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Greetings, and welcome to the TrueBlue First Quarter 2024 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. At this time, I'd like to remind everyone that today's call and slide presentations contain forward-looking statements, all of which are subject to risks and uncertainties, and management assumes 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 SEC filings could cause the actual results to differ materially from those in these forward-looking statements. Management uses non-GAAP measures when presented 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 TrueBlue's Investors 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. We appreciate you being here with us today. As we expected, the challenging market conditions we discussed on our last call continued in the first quarter. Revenue for the quarter was $403 million, down 13% compared to the prior year and right in line with our outlook as economic uncertainty continued to weigh on businesses, leading to reduced spend and curve hiring trends. While current demand levels are subdued, we continue to manage through this market cycle with agility and discipline. Our teams are staying highly engaged with clients to address their current needs and ensure we are well positioned to support them as their needs change or expand. We are leveraging our flexible and short duration offerings for those clients that are hesitant to make long-term workforce commitments and tapping into opportunities in high-growth and attractive end markets. We are committed to growing sales by providing excellent service and responding to our clients' immediate and evolving needs. Alongside our commitment to meet the needs of the market today, we are progressing the strategic priorities we outlined last quarter, which will enable us to capture market share and enhance our long-term profitability. Positioning our contingent staffing business to compete in a digital forward future is a key component to our strategic plans. During the quarter, we continued the rollout of our new proprietary JobStack app, which allows us to control our road map and quickly address evolving user needs. We are excited about the opportunities this real-time insight creates, allowing us to implement competitive enhancements faster and making it easier for our customers and associates to engage with us. We are on track to complete the rollout this year, which will represent a significant achievement in the digital transformation of our business as we remain focused on driving efficiencies and strengthening our market position through a differentiated experience that combines our technology with our expansive market presence and expertise. Expansion in high growth, less cyclical and underpenetrated end markets is a key strategic priority to capitalize on secular growth opportunities. We are leveraging our deep expertise, flexible solutions and expansive service offerings to capture growth opportunities in attractive end markets such as skilled trades and health care. Within skilled trades, we continue to excel in the renewable energy vertical with strong demand in the first quarter and a healthy pipeline for continued growth potential. Within RPO, we are encouraged to see our efforts gaining momentum with recent wins serving the health care market and diversifying into higher skilled placements. These wins help us to increase our market presence and grow our experience to drive further growth opportunities in high-value and high-growth end markets. As we said last quarter, another key element of our strategic plan is the simplification of our organizational structure to drive enhanced focus and profitability. During the quarter, we completed the sale of our on-demand labor business in Canada, which allows greater focus on our U.S. staffing operations where we are an industry leader. We also increased synergies within our staffing business through greater leverage of our technology assets across brands and consolidated leadership within our on-site business. Combining these actions with our cost discipline is already driving results with improved profitability for our PeopleManagement segment this quarter despite the weakness in demand. In PeopleScout, we made strides in driving enhanced focus by streamlining our global leadership structure. We further eliminated silos amongst our project management and internal talent acquisition teams enterprise-wide to better leverage experience and synergies and driving innovation across the organization. While we will continue to go to market under our current well-established brands, we are aligning our internal organization around 2 core specialties: commercial staffing and direct hire. When we talk about commercial staffing, this encompasses our on-demand and on-site industrial staffing services as well as our skilled trades and commercial driving services. Direct hire includes our go-to-market brand PeopleScout with its strong growth and margin prospects, simplifying our organizational structure creates opportunities to drive efficiencies and bring our teams closer to our clients and associates, allowing us to reduce costs, eliminate silos, and better leverage our combined strengths to deliver long-term profitable growth. As we move forward, we remain laser-focused on leveraging our inherent streaks to capture market share and managing our cost structure with discipline to enhance our long-term profitability. While current market dynamics are challenging, the long-term staffing outlook remains positive. Structural staffing shortages and evolving workforce needs create compelling long-term opportunities for our business, and we are well positioned to capitalize with our competitive strengths, tremendous assets and clear strategic priorities. We are excited about the opportunities ahead, and we are confident that we have the right people, technology and resources to drive our strategic priorities forward, enhancing shareholder value and advancing our mission to connect people and work. 