Exhibit 99.1
Labor Ready Announces 2007 Second Quarter Results
TACOMA, Wash. — July 18, 2007 — Labor Ready, Inc. (NYSE:LRW) reported revenue for the second quarter ended June 29, 2007 of $351.1 million, an increase of 3.3 percent from $339.8 million for the second quarter of 2006. Net income for the second quarter was $18.8 million or $0.41 per diluted share, an increase in net income of 0.8 percent as compared to $18.6 million or $0.35 per diluted share for the second quarter of 2006.
“During 2007, we have been experiencing positive momentum in our same branch sales growth as a result of the increased sales activity we started in the fourth quarter of 2006,” said Labor Ready CEO Steve Cooper. “We are pleased with the growth trends in same branch revenue since growing average branch revenue and profitability is our main priority.”
Revenue for the quarter from branches open 12 months or longer increased 0.7 percent over the same quarter a year ago, an improvement from the decline of 3.1 percent reported in the first quarter of 2007.
A recent acquisition provided 2.4 percent of additional revenue for the company over the same quarter a year ago. As expected, the acquisition only made a small contribution to net income due to related amortization of intangible assets.
“We intend to continue pursuing growth through strategic acquisitions that expand our blue-collar staffing services,” said Cooper. “Operating as one company with multiple blue-collar brands in the temporary help industry is a key component of our vision.”
During the quarter the company purchased approximately 0.9 million shares of its outstanding common stock for $18 million, which leaves $93 million available to purchase additional shares under the current share purchase authorization. Since the beginning of 2006, the company has purchased approximately 9.2 million shares of its common stock at the cost of $184 million.
Labor Ready opened eight new branches, acquired 17 branches and closed six branches during the quarter resulting in 932 branches in operation at the end of the quarter. Approximately five additional branch openings are planned for 2007.
Labor Ready also provided guidance for the third quarter and updated its outlook for 2007. For the third quarter, the company estimates revenue in the range of $390 million to $395 million and net income per diluted share between $0.48 and $0.50. For the year, the company estimates revenue in the range of $1.39 to $1.40 billion and net income per diluted share between $1.45 and $1.48.
Management will discuss the company’s performance with analysts on a conference call at 5 p.m. (ET) today, July 18, 2007. The conference call will be broadcast on the internet at www.laborready.com and archived later in the day for replay.
This news release contains forward-looking statements, such as statements about the ranges of revenues, gross margins and net income anticipated for future periods, improvements in safety and workers’ compensation claims and costs, strategies for increasing revenue and net income, and other factors that may affect Labor Ready’s financial results and operations in the future. Labor Ready’s actual results are, however, subject to a number of risks, including without limitation the following: 1) national and global economic conditions; 2) Labor Ready’s ability to continue to attract and retain customers and maintain profit margins in the face of new and
existing competition; 3) potential new laws and regulations that could have a materially adverse effect on Labor Ready’s operations and financial results; 4) significant labor disturbances which could disrupt industries Labor Ready serves; 5) increased costs and collateral requirements in connection with Labor Ready’s insurance obligations, including workers’ compensation insurance; 6) the adequacy of Labor Ready’s financial reserves; 7) Labor Ready’s continuing ability to comply with financial covenants in its lines of credit and other financing agreements; 8) Labor Ready’s ability to attract and retain competent employees in key positions or to find temporary employees or skilled trade workers to fulfill the needs of our customers; 9) Labor Ready’s ability to successfully complete and integrate acquisitions that it may make from time to time; 10) Labor Ready’s ability to timely execute strategies for acquired companies; and 11) other risks described in Labor Ready’s filings with the Securities and Exchange Commission, including its most recent Form 10-K and Form 10-Q filings.
About Labor Ready
Labor Ready is an international provider of blue-collar staffing with three primary service lines including on-demand labor, light industrial and skilled construction trades. The company operates under the brand names of Labor Ready, Labour Ready and Workforce for its on-demand service line; Spartan Staffing for its light industrial service line; and CLP Resources and Skilled Services for its skilled construction trades service line. Labor Ready’s customers are primarily small to mid-sized businesses in the construction, warehousing, hospitality, landscaping, transportation, light manufacturing, retail, wholesale, facilities and sanitation industries. Annually, Labor Ready serves more than 300,000 customers and puts approximately 600,000 people to work through its more than 900 branch offices in the United States, Canada, and the United Kingdom. For additional information, visit Labor Ready’s website at www.laborready.com.
For more information, contact:
Derrek Gafford, CFO
253-680-8214
Stacey Burke, VP, Corporate Communications
253-680-8291
LABOR READY, INC.
