Core Viewpoint - EHS Investments expresses significant concern over TrueBlue's ongoing operational and financial deterioration, emphasizing the need for meaningful change at the Board level to enhance shareholder value [2][11]. Group 1: Operational and Financial Performance - TrueBlue's operational performance continues to decline, with the share price nearing all-time lows, necessitating a change in the Board [2][10]. - The Q3 earnings report indicates a return to organic revenue growth after twelve consecutive quarters of decline, but the growth is misleading due to cost pass-through accounting from renewable energy projects [6][7]. - TrueBlue's core PeopleReady branch performance is declining, and PeopleSolutions has experienced an -11% organic year-over-year revenue decline [7]. - The company has burned -$17 million in free cash flow for the quarter and -$40 million year-to-date, limiting its ability to repurchase shares [8]. Group 2: Board and Governance Issues - EHS Investments plans to nominate highly qualified director candidates to the Board at the 2026 Annual Meeting, aiming to improve governance and oversight [3][12]. - The Board has shown a lack of substantive engagement and has previously declined acquisition offers, resulting in a significant decline in stock price from approximately $12.30 per share to around $5 per share [10][11]. - Allegations in a recent lawsuit suggest a serious lapse in management and Board oversight, particularly regarding the misallocation of capital in the Jobstack initiative [9]. Group 3: Strategic Focus Areas - EHS nominees will focus on three core pillars: staffing excellence, digital transformation, and disciplined capital allocation, all aimed at maximizing shareholder value [3][14]. - A strategic reassessment of the business is planned, including evaluating potential strategic alternatives and opportunities for simplification [14].

I focus on producing objective, data-driven research, mostly about small- to mid-cap companies, as these tend to be overlooked by many investors. From time to time, though, I also look at large-cap names, just to give a fuller sense of the broader equity markets.Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, but may initiate a beneficial Long position through a purchase of the stock, or the purchase of call options or similar derivatives in ...

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Financial Data and Key Metrics Changes - Total revenue for Q3 2025 was $431 million, up 13% year-over-year, exceeding expectations, primarily driven by skilled businesses [11][12] - Gross margin decreased to 22.7% from 26.2% in the prior year, attributed to changes in revenue mix and less favorable workers' compensation reserve adjustments [11][12] - The company reported a net loss of $2 million for the quarter, with adjusted net income of $1 million and adjusted EBITDA of $11 million [13][16] Business Line Data and Key Metrics Changes - PeopleReady segment revenue grew 17%, with energy sector revenue more than doubling due to heightened demand [13][14] - PeopleManagement revenue increased by 2%, driven by the commercial driver business, which achieved its fifth consecutive quarter of double-digit growth [15] - PeopleSolutions revenue rose by 28%, with the recently acquired Healthcare Staffing Professionals contributing significantly to growth [16] Market Data and Key Metrics Changes - The on-demand business showed improved trends, particularly in the eastern U.S., which returned to year-over-year growth [15][27] - The energy sector, hospitality, and manufacturing experienced stronger performance, while retail showed some softness [27] - The East region of PeopleReady achieved year-over-year growth in September, marking a significant recovery [27] Company Strategy and Development Direction - The company is focused on enhancing digital transformation and optimizing sales functions to capture demand and accelerate growth [4][19] - A territory-based go-to-market structure has been implemented to improve sales capacity by 50% and drive local sales strategies [6][19] - The company aims to expand in high-growth markets and strengthen its position in the healthcare sector following the acquisition of Healthcare Staffing Professionals [8][19] Management's Comments on Operating Environment and Future Outlook - Management noted early signs of momentum and a cautious customer sentiment due to ongoing uncertainties in the market [36][37] - The company expects revenue growth of 4%-10% year-over-year in Q4, with the HSP business contributing positively [17][18] - Management highlighted the importance of maintaining pricing discipline amid competitive pressures and cost-conscious clients [47] Other Important Information - The company finished the quarter with $20 million in cash, $68 million in debt, and total liquidity of $95 million [16] - A sublease agreement for the Chicago support center is expected to unlock over $30 million in cash flow over the remaining lease term [18] Q&A Session Summary Question: Strength in on-demand business - Management indicated strong performance in sales-enabled territories and noted a 50% increase in sales capacity, complemented by a new head of sales [23][24] Question: Differences in client verticals and geographies - Local business outperformed national accounts, with significant improvements in energy, hospitality, and manufacturing sectors [25][26] Question: Client sentiment and market uncertainty - Clients are showing cautious sentiment, with some early signs of growth, but overall uncertainty remains [36][37] Question: Impact of immigration reform - The company is experiencing both tailwinds and challenges due to immigration reform, with opportunities for compliant staffing solutions [38] Question: Incremental margin expansion before reinvestment - Management expects to achieve over 20% incremental margins, with a focus on growth opportunities while managing costs [44][46] Question: Pricing environment and competition - The company is facing typical pricing pressures but is maintaining pricing discipline and seeking efficiencies [47]

Forward-looking statements and non-GAAP financial measures This presentation contains forward-looking statements relating to our plans and expectations including, without limitation, statements regarding the future performance and operations of our business, expectations regarding stabilization in demand, and expected growth from our digital investments, all of which are subject to risks and uncertainties. Such statements are based on management's expectations and assumptions as of the date of this presenta ...

