UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

	
 	
FORM 8-K

	
 	
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported): February 7, 2019

	

TRUEBLUE, INC.
(Exact Name of Registrant as Specified in Its Charter)

	
 	
Washington
(State or Other Jurisdiction
of Incorporation)

			
001-14543	 	91-1287341	
(Commission
File Number)	 	(IRS Employer
Identification No.)	

	
			
1015 A Street, Tacoma, Washington	 	98402	
(Address of Principal Executive Offices)	 	(Zip Code)	
(253) 383-9101
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)

	
 	
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions ( see General Instruction A.2. below):

		
¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)	

		
¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)	

		
¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))	

		
¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))	

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

					

	
		
Item 2.02.	Results of Operations and Financial Condition.	

On February 7, 2019 , TrueBlue, Inc. (the “company”) issued a press release (the “Press Release”) reporting its fourth quarter and fiscal year financial results for the year ended December 30, 2018 , and revenue and earnings outlook for the first quarter of 2019 , a copy of which is attached hereto as Exhibit 99.1 and the contents of which are incorporated herein by this reference. Also attached to this report as Exhibit 99.2 is a slide presentation relating to the financial results for the fourth quarter ended December 30, 2018 (the “Earnings Results Presentation”), which will be discussed by management of the company on a live conference call at 2:00 p.m. Pacific Time (5:00 p.m. Eastern Time) on Thursday, February 7, 2019 . The Earnings Results Presentation is also available on the company’s website at www.trueblue.com.

In accordance with General Instruction B.2. of Form 8-K, the information contained above in this report (including the Press Release and the Earnings Results Presentation) shall not be deemed “Filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall the Press Release or the Earnings Results Presentation be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing. This report will not be deemed a determination or an admission as to the materiality of any information in the report that is required to be disclosed solely by Regulation FD.

	
		
Item 7.01.	Regulation FD Disclosure.	
    
We are also attaching our Investor Roadshow Presentation to this report as Exhibit 99.3, which we will reference in our Q4 2018 earnings results discussion and which may be used in future investor conferences. The Investor Roadshow Presentation is also available on the company’s website at www.trueblue.com.
In accordance with General Instruction B.2. of Form 8-K, the information contained above in this report (including the Investor Roadshow Presentation) shall not be deemed “Filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall the Investor Roadshow Presentation be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing. This report will not be deemed a determination or an admission as to the materiality of any information in the report that is required to be disclosed solely by Regulation FD.

		
Item 9.01.	Financial Statements and Exhibits.	
		
(d)	Exhibits	
		
99.1	Press Release dated February 7, 2019	
		
99.2	Earnings Results Presentation for February 7, 2019 conference call	
		
99.3	Investor Roadshow Presentation	

SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	

 	 	TRUEBLUE, INC.	
 	 	(Registrant)	
 	 	 	
Date:	February 7, 2019	By:	 	/s/ Derrek L. Gafford	
 	 	 	 	Derrek L. Gafford	
 	 	 	 	Chief Financial Officer and Executive Vice President	

EXHIBIT INDEX

			
Exhibit
Number	Exhibit Description	Filed Herewith	
99.1	Press Release dated February 7, 2019	X	
99.2	Earnings Results Presentation for February 7, 2019 conference call	X	
99.3	Investor Roadshow Presentation	X	

TRUEBLUE REPORTS FOURTH QUARTER AND FULL-YEAR 2018 RESULTS

TACOMA, WASH. - Feb. 7, 2019 -- TrueBlue (NYSE:TBI) today announced its fourth quarter and full-year results for 2018 . Full-year revenue was $2.5 billion , which was flat compared to 2017. Net income per diluted share was $1.63 , an increase of 22 percent , compared to $1.34 in 2017. Adjusted net income per diluted share 1 was $2.28 , an increase of 31 percent , compared to $1.74 in 2017.

Fourth quarter revenue was $650 million , a decrease of 3 percent , compared to revenue of $670 million in the fourth quarter of 2017 . Net income per diluted share was $0.37 , a decrease of 8 percent , compared to $0.40 in the fourth quarter of 2017 . Adjusted net income per diluted share was $0.61 , an increase of 20 percent , compared to $0.51 in the fourth quarter of 2017 .

“Our 2018 results showed meaningful improvement in many parts of our business,” said Patrick Beharelle, CEO of TrueBlue. “PeopleReady, our largest segment, returned to revenue growth, and PeopleScout, our highest margin segment, delivered double-digit revenue growth. Our focus on lowering cost of services helped produce our third consecutive year of gross margin expansion, and we utilized a significant portion of cash flow to repurchase shares.

“During the year, TrueBlue made substantial progress on several strategic initiatives as well,” Mr. Beharelle added. “We divested PlaneTechs, which further concentrated our focus on more profitable, higher-growth markets. We also acquired TMP Holdings LTD, increasing PeopleScout’s ability to compete for more global business. On the digital front, we dispatched 3 million shifts via JobStack TM and achieved impressive user ratings. Affinix TM , PeopleScout’s proprietary talent acquisition platform, generated high interest among customers and received industry accolades for its compelling innovation.”

“Our fourth quarter results were in-line with our outlook for both revenue and earnings per share,” said Derrek Gafford, chief financial officer. “Effective cost management helped produce a 3 percent increase in gross profit. We continue to see opportunity in the marketplace and believe that our team has the right focus on business development, pricing and costs to deliver profitable growth in 2019.”

2019 Outlook

“Looking forward to the first quarter of 2019, we expect some revenue and pricing headwinds with certain clients in PeopleManagement and PeopleScout,” said Mr. Beharelle. “Despite the near-term challenges, we believe that we have the right focus and strategies for long-term growth. We continue to see a positive demand environment for our services and expect increased demand for PeopleReady services in the first quarter.”

TrueBlue estimates revenue for the first quarter of 2019 will range from $552 million to $569 million . The company also estimates net income per diluted share will range from $0.07 to $0.11 and adjusted net income per diluted share will range from $0.22 to $0.27 .

Management will discuss fourth quarter and full-year 2018 results on a webcast at 2 p.m. PST (5 p.m. EST), today, Thursday, Feb. 7, 2019. The webcast can be accessed on TrueBlue’s website:  www.trueblue.com .

About TrueBlue

TrueBlue (NYSE: TBI) is a leading provider of specialized workforce solutions that help clients achieve business growth and improve productivity. In 2018, we connected approximately 730,000 people with work. Our PeopleReady segment offers industrial staffing services, PeopleManagement offers contingent and productivity-based on-site industrial staffing services, and PeopleScout offers recruitment process outsourcing (RPO) and managed service provider (MSP) solutions to a wide variety of industries. Learn more at www.trueblue.com .

1 See the financial statements accompanying the release and the company’s website for more information on non-GAAP terms.

Forward-looking statements

This document contains forward-looking statements relating to our plans and expectations, 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 release and involve many risks and uncertainties that could cause actual results to differ materially from those expressed or implied in our forward-looking statements including: (1) national and global economic conditions, (2) our ability to attract and retain clients, (3) our ability to attract sufficient qualified candidates and employees to meet the needs of our clients, (4) our ability to maintain profit margins, (5) new laws and regulations that could affect our operations or financial results, (6) our ability to successfully complete and integrate acquisitions, (7) our ability to successfully execute on

business strategies to further digitize our business model, and (8) any reduction or change in tax credits we utilize, including the Work Opportunity Tax Credit. Other information regarding factors that could affect our results is included in our Securities Exchange Commission (SEC) filings, including the company's most recent reports on Forms 10-K and 10-Q, copies of which may be obtained by visiting our website at www.trueblue.com under the Investor Relations section or the SEC's website at www.sec.gov. We assume no obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law. Any other reference to future financial estimates are included for informational purposes only and subject to risk factors discussed in our most recent filings with the SEC.
In addition, we use several non-GAAP financial measures when presenting our financial results in this document. Please refer to the reconciliations between our GAAP and non-GAAP financial measures in the appendix to this document and on our website at www.trueblue.com under the Investor Relations section for additional information on both current and historical periods. The presentation of these non-GAAP financial measures is used to enhance the understanding of certain aspects of our financial performance. It is not meant to be considered in isolation, superior to, or as a substitute for the directly comparable financial measures prepared in accordance with U.S. GAAP, and may not be comparable to similarly titled measures of other companies.

