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• | We maintain the direct contractual relationship with the customer. |
• | We have discretion in selecting and assigning the temporary worker to a particular job and establishing their billing rate. |
• | We bear the risk and rewards of the transaction, including credit risk, if the customer fails to pay for services performed. |
• | Level 1: The carrying value of cash and cash equivalents and mutual funds approximates fair value because of the short-term nature of these instruments. Inputs are valued using quoted market prices in active markets for identical assets or liabilities. |
• | Level 2: Inputs other than quoted prices in active markets for identical assets and liabilities. Instead we use quoted prices for similar instruments in active markets or quoted prices or we estimate the fair value using a variety of valuation methodologies, which include observable inputs for comparable instruments and unobservable inputs. |
• | Level 3: For assets and liabilities with unobservable inputs, we typically rely on management’s estimates of assumptions that market participants would use in pricing the asset or liability. |
Years | |
Buildings | 40 |
Computers and software | 3 - 10 |
Furniture and equipment | 3 - 10 |
|
(in thousands) | Purchase price allocation | ||
Cash purchase price, net of working capital adjustment | $ | 72,476 | |
Purchase price allocated as follows: | |||
Accounts receivable | $ | 12,272 | |
Prepaid expenses, deposits and other current assets | 894 | ||
Customer relationships | 34,900 | ||
Technologies | 400 | ||
Total assets acquired | 48,466 | ||
Accrued wages and benefits | 1,025 | ||
Other long-term liabilities | 456 | ||
Total liabilities assumed | 1,481 | ||
Net identifiable assets acquired | 46,985 | ||
Goodwill (1) | 25,491 | ||
Total consideration allocated | $ | 72,476 |
(1) | Goodwill represents the expected synergies with our existing business, the acquired assembled workforce, potential new customers and future cash flows after the acquisition of the RPO business of Aon Hewitt. Goodwill is deductible for income tax purposes over 15 years as of January 4, 2016. |
(in thousands, except for estimated useful lives, in years) | Estimated Fair Value | Estimated Useful Lives in Years | ||
Customer relationships | $ | 34,900 | 9.0 | |
Technologies | 400 | 3.0 | ||
Total acquired identifiable intangible assets | $ | 35,300 |
(in thousands) | Purchase price allocation | ||
Purchase price: | |||
Cash purchase price, net of working capital adjustment | $ | 66,603 | |
Contingent consideration (1) | 18,300 | ||
Total consideration | $ | 84,903 | |
Purchase price allocated as follows: | |||
Accounts receivable (2) | $ | 19,207 | |
Prepaid expenses, deposits and other current assets | 461 | ||
Property and equipment | 464 | ||
Customer relationships | 39,000 | ||
Trade name/trademarks | 800 | ||
Technologies | 100 | ||
Restricted cash | 4,277 | ||
Other non-current assets | 2,439 | ||
Total assets acquired | 66,748 | ||
Accounts payable and other accrued expenses | 3,741 | ||
Accrued wages and benefits | 4,075 | ||
Workers’ compensation liability | 8,520 | ||
Total liabilities assumed | 16,336 | ||
Net identifiable assets acquired | 50,412 | ||
Goodwill (3) | 34,491 | ||
Total consideration allocated | $ | 84,903 |
(1) | The present value of the $22.5 million contingent consideration as of the acquisition date based on a probability-weighted fair value measurement. |
(2) | The gross contractual amount of accounts receivable was $19.3 million of which $0.1 million was estimated to be uncollectible. |
(3) | Goodwill represents the expected synergies with our existing business, the acquired assembled workforce, potential new customers and future cash flows after the acquisition of SIMOS. Goodwill is deductible for income tax purposes over 15 years as of December 1, 2015. |
(in thousands, except for estimated useful lives, in years) | Estimated fair value | Estimated useful life in years | ||
Customer relationships | $ | 39,000 | 9.0 | |
Trade name/trademarks | 800 | 3.0 | ||
Technologies | 100 | 2.0 | ||
Total acquired identifiable intangible assets | $ | 39,900 |
|
December 31, 2017 | ||||||||||||
(in thousands) | Total fair value | Quoted prices in active markets for identical assets (level 1) | Significant other observable inputs (level 2) | Significant unobservable inputs (level 3) | ||||||||
Financial assets: | ||||||||||||
Cash and cash equivalents (1) | $ | 28,780 | $ | 28,780 | $ | — | $ | — | ||||
Restricted cash and cash equivalents (1) | 39,039 | 39,039 | — | — | ||||||||
Other restricted assets (2) | 28,440 | 28,440 | — | — | ||||||||
Restricted investments classified as held-to-maturity | 172,238 | — | 172,238 | — |
January 1, 2017 | ||||||||||||
(in thousands) | Total fair value | Quoted prices in active markets for identical assets (level 1) | Significant other observable inputs (level 2) | Significant unobservable inputs (level 3) | ||||||||
Financial assets: | ||||||||||||
Cash and cash equivalents (1) | $ | 34,970 | $ | 34,970 | $ | — | $ | — | ||||
Restricted cash and cash equivalents (1) | 67,751 | 67,751 | — | — | ||||||||
Other restricted assets (2) | 16,925 | 16,925 | — | — | ||||||||
Restricted investments classified as held-to-maturity | 145,953 | — | 145,953 | — | ||||||||
Financial liabilities: | ||||||||||||
Contingent consideration (3) | 21,600 | — | — | 21,600 |
(1) | Cash equivalents and restricted cash equivalents consist of money market funds, deposits and investments with original maturities of three months or less. |
(2) | Other restricted assets primarily consist of deferred compensation plan accounts, which are comprised of mutual funds classified as available-for-sale securities. |
(3) | The estimated fair value of the contingent consideration associated with the acquisition of SIMOS, which was estimated using a probability-adjusted discounted cash flow model. Refer to Note 2: Acquisitions for further details regarding the SIMOS acquisition. |
(in thousands) | |||
Fair value measurement at beginning of period | $ | 21,600 | |
Accretion on contingent consideration | 900 | ||
Payment of contingent consideration | (22,500 | ) | |
Fair value measurement at end of period | $ | — |
January 1, 2017 | |||||||||||||||
(in thousands) | Total fair value | Quoted prices in active markets for identical assets (level 1) | Significant other observable inputs (level 2) | Significant unobservable inputs (level 3) | Total impairment loss | ||||||||||
