Earnings call transcript Q2 2023

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Operator

Greetings, and welcome to the TrueBlue Second Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce you to your host, Derrek Gafford, EVP. Derrek. you, Thank

begin. You can

Derrek Gafford

everyone, I’m and Cooper, joining afternoon, Taryn you our thank by our call. Owen. Officer, joined Operating Steve and today’s Chief President Good Chief for Executive and Officer,

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

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

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

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

Okay.

Let’s over turn Steve. the to call

Steve Cooper

everyone you, Thank call. welcome today’s Derrek, to and

compared for $XXX Revenue was down the million, quarter year. prior XX% the to

of environment Our results demand. reflect an softening

effect. some While to caution, taking resilience when sentiment the the recessionary traditional it staffing mixed broader economy and remains already with is comes showing indicators others highlighting industry, the

demand trends three is customers that all our and in on across Economic the weighing our seeing uncertainty segments. we’re of manifest

also Given focused costs. the retaining on focus on employees, but tight market, increasingly they are to labor clients continue reducing

they more which choose fill. clients result, becoming are jobs a on As to selective

high have million, jobs openings in and been job added number in roles. remains the of the XX months across the permanent United primarily professional recent about While at States

temporary play and wholesale involve open overall, blue year-over-year. where retail well jobs has in number and market, as positions we larger manufacturing, role declined the trade was help more a the with For collar of which

still know services, leading for With need volumes, is the of of fill talent find to help finding to lower decades macro-environment to clients we critical roles. how staffing clients. talent breadth our challenging the our right While and experience

demand to we’d like, staffing down of not current the timing. a comes remains though long-term for matter and positive levels really Even outlook what are

an help in for to broader trends through and helping improves. We’re first customers as the times we’re when cycles. comes often them first early macroeconomic our the usually viewed We and that as environment indicator out pride take being these prepared it economic to are challenging in

the additional we’re will I the who taking actions Now, turn detail as growth our provide call today to over as future. about the well for will Taryn, strategies

Taryn Owen

Thank you, Steve.

Staying a is our response and their teams. critical highly with high within in to adjust needs pressures as our their engaged cost service priority workforce they businesses. for remains clients sales This

to providing on customers’ excellent we sales, needs. are With and being focused PeopleReady, our responsive service

We are to teams trades. development sales business in efforts on-demand managers by new skilled our account centralized the our of our have enhancing embedded training velocity within and business, leveraging markets cover increasing

growth opportunity remains While our caution, acting our us present sector and strong for energy to with of renewable most pipeline continues are a as clients expands portfolio the our healthy.

We expansion well high-growth further area other industries. this are as targeting as in

sector, has shown resiliency we market healthcare which entered pressures. At greater have to PeopleScout, the

in recession efforts targeting this We industries. well are further sales other as as resistant vertical

short-term will our current that relationships long-term while building meet On-Demand, to make remain clients needs who workforce growth offerings, in to we Recruiter such hesitant their as commitments, the For are drive leveraging future. the

Many and complexity gain which provider for service for to our recruitment complimentary reducing in offerings opportunity portfolio expanding service are our the consolidate PeopleManagement, around to go-to-market and looking messaging space. reach with consulting businesses us media are rebalance aligning also With creates clients. we are We market our their share. the

us allow scale support offerings and project this to they growth. ready ensure as are clients short-term to to macroeconomic and in that return our flex environment we challenging Our

commitment to that and with we evolving meet to and be clients’ people will our continue technology transformation, ensure to combined efforts, employee ready These underpinned satisfaction ongoing to mission help by workforce our work, our needs. connect

the pass details now call to Derrek, I’ll share over results. financial will who our around further

Derrek Gafford

Thank you, Taryn.

