TBI - Earnings call transcript Q3 2019

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Operator

Thank you for calling and welcome to the TrueBlue third quarter 2019 earnings call.

I will now turn the call over to Derrek Gafford, Executive Vice President and Chief Financial Officer. Please go ahead.

Derrek Gafford

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

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

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

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

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

the over Patrick. With that, call to I turn will

Patrick Beharelle

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

drove Strong results quarter. bottomline this expected and topline than better execution

to we While another has yet of delivered and during monthly the were return, revenue quarter we see were pleased growth. quarter earnings revenue growth trends to consistent

in JobStack offerings expansion and within retention, disruption staffing has driving digital squarely client on and remain to our been investing focused strategies service favorable TrueBlue offerings. digital customer disciplined and to employee management industry and with experience the differentiate continue our Affinix we adoption. and our We cost

approved repurchase. million share announced today an of that additional also our $XXX Directors We Board of

to repurchasing shareholders. opportunistically focus capital highly returning Board supportive remains Our our and on of shares

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

QX the quarter of activity clients due base. at PeopleReady during our client down at was revenue project benefit. Growth creating across year-over-year in business one to X% growth PeopleReady's by lower work impacted X% favorably a our was

work underlying I consistent trends revenue quarter. throughout were just project the the Excluding monthly at mentioned, PeopleReady

annualized the on hard taking information been Derrek focus savings. look QX branch $XX did structure. focused managing to It's positions at cost including our have to management additional with we cost and on impact are important and costs net last Since our earnings across result will expected were with not actions provide approximately business, the expected impact PeopleReady's we reductions Consistent in a have taken resources. outlook. sales or million that support note conjunction of to that these call, mid-level staff in our

a move leaders are team early of curve JobStack of base helping we up As critical enhancing client build This experienced reaching satisfaction investments in the client example always, our on in to is balance usage. strategic and our days with the seasoned proactively operational drive smart last by One sales client who clients out team. terms to is is quarter touched growth. dedicated and management objective cost to and PeopleReady's new

drive helping cross-selling While program has activity for program customers The continues TrueBlue. been our revenue overwhelmingly infancy, still colleagues branch-based more year-over-year the is and team our strategic the feedback through growth from in our is also positive. proactively its which us to drive

of we customers millions several have where additional uncovered dollars have We revenue. overall, in

PeopleReady. important via our one digital initiatives the Our of within remains strategic app transformation mobile JobStack most

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

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

within the we build with we have made that working the critical been the mass and need on have progress pleased front. we app are We to hard very

representing a as rate the XXXX. quarter, one than more up in approximately during as of XX%, excess million of via digital deployed quarter from recently have fill We fourth shifts the XX% JobStack

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

We Works separate represents JobStack new our need from temporary that Uber another distinct Uber also step businesses forward is a with strategic and available shifts. staffing. Works this new is Works. and strategy relationship fill recently workers with in connects Uber to a digital platform for venture announced that

Now, W-X don't they one paying employees. while managing Uber area Works has in experience a is great have platform,

days know there new PeopleWorks early payroll don't to venture for a Works expertise Uber provider an that material yet a for of Uber strength Uber service work with clear to PeopleWorks in and and offering, the as the and So on It's have of TrueBlue it's Works called service serve to is we employer the but impact app. turned help if workers business and TrueBlue for created payroll choice venture longer-term we jobs will decades testament a staffing. our world-class be on-demand Works' booking

provides workforce contingent This that the and in North segment of profit. are market for revenue with on-site American compelling workers. and PeopleManagement staffing industrial Turning larger value fit perfect represents XX% trailing XX% for of duration company offers to total segment. needs strategic solutions our business clients next longer XX-months

of The same-customer Revenue Canadian volume less due another lower due activity and at was to remainder due levels reductions of within down own client. demand is is this retail to XX%. the half to business businesses. previously Roughly headwinds, loss price their disclosed Amazon's namely decline and

with which same XX% We period business wins, are our are new over the pleased year-to-date the of up year. last strength

trailing represents PeopleScout and revenue offerings last permanent leader XX% to service segment is positions filling of Turning the through in of profit. outsourcing company process XX% segment. our total recruitment provider global managed XX-months our and and

good overall, account previously and getting are that reflect headwinds, being client offerings less at In due traction. lost of X% of and these to multiyear another namely recent the Revenue was strength one we disclosed after a acquired margins service primarily that was to headwinds, repriced down lower was volume spite like arrangement. and our large

Customer Baker's as healthcare PeopleScout survey. year's in PeopleScout this a RPO as leader was Satisfaction enterprise on ranked leader was also QX, During recognized RPO Today's an Ratings. HRO Dozen XXXX

