TrueBlue Q4 2024 Earnings Call Transcript

Quartr
Provided by Quartr
February 19, 2025
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Operator

Greetings, and welcome to the True Blue Fourth Quarter twenty twenty four 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 would like 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 obligation to update or revise any forward looking statements.

Operator

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 TrueBlue's Investor website at the conclusion of today's call and a full transcript of the audio replay will be available soon after the call.

Operator

It is now my pleasure to turn the call over to Karen Owat, President and Chief Executive Officer. Please go ahead.

Taryn Owen
Taryn Owen
CEO, President & Director at Trueblue

Thank you, operator, and welcome everyone to today's call. I am joined by our Chief Financial Officer, Carl Zweiss. We appreciate you being here with us. 2024 was a challenging year and I'm incredibly proud of how the team navigated with ability and discipline. Our teams are doing tremendous work as customers seek improved market confidence before making significant adjustments to their workforce strategies.

Taryn Owen
Taryn Owen
CEO, President & Director at Trueblue

Uncertainty and caution continue to weigh on the staffing industry with reduced business spend and curb hiring trends, but we remain focused on the areas we can control. Our teams are staying highly engaged with clients to address their immediate needs with short duration and flexible solutions, while also ensuring we are well positioned to support demand as needs expand. For example, our on-site business stepped in to serve as a supplemental staffing provider for an international transportation and logistics company and driven by the team's exceptional service, we have expanded to serve as their primary staffing provider in four locations and their sole provider in two additional facilities. Another example comes from our commercial driving business, where a long standing customer requested our exclusive partnership to service their new account with a Fortune 50 technology company, resulting in our expansion to 10 additional sites across the Midwest. These examples demonstrate the strength of our client relationship and the agility of our teams in meeting today's needs, while also creating opportunities for growth.

Taryn Owen
Taryn Owen
CEO, President & Director at Trueblue

2024 was also a transformative year for TrueBlue as we made significant progress executing on our strategic priorities and positioning the company for strong growth and expanded profitability when customer demand volumes return. We achieved a critical milestone in the digital transformation of our business with the launch of our new proprietary JobStack app, allowing us to control our roadmap and continuously expand the value we bring to our customers and associates. We also delivered strong performance in attractive skilled markets, including commercial driving and energy work, and we made notable progress diversifying our RPO business in attractive vertical such as healthcare and higher skilled professional placements. Our actions to simplify our organizational structure including the sale of our on demand labor business in Canada and consolidation of our on-site and global leadership structures strategically position us to better leverage our inherent strengths as we look to capture growth opportunities ahead. As we turn to 2025, we remain committed to capturing market share and enhancing our long term profitability through clear strategic priorities focused on top line growth and margin expansion and as you may have seen, we are off to a fast start.

Taryn Owen
Taryn Owen
CEO, President & Director at Trueblue

We will continue to advance our digital transformation with a focus on enhancing the user experience and creating efficiencies. Our proprietary technologies, including JobStack and Affinix, allow us to accelerate innovation and implement enhancements quickly to address evolving user needs. For example, we recently introduced AI assisted on demand digital interviewing and self scheduling using our Affinix technology, which has shown to reduce processing times up to seven days, while JobStack's latest Ready Match technology instantly matches job requirements with a pool of reliable, qualified individuals, making it easy for customers to invite the best fit workers to the job and optimizing success rates. The digital transformation of our business positions us to drive growth and expand our reach by combining our expansive market presence and expertise with our proprietary technology to deliver a more customized differentiated experience. We are also focused on expanding our presence in high growth and underpenetrated end markets as well as high value roles to capitalize on secular growth opportunities.

Taryn Owen
Taryn Owen
CEO, President & Director at Trueblue

We continue to improve our strong position in skilled trades with our skilled staffing businesses outpacing the broader market in recent years as well as our workup and apprenticeship programs providing skill development opportunities for workers to build careers and skilled trades while bolstering our talent pool to fill critical market gaps. We have additional opportunity to drive revenue expansion with our growing momentum in healthcare and professional services. Our recent acquisition of healthcare staffing professionals marks a key milestone in advancing our strategic expansion in the healthcare space. We are excited to welcome HSP to the TrueBlue team as we look to realize uncapped growth potential and enhanced value by combining their expertise and fast growing roster of long term clients with our significant footprint, technology and recruiting agility. Our PeopleScout team also recently announced a landmark talent advisory win having been selected as a delivery partner to provide employer brands and candidate attraction services for the UK's armed forces, further expanding our presence in the government sector.