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 $403 million, a decline of 13% and right in line with our outlook. As expected, weakness in demand trends continued in the first quarter with businesses focused on reducing costs and asking more from their existing teams. While economic pressures led to overall softness in market demand, there were some pockets of strength. For example, we roughly doubled our renewable energy work again this quarter. This marks the seventh straight quarter of revenue growth in this vertical, and we expect continued success in this space with an attractive pipeline and our strong market position. Gross margin was 24.7% for the quarter, down 180 basis points. The primary driver of the decline was unfavorable changes in revenue mix, both from increased renewable energy work as well as a decline in our highest margin business, PeopleScout. The increase in PeopleReady's renewable energy work reduced our total gross margin because of the pass-through travel costs involved in that business. Outside of these costs, the underlying margin for renewable energy work is consistent with other large PeopleReady accounts and the impact to total gross margin will normalize as we lapse low-value comparable periods. We reduced SG&A by 13%, matching our revenue decline for the quarter. We are operating with discipline and focus in the areas we can control, as demonstrated by our actions to reduce costs and better align our cost structure with client demand. We are confident in our ability to manage through this market cycle with a focus on enhancing our profitability and ensuring we are well positioned as conditions improve. We reported a net loss of $2 million this quarter versus a net loss of $4 million last year. Included in our results for the quarter was an income tax benefit of $12 million due to the favorable impact of job tax credits. Adjusted net income was $1 million versus an adjusted net loss of $2 million last year, while adjusted EBITDA declined to minus $3 million versus positive $3 million last year. Now let's turn to the specifics of our segments. PeopleReady revenue decreased 12% and segment profit margin was down 260 basis points. Softness in demand trends continued in the first quarter as client volumes declined across most verticals and geographies, with the largest being in retail, hospitality and service industries. General market decline was partially offset by continued growth in renewable energy work, which roughly doubled for the quarter. From a margin perspective, the contraction was largely driven by lower operating leverage as revenue declined as well as increased revenue mix from renewable energy work, which includes more pass-through costs. After more than 10 quarters of favorable spread between bill and pay rate inflation, we are beginning to see the type of pricing pressure we would expect in this type of economic environment, with bill rates up 5.8% and pay rates up 6.1%. This dynamic is normal for our industry as customers look to cut costs and staffing companies compete in a lower demand environment. We continue to demonstrate strong pricing discipline, and we expect this to improve as the business environment returns to growth and demand rebounds. PeopleScout revenue decreased 33% and segment profit margin was down 230 basis points. The decline in demand was driven by lower client volumes as businesses continue to face economic cost pressures, leading to curved hiring trends. Businesses are seeing less churn in their employee base and many remain uncertain around their workforce needs, making them more selective in the roles they choose to fill. For some, hiring volumes have declined to a level where they are relying more heavily on internal resources to fill jobs. All these factors are playing into the reduced market demand. The margin contraction was driven by lower operating leverage as revenue declined. PeopleManagement revenue decreased 7%, while segment profit margin was up 220 basis points. The decline in demand was primarily within on-site services, driven by lower retail client volumes consistent with the macro conditions evident in that vertical. Meanwhile, we're encouraged to see our commercial driving services returned to growth in the quarter. PeopleManagement segment profit margin expanded due to disciplined cost management actions to better align our cost structure with client demand. Now let's turn to the balance sheet. We finished the quarter with no debt, $36 million in cash and $140 million of borrowing availability. We repurchased $10 million of common stock during the quarter, leaving $45 million remaining under our authorization. Our balance sheet is in excellent shape, providing a strong liquidity position and great flexibility to support future growth opportunities. Turning to our outlook for the second quarter of '24. We expect a revenue decline of 16% to 10%. This includes a 1-point drag on total company revenue growth due to the sale of our on-demand business in Canada. While there are signs of improvement in certain end markets such as transportation and manufacturing, we have yet to see an indication as to when the overall demand trends will turn. Our outlook reflects a continuation of current market trends in the second quarter against the less challenging prior year comparison. We expect a $10 million COVID-19 government subsidy benefit in the second quarter from the resolution of a payroll tax matter, with $3 million flowing through cost of sales and $7 million in SG&A. Keep in mind, with the seasonality of our business, we typically see our highest volumes in the second half of the year. And while we expect improved revenue and operating leverage in the second quarter, our lean cost structure will drive additional margin improvement as we move through the year. It's also important to note that our effective tax rate is highly sensitive in periods of low profitability, where tax credits can drive significant movement. We expect the statutory income tax rate before job tax credits of 24% to 28% for the year with job tax credits of $4 million to $8 million. Additional information on our outlook can be found in the earnings presentation shared on our 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 committed to advancing our strategic priorities and managing through this challenging market cycle with the agility and discipline needed to return to profitable growth. We understand the current market dynamics and the needs of our customers, and we are taking decisive actions to preserve and enhance our strengths, ensuring we are well positioned to capitalize on growth opportunities as conditions improve. We are confident that combining our strategic priorities with our many strengths and assets will enable us to advance our mission to connect people and work while delivering long-term value. This concludes our prepared remarks. Operator, please open the call now for questions.

