TrueBlue Inc

Previous wording

PeopleReady provides clients with dependable access to qualified associates for their on-demand, contingent general and skilled labor needs to supplement their permanent workforce. Our services range from providing one associate to hundreds, and are generally short-term in nature as they are filling the contingent staffing needs of our clients. PeopleReady connects people with work in a broad range of industries through our network of branches across all 50 states in the United States (“U.S.”) and Puerto Rico. Augmenting our branch network and consolidated service centers is our industry-leading mobile app, JobStack®, which connects people with work 24 hours a day, seven days a week. JobStack creates a digital exchange between our associates and clients, competitively differentiates us, and allows our branch resources to expand their sales, recruiting and service delivery efforts. Our primary focus at PeopleReady is the continued roll-out of our new, proprietary version of the JobStack app, and expansion in attractive end markets including renewable energy.

Current wording

PeopleReady provides clients with dependable access to qualified associates for their on-demand, contingent general and skilled labor needs to supplement their permanent workforce. Our services range from providing one associate to hundreds, and are generally short-term in nature as they are filling the contingent staffing needs of our clients. PeopleReady connects people with work in a broad range of industries through our network of branches across all 50 states in the United States (“U.S.”) and Puerto Rico. Our local presence is digitally enabled by our industry-leading mobile app, JobStack®, which connects people with work 24 hours a day, seven days a week. JobStack creates a digital exchange between our associates and clients, competitively differentiates us, and allows our branch resources to expand their sales, recruiting and service delivery efforts. Our primary focus at PeopleReady is the continued development of our new, proprietary version of the JobStack app, and expansion in attractive end markets, including renewable energy.

Previous wording

PeopleScout offers recruitment process outsourcing (“RPO”), managed service provider (“MSP”) solutions and talent advisory services to a wide variety of industries, primarily in the U.S., Canada, the United Kingdom and Australia. Our RPO solutions are generally multi-year in duration, highly scalable and provide clients the support they need as their hiring volumes fluctuate. Our services are designed to lower client recruiting costs while improving the candidate experience by creating strategies that facilitate our clients’ talent acquisition, development and retention goals. We tailor our services based on individual client needs by offering multiple solutions, including full-cycle RPO, project RPO, recruiter on demand, and talent advisory. Our proprietary technology platform (Affinix®) uses machine learning to rapidly source a qualified talent pool within minutes, and further engages candidates through a seamless digital experience. Our MSP business manages our clients’ contingent labor programs, including vendor selection, performance management, compliance monitoring and risk management. Our primary focus at PeopleScout is leveraging our strong brand reputation, flexible solutions, international footprint, and using Affinix technology to continue to gain market share in high-growth sectors.

Current wording

PeopleScout offers recruitment process outsourcing (“RPO”), managed service provider (“MSP”) solutions and talent advisory services to a wide variety of industries, primarily in the U.S., Canada, the United Kingdom and Australia. Our RPO solutions are generally multi-year in duration, highly scalable, and provide clients the support they need as their hiring volumes fluctuate. Our services are designed to lower client recruiting costs while improving the candidate experience by creating strategies that facilitate our clients’ talent acquisition, development and retention goals. We tailor our services based on individual client needs by offering multiple solutions, including full-cycle RPO, project RPO, recruiter on demand, and talent advisory. Our proprietary technology platform (Affinix®) uses machine learning to rapidly source a qualified talent pool within minutes, and further engages candidates through a seamless digital experience. Our MSP business manages our clients’ contingent labor programs, including vendor selection, performance management, compliance monitoring and risk management. Our primary focus at PeopleScout is leveraging our strong brand reputation, flexible solutions, international footprint and Affinix technology to continue to gain market share in high-growth sectors.

Previous wording

PeopleManagement, through our On-Site business, provides and manages contingent associates at clients’ facilities throughout the U.S., Canada and Puerto Rico. Our client engagements are generally multi-location and multi-year, and include scalable recruiting, screening, hiring and management of the contingent workforce. We deploy dedicated management and service teams that work side-by-side with a client’s full-time workforce. Our teams are an integral part of the production and logistics process, and specialize in labor-intensive manufacturing, warehousing and distribution. Our proprietary hiring and workforce management software (Stafftrack®) enables us to recruit and connect the best candidates with on-site assignments. PeopleManagement also provides dedicated and contingent commercial drivers to the transportation and distribution industries through our Centerline Drivers (“Centerline”) brand. Centerline matches drivers to each client’s specific needs, allowing them to improve productivity, control costs, ensure compliance and deliver improved service. Our primary focus at PeopleManagement is growing our client base across the transportation, manufacturing, professional services and retail sectors, while creating efficiencies in our operating model.