Taryn Owen
Taryn Owen
CEO, President & Director at Trueblue

With the traditional end markets we serve poised for growth and our continued expansion in underpenetrated markets, we are well positioned for a strong rebound and accelerated growth. Another key priority is to optimize our business model to drive enhanced sales focus, ultimately accelerate our growth and improve profitability. We have simplified our organizational structure to eliminate silos and create efficiencies that brought our teams closer to each other and to our customers resulting in increased synergies and cross selling. For example, our PeopleReady and PeopleManagement teams recently won a joint pursuit serving a global environmental services company to staff temporary warehouse positions as well as long term supervisor, skilled and administrative roles, which speaks to the strength of our teams as they work closer in collaboration. Looking forward, we are focused on new and differentiating ways to enhance growth and capture demand.

Taryn Owen
Taryn Owen
CEO, President & Director at Trueblue

For example, in PeopleReady, we are aligning our on demand organization into territories that include one or more branches working in collaboration to grow our customer base. Sales representatives will be added across the country to implement targeted sales strategies in each territory and by the end of the summer, we will have increased the number of field sales representatives by 50%. The addition of dedicated sales representatives combined with focused responsibilities for both operations and sales and complemented by the digital capabilities of our JobStack app is expected to improve results across our on demand field network. We will make this investment in a cost neutral way, thanks to our disciplined cost actions to create a more simplified structure. Optimizing our business model allows us to better leverage our strengths and assets to deliver long term profitable growth.

Taryn Owen
Taryn Owen
CEO, President & Director at Trueblue

While current labor market dynamics are challenging, evolving workforce needs and structural staffing shortages create compelling opportunities for our business. The long term staffing outlook remains positive and we are managing through the cycle with the discipline and agility needed to ensure we are strategically positioned for strong growth and profitability as conditions improve. We are excited about the opportunities ahead and 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.

Carl Schweihs
Carl Schweihs
Chief Financial Officer at Trueblue

Thank you, Taryn. Total revenue for the quarter was $386,000,000 a decline of 22% with six percentage points driven by the extra fourteenth week in the prior year resulting in a 16% decline on a comparable thirteen week basis. As expected, temporary labor and permanent hiring volumes continue to be suppressed as clients remain uncertain of their workforce needs and cautious around business spend. While these factors led to overall softness in market demand, our teams continue to capitalize on growing verticals. For example, our commercial driving services delivered double digit growth for the second consecutive quarter and our PeopleScout team continued to outperform prior year in new business wins, especially in professional roles.

Carl Schweihs
Carl Schweihs
Chief Financial Officer at Trueblue

Gross margin was 26.6% for the quarter, up 50 basis points. Lower workers' compensation costs driven by favorable development of prior year reserves contributed 170 basis points of expansion. This was partially offset by changes in revenue mix with more favorable trends in our lower margin PeopleManagement segment as well as a decline in our highest margin business PeopleScout, which drove a decline of 80 basis points. Pricing pressures consistent with the current market environment contributed another 20 basis points of decline and software depreciation now recorded in cost of services drove another 20 basis points of decline. Keep in mind software depreciation is non cash and excluded from our EBITDA and adjusted EBITDA calculations.

Carl Schweihs
Carl Schweihs
Chief Financial Officer at Trueblue

We reduced SG and A by 18% as we remain disciplined and committed to enhancing our profitability. With the transition to our proprietary JobStack app, we accelerated the recognition of third party software licensing fees associated with the previous version, resulting in $6,000,000 of additional non cash expense in the fourth quarter. This accelerated expense as well as other costs associated with upgrading our legacy PeopleReady technology are excluded from our adjusted net income and adjusted EBITDA calculations. On an adjusted basis, we reduced SG and A by 24%, outpacing our revenue decline as we continue to focus on areas we can control. While our profitability can traditionally expand quickly as revenue grows, our lean cost structure and improved efficiencies mean that we are even better positioned to deliver enhanced profitability as the demand environment rebounds.

Carl Schweihs
Carl Schweihs
Chief Financial Officer at Trueblue

We reported a net loss of $12,000,000 this quarter, which included $2,000,000 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 and effect on our U. S. Deferred tax assets.

