TrueBlue (TBI) 24 Oct 222022 Q3 Earnings call transcript

Good afternoon. My name is Emma, and I will be your conference operator today. At this time, I would like to welcome everyone to the TrueBlue Third Quarter 2022 Earnings Conference Call. [Operator Instructions]

Derrek Gafford, Chief Financial Officer, you may begin your conference.

thank joining and call. everyone, afternoon, you today's for Good Steve Chief I'm our Officer, Cooper. joined by Executive

non-GAAP Before we those encourage and in uncertainties, materially Relations cause press or in release our measures a update section all want we non-GAAP slide subject year, and their our any release begin, I based risks forward-looking when from today assume to comparisons presentation actual comparison review the call unless to are for that in to which on SEC contain are trueblue.com, statements. made our and statements. no reconciliations forward-looking otherwise today's We We obligation forward-looking a Any uncertainties, Investor statements, complete the terms and results. at today's earnings of to of use revise are or could to which and same financial results the and in differ remind to these purpose. described risks period filings, the These some prior in everyone presenting you stated. understanding under of today's

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

Okay.

Let's now turn the call over to Steve.

PeopleReady, spreads continued bill was the tight. PeopleReady Thank market income and the as while strong, everyone to clients At and to steady. Operating today's yet pay hiring or X%. softened, quarter results million remained $XXX margin historically were revenue held solid as flat rates filled due you, our as worker roughly of volumes down for welcome to trends a were at were was revenue Overall, improve. between higher wide labor jobs supply and XXXX. demand Derrek, call. higher we compared QX to PeopleScout proportion PeopleManagement

is representing fill largest PeopleReady our was demand improved, in app. is clients our labor slowed, American compared order increase segment, physical on-demand leading of XX% of by number trailing XX% openings. services of footprint in year total trades and leading XX-month to skilled supported supply an revenue RPO to revenue of mobile PeopleScout existing our profit. job due provider rates. Demand a service via XX% While high a strong a PeopleReady worker North market. We job up and the total our to the JobStack branch remained new for and staffing industrial national segment at of clients locations ago.

is XX% of total services. our Our highest total of represents recruitment our and segment filling revenue trailing positions profit. leader PeopleScout, margin in outsourcing XX% XX-month process segment, permanent PeopleScout a through global

are regional highly supplement up market temporary trailing client time. is third to segment, views of relationships. I remained the users. steady, discussion America. clients, fragmented at over contributed States commercial PeopleManagement has that segment share allowing revenue total over on associates a the of both strategies The where to digitalization our staffing connect the our additional smaller ending PeopleManagement user-experience to not North nationwide before multiyear, total the workforce outsourced supplying to Turning like companies strategy an now is associates used any represents competes. PeopleReady invest multimillion-dollar is of application labor expansion. environment. At The and applications, more XX-month XX% the essence digital shift industrial provides made the The able market our JobStack revenue XX% for our day our services smaller, companies X%. key our footprint, engagement driver United of branch driver segment efficiency. of year-over-year to onsite XX% These improve of onsite or to of bulk Commercial services the and and typically a with gain current PeopleReady, in use typical will app. with PeopleManagement XX,XXX profit. unique bulk is and market in provides growth JobStack staffing up PeopleManagement, a driver industrial in groups and involves by

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made an have to levels, the retention. enhance in effort We improve to targeted areas service in these investments

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this time. we the market XX the tight some where States, over United will with openings labor collars specialize, However, implies job blue paid, remain lower jobs million throughout many for

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poised When lowering the Over the customers. for more to productivity cascading past scalability our a niche paired and in a friction, market markets we quickly the the services. expansion mainly enhances gain a services. cost have have The goal in These especially our back with record transformation businesses platform. our high year we accelerate and Freeing and It increases on our has which within also to is technology United within share, we high of a track with differentiation the been the PeopleReady of journey allows up JobStack, commercial market within and create and employee of deliver to At States underlying business, opportunity margin investments interaction are service. Each of and time to the effect. PeopleReady, double-digit update reduce process producing product pay PeopleManagement, trucking is grow the competitive eastern half the skilled to advantage returns. trades proven offerings.