Goodwill | $ | 42,629 | $ | — | $ | — | $ | 42,629 | $ | (65,869 | ) | ||||
Customer relationships | 11,100 | — | — | 11,100 | (28,900 | ) | |||||||||
Trade names/trademarks | 3,600 | — | — | 3,600 | (8,775 | ) | |||||||||
Total | $ | 57,329 | $ | — | $ | — | $ | 57,329 | $ | (103,544 | ) |
|
(in thousands) | December 31, 2017 | January 1, 2017 | ||||
Cash collateral held by insurance carriers | $ | 22,926 | $ | 34,910 | ||
Cash and cash equivalents held in Trust | 16,113 | 32,841 | ||||
Investments held in Trust | 171,752 | 146,517 | ||||
Other (1) | 28,440 | 16,925 | ||||
Total restricted cash and investments | $ | 239,231 | $ | 231,193 |
(1) | Primarily consists of deferred compensation plan accounts, which are comprised of mutual funds classified as available-for-sale securities. |
December 31, 2017 | ||||||||||||
(in thousands) | Amortized cost | Gross unrealized gain | Gross unrealized loss | Fair value | ||||||||
Municipal debt securities | $ | 82,770 | $ | 974 | $ | (378 | ) | $ | 83,366 | |||
Corporate debt securities | 83,916 | 309 | (434 | ) | 83,791 | |||||||
Agency mortgage-backed securities | 4,066 | 22 | (26 | ) | 4,062 | |||||||
U.S. government and agency securities | 1,000 | 19 | — | 1,019 | ||||||||
$ | 171,752 | $ | 1,324 | $ | (838 | ) | $ | 172,238 |
January 1, 2017 | ||||||||||||
(in thousands) | Amortized cost | Gross unrealized gain | Gross unrealized loss | Fair value | ||||||||
Municipal debt securities | $ | 71,618 | $ | 443 | $ | (865 | ) | $ | 71,196 | |||
Corporate debt securities | 68,934 | 212 | (352 | ) | 68,794 | |||||||
Agency mortgage-backed securities | 5,965 | 30 | (32 | ) | 5,963 | |||||||
$ | 146,517 | $ | 685 | $ | (1,249 | ) | $ | 145,953 |
December 31, 2017 | ||||||
(in thousands) | Amortized cost | Fair value | ||||
Due in one year or less | $ | 17,265 | $ | 17,248 | ||
Due after one year through five years | 90,906 | 90,825 | ||||
Due after five years through ten years | 63,581 | 64,165 | ||||
$ | 171,752 | $ | 172,238 |
|
(in thousands) | December 31, 2017 | January 1, 2017 | ||||
Buildings and land | $ | 37,672 | $ | 35,514 | ||
Computers and software | 149,835 | 130,317 | ||||
Furniture and equipment | 15,527 | 12,262 | ||||
Construction in progress | 7,157 | 12,073 | ||||
Gross property and equipment | 210,191 | 190,166 | ||||
Less accumulated depreciation | (150,028 | ) | (126,168 | ) | ||
Property and equipment, net | $ | 60,163 | $ | 63,998 |
|
(in thousands) | PeopleReady | PeopleManagement | PeopleScout | Total company | ||||||||
Balance at December 25, 2015 | ||||||||||||
Goodwill before impairment | $ | 106,304 | $ | 103,977 | $ | 104,424 | $ | 314,705 | ||||
Accumulated impairment loss | (46,210 | ) | — | — | (46,210 | ) | ||||||
Goodwill, net | 60,094 | 103,977 | 104,424 | 268,495 | ||||||||
Acquired goodwill and other (1) | — | (3,831 | ) | 25,491 | 21,660 | |||||||
Impairment loss | — | (50,700 | ) | (15,169 | ) | (65,869 | ) | |||||
Foreign currency translation | — | — | (63 | ) | (63 | ) | ||||||
Balance at January 1, 2017 | ||||||||||||
Goodwill before impairment | 106,304 | 100,146 | 129,852 | 336,302 | ||||||||
Accumulated impairment loss | (46,210 | ) | (50,700 | ) | (15,169 | ) | (112,079 | ) | ||||
Goodwill, net | 60,094 | 49,446 | 114,683 | 224,223 | ||||||||
Foreign currency translation | — | — | 2,471 | 2,471 | ||||||||
Balance at December 31, 2017 | ||||||||||||
Goodwill before impairment | 106,304 | 100,146 | 132,323 | 338,773 | ||||||||
Accumulated impairment loss | (46,210 | ) | (50,700 | ) | (15,169 | ) | (112,079 | ) | ||||
Goodwill, net | $ | 60,094 | $ | 49,446 | $ | 117,154 | $ | 226,694 |
December 31, 2017 | January 1, 2017 | ||||||||||||||||||
(in thousands) | Gross carrying amount | Accumulated amortization | Net carrying amount | Gross carrying amount | Accumulated amortization | Net carrying amount | |||||||||||||
Finite-lived intangible assets (1): | |||||||||||||||||||
Customer relationships (2) | $ | 148,114 | $ | (53,801 | ) | $ | 94,313 | $ | 165,725 | $ | (54,676 | ) | $ | 111,049 | |||||
Trade names/trademarks (3) | 4,149 | (3,736 | ) | 413 | 4,378 | (3,385 | ) | 993 | |||||||||||
Non-compete agreements | 1,400 | (1,377 | ) | 23 | 1,400 | (1,097 | ) | 303 | |||||||||||
Technologies | 17,500 | (13,588 | ) | 3,912 | 17,009 | (9,683 | ) | 7,326 | |||||||||||
Total finite-lived intangible assets | $ | 171,163 | $ | (72,502 | ) | $ | 98,661 | $ | 188,512 | $ | (68,841 | ) | $ | 119,671 |
(1) | Excludes assets that are fully amortized. |
(2) | Balance at January 1, 2017, is net of impairment loss of $28.9 million. |
(3) | Balance at January 1, 2017, is net of impairment loss of $4.3 million. |
(in thousands) | |||
2018 | $ | 19,821 | |
2019 | 17,299 | ||
2020 | 15,736 | ||
2021 | 12,431 | ||
2022 | 12,128 | ||
Thereafter | 21,246 | ||
Total future amortization | $ | 98,661 |
• | Staff Management: In April 2016, we were notified by our former largest customer of its plans to reduce the use of contingent labor and realign its contingent labor vendors for warehousing. Our former largest customer announced it would be reducing the use of our services for its warehouse fulfillment centers in the United States and focusing our services on its planned expansion of distribution service sites to a national network for delivery direct to the customer. |
◦ | Goodwill impairment - We estimated that the change in scope of our services would decrease revenues by approximately $125 million compared to the prior year. As a result, we lowered our future expectations, which resulted in a goodwill impairment charge of $33.7 million. |
◦ | Intangible asset impairment - The significant decrease in scope of services by our former largest customer required us to lower our future expectations, which was the primary trigger of an impairment charge to our acquired customer relationships intangible asset of $28.9 million and indefinite-lived intangible assets trade name of $4.5 million. Considerable management judgment was necessary to determine key assumptions, including projected revenue, royalty rates, and an appropriate discount rate of 13.0% for the customer relationships intangibles asset and 17.0% for the indefinite-lived trade-name. In addition, we utilized the relief from royalty method to determine the fair value of Staff Management’s indefinite-lived trade name using a royalty rate of 10.0%. |