Carl Schweihs
Carl Schweihs
Chief Financial Officer at Trueblue

As a reminder, the valuation allowance has no impact on our operations, liquidity or debt covenants. Adjusted net loss was $1,000,000 while adjusted EBITDA was positive $9,000,000 Now, let's turn to the specifics of our segments. PeopleReady revenue decreased 21% on a comparable thirteen week basis, which includes two points of decline from the sale of our on demand business in Canada. The extra fourteenth week in the prior year contributed six points of additional year over year decline, resulting in reported revenue decline of 27%. Lower client volumes continued across most verticals and geographies.

Carl Schweihs
Carl Schweihs
Chief Financial Officer at Trueblue

We have yet to see a meaningful shift in our overall sequential trends, but we are encouraged to see momentum building in skilled trades with an improvement to underlying trends as we exited the quarter. PeopleReady segment profit margin was up 80 basis points, largely driven by favorable workers' compensation reserve adjustments, which were partially offset by lower operating leverage as revenue declined. PeopleScout revenue decreased 30% on a comparable thirteen week basis, which includes eight points of decline from the client loss we discussed last quarter. The extra fourteenth week in the prior year contributed one point of additional year over year decline, resulting in reported revenue decline of 31%. We saw reduced client volumes as businesses continue to navigate challenging market dynamics.

Carl Schweihs
Carl Schweihs
Chief Financial Officer at Trueblue

Customers are hesitant to make significant adjustments in their workforce strategies as they face cost pressures and uncertainty around their workforce needs. While these factors led to subdued client volumes, our teams continue to outperform in new business wins and we expect these relationships to drive further revenue expansion as customers hiring volumes return. PeopleScout segment profit margin was down two twenty basis points due to the lower operating leverage as revenue declined. PeopleManagement revenue decreased 2% on a comparable thirteen week basis with the extra fourteenth week in the prior year contributing seven points of additional year over year decline resulting in a reported decline of 9%. The decline in demand was driven by lower on-site client volumes consistent with the macro conditions in the verticals we serve.

Carl Schweihs
Carl Schweihs
Chief Financial Officer at Trueblue

This was partially offset by continued strength in our commercial driving services, which delivered its second consecutive quarter of double digit growth. PeopleManagement segment profit margin was up two twenty basis points, primarily due to disciplined cost management actions to drive improved efficiency. Now let's turn to the balance sheet. We finished the quarter with $23,000,000 in cash, $8,000,000 of debt and $119,000,000 of borrowing availability. We have diligently balanced strategic investments and returning excess capital to shareholders with maintaining a strong liquidity position to pursue growth opportunities.

Carl Schweihs
Carl Schweihs
Chief Financial Officer at Trueblue

This focused capital strategy enabled our recent acquisition of healthcare staffing professionals, where we leveraged our strong balance sheet to take on a modest amount of debt at attractive terms to capitalize on the strategic opportunity. Healthcare Staffing Professionals or HSP was purchased on January 31 for $42,000,000 with the possibility of an additional $14,000,000 of consideration if favorable results are achieved over the next two years. We expect the HSP business to produce segment profit of $5,000,000 to $7,000,000 over the next twelve months, which corresponds with a forward looking multiple of six to eight times. We're excited to bring HSP into the True Blue portfolio as we work together to accelerate growth and enhance shareholder value. Turning to our outlook for the first quarter, we expect a revenue decline of 13% to 7%.

Carl Schweihs
Carl Schweihs
Chief Financial Officer at Trueblue

This includes one percentage point of headwind from the sale of our on demand business in Canada, offset by three percentage points of inorganic growth from the acquisition of HSP. Our outlook reflects a continuation of current market trends because while there are encouraging signs for the new year, we've yet to see a definitive indication as to when overall demand trends will turn. We expect SG and A of 93,000,000 to $97,000,000 which represents an improvement of roughly $12,000,000 compared to the prior year period as we manage through this market cycle with a commitment to enhance our profitability and to ensure that we are well positioned as conditions improve. Additional information on our outlook can be found in our earnings presentation shared on our website today. Before we open up the call for questions, I want to turn it back over to Taryn for some closing remarks.

Taryn Owen
Taryn Owen
CEO, President & Director at Trueblue

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 ensure we are positioned to capitalize on the growth opportunities ahead. 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. This concludes our prepared remarks. Operator, please open the call now for questions.

