TrueBlue, Inc.

Greetings and welcome to True Blue Third Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Derek Gafford, Chief Financial Officer. Thank you, Derek. You may begin.

Good afternoon, everyone, and thank you for joining today's call. I'm joined by our President and Chief Executive Officer, Taryn Owen. 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 our 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 TRULVU.com under the investor relations section for a complete understanding of these terms and their purpose. I do want to highlight one change involving the tax impact of our adjustments when calculating our adjusted net income measure. We will now be tax affecting all taxable and deductible adjustments using our statutory rate of 26% versus our prior method of tax affecting adjustments using our blended effective income tax rate. As we believe this provides investors with more useful insight. For your convenience, we have provided a reconciliation of U.S. GAAP net income to adjusted net income and adjusted net income per diluted share using this approach for all prior quarters and years back to 2021 on the financial results page under the investor relations section of our website. 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. Okay, let's now turn the call over to Taryn.

Thank you, Derek, and welcome everyone to today's call. We appreciate you being with us. Revenue for the quarter was $473 million, down 18% compared to the prior year. Our results are reflective of a challenging environment in staffing and recruiting. Across most True Blue verticals and geographies, our clients remain cost-conscious and selective about the temporary and full-time positions they choose to fill. Our teams are staying highly engaged to help our clients navigate this uncertainty and to ensure we are poised to support them when their staffing needs expand. We are being proactive with our sales approach by leveraging our playbooks and centralized teams to capitalize on every opportunity. And we have a particular focus on high growth verticals and under penetrated geographies nationwide. Additionally, we are pursuing shorter term projects and offering flexible solutions to clients in order to meet immediate needs while positioning us for future expansion opportunities. Along with our current focus, we remain highly committed to our longer term strategic priorities, including advancing our digital capabilities to position us to gain market share. For instance, we are enhancing our job stack and Affinix platforms to drive greater efficiency and improve the client, associate, and candidate experience. We are also committed to expanding both our scope and our footprint. For example, within staffing, we're focused on high growth sectors such as renewables, and skilled labor placements. Within RPO, we're focused on high-growth verticals such as healthcare, as well as diversifying into higher skill placements and more specialized product offerings. Gaining market share in under-penetrated geographies is also a focus across our driver, skilled trades, and RPO businesses. While industry demand is currently subdued, the long-term outlook for staffing remains positive, and we are well-positioned to capitalize. We have deep expertise in staffing and RPO, a strong footprint, leading technology, and significant resources. Our team is incredibly talented and committed. Our values are strong and we have a compelling mission. TrueBlue provides a vital service and we remain ready to serve our clients' immediate and future needs. Before I turn it over to Derek for further discussion on our results, I want to take a moment to thank him for his leadership and numerous contributions to TrueBlue during his more than two decades with our company. He has built a digital and people-first finance organization with a deep talent bench that will continue to serve us well, and our entire organization is grateful for his contribution. Thank you, Derek. I'll pass the call over to you now.

