TBI - Earnings call transcript Q2 2019

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Operator

Good afternoon. My name is Jesse, and I'll be your conference operator today. At this time, I would like to welcome everyone to the TrueBlue Second Quarter 2019 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session [Operator Instructions] Thank you.

may conference. you CFO Gafford, begin your Derrek

Derrek Gafford

Good call. Executive I'm and thank Officer, joining today's you for here Beharelle. afternoon, everyone, Patrick with our Chief

Before assume of which that subject to remind presentation want uncertainties, several to are we and update and and we contain all call obligation slide everyone statements, forward-looking risks begin, I no today's to actual today's SEC forward-looking some from our of described cause in uncertainties, filings, materially These our which in and press to risks statements. and those revise forward-looking any release differ statements. results could are in or

non-GAAP financial trueblue.com of and their to today's you when for the use We reconciliations release, these terms earnings measures section, presenting understanding under results. We in complete non-GAAP the our purpose. Investor encourage at or Relations review a

are Any stated. unless year, on comparisons the to a otherwise in period the today based made same prior comparison

and website audio on Lastly, conclusion after of we prepared available be our will the call, remarks full of soon be call. a the at will copy also a transcript our providing today's replay and

that, Patrick. call turn the over to I'll With

Patrick Beharelle

welcome, and Derrek, We today's to us. you, Thank appreciate you call. joining everyone,

clients. X% volumes down experienced the attributable revenue lower During pace of growth in within flat Total from versus down our of the we slower was prior to year, businesses was demand second a quarter, which QX.

share to While the per revenue well EBITDA costs as manage effectively able in that challenging, resulting income I'm were environment margin earnings growth was as we net and pleased expansion. adjusted

share EBITDA by the period adjusted prior earnings margins adjusted from per points. basis and generated $X.XX of XX% up We XX expanded

under with shareholders another shares current million enhance buyback to progress initiatives make returns, we returning remaining have capital of authorization. our to to digital continue to designed also of drive worth still million Consistent long-term growth. goal our $XX our and repurchased $X We on

North PeopleReady. PeopleReady like XX% with total on leading each is within financial segment I'd and segments our and on-demand and American company of the labor starting our industrial few you of minutes update of and segment skilled provider the staffing of take to XX-month revenue strategic largest to XX% a market in trailing Now results initiatives the trades profit. represents

was revenue to It's same-client own as to we rather to use lower don't note services volumes demand own reported many have quarter themselves the their that lower X% due within their our PeopleReady's of important on part reluctance us tell slowed. sense during clients our down businesses. our clients that the businesses any

operational at on also costs investments the Consistent some the effectively within PeopleReady. with trimmed time, our managing But we same across focus for cost we are growth. have business, strategic making

reaching two, curve in and the assessments four, clients to and we a clients example, team experience a satisfaction success are new the out terms client an operational usage. touch three, dedicated and up to with helping critical points: client leaders, client days; one, follow-up and is new clients early move This onboarding As team. declining sales our PeopleReady who key seasoned our of JobStack volumes; proactively of launched four in enhancing capabilities; recently ensuring

one you digital most our initiatives via of is our know PeopleReady. the mobile many app As within transformation strategic of JobStack important

mobile business. do we JobStack transforming Our the is app way

users seen quarters, disproportionately of revenue Over clients growth high are that we've several from the past heavy JobStack.

up of the We've deployed front. and XXXX. progress app critical quarter during than working this XXX,XXX a representing very of rate via as recently JobStack XX% We've have within the approximately we're quarter been fill XX%, to the on as hard the need digital we more made mass the from build shifts we with fourth pleased

remains one worker in in million seven every shifts X.X Our goal of reach. or seconds dispatching XXXX

December. now XX,XXX using from clients approximately XX% the XX,XXX is app, Associate up north we have in adoption of and

to is critical have we client drive crank key operational JobStack experience results. leverage team of next the to just like that financial I Now described with mass, initiatives, the the turn

XX-month trailing in volume provides decline business larger Amazon's are our of clients and contingent segment due business duration workforce the strategic price to was This retail and with PeopleManagement longer on-site profit. client. at disclosed revenue and company previously American for to compelling market segment. next needs total half solutions down Roughly loss of North XX% the of XX%. industrial Revenue namely staffing this for of fit another reductions offer Canadian perfect represents is workers. Turning that XX% headwinds, and value

is consistent. slowing Once remains again, conditions business by earlier. that mentioned due the remainder to The I focus our experienced our clients