Current wording

PeopleManagement, through our OnSite business, provides and manages contingent associates at clients’ facilities throughout the U.S., Canada and Puerto Rico. Our client engagements are generally multi-location and multi-year, and include scalable recruiting, screening, hiring and management of the contingent workforce. We deploy dedicated management and service teams that work side-by-side with a client’s full-time workforce. Our teams are an integral part of the production and logistics process, and specialize in labor-intensive manufacturing, warehousing and distribution. Our proprietary hiring and workforce management software (Stafftrack®) enables us to recruit and connect the best candidates with on-site assignments. PeopleManagement also provides dedicated and contingent commercial drivers to the transportation and distribution industries through our Centerline Drivers (“Centerline”) brand. Centerline matches drivers to each client’s specific needs, allowing them to improve productivity, control costs, ensure compliance and deliver improved service. Our primary focus at PeopleManagement is growing our client base across the transportation, manufacturing, professional services and retail sectors, while creating efficiencies in our operating model.

Previous wording

Fiscal second quarter of 2024 summary

Current wording

Fiscal third quarter of 2024 summary

Previous wording

Total company gross profit as a percentage of revenue for the thirteen weeks ended June 30, 2024 decreased to 26.4%, compared to 27.4% for the same period in the prior year. This decrease was primarily driven by changes in revenue mix towards our lower margin staffing businesses.

Current wording

Total company gross profit as a percentage of revenue for the thirteen weeks ended September 29, 2024 remained flat at 26.2%, compared to the same period in the prior year. Changes in revenue mix towards our lower margin staffing businesses and pricing pressures were offset by lower workers’ compensation costs resulting from favorable development of prior year reserves.

Previous wording

Total company selling, general and administrative (“SG&A”) expense decreased 20.0% to $97.0 million for the thirteen weeks ended June 30, 2024, compared to the same period in the prior year. SG&A expense decreased as a result of continued operational cost management actions in response to the decline in demand for our services, and simplification of our organizational structure in line with our strategic plan. In addition, the current period included a benefit, net of related fees, of $6.8 million for recognition of certain COVID-19 government subsidies.

Current wording

Total company selling, general and administrative (“SG&A”) expense decreased 17.2% to $100.0 million for the thirteen weeks ended September 29, 2024, compared to the same period in the prior year. SG&A expense decreased as a result of continued operational cost management actions in response to the decline in demand for our services, and simplification of our organizational structure in line with our strategic plan.

Previous wording

The items above resulted in net loss of $104.7 million for the thirteen weeks ended June 30, 2024, compared to net loss of $7.3 million for the same period in the prior year.

Current wording

The items above resulted in a net loss of $7.6 million for the thirteen weeks ended September 29, 2024, compared to a net loss of $0.0 million for the same period in the prior year.

Previous wording

As of June 30, 2024, we had cash and cash equivalents of $26.4 million, no debt, and $132.5 million available under the most restrictive covenant of our revolving credit agreement (“Revolving Credit Facility”), for total liquidity of $158.9 million.

Current wording

As of September 29, 2024, we had cash and cash equivalents of $14.5 million, no debt, and $132.5 million available under the most restrictive covenant of our revolving credit agreement (“Revolving Credit Facility”), for total liquidity of $147.0 million.

Previous wording

PeopleReady revenue declined 18.9% to $223.4 million for the thirteen weeks ended June 30, 2024, and declined 15.5% to $446.1 million for the twenty-six weeks ended June 30, 2024, compared to the same periods in the prior year. PeopleReady revenue declined as a result of continued economic uncertainty, leading our clients to reduce their dependence on contingent labor to supplement their core workforce in order to manage their costs. Declines in demand were seen across most industries and geographies, but were partially offset by increased demand in the renewable energy industry.

Current wording

PeopleReady revenue declined 24.2% to $214.8 million for the thirteen weeks ended September 29, 2024, and declined 18.5% to $660.9 million for the thirty-nine weeks ended September 29, 2024, compared to the same periods in the prior year. PeopleReady revenue declined as a result of continued labor market uncertainty, leading our clients to reduce their dependence on contingent labor to supplement their core workforce. Declines in demand were seen across most industries and geographies. For the thirteen weeks ended September 29, 2024, revenue from clients in the renewable energy industry declined due to project delays caused by weather and other external factors. However, increased demand from clients in the renewable energy industry for the thirty-nine weeks ended September 29, 2024 helped partially offset demand declines in other industries.

Previous wording

PeopleScout revenue declined 31.2% to $41.1 million for the thirteen weeks ended June 30, 2024, and declined 32.3% to $87.4 million for the twenty-six weeks ended June 30, 2024, compared to the same periods in the prior year. PeopleScout revenue declined as clients are experiencing less employee turnover, and economic conditions are leading to uncertainty about future workforce needs. This has resulted in clients reducing hiring volumes, sourcing candidates with internal resources, and initiating hiring freezes to control costs.