was Total a revenue for QX XXXX decrease $XXX of XX%. million,

adjusted our are becoming the from our the to are choice demand clients up income $XX net million $X of with versus most loss $XX EBITDA softening is only write $XX fill more in in million. many net short year. We to their a QX is charge for charge cost posted Clients approach critical a non-cash We MSP jobs. coming points job in a in of for million $X other last million. of business a Adjusted income conscious impairment goodwill revenue results down Included to million, certainly wait-and-see a conjunction while tied expectation. net expectations. $XX climate while with of lower of impairment midpoint down PeopleScout’s quarter declined with $X mostly from X in of down openings million, taking demand The our making million, was

which of XX This margin PeopleReady blended a of compensation the employee expenses workers’ in contingent business, was driven better a This XX.X% our business. a points. down include that drop reserves, was in the disciplined in offset pricing mix lower and from in year PeopleScout gross not renewable energy mix as by PeopleReady’s prior Gross well basis markup. results increase carries a than business, revenue partially as by favorable part due was travel do to margin development

and between quarter consecutive delivered Our of PeopleReady spread business rate its inflation. positive pay rate bill ninth

benefit X%. incentive-related the of our million year, million there departure $X prior In decreased CEO. or costs the in a with associated was SG&A $X

X% actions about was $XX bringing million. to SG&A total this year, Excluding the this to about for cost this In by taken QX QX, were down and QX taken this event, in reduce in similar were year million $XX savings costs year. actions

cost about $XX year. inflation additional costs, the is factor for our most in savings notably in which to seeing benefits, also are netting medical million We our a

Despite the of goodwill the our income primarily tax loss, charge. $X the million we due quarter non-deductible expense impairment pre-tax nature incurred in for to

we year, expect benefit our income the a of exceeding to result $X $X the tax credits pre-tax million million with job associated as income. For tax of tax our income

challenging down results revenue XX%, segments. Now, the specific our PeopleReady of let’s basis of largest while profit is total XX% XX%, revenue to and XX% margin our XX-month PeopleReady and turn segment, profit points. trailing segment segment representing profit. of segment was lower XXX service decreased decreased these industries. volumes three are industries line in and is transportation the industry retail currently associated next excess in the from our Declines ranged to and XX%. with in due The inventories vertical most centers through distribution XX% to flowing clients

our flip construction the On is side, resilient market. most

of from acceleration of Our business was renewable QX. our the business only was in rest up XX% and XXX%, QX in XX% energy down construction an growth about

expenses. the pricing rates a and our We X.X% to bill and rates business inflation SG&A The help cover spread discipline inflation positive up between X.X%. bill pay up in strong are maintaining produced pay rate with

our Demand and of PeopleScout healthy the seeing margin to also our basis fill moderated peak while levels of initiating are of decreased services in assortment some year. jobs. XX% softer some turnover PeopleScout XX-month segment of points, is segment, resources profit down segment representing margin XX%, XX% of highest with an our has produced industries but internal XX%, XXX profit clients XX%. levels trailing was total a and Demand decreased many profit. revenue still as margin segment revenue clients attempting employee comparison hiring use in for of freezes was with profit segment lower across to and prior

Demand total profit. uncertainty decreased in and driving on-site represents PeopleManagement XX-month and points. PeopleManagement segment as XX%, segment was to segment XX% XXX of both commercial XX%, down services of trailing while profit basis decreased revenue volumes. XX% lower revenue margin client economic led and declined profit

finished Now, great let’s sheet $XXX balance availability. cash, quarter $XX the in of in and to million We no balance The debt the with is million borrowing sheet. turn shape.

additional our on one we wrap moment items. I’d provide like a forward-looking to Before color up, of to take

We to in decline expect XXXX. revenue XX% a QX of XX%

XX%, the of by is prior comparison. QX decline decline mid-point of challenging the improvement an less compared year XX% driven is to this While a

