Attached files
| file | filename |
|---|---|
| 8-K - TRUEBLUE FORM 8-K - TrueBlue, Inc. | tbi2016q3pressrelease.htm |
| EX-99.3 - TRUEBLUE INVESTOR PRESENTATION - TrueBlue, Inc. | investorroadshowpresenta.htm |
| EX-99.1 - TRUEBLUE PRESS RELEASE - TrueBlue, Inc. | tbi2016q3pressreleaseexhib.htm |
www.TrueBlue.com
www.TrueBlue.com
Forward-Looking Statements
Certain statements made by us in this presentation that are not historical facts or that relate to future plans, events or
performances are forward-looking statements that reflect management’s current outlook for future periods, including statements
regarding future financial performance. These forward-looking statements are based upon our current expectations, and our actual
results may differ materially from those described or contemplated in the forward–looking statements. Factors that may cause our
actual results to differ materially from those contained in the forward-looking statements, include without limitation the following: 1)
national and global economic conditions, including the impact of changes in national and global credit markets and other changes
that affect our customers; 2) our ability to continue to attract and retain customers and maintain profit margins in the face of new
and existing competition; 3) new laws and regulations that could have a materially adverse effect on our operations and financial
results; 4) increased costs and collateral requirements in connection with our insurance obligations, including workers’
compensation insurance; 5) our continuing ability to comply with the financial covenants of our credit agreement; 6) our ability to
attract and retain qualified employees in key positions or to find temporary and permanent employees with the right skills to fulfill
the needs of our customers; 7) our ability to successfully complete and integrate acquisitions that we may make; and 8) other risks
described in our most recent filings with the Securities and Exchange Commission.
Use of estimates and forecasts:
Any references made to fiscal 2016 are based on management’s outlook issued October 19, 2016, and are included for
informational purposes only. We assume no obligation to update or revise any forward-looking statement, whether as a result of
new information, future events, or otherwise, except as required by law. Any other reference to future financial estimates are
included for informational purposes only and subject to risk factors discussed in our most recent filings with the Securities
Exchange Commission.
Financial Comparisons
All comparisons are to prior year periods unless stated otherwise.
www.TrueBlue.com
Q3 2016 Highlights
Total revenue growth of 2%, net income growth of 17%
Organic1 revenue decline of -6% (-3% excluding Amazon)
Adjusted EBITDA2 growth of 12%
Adjusted EBITDA margin expansion of 70 basis points (bps)
o Taking the right steps to preserve profit margins
o Disciplined pricing and cost management
o Accretive acquisition performance
Recent acquisitions on track to exceed original Adjusted EBITDA
expectations
1 Organic excludes acquisitions completed in the last twelve months.
2 See Appendix for definitions of non-GAAP financial terms.
www.TrueBlue.com
Financial Summary
Organic revenue trends excluding Amazon -3% for the quarter. Trends further softened
through the quarter:
o July = 0%, August = -3%, September = -5%
Adjusted EBITDA margin expansion = 70 bps
o Accretive acquisition performance = 40 bps
o Pricing and cost management = 30 bps
Amounts in millions, except per share data Q3 2016 Change
Revenue $697 +2% (-6% organic)
Net Income $23 17%
Net Income Per Share $0.56 17%
Adjusted Net Income Per Share1 $0.70 17%
Adjusted EBITDA
% Margin
$49
7.1%
+12%
+70 bps
1 See Appendix for definitions of non-GAAP financial terms.
www.TrueBlue.com
Gross Margin and SG&A Bridges
SG&A
Amounts in millions
Gross Margin
24.7%
25.6%
0.4% 0.4% 0.1%
Q3 2015 Acquisitions Revenue Mix Bill/Pay & Other Q3 2016
$125
$135
$11
$5 $6
Q3 2015 Acquisitions Integration and Other
Charges*
Organic Business Q3 2016
*Includes acquisition and integration costs of $1.4M, branch signage write-offs of $1.6M due to our re-branding to PeopleReady as well as costs of $1.8M associated with our exit from the Amazon delivery business.
www.TrueBlue.com
Staffing Services Segment1
Organic decline of -7% impacted by Amazon business
Excluding Amazon, organic revenue down -3% on top of tougher prior
period comparison. Q3-15 comp was +6% vs. Q2-15 comp +1%.
Adjusted EBITDA margin down 50 bps as the organic revenue decline
slightly outpaced the decline in operating expense
Amounts in millions Q3 2016 Change
Revenue $653 -1% (-7% organic)
Adjusted EBITDA $47 (-6%)
Adjusted EBITDA Margin 7.2% (-50 bps)
1 Staffing Services includes all contingent labor businesses.
www.TrueBlue.com
Managed Services Segment1
Total growth of 63% from recent acquisitions and organic growth
Mid-single digit organic revenue growth
o New customer pipeline driving growth
Strong increase in Adjusted EBITDA and related margin:
o Aon Hewitt RPO acquisition and related synergies
o Pricing and cost management adjustments in legacy business
Amounts in millions Q3 2016 Change
Revenue $44 +63% (5% organic)
Adjusted EBITDA $9 +190%
Adjusted EBITDA Margin 20.8% +920 bps
1 Managed Services primarily consists of recruitment process outsourcing (RPO). Also includes managed service provider (MSP) solutions.
www.TrueBlue.com
$180
$216
$115
$202
$246
$139
2014 2015 Q3 2016
Net Debt Cash
$101
$77
$155
$21
$30
$25
$123
$107
$179
2014 2015 Q3 2016
Borrowing Availability Cash
Debt and Liquidity – Substantial Improvements in 2016
30% 31%
21%
2014 2015 Q3 2016
Total Debt
Liquidity
Debt to Total
Capital
Amounts in millions
Amounts in millions
Note: Balances as of fiscal period end. Figures on this page may not sum due to rounding.