Contact:
Derrek Gafford, Executive Vice President and CFO
253-680-8214

TRUEBLUE, INC.
SUMMARY CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)

	
														
 	13 Weeks Ended	 	52 Weeks Ended	
(in thousands, except per share data)	Dec 30, 2018	Dec 31, 2017	 	Dec 30, 2018	Dec 31, 2017	
Revenue from services	$	650,147		$	669,625		 	$	2,499,207		$	2,508,771		
Cost of services	477,717		501,880		 	1,833,607		1,874,298		
Gross profit	172,430		167,745		 	665,600		634,473		
Selling, general and administrative expense	145,280		132,644		 	550,632		510,794		
Depreciation and amortization	10,272		11,465		 	41,049		46,115		
Income from operations	16,878		23,636		 	73,919		77,564		
Interest and other income (expense), net	848		(24	)	 	1,744		(14	)	
Income before tax expense	17,726		23,612		 	75,663		77,550		
Income tax expense	2,839		7,185		 	9,909		22,094		
Net income	$	14,887		$	16,427		 	$	65,754		$	55,456		
 	 	 	 	 	 	
Net income per common share:	 	 	 	 	 	
Basic	$	0.38		$	0.41		 	$	1.64		$	1.35		
Diluted	$	0.37		$	0.40		 	$	1.63		$	1.34		
 	 	 	 	 	 	
Weighted average shares outstanding:	 	 	 	 	 	
Basic	39,528		40,545		 	39,985		41,202		
Diluted	39,926		40,856		 	40,275		41,441		

TRUEBLUE, INC.
SUMMARY CONSOLIDATED BALANCE SHEETS
(Unaudited)

	
							
(in thousands)	Dec 30, 2018	Dec 31, 2017	
ASSETS	 	 	
Cash and cash equivalents	$	46,988		$	28,780		
Accounts receivable, net	355,373		374,273		
Other current assets	27,466		25,226		
Total current assets	429,827		428,279		
Property and equipment, net	57,671		60,163		
Restricted cash and investments	235,443		239,231		
Goodwill and intangible assets, net	328,695		331,309		
Other assets, net	63,208		50,049		
Total assets	$	1,114,844		$	1,109,031		
 	 	 	
LIABILITIES AND SHAREHOLDERS’ EQUITY	 	 	
Current liabilities	$	225,526		$	212,419		
Long-term debt, less current portion	80,000		116,489		
Other long-term liabilities	217,879		225,276		
Total liabilities	523,405		554,184		
Shareholders’ equity	591,439		554,847		
Total liabilities and shareholders’ equity	$	1,114,844		$	1,109,031		

TRUEBLUE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
( Unaudited)

							
 	52 Weeks Ended	
(in thousands)	Dec 30, 2018	Dec 31, 2017	
Cash flows from operating activities:	 	 	
Net income	$	65,754		$	55,456		
Adjustments to reconcile net income   to net cash provided by operating activities:	 	 	
Depreciation and amortization	41,049		46,115		
Provision for doubtful accounts	10,042		6,808		
Stock-based compensation	13,876		7,744		
Deferred income taxes	(1,929	)	2,440		
Other operating activities	5,154		2,349		
Changes in operating assets and liabilities:	 	 	
Accounts receivable	11,640		(28,483	)	
Income tax receivable	(996	)	14,875		
Other assets	(12,928	)	5,289		
Accounts payable and other accrued expenses	2,855		(10,569	)	
Accrued wages and benefits	(1,447	)	(2,888	)	
Workers’ compensation claims reserve	(7,877	)	(1,048	)	
Other liabilities	499		2,046		
Net cash provided by operating activities	125,692		100,134		
Cash flows from investing activities:	 	 	
Capital expenditures	(17,054	)	(21,958	)	
Acquisition of business	(22,742	)	—		
Divestiture of business	10,587		—		
Purchases of restricted investments	(12,941	)	(50,601	)	
Maturities of restricted investments	21,635		20,157		
Other	—		(1,979	)	
Net cash used in investing activities	(20,515	)	(54,381	)	
Cash flows from financing activities:	 	 	
Purchases and retirement of common stock	(34,818	)	(36,680	)	
Net proceeds from stock option exercises and employee stock purchase plans	1,503		1,646		
Common stock repurchases for taxes upon vesting of restricted stock	(3,404	)	(3,127	)	
Net change in revolving credit facility	(15,900	)	(16,607	)	
Payments on debt	(22,397	)	(2,267	)	
Payment of contingent consideration at acquisition date fair value	—		(18,300	)	
Net cash used in financing activities	(75,016	)	(75,335	)	
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(1,542	)	191		
Net change in cash, cash equivalents, and restricted cash	28,619		(29,391	)	
Cash, cash equivalents and restricted cash, beginning of period	73,831		103,222		
Cash, cash equivalents and restricted cash, end of period	$	102,450		$	73,831		

TRUEBLUE, INC.
SEGMENT DATA
(Unaudited)

	
																
 	13 Weeks Ended	 	52 Weeks Ended	
(in thousands)	Dec 30, 2018	 	Dec 31, 2017	 	Dec 30, 2018	 	Dec 31, 2017	
Revenue from services:	 	 	 	 	 	 	 	
PeopleReady	$	399,116		 	$	393,029		 	$	1,522,076		 	$	1,511,360		
PeopleManagement	184,324		 	225,865		 	728,254		 	807,273		
PeopleScout	66,707		 	50,731		 	248,877		 	190,138		
Total company	$	650,147		 	$	669,625		 	$	2,499,207		 	$	2,508,771		
 	 	 	 	 	 	 	 	
Segment profit  (1):	 	 	 	 	 	 	 	
PeopleReady	$	22,045		 	$	21,128		 	$	85,998		 	$	79,044		
PeopleManagement	5,097		 	8,457		 	21,627		 	27,216		
PeopleScout	11,680		 	10,283		 	47,383		 	39,354		
Total segment profit	38,822		 	39,868		 	155,008		 	145,614		
Corporate unallocated expense	(6,065	)	 	(4,268	)	 	(26,066	)	 	(20,968	)	
Total company Adjusted EBITDA	32,757		 	35,600		 	128,942		 	124,646		
Work Opportunity Tax Credit processing fees (2)	(285	)	 	(337	)	 	(985	)	 	(805	)	
Acquisition/integration costs (3)	(989	)	 	—		 	(2,672	)	 	—		
Other costs (4)	(4,333	)	 	(162	)	 	(10,317	)	 	(162	)	
EBITDA	27,150		 	35,101		 	114,968		 	123,679		
Depreciation and amortization	(10,272	)	 	(11,465	)	 	(41,049	)	 	(46,115	)	
Interest and other income (expense), net	848		 	(24	)	 	1,744		 	(14	)	
Income before tax expense	17,726		 	23,612		 	75,663		 	77,550		
Income tax expense	(2,839	)	 	(7,185	)	 	(9,909	)	 	(22,094	)	
Net income	$	14,887		 	$	16,427		 	$	65,754		 	$	55,456		
		
(1)	We evaluate performance based on segment revenue and segment profit. Segment profit includes revenue, related cost of services, and ongoing operating expenses directly attributable to the reportable segment. Segment profit excludes goodwill and intangible impairment charges, depreciation and amortization expense, unallocated corporate general and administrative expense, interest, other income and expense, income taxes, and costs not considered to be ongoing costs of the segment. Segment profit is comparable to segment adjusted EBITDA amounts reported in prior years.	