SUMMARY CONSOLIDATED STATEMENTS OF INCOME
In Thousands, except per share data
(Unaudited)
|
| Thirteen Weeks Ended |
| Twenty Six Weeks Ended |
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|
| June 29, |
| June 30, |
| June 29, |
| June 30, |
| ||||
|
| 2007 |
| 2006 |
| 2007 |
| 2006 |
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Revenue from services |
| $ | 351,131 |
| $ | 339,777 |
| $ | 641,368 |
| $ | 636,844 |
|
Cost of services |
| 239,244 |
| 230,326 |
| 436,690 |
| 434,476 |
| ||||
Gross profit |
| 111,887 |
| 109,451 |
| 204,678 |
| 202,368 |
| ||||
Selling, general and administrative expenses |
| 81,902 |
| 79,509 |
| 159,278 |
| 153,733 |
| ||||
Depreciation and amortization |
| 2,858 |
| 2,672 |
| 5,259 |
| 5,468 |
| ||||
Income from operations |
| 27,127 |
| 27,270 |
| 40,141 |
| 43,167 |
| ||||
Interest and other income, net |
| 2,438 |
| 3,001 |
| 5,719 |
| 5,747 |
| ||||
Income before tax expense |
| 29,565 |
| 30,271 |
| 45,860 |
| 48,914 |
| ||||
Income tax |
| 10,791 |
| 11,655 |
| 16,739 |
| 18,832 |
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Net income |
| $ | 18,774 |
| $ | 18,616 |
| $ | 29,121 |
| $ | 30,082 |
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Net income per common share: |
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Basic |
| $ | 0.41 |
| $ | 0.35 |
| $ | 0.61 |
| $ | 0.56 |
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Diluted |
| $ | 0.41 |
| $ | 0.35 |
| $ | 0.61 |
| $ | 0.56 |
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Weighted average shares outstanding: |
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Basic |
| 45,888 |
| 53,277 |
| 47,482 |
| 53,478 |
| ||||
Diluted |
| 46,201 |
| 53,775 |
| 47,771 |
| 54,039 |
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LABOR READY, INC.
SUMMARY CONSOLIDATED BALANCE SHEETS
In Thousands
|
| June 29, |
| December 29, |
| ||
|
| 2007 |
| 2006 |
| ||
|
| (unaudited) |
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Assets |
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Current assets |
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Cash and cash equivalents |
| $ | 58,685 |
| $ | 107,944 |
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Marketable securities |
| 50,397 |
| 91,510 |
| ||
Accounts receivable, net |
| 136,521 |
| 120,173 |
| ||
Other current assets |
| 21,904 |
| 20,131 |
| ||
Total current assets |
| 267,507 |
| 339,758 |
| ||
Property and equipment, net |
| 39,544 |
| 31,949 |
| ||
Other assets |
| 240,277 |
| 220,599 |
| ||
Total assets |
| $ | 547,328 |
| $ | 592,306 |
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Liabilities and shareholders’ equity |
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Current liabilities |
| $ | 107,984 |
| $ | 101,385 |
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Long-term liabilities |
| 143,767 |
| 138,403 |
| ||
Total liabilities |
| 251,751 |
| 239,788 |
| ||
Shareholders’ equity |
| 295,577 |
| 352,518 |
| ||
Total liabilities and shareholders’ equity |
| $ | 547,328 |
| $ | 592,306 |
|
LABOR READY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
In Thousands
(Unaudited)
|
| Twenty Six Weeks Ended |
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|
| June 29, |
| June 30, |
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|
| 2007 |
| 2006 |
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Cash Flows from Operating activities: |
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Net income |
| $ | 29,121 |
| $ | 30,082 |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization |
| 5,259 |
| 5,468 |
| ||
Provision for doubtful accounts |
| 4,184 |
| 2,999 |
| ||
Deferred income taxes |
| (3,289 | ) | (6,144 | ) | ||
Stock-based compensation |
| 3,960 |
| 3,891 |
| ||
Excess tax benefits from stock-based compensation |
| (1,045 | ) | (3,505 | ) | ||
Other operating activities |
| — |
| 414 |
| ||
Changes in operating assets and liabilities, exclusive of business acquired: |
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Accounts receivable |
| (14,557 | ) | (9,025 | ) | ||
Income taxes |
| 9,566 |
| 4,001 |
| ||
Other assets |
| 5,397 |
| 1,225 |
| ||
Accounts payable |
| 3,662 |
| (6,128 | ) | ||
Accrued wages and benefits |
| (1,792 | ) | 495 |
| ||
Workers’ compensation claims reserve |
| 1,579 |
| 10,460 |
| ||
Other current liabilities |
| — |
| (38 | ) | ||
Net cash provided by operating activities |
| 42,045 |
| 34,195 |
| ||
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Cash Flows from Investing activities: |
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Capital expenditures |
| (11,077 | ) | (6,808 | ) | ||
Maturities of marketable securities |
| 178,964 |
| 34,916 |
| ||
Purchases of marketable securities |
| (137,864 | ) | (36,255 | ) | ||
Purchase of Skilled Services Corporation, net of cash acquired |
| (26,415 | ) | — |
| ||
Change in restricted cash and other assets |
| (3,956 | ) | (2,087 | ) | ||
Other |
| — |
| (167 | ) | ||
Net cash used in investing activities |
| (348 | ) | (10,401 | ) | ||
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Cash Flows from Financing activities: |
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Purchase and retirement of common stock |
| (94,818 | ) | (51,833 | ) | ||
Net proceeds from sale of stock through options and employee benefit plans |
| 2,447 |
| 2,869 |
| ||
Excess tax benefits from stock-based compensation |
| 1,045 |
| 3,505 |
| ||
Payments on debt |
| (745 | ) | (829 | ) | ||
Net cash used in financing activities |
| (92,071 | ) | (46,288 | ) | ||
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Effect of exchange rates on cash |
| 1,115 |
| 676 |
| ||
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Net change in cash and cash equivalents |
| (49,259 | ) | (21,818 | ) | ||
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Cash and cash equivalents, beginning of period |
| 107,944 |
| 82,155 |
| ||
Cash and cash equivalents, end of period |
| $ | 58,685 |
| $ | 60,337 |
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