www.TrueBlue.com
www.TrueBlue.com
Q4 2016 Outlook
Amounts in millions, except per share data 13-week basis Notes
Revenue
Growth Ranges
Total Revenue
Staffing Services
Managed Services
$670M to $686M
-17% to -15%
-20% to -18%
50% to 60%
• Total organic revenue decline excluding Amazon of -5% to -8% (13-week basis)
• Tough organic comparison in Q4-16; gets easier in Q1-17. Prior year organic growth
trends excluding Amazon:
Q3-15 = 6%
Q4-15 = 11%
Q1-16 = 4%
• 14-week basis (GAAP): adds $30M of revenue.*
Net Income
Adjusted Net Income
$17M to $19M
$23M to $25M
• Assumes income tax rate of 32%
• Adjustments include $1.8M for acquisition and integration costs (before tax), $300k
for WOTC processing fees (before tax), $6.2M for acquisition amortization and earn-
out accretion expense (before tax) and -$2.7M for the tax effect of these adjustments
• 14-week basis (GAAP): Neutral impact on profit due to low seasonal volume.*
EPS
Adjusted EPS
$0.40 to $0.45
$0.54 to $0.59
• N/A
Adjusted EBITDA $38M to $41M • N/A
Our fiscal fourth quarter of 2016 will include a 14th week and we plan to change our week-ending date from Friday
to the following Sunday to better align with our customers.
This will result in our year-end being the Sunday closest to Dec. 31st every year, with our 2016 fiscal year-end
occurring on Jan. 1st, 2017.
Q4 outlook provided on a comparable 13-week basis. Incremental impact of extra week and week-ending date
also provided.
*Represents incremental impact of extra week and change in week ending date.
www.TrueBlue.com
Amazon Update
Amazon is continuing to insource more control over its logistics operations
Amazon will not be outsourcing contingent labor in their delivery business
starting in early Q4-16
Year-to-date revenue and Adjusted EBITDA for the delivery portion of the
business is $35 million and -$3 million of start-up losses, respectively
70 68
6
55
37
55
32
174
29
2015A 2016F Expected Run
Rate
Revenue Q4
Q3
Q2
Q1
$24
$7
$2
0
5
10
15
20
25
30
2015A 2016F Expected Run
Rate
Adjusted EBITDA
$166
$354
$30
Financials for
Total Amazon
Relationship
www.TrueBlue.com
Update on Recent Acquisitions
Strategic Rationale
Above market growth in 2016
Great compliment to existing business
Productivity-based business model provides unique client
value proposition
Competitively differentiated workforce solution
Embedded business process service provides high client
retention
Strategic Rationale
2016F
Original
Target
Current
Outlook
Difference
Revenue $185M
$170M to
$180M
-$5M to -$15M
Adjusted EBITDA $13M $15M to $16M +$2M to +3M
RPO Division of Aon Hewitt SIMOS
2016F
Original
Target
Current
Outlook
Difference
Revenue $65M $65M to $67M Flat to +$2M
Adjusted EBITDA* $13M $17M to $18M +$4M to +$5M
*Note: 2016F Adjusted EBITDA benefited from ~$2M in favorable transition service agreement savings that
we do not expect to repeat in future periods.
www.TrueBlue.com
www.TrueBlue.com
Growth Strategies
www.TrueBlue.com
Simplify Branding to Increase Operational Agility & Growth
Staffing Services
RPO division of
Aon Hewitt
Managed Services
Timing:
Legacy:
Future:
By mid-2017 NA Complete
www.TrueBlue.com
www.TrueBlue.com
Non-GAAP Terms and Definitions
EBITDA and Adjusted EBITDA are non-GAAP financial measures. EBITDA excludes interest, taxes, depreciation and amortization.
Adjusted EBITDA further excludes from EBITDA, costs related to acquisition and integration, goodwill and intangible asset
impairment charges, other charges, and Work Opportunity Tax Credit third-party processing fees. EBITDA and Adjusted EBITDA
are key measures used by management to assess performance and, in our opinion, enhance comparability and provide investors
with useful insight into the underlying trends of the business. EBITDA and Adjusted EBITDA should not be considered measures of
financial performance in isolation or as an alternative to Income from operations in the Consolidated Statements of Operations in
accordance with U.S. GAAP, and may not be comparable to similarly titled measures of other companies.
Adjusted net income and adjusted net income per diluted share are non-GAAP financial measures which exclude from net income
and net income on a per diluted share basis costs related to acquisition and integration, goodwill and intangible asset impairment
charges, other charges, Work Opportunity Tax Credit third-party processing fees, amortization of intangibles of acquired
businesses as well as accretion expense related to acquisition earn-out, tax effect of each adjustment to U.S. GAAP net income,
and adjusts income taxes to the expected ongoing effective tax rate. Adjusted net income and adjusted net income per diluted
share are key measures used by management to assess performance and, in our opinion, enhance comparability and provide
investors with useful insight into the underlying trends of the business. Adjusted net income and adjusted net income per diluted
share should not be considered measures of financial performance in isolation or as an alternative to net income or net income per
diluted share in the Consolidated Statements of Operations in accordance with U.S. GAAP, and may not be comparable to
similarly titled measures of other companies.
See “Financials” in the Investors section of our web site at www.trueblue.com for a full reconciliation of non-GAAP financial
measures to U.S. GAAP financial results.
Oct. 19, 2016