Release Date: August 05, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- TrueBlue Inc (TBI, Financial) has made significant progress in advancing its strategic priorities, including digital transformation and expansion into high-growth markets.
- The rollout of the new proprietary JobStack app is on track and has shown early success in improving usability and operational efficiency.
- The company has expanded its presence in attractive end markets such as skilled trades and healthcare, showing growth in renewable energy work and commercial driving services.
- TrueBlue Inc (TBI) has taken decisive cost actions, reducing SG&A by 20% and removing over $70 million in costs from its operating structure.
- The company maintains a solid balance sheet with no debt, $26 million in cash, and $130 million of borrowing availability, providing strong liquidity and flexibility for future growth.
Negative Points
- Revenue for the quarter was $396 million, down 17% compared to the prior year, driven by economic uncertainty and reduced business spend.
- Gross margin declined by 100 basis points to 26.4%, primarily due to unfavorable changes in revenue mix and pricing pressures.
- TrueBlue Inc (TBI) reported a net loss of $105 million for the quarter, including a non-cash goodwill and intangible asset impairment charge of $45 million.
- PeopleReady revenue decreased by 19%, with a segment profit margin down by 280 basis points, reflecting lower client volumes and increased revenue mix from lower-margin renewable energy work.
- PeopleScout revenue decreased by 31%, with a segment profit margin down by 640 basis points, driven by lower client volumes and economic challenges leading to reduced market demand.
Q & A Highlights
TrueBlue Inc (TBI) Q2 2024 Earnings Call Highlights
Q: Could you elaborate on the most recent trends? What are you seeing on a month-to-month basis? And what do the latest data points in customer conversations suggest?
A: (Taryn Owen, CEO) There's still pressure on our clients to improve their bottom-line results. We continue to see a focus on reducing costs with many customers leaning more on internal resources and being selective in filling positions. We haven't seen increased hiring needs yet. (Carl Schweihs, CFO) Our outlook reflects a continuation of current market trends, with a lack of sequential build in our PeopleReady business. Most verticals and geographies saw continued softness, especially in retail, hospitality, and service.
Q: Is there any discernible difference across regions or end markets aside from renewables?
A: (Carl Schweihs, CFO) Excluding renewables, trends are consistent across verticals and geographies. There are no significant differences.
Q: Can you outline the $70 million in cost adjustments? How much of a change is there in headcount and office structure?
A: (Carl Schweihs, CFO) The majority of costs are in people and headcount, with 3/4 of the $70 million reduction in this area. Year over year, headcount is down roughly 18%. (Taryn Owen, CEO) We've simplified our organizational structure, reducing support and leadership roles while continuing to invest in customer-facing and sales roles.
Q: What are your thoughts on RPO demand? Has there been any change from last quarter?
A: (Taryn Owen, CEO) We're seeing reduced volumes from current customers, with some handling their needs internally. However, we've added new customers to the portfolio, though at subdued hiring levels. We're well-positioned to support them when demand increases. (Carl Schweihs, CFO) Our account base in PeopleScout grew sequentially from Q1 to Q2.
Q: Can you talk about the progress with JobStack and its benefits?
A: (Taryn Owen, CEO) The new JobStack app has been rolled out to most branches and national accounts, with full rollout expected by year-end. Early features include digital onboarding and text reminders, which have improved fill rates. We have a robust roadmap for further enhancements.
Q: What are the potential benefits of data build and improved analytics with JobStack?
A: (Taryn Owen, CEO) Real-time insights will help us serve jobs to associates most likely to complete shifts successfully and allow for real-time pricing opportunities. This will enhance our competitive advantage.
Q: What are your plans for expansion in healthcare?
A: (Taryn Owen, CEO) We're seeing new wins in healthcare, such as hiring clinicians for schools and niche roles in biopharmaceuticals. (Carl Schweihs, CFO) Our strategy focuses on professional hires, with double-digit growth in both the number of customers and professional placements.
Q: What can you do about the pressure on the bill/pay spread?
A: (Carl Schweihs, CFO) We are focusing on appropriate pricing and pay rates. We've seen pay rate growth trends moderate, which helps manage the bill/pay spread.
Q: What does the outlook look like if there is a 10% to 20% increase in revenue?
A: (Carl Schweihs, CFO) With our current cost structure, we'd expect enhanced operating leverage and improved EBITDA margins by 30 to 50 basis points, along with an additional $0.15 to $0.30 of free cash flow per share.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
