Trueblue, Inc. · NYSE:TBI
Trueblue — Labor Ready — Investor Day (September 2004)
46 slides from Trueblue's investor day presentation, Sep 15, 2004
Slide 1: 2nd Annual Labor Ready Analyst Day 2004
Slide 2: Safe Harbor Statement
SAFE HARBOR STATEMENT Cautionary Note about Forward-Looking Statements Certain statements made by us in this presentation that are not historical facts or that relate to future plans, events or performances are forward-looking statements within the meaning of the federal securities laws. Our actual
Slide 3: Introduction to Directors
INTRODUCTION TO DIRECTORS = Robert Sullivan Chairman = Tom McChesney =" Gates McKibbin = Joe Sambataro = Carl Schafer ™ Bill Steele WE PUT PEOPLE TO WORK.
Slide 4: Management Team
MANAGEMENT TEAM = Joe Sambataro CEO = Tim Adams VP & General Counsel = Bob Breen VP, Strategic Planning & Analysis = Steve Cooper CFO = Yolanda Hubbard VP, National Sales = John Hopkins Regional VP, Western U.S. Operations = Gary North Regional VP, Eastern U.S. and International Operations WE PUT PE
Slide 5: 2004 Analyst Presentation Agenda
2004 ANALYST PRESENTATION AGENDA =" Labor Ready’s Business Model = Industry Trends = Key Business Strategies = Financial Review WE PUT PEOPLE TO WORK.
Slide 6: Our Mission
Our Mission: “We Put People to Work.” = Largest supplier of temporary manual labor in the U.S. ™ Nearly 600,000 people employed annually i = 821 branches throughout the U.S. Canada and the U.K.
Slide 7: Diversified Customer Base
DIVERSIFIED CUSTOMER BASE = Nearly 275,000 customers * Largest customer represents less than 2% of sales * Average yearly sales per customer of $3,000 * Over 400 industry classifications Sales by Industry Manufacturing 20% Transportation 10% Retail 7% We PUT PEOPLE TO WORK
Slide 8: Strong Value Proposition
STRONG VALUE PROPOSITION Attracting customers with: = Access to workers on short notice = National scale and multiple locations = Management of labor costs = Elimination of workers’ comp. and payroll tax administration = Web ordering & billing = 100% Satisfaction Guarantee Attracting workers with: =
Slide 9: Fragmented, Growth Industry
FRAGMENTED, GROWTH INDUSTRY = Staffing: $101 billion industry ® = Industrial staffing: $17.6 billion @ = Day labor market: $5 billion ©) Day Labor Market Breakdown Labor Ready A Tops 20% Competitors 10% Untapped Demand 30% (@) Stating Industry Analysts, 2004 Project Other @) Stating Industy Analysts
Slide 10: Year Trends in Temporary Staffing
% Growth # of Employees) 20 YEAR TRENDS IN TEMPORARY STAFFING U.S. Help Supply 55% 45% 36% 25% 15% 5% 5% — Toa non-fat Free Growin — fp supplz Grout 15% 26% 1983198419851 986 1987 198819891990 1991 199219931994 1995 1996 1997 1998 199920002001 2002 20032004 Cycle Expansions and Contractions: (1) Eco
Slide 11: Favorable Demographic Trends
FAVORABLE DEMOGRAPHIC TRENDS TEMPORARY EMPLOYMENT A GROWTHINDUSTRY « Temporary Employment é expected to be the 5 fastest growing industry over the next decade with nearly 1.8 million new jobs by 2012* & ¢ Unskilled Jobs expected to make up 70% of the top 20 fastest growing occupations* vu ¢ Construc
Slide 12: Key Business Strategies