which green developers have passed also grow to Recently, a the Reduction presence. fund the Administration We access tax energy new lot Inflation solar Act, to of PeopleReady's renewable to projects. space provides credits Biden

capture relationships us strongly quickly client share. to scale positions long-term Our the with market combined to ability

only across around get We investments with time over existing position such Unlike Don't our fast Derrek, we focused our future. costs, pass profit at and me past life potential the client will is are to to greater also rebound highest goals. I'll in we ourselves for now the who enter current maximize our details Finally, We cycle the a to remain will call the achieve will on we and for share and expanding base. relationships disciplined results. on verticals, business. growing wrong, footprint well-positioned limit with strategies sky capitalize the this technology, margin find investing downturn. on the the big and grow right as financial long-term to ways PeopleScout, be with to by unique the see recessions, find our not geographic our but sciences this

XXXX points. XXXX due Key more down, due QX lower while a for spread bill- partially QX from was flat of included management line increase margin and PeopleManagement. and Total spreads, was growth of $XXX QX proportion a or revenue at results. Gross increased are was is year and adjusted than respectively. level were SG&A contributors margin workplace grew from Net expanded which expense and which XXX workers' development lower the income to XX%, by our XXXX income expansion. XX from Adjusted of from XX% EBITDA results income demand this adjusted business. and and PeopleScout expense basis bill/pay year last our Steve. and net in year you, than basis excluded XXX to our and workers' Thank revenue a margin for up higher grew net margin grew costs services. compensation compensation inflation compensation current grew of fewer The technology from positive XXX contribution EBITDA adjusted and pay-rate roughly given PeopleManagement margin margins cost XX% QX basis million, of points revenue which this less upgrade PeopleReady points XX.X% bottom between EBITDA revenue XX led the year. offset Lower workers' injuries. QX for reserves combination actions while PeopleReady favorable to X%, points, were to basis prior

income rate effective XX%, with which Our our was expectations. line in tax was

rates consumption economy, performance our segments, current environment of commentary demand for to which Before PeopleReady is slowing uncertainty and to their with and to is different level customers, or our see the businesses. translating Inflation interest a some short business. into picture their is investment ways. The business noticeable the on impact causing for many clearly of businesses In higher customers typically of a and of assignments lines demand metrics X first our accelerating discussing is most the job how each many workforce uncertainty big workforce. slightly to business, as I'd many albeit duration consumers the provide in Demand impacting future of business. are in supplement impacting resulting uncertainty we rethink of in core impact our our rely that this due PeopleReady in fact combined variable on the revenue like

On the talent reprice given the in assignments the job allows side, shortages that short duration of its a PeopleReady business to way continuously favorable flip exist.

PeopleManagement an adjustments PeopleReady workforce. and of workforce. our services customers here the tandem as use Demand In favorable with volatile of spread vary core with quarter history their integrated fact, my I in to customers seen their company. At the services XX-year bill- use of pay-rate our part largest was inflation often in less many core are with the changes as have the this comparison between PeopleManagement, in

at have trends PeopleReady. demand been more recent result, than steady a As

However, seen uncertainty to we new it have when comes customers.

hesitating this employee supplier potential new needs. of new multi-year has higher creating PeopleScout for uncertainty changes very open healthy. levels turnover on making our about from the commitments in customers Similar due their While customers deals, make have are year been but record healthy, economy, on new short-term are to employees workforce to in choices jobs many clients some for demand the remains With additional remains projects for future demand resulting pipeline to strong PeopleManagement, of and hesitant customers. our levels labor

was growth XXX fill profit results offset of specific by order segments. decreased rates XX% PeopleReady X.X%, X%, XX%, margin points profit pay up business segment relatively grew revenue contributed the points. margin profit by favorable Commercial up recruiting profit from profit flat. PeopleManagement volume candidate margin to up was supply profit workers' XXX related helped compensation an within segment XX%, to increased decline were expense driver revenue grew due spreads. due Growth driving from last margin were point in and QX short-term Segment the rates X.X%. PeopleScout of lower a and segment QX job up core marketing X with X%, lower Improving to majority at basis in segment as was the RPO driven higher from turn to let's and this year year. and revenue Segment while rates commercial basis increased our and segment which increased services as profit mix increase year-over-year while segment was the our RPO demand, and and high profit margin and performance. projects. bill/pay revenue the costs, worker challenges. Bill well points. improving and Now came