[Operator Instructions] Our first question comes from the line of Jeff Silber with BMO Capital Markets.

I was wondering if you can give us a little bit of color on the intra-quarter trends in the first quarter and what's happened so far in the second quarter if there's been any change?

Yes, absolutely. Thanks, Jeff, for the question. First, just as we kind of think back on the quarter, look, we ended at minus 13% with PeopleReady at minus 12%. If you exclude Canada, that was all around 11%. PeopleManagement was down 7% and PeopleScout was down 33%. That was right in line with our outlook, right, at minus 13% for the total company, minus 11% for PeopleReady, minus 6% for PeopleManagement and minus 35% for PeopleScout. As we look to Q2, we're down 13%, which includes a point from Canada as well, the total company. PeopleReady is down 15% for the quarter, which includes 2 points of headwind from Canada. PeopleManagement, the midpoint is at minus 4% and PeopleScout at minus 28%. Jeff, as you're asking about kind of results intra-quarter, the results from staffing are really comparable kind of each month to the quarter results. And we are seeing very similar results in April, which is in line with our outlook. I think the one item that's important to note is we are seeing a sequential build in Peopleready from March to April. However, it's a bit softer than our kind of pre-pandemic historical averages, which is also reflected in our outlook.

Okay. That's really helpful. You actually asked my second question about the outlook by segment. And then generally, when you talk to customers, are you seeing any signs of kind of a light at the end of the tunnel or it's still kind of steady as she goes?

Jeff, this is Taryn. I -- we have a couple of bright spots within our customer base renewable, which we spoke about in our prepared remarks. Transportation returned to growth in the quarter, as did manufacturing in our people management on-site business. And so those are a couple of bright spots that we are encouraged by. However, when we're out talking to customers more broadly, they're still in a place of uncertainty and really waiting for economic conditions to improve before they make long-term workforce decision. So that continues to be what we are hearing from customers overall.

Our next question comes from the line of Kartik Mehta with Northcoast Research.

I think, Taryn, you might have said something about price competition. Finally, coming into the market. I was wondering if you would be able to elaborate, is this something new? Did it start at the beginning of the year? And what does it look like now compared to what you've seen in the past?

Thanks for the question, Kartik. I'll hop in here and let Taryn add any additional color if you ask them. But from really a bill pay spread, we talked about this the last couple of quarters, right? We -- after more than 10 quarters of favorable spreads, we are beginning to see some of the type of pricing pressure that we'd expect in this type of economic environment, right? This quarter, our pay rates were up 6.1%, our bill rates were up 5.8%. That only led to about basis point impact on our margin for the quarter. We expect our results to be slightly better in Q2 really because of signs of pay rate softening in some parts of the country, which is really leading the kind of -- will lead to improved bill pay spread in the second half of the year. Just to kind of put this in perspective, Kartik. Look, if you look at kind of where we saw pay rates increase in '22, we were up like 8%. In '23, we were up around 7%. And in the first quarter, we're seeing 6%. So we see that continuing to moderate and we don't think that's going to be a big headwind for us. But just like with any pricing, we make sure that we're priced competitively for our customers and also that they know that our bill rates are competitive in the market, and they provide value for the services we provide.

