization of software as a service
assets,
– gain on deferred compensation
assets,
– PeopleReady technology upgrade
costs,
– COVID-19 government subsidies, and
– 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,
– gain on deferred compensation
assets,
– PeopleReady technology upgrade
costs,
– COVID-19 government subsidies, and
– 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 TO ADJUSTED NET INCOME AND ADJUSTED NET INCOME
PER DILUTED SHARE
(Unaudited)
13 weeks ended
52 weeks ended
(in thousands, except for per share
data)
Dec 25, 2022
Dec 26, 2021
Dec 25, 2022
Dec 26, 2021
Net income
$
7,045
$
20,210
$
62,273
$
61,634
Amortization of intangible assets
1,265
1,503
5,746
6,704
Amortization of software as a service
assets (1)
810
720
2,985
2,709
Accelerated depreciation (2)
—
—
1,658
—
PeopleReady technology upgrade costs
(3)
1,779
1,300
7,935
1,300
COVID-19 government subsidies
—
(91)
—
(4,222)
Other adjustments, net (4)
4,193
1,970
4,027
4,404
Tax effect of adjustments to net income
(5)
(981)
(1,014)
(3,392)
(1,802)
Adjusted net income
$
14,111
$
24,598
$
81,232
$
70,727
Adjusted net income per diluted
share
$
0.43
$
0.69
$
2.43
$
2.00
Diluted weighted average shares
outstanding
33,014
35,621
33,447
35,434
Margin / % of revenue:
Net income
1.3 %
3.2 %
2.8 %
2.8 %
Adjusted net income
2.5 %
4.0 %
3.6 %
3.3 %
2. RECONCILIATION OF U.S. GAAP NET INCOME TO EBITDA AND
ADJUSTED EBITDA
(Unaudited)
13 weeks ended
52 weeks ended
(in thousands)
Dec 25, 2022
Dec 26, 2021
Dec 25, 2022
Dec 26, 2021
Net income
$
7,045
$
20,210
$
62,273
$
61,634
Income tax expense (benefit)
(54)
5,278
11,143
12,216
Interest expense and other (income),
net
(133)
(3,528)
(1,231)
(5,408)
Depreciation and amortization
7,258
7,151
29,273
27,556
EBITDA
14,116
29,111
101,458
95,998
Third-party processing fees for hiring tax
credits (6)
108
150
594
734
Amortization of software as a service
assets (1)
810
720
2,985
2,709
Gain on deferred compensation assets
(7)
—
2,897
—
2,897
PeopleReady technology upgrade costs
(3)
1,779
1,300
7,935
1,300
COVID-19 government subsidies
—
(91)
—
(4,222)
Other adjustments, net (4)
4,193
1,970
4,027
4,404
Adjusted EBITDA
$
21,006
$
36,057
$
116,999
$
103,820
Margin / % of revenue:
Net income
1.3 %
3.2 %
2.8 %
2.8 %
Adjusted EBITDA
3.8 %
5.8 %
5.2 %
4.8 %
3. RECONCILIATION OF U.S. GAAP SELLING, GENERAL AND
ADMINISTRATIVE EXPENSE TO ADJUSTED SG&A EXPENSE
(Unaudited)
13 weeks ended
52 weeks ended
(in thousands)
Dec 25, 2022
Dec 26, 2021
Dec 25, 2022
Dec 26, 2021
Selling, general and administrative
expense
$
133,733
$
137,665
$
500,686
$
464,322
Third-party processing fees for hiring tax
credits (6)
(108)
(150)
(594)
(734)
Amortization of software as a service
assets (1)
(810)
(720)
(2,985)
(2,709)
Gain on deferred compensation assets
(7)
—
(2,897)
—
(2,897)
PeopleReady technology upgrade costs
(3)
(1,779)
(1,300)
(7,935)
(1,300)
COVID-19 government subsidies
—
91
—
4,097
Other adjustments, net (4)
(4,193)
(1,970)
(4,027)
(4,404)
Adjusted SG&A expense
$
126,843
$
130,719
$
485,145
$
456,375
% of revenue:
Selling, general and administrative
expense
24.0 %
22.1 %
22.2 %
21.4 %
Adjusted SG&A expense
22.7 %
21.0 %
21.5 %
21.0 %
(1)
Amortization of software as a service
assets is reported in selling, general and administrative
expense.
(2)
Accelerated depreciation for the existing
systems being replaced by the upgraded PeopleReady technology
platform.
(3)
Costs associated with upgrading legacy
PeopleReady technology.
(4)
Other adjustments for the 13 and 52 weeks
ended December 25, 2022 primarily include $4.2 million in
accelerated software costs. The 52 weeks ended December 25, 2022
also includes a benefit of $1.4 million from forfeited stock awards
associated with the CEO transition that were expensed in prior
years, partially offset by costs of $1.1 million incurred to
transition to a new third-party claims administrator for workers’
compensation. Other adjustments for the 13 and 52 weeks ended
December 26, 2021 primarily include workforce reductions costs of
$1.8 million and $2.0 million, respectively, costs incurred while
transitioning into our new Chicago office of $0.1 million and $1.8
million, respectively and other technology implementation
costs.
(5)
Total tax effect of each of the
adjustments to U.S. GAAP net income using the effective income tax
rate for the respective periods.
(6)
These third-party processing fees are
associated with generating hiring tax credits.
(7)
Gain realized on sale of deferred
compensation mutual funds to purchase corporate owned life
insurance policies.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230201005143/en/
Derrek Gafford, Executive Vice President and CFO
253-680-8214
TrueBlue (NYSE:TBI)
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