Current wording

PeopleScout revenue declined 30.7% to $36.7 million for the thirteen weeks ended September 29, 2024, and declined 31.9% to $124.1 million for the thirty-nine weeks ended September 29, 2024, compared to the same periods in the prior year. PeopleScout revenue declined as clients are experiencing less employee turnover, and labor market conditions are leading to uncertainty around future workforce needs. This has resulted in clients reducing hiring volumes, sourcing candidates with internal resources, and initiating hiring freezes to control costs. Revenue for the current year periods were also impacted by the loss of a large hospitality client due to their decision to insource hiring for high-volume roles.

Previous wording

PeopleManagement revenue declined 6.3% to $131.8 million for the thirteen weeks ended June 30, 2024, and declined 6.4% to $265.6 million for the twenty-six weeks ended June 30, 2024, compared to the same periods in the prior year. PeopleManagement revenue declined as clients in our on-site business continued to respond to economic uncertainty by reducing dependence on variable labor, primarily within the retail industry, partially offset by growth within our commercial driving business.

Current wording

PeopleManagement revenue declined 4.5% to $130.9 million for the thirteen weeks ended September 29, 2024, and declined 5.8% to $396.5 million for the thirty-nine weeks ended September 29, 2024, compared to the same periods in the prior year. PeopleManagement revenue declined as clients in our on-site business continue to be hesitant to make significant changes to their workforce strategies after taking steps to reduce their dependence on variable labor, primarily within the retail industry. These declines were partially offset by growth within our commercial driving business.

Previous wording

Gross profit as a percentage of revenue declined 150 basis points to 25.5% for the twenty-six weeks ended June 30, 2024, compared to 27.0% for the same period in the prior year. Changes in revenue mix resulted in a contraction of 150 basis points driven by revenue growth from renewable energy clients within PeopleReady, as well as the decline in revenue in our highest margin business, PeopleScout. Our staffing businesses contributed an additional 30 basis points of contraction as a result of pricing pressure typical of a low demand environment, offset by expansion of 30 basis points from recognition of certain COVID-19 government subsidies.

Current wording

Gross profit as a percentage of revenue remained flat at 26.2% for the thirteen weeks ended September 29, 2024, compared to the same period in the prior year. Changes in revenue mix resulted in a contraction of 80 basis points, driven in part by revenue shifts toward our lower margin staffing businesses. Our staffing businesses contributed an additional 60 basis points of contraction as a result of pricing pressure typical of a low demand environment. These contractions were offset by 140 basis points of expansion from lower workers’ compensation costs driven by favorable development of prior year reserves.

Previous wording

Gross profit as a percentage of revenue declined 100 basis points to 26.4% for the thirteen weeks ended June 30, 2024, compared to 27.4% for the same period in the prior year. Changes in revenue mix resulted in a contraction of 120 basis points, driven in part by revenue growth from renewable energy clients within PeopleReady, which have lower margins than average PeopleReady clients due to pass-through travel costs, as well as the decline in revenue in our highest margin business, PeopleScout. Our staffing businesses contributed an additional 50 basis points of contraction as a result of pricing pressure typical of a low demand environment, partially offset by expansion of 70 basis points from recognition of certain COVID-19 government subsidies.

Current wording

Gross profit as a percentage of revenue declined 100 basis points to 25.7% for the thirty-nine weeks ended September 29, 2024, compared to 26.7% for the same period in the prior year. Changes in revenue mix resulted in a contraction of 130 basis points driven by revenue growth from renewable energy clients within PeopleReady, which have lower margins than average PeopleReady clients due to pass-through travel costs, as well as the decline in revenue in our highest margin business, PeopleScout. Our staffing businesses contributed an additional 30 basis points of contraction as a result of pricing pressure typical of a low demand environment. These contractions were partially offset by 40 basis points of expansion from lower workers’ compensation costs driven by favorable development of prior year reserves, as well as 20 basis points of expansion from recognition of certain COVID-19 government subsidies in the current year.

Previous wording

Total company SG&A expense decreased by $24.3 million, or 20.0% for the thirteen weeks ended June 30, 2024, and decreased by $40.0 million, or 16.4% for the twenty-six weeks ended June 30, 2024, compared to the same periods in the prior year. We have continued to execute operational cost management actions in response to the decline in demand for our services, and simplification of our organizational structure in line with our strategic plan. In addition, the thirteen and twenty-six weeks ended June 30, 2024 included a benefit, net of related fees, of $6.8 million for recognition of certain COVID-19 government subsidies.