XXXX Additionally, PeopleScout leader was of NelsonHall in RPO category evaluation their the as every marketplace. identified by a in

for PeopleScout strategy expand in ability service Affinix to at capitalizing leadership the technology. our compete global is next-generation market differentiate HR to and aimed offerings North on through position proprietary capabilities Our is our in our is unchanged our American and marketplace. our the RPO improving tool, is

reason fill, flow several a and Moreover, being recent example, was pursuits, Affinix with in clients PeopleScout candidate a shared to improved selected. fully satisfaction. for us are Affinix implemented For candidate winning differentiator RPO buyers sales clear key time and on that experiencing

performance. Summarizing our

technology, on growth, managing our toward putting leveraging and to enhance We sustainable are use costs These a path which will executing work. help on to us excess capture our strategic our to free many something of the is segments areas our flow three primary focus, are capital of regardless changing in initiatives with shareholders. clients of ahead world of opportunities that embracing ebbs of and return the our profitability cash along own businesses, of the their flows

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

Derrek Gafford

X% you better work anticipated $XXX million not $XX from was down of in $XXX which of was Thank by our the was QX with QX million at year. QX. The the project performance end TMP the high was to due Total QX revenue in -X% anniversary benefit of million larger revenue driven this than was in down our acquisition was outlook. outlook. to with the was the revenue Organic client $XXX of one which Patrick. X%, that of decline decline of Total consistent in

trends revenue consistent mentioned, monthly were previously Excluding the project the quarter. during

end adjusted XX%, high actions. net last $X.XX to end down also growth adjusted of $X.XX exceeded EPS Turning cost EPS X% beat bottomline. $X.XX outlook. and EPS variety our income strong to The the and respectively. XX% due and to share were up per management diluted income expected the than Net XX% the EPS on was outlook of was and primarily year adjusted better results diluted of QX of and and a of $X.XX revenue of EPS EPS to of share $X.XX in top per the high our $X.XX exceeded adjusted

addition, Credits. effective the below of tax expected to rate was quarter due rate the income XX% additional Tax our Opportunity In for XX% Work

basis a workers' expense Workers' this at the XX.X% primarily compensation year expense and than previously headwinds but was Gross XX higher percentage PeopleScout. of higher with points year. as last QX this was revenue of margin due compensation to disclosed consistent QX down quarter

management due XX% actions. remainder down SG&A SG&A is percentage and expense cost down was of a of down $XX million, to $X was million exclusions was lower EBITDA as of basis variety revenue XX points. due a SG&A and to which adjusted the

adjusted X% points. basis exclusions, down SG&A XX Excluding was or EBITDA

XXXX, and which by excluded adjusted are in retention to also offset future. expected the to to $X net also EBITDA. $X in be adjusted which income $X benefit and actions in operating produce These have in QX million million customer activities, of a benefit of $XX million charge of in acquisition into We actions of million will reduce taken we This will of $X reinvest of benefit number net costs from a resulting XXXX. provide plan million

with impact Staff Similarly, we of of to from consistently the we lost PeopleManagement of and and our transition discussed account. profit buyer. business SIMOS acquired had that XXXX, the Management Throughout business, headwinds the strategic a of customer revenue our a discussed account have the an repricing in been loss some client and diminishing a by Amazon our business the PeopleScout within associated our business segment

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

as of XX% lower margin revenue Adjusted down $XX.X points EBITDA million gross related basis of and result due lower a was margin. was XX down to

the to $XX represents of authorization continue our million our share our long million we quarter, million shareholders. authorized $XXX amount flow. took the bringing pleased buyback. repurchases to term which for activity about that our the year-to-date This outlook of and During announce remaining authorization cash our are free to in down to to $XX and common under This return year-to-date desire an we XX% of repurchased $XX XXXX confidence Board stock our million business Directors additional to today capital reflects

expected PeopleReady X% the segments. better revenue our down decline X% down was than QX. to step Turning in a from was but which

As creating with benefit one in favorably project our work outlook. impacted of discussed earlier, revenue at QX comparison clients by million $XX was our of

monthly project X%. the underlying were consistent Segment quarter. the work, was trends profit down Excluding throughout revenue

Of previously million expectation. came Segment was points was PeopleManagement XX the our the which percentage the which discussed. decline and headwinds XX% XX%, with lower consistent same-customer revenue profit down includes of customer headwinds $X remainder from from percentage from approximately five was previously down or the decline, disclosed demand. XX% points

