Greetings and welcome to the TrueBlue First Quarter 2025 Earnings Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. At this time, 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 management assumes no obligations to update or revise any forward-looking statements. These risks and uncertainties, some of which are described in today's press release and SEC filings, could cause actual results to differ materially from those in the forward-looking statements. Management uses non-GAAP measures when presenting financial results. You are encouraged 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, a copy of the company's prepared remarks will be provided on True Blue's investor website at the conclusion of today's call, and a full transcript and audio replay will be available soon after the call. It is now my pleasure to turn the call over to Taryn Owen, President and Chief Executive Officer.

Thank you, Operator, and welcome everyone to today's call. I am joined by our Chief Financial Officer, Carl Schweihs. As expected, the subdued market demand we discussed on our last call continued in the first quarter. Revenue for the quarter was $370 million and near the high end of our outlook range due to encouraging trends in our on-demand and on-site staffing businesses. I am incredibly proud of the resilience and dedication shown by the TrueBlue team as we help our customers navigate an increasingly complex and unpredictable business landscape, all while persistently controlling costs. Evolving governmental policies have hindered business confidence and thereby continue to suppress the staffing industry. Despite these challenges, we remain diligent in driving value for our customers with innovative and flexible workforce solutions. For example, our onsite business recently secured a new engagement with a global logistics company, helping them drive enhanced efficiencies and replace over 35 vendors across the client's network. Another example comes from our PeopleReady on-demand business where a large national retail customer needed increased support as they worked through large-scale store liquidations, and our team was there tapping into our extensive branch network to quickly address the heightened demand. Our depth of expertise enables us to understand the unique challenges our clients face and we continue to support them every step of the way. As we leverage our inherent strengths and comprehensive service offerings to meet the needs of the market today, we are also paving the path forward with our strategic priorities to capture market share and enhance our long-term profitability. We are expanding our presence in high growth and under-penetrated end markets as well as high value roles to capitalize on secular growth opportunities. We have additional opportunities to drive revenue expansion in the healthcare space thanks in large part to the recent addition of healthcare staffing professionals to our portfolio. While still new to the TrueBlue team, we are excited to see HSP expanding into new regions and operational synergies forming as we collectively target the secular growth market with significant untapped potential. Meanwhile, our momentum has continued to build within our PeopleScout business with several new business wins focused on professional roles in a variety of industries including healthcare, engineering, and technology. We also continue to expand our strong position in skilled trades with our Centerline commercial drivers business delivering its third consecutive quarter of double-digit revenue growth and a solid pipeline paired with our successful track record in the energy and construction verticals. Advancing the significant progress we have already achieved over the past year in expanding our presence in under-penetrated markets sets us up for a strong rebound and accelerated growth. We also continue to advance our digital transformation with a focus on enhancing the user experience and creating efficiencies. Our proprietary technologies allow us to control our roadmap and accelerate innovation. For example, PeopleScout recently launched the Outthink Index, a proprietary benchmarking tool that empowers organizations with actionable and competitive insights to strengthen their brand performance. We also continue to strategically invest in our JobStack, StaffTrack, and Affinix platforms with robust roadmaps focused on elevating the user experience, improving operational efficiencies, and advancing AI utilization. AI is embedded across our proprietary platforms helping us enhance every stage of the staffing life cycle and deliver superior workforce solutions. For example, we are expanding the use of generative and conversational AI in the recruitment process to make applying for roles simple and seamless for candidates. We look forward to continuing these advancements as our proprietary technology combined with our expansive market presence and expertise positions us to drive growth and expand our reach with a more customized and differentiated experience. Building on our successful efforts to streamline and create efficiencies, we are also advancing our strategic priority to optimize our business model in ways that drive enhanced sales focus and accelerate our growth and improved profitability. As I mentioned last quarter, we are aligning our PeopleReady on-demand organization into territories and adding sales representatives across the country to implement targeted sales strategies in each territory. We are on track to increase our field sales representatives by 50% with the first wave of new hires joining the team in Q1 and supported by a newly formed sales leadership team with deep expertise. We expect the addition of dedicated sales representatives combined with focused responsibilities between operations and sales to improve results across our on-demand field network, and we are already seeing signs of success with stronger performance in the sales-enabled territories rolled out thus far. Another way we are looking to optimize our business model is through strategic partnerships that will help us expand and accelerate growth. For example, we recently announced a strategic partnership with a leading group purchasing organization, OMNIA Partners, to help businesses across the private sector source more tailored and efficient workforce solutions. Implementation has also begun for the UK Armed Forces engagement that I mentioned last quarter, where we will serve as a delivery partner providing employer brand and candidate attraction services. Across the organization, we are committed to finding new and differentiating ways to capture demand and better leverage our strengths and assets to deliver long-term profitable growth. While economic uncertainty persists, creating a challenging market environment, the long-term staffing outlook remains positive, and we are enthusiastic about the opportunities ahead. Evolving workforce needs and structural staffing shortages create compelling opportunities for our business, and we are confident that our strategic priorities in combination with our many strengths and assets will enable us to advance our mission to connect people and work while delivering long-term shareholder value. I will now pass the call over to Carl, who will share further details around our financial results and outlook.