• | PlaneTechs: Revenue declined significantly compared to fiscal 2015 as large projects were completed for a major aviation customer and its supply chain and anticipated projects did not occur to the extent expected. PlaneTechs has been diversifying from providing services to one primary customer without offsetting growth in the broader aviation and transportation marketplace. As a result of significantly underperforming against current year expectations and increased future uncertainty, we lowered our future expectations, which resulted in a goodwill impairment charge of $17.0 million. |
• | hrX: Sales of this service line included our internally developed applicant tracking software (“ATS”). ATS sales and prospects have underperformed against our expectations. As a result of underperforming against our expectations and increased future uncertainty in customer demand, we lowered our future expectations, which resulted in a goodwill impairment charge of $15.2 million. Note, our PeopleScout and hrX service lines were combined during fiscal 2016 and now represent a single operating segment (PeopleScout). |
|
(in thousands) | December 31, 2017 | January 1, 2017 | ||||
Undiscounted workers’ compensation reserve | $ | 293,600 | $ | 292,169 | ||
Less discount on workers’ compensation reserve | 19,277 | 14,818 | ||||
Workers’ compensation reserve, net of discount | 274,323 | 277,351 | ||||
Less current portion | 77,218 | 79,126 | ||||
Long-term portion | $ | 197,105 | $ | 198,225 |
• | changes in medical and time loss (“indemnity”) costs; |
• | changes in mix between medical only and indemnity claims; |
• | regulatory and legislative developments impacting benefits and settlement requirements; |
• | type and location of work performed; |
• | impact of safety initiatives; and |
• | positive or adverse development of claims. |
(in thousands) | |||
2018 | $ | 76,536 | |
2019 | 42,611 | ||
2020 | 24,429 | ||
2021 | 15,227 | ||
2022 | 10,187 | ||
Thereafter | 56,507 | ||
Sub-total | 225,497 | ||
Excess claims (1) | 48,826 | ||
Total | $ | 274,323 |
(1) | Estimated expenses related to claims above our self-insured limits for which we have a corresponding receivable for the insurance coverage based on contractual policy agreements. |
|
(in thousands) | December 31, 2017 | January 1, 2017 | ||||
Revolving Credit Facility | $ | 95,900 | $ | 112,507 | ||
Term Loan | 22,856 | 25,122 | ||||
Total debt | 118,756 | 137,629 | ||||
Less current portion | 2,267 | 2,267 | ||||
Long-term debt, less current portion | $ | 116,489 | $ | 135,362 |
(in thousands) | |||
2018 | $ | 2,267 | |
2019 | 20,589 | ||
Total | $ | 22,856 |
|
(in thousands) | December 31, 2017 | January 1, 2017 | ||||
Cash collateral held by workers’ compensation insurance carriers | $ | 22,148 | $ | 28,066 | ||
Cash and cash equivalents held in Trust | 16,113 | 32,841 | ||||
Investments held in Trust | 171,752 | 146,517 | ||||
Letters of credit (1) | 7,748 | 7,982 | ||||
Surety bonds (2) | 19,829 | 20,440 | ||||
Total collateral commitments | $ | 237,590 | $ | 235,846 |
(1) | We have agreements with certain financial institutions to issue letters of credit as collateral. |
(2) | Our surety bonds are issued by independent insurance companies on our behalf and bear annual fees based on a percentage of the bond, which are determined by each independent surety carrier. These fees do not exceed 2.0% of the bond amount, subject to a minimum charge. The terms of these bonds are subject to review and renewal every one to four years and most bonds can be canceled by the sureties with as little as 60 days’ notice. |
(in thousands) | |||
2018 | $ | 8,779 | |
2019 | 7,132 | ||
2020 | 6,370 | ||
2021 | 4,253 | ||
2022 | 1,218 | ||
Thereafter | 502 | ||
Total future non-cancelable minimum lease payments | $ | 28,254 |
|
|
(shares in thousands) | Shares | Weighted- average grant-date price | |||
Non-vested at beginning of period | 1,209 | $ | 22.76 | ||
Granted | 657 | $ | 25.45 | ||
Vested | (438 | ) | $ | 23.73 | |
Forfeited | (107 | ) | $ | 24.65 | |
Non-vested at the end of the period | 1,321 | $ | 23.50 |
(shares in thousands) | Shares | Average price per share | ||||
Issued during fiscal | 2017 | 72 | $ | 20.43 | ||
Issued during fiscal | 2016 | 87 | $ | 17.51 | ||
Issued during fiscal | 2015 | 68 | $ | 20.65 |
|
|
Years ended | |||||||||
(in thousands) | 2017 | 2016 | 2015 | ||||||
Current taxes: | |||||||||
Federal | $ | 12,134 | $ | 12,082 | $ | 12,665 | |||
State | 3,979 | 5,448 | 5,611 | ||||||
Foreign | 3,545 | 2,677 | 1,882 | ||||||
Total current taxes | 19,658 | 20,207 | 20,158 | ||||||
Deferred taxes: | |||||||||
Federal | 3,645 | (20,693 | ) | 4,963 | |||||
State | (195 | ) | (4,064 | ) | 81 | ||||
Foreign | (1,014 | ) | (539 | ) | (2 | ) | |||
Total deferred taxes | 2,436 | (25,296 | ) | 5,042 | |||||
Provision for income taxes | $ | 22,094 | $ | (5,089 | ) | $ | 25,200 |
Years ended | |||||||||||||||
(in thousands, except percentages) | 2017 | % | 2016 | % | 2015 | % | |||||||||
Income tax expense (benefit) based on statutory rate | $ | 27,140 | 35.0 | % | $ | (7,119 | ) | 35.0 | % | $ | 33,745 | 35.0 | % | ||
Increase (decrease) resulting from: | |||||||||||||||
State income taxes, net of federal benefit | 2,667 | 3.4 | % | 1,373 | (6.8 | )% | 4,175 | 4.3 | % | ||||||
Tax credits, net | (9,964 | ) | (12.9 | )% | (17,141 | ) | 84.3 | % | (14,483 | ) | (15.0 | )% | |||
Transition to the U.S. Tax Cuts and Job Act | 2,466 | 3.2 | % | — | — | % | — | — | % | ||||||
Non-deductible goodwill impairment charge | — | — | % | 17,694 | (87.0 | )% | — | — | % | ||||||
Non-deductible/non-taxable items | 1,157 | 1.5 | % | 630 | (3.1 | )% | 2,456 | 2.5 | % | ||||||
Foreign taxes | (342 | ) | (0.4 | )% | 993 | (4.8 | )% | (933 | ) | (1.0 | )% | ||||
Other, net | (1,030 | ) | (1.3 | )% | (1,519 | ) | 7.4 | % | 240 | 0.3 | % | ||||
Total taxes on income (loss) | $ | 22,094 | 28.5 | % | $ | (5,089 | ) | 25.0 | % | $ | 25,200 | 26.1 | % |
(in thousands) | December 31, 2017 | January 1, 2017 | ||||
Deferred tax assets: | ||||||
Allowance for doubtful accounts | $ | 876 | $ | 1,970 | ||
Workers’ compensation | 1,420 | — | ||||
Accounts payable and other accrued expenses | 4,000 | 8,577 | ||||
Net operating loss carryforwards | 2,388 | 2,287 | ||||
Tax credit carryforwards | 1,615 | 2,835 | ||||
Accrued wages and benefits | 4,644 | 9,470 | ||||
Deferred compensation | 4,484 | 7,003 | ||||
Other | 841 | 1,090 | ||||
Total | 20,268 | 33,232 | ||||
Valuation allowance | (2,508 | ) | (2,266 | ) | ||
Total deferred tax asset, net of valuation allowance | 17,760 | 30,966 | ||||
Deferred tax liabilities: | ||||||
Prepaid expenses, deposits and other current assets | (2,096 | ) | (2,697 | ) | ||
Depreciation and amortization | (11,881 | ) | (18,330 | ) | ||
Workers’ compensation | — | (3,169 | ) | |||