Current wording

Total company SG&A expense decreased by $20.7 million, or 17.2% for the thirteen weeks ended September 29, 2024, and decreased by $60.7 million, or 16.7% for the thirty-nine weeks ended September 29, 2024, compared to the same periods in the prior year. We have continued to execute operational cost management actions in response to the decline in demand for our services, and simplification of our organizational structure in line with our strategic plan. In addition, the thirty-nine weeks ended September 29, 2024 included a benefit, net of related fees, of $6.8 million for recognition of certain COVID-19 government subsidies.

Previous wording

Depreciation and amortization increased for the thirteen weeks and twenty-six weeks ended June 30, 2024, compared to the same periods in the prior year, due to assets being placed into service at the end of 2023, primarily related to PeopleReady technology.

Current wording

Depreciation and amortization increased for the thirteen weeks and thirty-nine weeks ended September 29, 2024, compared to the same periods in the prior year, due to assets placed into service at the end of 2023, primarily related to PeopleReady technology.

Previous wording

A summary of the goodwill and intangible asset impairment charge for the twenty-six weeks ended June 30, 2024, by reportable segment, is as follows:

Current wording

A summary of the goodwill and intangible asset impairment charge for the thirty-nine weeks ended September 29, 2024, by reportable segment, is as follows:

Previous wording

We performed an interim impairment test as of the last day of fiscal May 2024 following the determination by management that a triggering event had occurred. As a result of this impairment test, we concluded that the carrying amount of our PeopleReady reporting unit exceeded its fair value and we recorded a non-cash goodwill impairment charge of $59.1 million, which was included in goodwill and intangible asset impairment charge on our Consolidated Statements of Operations and Comprehensive Income (Loss) for the thirteen and twenty-six weeks ended June 30, 2024. As a result of this impairment charge, the goodwill carrying value of $59.1 million for PeopleReady was fully impaired. The goodwill impairment was primarily driven by recent performance of the PeopleReady reporting unit and the temporary industrial staffing industry since our annual impairment testing date, as well as a delay in the projected timing of recovery. No further impairment loss was recognized during the thirteen weeks ended June 30, 2024. See Note 6: Goodwill and Intangible Assets, to our consolidated financial statements found in Item 1 of this Quarterly Report on Form 10-Q, for additional details.

Current wording

We performed an interim impairment test as of the last day of fiscal May 2024 following the determination by management that a triggering event had occurred. As a result of this impairment test, we concluded that the carrying amount of our PeopleReady reporting unit exceeded its fair value and we recorded a non-cash goodwill impairment charge of $59.1 million, which was included in goodwill and intangible asset impairment charge on our Consolidated Statements of Operations and Comprehensive Income (Loss) for the thirty-nine weeks ended September 29, 2024. As a result of this impairment charge, the goodwill carrying value of $59.1 million for PeopleReady was fully impaired. The goodwill impairment was primarily driven by recent performance of the PeopleReady reporting unit and the temporary industrial staffing industry since our annual impairment testing date, as well as a delay in the projected timing of recovery. No further impairment charge was recognized during the thirteen weeks ended September 29, 2024. See Note 6: Goodwill and Intangible Assets, to our consolidated financial statements found in Item 1 of this Quarterly Report on Form 10-Q, for additional details.

Previous wording

We performed an impairment test during our fiscal second quarter of 2024. As a result of this impairment test, we concluded that a trade name/trademark related to our PeopleManagement segment exceeded its estimated fair value and we recorded a non-cash impairment charge of $0.6 million, which was included in goodwill and intangible asset impairment charge on our Consolidated Statements of Operations and Comprehensive Income (Loss) for the thirteen and twenty-six weeks ended June 30, 2024. The charge was primarily driven by recent revenue performance of the related business given a decline in demand and overall economic uncertainty. The remaining balance for this trade name/trademark was $2.7 million as of June 30, 2024.

Current wording

We performed an impairment test during our fiscal second quarter of 2024. As a result of this impairment test, we concluded that a trade name/trademark related to our PeopleManagement segment exceeded its estimated fair value and we recorded a non-cash impairment charge of $0.6 million, which was included in goodwill and intangible asset impairment charge on our Consolidated Statements of Operations and Comprehensive Income (Loss) for the thirty-nine weeks ended September 29, 2024. The charge was primarily driven by recent revenue performance of the related business given a decline in demand and overall economic uncertainty. The remaining balance for this trade name/trademark was $2.7 million as of September 29, 2024.

Previous wording

Significant fluctuations in our effective tax rate are primarily due to changes in the valuation allowance against our U.S. federal and state deferred tax assets, as well as tax benefits from hiring credits and non-deductible goodwill impairment charges.

Current wording

Significant fluctuations in our effective tax rate are primarily due to changes in the valuation allowance against our U.S. federal, state and certain foreign deferred tax assets, as well as tax benefits from hiring credits and non-deductible goodwill impairment charges.

