TrueBlue (NYSE:TBI) today announced its second quarter results
for 2023.
Second quarter revenue was $476 million, a decrease of 16
percent compared to revenue of $569 million in the second quarter
of 2022. Net loss per diluted share was $0.24 compared to net
income per diluted share of $0.72 in the second quarter of 2022.
Second quarter adjusted net income1 per diluted share was $0.17
compared to adjusted net income per diluted share of $0.82 in the
second quarter of 2022.
Included in the net loss for the second quarter is a non-cash
goodwill and intangible asset impairment charge of $9 million after
tax or $0.30 per diluted share.
“Our results reflect an environment of softening demand,” said
Steve Cooper, CEO of TrueBlue. “Given the tight labor market,
clients continue to focus on retaining employees, but they are also
increasingly focused on reducing costs. As a result, clients are
becoming more selective on which jobs they choose to fill.”
“We maintained pricing discipline in our staffing segments and
took additional actions to reduce costs,” said Taryn Owen,
President & COO of TrueBlue. “We remain highly engaged with our
clients and are well positioned to support their current and future
workforce needs.”
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 second quarter 2023 results on a webcast
at 2:30 p.m. PT (5:30 p.m. ET), today, Monday, Jul. 24,
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, 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
26 weeks ended
(in thousands, except per share
data)
Jun 25, 2023
Jun 26, 2022
Jun 25, 2023
Jun 26, 2022
Revenue from services
$
475,588
$
569,253
$
940,876
$
1,120,768
Cost of services
345,097
410,722
687,272
822,392
Gross profit
130,491
158,531
253,604
298,376
Selling, general and administrative
expense
121,282
122,034
243,927
242,602
Depreciation and amortization
6,280
7,245
12,691
14,532
Goodwill and intangible asset impairment
charge
9,485
—
9,485
—
Income (loss) from operations
(6,556
)
29,252
(12,499
)
41,242
Interest and other income (expense),
net
578
(110
)
1,592
395
Income (loss) before tax
expense
(5,978
)
29,142
(10,907
)
41,637
Income tax expense
1,345
5,129
705
7,105
Net income (loss)
$
(7,323
)
$
24,013
$
(11,612
)
$
34,532
Net (loss) income per common
share:
Basic
$
(0.24
)
$
0.73
$
(0.37
)
$
1.04
Diluted
$
(0.24
)
$
0.72
$
(0.37
)
$
1.02
Weighted average shares
outstanding:
Basic
30,966
32,707
31,629
33,318
Diluted
30,966
33,149
31,629
33,832
TRUEBLUE, INC.
SUMMARY CONSOLIDATED BALANCE
SHEETS
(Unaudited)
(in thousands)
Jun 25, 2023
Dec 25, 2022
ASSETS
Cash and cash equivalents
$
49,653
$
72,054
Accounts receivable, net
267,949
314,275
Other current assets
36,232
43,883
Total current assets
353,834
430,212
Property and equipment, net
100,277
95,823
Restricted cash and investments
206,106
213,734
Goodwill and intangible assets, net
98,210
109,989
Other assets, net
166,430
169,650
Total assets
$
924,857
$
1,019,408
LIABILITIES AND SHAREHOLDERS’
EQUITY
Accounts payable and other accrued
expenses
$
48,555
$
76,644
Accrued wages and benefits
82,961
92,237
Current portion of workers’ compensation
claims reserve
44,840
50,005
Other current liabilities
22,847
23,989
Total current liabilities
199,203
242,875
Workers’ compensation claims reserve, less
current portion
186,271
201,005
Other long-term liabilities
85,338
79,213
Total liabilities
470,812
523,093
Shareholders’ equity
454,045
496,315
Total liabilities and shareholders’
equity
$
924,857
$
1,019,408
TRUEBLUE, INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(Unaudited)
26 weeks ended
(in thousands)
Jun 25, 2023
Jun 26, 2022
Cash flows from operating
activities:
Net income (loss)
$
(11,612
)
$
34,532
Adjustments to reconcile net income
(loss) to net cash provided by operating activities:
Depreciation and amortization
12,691
14,532
Goodwill and intangible asset impairment
charge
9,485
—
Provision for credit losses
2,408
2,572
Stock-based compensation
5,294
4,487
Deferred income taxes
(22
)
2,117
Non-cash lease expense
6,249
6,518
Other operating activities
(1,099
)
6,752
Changes in operating assets and
liabilities:
Accounts receivable
43,915
12,524
Income taxes receivable and payable
(3,039
)
(3,549
)
Other assets
15,053
(8,486
)
Accounts payable and other accrued
expenses
(26,968
)
(10,629
)
Accrued wages and benefits
(9,277
)
(14,638
)
Workers’ compensation claims reserve
(19,899
)
11,404
Operating lease liabilities
(6,295
)
(6,441
)
Other liabilities
3,980
1,407
Net cash provided by operating
activities
20,864
53,102
Cash flows from investing
activities:
Capital expenditures
(15,738
)
(13,992
)
Payments for company-owned life
insurance
(2,347
)
—
Purchases of restricted held-to-maturity
investments
(9,955
)
(4,950
)
Maturities of restricted held-to-maturity
investments
15,613
17,826
Net cash used in investing
activities
(12,427
)
(1,116
)
Cash flows from financing
activities:
Purchases and retirement of common
stock
(34,200
)
(60,939
)
Net proceeds from employee stock purchase
plans
509
536
Common stock repurchases for taxes upon
vesting of restricted stock
(2,514
)
(4,132
)
Other
(91
)
(147
)
Net cash used in financing
activities
(36,296
)
(64,682
)
Effect of exchange rate changes on cash,
cash equivalents and restricted cash
(20
)
(494
)
Net change in cash, cash equivalents,
and restricted cash
(27,879
)
(13,190
)
Cash, cash equivalents and restricted
cash, beginning of period
135,631
103,185
Cash, cash equivalents and restricted
cash, end of period
$
107,752
$
89,995
TRUEBLUE, INC.