Thank you, Taryn. Total revenue for the quarter was $370 million, a decline of 8%, and at the high end of our outlook range. Included in these results is 3 percentage points of growth driven by our recent acquisition of HSP. As expected, overall market demand remains soft as uncertainty and client caution continue to weigh on the staffing industry. While these factors led to subdued volumes across most verticals, our teams are doing a fantastic job capitalizing on growing markets and creating opportunities for additional growth. For example, our onsite team outperformed the prior year in new business wins this quarter, and our commercial driver business delivered double-digit growth for the third consecutive quarter. Gross margin was 23.3% for the quarter, down 140 basis points. Lower workers' compensation costs driven by favorable development of prior year reserves contributed 130 basis points of expansion. This was offset by changes in revenue mix, with more favorable trends in our lower margin businesses contributing to a 210 basis points decline. Pricing pressures consistent with current market conditions drove another 30 basis points of decline, and certain software depreciation now being reported in cost of services contributed 30 basis points. Keep in mind, software depreciation is non-cash and excluded from our EBITDA and adjusted EBITDA calculations. We successfully reduced SG&A by 12%, outpacing our revenue decline as we remain disciplined and committed to enhancing our profitability. We have made significant progress creating greater flexibility to scale, so while our profitability traditionally expands quickly as revenue grows, our lean cost structure and improved efficiencies mean that we're even better positioned to deliver enhanced profitability as industry demand rebounds. We reported a net loss of $14 million this quarter, which included a small amount of income tax expense primarily associated with our foreign operations and essentially zero income tax benefit on U.S. operations due to the valuation allowance in effect on our U.S. deferred tax assets. Conversely, we recognized a tax benefit of $12 million on similar pretax results in Q1 last year. As a reminder, the valuation allowance has no impact on our operations, liquidity, or debt covenants. Adjusted net loss was $12 million, while adjusted EBITDA was minus $4 million. Now let's turn to our segments. First, I'd like to call out our new PeopleSolutions segment, which includes our previously reported PeopleScout segment, as well as our newly acquired HSP business. This reporting structure combines our more professional and specialized service offerings into a single view, aligning with our commitment to expand in high-growth end markets and high-value roles as we target significant growth opportunities in attractive sectors, such as healthcare. Revenue for our PeopleSolutions segment declined 2%, with HSP performing in line with expectations and contributing 24 percentage points of inorganic growth, partially offsetting the segment's organic decline of 26%. Also included in these results is an 8 percentage point decline from the client loss we discussed in previous quarters. Overall, clients continue to face cost pressures and uncertainty around their workforce needs, leading to reduced hiring volumes. Despite the challenging market dynamics at play, our teams continue to outperform in new business wins, especially in high-value, professional roles and attractive end markets, positioning us well to drive further revenue expansions as customers' hiring volumes return. PeopleSolutions segment profit margin was down 620 basis points due to the lower operating leverage as revenue declined. PeopleReady revenue declined 15%, which includes one point of decline from our February 2024 sale of our on-demand business in Canada. Reduced client volumes continued across most verticals and geographies, with the largest being in hospitality and manufacturing. While market conditions continue to evolve, we are encouraged to see improved trends in our on-demand business as we exited the quarter and growing momentum in skilled trades with strong new business wins and a healthy pipeline of additional growth opportunities. PeopleReady segment profit margin was up 70 basis points, largely driven by favorable workers' compensation reserve adjustments, which were partially offset by lower operating leverage as revenue declined. PeopleManagement returned to growth this quarter, with revenue up 1%, driven by strong results from our commercial drivers' business. This marks the third consecutive quarter of double-digit growth in our commercial drivers' business, and while onsite client volumes declined for the quarter, trends showed signs of improvement as we exited the quarter, bolstered by continued strength in our new business wins. PeopleManagement's segment profit margin was flat as our disciplined cost management actions continue to drive improved efficiencies. Now, let's turn to the balance sheet. We finished the quarter with $23 million in cash, $58 million of debt, and $71 million of borrowing availability, resulting in total liquidity of $94 million. We continue to maintain a very focused capital strategy, balancing strategic investments with maintaining a strong liquidity position to pursue additional growth opportunities. This provides us with great flexibility and ensures we are ready to capitalize as market demand rebounds. Turning to our outlook for the second quarter, we expect revenue of minus 1% to plus 5% year-over-year. This includes five percentage points of inorganic growth from the acquisition of HSP. Our outlook reflects a continuation of current market trends because, while there are some signs of improvement, the business landscape remains unpredictable. I also want to call out the roughly $9 million in COVID-19 government subsidy benefit we expect in the second quarter, with $3 million flowing through cost of services and $5 million in SG&A. Also, keep in mind, given the seasonality of our business, we typically see our highest volumes in the second half of the year. So, while we expect improved operating leverage in the second quarter, our lean cost structure will drive additional margin improvement as we move through the year. Additional information on our outlook can be found in our earnings presentation shared on the website today. Before we open the call up for questions, I want to turn it back over to Taryn for some closing remarks.