Thank you, Taryn. Demand for our services continues to be soft as businesses of all sorts face a tough balancing act. On one hand, Labor pools remain tight and businesses recognize how critical retaining talent is in today's environment. On the other hand, businesses have seen significant increases in pay rates, particularly with positions at the lower end of the pay scale. In an attempt to further manage labor costs, businesses are taking action. They are asking their existing employees to do more. They're also being more selective on the roles they choose to fill and more judicious in their use of human capital providers. These factors, coupled with uncertainty about the trajectory of their future workforce needs, are some of the underlying factors impacting our demand, as well as the demand for the broader staffing market in the U.S. Total revenue for the quarter was down 18%. Revenue growth for the quarter came in four points short of our midpoint expectation, driven by softer than expected trends in August and the first half of September. Looking at the second half of September and into October, we are encouraged to see that the weekly sequential revenue trends for the staffing side of our business are in line with historical patterns. From a net income and loss perspective, our results were roughly breakeven this quarter. down from net income of 21 million in Q3 last year. Included in our results for the quarter are 2 million of costs associated with our CEO transition. Adjusted net income was 5 million, down from 24 million last year, while adjusted EBITDA declined to 10 million versus 35 million last year. Gross margin of 26.2% was down 90 basis points. This was driven by a revenue mix increase in PeopleReady's renewable energy business, which carries a lower gross margin than the blended business due to the pass-through travel costs associated with the business, as well as a decline in the revenue mix of our highest margin business, PeopleScout. Workers' compensation as a percentage of revenue was higher due to less favorable development and prior period reserves than we received last year. These factors were partially offset by discipline pricing in our people-ready business, which delivered its 10th consecutive quarter of positive spread between bill rate and pay rate inflation. SG&A decreased 3% for the quarter. Adjusted SG&A decreased 5%, which we believe will also be the case for Q4 this year, excluding the impact of the extra week associated with our 53-week fiscal year. We remain focused on managing costs to enhance our profitability while maintaining our operational strengths and readiness to increase our market share when demand rebounds. We recognize an income tax benefit of $2 million this quarter due to the favorable impact of job tax credits. Now let's turn to the specific results of our segments. People ready revenue decreased 15% while segment profit decreased 66%. and segment profit margin was down 520 basis points. The retail, transportation, and service industries continue to be our most challenging verticals, while our renewable energy business continues to have solid growth. We are also seeing greater resilience in our small to medium-sized customers compared to larger national accounts. Being disciplined with our pricing is an important priority to help cover the inflationary pressures in our SG&A expense. The business produced another quarter of positive spread between bill and pay rate inflation with bill rates up 6.9% and pay rates up 6.1%. People Scout revenue decreased 32% while segment profit decreased 41% and segment profit margin was down 200 basis points. We would characterize the RPO demand environment as soft, with clients continuing to be selective with the roles they choose to fill, some initiating or continuing hiring freezes, and others attempting to use internal resources to fill jobs. Also playing into this are employee quit rates in the United States. Quit rates have consistently drifted lower throughout 2023 as more employees choose to remain in their current jobs. resulting in less employee churn for our customers. Despite the margin contraction, the people scout business produced a healthy segment profit margin of 12%. People management revenue decreased 16% while segment profit decreased 52% and segment profit margin was down 110 basis points. Now let's turn to the balance sheet. Our balance sheet is in good shape. We finished the quarter with no debt, $47 million in cash, and over $120 million of borrowing availability. Before we wrap up, I'd like to take a moment to provide additional color on a couple forward-looking items. First, similar to 2016, I want to remind everyone that our fiscal fourth quarter this year will include a 14th week, which is expected to add incremental revenue of $17 to $22 million, and a slight headwind on profit due to the low seasonal volume. Second, we expect a revenue decline of 19% to 15% on a comparable 13-week basis. While we are encouraged by the fact that the most recent weekly revenue trends on the staffing side of our business have followed historical expectations, it's too soon to tell whether the trend has staying power. For additional details on our outlook, please see our earnings presentation posted to our website today. As we think about planning for 2024, it comes down to staying disciplined. We have been focused with our pricing and cost management actions while preserving our operational strengths, and we plan to continue this course in 2024. We're also prepared to take additional cost management actions should the operating environment become more challenging. Now on a personal note, while this will be my last month as CFO, I will be staying on through the end of this year as an advisor to help ensure a smooth transition. It has been a pleasure to serve our employees, our customers, and the investment community over my 20 year tenure here. Okay. This concludes our prepared remarks. Operator, please open the call now for questions.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Thank you. Our first question comes from Jeff Silber with BMO Capital Markets. Please proceed with your question.

Thanks so much. And before I start, Derek, I just wanted to wish you the best of luck and thank you for all your help over the past 20 years or so. Wow, it's been a long time. I know there's somewhat of a lack of visibility in your space, but the last couple quarters seem to have been especially tough in terms of the guidance Is there anything different going on in the business or the competitive environment that's making it more difficult to provide this guidance?