For website earnings additional please our today. presentation posted details our outlook, see on to our

we to we supply the are more this focused on commitments our well are workforce be of about we a for for perspective, customers, the equipped In on and us a when ourselves one meantime, will believe highly close. by before want to service our time improves. strong some not positioning and staying with staying help are to and costs. recovery true need. ahead performance we disciplined we of blue-collar excited tight to are technology add from all where sorts remaining remain currently of opportunity engaged the the businesses fill We critical Though environment we thought labor I’ll macroeconomic quite

for please prepared This questions. call concludes Operator, our remarks. the open

Operator

you. Thank

from We with Silber question-and-answer Markets. be Instructions] session. Jeff BMO a comes [Operator Capital will now conducting first Our question

Jeff Silber

Thanks. That's close enough.

Let start a steep us with there color Were can first by large give year-over-year that that you a sharp PeopleScout. I little bit left? If don't was specific it that pretty sudden? know but PeopleScout. guidance you in some segment, Was on drop. me decline more accounts give

Derrek Gafford

here. also I the year. happened to quarter, QX Derrek it's last drop talk And it's here, for what PeopleScout us got okay? know about your name. last to I comes When Jeff, important it Hi this in you

revenue that with we we had If PeopleScout. you remember, quarterly our in all-time year, QX on about record last talked

were our big in we that already happening a because then, trending of high level really was the employee at turnover base So, the customers. And levels high and pretty had we some churn surge. of of

us So, also a perspective, not margin peak peak perspective. about for me, from created margin excuse a an created -- was from revenue us for an -- operating segment only when it gross that all-time a it

the and PeopleScout, the exaggerated decline at segment look profit same comps a that based the given for margin. taking an on revenue peak we're as So, goes year-over-year it's with

QX, towards expect for drop look our we a revenue as guidance about XX% that decline. down would So, this to would we

comp as QX So, that of more moderate get year. past last we

Jeff Silber

PeopleManagement? both All right. Is to get PeopleReady for it color similar and for XQ possible

Derrek Gafford

Yes.

quoting guidance, you each just [Technical Difficulty] ranges segment going to for purposes. PeopleReady midpoint for in range So so in I'm the the of give our versus a

around PeopleScout down around PeopleReady around XX%, XX%. So down down PeopleManagement XX%, and

Jeff Silber

appreciate Okay. your some helpful. I pretty That's changes that. last there seem slide quarter. really X, be to referring to looking at and debt, In from sizable I'm

you're this quarter. how the of kind of current seeing in of bullet mean, business looking were last framework? think to I business in with the quarter -- you like the we so quarter your update last priorities dramatically? highlighted changed happened kind points. at What and declines What strategy I priority different had second

Derrek Gafford

industry, Well, has to suitable more deck. strategies the to just of with how a roadshow now, operating on field. also on talk going And what And decided in buying to roadshow we what it. about we're right that on priorities our would would be are we with keep that operating that big in current helpful the be it picture what's we more deck going what's behaviors, the do, some have based thought in our

And comments. really prepared so, you we that that put debt you see here with heard in what the Taryn's lines in the

Taryn's those get prepared into referring summarized deck to. the you and So comments you're that and carryover form

Jeff Silber

Got it.

if might a that. Thanks companies? for of in logistics just can UPS focus business? FedEx in So, presentation, the in client. strategy. you And this sneak a overall I'm the change you is not like impact massive understand. if this about week. serve more. a this some just change of How just think If companies do We're smaller do business not, potential hearing I some wondering your one or other in strike the UPS I

Derrek Gafford

UPS don't in we space, much not a mentioned customer business do ours of and that Yes. names you other them. that is with the

practice driving you a line center a of, of that commercial million have do we it, $XXX revenue. that's, know rate call However, run

the some have ripple impact industries, like units direct you're some exposure could but to we there other then, no referring And think, to serve could I indirectly, that business industries it So, to many here. the be us, there. impacts

Operator

Our next question is with from Sidoti. Marc Riddick

Marc Riddick

verticals aspect, We've seasonal issues, bit little overall the the mean, the could I color little I certainly a wondering details with I some about some things the if talk I a bit wondering verticals. So, appreciate -- talk the if was the and around -- seeing a of lot macroeconomic that more you you're that there could was to of restructurings, instance, concerns seeing are retail there or if et general was retail? sort of around some seen cetera. with the of we're any about sort bankruptcies, certainly of -- was or there for you

umbrella? retailers much wondering under or of So, you I mix a that was that just have your may function consumer the maybe might specific of anything be how of weakness just like the versus seasonal

Derrek Gafford

Yes.