Operator

Thank you. We'll now be conducting a question and answer session. Our first question is from Will Brunneman with Northcoast Research. Please proceed with your question.

Will Brunemann
Equity Research Associate at Northcoast Research

Hey, how's it going guys?

Carl Schweihs
Carl Schweihs
Chief Financial Officer at Trueblue

Hey Will.

Taryn Owen
Taryn Owen
CEO, President & Director at Trueblue

Hi Will.

Will Brunemann
Equity Research Associate at Northcoast Research

So congrats on the HSP acquisition. I was going to ask your press release referred to HSP as high growth. And I was wondering if you could tell us a little bit more specifically about your expectations on revenue growth. What HSPs growth has looked like in recent years and how the pressures that are in the healthcare industry as experienced plays into expectations?

Taryn Owen
Taryn Owen
CEO, President & Director at Trueblue

Thank you for the question, Will. We are thrilled to welcome the HSP team and customer base to TrueBlue. Although the healthcare staffing market has seen some pressure over the last couple of years, an aging population and secular growth offer long term potential opportunities making healthcare an attractive end market for TrueBlue that we're excited to participate in. HSP has outperformed the healthcare industry growth rates over periods of both expansion and contraction and we feel really good about their ability to continue that trend. They have long term clients, many of which are in the government and educational sectors, which typically provide more stability through various market cycles.

Taryn Owen
Taryn Owen
CEO, President & Director at Trueblue

And then finally, HSP's strong track record and niche service in the healthcare space opens doors for us at TrueBlue to expand into new markets, while at the same time our geographical footprint, technology and recruitment sophistication will help accelerate HSP's potential growth opportunities.

Carl Schweihs
Carl Schweihs
Chief Financial Officer at Trueblue

And just to add a little on to there too, as you're talking about revenue, we put this in the investor deck as well. But just over the next twelve months, we'll have about eleven months of impact in 2025 will, but we think anywhere between $75,000,000 and $85,000,000 of revenue and about $5,000,000 to $7,000,000 of EBITDA, really in the high single digit margins, higher than our traditional staffing businesses today.

Will Brunemann
Equity Research Associate at Northcoast Research

Okay, great. All right. I just have one more for you. If you could provide some more details about the U. K.

Will Brunemann
Equity Research Associate at Northcoast Research

Armed Forces contract, the revenue potential, the length of the contract and the margins as well?

Taryn Owen
Taryn Owen
CEO, President & Director at Trueblue

Yes. Thanks, Will. We're very happy to report that PeopleScout talent advisory team secured what is a significant new win to provide employer brand and candidate attraction services for the UK Armed Forces. We'll be one of several delivery partners for Serco, which is an international provider of government services and this is part of a multi year contract. The scope that we have here includes their recruitment marketing to fill the pipelines for hires across the UK Armed Forces.

Taryn Owen
Taryn Owen
CEO, President & Director at Trueblue

If you think about the British Navy, Royal Navy and the Royal Air Force are included here. 2025 and 2026 will be transition years with implementation work where we will see some revenue, but the full service of the contract will begin in 2027. It's a seven year contract with an option to extend for an additional three years after that initial period. In terms of deal size, we expect them to be one of our top clients within PeopleScout. There's some media revenue within scope which comes at a bit of a lower margin, but the deal will be certainly a contributor to bringing PeopleScout back to double digit segment profit margin.

Will Brunemann
Equity Research Associate at Northcoast Research

All right, great. Thank you guys. I appreciate it.

Taryn Owen
Taryn Owen
CEO, President & Director at Trueblue

Thanks Will.

Carl Schweihs
Carl Schweihs
Chief Financial Officer at Trueblue

Thanks

Carl Schweihs
Carl Schweihs
Chief Financial Officer at Trueblue

Will.

Operator

Our next question is from Mark Marcon with Baird. Please proceed with your question.

Mark Marcon
Senior Research Analyst at Baird

Good afternoon and thanks for taking my questions. I'm wondering with regards to the PeopleReady business, can you discuss any sort of regional differences that you're currently seeing, any signs of improvement? We've certainly seen small business confidence in the indices improve. Just wondering if you're seeing any of that translate to revenue at all? That's the first question.