PeopleScout profit which consistent with Segment associated down X%, was revenue primarily was discussed was expectation. down is headwinds. previously XX% with our which also the

flow to cash company. overall of $XX end for and from were improve. totaled cash Year-to-date down continues flow of XX-months sheet $XX trailing stands million, a the ratio to X.X. cash expenditures flow operations at is debt-to-adjusted the million million debt-to-capital balance capital our at to multiple total of free Total XXXX On The basis, debt EBITDA our $XX our of million. Turning is strength netting million from $XX $XX X%. and

outlook quarter our for to fourth Turning the XXXX. of

is expect in PeopleReady of QX. within October. One same-customer a occurred minus The in geographies notable impacted of within vertical We The our lower our of XX% due step-down experienced favorably work most business of roll-off PeopleManagement percentage two to midpoint that X% is trends in project due early is with the points results. X%. percentage to minus the of point of demand step-down range across trends softening posted construction than range business. softening this the industries remaining and to revenue the and some step-down This QX the decline

expense. margin a a about is margin payroll $X.XX lower last a which tax an per in is net to QX The The XX%. moments We in XXXX of benefits on the lower to our SG&A of lower the year. count decline growth XX% drop to XX.X which primarily versus $X.XX versus XX% $X.XX, year. share due few the revenue this and to basis, QX The gross of due of assumes of midpoint to guidance a income throughout of effective timing lesser is in trend a EPS income gross ago share million mentioned extent and and of adjusted trend were an annual or recognized expect I an tax a deceleration in primarily in rate $X.XX true-up decline

part related to expecting are in additional earlier decline charge a lower to in QX in versus SG&A reduction expense in QX cost the anticipated actions. We due QX discussed the

to Lastly, the I end Work Tax expires everyone would this like year. remind at of the Credit Opportunity that

renewed be decades for existence in program to income both due political can is this renewed, been points to be expect Since rate, the we has about to program contributes of and lumpy. program to an of this would it we this XX%. parties, its While to to tax benefit effective appeal XX XX% if percentage tax rate expect about our income XX effective timing not

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

some focus clear. While is uncertainty economic exists, our

We are not digitally strong business the the committed come only differentiate and in ensure to retention believe more to to plan We in oriented our We share. industry but services and staying more business, we strategies. a market acquire model acquire improves. to initiatives to economic out leading when customer are our digital moving to acquisition invest climate we

shareholders capital managing operating stock diligent stay We lastly, also plan to our returning are And costs. repurchases. in we to committed through to

prepared remarks. concludes This our

for now call the questions. open now will We

Operator

Instructions]. [Operator

Vogel question comes Please ahead. Company. Sidoti go the first with Josh of & Your line from

Josh Vogel

first Thank some $XX additional in this PeopleReady in for mentioned, at that million you roll-off guys. into of is that's QX was your there Derrek, guidance? QX What you. large Good contribution project that from My your built from question, expectation the project revenue. afternoon contributed

Derrek Gafford

Josh. Hi Yes.

to be about rate. expect it that We half

$X one roll-off in that revenue roll-off, less the revenue QX it in headwind, million So about additional because point to of revenue. $X headwind, call contributing million

Josh Vogel

Great. Okay.

good know the are continue to and feel invest year, capabilities reason all? if now up on in how strategies for this end these them to you are it's curious there was now feel just So just much more we you the offerings, at that I nearing I digital front you invest the of fully entering XXXX? further? do and How Or about scaling and are planning you in

Patrick Beharelle

big of quarter of that A in Hi users Josh, leverage clients that of have in we phenomenon XXXX is the Patrick. fourth focus heavy is JobStack. part the our are this seen to and

moderate in those using that for all. not in are We using at it have growth using way seen are heavy it clients versus a disproportionate that way JobStack a those or

marketing big to a and mentioned in and So the our sales part campaigns have tool growth. XXXX our as because of earlier, disproportionate to more seen QX I base we client target investments use is around existing

heavily. in year-over-year of north have are those growth You that XX% clients it using

also are around the of some We investments acquisition the tool. with talent making

that help we out more candidate first So think are new rolling to flow. we going are some going to features the in drive quarter

perspective two both So we ways, are looking at a from this demand from perspective. supply from a and

areas focus. of So those the would be

to the XX% for we in number perspective numbers can fills somewhere we XXXX, finished XX% we Just of coming closer by way. you, XXXX. our the so as put around get finish end about will think we in some or digital We think or the year that to year a of

get year XX,XXX XX,XXX the XXXX. We around finish we to end the by closer clients will the will on of We tool. think

that or can Shifts, We five get so we we north around will do million of million. four this think number year.

and XXXX in So of terms digital progress goals set that some have we these continuing our ourselves strategy. for are on

Josh Vogel

helpful. Thank you. That's Okay.

