UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 2023
or
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 001-14543
____________________________________
TrueBlue, Inc.
(Exact name of registrant as specified in its charter)
______________________________________
Washington
(State of incorporation)
91-1287341
(I.R.S. employer identification no.)
1015 A Street, Tacoma, Washington 98402
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (253) 383-9101
______________________________________
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common stock, no par value
Trading Symbol(s)
TBI
Name of each exchange on which registered
New York Stock Exchange
Securities registered under Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the
definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
☐ Accelerated filer
☒ Non-accelerated filer
☐
Smaller reporting company
☐ Emerging growth company
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting
standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under
Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error
to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive
officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark if the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
As of June 25, 2023, the aggregate market value (based on the NYSE quoted closing price) of the common stock held by non-affiliates of the registrant was approximately $ 0.5 billion.
As of February 14, 2024, there were 31,387,635 shares of the registrant’s common stock outstanding.
The information required by Part III of this report is incorporated by reference from the registrant’s definitive proxy statement relating to the Annual Meeting of Shareholders scheduled to be
held May 15, 2024, which will be filed no later than 120 days after the end of the fiscal year to which this report relates.
DOCUMENTS INCORPORATED BY REFERENCE
TrueBlue, Inc.
Table of Contents
PART I
Business
Risk factors
Unresolved staff comments
Cybersecurity
Properties
Legal proceedings
Mine safety disclosures
PART II
Market for registrant’s common equity, related stockholder matters and issuer purchases of equity securities
[Reserved]
Management’s discussion and analysis of financial condition and results of operations
Quantitative and qualitative disclosures about market risk
Financial statements and supplementary data
Changes in and disagreements with accountants on accounting and financial disclosure
Controls and procedures
Report of management on internal control over financial reporting
Report of independent registered public accounting firm
Other information
Disclosure regarding foreign jurisdictions that prevent inspections
PART III
Directors, executive officers and corporate governance
Executive compensation
Security ownership of certain beneficial owners and management and related stockholder matters
Certain relationships and related transactions, and director independence
Principal accountant fees and services
PART IV
Exhibits
Index to exhibits
Form 10-K summary
Signatures
Item 1.
Item 1A.
Item 1B.
Item 1C.
Item 2.
Item 3.
Item 4.
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C.
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
Item 15.
Item 16.
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COMMENT ON FORWARD LOOKING STATEMENTS
Certain statements in this Form 10-K, other than purely historical information, including estimates, projections, statements relating to our business plans, objectives and
expected operating results, and the assumptions upon which those statements are based, are “forward-looking statements” within the meaning of the Private Securities
Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements involve risks and
uncertainties, and future events and circumstances could differ significantly from those anticipated in the forward-looking statements. These forward-looking statements
generally are identified by the words “believe,” “project,” “expect,” “anticipate,” “estimate,” “intend,” “strategy,” “future,” “opportunity,” “goal,” “plan,” “may,”
“should,” “will,” “would,” “will be,” “will continue,” “will likely result,” and similar expressions. Forward-looking statements are based on current expectations and
assumptions that are subject to risks and uncertainties that may cause actual results to differ materially from those expressed or implied in our forward-looking statements,
including the risks and uncertainties described in “Risk Factors” (Part I, Item 1A of this Form 10-K), “Cybersecurity Risk Management and Strategy” (Part 1C of this Form
10-K), “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (Part II, Item 7 of this Form 10-K), and “Quantitative and Qualitative
Disclosures about Market Risk” (Part II, Item 7A of this Form 10-K). Except as required by law, we undertake no duty to update or revise publicly any of the forward-looking
statements after the date of this report or to conform such statements to actual results or to changes in our expectations, whether because of new information, future events, or
otherwise.
PART I
Item 1.
BUSINESS
OUR COMPANY
TrueBlue, Inc. (the “company,” “TrueBlue,” “we,” “us” and “our”) is a leading provider of specialized workforce solutions that help our clients improve productivity and grow
their businesses. We began operations in 1989 and are headquartered in Tacoma, Washington.
BUSINESS OVERVIEW
In 2023, we connected approximately 464,000 people with work and served approximately 67,000 clients. Our operations are managed as three business segments:
PeopleReady, PeopleScout and PeopleManagement.
PeopleReady connected approximately 195,000 people with work in fiscal 2023 within a broad range of industries that included construction, transportation, manufacturing,
retail, hospitality and renewable energy. We connected individuals looking for general temporary, temp-to-hire and skilled trade positions with our vast network of clients.
In fiscal 2023, PeopleReady provided approximately 66,000 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.
We have a network of approximately 600 branches across all 50 states in the United States (“U.S.”), Canada 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.
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PeopleScout, a global leader in recruitment process outsourcing (“RPO”) services, connected approximately 224,000 people with work in fiscal 2023, 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. To do so, we tailor our services to individual client needs by offering multiple solutions, including the following:
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Full-cycle RPO solution: Provides oversight of the entire talent acquisition strategy, including sourcing, screening, hiring and onboarding of candidates.
Project RPO solution: Brings a full-scale RPO model to solve a specific client challenge for a defined scope of work and time.
Recruiter on demand solution: Provides access to a network of highly-skilled talent acquisition experts, giving clients the option to choose the type of support they need
with less cost and complexity than ramping up their internal teams.
Talent advisory solution: Provides employer branding, recruitment marketing, talent insights, diversity, equity and inclusion consulting, candidate assessment services and
talent acquisition strategy consulting.
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. Affinix provides real-time insights to our clients, helping our dedicated service delivery teams efficiently and effectively manage the entire
recruitment process. Client contracts are generally multi-year in duration and pricing is typically composed of a fee for each hire and/or talent consulting fees. Pricing is
impacted by factors such as geography, volume, job type, degree of recruiting difficulty, and the scope of outsourced recruitment and employer branding services included.
®
PeopleScout also includes our managed service provider (“MSP”) business, which manages our clients’ contingent labor programs including vendor selection, performance
management, compliance monitoring and risk management. As the client’s exclusive MSP, we have dedicated service delivery teams, which work as an integrated partner with
our clients to increase the productivity of their contingent workforce program.
PeopleManagement connected approximately 45,000 people with work in fiscal 2023.
Our On-Site business provides and manages contingent associates at clients’ facilities through our Staff Management | SMX (“Staff Management”) and SIMOS Insourcing
Solutions (“SIMOS”) branded services 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. We offer hourly
and productivity-based (cost-per-unit) pricing options for industrial staffing solutions. The productivity-based pricing leverages a strategically engineered on-site solution to
incentivize performance improvements in cost, quality and on-time delivery using a fixed price-per-unit approach. Both hourly and productivity-based pricing are impacted by
factors such as geography, volume, job type and degree of recruiting difficulty.
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.
Centerline offers three solutions for clients:
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Flexible Drivers solution: On-demand service helping clients find drivers where and when they need them.
Driver Management Services solution: Fully outsourced recruitment, management and supervision of drivers for a client.
• Mobile Drivers solution: Short-term relocation of qualified, experienced drivers for special projects or to high-need markets or remote locations where drivers are
unavailable.
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INDUSTRY AND MARKET DYNAMICS
The staffing industry, which includes our PeopleReady and PeopleManagement businesses, plays a key role in many employers’ talent strategies. Staffing companies supply
contingent workforce solutions to ensure the best return on talent investment, optimize talent for business circumstances, and reduce the cost and effort of hiring and managing
permanent employees. This allows for a rapid response to changes in business conditions through the ability to replace absent employees, fill new positions, and convert fixed or
permanent labor costs to variable costs. Staffing companies act as intermediaries to match available associates with employer work assignments. Work assignments vary widely
in duration, skill level and required experience.
The human resource outsourcing industry, which includes our PeopleScout business, involves transitioning various functions handled by internal human resources and labor
procurement departments to outside service providers on a permanent or project basis. Human resource departments are faced with increasingly complex operational and
regulatory requirements, increased candidate expectations, an expanding talent technology landscape, and pressure to achieve efficiencies, which increase the need to migrate
non-core functions to outsourced providers. The human resource outsourcing industry includes our RPO and MSP services, which allow clients to more effectively find and
engage high-quality talent, leverage talent acquisition technology and scale their talent acquisition function to keep pace with changing business needs.
Our workforce solutions address the following key industry and market trends contributing to anticipated growth:
• Workforce flexibility and scalability: The staffing industry continues to experience dynamic shifts between the permanent and flexible workforce based on competitive and
economic pressures to reduce costs, seasonal demands, and in response to rapidly changing market conditions. Providers in the human resource outsourcing industry can add
significant scalability to a company’s recruiting and hiring efforts, including accommodating seasonal, project or peak hiring needs without sacrificing quality. These
providers also help clients increase efficiency and drive lower overhead costs by standardizing processes, reducing time to fill, and onboarding the best fit talent into a client’s
organization.
• Workforce productivity: Companies are under increasing competitive pressures to improve productivity through workforce solutions that improve performance and enable
clients to focus on their core business.
•
Leveraging technology to access talent: Automation, artificial intelligence and machine learning are transforming talent recruitment and service delivery. The fragmented
talent technology ecosystem is becoming more crowded, with significant investments flowing in and new technology coming online. Associates are demanding more
flexibility in how, when and where they work, as well as access to contingent work opportunities through mobile technology. Available associates are in high demand and
have more power to find the employment situation they desire. As competition for qualified candidates increases, clients and their outsourced service providers are leveraging
innovative talent technology to improve the recruiting process and efficiently hire more qualified candidates. Additionally, talent technology continues to elevate the
employer brand, build talent communities, create a world-class candidate experience, and facilitate effective recruitment marketing and candidate communication strategies.
BUSINESS STRATEGY
Our business strategy is focused on investing in innovative technology and initiatives that will drive organic growth and improve the client, candidate and associate experience.
Our clients have a variety of challenges in running their businesses, each of which are unique to the competitive pressures of their industries. Our business segments are
dedicated to workforce solutions tailored to our clients’ needs and the industries in which they operate. We ensure our differentiated solutions keep pace with the changing
needs of our clients while driving growth through the following strategies:
• We continue to invest in technology to accelerate revenue growth, reduce the cost of delivering our services, and increase our ability to attract and retain clients, candidates
and associates. Our technological innovations improve the access, speed and ease of connecting our clients with high-quality contingent and permanent employee workforce
solutions.
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Augmenting our PeopleReady branch network is our JobStack platform, which connects our associates and clients through a real-time 24 hours a day, seven days a week
digital exchange with an easy-to-use mobile app. JobStack enables our branches to expand their recruiting and sales efforts. JobStack is competitively differentiating our
services, expanding our reach into new demographics, and improving both service delivery and work order fill rates as we continue to execute our digital strategy. We
are in the early stages of launching a new, proprietary version of JobStack that provides a more customized experience for our clients and associates. During fiscal 2023,
we made the new JobStack app accessible to a limited number of PeopleReady branches, and will continue the rollout to additional branches in fiscal 2024. Through the
new version of JobStack, we will continue to periodically add features and
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enhancements to expand functionality to further leverage this technology to transform our business by reducing expenses, accelerating revenue growth and enhancing
our client and associate retention.
Augmenting our Staff Management and SIMOS dedicated on-site teams is Stafftrack . Stafftrack is a proprietary hiring and workforce management software that
enables us to recruit and connect the best candidates with on-site assignments. Stafftrack has robust, near real-time analytics that drive dynamic supply chain and
workforce strategies, which allow clients faster, more precise hiring and help drive operational improvements and efficiencies. The Stafftrack associate mobile app
provides associates the ability to search for a job, view schedules, add shifts, receive real-time notifications, and earn perks through our Stafftrack Rewards program,
which incentivizes associates for perfect attendance and referrals. We continue to expand functionality within Stafftrack to further enhance our client and associate
experience.
®
Our Centerline mobile app provides our drivers with access to information on-the-go including schedules, pay information, job extension requests and access to our
Respect the Drive driver engagement program, which tracks milestone accomplishments for hours worked. We continue to expand and build functionality within the
mobile app to enhance the overall driver experience.
Augmenting our PeopleScout dedicated service delivery teams is our Affinix platform used for sourcing, screening and delivering a permanent workforce to our clients.
Affinix creates a consumer-like candidate experience and streamlines the sourcing process. Affinix delivers speed and scalability while leveraging recruitment
marketing, machine learning, predictive analytics and other emerging technology to make the end-to-end process seamless for the candidate. We continue to invest in
Affinix to further improve our ability to quickly and efficiently source the most attractive talent at the best price.
• We continue to evaluate opportunities to expand our market presence for specialized blue-collar staffing services, expand our geographical and industry reach, provide a
broad range of general staffing services, and dispatch our associates by leveraging a combination of technology and local market presence. Continued investment in
specialized sales, recruiting and service expertise will create a more seamless experience for our clients to access all our services with more comprehensive solutions to
enhance their performance and our growth. Our business segments offer complementary workforce solutions with unique value propositions to meet our clients’ demands for
talent.
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•
Our RPO business continues to leverage our strong brand and innovative technology for high-volume sourcing and dedicated client service teams for connecting people to
opportunities. We will continue to focus our sales and marketing efforts to reach new clients as the demand for outsourced recruiting support increases.
Our fiscal 2024 business strategy is focused on accelerating business growth to capture market share, while enhancing our profitability. Key elements of this strategy include
advancement of our digital transformation, expansion in high-growth and under-penetrated end markets, and evaluating and simplifying our operating structure. While we
will continue to go to market under our current, well-established brands, streamlining our organization will create opportunities to reduce inefficiencies and bring our teams
closer to our clients and associates, enabling greater focus on operational excellence, cross-selling and innovation. With a more focused structure, we will be better able to
leverage our strengths and assets to deliver long-term, profitable growth.
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COMPETITION
Contingent staffing services
The staffing industry is large and highly fragmented, including large publicly-held companies as well as privately-owned companies on a national, regional and local level. No
single company has a dominant share of the industry. We compete primarily with local and regional companies, as well as online and app-based companies providing a variety
of flexible workforce solutions. The strongest staffing services competitor in a particular market is a company with established relationships and a track record of meeting the
clients’ needs. The most significant competitive factors are price, ability to promptly fill client orders, success in meeting clients’ expectations of recruiting qualified associates,
quality of client and associate technology tools, and appropriately addressing client service issues.
Staffing companies compete both to recruit and retain a supply of associates, and to attract and retain clients who will utilize these associates. Client demand for contingent
staffing services is heavily influenced by the overall strength of the economy and labor market, specific industry and sector performance, and workforce flexibility trends. This
creates volatility for the staffing industry based on overall economic conditions. Historically, in periods of economic growth, the number of companies providing contingent
workforce solutions has increased due to low barriers to entry, whereas, during recessionary periods, the number of companies has decreased through consolidation,
bankruptcies or other events. Competitive forces have historically limited our ability to raise our prices to immediately and fully offset the increased costs of doing business,
some of which include increased associate wages, workers’ compensation costs, unemployment insurance and health care.
We have a competitive advantage from our service history, our specialized approach in serving the industries of our clients, and our mobile apps, which connect associates with
jobs and create virtual exchanges between our associates and clients. Our JobStack and Stafftrack mobile apps are competitively differentiating our services, expanding our
reach into new demographics, and improving our recruiting, sales and service delivery. Our national presence, industry specialization, investment in technology, and proprietary
systems and processes, together with specialized programs focused on worker safety, risk management, and legal and regulatory compliance, are key differentiators from many
of our competitors.
Human resource outsourcing
Our strongest competitors are companies who specialize in RPO services, as well as companies who offer broader human resource outsourcing solutions, which include RPO
services. No single provider dominates the market. Competition also includes companies that choose to perform recruiting in-house. The most significant competitive factors
for RPO services are the ability to attract top talent, reduce cost per hire, improve retention, deploy best-in-class technology solutions and improve employer branding.
Important factors for success in RPO services include the ability to add significant scalability to a client’s recruiting and hiring efforts, including accommodating seasonal and
irregular hiring, the ability to increase efficiency by standardizing processes and facilitating transitions for candidates and employees, and the ability to source the most
attractive talent at the best price. Our tailored solutions, client partnerships, proprietary technologies and service delivery are key differentiators from many of our competitors.
CLIENTS
Our clients range from small businesses to Fortune 100 companies.
During fiscal 2023, we served approximately 67,000 clients in industries including construction, manufacturing and logistics, warehousing and distribution, waste and recycling,
energy, transportation, retail, hospitality and general labor. Our ten largest clients accounted for 20.5% of total revenue for fiscal 2023, 19.2% for fiscal 2022 and 17.2% for
fiscal 2021. No single client represented more than 10.0% of total company revenue for fiscal 2023, 2022 or 2021.
CYCLICAL AND SEASONAL NATURE OF OUR BUSINESS
The workforce solutions business has historically been cyclical, often acting as an indicator of both economic downturns and upswings. Clients tend to use a contingent
workforce to supplement their existing workforce and generally hire permanent employees when long-term demand is expected to increase. As a consequence, our revenue
tends to increase quickly when the economy begins to grow. Conversely, our revenue decreases quickly when the economy begins to weaken and contingent staff positions are
eliminated, permanent hiring is frozen, and turnover replacement diminishes.
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Our business experiences seasonal fluctuations for contingent staffing services. Demand is lower during the first and second quarters, due in part to limitations to outside work
during the winter months and slowdown in manufacturing and logistics after the holiday season. Demand for contingent labor peaks during the third quarter for outdoor work
and the fourth quarter for manufacturing and logistics, warehousing and distribution, and retail for the holiday season. Our working capital requirements are primarily driven by
our associate payroll and client accounts receivable. Since receipts from clients lag payroll to associates, working capital requirements increase substantially in periods of
growth.
HUMAN CAPITAL MANAGEMENT
TrueBlue is The People Company . We specialize in connecting people with work and discovering solutions to our clients’ workforce needs. Our team has extensive experience
in a variety of industries, and is highly focused on the safety of our workforce. Human capital management is at the heart of what we do every day.
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Our employees
We believe our success as a company depends on our ability to attract, develop and retain talented employees. The skills, experience and industry knowledge of our employees
significantly benefit our operations and performance. As of December 31, 2023, we employed approximately 5,000 full-time equivalent (“FTE”) employees. We have
approximately 3,700 FTE employees in North America, of which approximately 97% are in the U.S., 1,000 FTE employees in Asia Pacific, and 300 FTE employees in Europe.