Previous wording

Based on our deferred tax asset realizability assessment performed as of June 30, 2024, we recorded a full valuation allowance against our U.S. federal and state deferred tax assets. This resulted in an increase in our income tax expense of approximately $55 million for the twenty-six weeks ended June 30, 2024. Our conclusion was driven by actual U.S. pre-tax losses beginning in 2023, combined with the significant non-cash goodwill impairment charge of $59.1 million recorded during the twenty-six weeks ended June 30, 2024.

Current wording

Based on our deferred tax asset realizability assessments performed during the thirty-nine weeks ended September 29, 2024, we recorded a valuation allowance against U.S. federal, state and certain foreign deferred tax assets. Our conclusion was driven by U.S. and foreign pre-tax losses beginning in 2023, combined with the significant non-cash goodwill impairment charge of $59.1 million recorded during the thirty-nine weeks ended September 29, 2024.

Previous wording

We evaluate performance based on segment revenue and segment profit (loss). Segment profit (loss) includes revenue, related cost of services, and ongoing operating expenses directly attributable to the reportable segment. Segment profit (loss) excludes goodwill and intangible asset impairment charges, depreciation and amortization expense, unallocated corporate general and administrative expense, interest expense, other income and expense, income taxes, and other costs and benefits not considered to be ongoing. See Note 13: Segment Information, to our consolidated financial statements found in Item 1 of this Quarterly Report on Form 10-Q, for additional details on our reportable segments, as well as a reconciliation of segment profit to income (loss) before tax expense.

Current wording

We evaluate performance based on segment revenue and segment profit (loss). Segment profit (loss) includes revenue, related cost of services, and ongoing operating expenses directly attributable to the reportable segment. Segment profit (loss) excludes goodwill and intangible asset impairment charges, depreciation and amortization expense, unallocated corporate general and administrative expense, interest expense, other income and expense, income taxes, and other costs and benefits not considered to be ongoing. See Note 13: Segment Information, to our consolidated financial statements found in Item 1 of this Quarterly Report on Form 10-Q, for additional details on our reportable segments, as well as a reconciliation of segment profit to income (loss) before tax expense (benefit).

Previous wording

PeopleReady segment profit declined $7.8 million and $13.7 million for the thirteen and twenty-six weeks ended June 30, 2024, and also declined as a percentage of revenue, compared to the same periods in the prior year, respectively. These declines were primarily due to the decline in revenue and the relatively high level of fixed versus variable costs within SG&A expense which resulted in lower operating leverage.

Current wording

PeopleReady segment profit declined $6.6 million and $20.3 million for the thirteen and thirty-nine weeks ended September 29, 2024, and also declined as a percentage of revenue, compared to the same periods in the prior year, respectively. These declines were primarily due to the decline in revenue and the relatively high level of fixed versus variable costs within SG&A expense which resulted in lower operating leverage, the effects of which were softened by our cost management actions.

Previous wording

PeopleScout segment profit declined $5.4 million and $9.4 million for the thirteen and twenty-six weeks ended June 30, 2024, and also declined as a percentage of revenue, compared to the same periods in the prior year, respectively. These declines were a result of the decline in revenue, the effects of which were softened by our cost management actions.

Current wording

PeopleScout segment profit declined $3.7 million and $13.2 million for the thirteen and thirty-nine weeks ended September 29, 2024, and also declined as a percentage of revenue, compared to the same periods in the prior year, respectively. These declines were a result of the decline in revenue, including the loss of a large hospitality client due to their decision to insource hiring for high-volume roles, the effects of which were softened by our cost management actions.

Previous wording

PeopleManagement segment profit grew $1.1 million and $4.1 million for the thirteen and twenty-six weeks ended June 30, 2024, and also grew as a percentage of revenue, compared to the same periods in the prior year, respectively. This growth was primarily due to disciplined cost management actions to better align our cost structure with client demand.

Current wording

PeopleManagement segment profit grew $1.1 million and $5.2 million for the thirteen and thirty-nine weeks ended September 29, 2024, and also grew as a percentage of revenue, compared to the same periods in the prior year, respectively. This growth was primarily due to disciplined cost management actions to better align our cost structure with client demand, as well as growth within our commercial driving business.

Previous wording

The following highlights represent our operating outlook. These expectations are subject to revision as our business changes with the overall economy. As part of our strategic plan to simplify our organizational structure, create efficiencies and bring our teams closer to our clients and associates, we continue to consolidate administrative, recruiting and support costs that serve our broader commercial staffing businesses, further leverage existing systems, and refocus our team on sales efforts to deliver future growth. Commercial staffing includes contingent on-demand, skilled and on-site industrial staffing, as well as commercial driving services.

Current wording

The following highlights represent our operating outlook. These expectations are subject to revision as our business changes with the overall economy. As part of our strategic plan to simplify our organizational structure, create efficiencies and bring our teams closer to our clients and associates, we continue to consolidate administrative, recruiting and support costs that serve our broader commercial staffing businesses, further leverage existing systems, and refocus our team on sales efforts to deliver future growth.