repricing within maybe had an And or well, account other PeopleScout. at were exploring of looking similar of PeopleManagement, you are notable or or -- Just currently any of curious, PeopleScout just type gauging a I the at repricing was who arrangements? clients, sizable there whether you some

Patrick Beharelle

Well, wouldn't anytime normal course there Josh. up comes renewal, I any say is is of client business, conversations around there a outside the for repricing.

to will concessions significant making of be be us price expect wouldn't I course price business. increases. or It So announcements normal about more

Josh Vogel

savings guess, over think Great. see the Okay. million the that course in heavy? will in, one cost spread that net Nice efforts the out it will be annualized about more $X year? something can be of Or I results you year. just Is in will evenly backend if And more. cost next reduction sneak that I to

Derrek Gafford

here. Hi Josh, it's relatively XXXX. Derrek Yes, will that through consistent

Josh Vogel

you my questions. Thank for Great. taking Okay.

Operator

Kevin And question line Please your next Credit of comes Suisse. with from go the ahead. McVeigh

Kevin McVeigh

Great. Thank are Patrick, how you? you.

Patrick Beharelle

Thanks Kevin. great. Doing

Kevin McVeigh

Just one Derrek. question, for maybe

that one-time the at kind contemplated So of did after clarification. issued come revenue, Derrek, gotten Or the that guidance guidance in the Was has was it? time of issued? of just one the kind $XX million you in the point

Derrek Gafford

issued, after Kevin. That the came was guidance in

can that's to know set is what coming that at of time. run Our of business economically. circumstances the are on when just in we And point any that job along we that we guidance, based set the

course, been to and things guidance wanted picked Now we doing, that some have had do, ideas of we really analysis the some that work some after about but issued. was up

Kevin McVeigh

thing be on it. Or where to the that corporate the And way is it what Got margin is type is of would there high? it was the average consistent overall? with any incremental frame,

Derrek Gafford

on I one not to that time you the because on am the give margin me Well, following more piece. cost

the dollars. We got have

Kevin McVeigh

I it, little what the trying the corporate of of Or in profile associated get margins a a revenue -- with of it was? revenue the were consistent of kind given side guess maybe that of that just million higher a on $XX bit stream the revenue was average with margin quarter? to sense

Derrek Gafford

Well, cost way. cost are it declines million anything way, about didn't we million $XX be with XXXX, reductions reinvesting Those come the it That savings, or from variable think for that. associated by talking that. we this going of to are you should about revenue that $X like

net or we across we So have the deliver reductions $X business. made just million that broadly cost would of

are work? to the margin you the on extra referring maybe Now project

Kevin McVeigh

That's Derrek. Yes. right,

Derrek Gafford

Okay.

the standard incremental Now that's, average, average well for it's above blended a but the mid-teens. right PeopleReady, PeopleReady little bit at incremental,

Kevin McVeigh

I you my then of comp? next functional the me erosion hear didn't just a I XXX margin was dynamic refresh that workers' there if said And points the it a that? or in just The apologize, revenue of workers' and could it. Is line. this Got that on call, you that on muddled was basis maybe was that, quarter, comp

Derrek Gafford

this was year the about. talked on we we have -- then partly that last QX Sure. gross some the margin because these XX mix basis client of down QX and because expecting versus margin year workers' compensation are points, in partly of gross Well, headwinds of

to more margin we incremental that we tax the in we end decline. As points XX go XXXX. that to or of basis and payroll taxes. And QX, expecting points up have XX will call tied benefits of some year-over-year I trued XXXX we gross more the that's payroll We had be some down are about largely with basis at

been realizing quarter. We have benefit that every

a got of on gross then SG&A And So points the as that's it's large have these we quite two that QX, nice SG&A our extra the decline mostly decline still on you the guidance charge with then but as comes built-in in deleveraging and margins. because not that. along somewhat have in savings cost we what had extra the taking timing we million. And side, are of $X of that's the revenue on

Kevin McVeigh

been are then And you kind seeing to the Derrek, that's a of, something there bit context more terms basis points. pause so it sounds debate maybe much that traditional there couple, or a within And kind just guess that Helpful. I has little little feel just, was step-down something in bit on or that? kind a of more of Where of stages initial like the XXX does macro, in of of the like you monitor? XXX