Now $XX let's cash operations The turn and flows. the strong with cash $XX cash with million totaling the balance and business flow producing from finished to is year-to-date We in debt. flows no cash sheet outstanding million. quarter

additional couple color like on revenue I'd a items. a Now to to forward-looking moment take provide

a headwind our year, will In of year, from sequential post-COVID year, be October, reason holding In themselves surge is need revenue weekly the next of across couple point reoccur total surge company also patterns. I'd with In for like our X% a this create XXXX. QX suppressed a QX which steady a typical, historical for for year. X% during decline to in are this comparison trends in labor QX same XX% expected out this year, for the create to QX last the business customers will For found drag growth revenue a year. desperate XXXX. This things as this QX X% in year will for the QX QX recovery. revenue not revenue benefited to last which compared demand PeopleReady we as peak expect to

to fiscal calendar for year of year. XXXX we have XX-week will revenue to occurrence since year year weekly extra not due typical profit the weeks, is provide a annual versus point it additional for will the but will This Finally, X million million, X to on XX which incremental years week $XX an revenue. every a being a low contribute $XX operate

outlook please call Operator, our now the on remarks. today. This details questions. earnings additional our fourth filed presentation For see open prepared quarter, for concludes our for the please

[Operator Instructions] Markets. BMO Capital Jeff the from Your Silber first question comes of line with today

bit vertical? Appreciate you doing little remarks. wondering to than get gave it a all in more prepared possible are others. market end by just markets better Is detail if the I'm color worse specific your there end or

softening XX%. the We still perspective we big up those of were prior take up hospitality this, comes us it Most of for question. a Derrek digit, really retail, several most a X% is It's we've give both we're you business coming And From for and QX. in but mid-single perspective, X our down we're seeing some up markets, comps, that grower was QX. over pressure where in were particularly in areas some but seen in quarters, growing. also up that been for I'll on It that that's XX% is because are in retail. To the thanks question. part of because Jeff, of retail on when here. year to results, tougher hospitality. that is that

other actually of steady side of industries minor and held with the in The On growth which are decline, construction depending it rates pick, manufacturing you the QX. was steady. one those pretty stayed on where equation,

Okay. really I That's helpful. that. appreciate

intra-quarter about talked and into we a also going I'm back just business? by the last quarter on in of possible, step trends, talk bit what's if lines You can different about wondering October. little if

Sure.

quarter minus the PeopleManagement minus most talking exited is XX% quarter. where X% July end down going and we're steady we July in of to as they So at intra-quarter saw stayed X% the the the about as up X% step from at throughout was X%, PeopleReady all PeopleScout trends, steady well. quarter. the

typical businesses though, trends that holding October, pretty we staffing would the steady our into are Going with sequential expect.

it trends in about that that's It's I getting pointed So the to prior probably seen October, rate. first my in we year-over-year we comparisons the We're haven't run weeks down perspective, not if a our any any are softening weekly From year in in compare declines historical running of X patterns. comments. about the softening but X% prepared typical the from out larger. more

I do what's guidance I'm revenue sneak That's your Okay. If on in for guidance implied quarter, more. helpful. and appreciate once guys you again. revenue in Based that, curious I us giving just X can the just

Yes, you bet.

So we're for our that in the to trends in expectations that is the And seeing the of guidance XX%. guidance midpoint gave. October QX of where are should right with we our minus compared in line October we be

Mark line Marcon from comes the question Baird. next of with Your

want just to on I Jeff's follow from questions.

expect with you And of all in terms PeopleManagement the XX%, terms in what PeopleScout? PeopleReady drag PeopleReady, is between in down to of of Just concentrated regards break would and onetime being cited? to the that down how all midpoint you

It'd be and growing. the the What question, will PeopleReady XX%. flattish second part was PeopleManagement teens. that of be still Yes. above your PeopleScout in low Mark?

the to client large Just don't particularly ensuring that of PeopleReady. drag one replicate all that's all that in from that the you expect

vast The is it there, Mark. of majority

rate in a PeopleScout we on had customer. from to QX nice sizable QX brought also sequential step-up pretty run We our as a

headwind the in from sits segment. total a business. perspective, the that well overwhelming company in increases So as the PeopleReady there But majority

Okay.