Total deferred tax liabilities | (13,977 | ) | (24,196 | ) | ||
Net deferred tax (liabilities) asset, end of year | $ | 3,783 | $ | 6,770 |
(in thousands) | Carryover tax benefit | Valuation allowance | Expected benefit | Year expiration begins | ||||||
Year-end tax attributes: | ||||||||||
State NOLs | $ | 1,593 | $ | (349 | ) | $ | 1,244 | Various | ||
Foreign NOLs | 795 | (795 | ) | — | Various | |||||
California Enterprise Zone credits (1) | 1,615 | (1,364 | ) | 251 | 2023 | |||||
Total | $ | 4,003 | $ | (2,508 | ) | $ | 1,495 |
(1) | The California Enterprise Zone credits fully expire in 2023. |
Years ended | |||||||||
(in thousands) | 2017 | 2016 | 2015 | ||||||
Balance, beginning of fiscal year | $ | 2,242 | $ | 2,195 | $ | 2,039 | |||
Increases for tax positions related to the current year | 356 | 348 | 436 | ||||||
Reductions due to lapsed statute of limitations | (388 | ) | (301 | ) | (280 | ) | |||
Balance, end of fiscal year | $ | 2,210 | $ | 2,242 | $ | 2,195 |
|
Years ended | |||||||||
(in thousands, except per share data) | 2017 | 2016 | 2015 | ||||||
Net income (loss) | $ | 55,456 | $ | (15,251 | ) | $ | 71,247 | ||
Weighted average number of common shares used in basic net income (loss) per common share | 41,202 | 41,648 | 41,226 | ||||||
Dilutive effect of non-vested restricted stock | 239 | — | 396 | ||||||
Weighted average number of common shares used in diluted net income (loss) per common share | 41,441 | 41,648 | 41,622 | ||||||
Net income (loss) per common share: | |||||||||
Basic | $ | 1.35 | $ | (0.37 | ) | $ | 1.73 | ||
Diluted | $ | 1.34 | $ | (0.37 | ) | $ | 1.71 | ||
Anti-dilutive shares | 418 | — | 89 |
|
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) |
Years ended | |||||||||||||||||||
December 31, 2017 | January 1, 2017 | ||||||||||||||||||
(in thousands) | Balance at beginning of period | Current period other comprehensive income | Balance at end of period | Balance at beginning of period | Current period other comprehensive income | Balance at end of period | |||||||||||||
Foreign currency translation adjustment | $ | (11,684 | ) | $ | 3,355 | $ | (8,329 | ) | $ | (13,514 | ) | $ | 1,830 | $ | (11,684 | ) | |||
Unrealized gain (loss) on investments (1) | 251 | 1,274 | 1,525 | (499 | ) | 750 | 251 | ||||||||||||
Total other comprehensive income (loss), net of tax | $ | (11,433 | ) | $ | 4,629 | $ | (6,804 | ) | $ | (14,013 | ) | $ | 2,580 | $ | (11,433 | ) |
(1) | Consists of deferred compensation plan accounts, which are comprised of mutual funds classified as available-for-sale securities. The tax impact on unrealized gain on available-for-sale securities was $0.5 million for fiscal 2017 and de minimis for fiscal 2016. |
|
• | Staff Management | SMX: Exclusive recruitment and on-premise management of a facility’s contingent industrial workforce; |
• | SIMOS Insourcing Solutions: On-premise management and recruitment of warehouse/distribution operations; |
• | Centerline Drivers: Recruitment and management of temporary and dedicated drivers to the transportation and distribution industries; and |
• | PlaneTechs: Recruitment and on-premise management of skilled mechanics and technicians to the aviation and transportation industries. |
• | PeopleScout: Outsourced recruitment of permanent employees on behalf of customers; and |
• | PeopleScout MSP: Management of multiple third party staffing vendors on behalf of customers. |
Years ended | |||||||||
(in thousands) | 2017 | 2016 | 2015 | ||||||
Revenue from services: | |||||||||
PeopleReady | $ | 1,511,360 | $ | 1,629,455 | $ | 1,625,817 | |||
PeopleManagement | 807,273 | 940,453 | 965,331 | ||||||
PeopleScout | 190,138 | 180,732 | 104,532 | ||||||
Total company | $ | 2,508,771 | $ | 2,750,640 | $ | 2,695,680 |
Years ended | |||||||||
(in thousands) | 2017 | 2016 | 2015 | ||||||
Segment EBITDA (1): | |||||||||
PeopleReady | $ | 78,372 | $ | 101,270 | $ | 123,899 | |||
PeopleManagement | 27,043 | (60,452 | ) | 36,512 | |||||
PeopleScout | 39,232 | 19,116 | 9,324 | ||||||
144,647 | 59,934 | 169,735 | |||||||
Corporate unallocated | (20,968 | ) | (30,237 | ) | (30,050 | ) | |||
Depreciation and amortization | (46,115 | ) | (46,692 | ) | (41,843 | ) | |||
Income (loss) from operations | 77,564 | (16,995 | ) | 97,842 | |||||
Interest and other expense, net | (14 | ) | (3,345 | ) | (1,395 | ) | |||
Income (loss) before tax expense | $ | 77,550 | $ | (20,340 | ) | $ | 96,447 |
(1) | Segment EBITDA was previously referred to as segment income (loss) from operations. This change had no impact on the amounts reported. |
Years ended | |||||||||||||||
(in thousands, except percentages) | 2017 | % | 2016 | % | 2015 | % | |||||||||
United States | $ | 2,387,992 | 95.2 | % | $ | 2,644,414 | 96.1 | % | $ | 2,603,085 | 96.6 | % | |||
International operations | 120,779 | 4.8 | % | 106,226 | 3.9 | % | 92,595 | 3.4 | % | ||||||
Total revenue from services | $ | 2,508,771 | 100.0 | % | $ | 2,750,640 | 100.0 | % | $ | 2,695,680 | 100.0 | % |
• | No single customer represented more than 10.0% of our PeopleReady reportable segment revenue for fiscal 2017, 2016, nor 2015. |
• | No single customer represented more than 10.0% of our PeopleManagement reportable segment revenue for fiscal 2017. One customer represented 18.2% and 36.7% of our PeopleManagement reportable segment revenue in fiscal 2016 and 2015, respectively. |
• | Two customers represented 14.4% and 10.1%, respectively of our PeopleScout reportable segment revenue for fiscal 2017, and 12.8% and 10.0%, respectively for fiscal 2016. Two different customers represented 10.6% and 10.2%, respectively of our PeopleScout reportable segment revenue for fiscal 2015. |
|
(unaudited; in thousands, except per share data) | First | Second | Third | Fourth | ||||||||
2017 | ||||||||||||
Revenue from services | $ | 568,244 | $ | 610,122 | $ | 660,780 | $ | 669,625 | ||||
Cost of services | 428,815 | 454,842 | 488,761 | 501,880 | ||||||||
Gross profit | 139,429 | 155,280 | 172,019 | 167,745 | ||||||||
Selling, general and administrative expense | 121,844 | 124,754 | 131,552 | 132,644 | ||||||||
Depreciation and amortization | 11,174 | 12,287 | 11,189 | 11,465 | ||||||||
Income from operations | 6,411 | 18,239 | 29,278 | 23,636 | ||||||||
Interest expense | (1,232 | ) | (1,296 | ) | (1,365 | ) | (1,601 | ) | ||||
Interest and other income | 1,306 | 1,451 | 1,146 | 1,577 | ||||||||
Interest and other income (expense), net | 74 | 155 | (219 | ) | (24 | ) | ||||||
Income before tax expense | 6,485 | 18,394 | 29,059 | 23,612 | ||||||||
Income tax expense | 1,811 | 5,260 | 7,838 | 7,185 | ||||||||