None of our permanent employees are represented by a labor union. We have not experienced work stoppages and believe that our employee relations are in good standing, as
evidenced by our periodic employee engagement survey results. The appropriate committees of the Board of Directors (“Board”) regularly receive reports directly from the
Chief People Officer and Chief Diversity Officer regarding the progress on our key human capital initiatives, including updates on diversity, equity and inclusion initiatives and
progress. These reports inform discussions regarding the development, retention and engagement of our employees. Some of our key human capital management initiatives are
discussed below.
Values and ethics
Our commitment to certain core values is what we believe attracts and, more importantly, retains individuals who live these values. Our values are:
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Be Optimistic – We believe there is a solution to every problem. By being innovative and working together, we can find new ways to get results.
Be Passionate – We believe in what we do, are committed to doing good, and will go above and beyond the call of duty for our clients and workers.
Be Accountable – We empower our people to take personal responsibility and make an impact.
Be Respectful – We listen and learn from each other, embrace diverse views and experiences, and know that finding successful solutions comes from working together.
Be True – We are true to who we are and what our clients need.
In addition to our values, our Code of Conduct & Business Ethics (the “Code”) describes the expectations we hold for each employee, from our commitment to treat each other
kindly to our zero tolerance for fraud, bribery or corruption. It reflects who we are, how we work, and is based on our core values and the law. The Code applies to members of
the Board, officers and all other employees who work for TrueBlue and its affiliates worldwide. We require all of our employees to complete our Code training, as well as
courses about sexual harassment awareness and prevention and cybersecurity awareness.
Culture and engagement
We believe a strong corporate culture includes an emphasis on employee engagement. As we have continued to maintain remote and hybrid work models, we have utilized live
virtual and recorded video town hall meetings to ensure employees throughout the company remain engaged, connected to leadership, and focused on our values and business
strategies. To assess and improve our culture, we utilize an independent third-party survey provider to measure how favorably our employees view our organizational culture
and engagement. These surveys include corporate culture assessments, as well as feedback on employee engagement and employee-management relations. The results of these
surveys are reported and distributed throughout management and the Board, and are used to create actionable plans to improve employee engagement and retention. Our August
2023 survey delivered an engagement score of 77, which exceeded the target benchmark score of 74 set by the survey provider.
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Developing our people
In order to retain talented employees, our Full Performance program focuses on personal development and career growth through setting and monitoring performance goals,
continuous learning, and the creation of internal career opportunities. Employees are encouraged to create individual development plans, identify specific skill gaps and
development goals, and chart a path for career growth. We aim to strengthen skills that transfer across roles, business segments and functions. Managers meet regularly with
employees to discuss their plans, and yearly assessments provide a formal process for tracking progress. This standardized process also ensures employees in similar positions
are similarly evaluated. To support employee growth, we provide access to a wide range of training and development programs to enable more effective onboarding, work
performance, compliance and advancement of corporate initiatives. This strategy supports our intent to foster a culture that enables all employees to realize their full
professional potential and cultivates a qualified network of future leaders. During 2023, our employees completed nearly 21,000 trainings.
Supplementing our Full Performance program, we launched an enterprise-wide Global Mentorship Program in 2020. The program is designed to pair mentees with mentors
based on a common area of interest for personal and professional development. In 2022, we introduced the Diversity, Equity & Inclusion stream, which gave employees the
opportunity to be paired based on alignment with common personal characteristics.
In 2022, we launched the Leadership BluePrint program, available to all global people leaders. In 2023, we offered targeted and bespoke programs to senior leadership teams
and select high-potential leaders. These leadership development programs, solutions, and services were designed to build leadership capabilities and behaviors in alignment with
our internal competency model. This demonstrates our commitment to growing internal talent, while enhancing leadership proficiency, and positioning TrueBlue leadership for
current and future roles.
Diversity, equity and inclusion
We are dedicated to fostering, recognizing and embracing diversity at every level of the organization. Our focus on diversity, equity and inclusion demonstrates that we believe
human capital is one of our most valuable assets. We strive to create an environment that supports and values our people. TrueBlue’s ability to embrace inclusion helps to attract
and retain excellent talent, boost innovation, foster collaboration, and increase employee engagement. Because our client population is comprised of a wide variety of
demographics and backgrounds, having a diverse workforce boosts client perception of the organization, improves the client experience, helps us be responsive to our clients’
needs, and increases client satisfaction.
Our Chief Executive Officer and executive team are committed to having opportunities and a career path for everyone in the organization. Our Chief Diversity Officer leads the
Diversity, Equity & Inclusion Council (the “Council”). The Council is a group of employees across multiple service lines who design and launch initiatives that advance
acceptance and foster a diverse and inclusive workplace. The Council sponsors training to build diversity and inclusion awareness, and supports our Employee Resource
Groups (“ERGs”).
Our ERGs are employee-led groups that create opportunities for employees to collaborate based on shared characteristics or life experiences to support each other for enhanced
career and personal development. These ERGs seek to maximize employee engagement and contribute to our overall business objectives by offering diverse perspectives,
networking opportunities and increased cultural awareness. We have nine ERGs for employees sharing similar ethnicity, nationality, gender, or life experiences and their
respective allies. Through these initiatives, we learn how our differences build stronger teams and how our histories reveal similarities. In 2023, we launched the Global Culture
Awareness campaign, which focused on the unique cultures of six countries we operate in. Our focus on diversity, equity and inclusion creates an environment where every
employee can experience merit-based career growth, receive the training and development they need to succeed, gain access to new opportunities, and be their authentic selves.
Today, 78% of our Board is comprised of members from under-represented groups. As of December 31, 2023, approximately 64% of our global FTE employee population and
48% of our directors and above were female. Approximately 48% of our total domestic FTE employee population and 19% of our directors and above consider themselves
ethnically diverse. While we believe we have assembled a diverse internal employee workforce, we are committed to making further improvements.
Health and wellness
We provide our employees and their families with flexible health and wellness programs, including competitive benefits. Our benefits include health, dental and vision
insurance, health savings and flexible spending accounts, paid time off, family leave, mental health resources and family care resources.
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Our associates
Associates are the individuals who make up our contingent workforce to serve the needs of our staffing clients. We attract our pool of associates through our proprietary mobile
apps, online resources, extensive internal databases, advertising, job fairs, community-based organizations and various other methods. We identify the skills, knowledge,
abilities and personal characteristics of our associates and match their competencies and capabilities to our clients’ requirements. This enables our clients to obtain immediate
value by placing a highly productive employee on the job site. We use a variety of proprietary programs and methods for identifying and assessing the skill level of our
associates when selecting a particular individual for a specific assignment and retaining those associates for future assignments. We believe that our programs and methods
enable us to offer a higher quality of service by increasing productivity, decreasing turnover, reducing absenteeism and improving associate safety.
Skill development
Associates come to us because of the flexibility we offer to fill a short-term financial need and/or provide longer-term contingent flexible labor opportunities. We act as a bridge
to permanent, full-time employment for thousands of associates each year. Associates may be assigned to different jobs and job sites, and their assignments could last for a few
hours or extend for several months or years. We provide our associates meaningful work and the opportunity to improve their skills. Through our WorkUp program, we provide
skills training and career development for associates. We are expanding the program into select markets where we operate. During 2023, we established an approved
apprenticeship program to support skills development and long-term employment in the renewable energy industry, and launched a commercial truck driver training scholarship
for female truck drivers. We are considered the legal employer of our associates, and laws regulating the employment relationship are applicable to our operations. We believe
we have an overall positive relationship with our associates.
Safety
We are committed to our associates’ safety. We have developed an integrated risk management program that focuses on loss analysis, education and safety improvement
programs to reduce the risk of injury to our associates. We implemented an employee incentive compensation program tied to metrics that promote associate safety. We
continuously track injuries to our associates at our client job sites across regions, industries and brands to identify trends that allow us to focus our safety resources on the types
of jobs that may lead to more injuries. Costs associated with accidents are charged to each branch or location, providing additional incentive to promote safety. We distribute
educational materials to our clients and provide safety training to all associates. We also perform client site visits to identify and address specific safety risks unique to an
industry or job site.
REGULATION
Our services are subject to a variety of complex federal, state, and foreign laws and regulations. We continuously monitor legislation and regulatory changes for their potential
effect on our business. We invest in technology and process improvements to implement required changes while minimizing the impact on our operating efficiency and
effectiveness. Regulatory cost increases are passed through to our clients to the fullest extent possible.
TRADEMARKS
We own several trademarks that are registered with the U.S. Patent and Trademark Office, the European Union Community Trademark Office and numerous individual country
trademark offices.
AVAILABLE INFORMATION
Our Annual Report on Form 10-K, along with all other reports and amendments filed with or furnished to the Securities and Exchange Commission (“SEC”), are publicly
available, free of charge, on our website at www.trueblue.com as soon as reasonably practicable after such reports are filed with, or furnished to, the SEC. The SEC also
maintains a website that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov. Our
Corporate Governance Guidelines, Code of Conduct and Business Ethics and Board Committee Charters are also posted to our website. The information on our website is not
part of this or any other report we file with, or furnish to, the SEC.
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Item 1A.
RISK FACTORS
Investing in our securities involves risk. The following risk factors and all other information set forth in this Annual Report on Form 10-K should be considered in evaluating
our future prospects. If any of the events described below occur, our business, financial condition, results of operations, liquidity, or access to the capital markets could be
materially and adversely affected.
To develop the following risk factors, we review risks to our business that are informed by our formal Enterprise Risk Management program, industry trends, the external
market, and financial environment as well as dialogue with leaders throughout our organization. Our risk factors descriptions are intended to convey our assessment of each
applicable risk and such assessments are prioritized and integrated into our strategic and operational planning.
RISKS RELATED TO OUR COMPANY’S OPERATIONS
Demand for our workforce solutions is significantly affected by fluctuations in general economic conditions.
The demand for our workforce solutions is highly dependent upon the state of the economy and the workforce needs of our clients, which creates uncertainty and volatility in
our operations. Our profitability is sensitive to decreases in demand. National and global economic activity is slowed by many factors, including rising interest rates,
recessionary periods, inflation, declining consumer confidence, political and legislative changes, international conflict or instability, epidemics, other significant health
concerns, and global trade uncertainties. As economic activity slows, companies tend to reduce their use of associates and recruitment of new employees. We work in a broad
range of industries that primarily include construction, manufacturing and logistics, warehousing and distribution, waste and recycling, energy, transportation, retail and
hospitality. Significant declines in demand from any region or industry in which we have a major presence, domestic or global supply chain disruptions, or decline in the
financial health of our clients, significantly decreases our revenues and profits. For example, we experienced significantly reduced demand from our clients due to the
coronavirus pandemic (“COVID-19”) and the resulting supply chain disruptions in the manufacturing and renewable energy sectors we serve. The extent to which global
pandemics impact our financial condition or results of operations will depend on factors such as the duration and scope of the pandemic, as well as whether there is a material
impact on the businesses or productivity of our clients, employees, associates and other partners.
A deterioration in economic conditions, global supply chain issues, political instability, rising energy prices, a recession or fear of a recession, and the related governmental
responses to these concerns, or otherwise, could lead to a prolonged decline in demand for our services and negatively impact our business. Deterioration in economic
conditions or the financial or credit markets could also have an adverse impact on our clients’ financial health or their ability to pay for services we have already provided.
It is difficult for us to forecast future demand for our services due to the inherent uncertainty in forecasting the direction and strength of economic cycles and the project nature
of our staffing assignments. The uncertainty can be exacerbated by volatile economic conditions, which has caused and may continue to cause clients to reduce or defer projects
for which they utilize our services. The negative impact to our business can occur before, during or after a decline in economic activity is seen in the broader economy. When it
is difficult for us to accurately forecast future demand, we may not be able to determine the optimal level of personnel and investment necessary to profitably manage our
business in light of opportunities and risks we face.
Advances in technology may disrupt the labor and recruiting markets. Failure to constantly improve our technology to meet the expectations of clients, associates,
candidates and employees could have a negative impact on our financial position and results of operations.
The increased use of internet-based and mobile technology is attracting additional online and app-based companies and resources to our industry. Our associates, candidates and
clients increasingly demand technological innovation to improve the access to and delivery of our services. Our clients increasingly rely on automation, artificial intelligence,
generative artificial intelligence, machine learning and other new technologies to reduce their dependence on labor needs, which may reduce demand for our services and
impact our operations.
We face extensive pressure for lower prices and new service offerings and must continue to invest in and implement new technology and industry developments in order to
remain relevant to our associates, candidates and clients. As a result of this increasing dependence upon technology, we must timely and effectively identify, develop, or license
technology from third parties, and integrate such enhanced or expanded technologies into the solutions that we provide. In addition, our business relies on a variety of
technologies, including those that support recruiting, hiring, paying, order management, billing, collecting, associate data analytics and client data analytics. If we do not
sufficiently invest in and implement new technology, or evolve our business at sufficient speed and scale, our business results may decline materially. Acquiring technological
resources and expertise to develop new technologies for our business may require us to incur significant expenses and capital costs. For some
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solutions, we depend on key vendors and partners to provide technology and support. If these third parties fail to perform their obligations or cease to work with us, our business
operations could be negatively affected. The development, adoption, and use of generative artificial intelligence are still in their early stages and ineffective, insufficient, or
inadequate development or deployment practices by us or third-party vendors could result in harm to our business, financial condition and results of operations. For example,
algorithms and models utilized by generative artificial intelligence that we use may have limitations, including bias, errors, and the inability to handle certain data sets.
Furthermore, there is risk of system failures, disruptions, or vulnerabilities that could compromise the integrity, security, or privacy of generated content. These limitations or
failures could result in reputational damage, legal liabilities, or loss of user confidence. Developing, testing, and deploying these systems may require additional investment and
increase our costs.
We are dependent on obtaining workers’ compensation and other insurance coverage at commercially reasonable terms. Unexpected changes in claim trends on our
workers’ compensation or an inability to obtain appropriate insurance coverage may negatively impact our financial condition.
Our contingent staffing services employ associates for which we provide workers’ compensation insurance. Our workers’ compensation insurance policies are renewed annually.
The majority of our insurance policies are with AIG. Our insurance carriers require us to collateralize a significant portion of our workers’ compensation obligation. The
majority of our collateral is held in trust by a third-party for the payment of these claims. The loss or decline in the value of our collateral could require us to seek additional
sources of capital to pay our workers’ compensation claims. As our business grows or financial results deteriorate, we have seen the amount of collateral required increase and
the timing of providing collateral accelerate, which could occur again in the future. Resources to meet these requirements may not be available. We cannot be certain we will be
able to obtain appropriate types or levels of insurance in the future or that adequate replacement policies will be available on acceptable terms. The loss of our workers’
compensation insurance coverage would prevent us from operating as a staffing services business in the majority of our markets. Further, we cannot be certain that our current
and former insurance carriers will be able to pay claims we make under such policies.
We self-insure, or otherwise bear financial responsibility for, a significant portion of expected losses under our workers’ compensation program. We have experienced
unexpected changes in claim trends, including the severity and frequency of claims, changes in state laws regarding benefit levels and allowable claims, actuarial estimates, and
medical cost inflation, and may experience such changes in the future which could result in costs that are significantly different than initially anticipated or reported and could
cause us to record adjustments to the reserves in our financial statements. There is a risk that we will not be able to increase the fees charged to our clients in a timely manner
and in a sufficient amount to cover increased costs as a result of any changes in claims-related liabilities.
We actively manage the safety of our associates through our safety programs and actively control costs with our network of workers’ compensation related service
providers. These activities have had a positive impact creating favorable adjustments to workers’ compensation liabilities recorded in the current and prior periods. The benefit
of these adjustments is likely to decline and there can be no assurance that we will be able to continue to reduce accident rates and control costs to produce these results in the
future.
Some clients require extensive insurance coverage and request insurance endorsements that are not available under standard policies. There can be no assurance that we will be
able to negotiate acceptable compromises with clients or negotiate appropriate changes in our insurance contracts. An inability to meet client insurance requirements may
adversely affect our ability to take on new clients or continue providing services to existing clients.
The loss of, continued reduction in or substantial decline in revenue from larger clients or certain industries could have a material adverse effect on our revenues,
profitability and liquidity.
We experience a degree of revenue concentration with large clients and in certain industries. Generally, our contracts do not contain guarantees of minimum duration, revenue
levels, or profitability. Our clients have in the past and could in the future terminate their contracts or materially reduce their requested levels of service at any time. Although
we have no client that represents over 10% of our consolidated revenue, there are a few clients that exceed 10% of revenues within some of our reportable segments. The
deterioration of the financial condition of a large client or a particular industry could have a material adverse effect on our business, financial condition, and results of
operations. In addition, a significant change to the business, staffing, or recruiting model of these clients, for example a decision to insource our services, has had, and could
again have, a material adverse effect on our business, financial condition, and results of operations. Reduced demand for our services from larger clients or certain industries, or
supply interruptions for manufacturing, have had, and in the future could have, a material adverse effect on our business, financial condition, and results of operations. Client
concentration exposes us to concentrated credit risk, as a significant portion of our accounts receivable may be from a small number of clients. If we are unable to collect our
receivables, or are required to take additional reserves, our results and cash flows will be adversely affected.
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Our business and operations have undergone, and will continue to undergo, significant change as we seek to improve our operational and support effectiveness, which if
not managed effectively could have an adverse outcome on our business and results of operations.
We have significantly changed our operations, support center structure and internal processes in recent periods, such as our continued development of technology to leverage
our operational effectiveness, and we will continue making similar changes to improve our operational effectiveness. These efforts could strain our systems, management,
administrative, operations and financial infrastructure. We believe these efforts are important to our long-term success. Managing and cascading these changes throughout the
company will continue to require the further attention of our management team and refinements to our operational, financial and management controls, reporting systems and
procedures. These activities will require ongoing expenditures and allocation of valuable management and employee resources. If we fail to manage these changes effectively,
our costs and expenses may increase more than we expect and our business, financial condition, and results of operations may be harmed.
New business initiatives may cause us to incur additional expenditures and could have an adverse effect on our business.
