TrueBlue, Inc.

Ladies and gentlemen, thank you for standing by, and welcome to the True Blue Fourth Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone keypad. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Derek Gafford. You may begin.

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 contain 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 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. Before I dive into quarterly results, I wanted to take a moment to reflect back on 2019. This past year had its share of challenges evidenced by a 5% revenue decline and a 4% net income decline. Some of the revenue decline was expected and came from a smaller number of large clients that simply experienced issues within their own businesses. As the year unfolded, we saw a broader softening in revenue trends, similar to other industrial staffing providers, as clients pulled back in response to lower volumes. While overall job data was positive for the United States, the contingent portion, which makes up 2% of the workforce, experienced a pullback as businesses used contingent services more sparingly in light of rising economic uncertainty. While we cannot control the macro environment, we will continue to focus on what we can control, which includes balancing smart cost management with strategic investments. I am pleased with the success of our cost management efforts in 2019. In total, our selling, general, and administrative expenses came down by more than $25 million, or roughly 5% compared to the prior year. In the third quarter, we announced a set of cost actions that are expected to result in approximately $8 million of net annualized savings during 2020. At the same time, we've been making targeted investments in sales and marketing to drive long-term growth. One example is PeopleReady's new client experience team. This is a dedicated team of professionals focused on client care and retention by proactively reaching out in the critical early days to understand their satisfaction and help clients move up the curve in terms of job stack usage. While the program is still relatively new, the feedback from our branch-based colleagues and our clients has been overwhelmingly positive. The team is also helping to proactively drive more activity through our strategic cross-selling program. Our cross-selling efforts generated nearly $50 million in sales for 2019, boosting growth for the company by approximately 2%. These investments, combined with the strategic focus of our team, give me confidence that we're on the right path and will maintain our industry leadership into 2020 and beyond. Our industry is ripe for digital transformation, and we believe we are on the leading edge to digitally differentiate our services and capture increased market share. Recruiting have always been people-first businesses, and the accelerated adoption of digital strategies in our businesses has come with the realization that technology can actually help build stronger human connections. Our People Ready segment has an app called JobStack that has filled more than six million shifts digitally since its inception and is currently filling a job every nine seconds. After we onboard our workers, They can proactively book jobs through a mobile app anytime, anywhere versus having to go to a branch early in the morning or wait for a call or text. On the flip side, clients can post job assignments 24-7. As we begin to leverage the power of digital technology, it is transforming the way we do business. Approximately 25% of our job stack orders are now placed outside of traditional branch hours. And 21,300 clients use job stack. up more than 50% from just one year ago. Throughout 2019, we've seen disproportionately high revenue growth from clients that are heavy users of Jobstack, and we believe there is potential to capture even more wallet share as we focus on removing process friction. The staffing industry is highly fragmented across a wide variety of mom and pop and regional businesses. I believe our Jobstack strategy provides us with the opportunity to clearly differentiate our people-ready services, to capture more market share. On the recruiting side of our business, PeopleScouts Affinix approves outcomes for recruiters and candidates by making applying for a full-time job simpler and more convenient. Moreover, clients that are fully implemented on Affinix are experiencing improved time to fill, candidate flow, and candidate satisfaction. This reduced friction for candidates and for clients, in our view, is the future of the industry. Our mission at True Blue is to connect people and work, and we're proud of it, having connected 724,000 people with work in 2019. Approximately half of these workers were connected to temporary jobs through either our People Ready or People Management Industrial Staffing segments. The remaining half were connected to full-time jobs via our People Scout segment. Each worker who comes to True Blue has their own unique story, whether it is a truck driver who is between jobs and needs to pick up another paycheck to pay the rent or a recent college grad who is happy to land their first full-time position with a Fortune 500 company. Here at True Blue, we've been connecting people with work for more than 30 years, and we're very good at it. As the world of work continues to evolve, we continue to find new and exciting ways to leverage our expertise, and our new strategic UberWorks relationship is a great example of this. While UberWorks has a great platform, one area they do not have experience is in paying and managing W-2 employees. So, UberWorks turned to TrueBlue for help, and we've created a new business venture called PeopleWorks to serve as an employer and payroll service provider for workers booking jobs on the UberWorks app. While it's early days for the PeopleWorks venture, we are excited about its potential. Now, let's discuss our Q4 results. Total revenue for the fourth quarter was down 9%. Clients were conservative in the use of our services during the quarter in light of softness in their own business volumes and continued economic uncertainty. particularly in industries associated with physical goods. While this created a challenging environment, I'm pleased with our strong cost management results and I'm encouraged by recent improvements in the demand for People Ready services. Now let's take a closer look at the performance of each of our three businesses. People Ready is a leading provider of on-demand labor and skilled trades in the North American industrial staffing market. And this business represented 62% of total company revenue and Segment Profit in fiscal 2019. People Ready's revenue was down 9% during the quarter due to lower business activity across our client base. This decline was slightly worse than our expectation, though we did see the trend improve to minus 7% in December after adjusting for the Thanksgiving holiday shift. 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 represented 27% of total company revenue and 10% of segment profit in fiscal 2019. Revenue was down 7% in Q4 versus down 12% in Q3. The improvement is due to the runoff of previously disclosed revenue headwinds. 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 represented 11% of total company revenue and 29% of segment profit in fiscal 2019. Revenue was down 18% during the quarter, primarily due to previously disclosed headwinds, namely one client that was lost after being acquired and less volume and less margins from another large client. We also saw some softness in our PeopleScout UK business as political and economic uncertainty weighed on client order volumes. As we close the books on 2019, I'm pleased with the strategic progress we've made and excited about the path ahead. Our balance sheet is in excellent shape and we are very pleased that we're able to leverage excess free cash flow to return approximately $39 million of capital to shareholders via share repurchases in 2019. Marking the third consecutive year that annual share repurchases exceeded $30 million. When I look at True Blue's digital strategy and competitive position, I'm pleased by what we have accomplished. We have more clients and workers using our technology than ever before. As we move into a new year and decade, I believe our digital strategies provide further opportunity to differentiate our services, capture additional market share, and deliver industry-leading growth. I'll now pass the call over to Derek, who will share greater detail around our financial results.