Net income | $ | 4,674 | $ | 13,134 | $ | 21,221 | $ | 16,427 | ||||
Net income per common share: | ||||||||||||
Basic | $ | 0.11 | $ | 0.32 | $ | 0.52 | $ | 0.41 | ||||
Diluted | $ | 0.11 | $ | 0.31 | $ | 0.51 | $ | 0.40 | ||||
2016 | ||||||||||||
Revenue from services | $ | 645,980 | $ | 672,612 | $ | 697,097 | $ | 734,951 | ||||
Cost of services | 495,468 | 502,688 | 518,702 | 554,064 | ||||||||
Gross profit | 150,512 | 169,924 | 178,395 | 180,887 | ||||||||
Selling, general and administrative expense | 130,624 | 135,787 | 134,679 | 145,387 | ||||||||
Depreciation and amortization | 11,289 | 11,694 | 11,690 | 12,019 | ||||||||
Goodwill and intangible asset impairment charge | — | 99,269 | 4,275 | — | ||||||||
Income (loss) from operations | 8,599 | (76,826 | ) | 27,751 | 23,481 | |||||||
Interest expense | (1,969 | ) | (1,740 | ) | (1,721 | ) | (1,736 | ) | ||||
Interest and other income | 950 | 853 | 854 | 1,164 | ||||||||
Interest and other income (expense), net | (1,019 | ) | (887 | ) | (867 | ) | (572 | ) | ||||
Income (loss) before tax expense | 7,580 | (77,713 | ) | 26,884 | 22,909 | |||||||
Income tax expense (benefit) | 612 | (13,978 | ) | 3,455 | 4,822 | |||||||
Net income (loss) | $ | 6,968 | $ | (63,735 | ) | $ | 23,429 | $ | 18,087 | |||
Net income (loss) per common share: | ||||||||||||
Basic | $ | 0.17 | $ | (1.53 | ) | $ | 0.56 | $ | 0.43 | |||
Diluted | $ | 0.17 | $ | (1.53 | ) | $ | 0.56 | $ | 0.43 |
|
|
(in thousands) | 2017 | 2016 | 2015 | ||||||
Balance, beginning of the year | $ | 5,160 | $ | 5,902 | $ | 7,603 | |||
Charged to expense | 6,903 | 8,171 | 7,132 | ||||||
Write-offs | (7,719 | ) | (8,913 | ) | (8,833 | ) | |||
Balance, end of year | $ | 4,344 | $ | 5,160 | $ | 5,902 |
(in thousands) | 2017 | 2016 | 2015 | ||||||
Balance, beginning of the year | $ | 4,019 | $ | 3,874 | $ | 3,933 | |||
Charged to expense | 1,153 | 207 | 48 | ||||||
Release of allowance | (1,394 | ) | (62 | ) | (107 | ) | |||
Balance, end of year | $ | 3,778 | $ | 4,019 | $ | 3,874 |
(in thousands) | 2017 | 2016 | 2015 | ||||||
Balance, beginning of the year | $ | 2,266 | $ | 3,227 | $ | 2,844 | |||
Charged to expense | 2 | 579 | 383 | ||||||
Transition to the U.S. Tax Cuts and Jobs Act | 240 | — | — | ||||||
Release of allowance | — | (1,540 | ) | — | |||||
Balance, end of year | $ | 2,508 | $ | 2,266 | $ | 3,227 |
|
• | We maintain the direct contractual relationship with the customer. |
• | We have discretion in selecting and assigning the temporary worker to a particular job and establishing their billing rate. |
• | We bear the risk and rewards of the transaction, including credit risk, if the customer fails to pay for services performed. |
• | Level 1: The carrying value of cash and cash equivalents and mutual funds approximates fair value because of the short-term nature of these instruments. Inputs are valued using quoted market prices in active markets for identical assets or liabilities. |
• | Level 2: Inputs other than quoted prices in active markets for identical assets and liabilities. Instead we use quoted prices for similar instruments in active markets or quoted prices or we estimate the fair value using a variety of valuation methodologies, which include observable inputs for comparable instruments and unobservable inputs. |
• | Level 3: For assets and liabilities with unobservable inputs, we typically rely on management’s estimates of assumptions that market participants would use in pricing the asset or liability. |
Years | |
Buildings | 40 |
Computers and software | 3 - 10 |
Furniture and equipment | 3 - 10 |
|
Years | |
Buildings | 40 |
Computers and software | 3 - 10 |
Furniture and equipment | 3 - 10 |
(in thousands) | December 31, 2017 | January 1, 2017 | ||||
Buildings and land | $ | 37,672 | $ | 35,514 | ||
Computers and software | 149,835 | 130,317 | ||||
Furniture and equipment | 15,527 | 12,262 | ||||
Construction in progress | 7,157 | 12,073 | ||||
Gross property and equipment | 210,191 | 190,166 | ||||
Less accumulated depreciation | (150,028 | ) | (126,168 | ) | ||
Property and equipment, net | $ | 60,163 | $ | 63,998 |
|
(in thousands) | Purchase price allocation | ||
Cash purchase price, net of working capital adjustment | $ | 72,476 | |
Purchase price allocated as follows: | |||
Accounts receivable | $ | 12,272 | |
Prepaid expenses, deposits and other current assets | 894 | ||
Customer relationships | 34,900 | ||
Technologies | 400 | ||
Total assets acquired | 48,466 | ||
Accrued wages and benefits | 1,025 | ||
Other long-term liabilities | 456 | ||
Total liabilities assumed | 1,481 | ||
Net identifiable assets acquired | 46,985 | ||
Goodwill (1) | 25,491 | ||
Total consideration allocated | $ | 72,476 |
(1) | Goodwill represents the expected synergies with our existing business, the acquired assembled workforce, potential new customers and future cash flows after the acquisition of the RPO business of Aon Hewitt. Goodwill is deductible for income tax purposes over 15 years as of January 4, 2016. |
(in thousands, except for estimated useful lives, in years) | Estimated Fair Value | Estimated Useful Lives in Years | ||
Customer relationships | $ | 34,900 | 9.0 | |
Technologies | 400 | 3.0 | ||
Total acquired identifiable intangible assets | $ | 35,300 |
(in thousands) | Purchase price allocation | ||
Purchase price: | |||
Cash purchase price, net of working capital adjustment | $ | 66,603 | |
Contingent consideration (1) | 18,300 | ||
Total consideration | $ | 84,903 | |
Purchase price allocated as follows: | |||
Accounts receivable (2) | $ | 19,207 | |
Prepaid expenses, deposits and other current assets | 461 | ||
Property and equipment | 464 | ||
Customer relationships | 39,000 | ||
Trade name/trademarks | 800 | ||
Technologies | 100 | ||
Restricted cash | 4,277 | ||
Other non-current assets | 2,439 | ||
Total assets acquired | 66,748 | ||
Accounts payable and other accrued expenses | 3,741 | ||
Accrued wages and benefits | 4,075 | ||
Workers’ compensation liability | 8,520 | ||
Total liabilities assumed | 16,336 | ||
Net identifiable assets acquired | 50,412 | ||
Goodwill (3) | 34,491 | ||
Total consideration allocated | $ | 84,903 |
(1) | The present value of the $22.5 million contingent consideration as of the acquisition date based on a probability-weighted fair value measurement. |
(2) | The gross contractual amount of accounts receivable was $19.3 million of which $0.1 million was estimated to be uncollectible. |