KEY BUSINESS STRATEGIES = Grow current branch revenues and profits = Expand in smaller markets in the United States and Canada = Expand in the United Kingdom ™ Penetrate existing/new markets with additional brands and diversification of services
Slide 13: Grow Current Branch Revenues & Profits
GROW CURRENT BRANCH REVENUES & PROFITS ™ Increase same-branch revenues * Current branches at 50% of recruiting capacity * National Accounts = Improve Branch Manager tenure * Compensation tied to profits ° Enhanced training ° Mentoring and development = Pricing and cost controls
Slide 14: Small Market Expansion
SMALL MARKET EXPANSION Opened 21 in 2003 and 20 in 2004; currently operating 211 branches in smaller markets in the U.S. and Canada. ° Average population of 60,000 ° At least 25 miles away from existing branch =" Smaller market branch model with less cost = Similar sales volumes of medium and large
Slide 15: 2003-04 Small Market Openings
2003-04 SMALL MARKET OPENINGS ‘ee e \ 5 i os y eae p vn e ws ° tie oe : a ‘po Pl ex| ‘ePhocni Mew en a a eons Texas ~ @ owston al © gflossau svegts coreg MEMEO
Slide 16: United Kingdom Expansion
UNITED KINGDOM EXPANSION " Estimated 100 - 125 locations available = Currently operating 50 branch locations ™ Leadership development = Expanded geographic reach for core business
Slide 17: United Kingdom Expansion
UNITED KINGDOM EXPANSION Ospberdeen @ conan, @ Aton peat “unde Greensck Giasi ATLANTIC OCEAN as Sparen —- _Searborough Cestebar ¢ Roscommon, “i ut . q ipatway os Kikenny, ° en “Tralee Watertord @ Current locations © Projected locations Plymouth English Channes iia
Slide 18: Diversify into Related Skilled Staffing Verticals
DIVERSIFY INTO RELATED SKILLED STAFFING VERTICALS Verticals Market Segments Technical ffing Construction t Skilled Event Mgmt. “Trades’ Hospitality Staffing Light Industrial Staffing Constucton) On-Demand Staffing Ri ationale: Common customer base + Channel synergies + Opportunity to create a growth
Slide 19: On Demand vs. Light Industrial
ON DEMAND vs. LIGHT INDUSTRIAL On Demand Light Industrial Short Assignments Longer-term Assignments Short Sales Cycle Longer Sales Cycle All Industries Manufacturing, Warehousing & Transportation Focus Dispatch Hall Recruiting | Newspaper & Telephone Recruiting $6 - $7 Pay Rates, Daily Pay $7 - $8 P
Slide 20: Financial Review
FINANCIAL REVIEW = Overview of revenue and profitability = Analysis of key business strategies = Investment highlights WE PUT PEOPLE TO WORK.
Slide 21: Long-Term Growth
LONG-TERM GROWTH Annual Revenue and Operating Income ingm insm 1200 Cs 1,000 50 800 40 g 3 5 2 2 600 30 3 2 4 Ss 400 2 2 200 10 ° ° 7994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004E E- Based on management guidance issued on September 13, 2004
Slide 22: Monthly Sales Growth Trends
MONTHLY SALES GROWTH TRENDS aH Year over Year Sales Growth Rates 25% 20% 15% 10% + 5% + 0% 5% 10% JFMAMJJASONDJFMAMIJJA 03 04
Slide 23: Sales Growth Components
SALES GROWTH COMPONENTS Same-store Growth NewiAcquired Store Growth 20% 20% 18% 18% +) BAcquired mNew 16% 16% 14% 14% 12% 12% 10% 10% 8% 4 8% 6% + 6% + 4% 4 4% 4 2% 4 2% + 0% 0% SONDJFMAMJUA ASONDJFMAMJJA 03 ‘4 ‘03 D4
Slide 24: Regional Results