Previous wording

•We expect total revenue for the fiscal third quarter of 2024 to decline between 20% and 14% as compared to the same period in the prior year, which assumes current market conditions continue.

Current wording

•We expect total revenue for the fiscal fourth quarter of 2024 to decline between 24% and 18% as compared to the same period in the prior year. The decline assumes current market conditions continue, and includes a 6% headwind due to the extra week in our fiscal fourth quarter of 2023, and 1% due to the sale of Labour Ready Temporary Services, Ltd. (“PeopleReady Canada”) in early 2024.

Previous wording

•We anticipate gross profit as a percentage of revenue to decline between 60 and 20 basis points for the fiscal third quarter of 2024, compared to the same period in the prior year, due to changes to business mix.

Current wording

•We anticipate gross profit as a percentage of revenue to decline between 100 and 60 basis points for the fiscal fourth quarter of 2024, compared to the same period in the prior year, due to prior year workers’ compensation reserve adjustments not expected to repeat at the same level, and changes in business mix.

Previous wording

•For the fiscal third quarter of 2024, we anticipate SG&A expense to be between $99 million and $103 million, representing a decline compared to the same period in the prior year due to ongoing cost management efforts.

Current wording

•For the fiscal fourth quarter of 2024, we anticipate SG&A expense to be between $98 million and $102 million, representing a decline compared to the same period in the prior year due to ongoing cost management efforts.

Previous wording

•We expect basic weighted average shares outstanding to be approximately 30 million for the fiscal third quarter of 2024. This expectation does not include the impact of potential share repurchases.

Current wording

•We expect basic weighted average shares outstanding to be approximately 30 million for the fiscal fourth quarter of 2024. This expectation does not include the impact of potential share repurchases.

Previous wording

•Capital expenditures and spending for software as a service assets are expected to be between $23 million and $27 million for fiscal 2024. Approximately $3 million relates to spending for software as a service assets for fiscal 2024.

Current wording

•We expect capital expenditures and spending for software as a service assets to be between $4 million and $8 million for the fiscal fourth 2024. Approximately $1 million relates to spending for software as a service assets.

Previous wording

We believe we have a strong financial position and sufficient sources of funding to meet our short- and long-term obligations. As of June 30, 2024, we had $26.4 million in cash and cash equivalents and no debt outstanding. Under the Revolving Credit Facility, $6.2 million was utilized by outstanding standby letters of credit, leaving $248.8 million unused, which is constrained by our most restrictive covenant making $132.5 million available for additional borrowing. We have an option to increase the total line of credit amount under the Revolving Credit Facility from $255.0 million to $405.0 million, subject to lender approval.

Current wording

We believe we have a strong financial position and sufficient sources of funding to meet our short- and long-term obligations. As of September 29, 2024, we had $14.5 million in cash and cash equivalents and no debt outstanding. Under the Revolving Credit Facility, $2.7 million was utilized by outstanding standby letters of credit, leaving $252.3 million unused, of which $132.5 million is available for additional borrowing after considering our most restrictive covenant. We have an option to increase the total line of credit amount under the Revolving Credit Facility from $255.0 million to $405.0 million, subject to lender approval.

Previous wording

Cash generated through our core operations is generally our primary source of liquidity. Our principal ongoing cash needs are to finance working capital, fund capital expenditures, repay outstanding Revolving Credit Facility balances, and execute share repurchases. We manage working capital through timely collection of accounts receivable, which we achieve through focused collection efforts and tightly monitoring trends in days sales outstanding. While client payment terms are generally 90 days or less, we pay our associates weekly, so additional financing through the use of our Revolving Credit Facility is sometimes necessary to support working capital needs in times of revenue growth. We also manage working capital through efficient cost management and strategically timing payments of accounts payable.

Current wording

Cash generated through our core operations is generally our primary source of liquidity. Our principal ongoing cash needs are to finance working capital, fund capital expenditures, repay outstanding Revolving Credit Facility balances, and execute share repurchases. We manage working capital through timely collection of accounts receivable, which we achieve through focused collection efforts and tightly monitoring trends in days sales outstanding. While client payment terms are generally 90 days or less, we pay our associates daily and weekly, so additional financing through the use of our Revolving Credit Facility is sometimes necessary to support working capital needs in times of revenue growth. We also manage working capital through efficient cost management and strategically timing payments of accounts payable.

Previous wording

We continue to make investments in online and mobile apps to increase the competitive differentiation of our services long-term and improve the efficiency of our service delivery model. In addition, we continue to transition our back-office technology from on-premise software platforms to cloud-based software solutions to increase automation and the efficiency of running our business.

