TrueBlue Reports Fourth Quarter and Full-Year 2020 Results

Income from operations returns to growth in the fourth quarter

TACOMA, Wash.--()--TrueBlue (NYSE:TBI) today announced its fourth quarter and full-year results for 2020.

Full-year revenue was $1.8 billion, a decrease of 22 percent compared to 2019. Net loss per diluted share was $4.01 compared to net income per diluted share of $1.61 in 2019. Adjusted net income1 per diluted share was $0.43 compared to adjusted net income per diluted share of $2.05 in 2019.

Fourth quarter revenue was $519 million, a decrease of 12 percent compared to revenue of $591 million in the fourth quarter of 2019. Net income per diluted share was $0.23 compared to net income per diluted share of $0.23 in the fourth quarter of 2019. Fourth quarter adjusted net income per diluted share was $0.33, a decrease of 15 percent compared to adjusted net income per diluted share of $0.39 in the fourth quarter of 2019.

“We saw steady improvement in our year-over-year revenue declines during the back half of the year, and we took the right actions to improve profitability, positioning the company for long-term growth as the economy continues to recover,” said Patrick Beharelle, CEO of TrueBlue. “In addition to improving revenue trends, we sustained our cost discipline during the fourth quarter to drive growth of 25 percent in income from operations. I am extremely proud of the entire TrueBlue team for coming together and staying true to our mission of connecting people and work.

“We continue to invest in our digital strategies,” Mr. Beharelle continued. “PeopleReady’s JobStack app has been a critical tool for us during the pandemic, allowing us to connect with associates and clients safely during these tough times. Heavy users of the app demonstrated disproportionately higher revenue growth. Looking ahead, our technology investments have us well-positioned to gain market share during the recovery and beyond.”

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 fourth quarter and full-year 2020 results on a webcast at 2:30 p.m. PST (5:30 p.m. EST), today, Wednesday, Feb. 3, 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 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 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 digitize 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

52 weeks ended

(in thousands, except per share data)

Dec 27, 2020

Dec 29, 2019

Dec 27, 2020

Dec 29, 2019

Revenue from services

$

518,634

$

591,040

$

1,846,360

 

$

2,368,779

Cost of services

 

397,837

 

442,205

 

1,405,715

 

 

1,748,831

Gross profit

 

120,797

 

148,835

 

440,645

 

 

619,948

Selling, general and administrative expense

 

103,626

 

132,475

 

408,307

 

 

516,220

Depreciation and amortization

 

8,029

 

9,021

 

32,031

 

 

37,549

Goodwill and intangible asset impairment charge

 

 

 

175,189

 

 

Income (loss) from operations

 

9,142

 

7,339

 

(174,882

)

 

66,179

Interest expense and other income, net

 

1,943

 

2,014

 

1,620

 

 

3,865

Income (loss) before tax expense (benefit)

 

11,085

 

9,353

 

(173,262

)

 

70,044

Income tax expense (benefit)

 

3,059

 

638

 

(31,421

)

 

6,971

Net income (loss)

$

8,026

$

8,715

$

(141,841

)

$

63,073

 

 

 

 

 

Net income (loss) per common share:

 

 

 

 

Basic

$

0.23

$

0.23

$

(4.01

)

$

1.63

Diluted

$

0.23

$

0.23

$

(4.01

)

$

1.61

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

 

Basic

 

34,529

 

37,843

 

35,365

 

 

38,778

Diluted

 

34,954

 

38,348

 

35,365

 

 

39,179

 

TRUEBLUE, INC.

SUMMARY CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands)

Dec 27, 2020

Dec 29, 2019

ASSETS

 

 

Cash and cash equivalents

$

62,507

$

37,608

Accounts receivable, net

 

278,343

 

342,303

Other current assets

 

38,035

 

41,822

Total current assets

 

378,885

 

421,733

Property and equipment, net

 

71,734

 

66,150

Restricted cash and investments

 

240,534

 

230,932

Goodwill and intangible assets, net

 

123,802

 

311,171

Other assets, net

 

165,622

 

106,169

Total assets

$

980,577

$

1,136,155

 

 

 

LIABILITIES AND SHAREHOLDERS’ EQUITY

 

 

Current liabilities

$

268,967

$

230,806

Long-term debt

 

 

37,100

Other long-term liabilities

 

274,420

 

242,276

Total liabilities

 

543,387

 

510,182

Shareholders’ equity

 

437,190

 

625,973

Total liabilities and shareholders’ equity

$

980,577

$

1,136,155

 
 

TRUEBLUE, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

 

52 weeks ended

(in thousands)

Dec 27, 2020

 

Dec 29, 2019

Cash flows from operating activities:

 

 

 

Net income (loss)

$

(141,841

)

 

$

63,073

 

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

 

 

 

Depreciation and amortization

 

32,031

 

 

 

37,549

 

Goodwill and intangible asset impairment charge

 

175,189

 

 

 

 

Provision for doubtful accounts

 

6,300

 

 

 

7,661

 

Stock-based compensation

 

9,113

 

 

 

9,769

 

Deferred income taxes

 

(26,791

)

 

 

1,263

 

Non-cash lease expense

 

15,195

 

 

 

14,823

 

Other operating activities

 

(686

)

 

 

(1,589

)

Changes in operating assets and liabilities, net of amounts divested:

 

 

 

Accounts receivable

 

57,146

 

 

 

5,450

 

Income tax receivable

 

(1,122

)

 

 

(6,480

)

Other assets

 

(2,124

)

 

 

(12,575

)

Accounts payable and other accrued expenses

 

(6,561

)

 

 

6,921

 

Accrued wages and benefits

 

55,053

 

 

 

(9,494

)

Workers’ compensation claims reserve

 

(125

)

 

 

(10,828

)

Operating lease liabilities

 

(14,562

)

 

 

(15,178

)

Other liabilities

 

(3,684

)

 

 

3,166

 

Net cash provided by operating activities

 

152,531

 

 

 

93,531

 

Cash flows from investing activities:

 

 

 

Capital expenditures

 

(27,066

)

 

 

(28,119

)

Divestiture of business

 

 

 

 

215

 

Payments for company-owned life insurance

 

(12,031

)

 

 

(12,210

)

Purchases of restricted available-for-sale investments

 

(2,896

)

 

 

(7,667

)

Sales of restricted available-for-sale investments

 

12,311

 

 

 

20,859

 

Purchases of restricted held-to-maturity investments

 

(32,495

)

 

 

(22,963

)

Maturities of restricted held-to-maturity investments

 

27,561

 

 

 

28,254

 

Other

 

205

 

 

 

 

Net cash used in investing activities

 

(34,411

)

 

 

(21,631

)

Cash flows from financing activities:

 

 

 

Purchases and retirement of common stock

 

(52,346

)

 

 

(38,826

)

Net proceeds from employee stock purchase plans

 

922

 

 

 

1,329

 

Common stock repurchases for taxes upon vesting of restricted stock

 

(2,438

)

 

 

(2,222

)

Net change in revolving credit facility

 

(37,100

)

 

 

(42,900

)

Other

 

(1,540

)

 

 

(296

)

Net cash used in financing activities

 

(92,502

)

 

 

(82,915

)

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

 

623

 

 

 

936

 

Net change in cash, cash equivalents, and restricted cash

 

26,241

 

 

 

(10,079

)

Cash, cash equivalents and restricted cash, beginning of period

 

92,371

 

 

 

102,450

 

Cash, cash equivalents and restricted cash, end of period

$

118,612

 

 

$

92,371

 

 

TRUEBLUE, INC.

SEGMENT DATA

(Unaudited)

 

13 weeks ended

 

52 weeks ended

(in thousands)

Dec 27, 2020

 

Dec 29, 2019

 

Dec 27, 2020

Dec 29, 2019

Revenue from services:

 

 

 

 

 

 

PeopleReady

$

297,471

 

 

$

364,801

 

 

$

1,099,462

 

$

1,474,062

 

PeopleManagement

 

179,306

 

 

 

171,344

 

 

 

586,822

 

 

642,233

 

PeopleScout

 

41,857

 

 

 

54,895

 

 

 

160,076

 

 

252,484

 

Total company

$

518,634

 

 

$

591,040

 

 

$

1,846,360

 

$

2,368,779

 

 

 

 

 

 

 

 

Segment profit (1):

 

 

 

 

 

 

PeopleReady

$

16,198

 

 

$

17,963

 

 

$

43,200

 

$

82,106

 

PeopleManagement

 

5,654

 

 

 

2,778

 

 

 

11,717

 

 

12,593

 

PeopleScout

 

4,450

 

 

 

5,407

 

 

 

4,525

 

 

37,831

 

Total segment profit

 

26,302

 

 

 

26,148

 

 

 

59,442

 

 

132,530

 

Corporate unallocated expense

 

(4,608

)

 

 

(5,190

)

 

 

(20,714

)

 

(21,870

)

Total company Adjusted EBITDA (2)

 

21,694

 

 

 

20,958

 

 

 

38,728

 

 

110,660

 

Work Opportunity Tax Credit processing fees (3)

 

(186

)

 

 

(240

)

 

 

(495

)

 

(960

)

Acquisition/integration costs

 