(2)	These third-party processing fees are associated with generating the Work Opportunity Tax Credits, which are designed to encourage employers to hire workers from certain targeted groups with higher than average unemployment rates.	

(3)	Acquisition/integration costs relate to the acquisition of TMP Holdings LTD completed on June 12, 2018.	

(4)	Other costs for the 13 weeks and 52 weeks ended December 30, 2018 include implementation costs for cloud-based systems of $2.2 million and $6.7 million, respectively, and accelerated vesting of stock associated with the CEO transition of $2.1 million and $3.6 million, respectively. Other costs for the 13 weeks and 52 weeks ended December 31, 2017 include a workforce reduction charge of $2.5 million primarily associated with employee reductions in the PeopleReady business, offset by $2.3 million of workers' compensation benefit. The workers' compensation benefit is associated with the favorable settlement of insurance coverage associated with a former insurance company and other items not considered part of our core operations.	

TRUEBLUE, INC.
NON-GAAP FINANCIAL MEASURES AND NON-GAAP RECONCILIATIONS

In addition to financial measures presented in accordance with U.S. GAAP, we monitor certain non-GAAP key financial measures. The presentation of these non-GAAP financial measures is used to enhance the understanding of certain aspects of our financial performance. It is not meant to be considered in isolation, superior to, or as a substitute for the directly comparable financial measures prepared in accordance with U.S. GAAP, and may not be comparable to similarly titled measures of other companies.

				
Non-GAAP Measure	Definition	 	Purpose of Adjusted Measures	
EBITDA and
Adjusted EBITDA	EBITDA excludes from net income:
- interest and other income (expense), net,
- income taxes, and
- depreciation and amortization.

Adjusted EBITDA, further excludes:
- Work Opportunity Tax Credit third-party processing fees,
- acquisition/integration costs and
- other costs.

	 	- Enhances comparability on a consistent basis and provides investors with useful insight into the underlying trends of the business.

- Used by management to assess performance and effectiveness of our business strategies.

- Provides a measure, among others, used in the determination of incentive compensation for management.
	
Adjusted net income and Adjusted net income, per diluted share	Net income and net income per diluted share, excluding:
- gain on divestiture,
- amortization of intangibles of acquired businesses, as well as accretion expense related to acquisition earn-out,
- acquisition/integration costs,
- other costs,
- tax effect of each adjustment to U.S. GAAP net income, and
- adjust income taxes to the expected effective tax rate.	 	- Enhances comparability on a consistent basis and provides investors with useful insight into the underlying trends of the business.

- Used by management to assess performance and effectiveness of our business strategies.
	
Organic revenue	Revenue from services excluding acquired entity revenue.	 	- Enhances comparability on a consistent basis and provides investors with useful insight into the underlying trends of the business.

- Used by management to assess performance and effectiveness of our business strategies.	
Free cash flow	Net cash provided by operating activities, minus cash purchases for property and equipment.	 	- Used by management to assess cash flows.	

1.	RECONCILIATION OF U.S. GAAP NET INCOME TO ADJUSTED NET INCOME AND ADJUSTED NET INCOME, PER DILUTED SHARE	
( Unaudited )

										
 	Q4 2018	 	Q4 2017	 	Q1 2019 Outlook*	
 	13 Weeks Ended	 	13 Weeks Ended	 	13 Weeks Ended	
(in thousands, except for per share data)	Dec 30, 2018	 	Dec 31, 2017	 	Mar 31, 2019	
Net income	$	14,887		 	$	16,427		 	$ 2,700 — $ 4,400	
Amortization of intangible assets of acquired businesses (2)	5,162		 	5,331		 	5,000	
Acquisition/integration costs (3)	989		 	—		 	700	
Other costs (4)	4,333		 	162		 	1,600	
Tax effect of adjustments to net income (5)	(1,468	)	 	(1,538	)	 	(1,000)	
Adjustment of income taxes to normalized effective rate (6)	357		 	574		 	—	
Adjusted net income	$	24,260		 	$	20,956		 	$ 8,900 — $ 10,600	
 	 	 	 	 	 	
Adjusted net income, per diluted share	$	0.61		 	$	0.51		 	$ 0.22 — $ 0.27	
 	 	 	 	 	 	
Diluted weighted average shares outstanding	39,926		 	40,856		 	39,800	
* Totals may not sum due to rounding	 	 	 	 	 	

	
								
 	2018	 	2017	
 	52 Weeks Ended	 	52 Weeks Ended	
(in thousands, except for per share data)	Dec 30, 2018	 	Dec 31, 2017	
Net income	$	65,754		 	$	55,456		
Gain on divestiture (1)	(718	)	 	—		
Amortization of intangible assets of acquired businesses (2)	20,750		 	22,290		
Acquisition/integration costs (3)	2,672		 	—		
Other costs (4)	10,317		 	162		
Tax effect of adjustments to net income (5)	(5,074	)	 	(6,287	)	
Adjustment of income taxes to normalized effective rate (6)	(1,843	)	 	380		
Adjusted net income	$	91,858		 	$	72,001		
 	 	 	 	
Adjusted net income, per diluted share	$	2.28		 	$	1.74		
 	 	 	 	
Diluted weighted average shares outstanding	40,275		 	41,441		

		
2.	RECONCILIATION OF U.S. GAAP NET INCOME TO EBITDA AND ADJUSTED EBITDA	
( Unaudited )

										
 	Q4 2018	 	Q4 2017	 	Q1 2019 Outlook*	
 	13 Weeks Ended	 	13 Weeks Ended	 	13 Weeks Ended	
(in thousands)	Dec 30, 2018	 	Dec 31, 2017	 	Mar 31, 2019	
Net income	$	14,887		 	$	16,427		 	$ 2,700 — $ 4,400	
Income tax expense	2,839		 	7,185		 	400 — 700	
Interest and other (income) expense, net	(848	)	 	24		 	(600)	
Depreciation and amortization	10,272		 	11,465		 	9,800	
EBITDA	27,150		 	35,101		 	12,300 — 14,300	
Work Opportunity Tax Credit processing fees (7)	285		 	337		 	200	
Acquisition/integration costs (3)	989		 	—		 	700	
Other costs (4)	4,333		 	162		 	1,600	
Adjusted EBITDA	$	32,757		 	$	35,600		 	$ 14,800 — $ 16,800	
* Totals may not sum due to rounding	 	 	 	 	 	

								
 	2018	 	2017	
 	52 Weeks Ended	 	52 Weeks Ended	
(in thousands)	Dec 30, 2018	 	Dec 31, 2017	
Net income	$	65,754		 	$	55,456		
Income tax expense	9,909		 	22,094		
Interest and other (income) expense, net	(1,744	)	 	14		
Depreciation and amortization	41,049		 	46,115		
EBITDA	114,968		 	123,679		
Work Opportunity Tax Credit processing fees (7)	985		 	805		
Acquisition/integration costs (3)	2,672		 	—		
Other costs (4)	10,317		 	162		
Adjusted EBITDA	$	128,942		 	$	124,646		

