Attached files
| file | filename |
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| EX-99.3 - TRUEBLUE INVESTOR PRESENTATION - TrueBlue, Inc. | investorroadshowpresenta.htm |
| EX-99.1 - TRUEBLUE PRESS RELEASE - TrueBlue, Inc. | tbi2018q1pressreleaseexhib.htm |
| 8-K - TRUEBLUE FORM 8-K - TrueBlue, Inc. | tbi2018q1pressrelease.htm |
www.TrueBlue.com
April 30, 2018
Forward-Looking Statements
Q1 2018 summary
Strong earnings per share growth
EPS +100%, adjusted EPS1 +48%
o Favorable income tax, gross margin, and depreciation results
o Gain on sale of PlaneTechs (excluded from adjusted EPS)
Modest revenue decline but gross profit up 3%
Total revenue -2%
PeopleReady -5%, solar industry challenges and soft trends in Southeast
PeopleManagement -4%, -2% excluding PlaneTechs2 and in-line with expectation
PeopleScout +22%, accelerating revenue growth
Programs to lower cost of services are working – gross margin +130 bps
Divestiture of PlaneTechs business
Small, non-strategic asset, less than 2% of total revenue
Concentrates our focus on larger market and higher growth and margin opportunities
Continuing to execute on our strategy
PeopleReady – Continued progress on mobile technology
PeopleManagement – Attractive on-premise solution for larger, strategic clients
PeopleScout – #1 in RPO market, new proprietary technology, attractive margin
1 See the appendix to this presentation and “Financial Information” in the investors section of our website at www.trueblue.com for a definition and full reconciliation of non-GAAP financial measures to GAAP financial results.
2 In mid-March 2018, we entered into an asset purchase agreement with a private, strategic buyer for the sale of our PlaneTechs service line. Growth presented excluding both current and prior year PlaneTechs results.
Financial summary
Amounts in millions, except per share data Q1 2018 Y/Y Change
Revenue $554 -2%
Net Income $8.8 +87%
Net Income Per Diluted Share $0.22 +100%
Adjusted Net Income1 $12.7 +43%
Adj. Net Income Per Diluted Share1 $0.31 +48%
Adjusted EBITDA1 $19.4 +9%
Adjusted EBITDA Margin 3.5% 40 bps
1 See the appendix to this presentation and “Financial Information” in the investors section of our website at www.trueblue.com for a definition and full reconciliation of non-GAAP financial measures to GAAP financial results.
PlaneTechs divested 3 weeks before quarter end = $3 million of lost revenue
Net income benefited from a $1.4 million pre-tax gain on the sale of PlaneTechs
Lower income tax rate from U.S. Tax Cuts and Jobs Act
Lower depreciation from certain technology investments becoming fully depreciated
Success with programs to reduce the cost of services boosted adj. EBITDA margin
24.5%
25.8%
0.6%
0.7%
Q1 2017 PeopleScout PeopleReady &
PeopleManagement
Q1 2018
Gross margin and SG&A bridges
SG&A
Amounts in millions
$122
$126
$2
$2
Q1 2017 EBITDA add-backs* Core business Q1 2018
Gross Margin
* Implementation costs for cloud-based systems.
Results by segment
Amounts in millions PeopleReady PeopleManagement PeopleScout
Revenue $317 $184 $54
% Growth -5% -4%
(-2% ex-PlaneTechs)
+22%
Segment Profit1 $9.5 $5.6 $11.9
% Growth -5% +2% +37%
% Margin
Y/Y Change
3.0%
Flat
3.1%
+20 bps
22.2%
+250 bps
Notes:
1 We evaluate performance based on segment revenue and segment profit. Segment profit includes revenue, related cost of services, and ongoing operating expenses directly attributable to the reportable segment. Segment profit
excludes goodwill and intangible impairment charges, depreciation and amortization expense, unallocated corporate general and administrative expense, interest, other income and expense, income taxes, and costs not considered
to be ongoing costs of the segment. Segment profit is comparable to segment adjusted EBITDA amounts reported in prior periods.