We expect to continue adjusting the composition of our business segments and entering into new business initiatives as part of our business strategy. New business initiatives,
strategic business partners, or changes in the composition of our business mix can be distracting to our management and disruptive to our operations, causing our business and
results of operations to suffer materially. New business initiatives, including initiatives outside of our workforce solutions business, in new end markets, or new geographies,
could involve significant unanticipated challenges and risks including not advancing our business strategy, not realizing our anticipated return on investment, experiencing
difficulty in implementing initiatives, or diverting management’s attention from our other businesses. In particular, we are making significant investments to advance our
technology, and we cannot be sure that those initiatives will be successful, will not interrupt our operations, or that we will achieve a return on our investment. These events
could cause material harm to our business, operating results or financial condition.
Damage to our brands and reputation could have an adverse effect on our business.
Our ability to attract and retain clients, associates, candidates and employees is affected by external perceptions of our brands and reputation. Negative perceptions or publicity
could damage our reputation with current or prospective clients, associates, candidates and employees. Negative perceptions or publicity regarding our employees, business
practices, vendors, clients, or business partners may adversely affect our brand and reputation. We may not be successful in detecting, preventing, or negating all changes in or
impacts on our reputation, including reputational effects of negative social media use by our clients, employees, or associates. If any factor, including unethical behavior, illegal
conduct, poor performance or negative publicity, whether or not true, hurts our reputation, we may experience negative repercussions which could harm our business.
We may not achieve the intended effects of our business strategy which could negatively impact our results.
Our business strategy focuses on driving growth in our business segments by investing in innovative technology and initiatives which drive organic growth. These investments
may not achieve our desired results, may be distracting to management or may be impacted by matters outside of our control. If we are unsuccessful in executing any of these
strategies, or if these strategies fail to address the changing demands of the market, we may not achieve our goal of revenue and profit growth, which could negatively impact
financial results.
Outsourcing certain aspects of our business could result in disruption and increased costs.
We have outsourced certain aspects of our business to third-party vendors. These relationships subject us to significant risks including disruptions in our business and increased
costs. For example, we license software from third parties, much of which is central to our systems and our business. The licenses are generally terminable if we breach our
obligations under the license agreements. If any of these relationships were terminated, or if any of these parties were to cease doing business or supporting the applications we
currently utilize, our business could be disrupted and we may be forced to spend significant time and money to replace the licensed software. In addition, we have engaged third
parties to host and manage certain aspects of our data center, information and technology infrastructure, mobile apps, and electronic pay solutions, to provide certain back office
support activities, and to support business process outsourcing for our clients. We are subject to the risks associated with the vendors’ inability to provide these services in a
manner that meets our needs and the risks associated with changing vendors or insourcing these aspects of our business. If the cost of these services is more than expected, if
the vendors suddenly cease providing their services, if we or the vendors fail to adequately protect our data and information is lost or compromised, or if our ability to deliver
our services is interrupted, then our business and results of operations may be negatively impacted.
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RISKS RELATED TO OUR FINANCIAL POSITION
We cannot guarantee that we will repurchase our common stock pursuant to our share repurchase program or that our share repurchase program will enhance long-term
shareholder value.
Our Board of Directors (the “Board”) has authorized a share repurchase program. Under the program, we are authorized to repurchase shares of common stock for a set
aggregate purchase price, or we may choose to purchase shares in the open market, from individual holders, through an accelerated share repurchase agreement or otherwise.
Although the Board has authorized a share repurchase program, the share repurchase program does not obligate us to repurchase any specific dollar amount or to acquire any
specific number of shares. The timing and amount of the repurchases, if any, will be determined at management’s discretion and depend upon several factors, including market
and business conditions, the trading price of our common stock and the nature of other investment opportunities. The repurchase program may be limited, suspended or
discontinued at any time without prior notice. Future regulatory action could impact our ability to continue this program or our ability to repurchase shares under the existing
program. In addition, repurchases of our common stock pursuant to our share repurchase program could affect our stock price and increase its volatility. The existence of a
share repurchase program could cause our stock price to be higher than it would be in the absence of such a program and could potentially reduce the market liquidity for our
stock. Additionally, our share repurchase program could diminish our cash reserves, which may impact our ability to finance future growth and to pursue possible future
strategic opportunities and acquisitions. There can be no assurance that these share repurchases will enhance shareholder value because the market price of our common stock
may decline below the level at which we repurchased shares of stock. Although our share repurchase program is intended to enhance long-term shareholder value, there is no
assurance that it will do so and short-term stock price fluctuations could reduce the program’s effectiveness.
Our level of debt and restrictions in our credit agreement could negatively affect our operations and limit our liquidity and our ability to react to changes in the economy.
Our revolving credit agreement (“Revolving Credit Facility”) contains restrictive covenants that require us to maintain certain financial conditions, which we may fail to meet if
there is a material decrease in our profitability. Our failure to comply with these restrictive covenants could result in an event of default, which, if not cured or waived, would
require us to repay these borrowings before their due date. We may not have sufficient funds on hand to repay these loans, and if we are forced to refinance these borrowings on
less favorable terms, or are unable to refinance at all, our results of operations and financial condition could be materially adversely affected by increased costs and rates.
Our principal sources of liquidity are funds generated from operating activities, available cash and cash equivalents, and borrowings under our Revolving Credit Facility. We
must have sufficient sources of liquidity to meet our working capital requirements, fund our workers’ compensation collateral requirements, service our outstanding
indebtedness, and finance investment opportunities. Without sufficient liquidity, we could be forced to curtail our operations or we may not be able to pursue promising business
opportunities.
If our debt level significantly increases in the future, it could have significant consequences for the operation of our business including requiring us to dedicate a significant
portion of our cash flow from operations to servicing our debt rather than using it for our operations; limiting our ability to obtain additional debt financing for future working
capital, capital expenditures, or other corporate purposes; limiting our ability to take advantage of significant business opportunities, such as acquisitions; limiting our ability to
react to changes in market or industry conditions; and putting us at a disadvantage compared to competitors with less debt.
We may have additional tax liabilities that exceed our estimates.
We are subject to federal taxes, a multitude of state and local taxes in the United States of America (“U.S.”), and taxes in foreign jurisdictions. Changes in the mix of our taxable
income by jurisdiction could have a material impact on our financial condition or results of operations. Changes in interpretation of existing laws and regulations by a taxing
authority could result in penalties and increased costs in the future. Taxing authorities may challenge our methodologies for valuing intercompany arrangements or may change
their laws, which could increase our worldwide effective tax rate and harm our financial position and results of operation.
We face continued uncertainty surrounding ongoing hiring tax credits we utilize, and for the recent business tax incentives related to measures taken to soften the impact of
COVID-19. Also, in the ordinary course of our business, there are transactions and calculations where the ultimate tax determination is uncertain. We are regularly subject to
audit by tax authorities. Although we believe our tax estimates are reasonable, the final determination of tax audits and any related litigation could be materially different from
our historical tax provisions and accruals. The results of an audit or litigation with tax authorities could materially harm our business.
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The Organization for Economic Co-operation and Development (“OECD”) has introduced a framework to implement a global minimum corporate tax of 15%, referred to as
“Pillar Two” or “the minimum tax directive.” Many aspects of the minimum tax directive will be effective beginning in fiscal years 2025 and 2026. While it is uncertain
whether the United States will enact legislation responding to Pillar Two, certain countries in which we operate have or are in the process of adopting minimum tax legislation.
While we do not currently expect the minimum tax directive to have a material impact on our effective tax rate, our analysis is ongoing as additional guidance is released. It is
possible that these legislative changes could have an adverse impact on our effective tax rates or operations.
Failure to maintain adequate financial and management processes and controls could lead to errors in our financial reporting or fail to prevent fraud.
If our management is unable to certify the effectiveness of our internal controls, including those over our third-party vendors, our independent registered public accounting firm
cannot render an opinion on the effectiveness of our internal controls over financial reporting, or if material weaknesses in our internal controls are identified, we could be
subject to regulatory scrutiny, a loss of public confidence and litigation. In addition, if we do not maintain adequate financial, technology, and management personnel, processes
and controls, we may not be able to accurately report our financial performance on a timely basis, or prevent fraud which could cause our stock price to decline.
LEGAL AND COMPLIANCE RELATED RISKS
We may experience employment-related claims, commercial indemnification claims and other legal proceedings that could materially harm our business.
We incur a risk of liability for claims relating to personal injury, wage and hour violations, immigration, discrimination, harassment, securities law matters, contractual
obligations, government inquiries and other claims. Some or all of these claims may give rise to negative publicity, investigations, litigation or settlements, which may cause us
to incur costs or have other material adverse impacts on our financial statements. Additionally, new employment and labor laws and regulations may be proposed or adopted
that may increase the potential exposure of employers to employment-related claims and litigation.
Certain clients have negotiated broad indemnification provisions regarding the services we provide. In addition, we may have liability to our clients for the action or inaction of
our employees that may cause harm to our clients or third parties. In some cases, we must indemnify our clients for certain acts of our associates or arising from our associates’
presence on the client’s job site. We may also incur fines, penalties, and losses that are not covered by insurance or negative publicity with respect to these matters.
We maintain insurance with respect to some potential claims and costs with deductibles. We cannot be certain we will be able to obtain appropriate types or levels of insurance
in the future or that adequate replacement policies will be available on acceptable terms. Should the final judgments or settlements exceed our insurance coverage, they could
have a material adverse effect on our business. Our ability to obtain insurance, its coverage levels, deductibles and premiums, are all dependent on market factors, our loss
history, and insurance providers’ assessments of our overall risk profile. Further, we cannot be certain our current and former insurance carriers will be able to pay claims we
make under such policies.
Failure to protect our intellectual property could harm our business, and we face the risk that our services or products may infringe upon the intellectual property rights of
others.
We have invested in developing specialized technology and intellectual property, proprietary systems, processes and methodologies that we believe provide us a competitive
advantage in serving clients. We cannot guarantee that trade secret, trademark, patent, and copyright law protections are adequate to deter misappropriation of our intellectual
property, which is an important part of our business. We may be unable to detect the unauthorized use of our intellectual property and take the necessary steps to enforce our
rights. We cannot be sure that our services and products, or the products of others that we offer to our clients, do not infringe on the intellectual property rights of third parties,
and we may have infringement claims asserted against us or our clients. These claims may harm our reputation, result in financial liability or prevent us from offering some
services or products to clients.
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Our efforts to maintain adequate compliance policies and controls may not prevent violations that could result in significant fines and penalties.
We could be exposed to fines and penalties under U.S., foreign, or local jurisdictions for failure to adequately monitor operating requirements and changes thereto, including
rules related to the employment and recruiting of associates and candidates. Failure to comply with laws in a particular market may result in substantial liability and could have a
significant and negative effect not only on our business in that market, but also on our reputation generally. Although we have implemented policies, procedures and training
programs designed to monitor, ensure compliance with and build awareness of these various regulations, we cannot be sure that our employees, contractors, vendors, or agents
will not violate such policies. Any such violations could materially damage our reputation, brand, business and operating results.
RISKS RELATED TO OUR INDUSTRY
Our workforce solutions are subject to extensive government regulation and the imposition of additional regulations, which could materially harm our future earnings.
Our workforce solutions are subject to extensive federal, state, local and foreign government regulation. The cost to comply, and any inability to comply with government
regulation, could have a material adverse effect on our business and financial results. Increases or changes in government regulation of the workplace, contingent staffing, the
employer-employee relationship, or judicial or administrative proceedings related to such regulation, could materially harm our business. From time to time, the contingent
staffing industry, in which we operate, has come under criticism from organizations and regulatory agencies which maintain that employment protections, such as wages and
benefits, are subverted when clients use our services. For example, some states have addressed these concerns by making it more challenging for clients to use our services, or
adding additional administrative burden to our industry. Our business is dependent on contingent staffing arrangements continuing to be a viable source of flexible labor for our
clients and flexible employment opportunities for our associates. If additional jurisdictions adopt regulations to our industry due to pressure from organized labor, political
groups, or regulatory agencies, it could have a material adverse impact on our business, results of operations and financial conditions.
The wage rates we pay to associates are based on many factors including government-mandated increases to minimum wage requirements, payroll-related taxes and benefits. If
we are not able to increase the fees charged to clients to absorb any increased costs related to these factors, our results of operations and financial condition could be adversely
affected.
We may be unable to attract sufficient qualified associates and candidates to meet the needs of our clients.
We compete to meet our clients’ needs for workforce solutions; therefore, we must continually attract qualified associates and candidates to fill positions. Attracting qualified
associates and candidates depends on factors such as desirability of the assignment, position requirements, location, the associated wages and other benefits. Many of these
factors are outside of our control, including the reputational effects of unfavorable comments on social media outlets about our business or a work site. When unemployment in
the U.S. is low, it is challenging to find sufficient eligible associates and candidates to meet our clients’ orders. Government responses to COVID-19, including generous
unemployment benefits, stimulus payments and other direct payments to individuals, negatively impacted our ability to recruit qualified associates and candidates. A return to
similar benefits in the future could further negatively impact our ability to recruit qualified associates and candidates.
We have experienced shortages of qualified associates and candidates and may experience such shortages in the future. Such a shortage of associates and candidates can
increase the cost to employ or recruit these individuals, cause us to be unable to fulfill our clients’ needs, or otherwise negatively impact our business. If general market
conditions or wage inflation increases the wage rates required to attract and retain associates, and we are unable to pass those costs through to our clients, it could materially and
adversely affect our business. Organized labor is increasing its unionization efforts in many of the industries we serve and periodically engages in efforts to represent various
groups of our associates. If we are subject to unreasonable collective bargaining agreements or work disruptions, our business could be adversely affected.
We operate in a highly competitive industry and may be unable to retain clients, market share or profit margins.
Our industry is highly competitive and rapidly innovating, with low barriers to entry. We compete in global, national, regional and local markets with full-service and
specialized companies offering contingent staffing as well as business process outsourcing. New entrants to the market include online and app-based staffing providers. Our
competitors offer a variety of flexible workforce solutions. Therefore, there is no assurance that we will be able to retain clients or market share in the future, nor can there be
any assurance that we will, in light of competitive pressures, be able to remain profitable or maintain our current profit margins.
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Our business is subject to evolving regulations and stakeholders’ expectations, including environmental, social and governance (“ESG”) matters, that could expose us to
numerous risks.
Institutional, individual and other investors, proxy advisor services, regulatory authorities, clients, employees and other stakeholders are increasingly focused on the ESG
practices of companies, including sustainability, diversity, equity and inclusion, human capital management, data privacy and security, supply chains (including human rights
issues) and climate change, among other topics. Our reputation could be affected by our position, or silence, regarding one or more of these ESG initiatives.
These evolving stakeholder expectations and our efforts and ability to respond to and manage these issues, provide updates on them, and establish and meet appropriate goals,
commitments and targets related to ESG initiatives present numerous operational, regulatory, reputational, financial, legal, and other risks and impacts. Our efforts in this area
may result in a significant increase in costs and may nevertheless not meet, or conflict with, investor, client or other stakeholder expectations and evolving standards or
regulatory requirements. Such costs or conflicts may negatively impact our financial results, our reputation, our ability to attract and retain employees, our attractiveness as a
service provider, investment or business partner, or may expose us to government enforcement actions, litigation, and actions by shareholders or stakeholders.
RISKS RELATED TO CYBERSECURITY, DATA PRIVACY AND INFORMATION SECURITY
Cybersecurity vulnerabilities and incidents could lead to the improper disclosure of information about our clients, candidates, associates and employees.
Our business requires the use, processing, and storage of confidential information about candidates, associates, employees and clients. We use information technology and other
computer resources to carry out operational and support activities and maintain our business records. We rely on information technology systems to process, transmit, and store
electronic information and to communicate among our locations around the world and with our clients, vendors, associates, and employees. The breadth and complexity of this
infrastructure increases the potential risk of security breaches which could lead to potential unauthorized disclosure of confidential information.
Our systems and networks, and the systems and networks of our vendors and clients, are vulnerable to computer viruses, malware, ransomware, hackers and other malicious
activity, including physical and electronic break-ins, disruptions from unauthorized access and tampering, social engineering attacks, impersonation of authorized users and
coordinated denial-of-services attacks. Even with increased security training, an increasingly remote workforce and flexible workplace practices may increase these risks, for
example with the use of home networks that may lack encryption or secure password protection. A material incident involving system failure, data loss or security breach could
harm our reputation and subject us to significant monetary damages or losses, litigation, negative publicity, regulatory enforcement actions, fines, criminal prosecution, as well
as liability under our contracts and laws that protect personal and/or confidential data. We and our vendors have experienced cybersecurity incidents and attacks that have not
had a material impact on our business or results of operations; however, there is no assurance that the impacts of any future incidents or attacks will not be material. The security
controls over sensitive or confidential information and other practices we and our third-party vendors follow may not prevent the improper access to, disclosure of, or loss of
such information. Continued investments in cybersecurity will increase our costs and a failure to prevent access to our systems could lead to penalties, litigation, and damage to
our reputation. Perceptions that we or our vendors do not adequately protect the privacy of information could harm our relationship with clients and employees.
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Data security, data privacy, data protection and artificial intelligence usage laws and other technology regulations increase our costs.
Laws and regulations related to privacy, data protection and artificial intelligence usage are evolving and generally becoming more stringent and complex. We may fail to
implement practices and procedures that comply with increasing foreign and domestic privacy regulations, such as the General Data Protection Regulations, the European
Union Artificial Intelligence Act or the California Consumer Privacy Act. Several additional U.S. states and foreign countries where we operate have issued cybersecurity and
data security regulations that outline a variety of required security measures for protection of data. These regulations are designed to protect client, candidate, associate, and
employee data and require that we meet stringent requirements regarding the handling of personal data, including the use, protection and transfer of personal data. As these laws
continue to change, we may be required to make changes to our services, solutions or products to meet the new legal requirements. Changes in these laws may increase our
costs to comply as well as our potential costs through higher potential penalties for non-compliance. Failure to protect or implement adequate controls to secure the integrity and
security of such confidential and/or proprietary information could expose us to regulatory fines, litigation, contractual liability, damage to our reputation and increased
compliance costs.
Improper disclosure of, or access to, our clients’ information could materially harm our business.