REGIONAL RESULTS Canada 36 Branches 396 of Sales YTD +12% Midwest 110 Branches 13% of Sales Naver YTD +20% 53 Branches i ofSaes Northeast ig 168 Branches 18% of Sales YTD +14% Southwest 158 Branches 2% ofa Spartan Staffing 27 Branches ‘ 6% of Sales 9 YID+2% United Kingdom South Southeast 45 Branches
Slide 25: Recent Trends in Temporary Staffing
RECENT TRENDS 20% IN TEMPORARY STAFFING 15% 10% 5% 0% 5% 10% 15% 20% 25% EELS Help Supply Year over Year Growth * ~@- LRW US. Sales Growth IFMAMITASONDIFMAM]JASONDIFMAMIJASONDJFMAMIJA iit w “vot seasonally adjusted, 3 4
Slide 26: Consistent Gross Margins
CONSISTENT GROSS MARGINS in, Gross Margins As a Percentage of Revenue 2000 2001 2002 2003 2004E E- Based on management guidance issued on September 13, 2004 PEOPLE TO WORK
Slide 27: Gross Margin Trends
GROSS MARGIN TRENDS 31% 30% 29% 28% 27% 26% 25% Q1 Q2 Q3 Q4 Qt Q2 Q3 Q4 QI Q2 Q3 Q4 2002 2002 2002 2002 2003 2003 2003 2003 2004 2004 2004E 2004E E- Based on management guidance issued on September 13, 2004
Slide 28: Selling, General & Admin. Costs
SELLING, GENERAL & ADMIN. COSTS Trailing four quarters as a percentage of revenue Q1 Q2 QO3 Q4 Qt Q2 Q3 Q4 Qt Q2 Q3 Q4 2002 2002 2002 2002 2003 2003 2003 2003 2004 2004 20048 20048 E- Based on management guidance issued on September 13, 2004
Slide 29: Workers' Compensation
WORKERS’ COMPENSATION Collateral Reconciliation: FY 2002 FY 2003 Q2 2004 Outstanding Collateral $ 126.4 165.7 $ 171.4 Less: Discount on Reserves (17.8) (23.6) (27.9) Less: Insurance Company Cushion (2.9) (6.2) (2.3) Less: Timing of Collateral Release (5.3) (23.3) (29.3) Less: Upfront Posting (14.5)
Slide 30: Long-Term Debt
LONG-TERM DEBT * $74 Million in long-term debt — $4 million in capital lease obligations — $70 million in convertible subordinated notes + 6.25% interest rate + Matures June 2007 + $7.26 conversion price (9.6 million shares) + Redeemable on or after June 20, 2005 Shares Short MJ JASONDJFMAMJ JASOND
Slide 31: Financial Outlook
FINANCIAL OUTLOOK 2001 | 2002 | 2003 | Forceastt wRevenus $017M | $863M |$e91M |$1,030M - 1,036M Growth (-6%) | (6%) | 3% 16% = EPS $0.23 | $0.28 | $0.41 | $0.64 - $0.67 = Operating Income $14M $21M | $32M $53M - $56M Growth (-15%) | 47% | 54% 65% - 75% Based on manayement guidance issued on Septemb
Slide 32: Four Key Business Strategies
FOUR KEY BUSINESS STRATEGIES 1. Grow current branch revenues and profits 2. Expand into smaller markets 3. Expand in the United Kingdom 4. Diversification of services WE PUT PEOPLE TO WORK.
Slide 33: Branch Maturity Drives Revenue
Revenue BRANCH MATURITY DRIVES REVENUE Branch Revenue and Maturity (2001 — 2003 Avg.) in $m $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $0 $1.1 Million per Branch in 2003 Tv. 2¥i. 34s, 4¥is. S¥rs. Bis. T¥Fs. 8 Ys, Gyre, 106 Yes. 25% 20% 5% 0% nt ranches
Slide 34: Branch Maturity Drives Revenue
Revenue BRANCH MATURITY DRIVES REVENUE in $M $2,000 $1,800 $1,600 $1,400 $1,200 $1,000 $800 $600 $400 $200 $0 2005 Estimated Branch Revenue $1.3 Million per Branch in 2005 2vis. 3¥rs. 4 Yrs. SVrs. 6 Ys, 7Yts. BY. Sys. 10+ 25% 20% 15% 10% 5% 0% % of Offices nt ranches
Slide 35: Sales Per Branch Is Climbing
SALES PER BRANCH IS CLIMBING ingooos «Sle per Branch - Trailing 12 Months $1,300 $1,250 $1,200 $1,150 + $1,100 $1,050 AS ONDJIFMAMSJIJIA "03 "04
Slide 36: Branch Profit Potential
