TrueBlue, Inc.

Good afternoon. My name is Emma, and I will be your conference operator today. At this time, I would like to welcome everyone to the True Blue fourth quarter 2021 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press one star followed by the number one on your telephone keypad. If you would like to withdraw your question, again, press the star one. Thank you. Derek Gafford, you may begin your conference.

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 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 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. Before I discuss our fourth quarter results, I want to take a moment to reflect on the past year. 2021 was an extraordinary year across many levels. As the world continued to learn how to live in a pandemic, I'm very proud of the True Blue community for growing together to deliver solid results. The demand for our services has never been higher as businesses turn to flexible solutions to solve their workforce challenges. Despite the ongoing challenges associated with COVID, including lower worker supply and supply chain disruptions, our ongoing commitment to our digital investments and numerous operating adjustments positioned us to emerge stronger from this downturn. Revenue grew 18% for the year and is on pace to recover to pre-pandemic levels two years faster than the previous recession. New client wins at People Management and People Scout throughout the year, and existing client recovery at People Ready and People Scout in the second half drove this growth. Compared to where we were prior to the pandemic, we now find ourselves with a stronger, more agile, and more efficient business model. 2022 will be my fourth year as CEO of True Blue, and I've never been more optimistic about the momentum we have in the business. Now let's turn to our fourth quarter results. I am pleased to announce our fourth quarter results surpassed pre-pandemic levels. Revenue was $622 million, an increase of 20% compared to Q4 2020, and up 5% versus Q4 2019. PeopleReady's revenue growth accelerated throughout the quarter, driven by improved worker supply, and strong performance within the retail sector, while same customer demand and new customer wins continued to produce impressive People Scout results. These factors produced adjusted EBITDA of $36 million, an increase of $14 million compared to Q4 2020, and an increase of $15 million compared to Q4 2019. Let's take a closer look at the performance of each of our three segments, starting with People Ready. PeopleReady is our largest segment, representing 59% of total trailing 12-month revenue and 63% of total segment profit. PeopleReady 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. Year-over-year PeopleReady revenue was up 22% during the quarter. Compared to the fourth quarter of 2019, we recovered 99% of our revenue, which is an improvement of 15 points from the recovery rate in the third quarter of this year. Performance was boosted by improving worker supply trends and solid results within the retail vertical. For worker supply, we saw an increase in the number of applicants, resulting in a 13-point improvement from September to December in associates put to work compared to 2019. Retail results were strong during the quarter, increasing 100% year over year, led by a seasonal surge combined with ongoing project work. People management is our second largest segment, representing 29% of total trailing 12-month revenue and 10% of total segment profit. People management provides 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 multi-year, multi-million dollar on-site and driver relationships. Even though people management revenue exceeded the comparable 2019 period by 4%, revenue declined 1% in the fourth quarter. This decrease is primarily due to lower same-site sales, which are being negatively impacted by recent supply chain disruptions impacting several of our clients. Turning to our third segment, PeopleScout represents 12% of total trailing 12-month revenue and 27% of total segment profit. PeopleScout is a global leader in filling permanent positions through our recruitment process outsourcing services, as well as offering managed service provider solutions. Revenue momentum at PeopleScout continued during the fourth quarter, going 96% year over year and surpassing the comparable 2019 period by 49%. PeopleScout's strong results were driven by growth in existing client volume of 71% year-over-year due to surging client demand and new customer wins. Now I'd like to shift gears and update you on our key strategies by segment, starting with People Ready. At People Ready, our most important strategy is to further digitalize our business model to gain market share and improve the efficiency of our service delivery cost structure. The U.S. temporary day labor market is highly fragmented, and there are very few large players in the industrial staffing segment where PeopleReady competes, with the bulk of the market made up of smaller companies. These smaller regional companies are typically not able to spend the type of investment required to deploy something like our Jobstack mobile app. But this, along with our nationwide footprint, is what makes us a leading provider within industrial staffing. Our goal is to use Jobstack to deliver value through differentiated associate and client experiences, leading to increased market share and operational efficiencies. Since rolling out the application to associates in 2017 and to our clients in 2018, associate adoption has grown to over 90%, and our Jobstack client user count ended the quarter at 29,700, up 13% versus Q4 2020. We continue to focus on converting clients to heavy users. As a reminder, a heavy user has 50 or more touches on Jobstack per month, whether it's entering an order, rating a worker, or approving time. Overall, heavy client users account for 56% of PeopleReady U.S. on-demand revenue compared to 35% in Q4 2020. We've also seen continued growth in our digital fill rates, which have increased 3x since rollout to nearly 60%. with 964,000 shifts filled via the app during the quarter. With our digital strategy providing a differentiated experience, our centralized service centers to better service existing clients and reach new ones more effectively is a major focus. As a reminder, 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, territory-based account managers who are responsible for new client acquisitions and management of existing client relationships. We expect the new structure will deliver a greater sales focus and provide elevated customer service, while non-client-facing positions will be reduced, resulting in a net cost reduction. Based on progress made over the past nine months, I'm excited to announce we have expanded our two service center pilots by consolidating additional branches into each. In addition, we are testing a virtual service center model and opening a service center to support our skilled trade customers and tradespeople. We view these actions as the next step in the journey. We will expand existing locations and add new ones over time, as long as we are able to meet the needs of our clients and achieve a variety of operational performance metrics. We have developed a standard rollout framework to ensure service continuity for our clients and associates. This includes aligning account managers to specific territories and client portfolios in advance of go-live, adjusting service center staffing levels to ensure adequate coverage, and a robust training and quality assurance process to ensure operational and service delivery excellence. Once the service center rollout is complete, we expect annual run rate cost savings of $10 million to $15 million. 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 as well as warehouse and distribution centers and made investments in our sales teams to enhance business development activities. With these initiatives implemented, we have broadened the strategy to expand our geographic footprint by targeting more local and underserved markets. People management secured annualized new business wins of $95 million this year. up more than 40% versus the three prior year comparable average, helping to offset recent supply chain challenges. Additionally, we are investing in customer and associate care programs in an effort to better serve our clients' needs and improve retention. Turning to PeopleScout, our strategy leverages our strong brand reputation to capture opportunities in an industry poised for growth. Many companies reduced or eliminated their in-house recruiting teams during the pandemic, And now we are seeing companies return to hybrid and fully outsourced models. Our ability to hire large volumes of workers quickly has us well positioned. And to capitalize further, we made investments in our sales teams to expand wallet share at existing clients and obtain new clients. Our efforts are delivering results with annualized new wins of $39 million this year versus the three-year prior comparable average of $11 million. Finally, I want to quickly address vaccine mandates. On January 13th, the Supreme Court blocked the Biden administration's vaccine mandate for large employers. Leading up to the ruling, we were taking the appropriate steps to comply with the mandate. As such, in the event vaccine mandates are enacted at the federal, state, or local levels, we will be prepared to service our clients. Looking forward, connecting people and work remains at the center of the True Blue strategy. As the economy improves and people return to work, We are excited about the prospects of the industry and our business. And I'll pass the call over to Derek, who will share greater detail around our financial results.