(3) | Goodwill represents the expected synergies with our existing business, the acquired assembled workforce, potential new customers and future cash flows after the acquisition of SIMOS. Goodwill is deductible for income tax purposes over 15 years as of December 1, 2015. |
(in thousands, except for estimated useful lives, in years) | Estimated fair value | Estimated useful life in years | ||
Customer relationships | $ | 39,000 | 9.0 | |
Trade name/trademarks | 800 | 3.0 | ||
Technologies | 100 | 2.0 | ||
Total acquired identifiable intangible assets | $ | 39,900 |
|
December 31, 2017 | ||||||||||||
(in thousands) | Total fair value | Quoted prices in active markets for identical assets (level 1) | Significant other observable inputs (level 2) | Significant unobservable inputs (level 3) | ||||||||
Financial assets: | ||||||||||||
Cash and cash equivalents (1) | $ | 28,780 | $ | 28,780 | $ | — | $ | — | ||||
Restricted cash and cash equivalents (1) | 39,039 | 39,039 | — | — | ||||||||
Other restricted assets (2) | 28,440 | 28,440 | — | — | ||||||||
Restricted investments classified as held-to-maturity | 172,238 | — | 172,238 | — |
January 1, 2017 | ||||||||||||
(in thousands) | Total fair value | Quoted prices in active markets for identical assets (level 1) | Significant other observable inputs (level 2) | Significant unobservable inputs (level 3) | ||||||||
Financial assets: | ||||||||||||
Cash and cash equivalents (1) | $ | 34,970 | $ | 34,970 | $ | — | $ | — | ||||
Restricted cash and cash equivalents (1) | 67,751 | 67,751 | — | — | ||||||||
Other restricted assets (2) | 16,925 | 16,925 | — | — | ||||||||
Restricted investments classified as held-to-maturity | 145,953 | — | 145,953 | — | ||||||||
Financial liabilities: | ||||||||||||
Contingent consideration (3) | 21,600 | — | — | 21,600 |
(1) | Cash equivalents and restricted cash equivalents consist of money market funds, deposits and investments with original maturities of three months or less. |
(2) | Other restricted assets primarily consist of deferred compensation plan accounts, which are comprised of mutual funds classified as available-for-sale securities. |
(3) | The estimated fair value of the contingent consideration associated with the acquisition of SIMOS, which was estimated using a probability-adjusted discounted cash flow model. Refer to Note 2: Acquisitions for further details regarding the SIMOS acquisition. |
(in thousands) | |||
Fair value measurement at beginning of period | $ | 21,600 | |
Accretion on contingent consideration | 900 | ||
Payment of contingent consideration | (22,500 | ) | |
Fair value measurement at end of period | $ | — |
January 1, 2017 | |||||||||||||||
(in thousands) | Total fair value | Quoted prices in active markets for identical assets (level 1) | Significant other observable inputs (level 2) | Significant unobservable inputs (level 3) | Total impairment loss | ||||||||||
Goodwill | $ | 42,629 | $ | — | $ | — | $ | 42,629 | $ | (65,869 | ) | ||||
Customer relationships | 11,100 | — | — | 11,100 | (28,900 | ) | |||||||||
Trade names/trademarks | 3,600 | — | — | 3,600 | (8,775 | ) | |||||||||
Total | $ | 57,329 | $ | — | $ | — | $ | 57,329 | $ | (103,544 | ) |
|
(in thousands) | December 31, 2017 | January 1, 2017 | ||||
Cash collateral held by insurance carriers | $ | 22,926 | $ | 34,910 | ||
Cash and cash equivalents held in Trust | 16,113 | 32,841 | ||||
Investments held in Trust | 171,752 | 146,517 | ||||
Other (1) | 28,440 | 16,925 | ||||
Total restricted cash and investments | $ | 239,231 | $ | 231,193 |
(1) | Primarily consists of deferred compensation plan accounts, which are comprised of mutual funds classified as available-for-sale securities. |
December 31, 2017 | ||||||||||||
(in thousands) | Amortized cost | Gross unrealized gain | Gross unrealized loss | Fair value | ||||||||
Municipal debt securities | $ | 82,770 | $ | 974 | $ | (378 | ) | $ | 83,366 | |||
Corporate debt securities | 83,916 | 309 | (434 | ) | 83,791 | |||||||
Agency mortgage-backed securities | 4,066 | 22 | (26 | ) | 4,062 | |||||||
U.S. government and agency securities | 1,000 | 19 | — | 1,019 | ||||||||
$ | 171,752 | $ | 1,324 | $ | (838 | ) | $ | 172,238 |
January 1, 2017 | ||||||||||||
(in thousands) | Amortized cost | Gross unrealized gain | Gross unrealized loss | Fair value | ||||||||
Municipal debt securities | $ | 71,618 | $ | 443 | $ | (865 | ) | $ | 71,196 | |||
Corporate debt securities | 68,934 | 212 | (352 | ) | 68,794 | |||||||
Agency mortgage-backed securities | 5,965 | 30 | (32 | ) | 5,963 | |||||||
$ | 146,517 | $ | 685 | $ | (1,249 | ) | $ | 145,953 |
December 31, 2017 | ||||||
(in thousands) | Amortized cost | Fair value | ||||
Due in one year or less | $ | 17,265 | $ | 17,248 | ||
Due after one year through five years | 90,906 | 90,825 | ||||
Due after five years through ten years | 63,581 | 64,165 | ||||
$ | 171,752 | $ | 172,238 |
|
Years | |
Buildings | 40 |
Computers and software | 3 - 10 |
Furniture and equipment | 3 - 10 |
(in thousands) | December 31, 2017 | January 1, 2017 | ||||
Buildings and land | $ | 37,672 | $ | 35,514 | ||
Computers and software | 149,835 | 130,317 | ||||
Furniture and equipment | 15,527 | 12,262 | ||||
Construction in progress | 7,157 | 12,073 | ||||
Gross property and equipment | 210,191 | 190,166 | ||||
Less accumulated depreciation | (150,028 | ) | (126,168 | ) | ||
Property and equipment, net | $ | 60,163 | $ | 63,998 |
|
(in thousands) | PeopleReady | PeopleManagement | PeopleScout | Total company | ||||||||
Balance at December 25, 2015 | ||||||||||||
Goodwill before impairment | $ | 106,304 | $ | 103,977 | $ | 104,424 | $ | 314,705 | ||||
Accumulated impairment loss | (46,210 | ) | — | — | (46,210 | ) | ||||||
Goodwill, net | 60,094 | 103,977 | 104,424 | 268,495 | ||||||||
Acquired goodwill and other (1) | — | (3,831 | ) | 25,491 | 21,660 | |||||||
Impairment loss | — | (50,700 | ) | (15,169 | ) | (65,869 | ) | |||||
Foreign currency translation | — | — | (63 | ) | (63 | ) | ||||||
Balance at January 1, 2017 | ||||||||||||
Goodwill before impairment | 106,304 | 100,146 | 129,852 | 336,302 | ||||||||
Accumulated impairment loss | (46,210 | ) | (50,700 | ) | (15,169 | ) | (112,079 | ) | ||||
Goodwill, net | 60,094 | 49,446 | 114,683 | 224,223 | ||||||||
Foreign currency translation | — | — | 2,471 | 2,471 | ||||||||
Balance at December 31, 2017 | ||||||||||||
Goodwill before impairment | 106,304 | 100,146 | 132,323 | 338,773 | ||||||||
Accumulated impairment loss | (46,210 | ) | (50,700 | ) | (15,169 | ) | (112,079 | ) | ||||
Goodwill, net | $ | 60,094 | $ | 49,446 | $ | 117,154 | $ | 226,694 |
December 31, 2017 | January 1, 2017 | ||||||||||||||||||