Thank you, Carl. As you have heard from us today, we remain dedicated to helping businesses adapt as market conditions continue to evolve, and we are committed to growing our business, controlling costs to improve profitability, and advancing our strategic priorities. We are confident that we have the right people, technology, and resources to drive TrueBlue forward and capitalize on the growth opportunities ahead, enhance shareholder value, and advance our mission to connect people and work. This concludes our prepared remarks. Operator, please open the call now for questions.

Good afternoon, Taryn and Carl. I wanted to ask about how each month performed in the quarter. Did you notice any differences as businesses faced more uncertainty, or was each month fairly consistent throughout the quarter?

Hi, Kartik. Thank you for the question. In a challenging environment, PeopleManagement returned to growth in the first quarter and continued to achieve success with new deals, securing over $30 million to $35 million in annualized wins for the quarter we discussed last time. The momentum in PeopleManagement has persisted as we moved from Q1 into April. We are also optimistic about some positive trends within PeopleReady, both in the first quarter and into April, as we focus on driving growth by capturing market share in the current environment. One significant way we are doing this is by organizing our PeopleReady on-demand team into territories and adding sales representatives nationwide to implement targeted sales strategies in each area.

Yes, and just to add onto that, Kartik, we've also seen some positive trends in the revenue growth by state. So we're seeing more geographies growing than we have in previous quarters, with more than about a third of our states returning to growth in March. This trend improved as we progressed throughout the quarter and continued into April. I know you also had just kind of a question on the monthlies and kind of how they went. Our PeopleReady business exited the quarter in March at minus 8%, and PeopleManagement exited the quarter in March at plus 4%. And then April trends, really similar to kind of how we've exited the quarter, which is pretty positive news given the uncertainty from all the tariff news.

Yes, definitely. I think, Taryn, you talked about some field sales reps, especially for the PeopleReady business that came in in the first quarter. I know maybe this is too early, but I'm curious if there's any signs of how they're doing, maybe any green shoots in that strategy?