Carl Schweihs
Carl Schweihs
Chief Financial Officer at Trueblue

Thanks for the question, Mark. Yes, let me just talk kind of revenue trends so far and then I'll let kind of Taran add some color in there as well. As you kind of know, our largest geographic opportunities California, Florida, Texas, right? That's about a third of people already is trailing twelve months revenue. Our trends in California, Texas were pretty closely aligned to what we were seeing in our end markets.

Carl Schweihs
Carl Schweihs
Chief Financial Officer at Trueblue

But we're seeing some improved trends in Florida during Q4. And we've also seen kind of some bright spots in specific markets that have not been impacted by weather throughout the country.

Taryn Owen
Taryn Owen
CEO, President & Director at Trueblue

If I could add to that, Mark, we are encouraged by some positive trends that we're seeing within PeopleReady here in the New Year, where weekly sequential revenue trends have improved in February after a slow start in January, which was really impacted by the holiday as well as some significant weather that we've seen. Also important to note that we're seeing some increased growth in our southern border states along with a handful of other pockets around the country. We believe that the focus on migration issues with the new administration has impacted our demand trends positively over the last month. Our teams in those areas are reporting that our clients are experiencing some high absentee rates and turning to us to fill those jobs. So it's a couple of weeks of data, but we're certainly encouraged by those times.

Mark Marcon
Senior Research Analyst at Baird

Karen, could you expand on that a little bit just in terms of how widespread that is and how much of a volume benefit you're getting in some of those particular regions?

Carl Schweihs
Carl Schweihs
Chief Financial Officer at Trueblue

Maybe I'll just add on this one first, Mark. Look, I think it's from it's the first couple of weeks of February, right? They're back kind of in line with sequential trends, which is a good thing after we talked about kind of that weather and holiday impact in January. From an outlook standpoint, I'd say, hey, if we see this continue, there could be some upside to our outlook. But I think it's still too soon to call this a trend as you know with what we're seeing.

Carl Schweihs
Carl Schweihs
Chief Financial Officer at Trueblue

It's hard to it's only a couple of weeks into February here.

Taryn Owen
Taryn Owen
CEO, President & Director at Trueblue

Yes.

Mark Marcon
Senior Research Analyst at Baird

Okay. And then speaking of things that have been in the news, obviously, there's been a tragedy in Southern California. Parts of Western Carolina are still dealing with all sorts of issues. Did you see any sort of pickup in terms of business, in terms of remediation of those disasters or are you not participating in that?

Taryn Owen
Taryn Owen
CEO, President & Director at Trueblue

Yes. Thank you for the question, Mark. We are participating in that. Our PeopleReady business provides on demand support in disaster recovery efforts. We are working to support those efforts in North Carolina and Florida.

Taryn Owen
Taryn Owen
CEO, President & Director at Trueblue

And in California, we have started the work now. We're working with 14 different organizations that are focused on those cleanup efforts. And we would expect in the upcoming months in California as construction plans are approved and permits are awarded that people ready skilled trades will play a role in the restoration and rebuild there in California as we are in Florida and North Carolina.

Mark Marcon
Senior Research Analyst at Baird

Great. And then any sort of commentary from an industry perspective in terms of areas of particular strength or weakness, particularly as it relates to PeopleReady?

Carl Schweihs
Carl Schweihs
Chief Financial Officer at Trueblue

I'd say one thing just as the skilled business for us continues to be a bright spot, right? We talked about this a little bit in prepared remarks as well, but kind of what we're doing in energy and then I'd also say transportation too from an end market. So think transportation and distribution, not just in PeopleReady, but across the portfolio for us has been doing better in Q4. And we've got a good foothold in that market and industry and expect for that to continue for us.

Mark Marcon
Senior Research Analyst at Baird

Great. And then just lastly on the SG and A, you did a nice job in terms of reducing your SG and A expenses. Can you talk a little bit about the actions that you ended up taking? Is that something that we should expect to stabilize as the year unfolds? Or how should we think about that?

Carl Schweihs
Carl Schweihs
Chief Financial Officer at Trueblue

Yes. Thanks for the question on that one too, Mark. So we did we over performed a little bit of what our guidance was here in Q4, I think by probably a point. I think our SG and A was expected to be about down $23,000,000 and we ended up being down $24,000,000 It's important to note that there was from a GAAP basis just about $6,000,000 of third party software licenses that hit in Q4. That will be non cash in Q4 and an adjustment to EBITDA.