Revenue Growth - Total company revenue grew 12.8% to $431.3 million for the thirteen weeks ended September 28, 2025, driven by strong demand in skilled businesses and the acquisition of HSP contributing 3.7% to growth[116][122] - PeopleReady revenue grew 17.1% to $251.4 million for the thirteen weeks ended September 28, 2025, primarily due to growth in the energy industry[123] - PeopleManagement revenue increased 1.5% to $132.9 million for the thirteen weeks ended September 28, 2025, supported by strong demand in the commercial driving business[125] - PeopleSolutions revenue surged 27.9% to $47.0 million for the thirteen weeks ended September 28, 2025, with the acquisition of HSP contributing 38.6% to this growth[126] - Total company revenue grew 1.4% to $1.2 billion for the thirty-nine weeks ended September 28, 2025[122] Profitability - Gross profit as a percentage of revenue declined to 22.7% for the thirteen weeks ended September 28, 2025, down from 26.2% in the prior year, primarily due to a shift towards lower margin staffing businesses[117] - Gross profit for the thirteen weeks ended September 28, 2025, was $97,892,000, representing 22.7% of revenue, a decline of 350 basis points compared to the prior year[127] - For the thirty-nine weeks ended September 28, 2025, gross profit was $277,798,000, or 23.2% of revenue, down 250 basis points from the same period last year[128] - The PeopleReady segment reported revenue from services of $251,436,000 for the thirteen weeks ended September 28, 2025, with a segment profit of $8,099,000, improving by $5.1 million year-over-year[136] - The PeopleManagement segment achieved revenue from services of $132,863,000 for the thirteen weeks ended September 28, 2025, with a segment profit of $4,552,000, an increase of $1.3 million compared to the prior year[137] - The PeopleSolutions segment reported a profit decline of $2.2 million for the thirty-nine weeks ended September 28, 2025, attributed to revenue loss from a large hospitality client[140] Expenses - Selling, general and administrative (SG&A) expenses improved 8.2% to $91.7 million for the thirteen weeks ended September 28, 2025, due to operational cost management actions[118] - Selling, general and administrative (SG&A) expenses improved by 8.2% to $91,728,000 for the thirteen weeks ended September 28, 2025, and by 9.1% to $276,147,000 for the thirty-nine weeks ended September 28, 2025[129] - SG&A expense for fiscal Q4 2025 is projected to be between $91 million and $95 million, reflecting a decline due to cost management efforts[144] Net Loss and Cash Flow - Net loss was $1.9 million for the thirteen weeks ended September 28, 2025, an improvement from a net loss of $7.6 million in the prior year[120][121] - Net cash used in operating activities for the thirty-nine weeks ended September 28, 2025, was $(53,674) thousand, compared to $(23,189) thousand for the same period last year[151] - Net cash provided by financing activities during the thirty-nine weeks ended September 28, 2025, was $59,589 thousand, primarily due to draws on the Revolving Credit Facility[157] Liquidity and Capital Expenditures - Total liquidity as of September 28, 2025, was $95.0 million, consisting of cash and cash equivalents of $19.9 million and $75.2 million available under the revolving credit facility[120] - As of September 28, 2025, the company had $19.9 million in cash and cash equivalents and $68.2 million in outstanding debt[145] - The company expects capital expenditures and spending for software as a service assets to be between $17 million and $19 million for fiscal 2025[143] Future Outlook - Future growth is anticipated as client hiring volumes return, particularly in higher-skilled roles and attractive end markets such as healthcare and technology[126] - Revenue growth for fiscal Q4 2025 is expected to be between 4% and 10%, including approximately 4% inorganic growth from the acquisition of HSP[144] - Anticipated gross profit as a percentage of revenue is expected to decline between 410 and 370 basis points compared to the same period last year[144] Impairment and Valuation - A non-cash impairment charge of $0.2 million was recorded for the thirty-nine weeks ended September 28, 2025, related to a trademark in the PeopleManagement segment[131] - The goodwill balance for HSP as of September 28, 2025, was $17.3 million, with an estimated fair value exceeding its carrying value by approximately 5%[168] - The weighted average cost of capital for the most recent goodwill impairment test ranged from 14.5% to 16.5%[167] - All reporting units' fair values were substantially in excess of their carrying values, except for HSP, which had a fair value exceeding its carrying value by approximately 5%[168] Digital Transformation and Market Strategy - The company continues to focus on enhancing digital transformation and expanding in high-growth, under-penetrated end markets to capture market share[112] - The company continues to invest in technology platforms to enhance service delivery efficiency and transition to cloud-based solutions[147]

