TrueBlue Reports Fourth Quarter and Full-year 2022 Results

·16-min read

Strong execution despite macroeconomic conditions

TACOMA, Wash., February 01, 2023--(BUSINESS WIRE)--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/

Contacts

Derrek Gafford, Executive Vice President and CFO
253-680-8214