Our associates and employees may have access or exposure to confidential information about candidates, associates, employees and clients. The security controls over sensitive
or confidential information and other practices we, our clients, and our third-party vendors follow may not prevent the improper access to, disclosure of, or loss of such
information, including through failure of employees or associates to properly comply with such controls or practices. Failure to protect the integrity and security of such
confidential and/or proprietary information could expose us to regulatory fines, litigation, contractual liability, damage to our reputation and increased compliance costs.
Failure of our information technology systems could adversely affect our operating results.
The efficient operation of our business applications and services we provide is dependent on reliable technology. We rely on our information technology systems to monitor and
control our operations, adjust to changing market conditions, implement strategic initiatives and provide services to clients. We rely heavily on proprietary and third-party
information technology systems, mobile device technology, data centers, cloud-based environments and other technology. We take various precautions and have enhanced
controls around these systems, but information technology systems are susceptible to damage, disruptions, shutdowns, power outages, hardware failures, computer viruses,
malicious attacks, telecommunication failures, user errors, catastrophic events or failures during the process of upgrading or replacing software, vendors, or databases. The
failure of technology and our applications and services, and our information systems to perform as anticipated could disrupt our business and result in decreased revenue and
increased overhead costs, causing our business and results of operations to suffer materially.
Our facilities and operations are vulnerable to damage and interruption.
Our primary technology systems, headquarters, support facilities and operations are vulnerable to damage or interruption from power outages, employee errors, security
breaches, natural disasters, extreme weather conditions, civil unrest and catastrophic events. Failure of our systems, or damage to our facilities, may cause significant
interruption to our business and require significant additional capital and management resources to resolve, causing material harm to our business.
GENERAL RISK FACTORS
Our results of operations could materially deteriorate if we fail to attract, develop and retain qualified employees.
Our performance is dependent on attracting and retaining qualified employees who are able to meet the needs of our clients. We believe our competitive advantage is providing
unique solutions for each client, which requires us to have trained and engaged employees. Our success depends upon our ability to attract, onboard, develop and retain a
sufficient number of qualified employees, including management, sales, recruiting, service, technology and administrative personnel. The turnover rate in the employment
services industry is high, and qualified individuals may be difficult to attract and hire. Our inability to recruit, train, motivate, retain, integrate and provide a safe working
environment to a sufficient number of qualified individuals may delay or affect the speed and quality of our strategy execution and planned growth. Significant increases in
employee turnover rates, failure to keep our staff healthy or significant increases in labor costs could have a material adverse effect on our business, financial condition and
results of operations.
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Loss of our executive officers or other key personnel or other changes to our management team could disrupt our operations or harm our business.
We depend on the efforts of our executive officers and certain key personnel. Our failure to develop an adequate succession plan for one or more of our executive officers or
other key positions could deplete our institutional knowledge base and erode our competitive advantage during a transition. The loss or limited availability of the services of one
or more of our executive officers or other key personnel, or our inability to recruit and retain qualified executive officers or other key personnel in the future, could, at least
temporarily, have a material adverse effect on our operating results and financial condition. We have recently experienced a CEO and CFO transition, and could have additional
executive leadership changes as part of our overall succession plans. Such leadership transitions can be inherently difficult to manage, and an inadequate transition could cause
disruption to our business, including our relationships with our clients and employees and fluctuations in the price of our stock.
Acquisitions may have an adverse effect on our business.
We may make acquisitions as part of our business strategy. However, this strategy may be impeded and we may not achieve our long-term growth goals if we cannot identify
suitable acquisition candidates or if acquisition candidates are not available under acceptable terms. We may have difficulty integrating acquired companies into our operating,
financial planning, and financial reporting systems and may not effectively manage acquired companies to achieve expected growth.
Future acquisitions could result in incurring additional debt and contingent liabilities, an increase in interest expense, amortization expense, and charges related to integration
costs. Additional indebtedness could also include covenants or other restrictions that would impede our ability to manage our operations. We may also issue equity securities to
pay for an acquisition, which could result in dilution to our shareholders. Any acquisitions we announce could be viewed negatively by investors, which may adversely affect
the price of our common stock. Acquisitions can also result in the addition of goodwill and intangible assets to our financial statements and we may be required to record a
significant charge in our financial statements during the period in which we determine an impairment of our acquired goodwill and intangible assets has occurred, which would
negatively impact our financial results. The potential loss of key executives, employees, clients, suppliers, vendors, and other business partners of businesses we acquire may
adversely impact the value of the assets, operations, or business we acquire. These events could cause material harm to our business, operating results or financial condition.
We may be subject to actions of activist shareholders, which could disrupt our business and impact the trading value of our securities.
We value constructive input from investors and regularly engage in dialogue with our shareholders regarding strategy and performance. Activist shareholders who disagree with
the composition of the Board, our strategy or the way the Company is managed may seek to effect change through various strategies and channels, such as through commencing
a proxy contest, making public statements critical of our performance or business, or engaging in other similar activities. Responding to shareholder activism can be costly and
time-consuming, disrupt our operations, and divert the attention of management and our employees from strategic initiatives. Activist campaigns can create perceived
uncertainties as to our future direction, strategy or leadership and may result in the loss of potential business opportunities, harm our ability to attract new employees, investors
and clients, and cause our stock price to experience periods of volatility or stagnation.
We face risks in operating internationally.
A portion of our business operations and support functions are located outside of the U.S. These international operations are subject to a number of risks, including the effects of
global health crises and resulting governmental actions, political and economic conditions in those foreign countries, foreign currency fluctuations, the burden of complying
with various foreign laws and technical standards, unpredictable changes in foreign regulations, U.S. legal requirements governing U.S. companies operating in foreign
countries, legal and cultural differences in the conduct of business, potential adverse tax consequences and difficulty in staffing and managing international operations. We
could also be exposed to fines and penalties under U.S. or foreign laws, such as the Foreign Corrupt Practices Act and/or the UK Anti-Bribery Act, which prohibit improper
payments to governmental officials and others for the purpose of obtaining or retaining business. Although we have implemented policies and procedures designed to ensure
compliance with these laws, we cannot be sure that our employees, vendors, contractors or agents will not violate such policies. Any such violations could materially damage
our reputation, brands, business and operating results. Further, changes in U.S. laws and policies governing foreign investment and use of foreign operations or workers, and any
negative sentiments towards the U.S. resulting from such changes, could adversely affect our operations.
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The price of our common stock may fluctuate significantly, which may result in losses for investors.
The market price for our common stock has been and may be subject to significant volatility. Our stock price can fluctuate as a result of a variety of factors, many of which are
beyond our control. These factors include, but are not limited to, changes in general economic conditions, including those caused by COVID-19; social unrest; announcement
of new services or acquisitions by us or our competitors; changes in financial estimates or other statements by securities analysts; changes in industry trends or conditions;
regulatory developments; and any major change in our Board, leadership team or management. In addition, the stock market in general has experienced extreme price and
volume fluctuations that have often been unrelated to the operating performance of listed companies. These broad market and industry factors may impact the price of our
common stock, regardless of our operating performance.
Natural disasters and unusual weather conditions, pandemic outbreaks, terrorist acts, global political events and other serious catastrophic events could disrupt business
and otherwise materially adversely affect our business and financial condition.
With operations in every state and multiple foreign countries, we are subject to numerous risks outside of our control, including risks arising from natural disasters, such as
fires, earthquakes, hurricanes, floods, tornadoes, unusual weather conditions, pandemic outbreaks such as the COVID-19 pandemic and other global health emergencies,
unplanned utility outages, terrorist acts or disruptive global political events including war, or similar disruptions that could materially adversely affect our business and financial
performance. Any public health emergencies, including a real or potential global pandemic such as those caused by COVID-19 or even a particularly virulent flu or respiratory
virus could decrease demand for our services or our ability to provide such services. Uncharacteristic or significant weather conditions may increase in frequency or severity due
to climate change, which may increase our expenses, exacerbate other risks to the Company, and affect travel and the ability of businesses to remain open, which could lead to a
decreased ability to offer our services and materially adversely affect our results of operations.
Item 1B.
UNRESOLVED STAFF COMMENTS
Not applicable.
Item 1C.
CYBERSECURITY
CYBERSECURITY RISK MANAGEMENT AND STRATEGY
We acknowledge the importance of assessing, identifying, and managing material risks associated with cybersecurity threats. These risks include, among other things, harm to
our candidates, associates, employees and clients; operational disruptions; violation of privacy laws and regulations; breach of confidentiality and other contractual obligations;
litigation and legal action; financial and reputational harm. We leverage cybersecurity technologies and established processes, procedures, and controls to identify, assess, and
manage material cybersecurity risks.
Risk assessments
Our Information Security Team, led by our Chief Information Security Officer (“CISO”), consists of a Cybersecurity function and a Governance, Risk and Compliance
function, and is constantly monitoring for cybersecurity risks and assessing any such risks’ potential severity. This team employs a range of tools and services, including regular
network and endpoint monitoring, vulnerability assessments, penetration testing and tabletop exercises to inform the company of potential risks and mitigation strategies. We
also execute an annual enterprise risk management assessment, which includes cybersecurity threat risks in addition to other risk areas that could impact the company.
We use a risk-based approach that is aligned with the National Institute of Standards and Technology. We maintain policies and standards that provide the framework for
assessing risk. We conduct an annual information security focused risk assessment, which leverages the process and control areas provided by the International Organization for
Standardization (“ISO”) 27001. In September 2021, we received our ISO 27001 Information Security Management certification. In fiscal 2022 and 2023, management
performed procedures to validate our continued conformity with the ISO 27001 standard and concluded that existing controls continued to operate effectively. In addition, we
assess our cybersecurity threat risks by conducting periodic internal and external risk assessments and annual external penetration testing, as well as maintaining an active
vulnerability management program to assess threats at the network, systems and application levels.
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Ongoing activities
To provide for the availability of critical data and systems, maintain regulatory compliance, manage our material risks from cybersecurity threats, and protect against, detect,
and respond to cybersecurity incidents, we undertake the following activities:
•
Perform an annual review of all of our policies related to cybersecurity;
• Monitor emerging data protection laws and implement changes to our policies to remain compliant;
•
•
•
•
•
•
•
•
Run tabletop exercises with the cybersecurity incident response team, including executive team members, to simulate a response to a cybersecurity incident and use the
findings to improve our processes and technologies;
Conduct regular phishing email simulations and quarterly security awareness trainings for all employees to enhance awareness and responsiveness to such possible
threats;
Require all employees to review and acknowledge the company’s information security policies upon hiring and annually thereafter;
Leverage the company’s incident response plan framework and a full set of cybersecurity technology tools, processes and procedures including, for example, security
incident and cyber event management, endpoint detection and response, extended detection and response, e-mail gateway, and vulnerability management to monitor any
cyber threats and to proactively detect, respond and recover when there is an actual or potential cybersecurity incident;
Carry insurance that provides protection against the potential losses arising from a cybersecurity incident;
Conduct annual penetration testing of our external technology and systems perimeter, including remediation and retesting;
Conduct security assessments for code level vulnerabilities of all our internally developed business-critical applications; and
Engage independent third parties to perform penetration testing of select business applications.
Incident response
Our incident response plan identifies the key employees responsible for responding to a cybersecurity incident and coordinates the activities we take to prepare for, detect,
respond to and recover from cybersecurity incidents, which include processes to triage, assess severity for, escalate, contain, investigate, and remediate the incident, as well as to
comply with potentially applicable legal obligations and mitigate brand and reputational damage.
As part of the above processes, we regularly engage with assessors, consultants, auditors, and other third parties, including periodic third-party reviews of our cybersecurity
program to help identify areas for continued focus, improvement and compliance.
Third-party risk management
Our polices and processes address cybersecurity threat risks associated with the use of third-party service providers, including those who access, use and/or store our client,
candidate, associate and employee data or have access to our network and systems. Third-party risks are included within our enterprise risk management assessment program,
as well as our information security-specific risk identification program, both of which are discussed above. In addition, cybersecurity considerations affect the selection and
oversight of our third-party service providers. We perform due diligence on third parties that have access to our systems, data or facilities that house such systems or data. This
allows us to identify high-risk providers and continually monitor for cybersecurity threat risks appropriately. Additionally, we require contracts with all third parties that have
access to our network and systems to include baseline security requirements for adequate data handling, as well as to provide the company with audit rights. Such contractual
requirements are reviewed during each subsequent contract renewal process.
Additional information
We describe how the risks related to cybersecurity could materially impact our business strategy, results of operations, or financial condition, in more detail under the heading
“Risks Related to Cybersecurity, Data Privacy and Information Security,” see Item 1A. Risk Factors of this Annual Report on Form 10-K.
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In the last three fiscal years, we have not experienced any cybersecurity incidents that have materially impacted or are reasonably likely to materially impact our business
strategy, results of operations, or financial condition.
CYBERSECURITY GOVERNANCE
Cybersecurity is an important part of our risk management processes and an area of focus for our Board and management.
Our Innovation and Technology (“I&T”) Committee of the Board is responsible for the oversight of risks from cybersecurity threats. All of our Board members are members of
the I&T Committee. At least quarterly, management provides the I&T Committee with updates regarding our cybersecurity risks, threats, and efforts focused on mitigating
those risks. These updates are provided by our Chief Technology Officer (“CTO”) and our CISO, and include recent developments in cybersecurity, the company’s actual
experience with cybersecurity incidents, and the systems and processes in place to defend against cyberattacks. Should a material or potentially material cybersecurity incident
occur, the Board will immediately be notified of such event by the company’s CEO. Our CTO and CISO frequently communicate with affected business and finance leaders
regarding any cybersecurity related event.
Our cybersecurity risk management and strategy processes are led by our CTO and our CISO. Such individuals have collectively over 25 years of prior work experience in
various roles involving managing information security; developing cybersecurity strategy; and implementing effective information and cybersecurity programs, including
governance, risk and compliance oversight for regulatory and contractual compliance. Such individuals are required by their job description to possess several relevant degrees
and certifications, including the Information Systems Audit and Control Association (“ISACA”) Certified Information Security Manager and the International Information
System Security Certification Consortium (“ISC2”) Certified Information Systems Security Professional certifications. These individuals are informed about and monitor the
prevention, mitigation, detection, and remediation of cybersecurity incidents through their management of, and participation in, the cybersecurity risk management and strategy
processes described above, including the operation of our incident response plan.
Item 2.
PROPERTIES
We lease building space for all our PeopleReady branches, except for two that we own in Florida. In addition, we lease domestic and international office space to support our
operations and centralized support functions. Under the majority of our branch leases, we have the right to terminate the lease with 90 days’ notice. We do not anticipate any
difficulty in renewing these leases or in finding alternative sites in the ordinary course of business. We own an office building in Tacoma, Washington, which serves as our
corporate headquarters. We continued to utilize a remote or hybrid work model for our headquarters’ and U.S.-based support employees, while utilizing our support center
facilities when necessary or beneficial. While management believes all our facilities are currently suitable for their intended use, we continually evaluate our business and
facilities and may decide to expand or dispose of facilities in the future.
Item 3.
LEGAL PROCEEDINGS
See Note 8: Commitments and Contingencies, to our consolidated financial statements found in Part II, Item 8 of this Annual Report on Form 10-K.
Item 4.
MINE SAFETY DISCLOSURES
Not applicable.
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PART II
Item 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
Market information
Our common stock is listed on the New York Stock Exchange under the ticker symbol TBI.
Holders of the corporation’s common stock
We had approximately 364 shareholders of record as of February 14, 2024. This number does not include shareholders for whom shares were held in “street name.”
Dividends
No cash dividends have been declared on our common stock to date nor have any decisions been made to pay a dividend in the future. Payment of dividends is evaluated on a
periodic basis and if dividends were paid, they would be subject to the covenants of our revolving credit agreement, which may have the effect of restricting our ability to pay
dividends.
Stock repurchases
The table below includes repurchases of our common stock pursuant to publicly announced plans or programs and those not made pursuant to publicly announced plans or
programs during the fourteen weeks ended December 31, 2023.
Period
09/25/2023 through 10/22/2023
10/23/2023 through 11/19/2023
11/20/2023 through 12/31/2023
Total
Total number
of shares
purchased (1)
Weighted
average price
paid per
share (2)
Total number of shares
purchased as part of
publicly announced plans
or programs
1,279
554
1,500
3,333
$14.67
$11.40
$14.70
$14.14
—
—
—
—
Approximate dollar value that
may yet be purchased under
plans or programs at period
end (3)
$55.1 million
$55.1 million
$55.1 million
(1) During the fourteen weeks ended December 31, 2023, we purchased 3,333 shares in order to satisfy employee tax withholding obligations upon the vesting of restricted stock. These shares
were not acquired pursuant to our publicly announced share repurchase program.
(2) Weighted average price paid per share does not include any adjustments for commissions.
(3) On January 31, 2022, our Board of Directors authorized a $100.0 million share repurchase program of our outstanding common stock. The share repurchase program does not obligate us
to acquire any particular amount of common stock and does not have an expiration date. As of December 31, 2023, $55.1 million remains available for repurchase under the existing
authorization.
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TrueBlue stock comparative performance graph
The following graph depicts our stock price performance from December 30, 2018 through December 31, 2023, relative to the performance of the S&P SmallCap 600 Index
and S&P 1500 Human Resources and Employment Services Index.
All indices shown in the graph have been reset to a base of 100 as of December 30, 2018, and assume an investment of $100 on that date and the reinvestment of dividends, if
any, paid since that date.
COMPARISON OF 5-YEAR CUMULATIVE TOTAL RETURN (1)
Total return analysis
TrueBlue, Inc.
S&P SmallCap 600 Index
S&P 1500 Human Resources and Employment Services Index
2018
2019
2020
2021
2022
2023
$
$
$
100 $
100 $
100 $
108 $
123 $
124 $
88 $
138 $
127 $
127 $
172 $
186 $
88 $
147 $
142 $
70
170
151
(1) Graphic prepared by Zacks Investment Research, Inc. Used with permission. All rights reserved. Copyright 1980-2024. Index Data: Copyright Standard and Poor’s, Inc. Used with
permission. All rights reserved.
Item 6.