The certainly Marc. out industry, fundamentals but perspective from industry. if We seeing one seasonal right, the from kind not really we of retail pressure, that pick is where You're a pointed we're most underlying were it perspective. an to

at a sets. second our where quarter would based the stand volume expect on if how So from retail a we we based moved or on weakness we have look take to shown quarter year-over-year to both things on first has basis the in patterns, historical where a be

of comes fact And that actually that's our into are we're long on that those centers, operations. retail using flowing that volume through adequate there's right? seeing from customers this less while still still in -- got not it's services. requirements and many some and we've customers are volumes inventory, our of translating A lot store, the our back level spending, to distribution It's where work, the in the an less

Marc Riddick

how was then, industry That's the about might has And of bit as if talk the of as has your certainly is as of to little about what whether going year. to challenges all spread wondering sort I play comfort that you that level your a through the helpful. planning thoughts bill seen, out as could maybe the thinking forward generally. the I remainder things are was far for the the there of pay one

Derrek Gafford

disciplined Well, section, spread consecutive our is and our and our energy work rate spending that's warranted quarter stayed and to time our ninth having people the deliver pretty down positive on because a expect. we pay think we between more have at And in the kind screen we're find more this inflation, lot people. to and bill we're SG&A and quality clients a to do find of candidates people level to having that to pricing,

the take very are market. we we're in priced by we stay going look the still a diminish sure make market to see labor back the pay go to bit. These a of be we'd inflation But in so, to in maybe spread a to we to half or dynamics on we we based want And on to different expect as of half we maintain the step point I into a year, get inflation that pricing. So, year. the sure make pay would But would different geographies. stay still also forward, positive the back pools the down rate rate take disciplined -- don't continue expect and want different out. touch a tightness as of the we markets also that

Marc Riddick

talk sort I maybe that be about the then, an any anything begin area, areas haven't And that like something, maybe that it's whether little Okay. a like was that a wondering that thinking if activity, about vertical you may see, we is that maybe should out about seeing yet industry positive talked call could a geographic are of sort we turning it's anything you be particular of some or to might time? there whether

Taryn Owen

for energy Thanks us particularly spot perspective industry for business, question. renewable is an installation. from solar in speaking. is Certainly, this farm Taryn Marc, our the bright around Hi a

results and pipeline with So, grow that some to good it's healthy slowing we're good just down. there, a opportunity to seeing not a continue segment,

some we've there. positive So, results got

Derrek Gafford

There's investment Yes. some And Where country just last with of legislation think into renewable a some we industry. moving lot we're that, we've on opportunity year, to Marc, really that perspective, to from putting energy add there. is got business. a pleased passed more the this

We XX%. of doubled. business, high a year-over-year our it up was mix You basis, digit our a as that single on at business business to take Sequentially, up renewable -- look energy now energy -- revenue. a it's

of this serving been knows to is just here got We've the a business. quarter, not of that in going for we can we've customers our advantage this a lot really I this but and this good serve for that think business a help opportunity while, a team earnings And to bright spots, great really one how forward. take that space. of definitely So,

Operator

you. Thank

is Our Kartik from Northcoast with next Research. question Mehta

Kartik Mehta

and Derrek. Steve Hey,

that aggressive disciplined. pricing, that out being seeing competitors I'm because both the you're just very you gone been their in said and in has that if have what you think haven't were you TrueBlue or that's price pointing marketplace down I wondering of road.