I don't think so, Jeff. You know, the way we take a look at the guidance, as you've noted, the visibility in our industry and particularly with some of our staffing brands and our niches are even less visible than many parts of the staffing market. So the way that we're taking a look at things is we take a look at the trends that we see and coming in to setting the guidance into right here before the conference call. And we just kind of really call the shot on how things are trending. We don't try to build in something extra that might turn up or something that might turn down unless we've got a reasonable probability of something that's kind of on our mind or we're seeing a little sign tick up. And so what we really saw this quarter was You know, July came out just about like we thought. And then as we went into August, things really kind of took a step down, particularly in PeopleReady, also at PeopleScout. People management pretty much hung in there. And so what we saw were the retail industry, the transportation industry, and to a lesser extent, the manufacturing industry vertical. As we came into August, all three of those actually didn't live up to what we would normally see from a sequential step-up perspective. That's really what threw us off the mark, and we didn't see that one coming. That continued a bit into September, and then we really saw things kind of rally back at the end of September. Matter of fact, as we went into September, all of those verticals that I talked about that took a step down actually took a step forward above their sequential step. revenue run rate with the exception of retail. We had a couple of other industries that bounced back nicely as well. And so going into October, you know, we look back the last five weeks for our staffing businesses. Everything's been right in line with historical sequential trends, and as we set the guidance and the outlook for this quarter that we're going into, the fourth quarter, we have made the assumption that that's going to continue.

Okay, that's helpful. A few times in the prepared remarks, you talked about cost management. Can we get a little bit more color in terms of where you think that cost management will be coming?

Well, sure. Well, let's talk about what we've done so far this year. And so I'm going to talk about where our cost actions have been this year in comparison with what our budget was coming into the year, which would have been really our outlook that we first shared with you for the year. when we talked to you in February this year. We've cut out about $35 million of costs. Not all of those costs are running through SG&A, though. A fair amount of those are running through cost of sales. In fact, we're down about 1,200 people this year from where we first started, about three-fourths of those in the PeopleScout brand. Now keep in mind, when I say some of these costs are running through cost of sales, because if they're recruiting actions, that's a cost of sale item for us. That's where we book it at People Scout, not down the SG&A line. So you're not seeing some of those. And then we've had about $10 million of what we would consider unique costs related to the severance and the workforce restructuring actions that we've taken. We also had some CEO transition costs that have negated those. Once we get past those, those are all built into our run rate. We've also had some things with medical inflation that have worked against us, so you're not seeing all of it. But those are the cost actions that we've taken so far this year. As we look forward to 2024, as I alluded to in the prepared remarks, the company's really preparing for it to be a really disciplined planning exercise. And what I mean by that is You know, there's probably a 50% chance that things get better next year for this industry. Maybe there's a 50% chance things get worse. Hard to say. With those kind of odds, though, it just plans to stay really disciplined and focus on the downside plans. Those are harder to pull together. It's what the company's doing. We think there could be some more gains made in some of the basics on cost management, like I just recapped for you that we did in 2023 and And also some things in lowering the service delivery costs for the company, some through centralization, some through some process and some technology actions. The company will be able to give you more color on those specifics, though, after we finish our planning for 2024 and come into talking to you about the fourth quarter results in February.

All right, great. If I could just sneak in one more follow-up question. I just want to just clarify the guidance. So the $450 to $475 million is on a 13-week basis, but since there is a 14th week in the quarter, we need to add $17 to $22 million on top of that to get to $467 to $499. Is that correct?

Yeah, that's exactly right. And so we think it's the easiest. We don't like these 53-week years any more than all of you do, but we think that we've had some practice over time. We think the easiest way is to provide things on a 13-week basis, and we'll kind of give it to you both ways so that it's more comparable to our other results. But from a gap perspective, you need to do exactly what you just mentioned. Add in that 14th week to revenue. Don't add anything else on the bottom line. It's a real low seasonal quarter. If anything, it's slightly decretive to the quarter and the year. Got it. Okay.

Thanks again.

Thank you. Our next question comes from the line of Kartik Mehta with North Coast Research. Please proceed with your question.

Thank you. Derek, I know maybe you already mentioned this, and if you did, I apologize, but you talked about the latter part of September kind of firming up. I'm wondering, the first few weeks of October, if you saw those trends continue, or if you saw anything different than what you might have anticipated?

Yeah, so let's talk about things from a year-over-year perspective and then talk to you about run rates, how things are looking. And we might as well just talk about what the trends were for the quarter because sometimes that's on people's minds. So for the quarter, revenue was down 18%. Every month during the quarter was right around 18%, so very steady from a year-over-year decline perspective. As we come through the first three weeks of October, the revenue declined. Now, this is for our staffing businesses. We only bill our PO, the People Scout business monthly and provide those metrics on a monthly basis. But for our staffing businesses, for the first three weeks, we were down 14% year over year. Now, if we take a look through the middle of September through the third week of October from a sequential perspective, run rate perspective in our staffing businesses, all of those were ramping up as we would expect with historical standards. You saw in some of our prepared remarks in our press release that we've seen potential signs of stabilization. That's really what we're referring to. So we're encouraged by that. We're not banking on it, but we're encouraged by it. And that's kind of the latest from the most recent trend perspective that we can share with you.