X-ish? exclusive that PeopleReady so more would be like down of And drag

Yes, that's right.

X-ish. to Excluding be down that would X-

And uncertainty. softening, obviously, because hey, there's going of economy is -- we're the your expectation lots is that to is,

-- particularly sensitive hospitality cyclically the in And that the in and toward created trends also continue those so markets? more is of expectation some retail should end in -- perhaps and

was from of quarter, softening headwind comps, Well, the PeopleReady mean, the but exited we there up. X%. year built we at lot we in don't at There of bit a of some prior have I exited a X%. little

X% or around QX, X%. saying So we're into be will going it

in just give case softening. seen didn't that. October we're for as lot So We additional off in what try to throw We is it and what building it's of we've a you far off based pretty to from a seeing. as steady

was there that trend? Okay. sequential end pace? versus then Were PeopleScout, ended markets to sequentially, Or we between significant And up think with any that change fairly a about regards QX a at there QX. how difference should having

asked Yes. glad you I'm that question.

million, to really QX PeopleScout than that One, and spend X there's less on So down handful reduced sequentially clients was $XX compared going a in their of there. things QX. there's

was QX peak all-time businesses. for an However, their

than just strong. say that of peak would fundamental any more their the looks clients, it's of that -- of less less I than a their Actually, business I quite -- coming softening in So businesses. off businesses handful

up other brands in facing I of right this half. inventory, their down one category consumers put now. there demand on business client makes of and with to as of are given host own They that they somewhat the lower-cost However, And luxury suffering. would going being their high what's inflation is is on are quite client the ship retailer. challenges a

from then in workers' we we And should for margin a there had are you Okay. considerations which think any think years. are called about thinking about you terms you've put next as comp, as out, you of And place that year How quarter? benefit fourth the impact that the just impacts we obviously in had multiple that? in about

Sure. going about Well, paint there's think just this I'm big probably to things to X here. picture.

reserves. last sustainable, period our workers' compared compensation prior by compensation fourth step it reserves. year workers' when When good year not also this this favorable it gross into year Ultimately, cascade development of to same XX that's our reduce That's a pretty back basis that's right performance focus will take I'm on year about here points. something margin. in we quarter to year, the on going Some the to helped from We've had a conversation. comes year-to-date a

there. -- way contribution favorable that to just us. positive you That's other bill/pay any about been just talked from margin right did hold around comments. basis some point. From probably being see all nothing. that in running for we quarter, So guidance end in at do we strong I'm up of XX gross our not XXX expect kind that's pricing to go there's the really the and year. would We're now, We prepared next this were points a giving could If the very basis for points PeopleReady of ground spreads perspective, that math. nothing the

a then if what Now thinking decline, PeopleReady in now the basis the negative of dynamic the about revenue job PeopleManagement gross recession but that mix, case, that's darker on XX up of deeper, XX is points. right to into that not larger take to with losses, obviously, that we business right mean, other there's you've a get proportion the and a could business if lower-margin we're the be with go I taking got bunch having and would sales margin way. of a now, impact our And is

excuse if trends. that the than for suspect better I estimates, you assumption me, to the that So reasonable than to PeopleManagement PeopleManagement have in revenue continue PeopleReady your continue the would a be the trends trends better --

own That's you very the regards year, And about how next then to given thinking and expenses the helpful. are own headcount, your uncertainty with in managing capital environment? allocation,

you've you growing, X%. QX this making it seen year, X% QX up It this trends be QX. XX% was of to And in SG&A guidance question. SG&A glad When growing, here for our asked our was I'm we're not is midpoint for in we're we're in and and Well, adjustments. down investing; the we're when

make adjustments. continue we'll So to

they been might have pronounced as However, be in recessions. prior not as they

been million reductions made to the in cuts. ]. cost we've industry PeopleReady in of $XX still those an with kind I us. [ it's think And leader come of business Most when XXXX are of we

