TrueBlue, Inc. (TBI)

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TrueBlue, Inc. (TBI)

Q2 2008 Earnings Call

July 16, 2008 5:00 pm ET



Stacey Burke – Vice President of Corporate Communications

Steven C. Cooper – President and Chief Executive Officer

Derrek Gafford – Executive Vice President and Chief Financial Officer


T.C. Robillard - Banc of America Securities

Clinton Fendley - Davenport & Company, LLC

[David Ridley Lane] - Merrill Lynch

Jeffrey Silber - BMO Capital Markets

David Feinberg - Goldman Sachs




Welcome to TrueBlue's conference call. (Operator Instructions)

Joining us today is TrueBlue CEO Steve Cooper and CFO Derrek Gafford. They will discuss TrueBlue's 2008 second quarter results, which were announced today. If you have not received a copy of this announcement, please contact [Teresa Berkland] at 1-800-610-8920, Extension 8206, and a copy will be faxed to you.

At this time, I would like to hand the call over to Stacey Burke for the reading of the Safe Harbor.

Stacey Burke


Here with me today is TrueBlue's CEO and President, Steve Cooper, and CFO Derrek Gafford. They will be discussing TrueBlue's 2008 second quarter earnings results, which were announced after market close today. Please note that our press release and the accompanying income statement, balance sheet, cash flow statement and financial assumptions are now available on our website at

Before I hand you over to Steve, I ask for your attention as I read the following Safe Harbor.

Please note that on this conference call management will reiterate forward-looking statements contained in today's press release and may make or refer to additional forward-looking statements relating to the company's financial results and operations in the future. Although we believe expectations reflected in these statements are reasonable, actual results may be materially different. Additional information concerning factors which could cause results to differ materially is contained in the press release and in the company's filings with the Securities and Exchange Commission, including our most recent Forms 10Q and 10K.

I'll now hand this call over to Steve Cooper.

Steven C. Cooper


Thank you for joining us this afternoon to discuss our second quarter results for 2008 and a recap of our strategic progress.

Earlier today we reported revenue increased 6% this quarter to $371 million, which is in line with our expectations we set at the beginning of the quarter. Net income per share came in at $0.39 compared to $0.41 a year ago and ahead of our earlier high end expectation of $0.30.

Holding the revenue trends in line with the beginning of the quarter and implementing further cost cuts during the quarter enabled us to exceed our earlier expectations. In a few minutes Derrek will review with you in detail the items that helped us exceed our net income per share expectations for the quarter.

Acquisitions completed during the last 12 months fueled our revenue growth during the quarter, contributing an 18% increase in revenue, while revenue in our organic operations declined by 12%. Derrek will be providing a detailed breakdown for you on the components of the organic revenue decline, but first I'd like to discuss our revenue trends and then I'll talk briefly about the progress we've made in executing our strategy to diversify our revenue streams and develop future growth platforms.

The operating environment continues to be challenging and the economic conditions have sure had an impact on us again this quarter. As mentioned on our first quarter results call on April 16, we had maintained essentially flat same-branch revenue growth for about a year. Our trends were stable during the first quarter up to the middle of March. During the last two weeks of March and the first two weeks of April, we saw our same-branch revenue decline by about 8% to 10%, significantly off the trends we had been experiencing.

From that trend change we estimated that organic revenue would decline in Q2 by about 12%, including the closed branch impact. We reported today that organic revenue did ultimately decline by the estimated 12%.

Although the revenue trend falloff back in March and April was steep, it appears we have a fairly stable sequential base of revenue from week to week at this point. Over the past eight weeks, our organic revenue declines have been about 15%, and that is how we have formed our estimates for Q3. This 15% organic decline is primarily a 12% decline in same-branch revenue and a 3% decline from closed branches.

The step down in revenue trends over this past quarter have been broad-based across most geographies and industries served and does not correspond to any one customer or type of customer. Understanding that our customers have costs to control as their own demand and needs fluctuate is the primary driver of our business model.

We are continuing to make investments in our people through more focused sales and customer service training. This training is focused on developing stronger relationships and developing strategies with our customers to help them with their fluctuating needs. I believe our training programs are making a positive impact.

Our strategy to grow revenue and income includes broadening our niche approach to serving the blue collar labor market in the following formats: First, serving the general labor needs with our 762 Labor Ready branches. Second, serving the longer-term needs in the light industrial markets with our 73 combined Spartan and PMI branches. Third, serving the skilled construction trades with 81 CLP Resources branches, fourth, serving the transportation markets with experienced truck drivers through our 10 TLC Drivers offices. And fifth, serving the aviation maintenance and manufacturing markets with experienced aviation mechanics through our PlaneTechs operation.

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