		
3.	RECONCILIATION OF U.S. GAAP REVENUE TO ORGANIC REVENUE	
( Unaudited )

																
Total Company	Q4 2018	 	Q4 2017	 	2018	 	2017	
 	13 Weeks Ended	 	13 Weeks Ended	 	52 Weeks Ended	 	52 Weeks Ended	
(in thousands)	Dec 30, 2018	 	Dec 31, 2017	 	Dec 30, 2018	 	Dec 31, 2017	
Revenue from services	$	650,147		 	$	669,625		 	$	2,499,207		 	$	2,508,771		
Acquired entity revenue (3)	(13,075	)	 	—		 	(30,958	)	 	—		
Organic revenue	637,072		 	669,625		 	2,468,249		 	2,508,771		
Amazon revenue (8)	(205	)	 	(24,052	)	 	(23,941	)	 	(53,435	)	
PlaneTechs revenue (9)	—		 	(10,405	)	 	(8,005	)	 	(44,327	)	
Organic revenue excluding Amazon and PlaneTechs	$	636,867		 	$	635,168		 	$	2,436,303		 	$	2,411,009		

																
Segments	PeopleScout	 	PeopleManagement	
 	Q4 2018	 	Q4 2017	 	Q4 2018	 	Q4 2017	
 	13 Weeks Ended	 	13 Weeks Ended	 	13 Weeks Ended	 	13 Weeks Ended	
(in thousands)	Dec 30, 2018	 	Dec 31, 2017	 	Dec 30, 2018	 	Dec 31, 2017	
Revenue from services	66,707		 	50,731		 	184,324		 	225,865		
Acquired entity revenue (3)	(13,075	)	 	—		 	—		 	—		
Organic revenue	53,632		 	50,731		 	184,324		 	225,865		
Amazon revenue (8)	—		 	—		 	(205	)	 	(24,052	)	
PlaneTechs revenue (9)	—		 	—		 	—		 	(10,405	)	
Organic revenue excluding Amazon and PlaneTechs	$	53,632		 	$	50,731		 	$	184,119		 	$	191,408		

		
4.	RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOWS	
(Unaudited)

																
 	2018	 	2017	 	2016	 	2015	
 	52 Weeks Ended	 	52 Weeks Ended	 	53 Weeks Ended	 	52 Weeks Ended	
(in thousands)	Dec 30, 2018	 	Dec 31, 2017	 	Jan 1, 2017	 	Dec 25, 2015	
Net cash provided by operating activities	$	125,692		 	$	100,134		 	$	260,703		 	$	72,072		
Capital expenditures	(17,054	)	 	(21,958	)	 	(29,042	)	 	(18,394	)	
Free cash flows	$	108,638		 	$	78,176		 	$	231,661		 	$	53,678		

(1)	Gain on the divestiture of our PlaneTechs business sold mid-March 2018.	

(2)	Amortization of intangible assets of acquired businesses, as well as accretion expense related to the SIMOS acquisition earn-out for 2017.	

(3)	Acquisition/integration costs and acquired entity revenue relate to the acquisition of TMP Holdings LTD completed on June 12, 2018.	

(4)	Other costs for the 13 weeks and 52 weeks ended December 30, 2018 include implementation costs for cloud-based systems of $2.2 million and $6.7 million, respectively, and accelerated vesting of stock associated with the CEO transition of $2.1 million and $3.6 million, respectively. Other costs for the 13 weeks and 52 weeks ended December 31, 2017 include a workforce reduction charge of $2.5 million primarily associated with employee reductions in the PeopleReady business, offset by $2.3 million of workers' compensation benefit. The workers' compensation benefit is associated with the favorable settlement of insurance coverage associated with a former insurance company and other items not considered part of our core operations. Other costs for the 13 weeks ended March 31, 2019 include anticipated implementation costs for cloud-based systems of $1.3 million and amortization expense associated with software as a service assets of $0.3 million.	

(5)	Total tax effect of each of the adjustments to U.S. GAAP net income using the expected ongoing rate of 14 percent for 2018, due to the enacted U.S. Tax Cuts and Jobs Act, and 28 percent for 2017.	

(6)	Adjustment of the effective income tax rate to the expected ongoing rate of 14 percent for 2018, due to the enacted U.S. Tax Cuts and Jobs Act, and 28 percent for 2017.	

(7)	These third-party processing fees are associated with generating the Work Opportunity Tax Credits, which are designed to encourage employers to hire workers from certain targeted groups with higher than average unemployment rates.	

(8)	Loss of Amazon Canadian business effective September 1, 2018.	

(9)	PlaneTechs business sold mid-March 2018.	

Q4 2018 Earnings February 2019 www.TrueBlue.com

 

Forward-looking statements

 

Results and strategy overview FY 2018 Revenue progress Strong EPS results Strategic progress &  Total revenue flat, or +1% organic  EPS +22% and adjusted EPS +31%1 capital return excluding Amazon and PlaneTechs1  Third consecutive year of gross  JobStackTM – 3 million dispatches in 2018  PeopleReady (largest segment) returned to margin expansion TM growth  Affinix – Successfully launched industry leading technology  PeopleScout (highest margin segment) grew double digit  TMP acquisition – UK RPO business accelerates global competitiveness  PeopleManagement (lowest margin segment) declined, primarily due to the loss  PlaneTechs divestiture – concentrates focus of Amazon and the PlaneTechs divestiture on more profitable, higher growth markets  $35M of stock repurchased; $58M remaining under current authorization Q4 2018 Revenue in-line with EPS in-line with Strategic progress & company outlook company outlook capital return  Total revenue -3% v. outlook of -4% to -2%  EPS of $0.37 v. outlook of $0.34 to  JobStack – 872,000 dispatches in Q4  Organic revenue growth flat excluding $0.41  Affinix – won award for Best Advance in Amazon and PlaneTechs  EPS -8% and adjusted EPS +20% RPO Technology2  Twelfth consecutive quarter of  $10M of stock repurchased gross margin expansion (+150 bps) 1 See the appendix to this presentation and “Financial Information” in the investors section of our website at www.trueblue.com for a definition and full reconciliation of non-GAAP financial measures to GAAP financial results. 2 In Dec. 2018, Affinix won the gold award in the Brandon Hall Group’s 2018 Human Capital Management (HCM) Excellence Awards program in the “Best Advance in Recruitment Process Outsourcing (RPO) Technology” category.

 

Financial summary Amounts in millions, except per share data FY 2018 % Change Q4 2018 % Change Flat -3% Revenue $2,499 (1% organic ex-Amazon $650 (Flat organic ex-Amazon and PlaneTechs) and PlaneTechs) Net Income $65.8 19% $14.9 -9% Net Income Per Diluted Share $1.63 22% $0.37 -8% Adjusted Net Income1 $91.9 28% $24.3 16% Adj. Net Income Per Diluted Share $2.28 31% $0.61 20% Adjusted EBITDA1 $128.9 3% $32.8 -8% Adjusted EBITDA Margin 5.2% 20 bps 5.0% -30 bps 1 See the appendix to this presentation and “Financial Information” in the investors section of our website at www.trueblue.com for a definition and full reconciliation of non-GAAP financial measures to GAAP financial results.

 

Gross margin and SG&A bridges 1.2% 0.2% 26.5% 25.1% Gross Margin Q4 2017 Staffing1 RPO Q4 2018 Amounts in millions $5 $5 $4 $145 $1 SG&A $133 Q4 2017 Adjusted EBITDA TMP PlaneTechs Core business Q4 2018 exclusions 2 (acquired) (divested) Figures may not sum due to rounding. 1 Margin improvement primarily due to improvements in workers’ compensation expense and payroll taxes. 2 Adjusted EBITDA further excludes from EBITDA Work Opportunity Tax Credit third-party processing fees, acquisition/integration costs and other costs. See the appendix to this presentation and “Financial Information” in the investors section of our website at www.trueblue.com for a definition and full reconciliation of non-GAAP financial measures to GAAP financial results.

