Release Date: May 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- TrueBlue Inc (TBI, Financial) continues to progress strategic priorities, including the rollout of the new proprietary JobStack app, enhancing digital transformation.
- Revenue growth in renewable energy vertical doubled this quarter, marking the seventh consecutive quarter of growth in this sector.
- TrueBlue Inc (TBI) has successfully completed the sale of its on-demand labor business in Canada, allowing for greater focus on its core U.S. staffing operations.
- The company has achieved improved profitability in its PeopleManagement segment through disciplined cost management and organizational simplification.
- TrueBlue Inc (TBI) is expanding into high-growth, less cyclical, and underpenetrated end markets such as skilled trades and healthcare, capturing new growth opportunities.
Negative Points
- TrueBlue Inc (TBI) reported a revenue decline of 13% to $403 million, continuing the trend of economic uncertainty impacting business spending and hiring.
- Gross margin decreased by 180 basis points due to unfavorable changes in revenue mix, particularly with increased renewable energy work involving higher pass-through costs.
- PeopleScout segment experienced a significant revenue decrease of 33% due to reduced client volumes and economic pressures on hiring trends.
- The overall market demand remains weak, with businesses still uncertain about making long-term workforce commitments amid ongoing economic pressures.
- Despite some pockets of strength, the company anticipates a revenue decline of between 16% to 10% in the second quarter of 2024, reflecting continued challenging market conditions.
Q & A Highlights
Q: Can you provide some color on the intra-quarter trends in Q1 and what has happened so far in Q2?
A: (Carl Schweihs, EVP and CFO) - In Q1, we saw a 13% decline in revenue, consistent with our outlook. PeopleReady was down 12%, PeopleManagement down 7%, and PeopleScout down 33%. For Q2, we are observing similar trends with a slight sequential build in PeopleReady from March to April, though it's softer than pre-pandemic averages.
Q: Are there any signs from customers indicating a potential improvement in market conditions?
A: (Taryn Owen, President and CEO) - While there are bright spots in renewable energy, transportation, and manufacturing, overall, customers remain uncertain and are waiting for economic conditions to improve before making long-term workforce decisions.
Q: Can you elaborate on the price competition in the market?
A: (Carl Schweihs, EVP and CFO) - After more than 10 quarters of favorable bill-pay spreads, we are beginning to see pricing pressure typical of this economic environment. Our pay rates were up 6.1%, and bill rates were up 5.8%. We expect this to improve in the second half of the year as pay rate increases moderate.
Q: How significant is the renewables business now, and what is its size excluding pass-through costs?
A: (Carl Schweihs, EVP and CFO) - The renewables business nearly doubled and is part of our skilled trades, which is about 20% of total company revenue. Excluding pass-through costs, the profitability of the renewables business aligns with other large PeopleReady accounts.
Q: What are your expectations for SG&A in the upcoming quarters?
A: (Carl Schweihs, EVP and CFO) - We expect SG&A to be down roughly 13% year-over-year, similar to Q1. We plan to make selective investments to accelerate growth, but these will not be material. Many of the SG&A reductions are permanent, improving profitability as revenue recovers.
Q: Can you discuss the strategic changes being considered, particularly regarding digital transformation and organizational simplification?
A: (Taryn Owen, President and CEO) - We are focusing on advancing digital transformation, expanding market presence in high-growth areas, and simplifying our organizational structure. These strategies include rolling out our proprietary JobStack app, targeting high-growth sectors like healthcare, and restructuring our organization to increase efficiency and cross-selling opportunities.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.