BRANCH PROFIT POTENTIAL Sensitivity analysis based on YC Revenue $1,100,000 $1,300,000 Gross Profit 330,000 390,000 Gross Profit Margin 30% 30% Branch Expenses 200,000 210,000 As a % of Revenue 18% 16% Income from Operations $130,000 $180,000 Operating income Margin [2%] Ea]
Slide 37: Operating Leverage Drives Profits
OPERATING LEVERAGE DRIVES PROFITS Earnings Per Share Sensitivity Analysis $200 $180 $1.60 $140 $100 : $080 : s60 sao 20 1 so00 sll 2 $13 $4 «95 $6 8178 Average Revenue per Branch ($ Millions) Earnings per Share Assumption (@ Eamings per share sensitiity analysis based on consistent gross profit marg
Slide 38: Q-3 Avg. U.S. Weekly Sales Volumes
Q-3 AVG. U.S. WEEKLY SALES VOLUMES @ One Year and Older $10 G New in 2004 Avg, Sales per Week per Branch 2 a a Medium & Large Small Markets Markets ‘Nunhers within yellow columns represent the nunber of branches opened in 2004,
Slide 39: Small Markets — Sales Ramp Up
SMALL MARKETS — SALES RAMP UP Small Market Revenue by Age of Office (2001-2003) in $M $1,400 $1,200 $800 $600 $400 $200 | so | s 2 8 8 Revenue per Office 1Yr. 0 2Yrs. 3Yrs. 4Yrs. 5Yrs. 6+Yrs.
Slide 40: Q-3 Avg. Weekly Sales Volumes
Q-3 AVG. WEEKLY SALES VOLUMES in $000s $30 $25 $20 $15 @ One Year and Older G New in 2004 $10 $5 $0 U.S. UK. ‘Nurahers within yellow columns represent the nunber of branches opened in 2004,
Slide 41: Record U.K. Profitability
RECORD U.K. PROFITABILITY July 2004 YTD One Year and Older 6New 3 YTDAII FY Offices Offices Offices 2004E FY 2003 Revenues $ 20,100 $ 300 $20,400 $44,200 $27,000 Branch Profit (Loss) $ 1,200 $ (400) $ 800 $2,700 $ -0- In thousands of US, Dolla.
Slide 42: Spartan Staffing Acquisition
SPARTAN STAFFING ACQUISITION " A large profitable staffing , Spartan Staffing Sales Growth agency in the Southeast Pre-accuisition (27 Branches) 25% — ™ Two divisions: Spartan Staffing and Workforce ™ $50 million in annual oe revenue = $9.8 Million Purchase '”% Price ™ Accretive: Projected 2004 EBIT
Slide 43: Consolidated Revenues and Average Sales per Branch
Consolidated Revermes Average Sales per Branch $1,200,000 $1,400 $1,000,000 + $1,200 + $1,000 $800,000 $800 $600,000 $600 $400,000 $400 $200,000 $200 $0 $0 2000 2001 2002 2003 2004E In thousands of US, Dollars E- Based on management guidance issued on September 13, 2004 2000 2001 2002 2003 20045
Slide 44: Profitability
PROFITABILITY Consolidated Net Income % Diluted Earnings per Share 3.50% $0.70 3.00% $0.60 250% $0.50 2.00% + $0.40 + 150% +4 $0.30 + 100% $0.20 050% $0.10 0.00% $0.00 2000 2001 2002 2003 20045 2000 2001 2002 2003 2004E E- Based on management guidance issued on September 13, 2004
Slide 45: Return on Investment
RETURN ON INVESTMENT Return on Assets Return on Invested Capital 9% 20% 8% + 18% ae 16% + 14% 6% + 12%4 50% 10% 4% 90% 3% 60 2% ite 1% 20% 0% 0% 2000 2001 2002 2003 -2n04E 2000 2001 2002 2003 2004E E- Based on management guidance issued on September 13, 2004
Slide 46: Searchable text section of graphics
Searchable text section of graphics shown above [ GRA PHIC] 2ND ANNUAL LABOR READY ANALYST DAY 2004 WE PUT PEOPLE TO WORK. SAF E HARBOR STATEMENT Cautionary Note about Forward-Looking Statements Certain statements made by us in this presentation that are not historical facts or that relate to future