 

Q4 2018 results by segment Amounts in millions PeopleReady PeopleManagement PeopleScout Revenue $399 $184 $67 % Growth 2% -18% 31% (-4% ex-Amazon and PlaneTechs) (6% organic) Segment Profit1 $22 $5 $12 % Growth 4% -40% 14% % Margin 5.5% 2.8% 17.5% Change 10 bps -100 bps -280 bps Notes:  Revenue headwind of  Revenue decline primarily  Margin compression due to approximately $9M (-2% due to loss of Amazon TMP acquisition (as part of growth) from previously Canadian business in Q3 their business, TMP purchases disclosed energy business 2018 and divestiture of recruitment media for clients peak in Q4 2017 PlaneTechs in Q1 2018 and the pass-through nature of  Segment profit headwind of these costs creates margin approximately $3M (-32% dilution) growth) from Amazon loss and PlaneTechs divestiture 1 We evaluate performance based on segment revenue and segment profit. Segment profit includes revenue, related cost of services, and ongoing operating expenses directly attributable to the reportable segment. Segment profit excludes goodwill and intangible impairment charges, depreciation and amortization expense, unallocated corporate general and administrative expense, interest, other income and expense, income taxes, and costs not considered to be ongoing costs of the segment. Segment profit is comparable to segment adjusted EBITDA amounts reported in prior years.

 

Segment strategy highlights  15%+ potential operating  Attractive on-site solution  Compelling value margin on incremental proposition with  Perfect fit for larger attractive margins revenue clients with longer- duration / strategic need  Global RPO market  JobStack creating for contingent workers experiencing strong favorable differentiation growth with clients and  Strength in the associates e-commerce vertical  Leverage TMP acquisition to compete  Focused on new client  >30% of all orders now on global opportunities wins and margin filled by JobStack expansion  Industry leading proprietary technology – rolling out Affinix, a next- generation HR tool Boost shareholder returns through share repurchase

 

Transforming our business for a digital future JobStack TM Mobile app that algorithmically connects workers Industry leading platform for sourcing, screening with jobs and delivering a permanent workforce  Driving value via higher candidate  Competitive satisfaction, faster conversion differentiation enhances rates, reduced time to fill and client and worker loyalty client scalability  4.6 stars in iOS app  Winner of the 2018 HRO Today store (worker app) TekTonic Award for Candidate Experience  >30% of all orders now filled by JobStack  Winner of the 2018 Brandon Hall Award for Best Advance in RPO Technology

 

Strong balance sheet and return of capital Total Debt Debt to Total Capital1 Amounts in millions Net Debt Cash $138 $119 $35 $29 $80 21% 18% $103 $90 $47 12% $33 2016 2017 2018 2016 2017 2018 Liquidity Share Repurchase % of Free Cash Flow2 Amounts in millions Borrowing Availability Cash $260 $47 $171 $146 $35 47% $29 $213 32% $136 $117 2% 2016 2017 2018 2016 2017 2018 Note: Balances as of fiscal period end. 1 Calculated as total debt divided by the sum of total debt plus shareholders’ equity. 2 Free cash flow calculated as net cash provided by operating activities less capital expenditures. See the appendix to this presentation and “Financial Information” in the Investors section of our website at www.trueblue.com for a definition and full reconciliation of non-GAAP financial measures to GAAP financial results.

 

 

2019 outlook Amounts in millions, except per share data Q1 2019 Outlook Adj. EBITDA / Key Messages Revenue Segment Profit • Increased demand for PeopleReady offset by other revenue and pricing headwinds o PeopleReady – accelerating demand; strength in small business revenue (65% of revenue) $552 to $569 $15 to $17 Total o PeopleManagment – retail headwinds impacting near-term revenue and profitability 0% to 3% growth -24% to -13% growth o PeopleScout – solid new logo wins but scope expansions lag; two client headwinds -3% to 0% organic • Despite near term headwinds, planning for top and bottom-line growth during 2019 • Revenue growth accelerating from 2% in Q4 2018 PeopleReady $326 to $334 $9 to $10 • $4M of revenue headwind from weather in Q1 2019 3% to 5% growth -8% to 5% growth • Active revenue pipeline; slow conversion in Q1 2019 People- • Retail headwind due to loss of Amazon Canadian business effective Sept. 1, 2018 and volume / $161 to $167 $2 to $3 Management price reduction at another retail client -12% to -9% growth -56% to -49% growth • PlaneTechs headwind due to divestiture in mid-March 2018 (no headwind after Q1 2019) • 2019 book of business was well stocked with 2018 new logo wins, but slow start in scope expansions weighing on growth $65 to $68 $9 to $11 PeopleScout 20% to 27% growth • Client headwinds due to one lost client that was acquired and less volume / lower margins on a -22% to -12% growth -5% to 0% organic large account (re-priced to reflect multi-year arrangement) Total Outlook Notes Net income per diluted share $0.07 to $0.11 • Assumes an effective income tax rate of 14% Adjusted net income per diluted share $0.22 to $0.27 • $2.5M of add-backs related to WOTC fees, integration and acquisition costs, implementation costs for cloud-based systems and SaaS amortization • Assumes diluted weighted average shares outstanding of 39.8 million Capital expenditures $4 1 Figures may not sum to consolidated totals due to rounding.

 

Select 2019 outlook information Amounts in millions  Retail headwind due to loss of Amazon Canadian business effective Sept. 1, 2018 and volume / price reduction at another retail client  PlaneTechs headwind due to divestiture in mid-March 2018 (no headwind after Q1 2019) YoY Revenue Headwind YoY Segment Profit Headwind Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY Retail (Amazon) $12 $6 $6 n/a $24 $1.4 $0.7 $0.6 n/a $2.6 % Growth Impact (PM / TrueBlue) (-6% / -2%) (-3% / -1%) (-3% / -1%) (-3% / -1%) (-25% / -7%) (-14% / -2%) (-10% / -1%) (-12% / -2%) Retail (Other client) $6 $5 $3 $1 $15 $1.6 $1.5 $0.9 $0.3 $4.3 % Growth Impact (PM / TrueBlue) (-3% / -1%) (-3% / -1%) (-2% / n/a) (-1% / n/a) (-2% / -1%) (-29% / -8%) (-32% / -4%) (-15% / -2%) (-6% / -1%) (-20% / -3%) PeopleManagement PlaneTechs $8 n/a n/a n/a $8 n/a n/a n/a n/a n/a % Growth Impact (PM / TrueBlue) (-4% / -1%) (-1% / n/a) Total $25 $12 $9 $1 $47 $3.0 $2.1 $1.5 $0.2 $6.9 % Growth Impact (PM / TrueBlue) (-14% / -5%) (-6% / -2%) (-5% / -1%) (-1% / n/a) (-6% / -2%) (-53% / -16%) (-46% / -6%) (-24% / -3%) (-4% / -1%) (-32% / -5%)  Client headwinds due to one lost client that was acquired and less volume / lower margins on a large account (re-priced to reflect multi- year arrangement) YoY Revenue Headwind YoY Segment Profit Headwind Q1 Q2 Q3 Q4 FY Q1 Q2 Q3 Q4 FY PeopleScout Total $2 $3 $6 $5 $15 $1.8 $2.3 $4.1 $3.1 $11.4 % Growth Impact (PS / TrueBlue) (-3% / -0%) (-5% / -0%) (-8% / -1%) (-7% / -1%) (-6% / -1%) (-15% / -9%) (-20% / -7%) (-33% / -10%) (-27% / -10%) (-24% / -9%) Note: Figures may not sum to consolidated totals due to rounding.