(in thousands) | Gross carrying amount | Accumulated amortization | Net carrying amount | Gross carrying amount | Accumulated amortization | Net carrying amount | |||||||||||||
Finite-lived intangible assets (1): | |||||||||||||||||||
Customer relationships (2) | $ | 148,114 | $ | (53,801 | ) | $ | 94,313 | $ | 165,725 | $ | (54,676 | ) | $ | 111,049 | |||||
Trade names/trademarks (3) | 4,149 | (3,736 | ) | 413 | 4,378 | (3,385 | ) | 993 | |||||||||||
Non-compete agreements | 1,400 | (1,377 | ) | 23 | 1,400 | (1,097 | ) | 303 | |||||||||||
Technologies | 17,500 | (13,588 | ) | 3,912 | 17,009 | (9,683 | ) | 7,326 | |||||||||||
Total finite-lived intangible assets | $ | 171,163 | $ | (72,502 | ) | $ | 98,661 | $ | 188,512 | $ | (68,841 | ) | $ | 119,671 |
(1) | Excludes assets that are fully amortized. |
(2) | Balance at January 1, 2017, is net of impairment loss of $28.9 million. |
(3) | Balance at January 1, 2017, is net of impairment loss of $4.3 million. |
(in thousands) | |||
2018 | $ | 19,821 | |
2019 | 17,299 | ||
2020 | 15,736 | ||
2021 | 12,431 | ||
2022 | 12,128 | ||
Thereafter | 21,246 | ||
Total future amortization | $ | 98,661 |
|
(in thousands) | December 31, 2017 | January 1, 2017 | ||||
Undiscounted workers’ compensation reserve | $ | 293,600 | $ | 292,169 | ||
Less discount on workers’ compensation reserve | 19,277 | 14,818 | ||||
Workers’ compensation reserve, net of discount | 274,323 | 277,351 | ||||
Less current portion | 77,218 | 79,126 | ||||
Long-term portion | $ | 197,105 | $ | 198,225 |
(in thousands) | |||
2018 | $ | 76,536 | |
2019 | 42,611 | ||
2020 | 24,429 | ||
2021 | 15,227 | ||
2022 | 10,187 | ||
Thereafter | 56,507 | ||
Sub-total | 225,497 | ||
Excess claims (1) | 48,826 | ||
Total | $ | 274,323 |
(1) | Estimated expenses related to claims above our self-insured limits for which we have a corresponding receivable for the insurance coverage based on contractual policy agreements. |
|
(in thousands) | December 31, 2017 | January 1, 2017 | ||||
Revolving Credit Facility | $ | 95,900 | $ | 112,507 | ||
Term Loan | 22,856 | 25,122 | ||||
Total debt | 118,756 | 137,629 | ||||
Less current portion | 2,267 | 2,267 | ||||
Long-term debt, less current portion | $ | 116,489 | $ | 135,362 |
(in thousands) | |||
2018 | $ | 2,267 | |
2019 | 20,589 | ||
Total | $ | 22,856 |
|
(in thousands) | December 31, 2017 | January 1, 2017 | ||||
Cash collateral held by workers’ compensation insurance carriers | $ | 22,148 | $ | 28,066 | ||
Cash and cash equivalents held in Trust | 16,113 | 32,841 | ||||
Investments held in Trust | 171,752 | 146,517 | ||||
Letters of credit (1) | 7,748 | 7,982 | ||||
Surety bonds (2) | 19,829 | 20,440 | ||||
Total collateral commitments | $ | 237,590 | $ | 235,846 |
(1) | We have agreements with certain financial institutions to issue letters of credit as collateral. |
(2) | Our surety bonds are issued by independent insurance companies on our behalf and bear annual fees based on a percentage of the bond, which are determined by each independent surety carrier. These fees do not exceed 2.0% of the bond amount, subject to a minimum charge. The terms of these bonds are subject to review and renewal every one to four years and most bonds can be canceled by the sureties with as little as 60 days’ notice. |
(in thousands) | |||
2018 | $ | 8,779 | |
2019 | 7,132 | ||
2020 | 6,370 | ||
2021 | 4,253 | ||
2022 | 1,218 | ||
Thereafter | 502 | ||
Total future non-cancelable minimum lease payments | $ | 28,254 |
|
(shares in thousands) | Shares | Weighted- average grant-date price | |||
Non-vested at beginning of period | 1,209 | $ | 22.76 | ||
Granted | 657 | $ | 25.45 | ||
Vested | (438 | ) | $ | 23.73 | |
Forfeited | (107 | ) | $ | 24.65 | |
Non-vested at the end of the period | 1,321 | $ | 23.50 |
(shares in thousands) | Shares | Average price per share | ||||
Issued during fiscal | 2017 | 72 | $ | 20.43 | ||
Issued during fiscal | 2016 | 87 | $ | 17.51 | ||
Issued during fiscal | 2015 | 68 | $ | 20.65 |
|
Years ended | |||||||||
(in thousands) | 2017 | 2016 | 2015 | ||||||
Current taxes: | |||||||||
Federal | $ | 12,134 | $ | 12,082 | $ | 12,665 | |||
State | 3,979 | 5,448 | 5,611 | ||||||
Foreign | 3,545 | 2,677 | 1,882 | ||||||
Total current taxes | 19,658 | 20,207 | 20,158 | ||||||
Deferred taxes: | |||||||||
Federal | 3,645 | (20,693 | ) | 4,963 | |||||
State | (195 | ) | (4,064 | ) | 81 | ||||
Foreign | (1,014 | ) | (539 | ) | (2 | ) | |||
Total deferred taxes | 2,436 | (25,296 | ) | 5,042 | |||||
Provision for income taxes | $ | 22,094 | $ | (5,089 | ) | $ | 25,200 |
Years ended | |||||||||||||||
(in thousands, except percentages) | 2017 | % | 2016 | % | 2015 | % | |||||||||
Income tax expense (benefit) based on statutory rate | $ | 27,140 | 35.0 | % | $ | (7,119 | ) | 35.0 | % | $ | 33,745 | 35.0 | % | ||
Increase (decrease) resulting from: | |||||||||||||||
State income taxes, net of federal benefit | 2,667 | 3.4 | % | 1,373 | (6.8 | )% | 4,175 | 4.3 | % | ||||||
Tax credits, net | (9,964 | ) | (12.9 | )% | (17,141 | ) | 84.3 | % | (14,483 | ) | (15.0 | )% | |||
Transition to the U.S. Tax Cuts and Job Act | 2,466 | 3.2 | % | — | — | % | — | — | % | ||||||
Non-deductible goodwill impairment charge | — | — | % | 17,694 | (87.0 | )% | — | — | % | ||||||
Non-deductible/non-taxable items | 1,157 | 1.5 | % | 630 | (3.1 | )% | 2,456 | 2.5 | % | ||||||
Foreign taxes | (342 | ) | (0.4 | )% | 993 | (4.8 | )% | (933 | ) | (1.0 | )% | ||||
Other, net | (1,030 | ) | (1.3 | )% | (1,519 | ) | 7.4 | % | 240 | 0.3 | % | ||||
Total taxes on income (loss) | $ | 22,094 | 28.5 | % | $ | (5,089 | ) | 25.0 | % | $ | 25,200 | 26.1 | % |
(in thousands) | December 31, 2017 | January 1, 2017 | ||||
Deferred tax assets: | ||||||
Allowance for doubtful accounts | $ | 876 | $ | 1,970 | ||
Workers’ compensation | 1,420 | — | ||||
Accounts payable and other accrued expenses | 4,000 | 8,577 | ||||
Net operating loss carryforwards | 2,388 | 2,287 | ||||
Tax credit carryforwards | 1,615 | 2,835 | ||||
Accrued wages and benefits | 4,644 | 9,470 | ||||
Deferred compensation | 4,484 | 7,003 | ||||
Other | 841 | 1,090 | ||||
Total | 20,268 | 33,232 | ||||
Valuation allowance | (2,508 | ) | (2,266 | ) | ||
Total deferred tax asset, net of valuation allowance | 17,760 | 30,966 | ||||
Deferred tax liabilities: | ||||||
Prepaid expenses, deposits and other current assets | (2,096 | ) | (2,697 | ) | ||
Depreciation and amortization | (11,881 | ) | (18,330 | ) | ||
Workers’ compensation | — | (3,169 | ) | |||
Total deferred tax liabilities | (13,977 | ) | (24,196 | ) | ||