our the in profit also we course, saving That it's producing did of staffing at if trending be for great from productivity at some with employee the of before but could to dollars -- So expense sounds we on gross we're comparison in than per revenue it the perspective, look it that's of when has wondering take XX% XX% be we are a hit. net that out running us side. higher negative to amount us a if PeopleReady, a COVID

the get our as If it in go that. not a adjustments, to much but reevaluate as to would say deeper, actions if shallow in to we as We year, particularly positions it's won't maximize reasonably recession, responsibility past. is picture go make some might help you is profitability. of the profit some the we to actually with drop looking that mitigate into need that have recession, we're cutting whole But there some cycle. the into PeopleReady recession, a as is economic take the But we make to we way investments be And next got may it that's open, see we've we're just -- big that feeling cost on the at into side. across some darker fill we'll much our managers. we branch So we

like Okay. what buybacks? the Didn't during like bought anything allocation back And in terms about quarter. you capital of look

Yes. From like do excess capital at shareholders, and we we're we stays perspective, it strong. balance to sheet to the back like return sure a to making do capital allocation prices. But our favorable

doing not From decisions we're we in perspective, not acquisitions we're move to the forward. So side the an those interested going make of in that's eye business. both acquisition keep on of and as any -- particularly an staffing

strategy there the got assets of by about all we've use the digitalizing Our better that making businesses. really

side, Now there and would interested we that of increasing over work in our collar different mix story. white on the do professional. a acquisitions be We RPO that's

quite have already. a We that bit of

trends We the in trends So and we like secular life really like secular sciences. technology. the

side So really for the deals. interested right And additions on on we'd new street that in increase credibility something could price. there our pursuing be

with comes Research. question of Kartik Northcoast the from next Your line Mehta

with I you have Jack of your in a little behaviors? demand on guys color Mehta. If place question smaller give ] Kartik difference in clients us or demand [ there. of just the their is that? larger in bit a Boyle quick amongst could Are you any going seeing This

the hesitant one and what larger providers uncertainty new demand we're services. which take pretty our their business, been of use and larger what more what color, so many the That's less Where with ahead differences all hesitating. deals. in -- is their our we've customers large workforce with cases, business when been about that in some that the our seeing our customers in are comes on. free. They're small holding in steady. PeopleScout Those comes choice seeing you it between to is, any been it's pipeline, to feel PeopleManagement customers our customers, they larger When and add to is I'll going movements don't a see more make that on -- customers if have go hesitation changing and want don't know means They needs are. know to it

a I would customers that keep know, we're mind, PeopleReady primarily of many as customers. with that's and small serving there. softening down business, -- X customers those vary you proportions up They say, large of of between supplement more equal both in And workforce. as on though, with the us have use workforce. variable a Over their core somewhat in their core side, Now needs we their and been the businesses, customers seeing,

the turned things one as things and slowing that one get turned And economically so things of of gets start first first off back it's that on. the

among seeing moments amongst ago? different a a any difference changes as are spreads just you mentioning few follow-up, positions that job some you And of bill just the were in

Well, with but getting PeopleReady through large a our dealing with part it's bill dealing with getting getting customers, the a more problem, all we're more circumstances, all getting equal our those our we that quote, through. a That pay spread the with some been out customers. rates, often benefit on And little both benefit it business with pushed But smaller an department. extra customers, been we've business. small manager bill large small with pay rates of hasn't but sides of the we're customers, versus particular and small and In rates customers. been virtually operations purchasing and customers the with both we've and house owner,

question with Marc of line Sidoti. next from comes Your the Riddick

your you're all detail either misunderstandings quite for bit there thinking a clients folks out seeing bit versus of sort I going and anything recession there. little or covered place what feel on particular, So tends misperceptions you've if talk maybe the what about and maybe helpful think to in a to if the to all, about are between maybe first that you've little bit a if provided you place? you your of you slides be of those and And are investors actually any that a the as thank sort of could taking Q&A. of as be maybe you as would may far or what's wondering as you hear off take already there it some could prior some was into talk thoughts