Specifically, report new new logo pleased engagements wins. on on-site we client to and to I'm look add positive progress

XX% a year. early secured business last new increase wins basis, over of stages period implementation are wins, the million we've year-to-date a representing same the Many annualized and in these $XX On ramp new in up. of

provider months the XX to X% trailing segment. Turning but profit. represents leader is which offerings an volume in organic primarily and XX% basis, positions overall, to outsourcing of process recruitment PeopleScout again total was revenue our within and of service lower XX% segment down global last was through on Revenue permanent and XX% managed due our company clients. existing up filling was

service choppiness Despite some volumes, recent getting we're we good hiring client traction our feel offerings. in with

star Nelson by was the including it an provider Everest by PeopleScout by one recognized a in as parties, recognized as and being every assessment on by MSP Hall selected category HRO worldwide Today as RPO number QX, evaluates. recognized its leader and performer matrix RPO Group leader During ranked third several

Employer are is PeopleScout's we for proud of accolade, particularly the in Times by recognition Military Veteran Best Another its ranking.

aimed is in expand our PeopleScout market RPO to is North position American our global for capabilities. on and strategy the Our at leadership unchanged capitalizing

to tool compete next-generation is already improving marketplace. HR in ability Affinix our our that is proprietary the

with clear that differentiator For RPO reason example, being pursuits, PeopleScout and in for selected. a sales several recent winning buyers shared a was Affinix key us

in clients win candidate helping hiring the are is Moreover, clients process. and Affinix In to experiencing because improved improvements candidate us fully in our flow, implemented on short, time tangible the satisfaction. candidate the marketplace, Affinix fill, see

marks number of provider our of compete one-year of RPO in position enhancing multi-continent helped the services acquisition by UK, anniversary to global has TMP Holdings one for which QX our as engagements. ability bolster PeopleScout's the the

to revenue and than forward. pleased capabilities for TMP report deals. excited expected, We're the execution prospects in came making better multi-continent our about we're this on going We're and that enhancing progress business for profit

it PeopleManagement the As Seaton, business. Staff five-year of Management legacy marks included PeopleScout also and brand of QX happens, the our acquisition anniversary within which the

five-year the company's rate TrueBlue capital XX% RPO segment XX%. growth The the profit of annual compounded providing a of of strategic accounts entry a Seaton has and higher-margin portfolio, diversified for acquisition PeopleScout profit now higher-growth, into point human business. segment achieved

and on a we're excess flow initiatives Summarizing path executing primary sustainable our to our capital our growth, putting performance, three return to of to enhance cash our profitability, segments costs towards shareholders. free leveraging on managing

of is the These technology, clients businesses, many work. regardless sharp along areas that are world changing use strategic of in embracing, which something the ebbs flows focus, our us own of of with opportunities their and ahead of the our capture help will

the now over greater I'll Derrek, results. detail call financial pass to around who share our will

Derrek Gafford

to revenue, flat $XXX million businesses. lower same-customer was quarter, Thank million was you, decrease the due growth was of from QX in X% outlook. down attributable primarily million below $XXX within to volumes to less which XXXX, Total for Patrick. our Revenue a our revenue $XXX customers'

X% flat. a revenue versus was after of business, Easter period three which timing was quarter up QX. of the occurred the and during X% decline first two-week shift QX, PeopleReady in within change the The trend of for week QX the in growth most experienced Revenue in X% prominent normalizing of the

a Revenue evident physical June not week quarter did remained rebound throughout our the with of rate culminating exit to the most demand decline in in industries The negative associated pace in X%. quarter, within was fourth goods. results in slowing and consolidated the of

percentage in in in by For XX retail, points year-over-year trend to trend X decelerated in example, QX, percentage QX, transportation. compared the and X by manufacturing year-over-year percentage in the points by points