Financial Performance - Third quarter revenue was $431 million, an increase of 13% compared to $382 million in the same period last year[5] - Net loss per diluted share improved to $0.06 from $0.26 in the prior year period[5] - Adjusted net income per diluted share was $0.03, compared to an adjusted net loss of $0.11 in the prior year[5] - Total company revenue for the 13 weeks ended September 28, 2025, was $431,266,000, an increase of 12.8% from $382,357,000 in the same period of 2024[19] - Net loss decreased to $1,916,000 for the 13 weeks ended September 28, 2025, compared to a net loss of $7,635,000 in the prior year, reflecting an improvement of 74.9%[22] - Adjusted net income for the quarter was $1,054,000, compared to a loss of $3,331,000 in the same quarter of 2024, marking a turnaround[22] Revenue Segments - Energy sector revenue more than doubled, contributing to strong performance in skilled businesses[4] - PeopleReady segment revenue increased to $251,436,000, up 17.0% from $214,792,000 year-over-year[19] - PeopleSolutions segment revenue rose to $46,967,000, a 27.9% increase from $36,713,000 year-over-year[19] - The company made $14 million in revenue from the January HSP acquisition[8] Expenses and Costs - SG&A expenses decreased by 8% to $92 million from $100 million in the prior year[8] - Adjusted SG&A expense was $88,438,000, down from $95,566,000, resulting in a decrease in the percentage of revenue from 25.0% to 20.5%[24] - Corporate unallocated expenses increased to $6,194,000 from $4,184,000, indicating higher overhead costs[19] - Workforce reduction costs were reported at $527,000 for the quarter, significantly lower than $2,809,000 in the same period last year[22] Profitability Metrics - Adjusted EBITDA increased to $11 million, up from $5 million in the prior year[8] - Adjusted EBITDA for the same period was $10,642,000, up from $4,679,000, representing a significant increase of 127.5%[23] - The company reported a segment profit of $16,836,000, more than doubling from $8,863,000 in the previous year[19] Cash and Liquidity - Cash position at the end of the quarter was $20 million, with total liquidity of $95 million[8] - Increased working capital by $19 million during the quarter[8] Future Outlook - TrueBlue expects continued stabilization in demand and growth from digital investments[9]

Core Viewpoint - TrueBlue (TBI) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive trend in earnings estimates which is a significant factor influencing stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system is based on changes in earnings estimates, which are strongly correlated with stock price movements, particularly due to institutional investors adjusting their valuations based on these estimates [4][6]. - TrueBlue's earnings estimates have been revised upward, with a 10.9% increase in the Zacks Consensus Estimate over the past three months, indicating an improvement in the company's business outlook [8][10]. Zacks Rating System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a proven track record of Zacks Rank 1 stocks generating an average annual return of +25% since 1988 [7]. - TrueBlue's upgrade to Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [9][10].

Core Insights - TrueBlue reported Q2 FY2025 results showing improved profitability despite flat revenue and ongoing demand softness, with a non-GAAP loss per share of $(0.07), better than the $(0.10) consensus estimate [1][2] - GAAP revenue was $396 million, slightly below the expected $400.52 million, indicating stabilization compared to the previous year, but organic growth remains challenging [1][2] - The quarter's profitability was supported by cost management, a government subsidy, and contributions from the recent acquisition of Healthcare Staffing Professionals [1] Financial Performance - Non-GAAP EPS improved by 79.9% year-over-year from $(0.35) in Q2 2024 to $(0.07) in Q2 2025 [2] - Adjusted EBITDA more than doubled to $2.6 million, representing 0.7% of revenue, with adjusted SG&A expenses reduced by 11.6% to $88.9 million [2][7] - Revenue from the PeopleReady segment was $213.2 million, down 4.6% year-over-year, while PeopleManagement's revenue increased by 1.6% to $133.9 million [5][6] Business Overview and Strategy - TrueBlue operates through three main segments: PeopleReady, PeopleManagement, and PeopleSolutions, focusing on connecting businesses with temporary and contract workers [3] - The company is prioritizing the expansion of digital platforms, scaling in high-growth sectors like healthcare, and enhancing operational efficiency [4] - Technology investments, particularly in the JobStack app, are crucial for growth, allowing for quick onboarding and job acceptance [8] Future Outlook - Management anticipates a return to growth in Q3 FY2025, with sales expected to range from a decline of 1% to an increase of 5%, particularly in the PeopleSolutions segment [10] - Despite expected growth, organic sales in PeopleSolutions are projected to decline, and PeopleReady is anticipated to remain under pressure [10][11] - Leaders noted potential for margin expansion if demand recovers, but emphasized the importance of underlying demand recovery [11]