TrueBlue, Inc. (TBI)·Q1 2025 Earnings Summary

Executive Summary

• Revenue of $370.3M beat Wall Street consensus ($362.4M*) and came in near the high end of management’s outlook; adjusted EPS of -$0.40 missed consensus (-$0.32*) while adjusted EBITDA was -$3.9M .
• Gross margin fell to 23.3% (-140 bps YoY) on mix and pricing, but SG&A decreased 12% to $94.6M, reflecting disciplined cost control; liquidity remained solid with $23M cash, $58M debt, and $71M availability (total $94M) .
• Segment performance was mixed: PeopleManagement returned to growth (+1%); Centerline delivered its third consecutive quarter of double-digit growth; PeopleReady declined (-15%) but improved exit trends; PeopleSolutions declined (-2%) with organic -26% offset by HSP’s 24-pt inorganic contribution .
• Q2 2025 guidance: revenue $392–$417M, gross margin down 180–220 bps YoY, SG&A $91–$95M, and ~$9M COVID subsidies expected; FY 2025 CapEx $19–$23M, depreciation $24–$28M, tax expense $1–$5M .
• Corporate actions: Board rejected HireQuest’s unsolicited $7.50/share offer and adopted a limited-duration shareholder rights plan—potential catalysts shaping investor sentiment around strategic alternatives and governance .

What Went Well and What Went Wrong

What Went Well

• Revenue landed near the high end of the outlook on “encouraging trends in our on-demand and on-site staffing businesses,” with the team “persistently controlling costs” .
• SG&A down 12% to $94.6M, outpacing the revenue decline, with management emphasizing lean structure and improved efficiencies to expand profitability as demand rebounds .
• Centerline commercial drivers delivered double-digit revenue growth for the third consecutive quarter; PeopleManagement returned to growth (+1%) and posted new business wins .

Selected quotes:

• “I am proud of the resilience and dedication shown by the TrueBlue team, delivering revenue results near the high-end of our outlook range.” — Taryn Owen, CEO
• “Our lean cost structure and improved efficiencies mean that we're even better positioned to deliver enhanced profitability as industry demand rebounds.” — Carl Schweihs, CFO

What Went Wrong

• Gross margin fell to 23.3% (-140 bps YoY) driven by unfavorable mix and pricing pressure; software depreciation (non-cash) now in cost of services added ~30 bps of pressure .
• PeopleReady revenue declined 15% amid softer volumes across hospitality and manufacturing, despite improved exit trends; PeopleSolutions margin contracted 620 bps on lower operating leverage .
• Net loss widened to $14.3M vs. $1.7M prior year, with “essentially 0 income tax benefit on U.S. operations” due to the valuation allowance (vs. $12M benefit in Q1’24) .

Financial Results

Consolidated Performance vs Prior Quarters

Profitability and Margins

Segment Breakdown (Q1 2025)

Notes: PeopleSolutions includes PeopleScout and HSP; organic decline was -26% with +24 points from HSP; margin down 620 bps on lower operating leverage .

KPIs

Results vs Wall Street Consensus (S&P Global)

Values retrieved from S&P Global.*

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• Strategic priorities: “We are expanding our presence in high-growth and underpenetrated end markets as well as high-value roles… thanks in large part to the recent addition of Healthcare Staffing Professionals” .
• Digital transformation: “AI is embedded across our proprietary platforms… expanding the use of generative and conversational AI in the recruitment process” .
• Cost discipline and leverage: “We successfully reduced SG&A by 12%… our lean cost structure… positions us to deliver enhanced profitability as industry demand rebounds” .
• Demand signals: “PeopleManagement did return to growth… momentum continued… PeopleReady… sales-enabled territories performing better” .
• Liquidity: “$23M in cash, $58M of debt, and $71M of borrowing availability, resulting in total liquidity of $94M” .

Q&A Highlights

• Monthly cadence and exits: PeopleReady exited March at -8%; PeopleManagement at +4%; April trends similar—“pretty positive news given the uncertainty from all the tariff news” .
• Sales force build and impact: On track to expand PeopleReady field sales reps by 50% to ~165 by end of Q2; sales-enabled territories “outperformed the rest of the business by several points” in Q1 and April .
• HSP (Healthcare Staffing Professionals): ~$11M revenue in Q1; performance in line with expectations; mid-single-digit margin profile; expected to continue outperforming market trends .
• End-market color: Improvement seen in transportation, retail, professional services; continued softness in manufacturing, construction, hospitality .
• Candidate supply and pricing: Fill rates ~90% in Q1; pricing pressure in line with a cost-conscious environment but maintained discipline .

Estimates Context

• Q1 2025: Revenue beat (+$7.9M) vs consensus $362.4M*; adjusted EPS missed (-$0.40 vs -$0.32*); EBITDA below consensus (company EBITDA -$7.31M vs -$6.0M*) .
• Q2 2025: Consensus revenue $400.5M* sits within guidance range ($392–$417M); guidance includes ~$9M COVID subsidies which should mechanically lift margins in Q2 .
• FY 2025: Consensus revenue $1.603B* and EPS -$0.525* reflect caution; management’s focus on cost controls, mix, and sales build may prompt upward revisions if macro stabilizes and sales traction continues .

Values retrieved from S&P Global.*

Key Takeaways for Investors

• Near-term: Expect margin improvement in Q2 aided by ~$9M COVID subsidies and seasonality; watch whether sales-enabled PeopleReady territories sustain outperformance—key for top-line stabilization .
• Mix and margin: Continued Centerline strength is positive but dilutive to gross margin; monitor pricing discipline and mix shifts impacting margin trajectory .
• RPO/solutions: PeopleSolutions organic pressure (-26%) and prior client loss headwind highlight sensitivity to hiring freezes; look for new business wins to translate as hiring resumes .
• Liquidity and flexibility: $94M total liquidity provides optionality for investment and resilience; leverage increase reflects revolver usage to support operations and HSP integration .
• Catalysts: Governance actions (rights plan, bid rejection) and strategic partnerships (OMNIA) can influence sentiment; track any follow-up on strategic alternatives and integration momentum with HSP .
• Technology/AI: Proprietary platforms (Affinix, JobStack, Stafftrack) and AI-enabled processes are differentiators; execution should drive efficiency and potentially market share gains .
• Estimates: Revenue beat alongside EPS miss signals mix/price pressures; if demand stabilizes and sales initiatives deliver, consensus on FY’25 could shift—monitor Q2 print vs guidance midpoints .