Carl Schweihs
Carl Schweihs
Chief Financial Officer at Trueblue

But as you're thinking about the longer term, we've guided to about a midpoint of $95,000,000 which is down about 11%. That includes about $1,000,000 of SG and A for our HSP acquisition. I'd say as we kind of look forward to the year, we'll make some select investments as we find some opportunities for growth, but nothing material. So I think that's a pretty good run rate from a cost standpoint. You also asked just kind of where these have been.

Carl Schweihs
Carl Schweihs
Chief Financial Officer at Trueblue

Similar to what we've talked about, this is about simplifying the organization, not where necessarily our field teams are closest to our customers and our associates. Really looking at kind of support structure and others that we've mentioned where we're taking action.

Taryn Owen
Taryn Owen
CEO, President & Director at Trueblue

If I could just add to that, one of the opportunities that has come from this is our ability to realign our PeopleReady On Demand organization into sales territories in a cost neutral manner. So each of our territories will be under single leadership with a dedicated sales representative here moving forward. Those territories are going to be comprised of one branch or multiple branches working together to grow our customer base. So if you think about we have four eighty branches today, those will be organized into three sixty territories as we move forward and we will increase our sales headcount out in the field by 50% by mid summer. And again, some of the cost actions that we took have enabled us to do this.

Carl Schweihs
Carl Schweihs
Chief Financial Officer at Trueblue

Great. Thank you.

Taryn Owen
Taryn Owen
CEO, President & Director at Trueblue

Thank you, Mark.

Operator

Our next question is from Jeff Silber with BMO Capital Markets. Please proceed with your question.

Analyst

Hey, it's Ryan on for Jeff. Just to start off with a quick numbers question. I was wondering if you could quantify the revenue guidance by the different segments and then also if you had the exit rates coming out of the quarter?

Carl Schweihs
Carl Schweihs
Chief Financial Officer at Trueblue

Yes. Thanks, Ryan, for the question. So I'm going to just give kind of the midpoint here, right? We were minus 13 to minus seven from a TrueBlue standpoint, that's a midpoint of minus 10 for TrueBlue. It's important to note that that includes a positive three point impact due to the acquisition of HSP at the January.

Carl Schweihs
Carl Schweihs
Chief Financial Officer at Trueblue

But the midpoints for each one of our segments, PeopleReady down about 16%, PeopleManagement down 3% and PeopleScout down 27. Just another a couple two other reminders in there. Our Canadian divestiture is approximately one point of headwind for both TrueBlue and PeopleReady. And we're going to lapse over those comps as we exit Q1 here. And then also the hospitality client loss that we discussed last quarter creates about a one point headwind for TrueBlue and about eight points for PeopleScout, which will lapse those comps as we exit Q2 as well.

Analyst

Got it. Thank you very much. And then just piggybacking on one of the prior questions, I was curious if you're seeing a material impact yet from some of the Trump policies regarding deportation? And then if you have any outlook on how that might kind of trend as we progress through the year? Thank you.

Taryn Owen
Taryn Owen
CEO, President & Director at Trueblue

Yes. Thanks, Ryan. In addition to what I talked about earlier related to the PeopleReady business and some of that demand that we're seeing due to increased absentee rates, we have customers across multiple industries that are increasingly performing internal audits to ensure that their work force complies with the current regulations. 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. And this has led to some of the new win momentum that we're seeing particularly in our on-site business.

Taryn Owen
Taryn Owen
CEO, President & Director at Trueblue

Just a note, in our on-site business, we've actually closed more deals in 2025 than in all of 2024. And we think that this focus on ensuring that the workforces meet the policy is contributing to that.

Carl Schweihs
Carl Schweihs
Chief Financial Officer at Trueblue

Maybe just to add on to that one too, Ryan, just from a kind of a tariff perspective. In the short term, look, we don't know how this is going to play out, but there could be some increases in input costs, other supply chain challenges that might affect some labor needs for our customers. But just as a reminder, TrueBlue has got about 25% exposure across our brands in manufacturing and this is what we're geared to support is onshore manufacturing here. And so we feel good about the long term nature of where we're positioned and what that ultimately can do for our business.

Analyst

Understood. Thank you very much.

Taryn Owen
Taryn Owen
CEO, President & Director at Trueblue

Thanks, Ryan.

Operator

Thank you. Our next question is from Mark Riddick with Sidoti. Please proceed with your question.