Yes, thank you for the question. The first wave of the new PeopleReady field sales reps joined in quarter one, and we are on track to have expanded our sales team by 50% by the end of Q2, which will bring our total number of sales reps in the field to approximately 165. We do continue to see those sales-enabled territories performing better than the rest of the PeopleReady on-demand business, and I'll let Carl give more specifics on those growth trends.

Yes, thanks, Taryn. Yes, so, Kartik, just those sales-enabled territories, they did outperform kind of the rest of the business by several points in Q1, and that trend continued in April where the territories exceeded the comp group, and that spread actually expanded. So we're feeling good about our focus on this.

And then just one last question. Just on HSP, the performance of the first quarter, how it compared to your expectations, and if there's been any change in fundamentals in that business this quarter?

Yes, no, thanks for the question, Kartik. Again, yes, financial results for HSP in Q1 were largely in line with our expectation as well as our guide for Q2. So, feeling good about that. Still early days with them, but yeah, right in line with where we had, and the margin profile there was kind of in the mid-single digits where we expected for the first quarter as well.

Perfect. Thank you very much. I appreciate it.

Good afternoon. Regarding HSP, what growth rate did they achieve this quarter, and what do you project for their organic growth rate if they reach that 5% of revenue?

Yes, I'm a bit uncertain about the 5%, but they delivered about $11 million in the quarter. As we've mentioned, HSP has historically outperformed the market during both growth and decline periods, and we anticipate that will continue in the current environment. I want to remind you, Mark, that because HSP primarily serves state and local government clients, their fiscal year ends on June 30th. Therefore, our Q1 results were approximately flat compared to the revenue results and trends we observed in Q3 of '24, and that’s how we have been modeling the business.

So, for this quarter coming up, you're basically expecting flat year-over-year revenue growth?

It was flat in Q3, and our expectations are aligned with our Q2 and Q1 results.

And Q1 was flat, or what was their organic growth rate in Q1?

The organic growth rate was similar. So, we didn't own them, obviously. We owned them as of January. What I was talking about is the HSP business has a kind of year start as of Q3. So, Q3 of '24 was flat. So, Q1 of '21 results were flat to Q3 of '24, and that's how we've modeled the business and talked about it so far.

Can you discuss their margin profile regarding gross margins? I'm examining the Q2 guidance related to gross margins and trying to understand the factors influencing that.

Yes. Gross margins kind of right around PeopleManagement margins from a gross perspective, and then our expectations for EBITDA margins are kind of high single-digit EBITDA margins for Q2.

The gross margins are part of the reason for the year-over-year decline of 220 to 180 basis points, influenced by the mixed contribution from HSP.

That's absolutely right.

Okay. Great. And then, regarding Kartik's question, what feedback are you receiving from the companies you're working with? Considering that Liberation Day was on April 2nd, have you noticed any changes in the pace of business wins, pauses, or similar matters since then? Additionally, can you share insights regarding PeopleReady, PeopleScout, and PeopleManagement? Are you observing any variations from an industry or vertical standpoint?

Yes. Thank you for the question, Mark. I would just say that the uncertainty and caution continues with our customers kind of pre- and post-Liberation Day. The uncertainty is certainly weighing on them, and it is creating some reduced hiring volumes and smaller scope deals as businesses and our customers are navigating this uncertain environment, I would say. From a pause perspective, we're seeing more of that in our PeopleScout business where customers are instituting hiring freezes or slowing down their hiring as they kind of wait this out and determine what their workforce needs will be. But I would just say that the uncertainty has continued.

Mark, I believe there were a couple of questions there, so I'll try to address them. As I mentioned earlier, the trends in April have been quite similar to how we finished the quarter, at least in the first few weeks of April that we have observed. This is, of course, following that news. You also inquired about trends in different geographic areas. I would say the trends... Or industry vertical. Yes, the biggest improvement that we saw were really in kind of transportation, retail, and professional services from an end market perspective in Q1. The improvement in transportation was really driven by our Centerline business, but also other brands saw improvement as they have some clients in this vertical that are less cyclical. We continue to see softness in, you know, as we said in prepared remarks, manufacturing, some in construction, and hospitality as well.

Thank you. Very helpful.