 

 

 

50

 

 

 

 

 

(1,562

)

Goodwill and intangible asset impairment charge

 

 

 

 

 

 

 

(175,189

)

 

 

Gain on deferred compensation assets (4)

 

(1,725

)

 

 

(495

)

 

 

(1,725

)

 

(495

)

Workforce reduction costs (5)

 

19

 

 

 

(2,829

)

 

 

(12,570

)

 

(3,301

)

COVID-19 government subsidies (6)

 

(964

)

 

 

 

 

 

6,211

 

 

 

Other adjustments, net (7)

 

(1,667

)

 

 

(1,084

)

 

 

2,189

 

 

(614

)

EBITDA (2)

 

17,171

 

 

 

16,360

 

 

 

(142,851

)

 

103,728

 

Depreciation and amortization

 

(8,029

)

 

 

(9,021

)

 

 

(32,031

)

 

(37,549

)

Interest expense and other income, net

 

1,943

 

 

 

2,014

 

 

 

1,620

 

 

3,865

 

Income (loss) before tax expense (benefit)

 

11,085

 

 

 

9,353

 

 

 

(173,262

)

 

70,044

 

Income tax expense (benefit)

 

(3,059

)

 

 

(638

)

 

 

31,421

 

 

(6,971

)

Net income (loss)

$

8,026

 

 

$

8,715

 

 

$

(141,841

)

$

63,073

 

 
(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 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)

Gain realized on sale of deferred compensation mutual funds to purchase corporate owned life insurance policies.

 

(5)

Workforce reduction costs for the 13 and 52 weeks ended December 27, 2020 were primarily due to employee reductions as part of our cost management actions in response to COVID-19. For the 13 and 52 weeks ended December 29, 2019, the workforce reductions costs were primarily associated with employee reductions in the PeopleReady business.

 

(6)

Net impact of COVID-19 related government subsidies. For the 13 and 52 weeks ended December 27, 2020, we received government subsidies of $2.7 million and $9.9 million, respectively. We elected to distribute a portion of the total benefit for the year to our employees in the form of a $3.7 million bonus, resulting in a net cost of $1.0 million for Q4 and a net benefit of $6.2 million for the fiscal year.

 

(7)

Other adjustments for the 13 and 52 weeks ended December 27, 2020 primarily include lease expense of $0.7 million incurred during the build-out phase of our Chicago office, amortization of software as a service assets of $0.6 million and $2.3 million, respectively, which is reported in selling, general and administrative expense, and implementation costs for cloud-based systems of $0.1 million and $0.9 million, respectively. For the 52 weeks ended December 27, 2020, these expenses were offset by a $6.3 million benefit from a reduction in expected costs to comply with the Affordable Care Act. Other adjustments for the 13 and 52 weeks ended December 29, 2019 primarily include implementation costs for cloud-based systems of $0.6 million and $3.2 million, respectively, and amortization of software as a service assets of $0.5 million and $1.6 million, respectively. For the 52 weeks ended December 29, 2019, these expenses were slightly offset by $3.9 million of workers’ compensation benefit related to additional insurance coverage associated with former workers’ compensation carriers that are in liquidation.

 

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:

- Work Opportunity Tax Credit third-party processing fees,

- acquisition/integration costs,

- goodwill and intangible asset impairment charge,

- gain on deferred compensation 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 (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,

- workforce reduction costs,

- COVID-19 government subsidies

- other adjustments, net,

- 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 AND ADJUSTED NET INCOME PER DILUTED SHARE
(Unaudited)

 

 

Q4 2020

 

Q4 2019

 

2020

 

2019

 

13 weeks ended

 

52 weeks ended

(in thousands, except for per share data)

Dec 27, 2020

 

Dec 29, 2019

 

Dec 27, 2020

 

Dec 29, 2019

Net income (loss)

$

8,026

 

 

$

8,715

 

 

$

(141,841

)

 

$

63,073

 

Amortization of intangible assets of acquired businesses

 

2,028

 

 

 

4,003

 

 

 

10,144

 

 

 

17,899

 

Acquisition/integration costs

 

 

 

 

(50

)

 

 

 

 

 

1,562

 

Goodwill and intangible asset impairment charge

 

 

 

 

 

 

 

175,189

 

 

 

 

Workforce reduction costs (1)

 

(19

)

 

 

2,829

 

 

 

12,570

 

 

 

3,301

 

COVID-19 government subsidies, net (2)

 

964

 

 

 

 

 

 

(6,211

)

 

 

 

Other adjustments, net (3)

 

1,667

 

 

 

1,084

 

 

 

(2,189

)

 

 

614

 

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

 

(1,280

)