Derrek Gafford

the guidance seen been of weeks of we bigger first step-down end picture one and We step-downs answer, addressing your of the And of has an in because that couple April. one kind just about saw saw talk answer first of also March of this this three weeks first July. my we year We we end have will October. interesting question, I saw week this at the to the of Well, during and in really couple year. But that last Kevin. towards the reframe the incorporated

our business up trends business. has been interesting what's PeopleReady our about it our shows in it's really at is and And same-customer in our business. been in it both PeopleManagement And PeopleManagement

model. different We don't we is the think that that don't in business here. there So got always have well, we we -- anything are for room improvement that doing think

is do this So driven. we think really macro

as look When and it how just the are step-downs. that, the those we see adjustments continue to business run comes to right around to going we at make we

trends remembers their are And take and signals last the real is Our believe the these and snuck it watching adjustments to that's trying on up and timely what everybody is workforces. with experiencing we we everybody at recession customers as we that, business. in closely our to everybody look very economic make

most at In Again, and PeopleManagement regard trends. both No same-customer specific to at the step-down, recent lost it at clients. PeopleReady was your question PeopleManagement. demand about

customer On the types a PeopleReady it sizes. variety and was fairly broad-based, a across side, of geographies and

will would construction had you pick the that PeopleReady. the for out to those area If be it most, in one, sit

to more that I thoughts. color hope our So some gives

Kevin McVeigh

just Super interest Thanks. the Derrek. could and of will in I if back helpful, And get then I time. in,

you is I impact GM it side, construction On out duration commercial? the of do tariff guess, because had or from Boeing, longer you just, kind the of comes back? a conversation? something it that Boeing was Is of had residential that's be or initial uncertainty you Or and maybe after think am again it there this little again, is more something phase General the then maybe that the think something in you and/or that there. of any -- is tonality, And a it the may Motors. of sure an Is or lot related I

is And pretty any broad? You just it obviously crosscurrents. tariff specific or state the had

Derrek Gafford

this broad. things. carry know residential hard how biggest this there answer, itself has going pretty There to Kevin. of impact a on from But of policies to in one. out it data variety and don't are us. other that question makes And really to answer in of thinking it's business. trade on, does manufacturing and and I It's about things a both the how a lot to in up answer non-residential. long non-residential really to It construction is our was two-thirds And the construction,

profitability candidate the time, for when but best eyes closely serve company, at stay we the touch customer to same XXXX just customers, investments both and and continue preserve can level with fund on to very will our comes our we really it really of it acquisition and So adjustments well and make retention. as the to keep them in and

Kevin McVeigh

obviously Nice Understood. environment. job in tough a

Operator

line comes with Healy go question ahead. next the of Research. your John Please And from North Coast

John Healy

of I ask did guys joint We you that you. Just that to a in call relationship? more about bit are if agreement? partnership? the trying And or how structure I you the then you Hi. opportunity Is wanted can working range roll Is with Thank to with additionally relationship. that are an well? them that guys a out upward it apologize, that a are Uber on, the is has if that business but to update working venture? a on dive little payrolling understand exclusive, them? if a you fast it how an ceiling of as to

Patrick Beharelle

John. is Thank Patrick. This

Uber, it expect And think terms with the Uber relationship a be of is the business impact near-term relatively In in our ours. to to terms impact of relationship client where of we as TrueBlue, a of small.

We the imagine, success in might directly and Works degree Uber pace related the at of started of the you to Chicago. TrueBlue, ultimately scaling the it's has on marketplace. As degree impact of in

We expanding will soon. be to other cities

the vision with is We Our staffing partnership straightforward. verticals adjoining for are digital believe light staffing industrial really along some market the for transformation. ripe

the know, you stages firsthand heavily our are As transformation. in been early seeing have that we and capabilities investing of in

it the we via confident our have digital in will capabilities think we best-in-class rolled And ultimately So solution JobStack. and are pretty drive in above-market growth. a business we out is that

disrupted, gotten pie. cab changed example the that Uber you good here elements other and as behavior End-user has industries with that One is And of created bigger phenomenon when business. dispatch been A bigger. we important Uber pie point study have that is about in relationship think is note there well. a oftentimes the this that to

is, proves success. it we EBITDA in we would are TrueBlue providing. that lift from that successful, and be TrueBlue the will revenue the come First if will for be with to and partnership? the Works from what's lucrative There this is for obvious the Uber So profit services partnership

will both Secondly, nimble innovative learnings there companies. company by an to practical accrue partnering is that we a with like some and think Uber,

already already. have some happen that seen We of

that And as to of effort. Works to terms then anchor with employer decide we services And other anchor client thirdly, we Uber referenceable should have an client. in that of in optionality want view it needs, companies to we we launch similar record jumpstart additional a

your an question is exclusive to this Related relationship. on,

with one are of two a larger two. much among We partner the

that not And larger but so to providing completely it's the with the firms two. being exclusive of support are limited it's two us

