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TrueBlue Reports Third Quarter 2021 Results

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Second consecutive quarter of double-digit revenue growth

TACOMA, Wash., October 25, 2021--(BUSINESS WIRE)--TrueBlue (NYSE:TBI) today announced its third quarter results for 2021.

Third quarter revenue was $577 million, an increase of 22 percent compared to revenue of $475 million in the third quarter of 2020. Net income per diluted share was $0.53 compared to net income per diluted share of $0.25 in the third quarter of 2020. Third quarter adjusted net income1 per diluted share was $0.59 compared to adjusted net income per diluted share of $0.24 in the third quarter of 2020.

"Net income per diluted share more than doubled as a result of strong demand combined with gross margin expansion," said Patrick Beharelle, CEO of TrueBlue. "We are seeing businesses of all types turning to flexible workforce solutions as they grapple with worker supply challenges and a variety of uncertainties related to the Covid-19 business environment. PeopleScout exceeded pre-pandemic revenue during the quarter, PeopleManagement new business wins have been exceptionally strong throughout the year and PeopleReady revenue growth accelerated as we entered October.

"Investing in technology remains at the center of our strategy," Mr. Beharelle continued. "Our digital platforms have us well-positioned to create differentiated value for our customers and workers. Given the strength of our strategies as well as a favorable environment for flexible labor solutions, we are increasingly optimistic about our prospects to deliver sustainable long-term growth."

2021 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 2021 results on a webcast at 2:30 p.m. PT (5:30 p.m. ET), today, Monday, Oct. 25, 2021. 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 2020, TrueBlue connected approximately 490,000 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 Refer to the financial statements accompanying this release and the company’s website for more information regarding 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 access sufficient capital to finance our operations, including our ability to comply with covenants contained in our revolving credit facility, (4) our ability to attract and retain clients, (5) our ability to attract sufficient qualified candidates and employees to meet the needs of our clients, (6) our ability to maintain profit margins, (7) new laws, regulations, and government incentives that could affect our operations or financial results, (8) our ability to successfully execute on business strategies to further digitalize our business model, 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

39 weeks ended

(in thousands, except per share data)

Sep 26, 2021

Sep 27, 2020

Sep 26, 2021

Sep 27, 2020

Revenue from services

$

577,031

$

474,530

$

1,551,692

$

1,327,726

Cost of services

430,529

364,066

1,158,148

1,007,878

Gross profit

146,502

110,464

393,544

319,848

Selling, general and administrative expense

118,748

90,100

326,657

304,681

Depreciation and amortization

6,426

7,652

20,405

24,002

Goodwill and intangible asset impairment charge

175,189

Income (loss) from operations

21,328

12,712

46,482

(184,024)

Interest expense and other income, net

581

(174)

1,880

(323)

Income (loss) before tax expense (benefit)

21,909

12,538

48,362

(184,347)

Income tax expense (benefit)

3,267

3,743

6,938

(34,480)

Net income (loss)

$

18,642

$

8,795

$

41,424

$

(149,867)

Net income (loss) per common share:

Basic

$

0.53

$

0.25

$

1.19

$

(4.20)

Diluted

$

0.53

$

0.25

$

1.17

$

(4.20)

Weighted average shares outstanding:

Basic

34,873

34,597

34,788

35,643

Diluted

35,475

34,904

35,255

35,643

TRUEBLUE, INC.
SUMMARY CONSOLIDATED BALANCE SHEETS
(Unaudited)

(in thousands)

Sep 26, 2021

Dec 27, 2020

ASSETS

Cash and cash equivalents

$

49,173

$

62,507

Accounts receivable, net

330,705

278,343

Other current assets

37,631

38,035

Total current assets

417,509

378,885

Property and equipment, net

86,414

71,734

Restricted cash and investments

223,832

240,534

Goodwill and intangible assets, net

118,384

123,802

Other assets, net

163,653

165,622

Total assets

$

1,009,792

$

980,577

LIABILITIES AND SHAREHOLDERS’ EQUITY

Accounts payable and other accrued expenses

$

62,706

$

58,447

Accrued wages and benefits

89,870

122,657

Current portion of workers’ compensation claims reserve

60,936

66,007

Other current liabilities

25,272

21,856

Total current liabilities

238,784

268,967

Workers’ compensation claims reserve, less current portion

197,633

189,486

Other long-term liabilities

87,699

84,934

Total liabilities

524,116

543,387

Shareholders’ equity

485,676

437,190

Total liabilities and shareholders’ equity

$

1,009,792

$

980,577

TRUEBLUE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

39 weeks ended

(in thousands)

Sep 26, 2021

Sep 27, 2020

Cash flows from operating activities:

Net income (loss)

$

41,424

$

(149,867)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization

20,405

24,002

Goodwill and intangible asset impairment charge

175,189

Provision for credit losses

2,881

6,582

Stock-based compensation

10,149

6,762

Deferred income taxes

445

(25,955)

Non-cash lease expense

11,173

11,115

Other operating activities

(1,484)

1,944

Changes in operating assets and liabilities:

Accounts receivable

(53,626)

55,408

Income tax receivable

963

(4,928)

Operating lease right-of-use-asset

7,150

Other assets

(7,003)

(2,646)

Accounts payable and other accrued expenses

3,212

(12,723)

Other accrued wages and benefits

24,278

(7,395)

Deferred employer payroll taxes

(57,066)

36,312

Workers’ compensation claims reserve

3,075

(824)

Operating lease liabilities

(10,017)

(11,410)

Other liabilities

4,598

(2,798)

Net cash provided by operating activities

557

98,768

Cash flows from investing activities:

Capital expenditures

(28,772)

(16,244)

Purchases of restricted available-for-sale investments

(29)

(2,310)