Net deferred tax (liabilities) asset, end of year | $ | 3,783 | $ | 6,770 |
(in thousands) | Carryover tax benefit | Valuation allowance | Expected benefit | Year expiration begins | ||||||
Year-end tax attributes: | ||||||||||
State NOLs | $ | 1,593 | $ | (349 | ) | $ | 1,244 | Various | ||
Foreign NOLs | 795 | (795 | ) | — | Various | |||||
California Enterprise Zone credits (1) | 1,615 | (1,364 | ) | 251 | 2023 | |||||
Total | $ | 4,003 | $ | (2,508 | ) | $ | 1,495 |
(1) | The California Enterprise Zone credits fully expire in 2023. |
Years ended | |||||||||
(in thousands) | 2017 | 2016 | 2015 | ||||||
Balance, beginning of fiscal year | $ | 2,242 | $ | 2,195 | $ | 2,039 | |||
Increases for tax positions related to the current year | 356 | 348 | 436 | ||||||
Reductions due to lapsed statute of limitations | (388 | ) | (301 | ) | (280 | ) | |||
Balance, end of fiscal year | $ | 2,210 | $ | 2,242 | $ | 2,195 |
|
Years ended | |||||||||
(in thousands, except per share data) | 2017 | 2016 | 2015 | ||||||
Net income (loss) | $ | 55,456 | $ | (15,251 | ) | $ | 71,247 | ||
Weighted average number of common shares used in basic net income (loss) per common share | 41,202 | 41,648 | 41,226 | ||||||
Dilutive effect of non-vested restricted stock | 239 | — | 396 | ||||||
Weighted average number of common shares used in diluted net income (loss) per common share | 41,441 | 41,648 | 41,622 | ||||||
Net income (loss) per common share: | |||||||||
Basic | $ | 1.35 | $ | (0.37 | ) | $ | 1.73 | ||
Diluted | $ | 1.34 | $ | (0.37 | ) | $ | 1.71 | ||
Anti-dilutive shares | 418 | — | 89 |
|
Years ended | |||||||||||||||||||
December 31, 2017 | January 1, 2017 | ||||||||||||||||||
(in thousands) | Balance at beginning of period | Current period other comprehensive income | Balance at end of period | Balance at beginning of period | Current period other comprehensive income | Balance at end of period | |||||||||||||
Foreign currency translation adjustment | $ | (11,684 | ) | $ | 3,355 | $ | (8,329 | ) | $ | (13,514 | ) | $ | 1,830 | $ | (11,684 | ) | |||
Unrealized gain (loss) on investments (1) | 251 | 1,274 | 1,525 | (499 | ) | 750 | 251 | ||||||||||||
Total other comprehensive income (loss), net of tax | $ | (11,433 | ) | $ | 4,629 | $ | (6,804 | ) | $ | (14,013 | ) | $ | 2,580 | $ | (11,433 | ) |
(1) | Consists of deferred compensation plan accounts, which are comprised of mutual funds classified as available-for-sale securities. The tax impact on unrealized gain on available-for-sale securities was $0.5 million for fiscal 2017 and de minimis for fiscal 2016. |
|
Years ended | |||||||||
(in thousands) | 2017 | 2016 | 2015 | ||||||
Revenue from services: | |||||||||
PeopleReady | $ | 1,511,360 | $ | 1,629,455 | $ | 1,625,817 | |||
PeopleManagement | 807,273 | 940,453 | 965,331 | ||||||
PeopleScout | 190,138 | 180,732 | 104,532 | ||||||
Total company | $ | 2,508,771 | $ | 2,750,640 | $ | 2,695,680 |
Years ended | |||||||||
(in thousands) | 2017 | 2016 | 2015 | ||||||
Segment EBITDA (1): | |||||||||
PeopleReady | $ | 78,372 | $ | 101,270 | $ | 123,899 | |||
PeopleManagement | 27,043 | (60,452 | ) | 36,512 | |||||
PeopleScout | 39,232 | 19,116 | 9,324 | ||||||
144,647 | 59,934 | 169,735 | |||||||
Corporate unallocated | (20,968 | ) | (30,237 | ) | (30,050 | ) | |||
Depreciation and amortization | (46,115 | ) | (46,692 | ) | (41,843 | ) | |||
Income (loss) from operations | 77,564 | (16,995 | ) | 97,842 | |||||
Interest and other expense, net | (14 | ) | (3,345 | ) | (1,395 | ) | |||
Income (loss) before tax expense | $ | 77,550 | $ | (20,340 | ) | $ | 96,447 |
(1) | Segment EBITDA was previously referred to as segment income (loss) from operations. This change had no impact on the amounts reported. |
Years ended | |||||||||||||||
(in thousands, except percentages) | 2017 | % | 2016 | % | 2015 | % | |||||||||
United States | $ | 2,387,992 | 95.2 | % | $ | 2,644,414 | 96.1 | % | $ | 2,603,085 | 96.6 | % | |||
International operations | 120,779 | 4.8 | % | 106,226 | 3.9 | % | 92,595 | 3.4 | % | ||||||
Total revenue from services | $ | 2,508,771 | 100.0 | % | $ | 2,750,640 | 100.0 | % | $ | 2,695,680 | 100.0 | % |
|
(unaudited; in thousands, except per share data) | First | Second | Third | Fourth | ||||||||
2017 | ||||||||||||
Revenue from services | $ | 568,244 | $ | 610,122 | $ | 660,780 | $ | 669,625 | ||||
Cost of services | 428,815 | 454,842 | 488,761 | 501,880 | ||||||||
Gross profit | 139,429 | 155,280 | 172,019 | 167,745 | ||||||||
Selling, general and administrative expense | 121,844 | 124,754 | 131,552 | 132,644 | ||||||||
Depreciation and amortization | 11,174 | 12,287 | 11,189 | 11,465 | ||||||||
Income from operations | 6,411 | 18,239 | 29,278 | 23,636 | ||||||||
Interest expense | (1,232 | ) | (1,296 | ) | (1,365 | ) | (1,601 | ) | ||||
Interest and other income | 1,306 | 1,451 | 1,146 | 1,577 | ||||||||
Interest and other income (expense), net | 74 | 155 | (219 | ) | (24 | ) | ||||||
Income before tax expense | 6,485 | 18,394 | 29,059 | 23,612 | ||||||||
Income tax expense | 1,811 | 5,260 | 7,838 | 7,185 | ||||||||
Net income | $ | 4,674 | $ | 13,134 | $ | 21,221 | $ | 16,427 | ||||
Net income per common share: | ||||||||||||
Basic | $ | 0.11 | $ | 0.32 | $ | 0.52 | $ | 0.41 | ||||
Diluted | $ | 0.11 | $ | 0.31 | $ | 0.51 | $ | 0.40 | ||||
2016 | ||||||||||||
Revenue from services | $ | 645,980 | $ | 672,612 | $ | 697,097 | $ | 734,951 | ||||
Cost of services | 495,468 | 502,688 | 518,702 | 554,064 | ||||||||
Gross profit | 150,512 | 169,924 | 178,395 | 180,887 | ||||||||
Selling, general and administrative expense | 130,624 | 135,787 | 134,679 | 145,387 | ||||||||
Depreciation and amortization | 11,289 | 11,694 | 11,690 | 12,019 | ||||||||
Goodwill and intangible asset impairment charge | — | 99,269 | 4,275 | — | ||||||||
Income (loss) from operations | 8,599 | (76,826 | ) | 27,751 | 23,481 | |||||||
Interest expense | (1,969 | ) | (1,740 | ) | (1,721 | ) | (1,736 | ) | ||||
Interest and other income | 950 | 853 | 854 | 1,164 | ||||||||
Interest and other income (expense), net | (1,019 | ) | (887 | ) | (867 | ) | (572 | ) | ||||
Income (loss) before tax expense | 7,580 | (77,713 | ) | 26,884 | 22,909 | |||||||
Income tax expense (benefit) | 612 | (13,978 | ) | 3,455 | 4,822 | |||||||
Net income (loss) | $ | 6,968 | $ | (63,735 | ) | $ | 23,429 | $ | 18,087 | |||
Net income (loss) per common share: | ||||||||||||
Basic | $ | 0.17 | $ | (1.53 | ) | $ | 0.56 | $ | 0.43 | |||
Diluted | $ | 0.17 | $ | (1.53 | ) | $ | 0.56 | $ | 0.43 |
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