John Healy

that Great. talk too are into record there world and could those be is don't company? for the the Lyft part itself, any Uber about the want in I market same platforms? and for on might potentially legislative it that if I category those know is some lines potentially of a the be fiction, something those And or there there kind I employer to states interest horizon potential that that Along are of is get the if science of thought that was and starting in drivers working studied become is digital if up. about battles some have in just on much but curious, you you ride-hailing, any of guys to the

Patrick Beharelle

wouldn't would say I rule this, out. Well, it just I

it. at ready to want should are be on we that have Certainly prepared We there eventuality look pretty a come. But that make the a taken don't yet. I pronouncements any there significant We road. could down be business certainly opportunity to

John Healy

then just for question And final Understood. me. a

quarter, minuses, things or the add the fall? up how think and those As how of just and weather there the for worth to And you guys the the fourth holidays calendar noting is about fourth in pluses quarter? days Thanks. way the anything the look at terms

Patrick Beharelle

a benefit thing time with, Monday on Sunday this because one slight the that a Well, benefit I around versus will be mention there that would less Christmas falls last is year. slight

a be versus could my I impact falls slight on there me, got dates a a wrong. So It Tuesday. or excuse Wednesday negative

versus earlier that a could There significant week is during little worth amount of the part it more the middle So that. out, of a slight week. nothing John. the be of calling bit from the headwind But

John Healy

guys. you Thank

Operator

next Please with line ahead. Chien of Henry go your from comes question BMO. And the

Henry Chien

cuts and cost where wanted wondering are investments. of and Thanks if Good about could little guys. finding the ask you talk to planned afternoon. in? invest efficiencies you I more bit sort the Hi to am just I a planning about

Patrick Beharelle

PeopleReady that not cuts specifically, Yes, organization. We Henry. were in branch the the in start we and by Thanks make organization cut. did made cost cuts where not any our I we will did

are resources adding some that fact, area. In in we

So basis, workers were in those with working working on and day-to-day folks with clients areas. that cuts a no are there

number down of senior one levels more layers and of terms from in team a leadership made two We cuts that and the the organization.

to the field closer So leadership organization, team we are the organization. the bringing flattening

also from the vendors as some We us received concessions that of some support well.

So all headcount It the our cuts broad-based we our wouldn't it area or pretty of look in necessarily that some impact reduction. a where make workers. could was wasn't clients

Henry, So of cut. that the of areas those in areas we terms were focus,

of of have investments, been one the count. had over challenges years last terms couple that of we the has around In client our

job pretty pricing a pricing done have up in. increases wage We that a from of perspective and good with keeping

and is have in good and of We the acquiring done in as hanging a good job the out a early things haven't our on job pretty then of new days. going But clients. we clients retaining them one done to

where But long is a some have job good us who the have challenges. we with we days for with. had done Those a time, been early

sure a multimillion off once a then and what making we made have a good focused share have that we JobStack of clients within clients really done on making also made and the investment pretty those and start. in heavy a have signed that's to so our And they they get on is, investments area we onboarded, get sure up they And onboarding team dollar it some in are using wallet that way. significant expanding in are

in quarter and out we been team early rolled days. really third successful. so that the It's And

on we fact, be that the probably that of have In the size based to are team results expanding had. going we early

$X our marketing within And have so out reinvest savings as we carved to the at base. existing about as million clients we both looking sales our and we in capabilities that are new well had aimed of cost and install

focus. areas are those so And the of

Henry Chien

Got it.

Okay. on Great. PeopleManagement. just That's helpful. And

be at the headwinds, to mean facing and appeared some both pretty business. looking Just pricing it I on volume. significant

it is new you the worth expand continuing are to where business like why unit? curious of that kind seeing business and Just

Patrick Beharelle

on Well, we now. are actually PeopleManagement pretty right bullish

of had in have a number that wins business. We

a are wins very these XX% large multiyear are up year-over-year In contracts companies. fact, than basis. And more our on with

are revenue and unimpressive business And on couple of margin so years feeling that you rightly point profile. we bullish after, a pretty growth pretty out,

the like is place companies have new that on put multiyear in signing up these these deals pricing solid engagements. we to and So we are large are

we and XXXX into beyond, that look And business returning growth. as we see to so

Henry Chien

it. Got

sense. Makes Thank Col. Okay. you.