Net income exceeded diluted $X.XX share net $X.XX $X.XX of $X.XX per exceeded and to $X.XX $X.XX end adjusted of income outlook, high of high of the the per end to outlook. share our our diluted

respectively. XX% on and of EPS year up adjusted growth and last strong XX% top QX and EPS respectively, in of XX% adjusted and EPS were EPS XX%

scale of Credits. reductions incentive our effective the income level XX% to to by was Our tax actions The rate, performance trends. to quarter rate for to below revenue was XX% costs driven given current a due as as the well our Tax costs of program Opportunity demand, of expected Work variety the additional

which Gross actions margin compared acquisition $X XXXX, million, of gross TMP, due million to discussed basis margin. lower the of cost operating to management down the points a primarily XX.X%, carries to $X was QX SG&A cost acquired was due TMP expense of or excluding earlier. down the XX

up a PeopleScout acquired the XX cost of business diminishing arrangement we Amazon associated discussed the to quarter, points some segment the an our to business million QX $XX.X of revenue Staff customer XXXX the buyer. due and client related of CMOS a a was impact from lost discussed Management to our business account. that to flat reductions. Adjusted of of compared multiyear a EBITDA been PeopleManagement the transition headwinds margin re-pricing account had by profit reflect primarily was loss and Similarly, Last within our our we in and business with strategic a and SG&A basis

EBITDA by items by and company total adjusted quarter these revenue This suppressed million million. $XX $X

of PeopleManagement of disclosed X% versus was was driven XX% remainder X% same-customer few revenue seven physical and in PeopleReady was as across expectation lower anticipated demand but ago, of not The in XX%, down concentrated X% headwinds came our most our most segments, by our moments pace evident mentioned goods a a more outlook. revenue. verticals Segment to within percentage down growth points roughly Turning earlier. which geographies, decline previously the slower discussed the from was was with below slowing down from associated industry X%. demand was profit revenue QX. the Of which customer of decline

points down earlier. headwinds growth down year, XX% discussed Segment $X million, this percentage previously which XX%, or XX% profit includes up was the approximately of in discussed. XX from decline the to due revenue QX from headwinds of primarily PeopleScout was customer

media margin the Segment recruitment segment on as the with XXX down X% of and acquired The primarily decline purchases TMP to of behalf associated profit due the certain business in basis decline nature disclosed was points. profit of primarily clients. is margin result segment is was and pass-through a headwinds in the previously down

On year, to personal. basis with cost anniversaried we key of a In was basis, all pleased XXX actions. retention I'm integration clients and and acquisition to TMP up a the June, points smooth in the management QX comparison including sequential segment margin due this report

by We $X revenue respectively. million profit also segment million, $X and targets one and exceeded performance year

capital working Year-to-date million, million. balance including free reducing of We sheet $XX million netting improvement outstanding, across cash our were day great a continues areas and sales flow capital multiple the expenditures from to $XX in two-day of flow overall operations $XX improve. progress made to totaled and cash on strength

returns from of times. Returning to basis, which at our is to a is consistent and million part representing stock to $XX down multiple shareholder is end been trailing at the current total debt important million period. XXXX under X.X debt remains year, strategy. of Total year of X%. free is $XX stands EBITDA XX-month XX% debt-to-capital Accordingly, On of in adjusted million ratio this authorization. proportion of capital boost prior our $X flow our repurchased the year-to-date $XX an million our has cash

range in X%. outlook The PeopleReady running expect trends a QX posted a of lower percentage QX. range XXXX, as points about than X% we than Turning in midpoint to is decline July softer the third revenue the in minus organic this year the XX% for trend minus quarter revenue of of our to the of result two

per XX%. of an a We basis, an rate income $X.XX of $X.XX assumes tax share share $X.XX count XX.X expect to effective million $X.XX net which of on or to adjusted and

year-over-year The in is decline of the the a QX, in pace some We which range to for larger additional PeopleReady revenue believe an less industries incrementally than disclosed lower in compensation headwinds of in XX% previously a QX as adjusted QX, underlying growth XX%, changing last the an client business of serve. EPS year, activity economic of due of QX this suggests there's million year. expense as in well we decline in $X workers'

belief PeopleReady our revenue is and on our the based in for step-down trends same-customer Our services. demand recent

it opinion. early of our in nature PeopleReady's indicator changing is project-based business, demand of an patterns the Given

by balancing PeopleReady. We have to team focused times such to an exercise while that and investing digital understands how client manage with these as in and need through growth our cost at management, the team execution experienced new the strategies experienced disciplined