Derrek Gafford

been a in been never always in cheapest industry our It has still the Well, have generally the And is we given competitive. pricing price competitive. market.

we really feel suite good where like customers RPO here about our to care a think experience. So, blue-collar versus and are we talking based really space. now now of on provide suited good we particularly, services, take I'm in staffing of the future in right the We we're

the there. are pricing we disciplined So, on staying

choosing we're operating supply I labor the pricing tight, certain market there's to seen supply choosing are has play versus think the aren't that that that how play where haven't in price to now prices amount and we're were trying the a to probably We're there. that where there's both When just overall cutting we to this markets. the a we there really say not in of And not function thing in labor general. is where And way. biggest market some how that's That's of share to certain year that is a choosing change a take and is. out dynamic and ago. power big we

Kartik Mehta

color if PeopleReady an acceleration? PeopleManagement if for the I'm were then they has what business. wondering quarter, the like And you July performed. or trends And on if of any and give stayed able to how throughout just steady you're the Derrek, saw kind

Derrek Gafford

Yes.

revenue talk let's trend quarter. numbers a about just from the So perspective for

consistent with out overall revenue to about thought was our Company. XX% we it about guidance. where be. very down was we in when April, for It's So, the going It's came

softening. is when seeing moved started As some into additional we we May

June We and basis that down July. I'm May itself carried I was for kind here our XX%. into we We're at was looking are for in has of at normalizing the -- reported holiday, Xth quarter but And down July XX%, revenue last of things, things really about at a of exited so year-over-year XX%. internally month lumpy about week, July little a XX%. believe the on

a with relatively where the consistent year-over-year basis on So we exited quarter.

Operator

with question next Our Marcon comes Baird. from Mark

Mark Marcon

I clients a thinking ramping for just you business? wondering, little bit core How in of about can season? the what up that more are was about you're terms talk thinking PeopleManagement holiday about

Derrek Gafford

of a There's Mark. for Well, a as fourth what's quarter, going perspective. retail little the from around far lot still on it's as and us, a been takes early puts

in perspective, the some little up bit opposed there our towards than consumer packaged from geared more competitors be say, food business space, reporting pretty some the industrial others other mix a their is As although of to staffing has see I may would a think held that here. can't that books, I manufacturing well. goods our I and

really us, held for has year-over-year kind so And as in up pressure. manufacturing as low-teens far of the

fourth As quarter, more see parts far of as-typical we're we're looking lot say. don't But, patterns. expectations this we just now. our basing historical right as to if the a quarter, of for with type what internal Hard any at an moving softening ramp-up on

Mark Marcon

if can PeopleScout. you And give the I'm little then, of you a Okay. to on wondering made with that more some comments detail regards

around did You that retail assuming I'm certain bit a challenged. the were indicate little more verticals were more were there not PeopleScout. PeopleReady, comments

little trending correct that for July, -- down for July could And range, XX% with if XX% PeopleScout? is what you actually or me or down better bit than you to is what verticals were in if regards the most are I'm wrong, PeopleScout? a showing soft So, that

Derrek Gafford

to do XX%. right lot Okay. that answer your questions, my of to to I'm some to around a come going best

perspective industry All that based from I at of made an PeopleReady. our comments vertical were

lot It's set best a proxy that's going a the big customers. to about think talk of industry-wide. of what's nice population I on

yes, -- really towards this think with retail, the directed PeopleReady and was I so business. all

Although I would into carry at also would business staffing over that say our PeopleManagement. other

talk you industry. an quarterly it to industry a too can don't comes customer whole it's to when PeopleScout, one really on trends. about When for I basis, think get trend Especially set the productive that down much

pretty pressure So, that some we've is PeopleScout, we for boom particularly when that we're a year record industries at But into across tough that all at QX really a facing. the because to industries, last will tend broad-based much. seen quarter looking say those comps us, and have the we're not we I was quarter get year-over-year is it such what