 

 

NON-GAAP FINANCIAL MEASURES AND NON-GAAP RECONCILIATIONS In addition to financial measures presented in accordance with U.S. GAAP, we monitor certain non-GAAP key financial measures. The presentation of these non- GAAP financial measures is used to enhance the understanding of certain aspects of our financial performance. It is not meant to be considered in isolation, superior to, or as a substitute for the directly comparable financial measures prepared in accordance with U.S. GAAP, and may not be comparable to similarly titled measures of other companies. Non-GAAP Measure Definition Purpose of Adjusted Measures EBITDA and EBITDA excludes from net income: - Enhances comparability on a consistent basis and provides investors with Adjusted EBITDA - interest and other income (expense), net, useful insight into the underlying trends of the business. - income taxes, and - depreciation and amortization. - Used by management to assess performance and effectiveness of our business strategies. Adjusted EBITDA, further excludes: - Work Opportunity Tax Credit third-party processing fees, - Provides a measure, among others, used in the determination of incentive - acquisition/integration costs and compensation for management. - other costs. Adjusted net income and Net income and net income per diluted share, excluding: - Enhances comparability on a consistent basis and provides investors with Adjusted net income, per - gain on divestiture, useful insight into the underlying trends of the business. diluted share - amortization of intangibles of acquired businesses, as well as accretion expense related to acquisition earn-out, - Used by management to assess performance and effectiveness of our - acquisition/integration costs, business strategies. - other costs, - tax effect of each adjustment to U.S. GAAP net income, and - adjust income taxes to the expected effective tax rate. Organic revenue Revenue from services excluding acquired entity revenue. - Enhances comparability on a consistent basis and provides investors with useful insight into the underlying trends of the business. - Used by management to assess performance and effectiveness of our business strategies. Free cash flow Net cash provided by operating activities, minus cash purchases for property and - Used by management to assess cash flows. equipment. 14

 

1. RECONCILIATION OF U.S. GAAP NET INCOME TO ADJUSTED NET INCOME AND ADJUSTED NET INCOME, PER DILUTED SHARE (Unaudited) Q4 2018 Q4 2017 Q1 2019 Outlook* 13 Weeks Ended 13 Weeks Ended 13 Weeks Ended (in thousands, except for per share data) Dec 30, 2018 Dec 31, 2017 Mar 31, 2019 Net income $ 14,887 $ 16,427 $ 2,700 — $ 4,400 Amortization of intangible assets of acquired businesses (2) 5,162 5,331 5,000 Acquisition/integration costs (3) 989 — 700 Other costs (4) 4,333 162 1,600 Tax effect of adjustments to net income (5) (1,468) (1,538) (1,000) Adjustment of income taxes to normalized effective rate (6) 357 574 — Adjusted net income $ 24,260 $ 20,956 $ 8,900 — $ 10,600 * Totals may not sum due to rounding Adjusted net income, per diluted share $ 0.61 $ 0.51 $ 0.22 — $ 0.27 Diluted weighted average shares outstanding 39,926 40,856 39,800 2018 2017 52 Weeks Ended 52 Weeks Ended (in thousands, except for per share data) Dec 30, 2018 Dec 31, 2017 Net income $ 65,754 $ 55,456 Gain on divestiture (1) (718) — Amortization of intangible assets of acquired businesses (2) 20,750 22,290 Acquisition/integration costs (3) 2,672 — Other costs (4) 10,317 162 Tax effect of adjustments to net income (5) (5,074) (6,287) Adjustment of income taxes to normalized effective rate (6) (1,843) 380 Adjusted net income $ 91,858 $ 72,001 Adjusted net income, per diluted share $ 2.28 $1.74 Diluted weighted average shares outstanding 40,275 41,441 See the last slide of the appendix for footnotes. 15

 

2. RECONCILIATION OF U.S. GAAP NET INCOME TO EBITDA AND ADJUSTED EBITDA (Unaudited) Q4 2018 Q4 2017 Q1 2019 Outlook* 13 Weeks Ended 13 Weeks Ended 13 Weeks Ended (in thousands) Dec 30, 2018 Dec 31, 2017 Mar 31, 2019 Net income $ 14,887 $ 16,427 $ 2,700 — $ 4,400 Income tax expense 2,839 7,185 400 — 700 Interest and other (income) expense, net (848) 24 (600) Depreciation and amortization 10,272 11,465 9,800 EBITDA 27,150 35,101 12,300 — 14,300 Work Opportunity Tax Credit processing fees (7) 285 337 200 Acquisition/integration costs (3) 989 — 700 Other costs (4) 4,333 162 1,600 Adjusted EBITDA $ 32,757 $ 35,600 $ 14,800 — $ 16,800 * Totals may not sum due to rounding 2018 2017 52 Weeks Ended 52 Weeks Ended (in thousands) Dec 30, 2018 Dec 31, 2017 Net income $ 65,754 $ 55,456 Income tax expense 9,909 22,094 Interest and other (income) expense, net (1,744) 14 Depreciation and amortization 41,049 46,115 EBITDA 114,968 123,679 Work Opportunity Tax Credit processing fees (7) 985 805 Acquisition/integration costs (3) 2,672 — Other costs (4) 10,317 162 Adjusted EBITDA $ 128,942 $ 124,646 See the last slide of the appendix for footnotes. 16

 

3. RECONCILIATION OF U.S. GAAP REVENUE TO ORGANIC REVENUE (Unaudited) Total Company Q4 2018 Q4 2017 2018 2017 13 Weeks Ended 13 Weeks Ended 52 Weeks Ended 52 Weeks Ended (in thousands) Dec 30, 2018 Dec 31, 2017 Dec 30, 2018 Dec 31, 2017 Revenue from services $ 650,147 $ 669,625 $ 2,499,207 $ 2,508,771 Acquired entity revenue (3) (13,075) — (30,958) — Organic revenue 637,072 669,625 2,468,249 2,508,771 Amazon revenue (8) (205) (24,052) (23,941) (53,435) PlaneTechs revenue (9) — (10,405) (8,005) (44,327) Organic revenue excluding Amazon and PlaneTechs $ 636,867 $ 635,168 $ 2,436,303 $ 2,411,009 Segments PeopleScout PeopleManagement Q4 2018 Q4 2017 Q4 2018 Q4 2017 13 Weeks Ended 13 Weeks Ended 13 Weeks Ended 13 Weeks Ended (in thousands) Dec 30, 2018 Dec 31, 2017 Dec 30, 2018 Dec 31, 2017 Revenue from services 66,707 50,731 184,324 225,865 Acquired entity revenue (3) (13,075) — — — Organic revenue 53,632 50,731 184,324 225,865 Amazon revenue (8) — — (205) (24,052) PlaneTechs revenue (9) — — — (10,405) Organic revenue excluding Amazon and PlaneTechs $ 53,632 $ 50,731 $ 184,119 $ 191,408 See the last slide of the appendix for footnotes. 17

 

4. RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOWS (Unaudited) 2018 2017 2016 2015 52 Weeks Ended 52 Weeks Ended 53 Weeks Ended 52 Weeks Ended (in thousands) Dec 30, 2018 Dec 31, 2017 Jan 1, 2017 Dec 25, 2015 Net cash provided by operating activities $ 125,692 $ 100,134 $ 260,703 $ 72,072 Capital expenditures (17,054) (21,958) (29,042) (18,394) Free cash flows $ 108,638 $ 78,176 $ 231,661 $ 53,678 Footnotes: 1. Gain on the divestiture of our PlaneTechs business sold mid-March 2018. 2. Amortization of intangible assets of acquired businesses, as well as accretion expense related to the SIMOS acquisition earn-out for 2017. 3. Acquisition/integration costs and acquired entity revenue relate to the acquisition of TMP Holdings LTD completed on June 12, 2018. 4. Other costs for the 13 weeks and 52 weeks ended December 30, 2018 include implementation costs for cloud-based systems of $2.2 million and $6.7 million, respectively, and accelerated vesting of stock associated with the CEO transition of $2.1 million and $3.6 million, respectively. Other costs for the 13 weeks and 52 weeks ended December 31, 2017 include a workforce reduction charge of $2.5 million primarily associated with employee reductions in the PeopleReady business, offset by $2.3 million of workers' compensation benefit. The workers' compensation benefit is associated with the favorable settlement of insurance coverage associated with a former insurance company and other items not considered part of our core operations. Other costs for the 13 weeks ended March 31, 2019 include anticipated implementation costs for cloud-based systems of $1.3 million and amortization expense associated with software as a service assets of $0.3 million. 5. Total tax effect of each of the adjustments to U.S. GAAP net income using the expected ongoing rate of 14 percent for 2018, due to the enacted U.S. Tax Cuts and Jobs Act, and 28 percent for 2017. 6. Adjustment of the effective income tax rate to the expected ongoing rate of 14 percent for 2018, due to the enacted U.S. Tax Cuts and Jobs Act, and 28 percent for 2017. 7. These third-party processing fees are associated with generating the Work Opportunity Tax Credits, which are designed to encourage employers to hire workers from certain targeted groups with higher than average unemployment rates. 8. Loss of Amazon Canadian business effective September 1, 2018. 9. PlaneTechs business sold mid-March 2018. 18