Sales of restricted available-for-sale investments

793

3,212

Purchases of restricted held-to-maturity investments

(32,495)

Maturities of restricted held-to-maturity investments

18,346

24,358

Net cash used in investing activities

(9,662)

(23,479)

Cash flows from financing activities:

Purchases and retirement of common stock

(52,346)

Net proceeds from employee stock purchase plans

754

734

Common stock repurchases for taxes upon vesting of restricted stock

(3,035)

(2,331)

Net change in revolving credit facility

(35,600)

Other

(270)

(1,436)

Net cash used in financing activities

(2,551)

(90,979)

Effect of exchange rate changes on cash, cash equivalents and restricted cash

(613)

(466)

Net change in cash, cash equivalents, and restricted cash

(12,269)

(16,156)

Cash, cash equivalents and restricted cash, beginning of period

118,612

92,371

Cash, cash equivalents and restricted cash, end of period

$

106,343

$

76,215

TRUEBLUE, INC.
SEGMENT DATA
(Unaudited)

13 weeks ended

(in thousands)

Sep 26, 2021

Sep 27, 2020

Revenue from services:

PeopleReady

$

349,056

$

293,546

PeopleManagement

157,789

147,241

PeopleScout

70,186

33,743

Total company

$

577,031

$

474,530

Segment profit (1):

PeopleReady

$

24,690

$

18,714

PeopleManagement

2,360

4,574

PeopleScout

9,778

349

Total segment profit

36,828

23,637

Corporate unallocated expense

(7,667)

(5,968)

Total company Adjusted EBITDA (2)

29,161

17,669

Third-party processing fees for hiring tax credits (3)

(419)

(174)

Amortization of software as a service assets (4)

(670)

(575)

Workforce reduction costs (5)

(110)

(270)

COVID-19 government subsidies

92

4,071

Other adjustments, net (6)

(300)

(357)

EBITDA (2)

27,754

20,364

Depreciation and amortization

(6,426)

(7,652)

Interest expense and other income, net

581

(174)

Income before tax expense

21,909

12,538

Income tax expense

(3,267)

(3,743)

Net income

$

18,642

$

8,795

(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)

Workforce reduction costs for the 13 weeks ended September 27, 2020 were primarily due to employee reductions as part of our cost management actions in response to COVID-19 ($0.2 million in cost of services and $0.1 million in selling, general and administrative expense).

(6)

Other adjustments for the 13 weeks ended September 26, 2021 primarily include costs of $0.2 million incurred while transitioning into our new Chicago office and implementation costs for cloud-based systems of $0.1 million. Other adjustments for the 13 weeks ended September 27, 2020 primarily include lease exit costs of $0.2 million and implementation costs for cloud-based systems of $0.1 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 expense and other income, net,

- income taxes, and

- depreciation and amortization.

Adjusted EBITDA, further excludes:

- third-party processing fees for hiring tax credits,

- amortization of software as a service assets,

- workforce reductions 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 net income and Adjusted net income per diluted share

Net income (loss) and net income (loss) per diluted share, excluding:

- amortization of intangibles of acquired businesses,

- amortization of software as a service assets,

- workforce reduction 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.

1. RECONCILIATION OF U.S. GAAP NET INCOME TO ADJUSTED NET INCOME AND ADJUSTED NET INCOME PER DILUTED SHARE
(Unaudited)

13 weeks ended

(in thousands, except for per share data)

Sep 26, 2021

Sep 27, 2020

Net income

$

18,642

$

8,795

Amortization of intangible assets of acquired businesses

1,506

2,041

Amortization of software as a service assets (1)

670

575

Workforce reduction costs (2)

110

270

COVID-19 government subsidies

(92)

(4,071)

Other adjustments, net (3)

300

357

Tax effect of adjustments to net income (loss) (4)

(372)

247

Adjusted net income

$

20,764

$

8,214

Adjusted net income per diluted share

$

0.59

$

0.24

Diluted weighted average shares outstanding

35,475

34,904

2. RECONCILIATION OF U.S. GAAP NET INCOME TO EBITDA AND ADJUSTED EBITDA
(Unaudited)

13 weeks ended

(in thousands)

Sep 26, 2021

Sep 27, 2020

Net income

$

18,642

$

8,795

Income tax expense

3,267

3,743

Interest expense and other (income), net

(581)

174

Depreciation and amortization

6,426

7,652

EBITDA

27,754

20,364

Third-party processing fees for hiring tax credits (5)

419

174

Amortization of software as a service assets (1)

670

575

Workforce reduction costs (2)

110

270

COVID-19 government subsidies

(92)

(4,071)

Other adjustments, net (3)

300

357

Adjusted EBITDA

$

29,161

$

17,669

(1)

Amortization of software as a service assets is reported in selling, general and administrative expense.

(2)

Workforce reduction costs for the 13 weeks ended September 27, 2020 were primarily due to employee reductions as part of our cost management actions in response to COVID-19 ($0.2 million in cost of services and $0.1 million in selling, general and administrative expense).

(3)

Other adjustments for the 13 weeks ended September 26, 2021 primarily include costs of $0.2 million incurred while transitioning into our new Chicago office and implementation costs for cloud-based systems of $0.1 million. Other adjustments for the 13 weeks ended September 27, 2020 primarily include lease exit costs of $0.2 million and implementation costs for cloud-based systems of $0.1 million.

(4)

Total tax effect of each of the adjustments to U.S. GAAP net income (loss) using the expected income tax rate of 14 percent for 2021 and the effective income tax rate of 30 percent for Q3 2020.

(5)

These third-party processing fees are associated with generating hiring tax credits.

View source version on businesswire.com: https://www.businesswire.com/news/home/20211025005602/en/

Contacts

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

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