includes which superior share interest to our providing in financial shareholders increased repurchases. is with sheet balance Our us shape in flexibility, returning through capital

outlook found can and Additional third today's quarter assumptions information release be certain annual deck. in earnings on our for the

the our questions. for remarks. Please prepared open concludes This now call

Operator

Thank from comes you. Research. [Operator question Northcoast Your Instructions] Healy John first with

open. is line Your

John Healy

big the do customers long are would say, From in Thank your meaningful has changed you. your just business? you then your appreciate sector vitals about in softness, wanted the do react we talk I vitals assess to and see in just assess cost need is changes broader I the kind our actions the comments long activity broader in help I your you the your you of you you understand want of you picture decision-making customers? the Can kind business? how Guys, before of activity take presenting to here, how about what how the ultimately, the customers business. at to perspective, some And us and And mean, to you. look something how your in process? okay, theme.

Patrick Beharelle

the Thanks Yes. is question This for Patrick. John.

couple a of first. comments Just

One is that widespread. remarks, Derrek of the that fairly prepared the the things in was mentioned -- softness his

you from July, it's in exit the what at pretty we're seeing just If widespread. rate look into June

Our softer. eight all states are largest

a all are Manufacturing, well Our is construction has down, transportation bit hospitality retail, us. little softer, gotten a verticals are for mixed. doing little pretty

than solar. particularly into what construction a And we're that providers. most anecdotally out as PeopleReady our particularly more And projects hearing business in heavy being our are bit, pushed clients projects you know and tilts in is from staffing

and inventory we’re consumer we We're and in and also in in and goods saw buildups, auto in clients demand our QX about buildups that some some softness packaged these hearing particularly to lead labor from them July. seeing

at of of ways John. do two look sort terms when In cost we We take actions? it

we where The in and we we in in trends so investments is investments is more very closely And sales QX, were marketing. to and revenue were make should the doing cuts? watching first we what some and we make decided the where make business should

and and in So stood a we've levels client, focused then having on If on and mentioned experience team I've a mode. recovery journey in marketing they're focused it's journey. sure our have we satisfied we onboarding making for -- marketing a a rapid there them clients that's up prepared client satisfaction some remarks, my that's as that's assessing putting expansion. a client we're good experience client team, a our existing a and If sales on challenges,

some making the given to that help softness investments seeing. revenue we're drive additional we're So

cuts And But some pretty marketing. that's now not or stuff business, areas then a client cost area the in particularly from and other cutting perspective, cuts right the sales we're have made hesitant candidate to facing facing. we in make any of of

structure that we've some those with started we cost made so make QX, we've revenue of got a of in some process have. that already actions And sure that so that to stream aligns the we

Derrek Gafford

cuts. related right is to decline the revenue going that in just we're and what I'm the to mean SG&A same a trend on Hey, revenue more don't QX is question color the cost outlook by now into for and that the this in time pace to have to we do our that quarter delivered we Derrek. was I think has decline the similar trend. of built it match at John, than additional need little this At doing we just a this jump and point

this pretty points this starts immature. Doing we it broader in well point. long a something time slow would we could very This that and had or very has have in be has and cycle think point bigger at this had been be slow cycle,

costs continue our in we our scale where intention to the level to is of business mind. the it manage that to in But revenue to to keep So want is. the part

were into those likely to on it that decline would then If looking And decelerate, revenue something would But to we cost steam more now. revenue longer at a the this we would we're up actions, periods. decrease pick bigger the how it develop as and slowdown, right would percentages if would cost trail more. -- cost take the the in in that's other -- continued

this, to given the not too quarter-to-quarter, stay on manage right going taking disciplined what and seeing sure on at jump point time. in but far So actions ahead any we're make based overreact we're we're

John Healy

how that account to Understood. some as revenues I of of those from mentioned was timing expect you new And $XX wins wins think bringing that might business, margin incremental of think -- revenues are the guys on new how kind we want you I How perspective, be that up? about together? how million coming incremental they solutions And a there that on business? Patrick kind or side. should say of on And business board the maybe ultimately the should then that ramp with we