And Kartik, just to add to that, pricing is becoming an increased part of the conversation, particularly when we look in our PeopleScout business and our people management business, where customers are going out to bid, and we're seeing an increase in RFPs that are coming to market. A lot of that is driven by customers looking at pricing in the market as they continue to be under pressure themselves.

And then when you look at some of the metrics for the business, such as job orders and other indicators you look at, particularly job orders, are they declining at the same rate as the revenue? Or is there a difference? And maybe based on the type of jobs you're seeing now versus a year ago?

It's similar in terms of the type of jobs that we're seeing a year ago with the exception of the progress that we've made in renewable that we mentioned. Transportation, our Centerline business, returned to growth. So we're seeing an increase in orders there and customer activity as well as manufacturing in the on-site business.

Our next question comes from the line of Mark Marcon with Baird.

The renewables business, you mentioned it doubled. What's the size of it now? And what would the size be if we strip out the pass-through costs?

Thanks, Mark. I'll take that. Yes, it did nearly double. We haven't kind of given the full size of our renewable business. It's stuck within our kind of skilled trades business within PeopleReady. I think the best way to kind of think about that, that's roughly about 20% of total company revenue in our skilled trades. If you add in our Centerline business as well, it's about 25%. And then as we talked about last week from a pass-through perspective, there is pass-through travel costs within that business. However, if you exclude those pass-through travel costs, the renewable business is very similar to other large PeopleReady customer accounts.

Okay. And then I was just trying to get a sense for -- you mentioned renewables has continued to be strong. transportation and manufacturing have actually turned. And so I was trying to get a consolidated view in terms of the portions of the business that have turned that seem like they're getting a little bit better relative to the rest, and just trying to think through when the overall business would likely turn?

Yes. And I think that's really where I kind of point out that skilled business, right? That kind of takes our skilled field network, our renewable business, Centerline, which is our driver business, and that's really where we're starting to see better demand trends. Taryn also mentioned earlier that we've seen manufacturing start to grow within our on-site business. So that's another bright spot that we've seen across the portfolio.

Great. And you did a nice job in terms of managing SG&A. Can you talk a little bit about like what your expectations would be for SG&A as we look towards the second quarter?

Yes, absolutely. So yes, if we just kind of look back on Q1, right? We guided to about 9% decline year-over-year. We overdelivered on those cost actions and got to minus 13%. We were guiding to a midpoint of $99 million, which is roughly down, call it, 18% year-over-year. It is important to note, Mark, that, that includes kind of a $7 million onetime benefit from our COVID subsidies as we talked about in the prepared remarks. So if you adjust that out, it's really in line with Q1 at roughly down 13% or about $106 million for the quarter. We expect that to carry through the year. We will make selective investments as we see opportunities to accelerate growth, but it's not going to be anything material. We actually -- we feel like we've made really good progress on SG&A over the past year, and many of these reductions are going to be permanent. Some will come back, obviously, as we get higher revenue. But we feel like when we look at the overall business, we deliver anywhere between 17% and 22% across all of the segments. In segment profit, we think, on a blended average, with the actions we'd take, we'd expect to be on the high side of that range as revenue recovers.

Mark, just to add to that, an important element of our strategy is to simplify our organization structure. So we're really looking at making structural changes to the business that will help drive efficiencies, bring us closer to our customers and not only not only increased profitability, but also get our business and teams closer together so that we are increasing cross-selling opportunities as well.

Great. And then the balance sheet is in really good shape. Can you talk a little bit about simplification and structural? And what sort of potential strategic changes you're contemplating at this point?

Sure. We're really focused on 3 strategic priorities. One is advancing our digital transformation across the enterprise. We made really good progress on that in the last quarter with our continued rollout of our own proprietary JobStack app. So really pleased with the project there. The second is expansion of market presence into high-growth underpenetrated market. So we have some wins to share there around wins in health care and our PeopleScout business. Just a couple of examples. We won a deal with a hearing health care provider where we're hiring both retail roles and audiologists in Australia, New

That's good to hear. And can you elaborate a little bit with regards to digital in terms of the transformation? And putting the JobStack on your proprietary system, what are the actual on-the-ground benefits that you're actually seeing from that? Is it easier from a candidate's perspective, easier from a client's perspective? Are the people sticking through the entire sign-on process? What are you seeing there?