And I know you mentioned some of this already, but curious on demand by end market. And you already talked about a few where things weren't progressing, but then you also said you had a couple where things were going well. So just thoughts on the end market.

Well, yeah, a question had come up. I believe Jeff had asked it, kind of, you know, asking about guidance and kind of what had happened in the quarter. And so that was the explanation of that. And so I think the main takeaway is, is what we've seen in the stabilization of our trends from a sequential perspective. Really all of those are looking good with the exception of retail. We've actually got some that are performed a little better than we expected, most kind of at expectation. The one call out if we wanted to go on the negative side would be retail. That one continues to weaken, but we've got some others that are strengthening and hence overall Really, the sequential trends are right in line with historical averages.

Perfect. Just one last question. As you look at your segments, and you talked a little bit about the staffing business being down about 14%. Just expectations of the other two businesses as you look at the segments.

Yes. Well, if we're talking about the fourth quarter, I'm just going to go off midpoints. We've given ranges, but to quote less numbers, I'm just going to give you midpoints, okay? So the midpoint of our outlook for the fourth quarter is for the company to be down about 17%. That's 15% for our two staffing segments, people management, people ready, and about 30% for our RPO business at PeopleScout.

Perfect. Thank you so much, Derek. I really appreciate it.

Thank you. Our next question comes from the line of Mark Riddick with Sudoti. Please proceed with your question.

Good evening, everyone. Hey, Mark. Just wanted to first thank you for everything and all of your assistance, Derek, over the years. I'm certainly looking forward to moving forward moving forward and hope all goes well that you're looking for there. And I did want to, you know, just sort of touch a little bit on revenue mix that you touched on in prepared remarks. Maybe you could shed a little more light on the renewables commentary and the sort of the pass-through effect and how that sort of plays into the revenue mix impact. And then I have a quick follow-up on cash flow.

Yeah. Well, When we're talking about the renewable space, that has been a bright spot for us. And so if we're talking on a year-over-year basis, renewable energy for us was up about 80%. And so that's continuing to be a really strong dynamic for us, not just on a year-over-year basis, but each quarter sequentially we've been building some run rate there. Our renewable energy for the third quarter was about $40 million in total.

Okay. Okay, that's definitely helpful. It seemed as though it would have to be a nice gain there to have the mixed impact there. I was wondering then if we could sort of follow up on cash – cash flow and cash usage prioritization. I know certainly that having a clean balance sheet and challenging demand times is certainly very advantageous. Is there anything that we should be thinking about as far as internal investments that are on the horizon for the digital capabilities, or is there anything lumpy that we should be thinking about as far as any potential needs in the coming quarters?

No, nothing really lumpy out there. From a cash flow perspective and a use of capital perspective, investing back in the business, that has been our priority, both from an operating expense perspective, use of capital, as well as from a CapEx perspective, largely in technology. So the company is still very focused on digitally transforming the business. There's some A lot that we have to be excited about there and some improvements that are being made and more to be done in the future there. So we're going to stay true to those. That doesn't mean we might trim some of that back going into next year, depending on what conditions look like. Outside of that, our next favorite spot is in returning capital back to shareholders. We think that the prices for the stock have been pretty advantageous this year. Um, we, you know, we bought about, we look at this both in total dollars and as a percentage of market cap. And so this year we bought back about 5% of the market cap. That's pretty much in alignment with where we've been in most years. Uh, we still want to keep that balance sheet really strong. You know, as you know, we've got a lot of operating leverage in this business, which is great when revenue is on the way up and more challenging times that, that, that operating leverage works against us. And it's important for us to not have financial leverage. top of negative operating leverage so we're going to stay disciplined on that part that's we're not ruling out any more share repurchases just kind of giving you some some thoughts about it from an acquisition perspective that is something we're taking a look at in the future we've talked about you know tuck-ins in the RPO space really though the main priority right now though is just running the business recovering the business business development from from a staffing perspective, an RPO perspective, less focused on acquisitions at the current moment.