[RESERVED]
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Item 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is designed to provide the reader of our accompanying consolidated
financial statements (“financial statements”) with a narrative from the perspective of management on our financial condition, results of operations, liquidity and certain other
factors that may affect future results. MD&A is provided as a supplement to, and should be read in conjunction with, our financial statements and the accompanying notes to
our financial statements.
BUSINESS OVERVIEW
TrueBlue, Inc. (the “company,” “TrueBlue,” “we,” “us” and “our”) is a leading provider of specialized workforce solutions that help our clients improve productivity and grow
their businesses. Client demand for contingent workforce solutions and outsourced recruiting services is cyclical and dependent on the overall strength of the economy and labor
market, as well as trends in workforce flexibility. During periods of rising economic uncertainty, clients reduce their contingent labor in response to lower volumes and reduced
appetite for expanding production or inventory, which reduces the demand for our services. That environment also reduces demand for permanent placement recruiting, whether
outsourced or in-house. However, as the economy emerges from periods of uncertainty, contingent labor providers are uniquely positioned to respond quickly to increasing
demand for labor and rapidly fill new or temporary positions, replace absent employees, and convert fixed labor costs to variable costs. Similarly, companies turn to hybrid or
fully outsourced recruiting models during periods of rapid re-hiring and high employee turnover. Our business strategy is focused on growth in each of our business segments
by investing in innovative technology and initiatives that drive organic growth and improve the client and candidate experience. We have implemented these core strategies for
each of our business segments: PeopleReady, PeopleScout and PeopleManagement. For additional discussion on our business and strategy, refer to Business, found in Part I,
Item 1 of this Annual Report on Form 10-K.
Fiscal 2023 highlights
Our 2023 fiscal year contained 53 weeks, with the 53rd week falling in the fiscal fourth quarter, while our 2022 and 2021 fiscal years contained 52 weeks.
Total company revenue declined 15.4% to $1.9 billion for the fiscal year ended December 31, 2023, compared to the prior year. The 53rd week contributed an additional $20.3
million in revenue. The decline was primarily driven by continued economic uncertainty impacting demand trends across all three segments. Our contingent staffing clients are
focused on employee retention and cost reduction, causing them to become increasingly selective in the positions they fill using outsourced labor providers. The decline in
demand has impacted most industries and markets, especially retail, hospitality and services.
Total company gross profit as a percentage of revenue for the fiscal year ended December 31, 2023 declined 20 basis points to 26.5%, compared to 26.7% for the prior year.
This decrease was primarily driven by changes in revenue mix favoring our lower margin staffing businesses.
Total company selling, general and administrative (“SG&A”) expense decreased 1.2% to $494.6 million for the fiscal year ended December 31, 2023, compared to the prior
year. The 53rd week added an additional $6.6 million of expense. During the year, cost management actions were taken to adjust our operating cost structure to better align with
reduced client demand. The resulting cost savings exceeded both the cost to execute these actions and inflation of certain employee costs, most notably medical benefits. We
remain focused on managing costs to enhance profitability, while maintaining our operational strengths to prepare for demand recovery.
We recorded a goodwill and intangible asset impairment charge of $9.5 million ($9.3 million net of tax), for the fiscal year ended December 31, 2023, primarily within our
PeopleScout MSP reporting unit.
The items described above contributed to our net loss of $14.2 million for the fiscal year ended December 31, 2023, compared to net income of $62.3 million in the prior year.
As of December 31, 2023, we had cash and cash equivalents of $61.9 million, no outstanding debt, and $85.9 million available under the most restrictive covenant of our
revolving credit agreement (“Revolving Credit Facility”), for total liquidity of $147.8 million.
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MANAGEMENT’S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
Total company results
The following table presents selected financial data:
(in thousands, except percentages and per share data)
Revenue from services
Gross profit
Selling, general and administrative expense
Depreciation and amortization
Goodwill and intangible asset impairment charge
Income (loss) from operations
Interest and other income (expense), net
Income (loss) before tax expense (benefit)
Income tax expense (benefit)
Net income (loss)
Net income (loss) per diluted share
Revenue from services
(in thousands, except percentages)
Revenue from services:
PeopleReady
PeopleScout
PeopleManagement
Total company
2023
% of revenue
2022
% of revenue
$
1,906,243
$
2,254,184
506,059
494,603
25,821
9,485
(23,850)
3,205
(20,645)
(6,472)
(14,173)
(0.45)
26.5 %
25.9
1.4
0.5
(1.3) %
(0.7) % $
$
602,144
500,686
29,273
—
72,185
1,231
73,416
11,143
62,273
1.86
26.7 %
22.2
1.3
—
3.2 %
2.8 %
$
$
2023
Growth
%
Segment % of
total
2022
Segment % of
total
$
$
1,096,318
229,334
580,591
1,906,243
(13.9)%
(27.8)%
(12.5)%
(15.4)%
57.5 % $
12.0
30.5
100.0 % $
1,272,852
317,518
663,814
2,254,184
56.5 %
14.1
29.4
100.0 %
Total company revenue declined 15.4% to $1.9 billion for the fiscal year ended December 31, 2023, compared to the prior year. The 53rd week contributed an additional $20.3
million in revenue. The decline was primarily driven by continued economic uncertainty impacting demand trends across all three segments. Our contingent staffing clients are
focused on employee retention and cost reduction, causing them to become increasingly selective in the positions they fill using outsourced labor providers. Our PeopleScout
clients continue to face uncertain future workforce needs, and have reduced volumes in an attempt to manage costs.
PeopleReady
PeopleReady revenue declined 13.9% to $1.1 billion for the fiscal year ended December 31, 2023, compared to the prior year. The 53rd week contributed an additional $11.9
million in revenue. Revenue declined as a result of continued economic uncertainty, leading our clients to reduce their dependence on variable labor in order to manage their
costs. Our clients are focused on employee retention, causing them to become increasingly selective in the positions they fill using outsourced labor providers. The decline in
demand has impacted clients across most industries, especially within retail, hospitality and services, partially offset by growth in the renewable energy industry which
continues to gain momentum.
PeopleScout
PeopleScout revenue declined 27.8% to $229.3 million for the fiscal year ended December 31, 2023, compared to the prior year. The 53rd week contributed an additional $0.8
million in revenue. Revenue declined as clients continued to respond to economic uncertainty and unknown future workforce needs by reducing hiring volumes, sourcing
candidates with internal resources, and initiating hiring freezes to control costs.
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MANAGEMENT’S DISCUSSION AND ANALYSIS
PeopleManagement
PeopleManagement revenue declined 12.5% to $580.6 million for the fiscal year ended December 31, 2023, compared to the prior year. The 53rd week contributed an additional
$7.6 million in revenue. Revenue declined as clients in our on-site business continued to respond to economic uncertainty by reducing dependence on variable labor to
supplement their core workforce. The decline in demand has impacted clients across most industries, especially within retail and transportation.
Gross profit
(in thousands, except percentages)
Gross profit
Percentage of revenue
2023
2022
$
506,059
$
26.5 %
602,144
26.7 %
Gross profit as a percentage of revenue contracted 20 basis points to 26.5% for the fiscal year ended December 31, 2023, compared to 26.7% for the prior year. Unfavorable
revenue shifts towards our lower margin staffing businesses caused a contraction of 100 basis points; specifically revenue growth in the renewable energy industry within
PeopleReady, which has lower margins than average PeopleReady margins, and revenue declines in PeopleScout. The contraction was partially offset by an expansion of 40
basis points from lower workers’ compensation costs and 40 basis points from higher bill rates in our staffing businesses, which have increased ahead of pay rates.
Selling, general and administrative expense
(in thousands, except percentages)
Selling, general and administrative expense
Percentage of revenue
2023
2022
$
494,603
$
25.9 %
500,686
22.2 %
Total company SG&A expense decreased by $6.1 million or 1.2% for the fiscal year ended December 31, 2023, compared to the prior year. Cost reduction efforts were taken in
fiscal 2023 to promote a return to profitability, while maintaining our operational strengths and readiness to increase market share when demand rebounds. These efforts resulted
in savings of approximately $31 million during the fiscal year ended December 31, 2023, partially offset by $3.2 million in workforce reduction costs. Operating cost savings
were also offset by inflation of certain employee costs, most notably for employee medical benefits, which have been rising nation-wide, and $5.8 million of accelerated
compensation costs related to transitions in our executive leadership. The 53rd week added an additional $6.6 million of expense. SG&A expense in the prior year included a
benefit of $3.3 million for the reversal of accrued compensation related to the resignation of a former Chief Executive Officer.
Depreciation and amortization
(in thousands, except percentages)
Depreciation and amortization
Percentage of revenue
2023
2022
$
25,821
$
1.4 %
29,273
1.3 %
Depreciation and amortization decreased primarily due to certain assets becoming fully depreciated and amortized during fiscal 2022.
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MANAGEMENT’S DISCUSSION AND ANALYSIS
Goodwill and intangible asset impairment charge
A summary of the goodwill and intangible asset impairment charge for the fiscal year ended December 31, 2023, by reportable segment, is as follows:
(in thousands)
Goodwill
Trade names/trademark
Total
Goodwill
PeopleScout
PeopleManagement
Total company
$
$
8,885 $
—
8,885 $
— $
600
600 $
8,885
600
9,485
We performed our annual impairment test as of the first day of our fiscal second quarter of 2023. As a result of this impairment test, we concluded that the carrying amount of
our PeopleScout MSP reporting unit exceeded its fair value and we recorded a non-cash goodwill impairment charge of $8.9 million, which was included in goodwill and
intangible asset impairment charge on our Consolidated Statements of Operations and Comprehensive Income (Loss) for the fiscal year ended December 31, 2023. The
PeopleScout MSP goodwill impairment was related to our revised internal revenue projections, which anticipated the current year declining trends would continue into future
periods. These projections were updated based on our then-current outlook and recent industry analysis, which indicated that our business would underperform due to a strategic
lack of investment in technology within an increasingly competitive market. No further impairment loss was recognized during the fiscal year ended December 31, 2023. The
remaining goodwill balance for PeopleScout MSP was $0.8 million as of December 31, 2023. See Note 5: Goodwill and Intangible Assets, to our consolidated financial
statements found in Item 8 of this Annual Report on Form 10-K, for additional details.
Indefinite-lived intangible assets
We performed our annual impairment test as of the first day of our fiscal second quarter of 2023. 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 fiscal year ended December 31, 2023. The charge
was primarily the result of an increase in the discount rate, as well as lower projected revenues given our then-current outlook. No further impairment loss was recognized
during the fiscal year ended December 31, 2023. The remaining balance for this trade name/trademark was $3.3 million as of December 31, 2023.
Income taxes
The income tax expense (benefit) and the effective income tax rate were as follows:
(in thousands, except percentages)
Income tax expense (benefit)
Effective income tax rate
2023
2022
$
(6,472)
$
31.3 %
11,143
15.2 %
Our tax provision and our effective tax rate are subject to variation due to several factors, including variability in our pre-tax and taxable income and loss by jurisdiction, tax
credits, government audit developments, changes in laws, regulations and administrative practices, and relative changes of expenses or losses for which tax benefits are not
recognized. Additionally, our effective tax rate can be more or less volatile based on the amount of our pre-tax income. For example, the impact of tax credits and non-
deductible expenses on our effective tax rate is greater when our pre-tax income is lower.
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MANAGEMENT’S DISCUSSION AND ANALYSIS
The items creating differences between income taxes computed at the statutory federal income tax rate and income taxes reported on the Consolidated Statements of Operations
and Comprehensive Income (Loss) are as follows:
(in thousands, except percentages)
Income tax expense (benefit) based on statutory rate
Increase (decrease) resulting from:
State income taxes, net of federal benefit
Hiring tax credits, net
Uncertain tax positions
Non-deductible goodwill impairment charge
Non-deductible and non-taxable items
Foreign taxes
Other, net
Total income tax expense (benefit)
2023
%
2022
%
$
(4,335)
21.0 % $
15,417
(1,384)
(4,997)
(206)
2,287
1,178
587
398
(6,472)
$
6.7
24.2
1.0
(11.1)
(5.7)
(2.9)
(1.9)
31.3 % $
3,008
(7,911)
(1,336)
—
1,377
654
(66)
11,143
21.0 %
4.1
(10.8)
(1.8)
—
1.9
0.9
(0.1)
15.2 %
Our effective tax rate for the fiscal year ended December 31, 2023 was 31.3% compared to 15.2% for the prior year. The higher effective tax rate in the current year was
primarily due to benefits of hiring tax credits, partially offset by certain non-deductible and non-taxable items and foreign income taxes. Because of the loss before tax benefit
for the fiscal year ended December 31, 2023, hiring tax credits add to the income tax benefit and rate and non-deductible items subtract from the income tax benefit and rate.
See Note 1: Summary of Significant Accounting Policies and Note 12: Income Taxes, to our consolidated financial statements found in Item 8 of this Annual Report on
Form 10-K, for additional information.
Segment performance
We evaluate segment performance based on segment revenue and segment profit. Segment profit includes revenue, related cost of services, and ongoing operating expenses
directly attributable to the reportable segment. Segment profit 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 14:
Segment Information, to our consolidated financial statements found in Item 8 of this Annual Report on Form 10-K, for additional details on our reportable segments, as well as
a reconciliation of segment profit to income (loss) before tax expense (benefit).
Segment profit should not be considered a measure of financial performance in isolation or as an alternative to net income (loss) in the Consolidated Statements of Operations
and Comprehensive Income (Loss) in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and may not be comparable to
similarly titled measures of other companies.
PeopleReady segment performance was as follows:
(in thousands, except percentages)
Revenue from services
Segment profit
Percentage of revenue
$
$
2023
2022
1,096,318 $
$
26,606
2.4 %
1,272,852
87,743
6.9 %
PeopleReady segment profit declined 69.7% or $61.1 million and declined as a percentage of revenue for the fiscal year ended December 31, 2023, compared to the prior year.
The decline was primarily due to the decline in revenue and the relatively high ratio of fixed to variable costs within SG&A expense, as well as changes in revenue mix towards
lower margin renewable energy projects. The decline was partially mitigated through disciplined pricing, with bill rates increasing ahead of pay rates.
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MANAGEMENT’S DISCUSSION AND ANALYSIS
PeopleScout segment performance was as follows:
(in thousands, except percentages)
Revenue from services
Segment profit
Percentage of revenue
$
$
2023
2022
229,334
26,922
$
$
11.7 %
317,518
44,771
14.1 %
PeopleScout segment profit declined 39.9% or $17.8 million and declined as a percentage of revenue for the fiscal year ended December 31, 2023, compared to the prior year.
The decline was a result of the decline in revenue, the effects of which were softened by workforce reductions during each quarter of 2023 to manage our operating cost
structure.
PeopleManagement segment performance was as follows:
(in thousands, except percentages)
Revenue from services
Segment profit
Percentage of revenue
$
$
2023
2022
580,591
6,963
$
$
1.2 %
663,814
15,811
2.4 %
PeopleManagement segment profit declined 56.0% or $8.8 million and declined as a percentage of revenue for the fiscal year ended December 31, 2023, compared to the prior
year. The decline was primarily due to the decline in revenue and the associated impact from lower operating leverage. We took actions during each quarter of 2023 to reduce
operating costs to better align with demand.
FISCAL 2022 AS COMPARED TO FISCAL 2021
See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, found in Part II of the Annual Report on Form 10-K for the fiscal year
ended December 25, 2022 for discussion of fiscal 2022 compared to fiscal 2021.
FUTURE OUTLOOK
The following highlights represent our operating outlook. These expectations are subject to revision as our business changes with the overall economy.
Operating outlook
• We expect revenue for the fiscal first quarter of 2024 to decline between 16% and 10% as compared to the same period in the prior year, primarily due to our clients’
continued response to macroeconomic uncertainty.
• We anticipate gross profit as a percentage of revenue to decline between 210 and 170 basis points for the fiscal first quarter of 2024, compared to the same period in the
prior year, primarily due to the change in business mix and higher workers’ compensation expense.
•
For the fiscal first quarter of 2024, we anticipate SG&A expense to be between $109 million and $113 million.
• We expect basic weighted average shares outstanding to be approximately 31 million for the fiscal first quarter of 2024. This expectation does not include the impact of
potential share repurchases.
• We expect our statutory income tax rate for fiscal 2024 to be between 24% and 28%. For fiscal 2024, we also expect an income tax benefit related to our hiring tax
credits of between $5 million and $9 million.
Liquidity outlook
•
Capital expenditures and spending for software as a service assets are expected to be between $23 million and $27 million for fiscal 2024, with approximately $4 million
of this amount relating to spending for software as a service assets for fiscal 2024.
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MANAGEMENT’S DISCUSSION AND ANALYSIS
LIQUIDITY AND CAPITAL RESOURCES
We believe we have a strong financial position and sufficient sources of funding to meet our short and long term obligations. As of December 31, 2023, we had $61.9 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 $293.8
million unused , which is constrained by our most restrictive covenant making $85.9 million available for additional borrowing. See Note 7: Long-Term Debt, to our
consolidated financial statements found in Item 8 of this Annual Report on Form 10-K, for details on our revolving credit facility.
On February 9, 2024, we entered into an amended and restated revolving credit agreement (the “2024 Revolving Credit Facility”), which matures on February 9, 2029. The 2024
Revolving Credit Facility provides for a revolving line of credit of up to $255.0 million, with an option to increase the amount to $405.0 million, subject to lender approval.
The following financial covenants, as defined in the 2024 Revolving Credit Facility, will be in effect beginning the fiscal first quarter of 2024:
•
•
Consolidated fixed charge coverage ratio greater than 1.25, defined as the trailing twelve months bank-adjusted cash flow divided by cash interest expense.
Asset coverage ratio of greater than 1.00, defined as the ratio of (a) 60% of accounts receivable to (b) total debt outstanding less unrestricted cash in excess of
$50.0 million, subject to certain minimums. Under this covenant we are limited to $25.0 million in aggregate share repurchases in any 12 month period.
The following financial covenant, as defined in the 2024 Revolving Credit Facility, will replace the asset coverage ratio beginning the fiscal first quarter of 2026, or earlier at
our discretion, subject to the terms of the agreement:
•
Consolidated leverage ratio less than 3.00, defined as our funded indebtedness divided by trailing twelve months consolidated EBITDA, as defined in the 2024
Revolving Credit Facility.