 

Investor Roadshow Presentation February 2019 www.TrueBlue.com

 

Forward-Looking Statements

 

Investment highlights Track record of favorable growth and investor returns Strong balance sheet and cash flow to support stock buybacks 3

 

TrueBlue at a glance 151,000 730,000 #1 Clients served annually People connected to One of the largest U.S. industrial Global 1 with strong diversity work during 2018 staffing providers RPO provider2 2013-2018 2013-2018 Average Return Revenue CAGR on Equity3 8% 16% $2.5B Growth Return 2018 Revenue PeopleScout named a Leader and HRO Today magazine repeatedly Thousands of veterans hired each Recognized for breakthrough board Star Performer by Everest Group for recognizes PeopleScout as a global year via internal programs as well as practices that promote greater service delivery, technology and market leader Hiring Our Heroes and Wounded diversity and inclusion buyer satisfaction Warriors 1 No single client accounted for more than 3% of total revenue for FY 2018. 2 Source: Everest Group. Overall recruitment process outsourcing rankings by annual number of hires (2018). 3 Calculated as adjusted net income divided by average shareholders’ equity over the prior four quarters. 4

 

Three specialized segments meet diverse client needs On-site contingent workforce management solutions1 Revenue mix3 61% 29% 10% Segment profit3 55% 14% 31% Margin 6% 3% 19% 1 We use the following distinct brands to market our PeopleManagement contingent workforce solutions: Staff Management | SMX, SIMOS Insourcing Solutions and Centerline Drivers. 2 Also includes managed service provider business, which provides clients with improved quality and spend management of their contingent labor vendors. 3 Revenue and segment profit calculations based on FY 2018. Starting in FY 2018 we are evaluating performance based on segment revenue and segment profit. Segment profit is comparable to segment adjusted EBITDA amounts reported in prior periods, and this change did not impact the mix of profit by segment. Segment profit includes revenue, related cost of services, and ongoing operating expenses directly attributable to the reportable segment. Segment profit excludes goodwill and intangible impairment charges, depreciation and amortization expense, unallocated corporate general and administrative expense, interest, other income and expense, income taxes, and costs not considered to be ongoing costs of the segment.

 

Solving workforce challenges globally robust worker shortage age 65 complex and will global workforce outnumber solutions growth diverse 1 Bureau of Labor Statistics Employment Projections: Occupations with the most job growth, 2016-2026. Industrial staffing and RPO jobs: #2: food prep/serving workers, #8: labor, freight, stock, and material movers, #12: construction laborers and #16: customer service representatives. 2 U.S. Census Bureau, An Aging Nation: Projected Number of Children and Older Adults (2018). 6

 

Strong position in attractive vertical markets Construction Manufacturing Transport & Wholesale Retail & Services            Industry Dynamics Industry FY-18 Business Mix: 23% FY-18 Business Mix: 26% FY-18 Business Mix: 22% FY-18 Business Mix: 18% Housing Starts Have Not Kept Pace U.S. Manufacturing Renaissance Wholesale Trade At New High E-commerce Growing % of Retail Sales US Population Housing Permits Industrial Production Transportation and Warehousing Employment E-commerce % of Retail Sales Millions Thousands Index Millions 350 2,500 120 330 5.5 14% 13% 310 2,000 110 5.0 12% 290 100 11% 270 1,500 4.5 10% 250 90 9% 230 1,000 4.0 8% 210 80 7% 190 500 3.5 6% 70 170 5% 3.0 150 - 60 4% 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 1993 1996 1999 2002 2005 2008 2011 2014 2017 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 1990 1993 1996 1999 2002 2005 2008 2011 2014 2017 Source: U.S. Census Bureau Source: U.S. Board of Governors of the Federal Reserve System (FRB) Source: Bureau of Labor Statistics Source: U.S. Census Bureau 7

 

Powerful secular forces in industrial staffing 6%   Growing Market  Compelling  Technology    Positive o  Demographic o Rise of Trends E-commerce   o  o Temporary Help On-Shoring  Penetration Growth Comeback 1 Source: Staffing Industry Analysts. 2 Source: TrueBlue estimate based on 6% CAGR from 2018 to 2025. 8 3 Source: Bureau of Labor Statistics.

 

Segment strategy highlights  15%+ potential operating  Attractive on-site solution  Compelling value margin on incremental proposition with  Perfect fit for larger attractive margins revenue clients with longer- duration / strategic need  Global RPO market  JobStackTM creating for contingent workers experiencing strong favorable differentiation growth with clients and  Strength in the associates e-commerce vertical  Leverage TMP acquisition to compete  Focused on new client  >30% of all orders now on global opportunities wins and margin filled by JobStack expansion  Industry leading proprietary technology – rolling out AffinixTM, a next-generation HR tool Boost shareholder returns through share repurchase

 

Transforming our business for a digital future JobStack TM Mobile app that algorithmically connects workers Industry leading platform for sourcing, screening with jobs and delivering a permanent workforce  Driving value via higher candidate  Competitive satisfaction, faster conversion differentiation enhances rates, reduced time to fill and client and worker loyalty client scalability  4.6 stars in iOS app  Winner of the 2018 HRO Today store (worker app) TekTonic Award for Candidate Experience  >30% of all orders now filled by JobStack  Winner of the 2018 Brandon Hall Award for Best Advance in RPO Technology

 

PeopleScout: attractive margin and rapid growth  Industry Leadership Segment Profit Margin 1 o #1 global provider of enterprise RPO PeopleScout 19% o Emerging healthcare vertical strength TBI Total 9%  Differentiated Service o Proprietary technology drives value-add recruitment capabilities FY-15 FY-18  Growing Market o 12% global market growth CAGR2  Global Prospects PeopleScout % of Total Company Results o Opportunity to broaden footprint in Revenue Segment Profit 31% Europe and Asia Pacific o Acquired TMP Holdings LTD, in June 2018 increasing PeopleScout’s ability 10% to compete for more global business 4% 5% FY-15 FY-18 1 Source: Everest Group. Overall RPO rankings by annual number of hires (2017). 2 Source: NelsonHall (2018). Represents estimated market CAGR from 2017-2022.