Okay, great. And then the last thing I'd be remiss if I didn't sort of ask about the announcement that came out after the close on the addition of a chief people officer. So I was wondering if you could maybe shed a little light on that and talk a little bit about that.

Sure. Thank you, Mark. This is Taryn speaking. You know, I would just say overall, I'm incredibly impressed with the support and strength of our leadership team overall, and certainly glad that you saw the announcement regarding our new chief people officer, Greg Nettolicki, joined us today. Actually, it's his first day. He brings to us outstanding experience in all aspects of HR, so really looking forward to the contribution he'll make to us as we move forward here.

Great, thank you very much.

Thank you. Our next question comes from the line of Mark McCrone with Baird. Please proceed with your question.

Good afternoon, and let me extend my thanks to Derek. It's been great working with you over the last 20 years, Derek, so really appreciate everything that you've done. Can you talk a little bit about the PeopleScout business? There's commentary with regards to some clients have been pulling back, some are pulling resources in-house. Can you talk a little bit about what percentage of the clients are just pulling back their volumes versus what percentage are bringing things in-house and Can you also describe, you know, what are you seeing in terms of new RFPs and, you know, any line of sight in terms of decisions that could be coming up and how you're thinking about win rates in your competitive position in that particular space?

Sure. So, Mark, in the PeopleScout business, the primary driver here is reduced volumes within our existing customers. And where our customers have relied more on internal resources, it's really around the focus on keeping them busy and retaining that internal talent acquisition team during a time of a hiring slowdown. So we're certainly still engaged with those customers and ready to support them as their needs increase, but they're really focused on ensuring that they're able to keep their internal recruiters retained and busy during this slower time. So we're seeing across the board lower hiring volumes. Some of our customers are on hiring freezes or have initiated additional approval requirements in the hiring process to just slow that overall process down as they look to gain more insight on what their future needs may be. From a sales perspective, the pipeline, I would say, just from an average deal size perspective, is just down in terms of what we are accustomed to seeing. Last year, our average deal size was about $3 million in the pipeline. It's a million now, and the deals are just taking longer to close. We are seeing some activity in our shorter term solutions with PeopleScout. We offer a service called Recruiter on Demand, where we're offering recruiters to supplement in-house recruiting teams and project RPO solutions. So we will provide those kind of solutions to stay engaged with customers and can expand upon those relationships and opportunities when their needs rebound.

And then, Taryn, what percentage of your current clients are just going through that lower volume versus what percentage of the clients, you know, have gotten down to the point where, you know, they're just – they don't have needs beyond their internal resources, but they're still keeping you as a vendor should the needs come up and – So to what extent, if any, did you lose any clients completely?

Yeah, it's a small percentage. Just a couple of customers that have taken where we don't have any volume whatsoever with them at this point.

Okay, great. And then, you know, if the environment, it doesn't sound like you're saying that things are stabilizing or picking up. Maybe that's just because we typically wait till the end of month before determining where things are. But you gave favorable commentary on the people ready side about a couple of segments like manufacturing and transportation, showing a little bit more stability, but you didn't say anything like that on the RPO side. If things continue to trend down, how should investors think about you know, kind of the margin range and how much room do you have in terms of cost management on that side?

Mark, I'll take that one. Yeah, we did talk about seeing some potential signs of stabilization in our staffing businesses. We are not seeing that yet with PeopleScout. However, I don't think that we would expect to see it. One, the stabilization, if we want to even call it stable, this has been a short period on the staffing side. So, as we said before, we're seeing it now. Too soon to tell whether it has staying power. However, our experience has been through, you know, multiple cycles. This is where we would start to probably see stabilization first is on the staffing side. Uh, just like we would expect to see staffing kind of go first and then per placement follow, we would expect to see things stabilize and improve on the staffing side. And then, uh, people scout, uh, tend to follow when it comes to the margin profile. You know, you can see even with this drop off, we turned in a 12% segment profit margin. And so out of all of our businesses, this is where it's the most variable. from the standpoint that we don't have branch locations here that have to be staffed to keep running. We don't have onsite operations. There are minimums there. Now, there are certain minimums, too, when it comes to RPO clients, but there's more flexibility there. So we still turned in a 12% margin. You heard some of my statistics earlier about the number of folks that we've had to downsize from to protect those margins. And there's more that we think we can do if we need to. Uh, both on my people perspective, a service delivery perspective and a technology perspective to try to keep that, that margin from flowing into a single digit, at least on an annual basis, quarters can be lumpy, but on an annual basis, we think we got a good shot at keeping that at a 10% plus.