Cash generated through our core operations is 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 revenue growth. We also manage working capital through
efficient cost management and strategically timing payments of accounts payable.
We continue to make investments in online and mobile apps to increase the competitive differentiation of our services over the 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.
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 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 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 6: Workers'
Compensation Insurance and Reserves, and Note 3: Restricted Cash and Investments, to our consolidated financial statements found in Item 8 of this Annual Report on
Form 10-K, for details on our workers’ compensation program as well as the restricted cash and investments held in Trust.
We have established investment policy directives for the Trust with the first priority to preserve capital, second to ensure sufficient liquidity to pay workers’ compensation
claims, third to diversify the investment portfolio and fourth to maximize after-tax returns. Trust investments must meet minimum acceptable quality standards. The primary
investments include U.S. Treasury securities, U.S. agency debentures, U.S. agency mortgages, corporate securities and municipal securities. For those investments rated by
nationally recognized statistical rating organizations the minimum ratings at time of purchase are:
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MANAGEMENT’S DISCUSSION AND ANALYSIS
Short-term rating
Long-term rating
S&P
A-1/SP-1
A
Moody’s
P-1/MIG-1
A2
Fitch
F-1
A
Total collateral commitments decreased $25.2 million during the fiscal year ended December 31, 2023 primarily due to a decrease in collateral levels required by our insurance
carriers, as well as the use of collateral to satisfy workers’ compensation claims. See Note 8: Commitments and Contingencies, to our consolidated financial statements found in
Item 8 of this Annual Report on Form 10-K, for additional details on our workers’ compensation commitments. We continue to actively manage workers’ compensation cost by
focusing on improving our associates’ 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. We expect diminishing favorable adjustments to our workers’ compensation
liabilities as the opportunity for significant reduction to the frequency and severity of accident rates has diminished.
Restricted cash and investments also includes collateral to support our non-qualified deferred compensation plan in the form of company-owned life insurance policies. Our
non-qualified deferred compensation plan is managed by a third-party service provider, and the investments backing the company-owned life insurance policies align with the
amount and timing of payments based on employee elections.
A summary of our cash flows for each period are as follows:
(in thousands)
Net cash provided by operating activities
Net cash used in investing activities
Net cash used in financing activities
Change in cash, cash equivalents and restricted cash reclassified to assets held-for-sale
Effect of exchange rate changes on cash, cash equivalents and restricted cash
Net change in cash, cash equivalents and restricted cash
Cash flows from operating activities
Fiscal year ended
Dec 31, 2023
Dec 25, 2022
34,754 $
(32,322)
(37,583)
(300)
(874)
(36,325) $
120,503
(20,945)
(64,692)
—
(2,420)
32,446
$
$
Cash provided by operating activities consists of net income (loss) adjusted for non-cash benefits and expenses, and changes in operating assets and liabilities.
As client demand for our services declines, the result is a deleveraging of accounts receivable and accounts payable. Accrued wages and benefits can fluctuate based on whether
the period end requires the accrual of one or two weeks of payroll, the amount and timing of bonus payments, and timing of payroll tax payments.
Net cash provided by accounts receivable collections through deleveraging during the fiscal year ended December 31, 2023 was partially offset by net cash used for payments
on accounts payable and accrued expenses. Net cash used for payments on accrued wages and benefits was primarily due to lower annual employee bonuses. In addition, our
workers’ compensation claims reserve for estimated claims decreases as contingent labor services decline, as was the case in fiscal 2023.
Cash flows from investing activities
Investing cash flows consist of capital expenditures and purchases, sales and maturities of restricted investments, which are managed in line with our workers’ compensation
collateral funding requirements and timing of claim payments.
Capital expenditures for the fiscal year ended December 31, 2023 were higher compared to the fiscal year ended December 25, 2022, due in part to the continued investments we
are making to upgrade our PeopleReady technology platform. For the fiscal year ended December 31, 2023, maturities of restricted investments were reinvested by the Trust
resulting in only a small impact to cash used in investing activities. In the prior period, cash provided by maturities of restricted investments was not immediately reinvested by
the Trust, and partially offset capital expenditures.
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MANAGEMENT’S DISCUSSION AND ANALYSIS
Cash flows from financing activities
Financing cash flows consist primarily of repurchases of common stock as part of our publicly announced share repurchase program, amounts to satisfy employee tax
withholding obligations upon the vesting of restricted stock, the net change in our Revolving Credit Facility, and proceeds from the sale of common stock through our employee
stock purchase plans.
Net cash used in financing activities during the fiscal year ended December 31, 2023 was primarily due to use of $34.2 million to repurchase our common stock in the open
market. During the fiscal year ended December 25, 2022, we used $60.9 million to repurchase our common stock in the open market. As of December 31, 2023, $55.1 million
remains available for repurchase under existing authorization.
FISCAL 2022 AS COMPARED TO FISCAL 2021
See Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, found in Part II of the Annual Report on Form 10-K for the fiscal year
ended December 25, 2022 for discussion of fiscal 2022 compared to fiscal 2021.
SUMMARY OF CRITICAL ACCOUNTING ESTIMATES
Management’s discussion and analysis of financial condition and results of operations discusses our financial statements, which have been prepared in accordance with U.S.
GAAP. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and the
disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. On an
ongoing basis, management evaluates its estimates and judgments. Management bases its estimates and judgments on historical experience and on various other factors that are
believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily
apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
Management believes that the following accounting estimates are the most critical to understand and evaluate our reported financial results, and they require management’s
most subjective or complex judgments, resulting from the need to make estimates about the effect of matters that are inherently uncertain. Such estimates and assumptions are
subject to inherent uncertainties, which may result in actual future amounts differing from reported estimated amounts.
Workers’ compensation reserve
We maintain reserves for workers’ compensation claims, including the estimated expenses related to claims above our self-insured limits (“excess claims”), using actuarial
estimates of the future cost of claims and related expenses. These estimates include claims that have been reported but not settled and claims that have been incurred but not
reported. These reserves, which reflect potential liabilities to be paid in future periods based on estimated payment patterns, are discounted to estimated net present value using
discount rates based on average returns of “risk-free” U.S. Treasury instruments available during the year in which the liability was incurred, which are evaluated on a quarterly
basis. We evaluate the reserves regularly throughout the year and make adjustments accordingly. If the actual cost of such claims and related expenses exceed the amount
estimated, additional reserves may be required. Changes in reserve estimates are reflected in cost of services on the Consolidated Statements of Operations and Comprehensive
Income (Loss) in the period when the changes in estimates are made.
Our workers’ compensation reserves include estimated expenses related to excess claims and a corresponding receivable for the insurance coverage on excess claims based on
the contractual policy agreements we have with insurance companies. We discount this reserve and corresponding receivable to its estimated net present value using the
discount rates based on average returns on “risk-free” U.S. Treasury instruments available during the year in which the liability was incurred. When appropriate, we record a
valuation allowance against the insurance receivable to reflect amounts that may not be realized.
There are two main factors that impact workers’ compensation cost: the number of claims and the cost per claim. The number of claims is driven by the volume of hours
worked, the business mix, which reflects the type of work performed, and the safety of the environment where the work is performed. The cost per claim is driven primarily by
the severity of the injury, the state in which the injury occurs, related medical costs, and lost-time wage costs. For fiscal 2023 claims, a 5% change in one or more of the above
factors would result in a change to workers’ compensation cost of approximately $2 million. Our reserve balances have been positively impacted primarily by the success of our
accident prevention programs. In the event that we are not able to further reduce our accident rates, the positive impacts to our reserve balance will diminish.
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MANAGEMENT’S DISCUSSION AND ANALYSIS
Management evaluates the adequacy of the workers’ compensation reserves in conjunction with an independent quarterly actuarial assessment. Factors considered in
establishing and adjusting these reserves include, among other things:
•
•
•
•
•
•
changes in medical and time loss (“indemnity”) costs;
changes in mix between medical only and indemnity claims;
regulatory and legislative developments impacting benefits and settlement requirements;
type and location of work performed;
impact of safety initiatives; and
positive or adverse development of claims.
Accounts receivable allowance for credit losses
We establish an estimate for the allowance for credit losses resulting from the failure of our clients to make required payments by applying an aging schedule to pools of assets
with similar risk characteristics. Based on an analysis of the risk characteristics of our clients and associated receivables, we have concluded our pools are as follows:
•
•
•
PeopleReady and Centerline Drivers (“Centerline”) have a large, diverse set of clients, generally with frequent, low dollar invoices due to the daily nature of the work
we perform. This results in high turnover in accounts receivable.
PeopleManagement On-Site has a smaller number of clients and follows a contractual billing schedule. The invoice amounts are higher than that of PeopleReady and
Centerline, with longer payment terms.
PeopleScout has a smaller number of clients, and generally sends invoices on a consolidated basis for a client. Invoice amounts are generally higher for PeopleScout than
for PeopleManagement On-Site, with similar payment terms.
When specific clients are identified as no longer sharing the same risk profile as their current pool, they are removed from the pool and evaluated separately. The credit loss
rates applied to each aging category by pool are based on current collection efforts, historical collection trends, write-off experience, client credit risk, current economic data and
forecasted information. The allowance for credit loss is reviewed and represents our best estimate of the amount of expected credit losses. Past due or delinquent balances are
identified based upon a review of aged receivables performed by collections and operations. Past due balances are written off when it is probable the receivable will not be
collected. Changes in the allowance for credit losses are recorded in SG&A expense on the Consolidated Statements of Operations and Comprehensive Income (Loss).
Business combinations
We account for our business acquisitions using the acquisition method of accounting. The purchase price of an acquisition is allocated to the underlying assets acquired and
liabilities assumed based upon their estimated fair values at the date of acquisition. We determine the estimated fair values after review and consideration of relevant
information including discounted cash flows, quoted market prices and estimates made by management. Determining the fair value of an acquired company is judgmental in
nature and involves the use of significant estimates and assumptions. The significant judgments include estimation of future cash flows, which is dependent on forecasts;
estimation of the long-term rate of growth; estimation of the useful life over which cash flows will occur; and determination of a weighted average cost of capital, which is risk-
adjusted to reflect the specific risk profile of the business being purchased. Intangible assets that arise from contractual/legal rights, or are capable of being separated, are
measured and recorded at fair value and amortized over the estimated useful life. If practicable, assets acquired and liabilities assumed arising from contingencies are measured
and recorded at fair value. If not practicable, such assets and liabilities are measured and recorded when it is probable that a gain or loss has occurred and the amount can be
reasonably estimated. The residual balance of the purchase price, after fair value allocations to all identified assets and liabilities, represents goodwill.
Goodwill acquired in business combinations is assigned to the reporting unit(s) expected to benefit from the combination as of the acquisition date. Acquisition-related costs are
expensed as incurred. Our acquisitions may include contingent consideration, which require us to recognize the fair value of the estimated liability at the time of the acquisition.
Subsequent changes in the estimate of the amount to be paid under the contingent consideration arrangement are recognized on the Consolidated Statements of Operations and
Comprehensive Income (Loss). Cash payments for contingent or deferred consideration are classified within cash flows from investing activities for the purchase price fair value
of the contingent consideration while amounts paid in excess are classified within cash flows from operating activities on the Consolidated Statements of Cash Flows.
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MANAGEMENT’S DISCUSSION AND ANALYSIS
Goodwill and indefinite-lived intangible assets
We evaluate goodwill and indefinite-lived intangible assets for impairment on an annual basis as of the first day of our fiscal second quarter, or whenever events or
circumstances make it more likely than not that an impairment may have occurred. These events or circumstances could include a significant change in general economic
conditions, deterioration in industry environment, changes in cost factors, declining operating performance indicators, legal factors, competition, client engagement, changes in
the carrying amount of net assets, sale or disposition of a significant portion of a reporting unit, or a sustained decrease in share price. We monitor the existence of potential
impairment indicators throughout the fiscal year.
Goodwill
We test for goodwill impairment at the reporting unit level. We consider our operating segments to be our reporting units for goodwill impairment testing. Our operating
segments with remaining goodwill are PeopleReady, PeopleManagement Centerline, PeopleScout RPO and PeopleScout MSP.
When evaluating goodwill for impairment, we may first assess qualitative factors to determine whether it is more likely than not the fair value of a reporting unit is less than its
carrying amount. Qualitative factors include macroeconomic conditions, industry and market conditions and overall company financial performance. If, after assessing the
totality of events and circumstances, we determine that it is more likely than not the fair value of the reporting unit is greater than its carrying amount, the quantitative
impairment test is unnecessary.
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 loss 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.
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 macroeconomic 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 internally-developed forecasts of revenue and profitability, 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.
We base fair value estimates on assumptions we believe to be reasonable but that are unpredictable and inherently uncertain. Actual future results may differ from those
estimates. We confirm the reasonableness of the valuation conclusions by comparing the indicated values of all the reporting units to the overall company value indicated by the
stock price and outstanding shares as of the valuation date, or market capitalization.
Annual impairment test
We performed our annual goodwill impairment test as of the first day of our fiscal second quarter of 2023. The weighted average cost of capital used in our most recent
impairment test was risk-adjusted to reflect the specific risk profile of the reporting units and ranged from 13.0% to 13.5%. The combined fair values for all reporting units were
then reconciled to our aggregate market value of our shares of common stock on the date of valuation, resulting in a control premium of 27.9%.
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MANAGEMENT’S DISCUSSION AND ANALYSIS
As a result of our annual impairment test, we concluded that the carrying amount of the PeopleScout MSP reporting unit exceeded its fair value and we recorded a non-cash
goodwill impairment charge of $8.9 million, which was included in goodwill and intangible asset impairment charge on our Consolidated Statements of Operations and
Comprehensive Income (Loss) for the fiscal year ended December 31, 2023. The PeopleScout MSP goodwill impairment was related to our revised internal revenue projections,
which anticipated the current year declining trends would continue into future periods. These projections were updated based on our then-current outlook and recent industry
analysis, which indicated that our business would underperform due to a strategic lack of investment in technology within an increasingly competitive market. The remaining
goodwill balance for PeopleScout MSP was $0.8 million as of December 31, 2023. Any further declines in PeopleScout MSP revenue, in excess of our projections used in the
annual impairment test, could give rise to an additional impairment. Based on our annual impairment test, we concluded the fair value of all other reporting units were
substantially in excess of their carrying value, and the goodwill associated with those reporting units was not impaired.
Operating results have declined compared to our expectations as of the date of the annual impairment test; however, we did not identify any events or conditions that make it
more likely than not that an additional impairment may have occurred during the fiscal year ended December 31, 2023. Further declines in our projected operating
performance, or a sustained decrease in our stock price, could give rise to a future impairment. See Note 5: Goodwill and Intangible Assets, to our consolidated financial
statements found in Item 8 of this Annual Report on Form 10-K, for additional details on the 2023 goodwill impairment.
There were no goodwill impairment charges recorded during fiscal 2022 or 2021.
Indefinite-lived intangible assets
We have indefinite-lived intangible assets related to our Staff Management and PeopleScout trade names. We evaluate our indefinite-lived intangible assets for impairment on
an annual basis as of the first day of our fiscal second quarter, or whenever events or circumstances make it more likely than not that an impairment may have occurred. These
events or circumstances could include significant change in general economic conditions, deterioration in industry environment, changes in cost factors, declining operating
performance indicators, legal factors, competition, client engagement, or sale or disposition of a significant portion of the business. We monitor the existence of potential
impairment indicators throughout the fiscal year.
When evaluating indefinite-lived intangible assets for impairment, we may first assess qualitative factors to determine whether it is more likely than not the fair value of the
indefinite-lived intangible is less than its carrying amount. Qualitative factors include macroeconomic conditions, industry and market conditions and overall company financial
performance. If, after assessing the totality of events and circumstances, we determine that it is more likely than not the fair value of the indefinite-lived intangible asset is
greater than its carrying amount, the quantitative impairment test is unnecessary.
The quantitative impairment test, if necessary, utilizes the relief from royalty method to determine the fair value of each of our trade names. If the carrying value exceeds the
fair value, we recognize an impairment loss in an amount equal to the excess, not to exceed the carrying value. Management uses considerable judgment to determine key
assumptions, including projected revenue, royalty rates and appropriate discount rates.
Annual impairment test
We performed our annual indefinite-lived intangible asset impairment test as of the first day of our fiscal second quarter of 2023. As a result of this impairment test, we
concluded that a trade name/trademark related to the 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 fiscal
year ended December 31, 2023. The charge was primarily the result of an increase in the discount rate, as well as lower projected revenues given our then-current outlook. The
remaining balance for this trade name/trademark was $3.3 million as of December 31, 2023. See Note 5: Goodwill and Intangible Assets, to our consolidated financial
statements found in Item 8 of this Annual Report on Form 10-K, for additional details on the 2023 indefinite-lived intangible asset impairment.
The fair value of the trade name/trademark related to the PeopleScout segment was substantially in excess of its carrying value of $2.1 million, and therefore did not result in an
impairment. Additionally, following performance of the annual impairment test, we did not identify any events or conditions that make it more likely than not that an additional
impairment may have occurred during the fiscal year ended December 31, 2023.
No impairment charge was recorded during fiscal 2022 nor 2021.
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MANAGEMENT’S DISCUSSION AND ANALYSIS
Finite-lived intangible assets and other long-lived assets
We review intangible assets that have finite useful lives and other long-lived assets whenever an event or change in circumstances indicates that the carrying value of the asset
may not be recoverable. Important factors that could result in an impairment review include, but are not limited to, significant underperformance relative to historical or
planned operating results, or significant changes in business strategies. We estimate the recoverability of these assets by comparing the carrying amount of the asset to the future
undiscounted cash flows that we expect the asset to generate. An impairment charge is recognized when the estimated undiscounted cash flows expected to result from the use of
the asset plus net proceeds expected from disposition of the asset (if any) are less than the carrying value of the asset. When an impairment charge is recognized, the carrying
amount of the asset is reduced to its estimated fair value based on discounted cash flow analysis or other valuation techniques.
No impairment charge was recorded during fiscal 2023, 2022 or 2021.