Patrick Beharelle

the you last PeopleManagement. of appreciate question. and I execution from just some are support those made business see know, made in we Yes. the perspective. sales year And We fairly year. of in long the that a in help lot the fruits brought we're of the PeopleManagement to progress in We've efforts some sales sales a leadership new so as starting last changes that cycles business to

year As rightly a pretty we're new out, relative had wins. good done what running you the clip terms to pointed we in of in prior at

that been XXX number and to that's want we once. in XXX, us challenge a people a come terms and of at of all bang client seen the have though a we've little a don't bit gosh, of bring in of those One ramping do said, things to wins XXX, big is

to of now months a And it's ramp. to a ramp seven or so what normally would six up, for couple take taking see closer a months full

it to bring life. an So I'll give to you just example

a don't contracts the said time at incumbents. have had got folks the were a the they need couple huge want with laundry of from have We've We And long transfer workforce. that of and a and impact client had scope that taking a XXX to had been allow on for a lot people those to productivity. for recently didn't we a they sold gosh industrial we a and us, of facility away an here the incumbents deal

we're those what opposed as a about workers. of at workforce bigger of XX we or And bang transfer as so had oftentimes workers a a to replacing a what doing out done is we're swap month, rate

in -- impact in helpful a that helpful deals in QX start the so the wins to to to the And really won going see PeopleManagement really XXXX are the beyond. bit But of these -- be and QX and little we'll we've us in QX.

Derrek Gafford

to it just million on quarter, John, come Hey, the million half the and a so for the pace on that our that In call of to revenue third about add breaks little Patrick to talked $X $XX more built color $XX a got million. new wins that bit that down will in that outlook of about we've quarter. of incremental how about

the Patrick So in as and not from it's if of $X there's rate million And X% mentioned, room necessarily many for neighborhood the they're implementation accounts. that sizable. the that wins. those be approximately we But south are on of are little of run first an new that incremental transitions on quarter expect of maybe in to another during of slower step-up coming a first-generation do these

will the cost So the and implementation well timing and the will be -- small short. timing

John Healy

Thank Great. guys. you,

Operator

question from BMO. Henry with comes Chien next Your

open. is line Your

Henry Chien

Derrek. hey, Patrick, Hey,

expand what of mean. and on there's the you mean physical One think the change. if goods you mentioned you hard could you that fundamental a just at I by least was of was I industries that sort wondering in things

Derrek Gafford

of on can from not comment but incumbents seeing Yes. Well we're we clients. we're what just kind here,

in which with running a as for XXX at focused services where of PeopleManagement as Fortune step-down to had clients focused well companies, saw demand our pace our more is manufacturing logistics the and compared in the those clear we heavily So business before. they on on been

and with own their most customers, on understanding those concentrated from that more back that the business -- time reply those going with And spend in it's common down. with what's volumes because businesses businesses was can there more were we

quarter in ended it And changes keel at well. in third I started we PeopleReady didn't anything we the prepared changes, the leadership minus mean a we the talked a growth quarter step-down as didn't didn't about delivering we -- to implement X% just we into at of this comments, any and my on and over the we When new, saw make bit X% quarter, and off business, we any method were services. our have as going of we we how I went the also

preferences see we -- particularly, So, we and the those of -- in most one the of the and changes to step-downs, in that which jobs project-based on in opinion, human in capital job work patterns just their our from see nature -- short margin our for that's experience buyer the will of in preferences, one duration of of PeopleReady demand because the the changes that businesses tend and when will first. the assignments, types

Henry Chien

Got it.

Yes, quite change sense. the beyond of growth on big say weakness lost step declines Okay, a that some PeopleScout or in client, just makes the of in of should that's inter-quarter. some mean I on terms -- I there there? what's then what's the And going

Patrick Beharelle

Yes, skill It's widespread we where fill some softness are Henry. than down. the different the a can't It's staffing seeing clients to businesses existing the seeing where fairly volumes temporary categories. across number coming in just similar of industries, situation in lighter definitely order question where seen. at We're we not we're had an issue It's different of what our volumes a great positions. what some are

revenue. into mentioned I we've longer concessions were our price on had had some gave two an an a then there where client on that arrangement previously we the as headwinds had calls, on we'd One where did and which wrong disclosed. have is renegotiated the got. those another we term And And acquisition we impact side arrangement of previous that we

has That well. volume pretty declines seen also significant as particular client some

biggest client of more at a lost base not it's headwind. the where other of we've disclosed, a it's been a So, number one than got existing we've our situation that's clients volume the

Henry Chien

guys. Thanks Yes.