Tariffs on solar panels
and soft trends in
Southeast impacting
revenue
Solid segment profit
margin performance in
spite of revenue
headwinds
Lower workers’
compensation aiding
segment profit margin
Revenue decline of 2%
excluding the divested
PlaneTechs business
Healthy new business
pipeline
SG&A management
produced higher
segment profit margin
Third consecutive quarter
of double-digit revenue
growth
New talent acquisition
technology garnering
strong interest from
prospective customers
Recruiting process
efficiencies continue to
drive higher segment
profit margin
Segment strategy highlights
Worker component of
JobStackTM mobile app
fully deployed
4,300 unique clients on
JobStack as of Q1-18
Expect 10,000 clients to
be actively using
JobStack by the end of
2018
Attractive on-premise
solution
o Perfect fit for larger
clients with longer-
duration / strategic
need for contingent
workers
o Strength in the e-
commerce vertical
o Internal focus on
new client wins and
margin expansion
Global RPO market
experiencing strong
growth
Industry leading
proprietary technology –
recently launched
AffinixTM, a next-
generation HR tool
Attractive margin
business with compelling
value proposition
Cross-Selling: Leverage significant opportunities with key strategic accounts
Successful divestiture of PlaneTechs business
Formerly part of PeopleManagment, PlaneTechs specializes in providing temporary skilled mechanics and technicians to aircraft
maintenance, repair, overhaul and manufacturing companies in the commercial, government services and business aviation sectors.
Transaction Highlights
Sold to private, strategic buyer in mid-March
$11 million purchase price
7.7x 2017 segment profit
Strategic Rationale
Financial Impact
Annual revenue of approximately $40 million
with a 3% segment profit margin
Divestiture creates revenue headwind of ~2%
in 2018
Yo
Y
R
ev
en
u
e
G
ro
w
th
H
ea
d
w
in
d
PlaneTechs Historical Results
Amounts in millions Q1-17 Q2-17 Q3-17 Q4-17 Q1-18
Revenue 12$ 11$ 10$ 10$ 8$
Segment Profit 0.4$ 0.4$ 0.3$ 0.4$ (0.2)$
Concentrates our
focus on larger
market and higher
growth and margin
opportunities
Small revenue
base and growth
potential
-1%
-2% -2% -2%
-1%
-2%
-6%
-5% -5%
-4%
Q1-18 Q2-18 Q3-18 Q4-18 Q1-19
Total TBI PeopleManagement
31%
21% 18%
11%
2015 2016 2017 Q1-18
$216
$103 $90
$45
$30
$35 $29
$27
$246
$138
$119
$72
2015 2016 2017 Q1-18
Net Debt Cash
$77
$136
$117 $132
$30
$35
$29
$27
$107
$171
$146
$159
2015 2016 2017 Q1-18
Borrowing Availability Cash
Lower debt and ample liquidity
Total Debt
Liquidity
Debt to Total
Capital1
Amounts in millions
Amounts in millions
Note: Balances as of fiscal period end.
1 Calculated as total debt divided by the sum of total debt plus shareholders’ equity.
Q2 2018 Outlook
Revenue Outlook % Growth
% Growth
Excluding PlaneTechs
Total $585 to $600 -4% to -2% -2% to Flat
PeopleReady $349 to $356 -6% to -4% -6% to -4%
PeopleManagement $181 to $185 -6% to -4% Flat to 2%
PeopleScout $55 to $58 17% to 25% 17% to 25%
Profitability & Capital Expenditures Outlook Notes
Net income per diluted share $0.32 to $0.38 • Assumes an effective income tax rate of 16%
• $2.2 million of add-backs related to implementation costs for
cloud-based systems
• Assumes diluted weighted average shares outstanding of
40.7 million
Adjusted net income per diluted share $0.47 to $0.53
Capital Expenditures $3
Amounts in millions, except per share data
Note: Figures may not sum to consolidated totals due to rounding.
NON-GAAP FINANCIAL MEASURES AND NON-GAAP RECONCILIATIONS
13
Non-GAAP Measure Definition Purpose of Adjusted Measures
EBITDA and Adjusted EBITDA EBITDA excludes from net income:
- interest and other income (expense), net,
- income taxes, and
- depreciation and amortization.
Adjusted EBITDA, further excludes:
- Work Opportunity Tax Credit third-party
processing fees, and
- cloud-based software implementation costs.
- Enhances comparability on a consistent
basis and provides investors with useful
insight into the underlying trends of the
business.
