TrueBlue(TBI) - 2025 Q1 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements Q1 2025 consolidated financial statements report revenue of $370.3 million, a net loss of $14.3 million, and total assets of $692.5 million Consolidated Balance Sheets Total assets increased to $692.5 million, liabilities to $390.3 million, and shareholders' equity decreased to $302.2 million as of March 30, 2025 Consolidated Balance Sheet Highlights (in thousands) | Account | March 30, 2025 (in thousands) | December 29, 2024 (in thousands) | | :--- | :--- | :--- | | Total Assets | $692,471 | $675,376 | | Total current assets | $281,047 | $277,093 | | Goodwill | $42,281 | $24,543 | | Total Liabilities | $390,254 | $360,017 | | Total current liabilities | $156,324 | $160,125 | | Long-term debt | $57,800 | $7,600 | | Total Shareholders' Equity | $302,217 | $315,359 | Consolidated Statements of Operations and Comprehensive Income (Loss) Q1 2025 revenue decreased 8.1% to $370.3 million, leading to a net loss of $14.3 million or ($0.48) per share Consolidated Statement of Operations (in thousands, except per share data) | Metric | Thirteen weeks ended March 30, 2025 (in thousands) | Thirteen weeks ended March 31, 2024 (in thousands) | | :--- | :--- | :--- | | Revenue from services | $370,254 | $402,853 | | Gross profit | $86,342 | $99,386 | | Income (loss) from operations | $(14,123) | $(15,509) | | Net income (loss) | $(14,348) | $(1,698) | | Diluted net income (loss) per share | $(0.48) | $(0.05) | Consolidated Statements of Cash Flows Q1 2025 cash flows show $22.1 million used in operations, $24.0 million in investing, and $49.4 million provided by financing Consolidated Statement of Cash Flows (in thousands) | Cash Flow Activity | Thirteen weeks ended March 30, 2025 (in thousands) | Thirteen weeks ended March 31, 2024 (in thousands) | | :--- | :--- | :--- | | Net cash used in operating activities | $(22,115) | $(14,239) | | Net cash (used in) provided by investing activities | $(23,968) | $919 | | Net cash provided by (used in) financing activities | $49,369 | $(13,662) | | Net change in cash, cash equivalents and restricted cash | $3,056 | $(27,586) | Notes to Consolidated Financial Statements Notes detail the $35.1 million HSP acquisition, increasing goodwill to $42.3 million, renaming PeopleScout, and increasing long-term debt to $57.8 million - Effective January 31, 2025, the company acquired Healthcare Staffing Professionals (HSP) for cash consideration of $35.1 million, intending to expand revenue in the healthcare market[25][26] - The HSP acquisition added $17.6 million in goodwill and $14.9 million in identifiable intangible assets, leading to the renaming of the PeopleScout segment to PeopleSolutions[28][29][30] - The company's revolving credit facility borrowing increased to $57.8 million as of March 30, 2025, up from $7.6 million at year-end 2024, primarily to fund the HSP acquisition[53][54] - The company is substantially self-insured for workers' compensation, with a discounted reserve of $122.9 million as of March 30, 2025[46][48] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes Q1 2025 revenue decline to soft demand, with gross margin contracting to 23.3% and SG&A decreasing 11.5% Results of Operations Q1 2025 total revenue decreased 8.1% to $370.3 million, gross profit margin fell 140 basis points to 23.3%, and SG&A expenses reduced by 11.5% Revenue by Segment (in thousands) | Segment | Q1 2025 Revenue (in thousands) | Q1 2024 Revenue (in thousands) | Growth (Decline) % | | :--- | :--- | :--- | :--- | | PeopleReady | $189,305 | $222,661 | (15.0)% | | PeopleManagement | $135,532 | $133,860 | 1.2% | | PeopleSolutions | $45,417 | $46,332 | (2.0)% | | Total Company | $370,254 | $402,853 | (8.1)% | - Gross profit margin declined by 140 basis points to 23.3%, driven by a 210 basis point contraction from revenue mix shifts and 30 basis points from pricing pressure, partially offset by a 130 basis point expansion from lower workers' compensation costs[93] - SG&A expense decreased by $12.3 million (11.5%) due to operational cost management actions taken in response to declining demand[94] Segment Performance Q1 2025 saw PeopleReady's loss improve, PeopleManagement's profit stable, and PeopleSolutions' profit fall sharply to $2.0 million Segment Profit (Loss) (in thousands) | Segment | Q1 2025 Profit (Loss) (in thousands) | Q1 2024 Profit (Loss) (in thousands) | | :--- | :--- | :--- | | PeopleReady | $(2,974) | $(5,058) | | PeopleManagement | $2,894 | $2,751 | | PeopleSolutions | $1,952 | $4,879 | Future Outlook Q2 2025 revenue growth is projected between -1% and 5%, with gross profit margin declining 180-220 basis points and SG&A between $91 million and $95 million - Q2 2025 revenue growth is expected to be between -1% and 5% compared to the prior year, including 5% inorganic growth from the HSP acquisition[105] - Gross profit as a percentage of revenue is anticipated to decline between 220 and 180 basis points in Q2 2025[105] - SG&A expense for Q2 2025 is projected to be between $91 million and $95 million[105] Liquidity and Capital Resources As of March 30, 2025, total liquidity was $94.0 million, with $22.1 million cash used in operations, and $33.5 million available for share repurchases - The company had $23.1 million in cash and cash equivalents and $57.8 million in debt outstanding as of March 30, 2025[107] - Net cash used in operating activities was $22.1 million for the quarter[113] - The primary use of cash for investing activities was the acquisition of HSP, while financing activities were driven by draws on the Revolving Credit Facility to fund this acquisition[117][119] Item 3. Quantitative and Qualitative Disclosures About Market Risk Market risk disclosures remain materially unchanged from the 2024 Annual Report on Form 10-K - Disclosures about market risk have not changed materially from the company's Annual Report on Form 10-K for the fiscal year ended December 29, 2024[126] Item 4. Controls and Procedures Disclosure controls and procedures were effective as of March 30, 2025, with no material changes in internal control over financial reporting - The Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective at a reasonable assurance level as of March 30, 2025[129] - No changes in internal control over financial reporting occurred during the most recently completed fiscal quarter that materially affected, or are reasonably likely to materially affect, internal controls[130] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is involved in various legal proceedings, with management believing any probable losses are immaterial and appropriately reflected - The company is involved in various legal proceedings in the normal course of business, but believes the liabilities are immaterial and the range of reasonably possible losses in excess of amounts accrued is also expected to be immaterial[62][133] Item 1A. Risk Factors Updated risk factors highlight demand dependence on economic conditions, acquisition integration challenges, and evolving regulations on sustainability and human capital - Demand for workforce solutions is highly dependent on the state of the economy, and a deterioration in economic conditions could lead to a prolonged decline in demand for the company's services[136][137] - Acquisitions may be difficult to integrate, could result in incurring additional debt and contingent liabilities, and may not achieve expected growth[139][140] - The business is subject to evolving regulations and stakeholder expectations regarding sustainability, human capital management, and data privacy, which could expose the company to increased costs and reputational risks[141][142] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds No shares were repurchased under the program in Q1 2025, with $33.5 million remaining available for repurchase as of March 30, 2025 - No shares were repurchased as part of the publicly announced plan during the thirteen weeks ended March 30, 2025[144] - As of March 30, 2025, $33.5 million remains available for repurchase under the company's share repurchase program[146] Item 5. Other Information No directors or executive officers adopted or terminated Rule 10b5-1 trading arrangements during Q1 2025 - No directors or executive officers adopted or terminated a Rule 10b5-1 trading arrangement during the fiscal first quarter of 2025[149] Item 6. Index to Exhibits This section indexes all exhibits filed with Form 10-Q, including CEO and CFO certifications and Inline XBRL financial statements - The report includes certifications from the CEO and CFO pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002[151]