Okay. And I mean, I mean, even during 2020 with COVID, um, you were able to, by the fourth quarter, get to like, you know, 11% margin. Obviously, there was a huge hit in Q2 and Q3 of 2020. But is that kind of, when we think about like the fourth quarter of 2020, when you were running at $41 million, does that seem like kind of like that's about as low as the margins would go? Or, you know, could we go into the single digits, do you think?

Well, I guess we'll have to see what happens from an operating environment perspective. If things were to get in another bona fide recession on top of where we're at right now, we could see single digits. I think what we're looking at right now with the run race that we've got and with a little slippage in place, we feel like we can make some adjustments. you know, with still positive GDP out there to do what we've just talked about, keeping it out of the single-digit realm.

Okay, great. And then with regards to PeopleReady in terms of, you know, in terms of the digitization efforts, can you give us an update in terms of job stack and some of the statistics?

Sure, happy to do that. Jobstack certainly has continued to be a critical component of our people-ready business. We have about 90% of our associates utilizing the app and 30,000 customers that engage at any given time. As Derek mentioned, we are continuing to focus investment in Jobstack. with all of the development really centered around improving the usability and experience for our customers, our associates, and our internal staff. So I'll give you a couple of examples. On the client side, our clients are now able to approve time directly in the app, which has saved them time and allows our associates to be paid more quickly once their assignment ends. On the associate side, we've been improving upon the job searching capabilities, including filtering for location proximity, which was a desire by our associates. And for our internal staff, they now have improved visibility through the platform into orders and available associates that can be matched to jobs, increasing their efficiency levels. We continue to make those improvements, again, really focused on improving upon the usability.

Okay, great. And then on the gross margins, you mentioned the workers' comp. We basically, the accruals weren't quite as favorable. Anything to point out there in terms of anything unusual?

No, I don't think so, Mark. You know, when... As you know, that's a big cost for us. It's a big item on our balance sheet, and it's a really long-tailed liability. And just like you would have with any other insurance company, there's adjustments that can kind of go back and forth, and it can be a little lumpy at times. And so that's really it. There were less favorable adjustments to prior year reserves this quarter. than what we saw the same quarter last year. However, when you take a look at the expense, there's a lot of consistency in it. I mean, workers' comp as a percentage of revenue came out at 1.7 this quarter. It was 1.7 last quarter. It was 1.7% in Q2 of last year. Just in Q3 of last year, it was lower than that because there was a nice lumpy benefit, larger benefit, hitting the work comp line.

Okay, great. And then on the balance sheet and cash flows, when we take a look at the accounts receivables, how are DSOs trending? Because it looked like receivables were a use of funds, of cash. We didn't get the normal harvest that we typically get when revenue declines. What's occurring there?

Well, when it comes to accounts receivable, at least for the year, you may be doing your own math on the quarter for the year, you know, it's $35 million to the positive.

Right. But I'm talking about for the quarter sequentially.

Yeah. Well, for the year over year, if we just kind of get to your question, DSO is up about one day year over year. So we're not really seeing a big slide on the accounts receivable side. We just saw, you know, if you take a look from Q2 to Q3, our revenue dollars were about the same this year. And so we didn't have anything where we went from Q2 to Q3 seeing any kind of decline. They were just stable. So we had one day of DSO increase year over year. Sequentially, it was up a bit more than that, but Q2 of this year was unseasonably low as well.

Okay, but, I mean, we should end up having some harvesting here in the fourth quarter. I mean, free cash flow should – there's just a timing difference, and free cash flow should rebound pretty nicely in the fourth quarter now.

That's right. That's exactly right.

Okay, great. Look forward to talking post-call. Thanks. Thanks.

Thank you. There are no further questions at this time. I'd like to turn the floor back over to Tayryn for closing comments.

Thank you, operator, and thank you, everyone, for joining us today. I look forward to meeting many of you at investor events over the coming year and keeping you updated on our progress. I also want to thank the entire True Blue team for their tremendous efforts and continued focus on fulfilling our mission to connect people and work. If you have any questions, please don't hesitate to reach out. Have a great evening.

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.