SEGMENT DATA
(Unaudited)
13 weeks ended
(in thousands)
Jun 25, 2023
Jun 26, 2022
Revenue from services:
PeopleReady
$
275,318
$
317,943
PeopleScout
59,710
89,372
PeopleManagement
140,560
161,938
Total company
$
475,588
$
569,253
Segment profit (1):
PeopleReady
$
8,158
$
20,325
PeopleScout
8,817
20,593
PeopleManagement
2,250
4,228
Total segment profit
19,225
45,146
Corporate unallocated expense
(8,215
)
(6,531
)
Total company Adjusted EBITDA
(2)
11,010
38,615
Third-party processing fees for hiring tax
credits (3)
(110
)
(162
)
Amortization of software as a service
assets (4)
(952
)
(699
)
Goodwill and intangible asset impairment
charge
(9,485
)
—
PeopleReady technology upgrade costs
(5)
(174
)
(1,748
)
Other adjustments, net (6)
(565
)
491
EBITDA (2)
(276
)
36,497
Depreciation and amortization
(6,280
)
(7,245
)
Interest and other income (expense),
net
578
(110
)
Income (loss) before tax expense
(5,978
)
29,142
Income tax expense
(1,345
)
(5,129
)
Net income (loss)
$
(7,323
)
$
24,013
(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)
Other adjustments for the 13 weeks ended
June 25, 2023 primarily include workforce reduction costs of $0.6
million ($0.2 million in cost of services and $0.4 million in
selling, general and administrative expense). Other adjustments for
the 13 weeks ended June 26, 2022 primarily include a benefit of
$1.4 million from forfeited stock awards associated with the CEO
transition that were expensed in prior years, partially offset by
$0.8 million of costs 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,
– 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
(loss):
– income tax expense,
– 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,
– goodwill and intangible asset impairment
charge,
– PeopleReady technology upgrade
costs,
– 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,
– 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)
Jun 25, 2023
Jun 26, 2022
Net income (loss)
$
(7,323
)
$
24,013
Amortization of intangible assets
1,274
1,495
Amortization of software as a service
assets (1)
—
699
Goodwill and intangible asset impairment
charge
9,485
—
Accelerated depreciation (2)
—
540
PeopleReady technology upgrade costs
(3)
174
1,748
Other adjustments, net (4)
565
(491
)
Tax effect of adjustments to net income
(loss) (5)
1,203
(749
)
Adjusted net income
$
5,378
$
27,255
Adjusted net income per diluted
share
$
0.17
$
0.82
Diluted weighted average shares
outstanding
31,185
33,149
Margin / % of revenue:
Net income (loss)
(1.5
)%
4.2
%
Adjusted net income
1.1
%
4.8
%
2. RECONCILIATION OF U.S. GAAP NET
INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDA
(Unaudited)
13 weeks ended
(in thousands)
Jun 25, 2023
Jun 26, 2022
Net income (loss)
$
(7,323
)
$
24,013
Income tax expense
1,345
5,129
Interest and other (income) expense,
net
(578
)
110
Depreciation and amortization
6,280
7,245
EBITDA
(276
)
36,497
Third-party processing fees for hiring tax
credits (6)
110
162
Amortization of software as a service
assets (1)
952
699
Goodwill and intangible asset impairment
charge
9,485
—
PeopleReady technology upgrade costs
(3)
174
1,748
Other adjustments, net (4)
565
(491
)
Adjusted EBITDA
$
11,010
$
38,615
Margin / % of revenue:
Net income (loss)
(1.5
)%
4.2
%
Adjusted EBITDA
2.3
%
6.8
%
3. RECONCILIATION OF U.S. GAAP SELLING,
GENERAL AND ADMINISTRATIVE EXPENSE TO ADJUSTED SG&A
EXPENSE
(Unaudited)
13 weeks ended
(in thousands)
Jun 25, 2023
Jun 26, 2022
Selling, general and administrative
expense
$
121,282
$
122,034
Third-party processing fees for hiring tax
credits (6)
(110
)
(162
)
Amortization of software as a service
assets (1)
(952
)
(699
)
PeopleReady technology upgrade costs
(3)
(174
)
(1,748
)
Other adjustments, net (4)
(390
)
491
Adjusted SG&A expense
$
119,656
$
119,916
% of revenue:
Selling, general and administrative
expense
25.5
%
21.4
%
Adjusted SG&A expense
25.2
%
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)
Other adjustments for the 13 weeks ended
June 25, 2023 primarily include workforce reduction costs of $0.6
million ($0.2 million in cost of services and $0.4 million in
selling, general and administrative expense). Other adjustments for
the 13 weeks ended June 26, 2022 primarily include a benefit of
$1.4 million from forfeited stock awards associated with the CEO
transition that were expensed in prior years, partially offset by
$0.8 million of costs incurred while transitioning to a new third
party administrator for workers’ compensation.
(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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230724851112/en/
Derrek Gafford, Executive Vice President and CFO
253-680-8214
TrueBlue (NYSE:TBI)
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