Estimated contingent legal and regulatory liabilities
We are subject to compliance audits by federal, state, local and foreign authorities relating to a variety of regulations including wage and hour laws, taxes, workers’
compensation, immigration, and safety. We are also subject to legal proceedings in the ordinary course of our operations. We have established reserves for contingent legal and
regulatory liabilities. We record a liability when management determines that it is probable that a legal claim will result in an adverse outcome and the amount of liability can be
reasonably estimated. To the extent that an insurance company or other third-party is legally obligated to reimburse us for a liability, we record a receivable for the amount of
the probable reimbursement. We evaluate our estimated liability regularly throughout the year and make adjustments as needed. If the actual outcome of these matters is
different than expected, an adjustment is charged or credited to expense in the period the outcome occurs or the period in which the estimate changes.
Income taxes and related valuation allowances
We account for income taxes by recording taxes payable or receivable for the current year and deferred tax assets and liabilities for the future tax consequences of events that
have been recognized in our financial statements or tax returns. These expected future tax consequences are measured based on provisions of tax law as currently enacted; the
effects of future changes in tax laws are not anticipated. We recognize deferred tax assets to the extent we believe it is more likely than not the asset will be realized. We
consider available positive and negative evidence when making such determination, including future reversals of existing taxable temporary differences, projected future taxable
income, tax-planning strategies, carryback potential if permitted, and results of recent operations. When appropriate, we record a valuation allowance against deferred tax assets
to reduce deferred tax assets to the amount that is more likely than not to be realized. Based on our deferred tax asset realizability analysis, we have determined that a valuation
allowance is appropriate for certain tax credits and net operating losses that we expect will not be utilized within the permitted carryforward periods as of December 31, 2023
and December 25, 2022. See Note 12: Income Taxes, to our consolidated financial statements found in Item 8 of this Annual Report on Form 10-K, for details on our current
valuation allowance.
NEW ACCOUNTING STANDARDS
See Note 1: Summary of Significant Accounting Policies, to our consolidated financial statements included in Item 8 of this Annual Report on Form 10-K.
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Item 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are exposed to market risk related to changes in interest rates and foreign currency exchange rates, each of which could adversely affect the value of our investments. We do
not currently use derivative financial instruments.
Interest rate risks
Our exposure to market risk for changes in interest rates relates primarily to our investment portfolio and our revolving credit facility. The interest on our revolving credit
agreement is based on the Secured Overnight Financing Rate (“SOFR”), plus an adjustment of 0.10%, plus an applicable spread between 1.25% and 3.50%. Alternatively, at
our option, we may pay interest based on a base rate plus an applicable spread between 0.25% and 1.50%. The base rate is the higher of the prime rate (as announced by Bank
of America) or the federal funds rate plus 0.50%.
Trust assets
Restricted cash and investments consist principally of collateral that has been provided or pledged to insurance carriers for workers’ compensation and state workers’
compensation programs. Our insurance carriers and certain state workers’ compensation programs require us to collateralize a portion of the workers’ compensation obligation.
The collateral typically takes the form of cash and cash equivalents and highly rated investment grade securities, primarily in municipal debt securities, corporate debt securities
and agency mortgage-backed securities. The majority of our collateral obligations are held in a trust at the Bank of New York Mellon (“Trust”). The individual investments
within the Trust are subject to credit risk due to possible rating changes, default or impairment. We monitor the portfolio to ensure this risk does not exceed prudent levels. We
consistently apply and adhere to our investment policy of holding high-quality, diversified securities. We have the positive intent and ability to hold these investments until
maturity and accordingly have classified them as held-to-maturity. For additional information, see Note 3: Restricted Cash and Investments, to the consolidated financial
statements included in Item 8 of this Annual Report on Form 10-K.
Foreign currency exchange rate risk
The majority of our revenue, expense, liabilities and capital purchasing activities are transacted in U.S. dollars. However, because a portion of our operations consists of
activities outside of the United States of America, we have minimal transactions in other currencies, primarily the Canadian and Australian dollars, British pound sterling and
Indian rupee. We have not hedged our foreign currency translation risk. We have the ability to hold our foreign currency denominated assets indefinitely and do not expect that
a sudden or significant change in foreign exchange rates will have a material impact on future operating results or cash flows.
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Item 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of TrueBlue, Inc.
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheets of TrueBlue, Inc. and subsidiaries (the “Company”) as of December 31, 2023 and December 25, 2022, the
related consolidated statements of operations and comprehensive income (loss), shareholders’ equity, and cash flows, for each of the three years in the period ended
December 31, 2023, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects,
the financial position of the Company as of December 31, 2023 and December 25, 2022, and the results of its operations and its cash flows for each of the three years in the
period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over
financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission and our report dated February 21, 2024, expressed an unqualified opinion on the Company’s internal control over financial
reporting.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our
audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material
misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test
basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates
made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current-period audit of the financial statements that were communicated or required to be
communicated to the audit committee and that (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,
subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are
not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
Workers’ Compensation Claims Reserves - Refer to Notes 1 and 6 to the Financial Statements
Critical Audit Matter Description
The Company bears the financial responsibility for a significant portion of expected losses under its workers’ compensation program and records reserves for workers’
compensation claims based on estimates of the future cost of claims and related expenses, which are discounted to their estimated net present value. The determination of the
undiscounted reserve requires significant estimates and assumptions related to the future cost of claims and related expenses for claims that have been reported but not settled,
as well as those that have been incurred but not reported. The undiscounted workers’ compensation reserve was $214.6 million as of December 31, 2023.
Given the fact that changes in actuarial assumptions could have a significant impact on the reserve, auditing management judgments regarding the workers’ compensation
reserve, including estimates of the future cost of claims and related expenses, involved a high degree of auditor judgment, including the need to involve our actuarial specialists.
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How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the workers’ compensation reserve included the following, among others:
• We tested the effectiveness of controls over workers’ compensation, including those over payments and related expenses, claims data provided to the actuary, and review
of actuarial results.
• We evaluated the methods and assumptions used by management to estimate the workers’ compensation reserve by:
◦ Making selections of the underlying claims data that serves as the basis for the actuarial analysis, including claims payments and related expenses, to evaluate
whether the inputs to the actuarial estimate were reasonable; and
◦
Comparing management’s prior-year assumptions of expected future cost of claims and related expenses to actuals incurred during the current year to identify
potential bias in the determination of the workers’ compensation reserve.
• With the assistance of our actuarial specialists, we developed independent estimates of the workers’ compensation reserve and compared our estimates to the Company’s
recorded workers’ compensation reserve.
Goodwill - PeopleScout MSP Reporting Unit - Refer to Notes 1, 2, and 5 to the Financial Statements
Critical Audit Matter Description
The Company’s evaluation of goodwill for impairment involves the comparison of the fair value of each reporting unit to its carrying value. The fair value of each reporting unit
was estimated using a weighting of the income and market valuation approaches, except for the PeopleScout MSP reporting unit (“MSP”) which relied only on the income
approach. The income approach applied a fair value methodology to each reporting unit based on discounted cash flows, which requires management to make significant
judgments related to the estimation of future revenue and profitability, and determination of the risk-adjusted weighted average cost of capital (“discount rate”). Changes in
these assumptions could have a significant impact on either the fair value of MSP and the related amount of the goodwill impairment charge. The goodwill balance was $84.1
million as of December 31, 2023, of which $0.8 million was allocated to MSP. A goodwill impairment charge of $8.9 million was recorded within MSP during the year ended
December 31, 2023.
The MSP goodwill impairment recorded during the year ended December 31, 2023 was due to management’s revised internal revenue projections. These projections were
updated based on management’s current macroeconomic outlook and industry analysis, which indicates that MSP will underperform due to a strategic lack of investment in
technology within an increasingly competitive market.
We identified goodwill for the MSP reporting unit as a critical audit matter because of the significant judgments made by management to estimate the fair value of MSP. This
required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists, when performing audit procedures to
evaluate the reasonableness of management’s estimates and assumptions related to selection of the discount rate and forecasts of future revenue and profitability.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the discount rate and forecasts of future revenue and profitability used by management to estimate the fair value of MSP included the following,
among others:
• We tested the effectiveness of controls over management’s goodwill impairment evaluation, including those over the determination of the fair value of MSP, such as
controls related to management’s selection of the discount rate and forecasts of future revenues and profitability.
• We evaluated management’s ability to accurately forecast future revenues and profitability by comparing actual results to management’s historical forecasts.
• We evaluated the reasonableness of management’s revenue and profitability forecasts by comparing the forecasts to:
◦
◦
Historical revenues and profitability.
Internal communications to management and the Board of Directors, including related to strategic decisions that could impact MSP’s future revenues.
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◦
Industry reports containing analyses of expected trends and the competitive environment in the industry in which MSP operates.
• With the assistance of our fair value specialists, we evaluated the reasonableness of (1) valuation methodology and (2) the discount rate by:
◦
◦
Testing the source information underlying the determination of the discount rate and the mathematical accuracy of the calculation.
Developing an independent estimate of the discount rate and comparing that estimate to the discount rate selected by management.
/s/ Deloitte & Touche, LLP
Seattle, Washington
February 21, 2024
We have served as the Company’s auditor since 2009.
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TRUEBLUE, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except par value and share count data)
ASSETS
Current assets:
Cash and cash equivalents
Accounts receivable, net of allowance of $2,005 and $3,212
Prepaid expenses and other current assets
Income tax receivable
Total current assets
Property and equipment, net
Restricted cash and investments
Deferred income taxes, net
Goodwill
Intangible assets, net
Operating lease right-of-use assets, net
Workers’ compensation claims receivable, net
Other assets, net
Total assets
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable and other accrued expenses
Accrued wages and benefits
Income tax payable
Current portion of workers’ compensation claims reserve
Current operating lease liabilities
Other current liabilities
Total current liabilities
Workers’ compensation claims reserve, less current portion
Long-term deferred compensation liabilities
Long-term operating lease liabilities
Other long-term liabilities
Total liabilities
Commitments and contingencies (Note 8)
Shareholders’ equity:
Preferred stock, $0.131 par value, 20,000,000 shares authorized; No shares issued and outstanding
Common stock, no par value, 100,000,000 shares authorized; 31,245,732 and 32,729,689 shares issued and outstanding
Accumulated other comprehensive loss
Retained earnings
Total shareholders’ equity
Total liabilities and shareholders’ equity
See accompanying notes to consolidated financial statements
Page - 43
December 31,
2023
December 25,
2022
61,885 $
252,538
28,894
11,676
354,993
104,906
192,985
35,465
84,114
10,525
49,819
53,841
12,735
899,383 $
56,401 $
80,120
439
44,866
11,902
10,371
204,099
151,649
35,205
49,434
1,123
441,510
—
1
(20,712)
478,584
457,873
899,383 $
72,054
314,275
32,530
11,353
430,212
95,823
213,734
25,842
93,784
16,205
50,823
75,185
17,800
1,019,408
76,644
92,237
1,137
50,005
11,963
10,889
242,875
201,005
26,213
50,601
2,399
523,093
—
1
(20,018)
516,332
496,315
1,019,408
$
$
$
$
Table of Contents
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
TRUEBLUE, INC.
(in thousands, except per share data)
Revenue from services
Cost of services
Gross profit
Selling, general and administrative expense
Depreciation and amortization
Goodwill and intangible asset impairment charge
Income (loss) from operations
Interest and other income (expense), net
Income (loss) before tax expense (benefit)
Income tax expense (benefit)
Net income (loss)
Net income (loss) per common share:
Basic
Diluted
Weighted average shares outstanding:
Basic
Diluted
Other comprehensive income (loss):
Foreign currency translation adjustment
Total other comprehensive income (loss), net of tax
Comprehensive income (loss)
2023
2022
2021
$
$
$
$
$
$
1,906,243 $
1,400,184
506,059
494,603
25,821
9,485
(23,850)
3,205
(20,645)
(6,472)
(14,173) $
(0.45) $
(0.45) $
31,317
31,317
(694) $
(694)
(14,867) $
2,254,184 $
1,652,040
602,144
500,686
29,273
—
72,185
1,231
73,416
11,143
62,273 $
1.89 $
1.86 $
32,889
33,447
(4,271) $
(4,271)
58,002 $
2,173,622
1,613,302
560,320
464,322
27,556
—
68,442
5,408
73,850
12,216
61,634
1.77
1.74
34,798
35,434
(919)
(919)
60,715
See accompanying notes to consolidated financial statements
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CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
TRUEBLUE, INC.
(in thousands)
Balances, December 27, 2020
Net income
Foreign currency translation adjustment
Purchases and retirement of common stock
Issuances under equity plans, including tax benefits
Stock-based compensation
Balances, December 26, 2021
Net income
Foreign currency translation adjustment
Purchases and retirement of common stock
Issuances under equity plans, including tax benefits
Stock-based compensation
Balances, December 25, 2022
Net loss
Foreign currency translation adjustment
Purchases and retirement of common stock
Issuances under equity plans, including tax benefits
Stock-based compensation
Balances, December 31, 2023
Common stock
Shares
Amount
Retained earnings
Accumulated other
comprehensive loss
Total
shareholders’
equity
35,493 $
—
—
(620)
(12)
—
34,861
—
—
(2,234)
103
—
32,730
—
—
(1,877)
393
—
31,246 $
1 $
—
—
—
—
—
1
—
—
—
—
—
1
—
—
—
—
—
1 $
452,017 $
61,634
—
(16,678)
(2,103)
13,943
508,813
62,273
—
(60,939)
(3,502)
9,687
516,332
(14,173)
—
(34,178)
(3,304)
13,907
478,584 $
(14,828) $
—
(919)
—
—
—
(15,747)
—
(4,271)
—
—
—
(20,018)
—
(694)
—
—
—
(20,712) $
437,190
61,634
(919)
(16,678)
(2,103)
13,943
493,067
62,273
(4,271)
(60,939)
(3,502)
9,687
496,315
(14,173)
(694)
(34,178)
(3,304)
13,907
457,873
See accompanying notes to consolidated financial statements
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Table of Contents
TRUEBLUE, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Cash flows from operating activities:
Net income (loss)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization
Goodwill and intangible asset impairment charge
Provision for credit losses
Stock-based compensation
Deferred income taxes
Non-cash lease expense
Other operating activities
Changes in operating assets and liabilities
Accounts receivable
Income taxes receivable and payable
Operating lease right-of-use asset
Other assets
Accounts payable and other accrued expenses
Other accrued wages and benefits
Deferred employer payroll taxes
Workers’ compensation claims reserve
Operating lease liabilities
Other liabilities
Net cash provided by operating activities
Cash flows from investing activities:
Capital expenditures
Payments for company-owned life insurance
Proceeds from company-owned life insurance
Purchases of restricted available-for-sale investments
Sales of restricted available-for-sale investments
Purchases of restricted held-to-maturity investments
Maturities of restricted held-to-maturity investments
Other
Net cash used in investing activities
Cash flows from financing activities:
Purchases and retirement of common stock
Net proceeds from employee stock purchase plans
Common stock repurchases for taxes upon vesting of restricted stock
Other
Net cash used in financing activities
Change in cash, cash equivalents and restricted cash reclassified to assets held-for-sale
Effect of exchange rate changes on cash, cash equivalents and restricted cash
Net change in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash, beginning of period
Cash, cash equivalents and restricted cash, end of period
Supplemental disclosure of cash flow information:
Cash paid (received) during the period for:
Interest
Income taxes
Operating lease liabilities
Non-cash transactions:
Property and equipment purchased but not yet paid
Right-of-use assets obtained in exchange for new operating lease liabilities
See accompanying notes to consolidated financial statements
Page - 46
2023
2022
2021
$
(14,173) $
62,273 $
61,634
25,821
9,485
4,972
13,907
(9,902)
12,591
(3,831)
56,761
(1,317)
—
31,366
(19,210)
(12,113)
—
(54,495)
(12,796)
7,688
34,754
(31,276)
(2,347)
1,662
—
—
(34,110)
33,749
—
(32,322)
(34,178)
856
(4,161)
(100)
(37,583)
(300)
(874)
(36,325)
135,631
99,306 $
1,031 $
5,171 $
15,799 $
3,404 $
12,526 $
29,273
—
4,462
9,687
3,933
12,920
7,862
34,765
(2,665)
118
(16,142)
(1,501)
(7,938)
—
(5,184)
(13,052)
1,692
120,503
(30,626)
—
—
—
—
(18,031)
27,712
—
(20,945)
(60,939)
980
(4,480)
(253)
(64,692)
—
(2,420)
32,446
103,185
135,631 $
1,123 $
9,980 $
15,964 $
4,502 $
9,637 $
27,556
—
6,493
13,943
752
14,446
(1,968)
(81,616)
1,602
8,080
(13,715)
16,425
34,581
(57,065)
701
(13,457)
2,048
20,440
(35,006)
(4,000)
832
(43)
7,333
(9,411)
23,935
140
(16,220)
(16,678)
1,135
(3,238)
(345)
(19,126)
—
(521)
(15,427)
118,612
103,185
1,425
9,773
16,590
3,949
11,878
$
$
$
$
$
$
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Description of business
TrueBlue, Inc. (the “company,” “TrueBlue,” “we,” “us” and “our”) is a leading provider of specialized workforce solutions that help clients achieve business growth and
improve productivity. We serve clients in a wide variety of industries through our PeopleReady segment which offers general, industrial and skilled trade contingent staffing,
our PeopleManagement segment which offers contingent, on-site industrial staffing and commercial driver services, and our PeopleScout segment which offers recruitment
process outsourcing (“RPO”), managed service provider (“MSP”) and talent advisory solutions.
Basis of presentation
The consolidated financial statements (“financial statements”) include the accounts of TrueBlue and all of its wholly-owned subsidiaries. Intercompany balances and
transactions have been eliminated in consolidation. The financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted
in the United States of America (“U.S. GAAP”).
Fiscal period end
The financial statements are presented on a 52/53-week fiscal year-end basis, with the last day of the fiscal year ending on the Sunday closest to the last day of December. In
fiscal years consisting of 53 weeks, the final quarter consists of 14 weeks, while in fiscal years consisting of 52 weeks, all quarters consist of 13 weeks. Our 2023 fiscal year
contained 53 weeks, with the 53rd week falling in the fiscal fourth quarter, while our 2022 and 2021 fiscal years contained 52 weeks.