Derrek this. and in off gaps But different definitely start different some on it's let the than fill I'll Marc, Well, recessions. of

to I last think And everyone's what playing Derrek our that to clients we're impact. the want just as trying in bounce in might last the back trying business card we're to deep are to our we long see that And doing, question this here mentioned mentioned and trying and how plan grasp our quarter. be. that we just

the is that so And to we're business solid. make aligning clients people and is listen that as with we be our and them for sure ourselves ready to our

deep to as in cutting have us. we important is might past And recessions not so as really

going available about real in outcome might going they're here that's on of seems little the on based and all is holiday our a have stay like some recession alignment bit our the through just talked to still adjustments people this. is is still have we close in signal. it we yet stay clients past. not in this. And making clients, how might Derrek will we're far our a deep time to to mixed be But as question understanding going asked The like nimble, coming not commitment and obviously, sectors. what really to the And slash we retail, and steeper. our some It's growth be as to be with the it's and -- a what's hit. how and this you've And others, in our

good clients about bounce be the I it's to be going be that knowing our for our are but here, shareholders, client to we're happy really hearing that prepared, and think It's good will with have. we will we ready situation for that, we them.

question definitely client-driven through Street if really misaligned we've and conversations there. I'll clients close information all But lots feel are. and about where data answer So we shared we with let and is around of Derrek to there. connected the our and investors staying feel don't clients the to more the the we're our the today disconnected

call-outs as I there's see any -- investor where the Marc, misalignment. guess where that. further anything any don't perspective, I Well, we'll of see into big if think there's quarter, an there's I fourth go from we

off I one everybody in it information could don't and alignment. the at week, or our think looking fundamentals the I just that week swing But everybody, other. any see is are including way by market,

pullbacks? now versus that the that historical in Do more past, you're you business in been getting flows you have that think -- given the beneficial of it do different have think information than that's of mix now there's you there's might and maybe

this to tough That's any Marc, size grow our even only serve we of than larger definitely the not grown in and PeopleReady. account PeopleScout in been our time, and much true, because is -- it's accounts market, of accounts work continues average other larger PeopleManagement with that those than has because

So XX those in at and over national account our or our drive business account last of XX years. years, than facts general PeopleReady XX small client. type has the grown the But early sales, size more business X

we information So be get us more and site to clients, sophisticated for these it's those and easier the the and the the larger have on account with account, of accounts. we manager align prepared more out

asked. very a question, that yes, So insightful Marc, you've

place. sort could better you is but bit little a that balance talk And on we've maybe I but the bit, pricing and visibility. was out you there a pricing could a then opportunity the earlier, -- past may more table but sort expand a This the on it maybe a about be bit at touched appreciate maybe got that's the that finally, could you talk macroeconomic little maybe that. dynamic. guess, could as seems about far because, there to today it. continue of challenges, about of yes, improving this little I maybe still It taking little still a of bit a lot have to still And seat talk than you if in bit sense make you'd as

Steve jump color any that, he'd take he part has can the if and front in additional add. I'll Sure. to like of

amongst be We've the that had XX an more with home, of from of On of economy. of at an which which and fields the top So is for blue an positions even we're pricing and quarters where can here from next jobs in pay could pool. here year. coming the million you've more some collar a an putting of types of that that, are pressure in labor interesting to at in GDP. on part which We many we increasing That's we couple PeopleReady. work jobs Yet negative sit open are tight placing lower they're preference then in home. got be serve employees from. done But already we is

don't if longer look Sure, So that we but there when fundamentally recession, next into we dynamic. term bad what to ahead the We a we would see see don't that. get changing I'm could be future, talking just blip year anything that. changing anything change

it some pricing a the talent talent, discussions. and plan very to of these pricing with a sure on scarcity PeopleReady in in And that gives our So the side appropriately got scale are we very with we've availability us more disciplined the that of team disciplined marketplace. business make power

further over I Cooper, no There time. at back are this Steve call the you. Mr. turn questions to

and Well, us for joining thank you, you, everyone, thank Emma, today.

was ahead tight the growth to tell, a we about drive in as positioned. just markets, opportunities with the about difficult can But well continued visiting market. excited feel you you Derrek are As labor we even

the grow when interest share definitely will through the with in questions, that to that with differentiated out growth believe current are technology, additional again. the thanks we the coming we've the really creating. We if got recession your any out come. client-first strategies Now situation opportunity and to But appreciate hesitate but market of mentality, our have you reach to through recession Don't a TrueBlue. work and we've we got

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

disconnect. may now You