TrueBlue, Inc.

Good afternoon. Thank you for standing by and welcome to the True Blue second quarter 2021 earnings 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. Please be advised that today's conference call is being recorded. 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, Executive Vice President and Chief Financial Officer of True Blue. Thank you. Please go ahead.

Good afternoon, everyone, and thank you for joining today's call. I'm joined by our Chief Executive Officer, Patrick Burrell. Before we begin, I want to remind everyone that today's call and slide presentation contain forward-looking statements, all of which are subject to recent certainties 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. I'm pleased to report our strong revenue momentum from earlier in the year carried into the second quarter. Second quarter revenue was $516 million, an increase of 44% compared to the second quarter of the prior year. Growth was driven by both new client wins and higher existing client volumes as we capitalize on strong demand in the markets and industries we serve. We delivered net income of $16 million in the second quarter, which is a loss of $8 million in the second quarter of the prior year and adjusted EBITDA was up $30 million year over year with the related margin of 640 basis points. Before turning to our segment results, I want to highlight three performance areas as they relate to our second quarter results and some thoughts regarding worker supply going forward. First, We are excited our People Management and People Scout segments have nearly recovered to their pre-pandemic revenue for the second quarter. At People Management, revenue was down just 1% versus Q2 2019, supported by a doubling of new client wins through June versus this time last year. Revenue for People Scout was down only 2% versus Q2 2019, as the travel and leisure segment rebounded strongly, growing over 200% during the quarter. Revenue for People Ready was down 19% versus Q2 2019. People Ready has not rebounded as quickly as the other segments. The worker supply shortage hits this segment harder due to the short notice period we receive from customers to deliver contingent workers. In addition, the federal unemployment benefits provide more compensation than typical low-wage on-demand jobs. We are seeing both dynamics in certain industries, such as commercial construction, which is 12% of our mix and has only recovered 60% of Q2 2019 revenue. Secondly, segment profit margins are improving across all segments. In our staffing segments, favorable workers' compensation trends combined with improving bill pay rate spreads are the primary drivers of the margin expansion. In People Scout, higher volumes and utilization of our recruiting staff are leading to improved operating leverage. Now I'd like to take a moment to touch on worker supply. Like many companies across the United States, we are experiencing some pressure on worker supply at People Ready and People Management. To proactively address the situation, both segments have launched programs to retain existing associates, re-engage former associates, and source new candidates. For our current associates, we started to provide attendance bonuses and rewards to our top performers. To re-engage, we launched a campaign in states eliminating the federal unemployment programs targeting those who have not worked over the last 18 months. Finally, we are running a job stack referral program to attract new workers. For our full-time employees, we are providing incentives to our recruiting team for putting people to work. We expect worker supply to gradually improve during the third quarter as broader federal unemployment program ends for all states and schools reopen. However, we are monitoring the impact of the latest stimulus payments that started on July 15th, focused on providing support for families with children, which could prolong the challenges. Now let's turn to our results by segment, starting with People Ready. People Ready is our largest segment, representing 58% of trailing 12-month revenue and 64% of segment profit. People Ready is the leading provider of on-demand labor and skilled trades in the North American industrial staffing market. We service our clients via a national footprint of physical branch locations, as well as our Jobstack mobile app. People Ready revenue was up 43% during the quarter versus down 13% in Q1. People management is our second largest segment representing 32% of trailing 12 month revenue and 16% of segment profit. People management provides onsite industrial staffing and commercial driving services in the North American industrial staffing market. The essence of a typical people management engagement is supplying an outsourced workforce that involves a multi-year, multi-million dollar onsite or driver relationships. People management revenue is reaching pre-pandemic levels with year-over-year growth of 28% in the second quarter versus growth of 7% in Q1. Turning to our third segment, PeopleScout represents 10% of trailing 12-month revenue and 20% of segment profit. PeopleScout is a global leader in filling permanent positions through our recruitment process outsourcing and managed service provider offerings. People Scout revenue is also nearing pre-pandemic levels with year-over-year growth of 106% in the second quarter versus a decline of 13% in Q1. We are very excited about the accelerated pace of their recovery. Now I'd like to shift gears and update you on our key strategies by segment, starting with People Ready. Our most important strategy at People Ready is to further digitalize our business model. to gain market share and improve the efficiency of our service delivery cost structure. Most of our competitors in this segment are smaller mom and pops that don't have the scale or capital to deploy something like our Jobstack mobile app. So this, along with our nationwide footprint, is what makes us a leading provider within industrial staffing. Controlling out Jobstack to our associates in 2017 and our clients in 2018, digital fill rates have increased 3x to nearly 60%, with 788,000 shifts filled via the app during the quarter. Our Jobstack client user count ended the quarter at 27,100, up 12% versus Q2 2020. Thriving heavy client user growth continues to be a key focus. A heavy client user has 50 or more touches on Jobstack per month, whether it's entering an order, rating a worker, or approving times. Jobstack heavy client users continue to post better year over year revenue growth rates compared to the rest of the customer base. With the Q2 2021 growth differential exceeding 40 percentage points on the same customer basis. This growth differential is largely driven by wallet share takeaways from competitors. Heavy client users tell us a major reason they are moving share to PeopleReady is due to Jobstack's unique capabilities. Heavy client users are becoming more material in our overall results. as they now account for 46% of PeopleReady U.S. on-demand revenue compared to 30% in Q2 2020. With the foundation of our digital strategy in place, we've expanded our focus on how to better serve existing clients and reach new ones. Combining the strength of our geographic footprint, JobsDeck technology, and repurposed job roles, PeopleReady is well-positioned to more effectively and efficiently serve clients. At the end of the first quarter, we launched two market pilots that utilize centralized service centers responsible for recruiting, onboarding, and local delivery. The service centers increase our accessibility as they operate 85 hours per week versus 60 hours for a typical branch. This enhanced go-to-market approach includes repurposed job roles with the creation of dedicated account managers who are responsible for growing, and building client relationships. We believe we'll be able to use the cost savings from reducing non-client facing roles to more than offset the cost increases from adding more client facing roles, such as account managers. This fundamental shift in how we deliver our services requires thorough training and change management for our employees. While it is still early, we are gathering key learnings that will improve our operating model, leading to higher digital fill rates, increased productivity, and higher customer satisfaction. We'll continue to provide updates as the pilots progress. Turning to people management, our strategy is to focus on execution and grow our client base. Last year, we sharpened our vertical focus to target essential manufacturers and warehouse and distribution clients and made investments in our sales teams to enhance productivity. With these initiatives implemented, we have broadened the strategy to expand our geographic footprint by targeting more local and underserved markets. We're seeing strong results as people management secured $63 million of annualized new business wins so far this year compared to $32 million this time last year. Finally, we are investing in customer and associate care programs in an effort to better serve our clients' needs and improve retention. Turning to PeopleScout, the strategy leverages our strong brand reputation to capture opportunities in an industry poised for growth. Before COVID struck, we, along with our competitors, experienced a trend towards more insourcing, with some clients bringing more recruitment functions in-house. Many of the in-house teams were reduced or eliminated during the pandemic, and we're seeing companies return to hybrid and fully outsourced models. To capitalize, we have made investments in our sales team. We believe there is a big opportunity to increase wallet share at our existing clients and diversify the industry mix within our portfolio by adding new clients. These efforts are already delivering results as shown by the $33 million of annualized new wins secured by PeopleScout so far this year versus $9 million this time last year. I'll now pass the call over to Derek who will share greater detail around our financial results.