Hey, this is Ryan on for Jeff. I know a lot of the tariff stuff is still up in the air, but are there any benefits you're seeing or might expect to see from reshoring American manufacturing? And then on a prior call, you called out heightened activity on the southern border. I was wondering if you have any updates there.

Yes, thank you for the question. We're carefully monitoring the news and assessing the potential indirect impacts that tariffs will have. But tariffs could certainly lead to more onshore manufacturing, which would be a tailwind for our business. And so we certainly have customers preparing for that. On the immigration side, many customers and prospects are increasingly looking to TrueBlue to ensure that they have a workforce that's authorized to work in the United States. In our staffing business, customers across multiple industries are increasingly performing internal audits to ensure that their workforce complies with current regulations. On the question regarding the southern border states, we did see positive trends in those southern border states continue through the quarter, specifically in Texas, Arizona, and Nevada.

Thank you very much. And then just for the follow-up, I was wondering if you could break down the revenue guidance between your three segments?

Yes, absolutely. Thanks for the question. So I'll just, in total, write minus 1% to 5% growth, which is a midpoint of 2%. And just a reminder, that includes five-point impact due to the acquisition of HSP. I'm going to just hit the midpoints for the rest of the segments. The midpoint for PeopleReady is minus 3%. The midpoint for PeopleManagement is plus 3%. The midpoint for PeopleSolutions is plus 29%. If you exclude HSP from that, that would have PeopleSolutions on an organic basis at minus 17%. And then just another reminder is just, look, the hospitality client loss we discussed in previous quarters creates about a point of headwind for TrueBlue and 10 points for PeopleSolutions, and we'll lapse those comps as we execute too.

Thank you very much.

Of course. Thanks for the questions.

Hey, good evening.

Hey, Marc.

Could you provide some insight into the flow of potential candidates? Are there any impacts from the headlines or economic shifts on candidate availability? If there are changes, are there specific areas where candidate availability has increased or decreased?

Yes. So Mark, at least from a fill perspective, we're continuing to see expansions in our fill rates. So not having trouble fill the orders that we have. We've seen our fill rates getting to 90% in Q1 here. So we continue to be able to fill the orders that we're getting.

Can you discuss any year-over-year pricing changes that are not related to revenue mix, particularly in terms of general pricing trends? Are there specific areas facing challenges or where you're noticing significant pushback?

Yes. Thanks for the question, Marc. We're seeing this type of pricing pressure we would expect in this type of environment as our clients certainly remain cost-conscious. But overall, we've maintained our pricing discipline and continue to look for ways to drive enhanced efficiencies to offset that.

Okay, great. And then maybe could you share a little bit as far as the, as JobStack continues to be a bigger piece and maybe what you're seeing there as far as those benefits, are there any particular areas that are specifically helpful as far as market share gains? And is that along, and as a tangent from that, is that along the lines of your expectations or better or worse? How should we think about that?

Yes, thanks for the question. As you know, having our own proprietary version of JobStack allows us to control our roadmap and quickly ensure that we're meeting the needs of our customers and our associates. And so our roadmap is delivering as expected. One thing that I'll call out is that our App Store rating continues to outperform competition in this space. And feedback indicates from those ratings that our users are highly appreciative of the app's convenience, ease of use, and its ability to really quickly help them find work. And they're also highlighting that they value the flexibility to choose work based on their schedule. A number of enhancements have been made in the tool. One is our ReadyMatch technology, which helps instantly match job requirements with a pool of qualified workers and makes it easy to invite the best fit workers to the job. Our digital onboarding experience is working as we would expect, where associates are able to onboard in as little as 30 minutes and immediately begin self-dispatching to available jobs. So I would say working as expected.

Sounds encouraging. Thank you very much.

Thank you, Marc.

Thank you. There are no further questions at this time. I'd like to hand the floor back over to Taryn Owen for any closing comments.

Thank you, Operator, and thank you, everyone, for joining us today. I also want to take this opportunity to thank the entire TrueBlue team for their tremendous efforts providing our customers and associates with exceptional service and their commitment to advancing our mission to connect people and work. We look forward to speaking with all of you at upcoming investor events and on our next quarterly call. If you have any questions, please don't hesitate to reach out. Have a great evening.

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