TrueBlue, Inc.

Good afternoon. My name is Jesse, and I'll be your conference operator today. At this time, I would like to welcome everyone to the True Blue second quarter 2019 earnings call. I'll line some place on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. If you'd like to withdraw your question, press the pound key. Thank you. Derek Gafford, CFO, you may begin your conference.

Good afternoon, everyone, and thank you for joining today's call. I'm here with our Chief Executive Officer, Patrick Burrell. Before we begin, I want to remind everyone that today's call and slide presentation contains several forward-looking statements, all of which are subject to risks and uncertainties, and we assume no obligation to update or revise any forward-looking statements. These risks and uncertainties, some of which are described in today's press release and in our SEC filings, could cause actual results to differ materially from those in our forward-looking statements. We use non-GAAP measures when presenting our financial results. We encourage you to review the non-GAAP reconciliations in today's earnings release or at TrueBlue.com under the investor relations section for a complete understanding of these terms and their purpose. Any comparisons made today are based on a comparison to the same period in the prior year, unless otherwise stated. Lastly, we will be providing a copy of our prepared remarks on our website at the conclusion of today's call. and a full transcript and audio replay will also be available soon after the call. With that, I'll turn the call over to Patrick.

Thank you, Derek, and welcome everyone to today's call. We appreciate you joining us. During the second quarter, we experienced a slower pace of demand attributable to lower volumes within the businesses of our clients. Total revenue was down 4% versus prior year, which was down from flat growth in Q1. While the revenue environment was challenging, I'm pleased that we were able to effectively manage costs, resulting in net income and earnings per share growth, as well as adjusted EBITDA margin expansion. We generated adjusted earnings per share of 64 cents, up 12% from the prior period, and expanded adjusted EBITDA margins by 30 basis points. We also continued to make progress on our digital initiatives designed to drive long-term growth. Consistent with our goal of returning capital to shareholders to enhance returns, we repurchased another $4 million worth of shares and still have $49 million remaining under our current buyback authorization. Now I'd like to take a few minutes to update you on the financial results and strategic initiatives within each of our segments, starting with our largest segment, PeopleReady. PeopleReady is the leading provider of on-demand labor and skilled trades in the North American industrial staffing market and represents 62% of trailing 12-month total company revenue and 58% of segment profit. PeopleReady's revenue was down 2% during the quarter due to lower same-client demand, as many reported lower volumes within their own businesses. It's important to note that we don't sense any reluctance on the part of our clients to use our services. Rather, our clients themselves tell us that their own businesses have slowed. Consistent with our focus on effectively managing costs across the business, we have trimmed some operational costs within People Ready. But at the same time, we are also making strategic investments for growth. As an example, we recently launched a new People Ready client experience team. This is a team of seasoned operational and sales leaders who are dedicated to four key client touchpoints. One, Onboarding new clients and ensuring success in the critical early days. Two, proactively reaching out to clients with declining volumes. Three, enhancing our client satisfaction assessments and follow-up capabilities. And four, helping our clients move up the curve in terms of job stack usage. As many of you know, our digital transformation via our job stack mobile app is one of the most important strategic initiatives within PeopleReady. Our Jobstack mobile app is transforming the way we do business. Over the past several quarters, we've seen disproportionately high revenue growth from clients that are heavy users of Jobstack. We've been working hard to build the critical mass we need within the app, and we're very pleased with the progress we've made on this front. We've deployed more than 980,000 shifts via Jobstack during the quarter, representing a digital fill rate of 43%. up from approximately 30% as recently as the fourth quarter of 2018. Our goal of dispatching 4.5 million shifts in 2019, or one worker every seven seconds, remains in reach. Associate adoption is now north of 85%, and we have approximately 17,000 clients using the app, up from 13,000 in December. Now that we have critical mass, the next turn of the crank is to leverage Jobstack with key operational initiatives like the client experience team I just described to drive financial results. Turning to our next segment, people management provides onsite workforce solutions in the North American industrial staffing market that offer compelling value and are a perfect fit for larger clients with longer duration strategic needs for contingent workers. This business represents 27% of trailing 12-month total company revenue and 12% of segment profit. Revenue was down 14%. Roughly half of this decline is due to previously disclosed headwinds, namely the loss of Amazon's Canadian business and volume and price reductions at another retail client. The remainder is due to the slowing business conditions experienced by our clients that I mentioned earlier. Once again, our focus remains consistent, specifically We look to add new on-site client engagements, and I'm pleased to report positive progress on new logo wins. On a year-to-date basis, we've secured $48 million in annualized new business wins, representing a 49% increase over the same period last year. Many of these new wins are in the early stages of implementation and ramp-up. Turning to our last segment, PeopleScout is the global leader in filling permanent positions through our recruitment process outsourcing and managed service provider offerings and represents 11% of trailing 12 months total company revenue and 30% of segment profit. Revenue was up 13% overall but was down 4% on an organic basis, which was again primarily due to lower volume within existing clients. Despite some recent choppiness in client hiring volumes, we feel we're getting good traction with our service offerings. During Q2, PeopleScout was recognized by several third parties, including being selected as the number one ranked MSP provider worldwide by HRO today, recognized by Everest Group as an RPO star performer and leader on its matrix assessment, and recognized by Nelson Hall as a leader in every RPO category it evaluates. Another accolade we are particularly proud of is PeopleScout's recognition by the Military Times in its Best for Veteran Employer ranking. Our strategy for PeopleScout is unchanged and is aimed at capitalizing on our leadership position in the North American RPO market to expand our global capabilities. Affinix is our proprietary next-generation HR tool that is already improving our ability to compete in the marketplace. For example, in several recent winning sales pursuits, RPO buyers shared with us that Affinix was a clear differentiator and a key reason for PeopleScout being selected. Moreover, clients fully implemented on Affinix are experiencing improved time to fill, candidate flow and candidate satisfaction. In short, Affinix is helping us win in the marketplace because our clients see the tangible improvements in the candidate hiring process. Q2 marks the one year anniversary of our acquisition of TMP Holdings in the UK, which helped bolster PeopleScout's position as the number one global We're pleased to report that TMP revenue and profit came in better than expected, and we're making progress on enhancing our execution capabilities for multi-continent deals. We're excited about the prospects for this business going forward. As it happens, Q2 also marks the five-year anniversary of our acquisition of Seton. which included the staff management brand within People Management and the legacy People Scout business. The seat and acquisition diversified the company's human capital portfolio, providing a strategic point of entry into the higher growth, higher margin RPO business. People Scout now accounts for 30% of True Blue segment profit and has achieved a five-year segment profit compounded annual growth rate of 29%. Summarizing our performance, We're executing on our three primary initiatives of putting our segments on a path towards sustainable growth, managing our costs to enhance profitability, and leveraging excess free cash flow to return capital to shareholders. These sharp areas of focus, along with our strategic use of technology, which is something that our clients are embracing, regardless of the ebbs and flows of their own businesses, will help us capture the many opportunities ahead in the changing world of work. I'll now pass the call over to Derek who will share greater detail around our financial results.