Operator

Mark ahead. our comes the line Marcon Baird. go question from with of Please final And

Mark Marcon

Patrick. Hi Derrek. Hi

workers' the regards what's underlying up? workers' comp with reason why wondering, Just to went comp, the the

Derrek Gafford

Mark. here. Derrek Hi It's

we certainly an the as quarter. Our prior point has the that year last period EBITDA second exclusion quite of benefit Matter we same a the the run year from It's XXXX year. the it reductions was the to believe, ever workers' and rate as point unless consistent. of quarter lowest our I fact, percentage we took larger than this and during reserves to was fiscal lowest just done third that that, normal third of have had that compensation during down had in have been was the quarter in revenue

Mark Marcon

it. Got

a minimum And of that the some outside Is Great. demand how could seeing terms construction regards fill how business, you in seeing little the hard are what could you of what any with bit seeing? at increases to in wage then the of with you to you talk also are are PeopleReady of, describe trends is that areas Okay. And the just the there end is of through, positions? terms about gone impacting and having light tunnel? in it just the you

Patrick Beharelle

Sure.

about headwind. if heavy certainly very has we talking PeopleReady manufacturing perspective, a are been a trend from So

manufacturing. into we to were perspective, XXXX, down in of about X% QX put So

my During well early about the we quarter, overall, fourth the earlier parts there quarters. most little construction bit XX%. were the up comments, pressure In additional two third down But in the a pretty quarter. first coming construction in part from held for of is of the

businesses. double is business down seeing call minus in some And let's industry. low XX%, also are then digit, We transportation we it That got have pressure the other XX%. minus

in If has holding quite far had as we in up as in we just noise the out did business the retail well. last you actually digits particularly that I project of take single we mid been this the there. PeopleReady growth QX, some that retail mean have were business

So there is business. some that resiliency for us in

set increases minimum have toughest minimum was sizable because of wage that the year have When the have increases California. wage last been increases, this it in been comes Those year-after-year. to happening those been

that those it through months three tough comes recover and that's typically on when pressure first for I has in four that or its running then that parts cost bit course. the volume. this are of we would and early So afterwards see of been And a say businesses on to take way moderates We the year-after-year. the little

As if which wage pushed relatively assessing far the was that for wouldn't the process that with as are we be to $XX minimum increase year, minimum minimum that. million had we was still I surprised it increases year, wage wage close of But we increases next through. this roughly in

with requisitions quite tough. people, open it's still Filling

are contingent are their We oftentimes is businesses at are space. go the that's environment seeing, more in than that are X% you they in you total only at the of employment of numbers. workforces why unemployment. an staffing That's first businesses really here looking the overall headwind where course, And of and where

workforce, fill positions that's take to given the an on. with work, put pretty much going fill environment challenging if So of those what's is you economic that a it fully

Mark Marcon

Obviously, when like you and make say Because you you the would feel It less got the PeopleReady year. But it some on sounds are you year, an I more trajectory that soft factors hitting macro potentially side. the what mean, lined it optimistic the has looking on overall doing as well kind would optimistic are softening inflection? next JobStack. the up sounds you think like or of towards environment, start you throughout about contracts and about have been

So how you capital just that deploying on the and buyback? are thinking also about the

Derrek Gafford

is, percentage of are have that place process. an make candidates the we a best to we increase these what got conditions. hiring on in under as are how we where opportunity we And operate can Well, focused our it through

So ours a of in big focus XXXX.

have people matches it's are that place but not we jobs. a with them JobStack and employees actual in matching who brings candidates, engine and While

about the utilizing workforce. really that's So

candidates and onboarded. that how of candidates. a sizable a investing become they our in to much And we then that are make improvement employee of have have become those We we system and got resources come to experience more to lot the changing conversion and opportunities in ratio some think the time make an the seamless and

So and work JobStack which time also for come conversion us, we cut be process which candidate also in applicants. to expanding the it of in more will the that that to and employees XXXX, our make improve we think for it much for be significantly our application the will ratios down seamless takes

Mark Marcon

How will Derrek? that, you expand

Derrek Gafford

Pardon?

Mark Marcon

next going that, How JobStack You Derrek? year? to expand will expand you are you said

Derrek Gafford

Yes.

And through will so system, now legacy through JobStack the our going tracking application. of applying applicant instead candidates be really

to way. they become also, will we will through the course, seamless digital a candidate-facing once have a easy work much us, they dispatch it application things will could then that model experience come a So that they move of about and more of more process with to the that and some learned and business for make

those have we that for So plans XXXX. are

Mark Marcon

Great.