Great. Thank you for that question, Mark. I'll just start with the strategy around having our own version of JobStack allows us to control our road map and implement competitive enhancements and quickly address the evolving needs of our customers and our associates that are unique to our business. And this is the level of control that we did not have in the past. Around improved usability, there are a couple of things that I can point to in our initial release. The first is that our associates can now complete an application and onboarding paperwork fully in the digital application, ultimately reducing the time that it takes for them to be deployed to an assignment. It also has more robust job searching and ability to filter based on location proximity for our associates. For our customers, we are able to respond very quickly to their feedback. So for example, we have a new time approval workflow in the new JobStack. And we got some feedback early on that when a customer had multiple associates on assignment, it was too cumbersome to ultimately approve the time. And so we were able to very quickly change that workflow and address the customers' needs. So those are a couple of examples. The third I would give is for our internal staff, our field employees who are working so hard every day to put people to work. It has improved visibility for our field staff into orders and associates that are available through the desktop application. So those are a couple of highlights for you.

Our next question comes from the line of Marc Riddick with Sidoti.

So I wanted to touch -- one of the things that I sort of noticed the -- for the 2Q guide on the share count that you're using that's below where you finish the -- where first quarter average was, I was wondering if you could talk a little bit about, is that a function of the cadence of the timing of share repurchases? Or are we looking at a pickup in the pace of share repurchase activity in the second quarter?

Yes, you're right with your first response there, Marc. So we did -- we purchased $10 million worth of shares in Q1, which is roughly around 3% of kind of overall share count. So you're seeing that weighted average and in our guide, I think we had $30.5 million as what the numbers to use for Q2.

Got you. And then I was wondering as far as -- the commentary as far as obviously, the client spending kind of situation is what it is. Are you getting a sense that there are any particular groups or industry verticals that might be sort of first to move or first to be more active and maybe whether it's interest rates that would drive that or not? But are there any particular client verticals that you're looking at that you think would sort of be first to sort of get moving in a positive direction?

Yes, Marc, I can take that one. So like kind of in the quarter, we saw most verticals in geography kind of continue to see that softness with the largest kind of being in retail and service industries. We mentioned some of the bright spots we're seeing, particularly in transportation and manufacturing. And I think that we're seeing those in kind of broader industry metrics as well, which we're happy to be able to see that kind of return to growth in ours. So I'd say that those are probably the bright spots that we're seeing. And traditionally, that's what we've seen at least in the supply chain, right? You make goods, you transfer those goods, and that's what starts to pick up. So we're not seeing the full increase in demand, but happy to see those things turn to growth in the quarter.

Great. And then the last one for me. I was wondering if you could just sort of maybe an update on your thoughts and views around talent availability if we're starting to see any pickup there? Or if so, any particular areas where you're starting to see maybe a little more talent there, maybe at the beginning of the year? Or is it about the same as it was then?

I would say, Marc, that our fill rates are in the high 80%, which is really strong for us compared to prior periods. And so we continue to see high fill rates, and our teams are certainly staying connected to our associates and continually recruiting. So there -- that continues to stay strong for us, and we expect for that to continue as demands return based on the recruiting work that we're doing in the interim here.

Yes. Maybe just to add on to that one, too, Marc. Taryn is absolutely right, right? We've seen that increase in our fill rate. Look, recruiting is what we do at our core. We've continued to recruit talent and see that available talent and be as evidenced by increased fill rate. If you think about kind of where we were in '23, though, high 70s, low 80s. So it is an improvement that we're seeing here in Q4 or Q1 of '24. So I just wanted to add that, so you had kind of the prior year numbers.

There are no further questions at this time. I'd like to turn the call back over to Taryn Owen for closing remarks.

Thank you, operator, and thank you, everyone, for joining us today. I do want to take a moment to thank the entire TrueBlue team for their tremendous efforts and commitment to advancing our mission to connect people and work. We look forward to speaking with you at upcoming investor events and our next quarterly call. If you have any questions, please don't hesitate to reach out. Have a great evening.