Marc Riddick
Business Services Analyst at Sidoti & Company, LLC

Hi, good afternoon.

Taryn Owen
Taryn Owen
CEO, President & Director at Trueblue

Hi, Mark. Hi, Mark.

Marc Riddick
Business Services Analyst at Sidoti & Company, LLC

So I wanted to touch a little bit on the acquisition and congratulations on HSPs. I wanted to touch a little bit more both on the attractiveness of the healthcare market, which seems encouraging. I think also there's a regional mix component that's expected to be beneficial. And then maybe on a broader scope, you can maybe spend a little time on thoughts around the current, maybe what the acquisition pipeline looks like within the space and maybe levels of attractiveness at this point?

Carl Schweihs
Carl Schweihs
Chief Financial Officer at Trueblue

Yes, thanks. So we're excited about this one. Thanks, Mark. I'll just add this, right? HSP is going to be immediately accretive to our financials, right, from a P and L and a cash flow standpoint.

Carl Schweihs
Carl Schweihs
Chief Financial Officer at Trueblue

We took on a bit of debt here on a variable term loan that will carry anywhere from 6% to 8% interest. So think about couple million, 2 million dollars to $3,000,000 of interest expense a year. And in this business, you'd be able to generate anywhere between $5,000,000 and $7,000,000 of EBITDA. Also just from a kind of a synergy standpoint, this is all this would all be kind of upside to our kind of initial valuation. We think that there's a lot of opportunity with our expansive recruiting network within our PeopleScout business to help assist and fill their exclusive open orders.

Carl Schweihs
Carl Schweihs
Chief Financial Officer at Trueblue

In the longer term, we we think that there's some opportunities to joint bid on non healthcare roles. So think of what we're really good at in our people ready business, janitorial and cafeteria type works with their current and future prospects. And I'd also say just from a cost synergies perspective, anything that we'd be able to save here, really the intent would be redeploying any of those savings into additional investments in growth resources to help accelerate the growth trajectory that HSP is now experiencing.

Marc Riddick
Business Services Analyst at Sidoti & Company, LLC

Great. And then I was wondering if you could spend a little time talking about sort of the progress you're making with the JobStack rollout? Thanks.

Taryn Owen
Taryn Owen
CEO, President & Director at Trueblue

Yes. Thanks for the question, Mark. As you know, last year, we successfully rolled out our new proprietary JobStack app, which really positions us well to control our roadmap and ensure that we are addressing the needs of our users. Our roadmap for 2025 includes significant enhancements, really designed to increase operational efficiency, improve sales effectiveness and drive revenue growth by delivering just a continued enhanced customer experience. Just a couple of things that I'll call out that have been successes so far.

Taryn Owen
Taryn Owen
CEO, President & Director at Trueblue

One, we rolled out our Ready Match technology within JobStack that instantly matches job requirements with a pool of candidates and makes it really easy for both our customers in our field to invite best fit workers to the job. We launched our digital onboarding experience that allows our candidates to quickly join our workforce. We're also able to now onboard customers in a completely digital manner if that is the way in which they choose to engage with us. Our customers are able to enter orders in a digital manner and have immediate access to our associate base. And finally, we've also added a customer and associate referral program that allows both our customers and associates to refer to PeopleReady.

Marc Riddick
Business Services Analyst at Sidoti & Company, LLC

Excellent. Thank you very much.

Taryn Owen
Taryn Owen
CEO, President & Director at Trueblue

Thank you, Mark.

Carl Schweihs
Carl Schweihs
Chief Financial Officer at Trueblue

Thanks, Mark.

Operator

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

Taryn Owen
Taryn Owen
CEO, President & Director at Trueblue

Thank you, operator, and thank you, everyone, for joining us today. I want to take another moment to welcome our newest colleagues at HSP to the TrueBlue team. We're excited to have you on board and look forward to working together. I also want to take this opportunity to thank the entire TrueBlue team for their tremendous efforts in providing our customers and associates with exceptional service and their dedication to advancing our mission to connect people and work. We look forward to speaking with you all at upcoming investor events and on our next quarterly call.

Taryn Owen
Taryn Owen
CEO, President & Director at Trueblue

If you have any questions, please don't hesitate to reach out. Have a great evening.

Operator

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

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Earnings Conference Call
TrueBlue Q4 2024
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