- Used by management to assess
performance and effectiveness of our
business strategies.
- Provides a measure, among others, used
in the determination of incentive
compensation for management.
Adjusted net income and Adjusted net
income, per diluted share
Net income and net income per diluted share,
excluding:
- gain on divestiture,
- amortization of intangibles of acquired
businesses, as well as accretion expense related
to acquisition earn-out,
- cloud-based software implementation costs,
- tax effect of each adjustment to U.S. GAAP
net income, and
- adjusted income taxes to the expected
effective tax rate.
- Enhances comparability on a consistent
basis and provides investors with useful
insight into the underlying trends of the
business.
- Used by management to assess
performance and effectiveness of our
business strategies.
In addition to financial measures presented in accordance with U.S. GAAP, we monitor certain non-GAAP key financial measures. The presentation of these non-
GAAP financial measures is used to enhance the understanding of certain aspects of our financial performance. It is not meant to be considered in isolation,
superior to, or as a substitute for the directly comparable financial measures prepared in accordance with U.S. GAAP, and may not be comparable to similarly titled
measures of other companies.
1. RECONCILIATION OF U.S. GAAP NET INCOME TO ADJUSTED NET INCOME AND
ADJUSTED NET INCOME, PER DILUTED SHARE (Unaudited)
14
See the last slide of the appendix for footnotes.
2. RECONCILIATION OF U.S. GAAP NET INCOME TO EBITDA AND ADJUSTED EBITDA
(Unaudited)
Q1 2018 Q1 2017 Q2 2018 Outlook*
13 Weeks Ended 13 Weeks Ended 13 Weeks Ended
(in thousands, except for per share data) Apr 1, 2018 Apr 2, 2017 Jul 1, 2018
Net income $ 8,755 $ 4,674 $ 12,900 — $ 15,400
Gain on divestiture (1) (1,393 ) — —
Amortization of intangible assets of acquired businesses (2) 5,221 5,864 5,100
Cloud-based software implementation costs (3) 1,715 — 2,200
Tax effect of adjustments to net income (4) (887 ) (1,642 ) (1,200)
Adjustment of income taxes to normalized effective rate (5) (675 ) (5 ) —
Adjusted net income $ 12,736 $ 8,891 $ 19,000 — $ 21,500
Adjusted net income, per diluted share $ 0.31 $ 0.21 $ 0.47 — $ 0.53
Diluted weighted average shares outstanding 40,694 41,937 40,700
Q1 2018 Q1 2017 Q2 2018 Outlook*
13 Weeks Ended 13 Weeks Ended 13 Weeks Ended
(in thousands) Apr 1, 2018 Apr 2, 2017 Jul 1, 2018
Net income $ 8,755 $ 4,674 $ 12,900 — $ 15,400
Income tax expense 864 1,811 2,500 — 2,900
Interest and other income (expense), net (2,204 ) (74 ) (400)
Depreciation and amortization 10,090 11,174 10,200
EBITDA 17,505 17,585 25,100 — 28,100
Work Opportunity Tax Credit processing fees (6) 195 272 200
Cloud-based software implementation costs (3) 1,715 — 2,200
Adjusted EBITDA $ 19,415 $ 17,857 $ 27,500 — $ 30,500
* Totals may not sum due to rounding
15
Footnotes:
1. In mid-March 2018, we entered into an asset purchase agreement with a private, strategic buyer for the sale of our PlaneTechs service line, which resulted in a pre-tax
gain of $1.4 million.
2. Amortization of intangible assets of acquired businesses as well as accretion expense related to the SIMOS acquisition earn-out.
3. Implementation costs for cloud-based systems.
4. Total tax effect of each of the adjustments to U.S. GAAP net income using the expected ongoing rate of 16 percent for 2018, due to the enacted U.S. Tax Cuts and
Jobs Act, and 28 percent for 2017.
5. Adjustment of the effective income tax rate to the expected ongoing rate of 16 percent for 2018, due to the enacted U.S. Tax Cuts and Jobs Act, and 28 percent for
2017.
6. These third-party processing fees are associated with generating the Work Opportunity Tax Credits, which are designed to encourage employers to hire workers from
certain targeted groups with higher than average unemployment rates and reduce our income taxes.