Current wording

We continue to make investments in online and mobile apps to increase the competitive differentiation of our services long-term and improve the efficiency of our service delivery model. In addition, we continue to transition our technology from on-premise software platforms to cloud-based software solutions to increase automation and the efficiency of running our business.

Previous wording

Outside of ongoing cash needed to support core operations, our insurance carriers and certain state workers’ compensation programs require us to collateralize a portion of our workers’ compensation obligation, for which they become responsible should we become insolvent. On a regular basis, these entities assess the amount of collateral they will require from us relative to our workers’ compensation obligation. Such amounts can increase or decrease independent of our assessments and reserves. We continue to have risk that these collateral requirements may be increased by our insurers due to our loss history and market dynamics. We generally anticipate that our collateral commitments will continue to grow as we grow our business. We pay our premiums and deposit our collateral, if required, in installments. The collateral typically takes the form of cash and cash-backed instruments, highly rated investment grade securities, letters of credit, and surety bonds. Restricted cash, cash equivalents and investments supporting our self-insured workers’ compensation obligation are held in a trust at the Bank of New York Mellon (“Trust”) and are used to pay workers’ compensation claims as they are filed. See Note 7: Workers' Compensation Insurance and Reserves, and Note 4: Restricted Cash, Cash Equivalents and Investments, to our consolidated financial statements found in Item 1 of this Quarterly Report on Form 10-Q, for details on our workers’ compensation program as well as the restricted cash, cash equivalents and investments held in Trust.

Current wording

Outside of ongoing cash needed to support core operations, our insurance carriers and certain state workers’ compensation programs require us to collateralize a portion of our workers’ compensation obligation, for which they become responsible should we become insolvent. On a regular basis, these entities assess the amount of collateral they will require from us relative to our workers’ compensation obligation. Such amounts can increase or decrease independent of our assessments and reserves. We continue to have risk that these collateral requirements may be increased by our insurers due to our loss history and market dynamics. We generally anticipate that our collateral commitments will grow as our business grows. We pay our premiums and deposit our collateral, if required, in installments. The collateral typically takes the form of cash and cash-backed instruments, highly rated investment grade securities, letters of credit, and surety bonds. Restricted cash, cash equivalents and investments supporting our self-insured workers’ compensation obligation are held in a trust at the Bank of New York Mellon (“Trust”) and are used to pay workers’ compensation claims as they are filed. See Note 7: Workers' Compensation Insurance and Reserves, and Note 4: Restricted Cash, Cash Equivalents and Investments, to our consolidated financial statements found in Item 1 of this Quarterly Report on Form 10-Q, for details on our workers’ compensation program as well as the restricted cash, cash equivalents and investments held in Trust.

Previous wording

Total collateral commitments decreased $16.0 million during the twenty-six-week period ended June 30, 2024, primarily due to the use of collateral to satisfy workers’ compensation claims. See Note 9: Commitments and Contingencies, to our consolidated financial statements found in Item 1 of this Quarterly Report on Form 10-Q, for additional details on our workers’ compensation commitments. We continue to actively manage workers’ compensation cost by focusing on improving our associate safety programs, and actively control costs with our network of service providers. These actions have had a positive impact creating favorable adjustments to workers’ compensation liabilities recorded in the prior periods. Continued favorable adjustments to our prior year workers’ compensation liabilities are dependent on our ability to continue to aggressively lower accident rates and costs of our claims. Due to our progress in worker safety improvements and the resulting reduction in the frequency and severity of accident rates, we expect diminishing favorable adjustments to our workers' compensation liabilities going forward.

Current wording

Total collateral commitments decreased $23.5 million during the thirty-nine-week period ended September 29, 2024, primarily due to the use of collateral to satisfy workers’ compensation claims. See Note 9: Commitments and Contingencies, to our consolidated financial statements found in Item 1 of this Quarterly Report on Form 10-Q, for additional details on our workers’ compensation commitments. We continue to actively manage workers’ compensation cost by focusing on improving our associate safety programs, and actively control costs with our network of service providers. These actions have had a positive impact creating favorable adjustments to workers’ compensation liabilities recorded in the prior periods. Continued favorable adjustments to our prior year workers’ compensation liabilities are dependent on our ability to continue to aggressively lower accident rates and costs of our claims. Due to our progress in worker safety improvements and the resulting reduction in the frequency and severity of accident rates, we expect diminishing favorable adjustments to our workers' compensation liabilities going forward.

Previous wording

Net cash provided by accounts receivable collections through deleveraging during the twenty-six weeks ended June 30, 2024 was partially offset by an increase in days sales outstanding of approximately six days for fiscal second quarter of 2024 compared to fiscal fourth quarter of 2023, primarily due to a higher percentage of receivables with longer payment terms. Net cash used for payments on accounts payable and accrued expenses was primarily related to timing of payments to vendors as well as a decrease in certain accrued expenses that fluctuate with revenue. In addition, our workers’ compensation claims reserve for estimated claims decreases as contingent labor services decline, as was the case in the current period.