Mark Marcon

XX%, July, a of Derrek, you in function down you like So, -- is quarter? seeing in bit or are a the the are little down later still XX% that more

Derrek Gafford

month Well, I'm of not carrying total XX% I down being XX%. do and July, remember that XX%, trend into is. sure talking what similar around the the down in about company the about in June

Mark Marcon

that regards PeopleScout. with was down the you were of I to guidance saying was to Jeff to for giving XX% referring the guidance midpoint Silber the

Derrek Gafford

track Everything that I suggested. here we've midpoint to XX% on so is far the seen deliver that

that off We track. haven't that seen anything would throw

Mark Marcon

sharp are those? you're things then, you expenses. cost than And cutting And in talk certain a perspective But margins? how the further you go-forward far hope to are to along cut And did would preserve the -- How you basis? what a great. from where expecting? on it a should there worse margin a we a but if sequential what should obviously, about bit on order -- achieve bit were because margins what was little think about able how you a to down Okay, preserve we can you think about fairly little basis,

Derrek Gafford

talking right Yes. about Mark? We're PeopleScout now,

Mark Marcon

then broadly and speaking. PeopleScout

Derrek Gafford

Yes. you. Got

trends PeopleScout, for So distracting. bit are year-over-year a the

the to of was a So than of step last of was PeopleScout it first margin this so in up we XXXX all quarter. the average from took where finished XX%, into put points actually year higher the of perspective, year XX%. and QX couple a

adjustments So, lot been a of there have that been have made.

-- so, in all hit different Those were made first here rate in of mostly those second And the run the the the that in have quarter. almost staffing quarter, levels. adjustments been throughout

the it's permanent areas most. placement, that So, of deleverages with the one

point where sledding a showing, industry this this as pleased turning tough we're XX% through is really margin. the on year, an certainly while some where we're PeopleScout particular at with at and as is So, company a

how keep XX%, margin we this place and between to XX% the let's call rest So, it, built in the year. -- in the mid-teens, low- of the structuring throughout was really to that's

that. think down, I we're positioned things step adjustments. we'll overall, Company make If the to another at talking and PeopleScout some well, take about do

what business workforce customers. about That's flexibility about. our It's our for is

needs be So, and we're them. we they happens, helping well be And when adjustments. pleased down workforce to agile have to serve that as their and adjust make as

So, we've done in QX, soften we set things QX. actions some haven't continue adjustments. actions that we'll in of more If to seen make more, yet,

Mark Marcon

comp Okay, or great. that accruals, think sorts about how I we the then of those should And balance initial were the on positive those with workers' the were assume those would just across should the all the given PeopleReady, accruals. accruals of positive concentrated in see board? And continue year? you conservatism to the

Derrek Gafford

That some got you've reserves positive really falls up is PeopleReady. in going prior on what years. all in Really, development put Yes.

While this versus revenue. -- amount it's QX QX we've the was got year dollar in also last same in ballpark, less year the

kind the showing now in a We're adjustments are a of little margins thing. gross to QX margins gross up the bit our we take forward And of That's positive look look at as really QX. be year, up to in expecting you can percentage a those main reserve larger. revenue So, and margin year-over-year guidance. as

but just bit a do we thing to thought last that, But takes in compensation. year. up talk puts margin and all profile, go a including was main there's versus to it expect the So, and about of be the overall it to I lot workers' gross easier of

Operator

floor at further I to Steve this back would time. are questions There comments. for you. Thank turn over closing no to like the

Derrek Gafford

We'd everyone. updating joining our just QX today, like you we here us of October. you for results on thank forward in to and to Thanks, all look

Operator

This teleconference. today's concludes

time. your this You may lines disconnect participation. at for you your Thank

TrueBlue (TBI) 24 Jul 232023 Q2 Earnings call transcript