 

 

(1,102

)

 

 

(28,729

)

 

 

(3,273

)

Adjustment of income taxes to normalized effective rate (5)

 

 

 

 

(671

)

 

 

(3,719

)

 

 

(2,835

)

Adjusted net income

$

11,386

 

 

$

14,808

 

 

$

15,214

 

 

$

80,341

 

 

 

 

 

 

 

 

 

Adjusted net income per diluted share

$

0.33

 

 

$

0.39

 

 

$

0.43

 

 

$

2.05

 

 

 

 

 

 

 

 

 

Diluted weighted average shares outstanding

 

34,954

 

 

 

38,348

 

 

 

35,658

 

 

 

39,179

 

 
 

2.

 

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

 

 

Q4 2020

 

Q4 2019

 

2020

 

2019

 

13 weeks ended

 

52 weeks ended

(in thousands)

Dec 27, 2020

 

Dec 29, 2019

 

Dec 27, 2020

 

Dec 29, 2019

Net income (loss)

$

8,026

 

$

8,715

 

$

(141,841

)

$

63,073

 

Income tax expense (benefit)

 

3,059

 

 

638

 

 

(31,421

)

 

6,971

 

Interest expense and other (income), net

 

(1,943

)

 

(2,014

)

 

(1,620

)

 

(3,865

)

Depreciation and amortization

 

8,029

 

 

9,021

 

 

32,031

 

 

37,549

 

EBITDA

 

17,171

 

 

16,360

 

 

(142,851

)

 

103,728

 

Work Opportunity Tax Credit processing fees (6)

 

186

 

 

240

 

 

495

 

 

960

 

Acquisition/integration costs

 

 

 

(50

)

 

 

 

1,562

 

Goodwill and intangible asset impairment charge

 

 

 

 

 

175,189

 

 

 

Gain on deferred compensation assets (7)

 

1,725

 

 

495

 

 

1,725

 

 

495

 

Workforce reduction costs (1)

 

(19

)

 

2,829

 

 

12,570

 

 

3,301

 

COVID-19 government subsidies, net (2)

 

964

 

 

 

 

(6,211

)

 

 

Other adjustments, net (3)

 

1,667

 

 

1,084

 

 

(2,189

)

 

614

 

Adjusted EBITDA

$

21,694

 

$

20,958

 

$

38,728

 

$

110,660

 

 
(1)

Workforce reduction costs for the 13 and 52 weeks ended December 27, 2020 were primarily due to employee reductions as part of our cost management actions in response to COVID-19. For the 13 and 52 weeks ended December 29, 2019, the workforce reductions costs were primarily associated with employee reductions in the PeopleReady business.

 

(2)

Net impact of COVID-19 related government subsidies. For the 13 and 52 weeks ended December 27, 2020, we received government subsidies of $2.7 million and $9.9 million, respectively. We elected to distribute a portion of the total benefit for the year to our employees in the form of a $3.7 million bonus, resulting in a net cost of $1.0 million for Q4 and a net benefit of $6.2 million for the fiscal year.

 

(3)

Other adjustments for the 13 and 52 weeks ended December 27, 2020 primarily include lease expense of $0.7 million incurred during the build-out phase of our Chicago office, amortization of software as a service assets of $0.6 million and $2.3 million, respectively, which is reported in selling, general and administrative expense, and implementation costs for cloud-based systems of $0.1 million and $0.9 million, respectively. For the 52 weeks ended December 27, 2020, these expenses were offset by a $6.3 million benefit from a reduction in expected costs to comply with the Affordable Care Act. Other adjustments for the 13 and 52 weeks ended December 29, 2019 primarily include implementation costs for cloud-based systems of $0.6 million and $3.2 million, respectively, and amortization of software as a service assets of $0.5 million and $1.6 million, respectively. For the 52 weeks ended December 29, 2019, these expenses were slightly offset by $3.9 million of workers’ compensation benefit related to additional insurance coverage associated with former workers’ compensation carriers that are in liquidation.

 

(4)

Total tax effect of each of the adjustments to U.S. GAAP net income (loss) using the effective rate for the respective periods in 2020 and the expected long-term ongoing rate of 14 percent for Q4 and fiscal year 2019.

 

(5)

Adjustment of the effective income tax rate to the expected long-term ongoing rate of 14 percent for Q4 and fiscal year 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. Thus the adjustment for fiscal year 2020 relates to the Q1 2020 adjustment of the effective income tax rate to the long-term ongoing rate of 12 percent expected at that time.

 

(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.

 

(7)

Gain realized on sale of deferred compensation mutual funds to purchase corporate owned life insurance policies.

 

Contacts

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

Contacts

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