Current wording

Net cash provided by accounts receivable collections through deleveraging during the thirty-nine weeks ended September 29, 2024 was partially offset by an increase in days sales outstanding of approximately seven days for the fiscal third quarter of 2024 compared to the fiscal fourth quarter of 2023, primarily due to a higher percentage of receivables with longer payment terms. Net cash used for payments on accounts payable and accrued expenses was primarily related to timing of payments to vendors as well as a decrease in certain accrued expenses that fluctuate with revenue. In addition, our workers’ compensation claims reserve for estimated claims decreases as contingent labor services decline, as was the case in the current period.

Previous wording

Capital expenditures for the twenty-six weeks ended June 30, 2024 included continued investments to upgrade our PeopleReady technology platform. Our capital expenditures were partially offset by proceeds from the divestiture of Labour Ready Temporary Services, Ltd., net of transaction costs, as well as cash provided by maturities of restricted investments to pay workers’ compensation claims exceeding purchases of new restricted investments.

Current wording

Capital expenditures for the thirty-nine weeks ended September 29, 2024 included continued investments to upgrade our PeopleReady technology platform. Our capital expenditures were partially offset by proceeds from the divestiture of PeopleReady Canada, net of transaction costs, as well as cash provided by maturities of restricted investments to pay workers’ compensation claims exceeding purchases of new restricted investments.

Previous wording

Net cash used in financing activities during the twenty-six weeks ended June 30, 2024 was primarily due to the repurchase of $17.0 million of our common stock in the open market, including excise tax. As of June 30, 2024, $37.8 million remains available for repurchase under existing authorizations.

Current wording

Net cash used in financing activities during the thirty-nine weeks ended September 29, 2024 was primarily due to the repurchase of $21.3 million of our common stock in the open market. As of September 29, 2024, $33.5 million remains available for repurchase under existing authorizations, though we are limited to $25.0 million in aggregate share repurchases in any twelve-month period by our financial covenants.

Previous wording

The quantitative impairment test, if necessary, involves comparing the fair value of each reporting unit to its carrying value, including goodwill. Fair value reflects the price a market participant would be willing to pay in a potential sale of the reporting unit. If the fair value exceeds the carrying value, we conclude that no goodwill impairment has occurred. If the carrying value of the reporting unit exceeds its fair value, we recognize an impairment charge in an amount equal to the excess, not to exceed the carrying value of the goodwill. We consider a reporting unit’s fair value to be substantially in excess of its carrying value at a 20% premium or greater.

Current wording

The quantitative impairment test, if necessary, involves comparing the fair value of each reporting unit to its carrying value, including goodwill. Fair value reflects the price a market participant would be willing to pay in a potential sale of the reporting unit. If the fair value exceeds the carrying value, we conclude that no goodwill impairment has occurred. If the carrying value exceeds the fair value, we recognize an impairment charge in an amount equal to the excess, not to exceed the carrying value of the goodwill. We consider a reporting unit’s fair value to be substantially in excess of its carrying value at a 20% premium or greater.

Previous wording

Determining the fair value of a reporting unit when performing a quantitative impairment test involves the use of significant estimates and assumptions to evaluate the impact of operational and economic changes on each reporting unit. We estimate the fair value of each reporting unit using a weighting of the income and market valuation approaches. The income approach applies a fair value methodology to each reporting unit based on discounted cash flows. This analysis requires significant estimates and judgments, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for our business, estimation of the useful life over which cash flows will occur, and determination of our weighted average cost of capital, which is risk-adjusted to reflect the specific risk profile of the reporting unit being tested. We also apply a market approach, which develops a value correlation based on the market capitalization of similar publicly traded companies, referred to as a multiple, to apply to the operating results of the reporting units. The primary market multiples to which we compare are revenue and earnings before interest, taxes, depreciation, and amortization.

Current wording

Determining the fair value of a reporting unit when performing a quantitative impairment test involves the use of significant estimates and assumptions to evaluate the impact of operational and economic changes on each reporting unit. We estimate the fair value using a weighting of the income and market valuation approaches. The income approach applies a fair value methodology to each reporting unit based on discounted cash flows. This analysis requires significant estimates and judgments, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for our business, estimation of the useful life over which cash flows will occur, and determination of our weighted average cost of capital, which is risk-adjusted to reflect the specific risk profile of the reporting unit being tested. We also apply a market approach, which develops a value correlation based on the market capitalization of similar publicly traded companies, referred to as a multiple, to apply to the operating results of the reporting units. The primary market multiples to which we compare are revenue and earnings before interest, taxes, depreciation, and amortization.