Derrek Gafford

the bit. looking out uncertainty change uncertainty, it's given don't on be minds time and be When less it seriously there that would that right the horizon allocation, to would the comes to our were we exists If think acquisitions we there. at to capital clear a

if and into go the more like with very be bottom along that the near at we future. hopefully, of traditional were a opportunistic this we it that On deals coin, the of could that, But more the consider prices, were we in and are doesn't side clearing see we some some if recession would to some other uncertainty came get would feel way. there

our staying to place this our resources our that. number really of that, is But putting business model, digital true in outside and time one of

We that, that think makes some also or to share are times are are good continue plan consistently capital We excess then whether bad. but makes going with repurchase. we investing into sense. And opportunistically have, whether in to times repurchasing put doing we sense that

million. acquisitions the an repurchase. additional $XXX to with capital or announced there of we And part So back strategy, stock authorized less that is put to as today Board more our authorized

our think I intentions. somewhat that So to speaks

Mark Marcon

in Derrek, I was sheet? light of timing of strong thinking about being the deployed, balance more the that particularly

Derrek Gafford

are is right. good you shape. really Well, balance The in sheet

flex given so probably environment. to get are see this wouldn't of right us circumstances, over But to And be want the to debt some on churn that type in of up EBITDA could we you opportunistic.

Mark Marcon

question PeopleReady, you about to other occur would pacing the there? the to talk any just profile should quarter sequential inflection when And regards in how expect then the be Okay. on And Was increase relative to margin about then the one signings? the think like, of contract there you given to can would about else there repricing any anything this occurred we more or past basis talk that a sequential revenue? with is

Patrick Beharelle

this is Patrick. Yes, Mark,

of PeopleManagement In contract referring in the terms signing, to those I was earlier.

Mark Marcon

meant PeopleManagement. I

Patrick Beharelle

there where is will guidance we now. not when from I a XXXX size QX. a have signings, in what the the you think necessarily of guided see Great. we magnitude quarter we for in to significant at right pretty are But giving QX step-up chance Okay. and by look that Well, good

happen see that than And a thought. a So ramp fairly a some implement in in have did had and early quarters an I improvement business we think the thought step-up pretty or little we be conditions. from current are the longer and to QX guided I had had point originally on versus I QX. couple I QX. asked inflection thought to assuming we said deals improvement ago, But we significant again earlier taking up would will been see year where think it will I when about in been, call the we

see what we really So QX of this I originally think thought we inflection in year. that QX will versus in

Mark Marcon

some of margin And along or was due to lines? fees those led margin Great. relates PeopleManagement? any anything these past sequential setup decline sign this to sort or of deals in that quarter, the What part larger just as the it the to EBITDA efforts to in of the PeopleManagement

Derrek Gafford

Yes. which But It impact. one-quarter negative. which less involved handful a customer a than were was some accounts, mostly positive, it's timing just really of with some were

overall given guidance the quarter you the results in have while the see, we when assuming for will think we within our you will fourth are out already, see come So PeopleManagement. I guidance what

issues year-over-year far You PeopleManagement. will quarter but just nothing profile see. normal a the can as that's client margin as a consider more sustainable few for third see timing I we

Mark Marcon

And be the QX. is that continue would into things. to well? continuing you work Would just which project guidance, on One two expect year as the into next

Patrick Beharelle

been is client about is that's this are for a terms strong of the our it's as XX of next well. multiple With years that client, we This as top now us relationship. But doing clients nature now and Mark, now. is right size additional in in It's we a speak with project lumpy. particular very work projects Patrick. one conversations year the so of

would expect So XXXX. will in see new terms to we projects that lumpiness of I continue some in

Mark Marcon

Okay.

shouldn't are So that assume away you expecting QX $X should to people necessarily to experience that in million that go in million $X QX?

Patrick Beharelle

a I lot of No. is projects. a conclusion. This has client that would just that not draw large very

Mark Marcon

regards guidance, with are cost And Great. question for the the then excluding you be second correct? the would the restructuring, to

Derrek Gafford

$X Yes. of of quarter, That's $X that savings fourth we in that got to right, provide reduction reserve of to related of the the million part but workforce away. costs million taken take actions that some The we Mark. have

million adjusted income. net So that that EBITDA $X just mentioned, be I that charge adjusted will excluded from and

Mark Marcon

through? tax the broadly rate about think that assuming WOTC we next should how just then speaking, And goes year, for Okay.

Derrek Gafford

up year come quarter. wrap XX% our But amount, that are that next for some sometimes fourth within should a putting change see looks to XX% will stuck throughout at into that, the be we we stayed Yes. for pretty the right for point together about about there and this that we we and talking it but with are right any new This have year. estimates rate reason rate this that, mean expected have been tax have up year good I this still but things time. for don't that now. in that I the

Mark Marcon

you. Thank Great.

Operator

will Thank remarks. the closing now I Beharelle for call you. And turn to Patrick

Patrick Beharelle

week forward you. everyone talking call. Have We to a XXXX. third again earnings to our quarter in to you great appreciate Thank look everyone. And listening I

Operator

you Ladies for conference call. and today's Thank participating. concludes gentlemen, this

disconnect. now may You

TrueBlue (TBI) 28 Oct 192019 Q3 Earnings call transcript