Operator

from Marcon [Operator with Instructions] Mark comes Your question Baird. next

open. is line Your

Mark Marcon

or Did Good July that for PeopleReady, X% you way you -- afternoon, down and the in were Derrek. is it's Patrick trending?

Derrek Gafford

Mark. X% about in July, running We're down

Mark Marcon

give And gave then PeopleReady you intra-quarter Okay. talk PeopleScout on can us you and color -- then non-July, as for as PeopleManagement? into about can that you well the monthly

Derrek Gafford

the consolidated -- me give Well, let the PeopleScout consolidated trends. first. me trends let give you you

had in third So, that down week the July was we down that X%. was Easter minus X%. Remember

normalize you would've really been that's Easter week and it, If it that. holiday flat X% the contributed what down was to following without then

Patrick Beharelle

not I think meant you April July.

Derrek Gafford

Excuse me, consistent the X% very June was then quarter April. Yeah. XX% at nature. and And for PeopleManagement XX% down X%. really X% in X% The the just PeopleScout up Thanks, May, down June. they're the and was too was RPO May down to up by Patrick. April, much very would trend in was trend month-to-month in really close in I read and wouldn't lumpy –

pushed job in they they don't and get a orders month come to the it's some get Sometimes or next filled small population.

read wouldn't I RPO too trends. monthly So much the into

Mark Marcon

should you're seeing? we you trends to that can pay/bill rate about little specifically, a volume? relative about the And bit how And the Okay. think increases talk bill

Derrek Gafford

Yeah. Bill QX rates in X%. up us were rates for pay X% and were up

Some X% were that biggest bill go issues. X.X%. of of if – that which the on have But all PeopleReady create talked and noise the we in our pay those going rates some is rates about and where were our up is driver to purest it's about up is that of basin some in mix that these we've about we some headwinds of

Mark Marcon

being minimum or would some at the on within typically and you demand rising by wage all? issue an folks potentially of lessening end Do you're that PeopleReady, you rates that up think is impacted placing

Derrek Gafford

it any Well, But we it increases went went a play. quarter. could the a – possibility there that something could minimum into as be into larger QX that there's period weren't on besides wage

we trends change anything that perspective. when there saw So, from a drive wage QX in wasn't just to PeopleReady minimum pertains there the to it new fundamental

Mark Marcon

was regards Got the construction decline a or actually also just – in lessening with you it. softer. it trend? Did it mentioned was year-over-year, And

Derrek Gafford

the two grower it been parts over stable. very to been a big because there's while us not construction construction, with the quarters, has last three for Well, has story

X% And or I'm to is QX year what whether last it talking quarter flat this or QX depending year year. so up which being this about here picked you on was it QX maybe

Now, July in the when into saw we -- primarily the was PeopleReady that PeopleReady business. that the we going deceleration trend in

we business -- is, usually take we happens our of what of So if the weeks June. what couple in PeopleReady last

and the And there third week on a weekly trends holiday holding we stepping at in second Xth. week, because of be first business off revenue look of up. July, the I'm And then third the second the should July. is But July our look the our and to take you week

about as went our becomes amount And that into July. we construction when I we months, get warmer the step-ups into say the mix. trends, I'm we of the dollar peace a talking doing. revenue In of lighter we're the Because, of the as greater part business business, construction seeing were

area main minus out the kind And X% during the the softness during construction. primarily coming of that that we seeing of thing coming is in for June X% exit that, I mentioned that at for the July trends PeopleReady So, difference had quarter. we're between rate the is the -- the minus of

Mark Marcon

I more color. a granular will follow-up appreciate I offline. the little bit really Great,

Operator

join At to another [Operator me like for for still waiting Instructions] would moment? the this Mr. queue. time, the you callers to line we're Beharelle, hold open

Patrick Beharelle

another just think I moment.

Operator

time. further no have questions We at this

Patrick Beharelle

three our quarter try trends. to The we working look Well, listening And to reporting second And months. in hard change in these team you. all I earnings call. to you forward thank on real is appreciate

everybody. you Thank

Operator

conference This call. concludes today's Thank joining. for you

disconnect. You may now

TrueBlue (TBI) 29 Jul 192019 Q2 Earnings call transcript