 

Well-Positioned to Boost Shareholder Returns with Buybacks 1.7x 1.7x millions $233 0.9x 1.0x $109 0.6x $78 $54 $31 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Total Debt to Adjusted EBITDA1 Free Cash Flow2 millions $37 17% 17% 17% $35 16% 13% $6 $0 $0 2014 2015 2016 2017 2018 Share Repurchases3 2014 2015 2016 2017 2018 1 See the appendix to this presentation and “Financial Information” in the Investors section of our website at www.trueblue.com for a definition and full reconciliation of non-GAAP financial measures to GAAP financial results. 2 Calculated as net cash provided by operating activities, minus purchases for property and equipment. See the appendix to this presentation and “Financial Information” in the Investors section of our website at www.trueblue.com for a definition and full reconciliation of non-GAAP financial measures to GAAP financial results. 3 Currently utilizing $100 million stock repurchase authorization announced on 30 October, 2017. $58 million remaining under the authorization as of December 31, 2018. 4 Calculated as adjusted net income divided by average shareholders’ equity at the end of the prior four quarters.

 

 

NON-GAAP FINANCIAL MEASURES AND NON-GAAP RECONCILIATIONS In addition to financial measures presented in accordance with U.S. GAAP, we monitor certain non-GAAP key financial measures. The presentation of these non-GAAP financial measures is used to enhance the understanding of certain aspects of our financial performance. It is not meant to be considered in isolation, superior to, or as a substitute for the directly comparable financial measures prepared in accordance with U.S. GAAP, and may not be comparable to similarly titled measures of other companies. Non-GAAP Measure Definition Purpose of Adjusted Measures EBITDA and EBITDA excludes from net income (loss): - Enhances comparability on a consistent basis and provides Adjusted EBITDA - interest and other income (expense), net, investors with useful insight into the underlying trends of the - income taxes, and business. - depreciation and amortization. - Used by management to assess performance and effectiveness of Adjusted EBITDA, further excludes: our business strategies. - acquisition/integration costs, - goodwill and intangible asset impairment charge, and - Provides a measure, among others, used in the determination of - Work Opportunity Tax Credit third-party processing fees and incentive compensation for management. - other costs. Adjusted net income Net income (loss) and net income (loss) per diluted share, excluding: - Enhances comparability on a consistent basis and provides and Adjusted net - adjustment to the gain on divestiture, investors with useful insight into the underlying trends of the income, per diluted - acquisition/integration costs, business. share - goodwill and intangible asset impairment charge, - amortization of intangibles of acquired businesses, as well as accretion expense - Used by management to assess performance and effectiveness of related to acquisition earn-out, our business strategies. - other costs, - tax effect of each adjustment to U.S. GAAP net income (loss), and - adjusted income taxes to the expected effective tax rate. Free cash flow Net cash provided by operating activities, minus cash purchases for property and - Used by management to assess cash flows equipment. 14

 

1. RECONCILIATION OF U.S. GAAP NET INCOME (LOSS) TO ADJUSTED NET INCOME AND ADJUSTED NET INCOME, PER DILUTED SHARE (Unaudited) 2018 2017 2016 2015 52 Weeks Ended 52 Weeks Ended 53 Weeks Ended 52 Weeks Ended (in thousands, except for per share data)* Dec 30, 2018 Dec 31, 2017 Jan 1, 2017 Dec 25, 2015 Net income (loss) $ 65,754 $ 55,456 $ (15,251) $ 71,247 Adjustment to gain on divestiture (1) (718) ——— Acquisition and integration costs (2) 2,672 — 6,654 5,135 Goodwill and intangible asset impairment charge (3) — — 103,544 — Amortization of intangible assets of acquired businesses (4) 20,750 22,290 27,069 19,903 Other costs (5) 10,317 162 5,569 — Tax effect of adjustments to net income (loss) (6) (5,074) (6,287) (39,994) (7,011) Adjustment of income taxes to normalized effective rate (7) (1,843) 380 606 (1,805) Adjusted net income $ 91,858 $ 72,001 $ 88,197 $ 87,469 Adjusted net income, per diluted share $ 2.28 $ 1.74 $ 2.10 $ 2.10 Diluted weighted average shares outstanding 40,275 41,441 41,968 41,622 2. RECONCILIATION OF U.S. GAAP NET INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDA (Unaudited) 2018 2017 2016 2015 52 Weeks Ended 52 Weeks Ended 53 Weeks Ended 52 Weeks Ended (in thousands) Dec 30, 2018 Dec 31, 2017 Jan 1, 2017 Dec 25, 2015 Net income (loss) $ 65,754 $ 55,456 $ (15,251) $ 71,247 Income tax expense (benefit) 9,909 22,094 (5,089) 25,200 Interest and other (income) expense, net (1,744) 14 3,345 1,395 Depreciation and amortization 41,049 46,115 46,692 41,843 EBITDA 114,968 123,679 29,697 139,685 Acquisition and integration costs (2) 2,672 — 6,654 5,135 Goodwill and intangible asset impairment charge (3) — — 103,544 — Work Opportunity Tax Credit processing fees (8) 985 805 1,858 2,352 Other costs (5) 10,317 162 5,569 — Adjusted EBITDA $ 128,942 $ 124,646 $ 147,322 $ 147,172 See the last slide of the appendix for footnotes. 15

 

3. RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOWS (Unaudited) 2018 2017 2016 2015 52 Weeks Ended 52 Weeks Ended 53 Weeks Ended 52 Weeks Ended (in thousands) Dec 30, 2018 Dec 31, 2017 Jan 1, 2017 Dec 25, 2015 Net cash provided by operating activities $ 125,692 $ 100,134 $ 260,703 $ 72,072 Capital expenditures (17,054) (21,958) (29,042) (18,394) Free cash flows $ 108,638 $ 78,176 $ 231,661 $ 53,678 Footnotes: 1. Gain on the divestiture of our PlaneTechs business sold mid-March 2018. 2. Acquisition and integration costs related to the acquisition of TMP Holdings LTD, which was completed on June 12, 2018, the acquisition of the recruitment process outsourcing business of Aon Hewitt, which was completed on January 4, 2016, the acquisition of SIMOS, which was completed on December 1, 2015, and the acquisition of Seaton, which was completed on June 30, 2014. 3. The Goodwill and intangible asset impairment charge for the fiscal year ended January 1, 2017, included $99.3 million of impairment charges relating to our Staff Management | SMX, hrX, and PlaneTechs reporting units, and write-off of the CLP and Spartan reporting unit trade names/trademarks of $4.3 million due to the re- branding to PeopleReady. Note, our PeopleScout and hrX service lines were combined during fiscal 2016 and now represent a single operating unit (PeopleScout). 4. Amortization of intangible assets of acquired businesses, as well as accretion expense related to the SIMOS acquisition earn-out in fiscal years 2017 and 2016. 5. Other charges for the fiscal year ended December 30, 2018 include implementation costs for cloud-based systems of $6.7 million and accelerated vesting of stock associated with the CEO transition of $3.6 million. Other charges for the fiscal year ended December 31, 2017 include a workforce reduction charge of $2.5 million primarily associated with employee reductions in the PeopleReady business, offset by $2.3 million of workers' compensation benefit. The workers' compensation benefit is associated with the favorable settlement of insurance coverage associated with a former insurance company and other items not considered part of our core operations. Other charges for the fiscal year ended January 1, 2017, consist of costs of $2.6 million associated with our exit from the Amazon delivery business, $1.3 million adjustment to increase the earn-out associated with the acquisition of SIMOS, and branch signage write branch signage write-offs of $1.6 million due to our re- branding to PeopleReady. 6. Total tax effect of each of the adjustments to U.S. GAAP net income (loss) using the expected ongoing rate of 16 percent for 2018, due to the enacted U.S.TaxCuts and Jobs Act, and 28 percent for all other periods presented. 7. Adjustment of the effective income tax rate to the expected ongoing rate of 16 percent for 2018, due to the enacted U.S. Tax Cuts and Jobs Act, and 28 percent for all other periods presented. 8. These third-party processing fees are associated with generating the Work Opportunity Tax Credits, which are designed to encourage employers to hire workers from certain targeted groups with higher than average unemployment rates. 16