Use of estimates
Preparing financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities,
revenues and expenses. Estimates in our financial statements include, but are not limited to, acquisition method of accounting, allowance for credit losses, estimates for asset
and goodwill impairments, stock-based awards, assumptions underlying self-insurance reserves, contingent legal, regulatory and government incentive liabilities, and the
potential outcome of future tax consequences of events that have been recognized in the financial statements. Actual results and outcomes may differ from these estimates and
assumptions due to risks and uncertainties, including uncertainty in the current economic environment.
Revenue recognition
We account for a contract when both parties to the contract have approved the contract, the rights of the parties are identified, payment terms are identified, the contract has
commercial substance, and collectability of consideration is probable. Consolidated revenues are presented net of intercompany eliminations. Additionally, consolidated
revenues are recognized net of any discounts, allowances and sales incentives, including rebates. Revenues are recognized over time using an output measure, as the control of
the promised services is transferred to the client, in an amount that reflects the consideration we expect to be entitled to in exchange for those services. The majority of our
contracts are short-term in nature as they are filling the contingent staffing needs of our clients, or include termination clauses that allow either party to cancel within a short
notice period, without cause. Revenue includes billable travel and other reimbursable costs and are reported net of sales, use or other transaction taxes collected from clients and
remitted to taxing authorities. Payment terms vary by client and the services offered, however we do not extend payment terms beyond one year. Substantially all of our
contracts include payment terms of 90 days or less.
We primarily record revenue on a gross basis as a principal on the Consolidated Statements of Operations and Comprehensive Income (Loss) based upon the following key
factors:
• We maintain the direct contractual relationship with the client and are responsible for fulfilling the service promised to the client.
• We demonstrate control over the services provided to our clients.
• We establish our billing rates.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Contingent staffing
We recognize revenue for our PeopleReady and PeopleManagement contingent staffing services over time as services are performed in an amount that reflects the consideration
we expect to be entitled to collect in exchange for our services, which is generally calculated as hours worked multiplied by the agreed-upon hourly bill rate. The client
simultaneously receives and consumes the benefits of the services as they are provided. We incur immaterial costs to obtain our contingent staffing contracts. We have
concluded that the amortization period for these costs would be less than one year and have elected to use the practical expedient to expense these costs as incurred. Also, we
incur immaterial costs to fulfill some contingent staffing contracts, which are expensed as incurred.
Human resource outsourcing
We primarily recognize revenue for our PeopleScout outsourced recruitment of permanent employees over time in an amount that reflects the consideration we expect to be
entitled to in exchange for our services. The client simultaneously receives and consumes the benefits of the services as they are provided. We recognize revenue using an output
method, generally based on the number of hires made during each month multiplied by the agreed-upon rate per hire. We incur immaterial costs to obtain our outsourced
recruitment of permanent employee contracts. We have concluded that the amortization period for these costs would be less than one year and have elected to use the practical
expedient to expense these costs as incurred. Also, we incur immaterial costs to fulfill these contracts, which are expensed as incurred.
Unsatisfied performance obligations
As a practical expedient, we do not disclose the value of unsatisfied performance obligations for (i) contracts with an expected original duration of one year or less and (ii)
contracts for which we recognize revenue at an amount for which we have the right to invoice for services performed.
Cost of services
Cost of services refers to costs directly associated with the earning of revenue and primarily includes wages, payroll taxes, benefits, and workers’ compensation expenses for our
associates and employees involved with the delivery of our services. These costs differ fundamentally from selling, general and administrative ("SG&A") expenses in that they
arise specifically from the action of providing services to clients, whereas SG&A costs are incurred regardless of whether or not we provide service to our clients.
Advertising costs
Advertising costs consist primarily of print, digital and other promotional activities. We expense advertisements as of the first date the advertisements take place. Advertising
expenses included in SG&A were $9.2 million, $12.5 million and $9.7 million in fiscal 2023, 2022 and 2021, respectively.
Cash, cash equivalents and marketable securities
We consider all highly liquid instruments purchased with an original maturity of three months or less at date of purchase to be cash equivalents. Investments with original
maturities greater than three months are classified as marketable securities. We do not buy and hold securities principally for the purpose of selling them in the near future. Our
investment policy is focused on the preservation of capital, liquidity and return. From time to time, we may sell certain securities but the objective is not to generate profits on
short-term differences in price. We manage our cash equivalents and marketable securities as a single portfolio of highly liquid securities. We have not experienced any losses
related to these balances, and we believe credit risk to be minimal.
Accounts receivable and allowance for credit losses
Accounts receivable are recorded at the invoiced amount. We establish an estimate for the allowance for credit losses resulting from the failure of our clients to make required
payments by applying an aging schedule to pools of assets with similar risk characteristics. Based on an analysis of the risk characteristics of our clients and associated
receivables, we have concluded our pools are as follows:
•
•
PeopleReady and Centerline Drivers (“Centerline”) have a large, diverse set of clients, generally with frequent, low dollar invoices due to the daily nature of the work
we perform. This results in high turnover in accounts receivable.
PeopleManagement On-Site has a smaller number of clients, and follows a contractual billing schedule. The invoice amounts are higher than that of PeopleReady and
Centerline, with longer payment terms.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
•
PeopleScout has a smaller number of clients, and generally sends invoices on a consolidated basis for a client. Invoice amounts are generally higher for PeopleScout than
for PeopleManagement On-Site, with similar payment terms.
When specific clients are identified as no longer sharing the same risk profile as their current pool, they are removed from the pool and evaluated separately. The credit loss
rates applied to each aging category by pool are based on current collection efforts, historical collection trends, write-off experience, client credit risk, current economic data and
forecasted information. The allowance for credit loss is reviewed and represents our best estimate of the amount of expected credit losses. Past due or delinquent balances are
identified based upon a review of aged receivables performed by collections and operations. Past due balances are written off when it is probable the receivable will not be
collected. Changes in the allowance for credit losses are recorded in SG&A expense on the Consolidated Statements of Operations and Comprehensive Income (Loss).
Restricted cash and investments
Cash and investments pledged as collateral and restricted for use in workers’ compensation insurance programs are included as restricted cash and investments on our
Consolidated Balance Sheets. Our investments consist of highly rated investment grade debt securities, which at the time of purchase, were rated A1/P1 or higher for short-term
securities and A or higher for long-term securities, by nationally recognized rating organizations. We have the positive intent and ability to hold our restricted investments until
maturity in accordance with our investment policy and, accordingly, all of our restricted investments are classified as held-to-maturity. In the event that an investment is
downgraded below our investment policy criteria, it may be replaced with a new security.
We establish an allowance for credit loss for our held-to-maturity debt securities using a discounted cash flow method including a probability of default rate based on the
issuer’s credit rating.
We have an agreement with American International Group, Inc. and the Bank of New York Mellon Corporation creating a trust (“Trust”), which holds the majority of our
collateral obligations under existing workers’ compensation insurance policies. Placing the collateral in the Trust allows us to manage the investment of the assets and provides
greater protection of those assets.
Fair value of financial instruments and investments
Fair value is the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in
an orderly transaction between market participants on the measurement date. For assets and liabilities recorded or disclosed at fair value on a recurring basis, we determine fair
value based on the following:
•
•
•
Level 1: Inputs are valued using quoted market prices in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices in active markets for identical assets and liabilities are used.
Level 3: Assets and liabilities with unobservable inputs.
The carrying value of our cash and cash equivalents and restricted cash approximates fair value because of the short-term maturity of those instruments. We hold money market
funds to support our workers’ compensation program, which are carried at fair value based on quoted market prices in active markets for identical assets. There are inherent
limitations when estimating the fair value of financial instruments, and the fair values reported are not necessarily indicative of the amounts that would be realized in current
market transactions.
The carrying value of our accounts receivable, accounts payable and other accrued expenses, and accrued wages and benefits approximates fair value due to their short-term
nature. We hold company-owned life insurance policies that fund our deferred compensation liability. Company-owned life insurance policies are carried at cash surrender
value, which approximates fair value. We hold certain restricted investments to collateralize our workers’ compensation programs, which are classified as held-to-maturity and
carried at amortized cost on our Consolidated Balance Sheets. We determine the fair value of these restricted investments based on comparisons to similar financial instruments
or financial models based on observable inputs to arrive at consensus pricing.
Annual and interim impairment tests may subject our reporting units with goodwill and other intangible assets to nonrecurring fair value measurement. We typically determine
the fair value of these items using internal estimates and assumptions that market participants would use in pricing the asset.
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Property and equipment
Property and equipment are recorded at cost. We compute depreciation using the straight-line method over the estimated useful lives of the assets as follows:
Buildings
Software
Computers, furniture and equipment
Years
40
3 - 8
3 - 10
Leasehold improvements are amortized over the shorter of the related non-cancelable lease term or their estimated useful lives. Non-capital expenditures associated with
opening new locations are expensed as incurred. When property is retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and
any resulting gain or loss, net of proceeds, is reflected on the Consolidated Statements of Operations and Comprehensive Income (Loss).
Repairs and maintenance costs are charged directly to expense as incurred. Major renewals or replacements that substantially extend the useful life of an asset are capitalized
and depreciated.
Costs associated with the acquisition or development of software for internal use, including internal and external labor costs, are capitalized and amortized over the expected
useful life of the software, from three to eight years. Capitalization of costs begins when the preliminary project stage is complete, when management authorizes and commits to
funding the project, and it is probable the project will be completed for the intended use. Capitalization of costs ends when the project is substantially complete and ready for its
intended use. A subsequent addition, modification or upgrade to internal-use software is capitalized to the extent that it enhances the software’s functionality or extends its
useful life. Software maintenance and training costs are expensed in the period incurred.
Leases
We conduct our PeopleReady branch operations primarily from leased locations. We also lease office spaces for our other operations, centralized support functions, office
equipment, and machinery for use at client sites. Many leases require variable payments for common area maintenance, sales tax, and repairs and maintenance, and insurance
coverage, in addition to base rent. The variable portion of these lease payments is not included in our right-of-use assets or lease liabilities. Rather, variable payments, other than
those dependent upon an index or rate, along with any non-lease components of a contract, are expensed when the obligation for those payments is incurred and are included in
SG&A expense on our Consolidated Statements of Operations and Comprehensive Income (Loss). We determine if an arrangement meets the definition of a lease at inception,
at which time we also perform an analysis to determine whether the lease qualifies as operating or financing. The terms of our lease agreements generally range from three to
five years, with some as high as 15 years and many containing options to renew. Under the majority of our leases, we have the right to terminate the lease with 90 days’ notice.
Operating leases are included in operating lease right-of-use assets, net and current and long-term operating lease liabilities on our Consolidated Balance Sheets. Lease expense
for operating leases is recognized on a straight-line basis over the lease term and is included in SG&A expense on our Consolidated Statements of Operations and
Comprehensive Income (Loss).
Lease right-of-use assets and lease liabilities are measured using the present value of future minimum lease payments over the lease term at commencement date. The right-of-
use asset also includes any lease payments made on or before the commencement date of the lease, less any lease incentives received. As the rate implicit in the lease is not
readily determinable in our leases, we use our incremental borrowing rates based on the information available at the lease commencement date in determining the present value
of lease payments. The incremental borrowing rates used are estimated based on what we would be required to pay for a collateralized loan over a similar term. We have lease
agreements with lease and non-lease components, which are accounted for as a single lease component.
For leases with an initial non-cancelable lease term of less than one year and no option to purchase, we have elected not to recognize the lease on our Consolidated Balance
Sheets and instead recognize rent payments on a straight-line basis over the lease term within SG&A expense on our Consolidated Statements of Operations and Comprehensive
Income (Loss). In addition, for those leases where the right to cancel the lease is available to both TrueBlue (as the lessee) and the lessor, the lease term is the initial non-
cancelable period plus the notice period, which is typically 90 days, and not greater than one year.
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Goodwill and indefinite-lived intangible assets
We evaluate goodwill and indefinite-lived intangible assets for impairment on an annual basis as of the first day of our fiscal second quarter, or whenever events or
circumstances make it more likely than not that an impairment may have occurred. These events or circumstances could include a significant change in general economic
conditions, deterioration in industry environment, changes in cost factors, declining operating performance indicators, legal factors, competition, client engagement, changes in
the carrying amount of net assets, sale or disposition of a significant portion of a reporting unit, or a sustained decrease in share price. We monitor the existence of potential
impairment indicators throughout the fiscal year.
Goodwill
We test for goodwill impairment at the reporting unit level. We consider our operating segments to be our reporting units for goodwill impairment testing. Our operating
segments with remaining goodwill are PeopleReady, PeopleManagement Centerline, PeopleScout RPO and PeopleScout MSP.
When evaluating goodwill for impairment, we may first assess qualitative factors to determine whether it is more likely than not the fair value of a reporting unit is less than its
carrying amount. Qualitative factors include macroeconomic conditions, industry and market conditions and overall company financial performance. If, after assessing the
totality of events and circumstances, we determine that it is more likely than not the fair value of the reporting unit is greater than its carrying amount, the quantitative
impairment test is unnecessary.
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 loss 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.
We performed our annual impairment test for goodwill as of the first day of our fiscal second quarter of 2023. Refer to Note 5: Goodwill and Intangible Assets for additional
details on the impairment charges, valuation methodologies, and inputs used in the fair value measurements.
Indefinite-lived intangible assets
We have indefinite-lived intangible assets related to our Staff Management and PeopleScout trade names. We evaluate our indefinite-lived intangible assets for impairment on
an annual basis as of the first day of our fiscal second quarter, or whenever events or circumstances make it more likely than not that an impairment may have occurred. These
events or circumstances could include significant change in general economic conditions, deterioration in industry environment, changes in cost factors, declining operating
performance indicators, legal factors, competition, client engagement, or sale or disposition of a significant portion of the business. We monitor the existence of potential
impairment indicators throughout the fiscal year.
When evaluating indefinite-lived intangible assets for impairment, we may first assess qualitative factors to determine whether it is more likely than not the fair value of the
indefinite-lived intangible is less than its carrying amount. Qualitative factors include macroeconomic conditions, industry and market conditions and overall company financial
performance. If, after assessing the totality of events and circumstances, we determine that it is more likely than not the fair value of the indefinite-lived intangible asset is
greater than its carrying amount, the quantitative impairment test is unnecessary.
The quantitative impairment test, if necessary, utilizes the relief from royalty method to determine the fair value of each of our trade names. If the carrying value exceeds the
fair value, we recognize an impairment loss in an amount equal to the excess, not to exceed the carrying value.
We performed our annual impairment test for indefinite-lived intangible assets as of the first day of our fiscal second quarter of 2023. Refer to Note 5: Goodwill and Intangible
Assets for additional details on the impairment charges, valuation methodologies, and inputs used in the fair value measurements.
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Other long-lived assets
We have finite-lived intangible assets related to acquired company customers, trade names/trademarks, and technology, as well as purchased trade names/trademarks. We
capitalize implementation costs incurred in a cloud computing arrangement that is a service contract. Capitalized implementation costs are recorded in both prepaid expenses
and other current assets, and in other assets, net on our Consolidated Balance Sheets, depending on the timing of future amortization. The related amortization expense is
recorded in SG&A expense on our Consolidated Statements of Operations and Comprehensive Income (Loss) on a straight-line basis over the fixed, non-cancelable term of the
associated arrangement plus any reasonably certain renewal periods. License fees incurred during the development period are expensed as incurred.
Other long-lived assets are tested for impairment whenever events or changes in circumstances indicate that the carrying value of the assets may not be recoverable. Other long-
lived assets include property and equipment, lease right-of-use assets, finite-lived intangible assets and capitalized implementation costs for cloud computing arrangements that
are service contracts. There were no material other long-lived asset impairment charges recorded during the fiscal year ended December 31, 2023.
Workers’ compensation claims reserves
We maintain reserves for workers’ compensation claims using actuarial estimates of the future cost of claims and related expenses. These estimates include claims that have
been reported but not settled and claims that have been incurred but not reported. These reserves, which reflect potential liabilities to be paid in future periods based on
estimated payment patterns, are discounted to estimated net present value using discount rates based on average returns of “risk-free” United States of America (“U.S.”)
Treasury instruments available during the year in which the liability was incurred, which are evaluated on a quarterly basis. We evaluate the reserves regularly throughout the
year and make adjustments accordingly. If the actual cost of such claims and related expenses exceeds the amounts estimated, additional reserves may be required. Changes in
reserve estimates are reflected in cost of services on the Consolidated Statements of Operations and Comprehensive Income (Loss) in the period when the changes are made.
Our workers’ compensation reserves include estimated expenses related to claims above our self-insured limits (“excess claims”) and a corresponding receivable for the
insurance coverage on excess claims based on the contractual policy agreements we have with insurance companies. We discount this reserve and corresponding receivable to
its estimated net present value using the discount rates based on average returns of “risk-free” U.S. Treasury instruments available during the year in which the liability was
incurred. We also establish an allowance for credit loss for our insurance receivables using a probability of default and losses expected upon default method, with the probability
of default rate based on the third-party insurance carrier’s credit rating. Changes in the allowance for credit losses are recorded in cost of services on the Consolidated
Statements of Operations and Comprehensive Income (Loss).
Management evaluates the adequacy of the workers’ compensation reserves in conjunction with an independent quarterly actuarial assessment. Factors considered in
establishing and adjusting these reserves include, among other things:
•
•
•
•
•
•
changes in medical and time loss (“indemnity”) costs;
changes in mix between medical only and indemnity claims;
regulatory and legislative developments impacting benefits and settlement requirements;
type and location of work performed;
impact of safety initiatives; and
positive or adverse development of claims.
Legal contingency reserves and regulatory liabilities
We are subject to compliance audits by federal, state, local and international authorities relating to a variety of regulations including wage and hour laws, taxes, workers’
compensation, immigration, and safety. In addition, we are subject to legal proceedings in the ordinary course of our operations. We establish accruals for contingent legal and
regulatory liabilities when management determines that it is probable that a legal claim will result in an adverse outcome and the amount of liability can be reasonably
estimated. We evaluate our reserve regularly throughout the year and make adjustments as needed. If the actual outcome of these matters is different than expected, an
adjustment is charged or credited to expense in the period the outcome occurs or the estimate changes.
Income taxes and related valuation allowance
We account for income taxes by recording taxes payable or receivable for the current year and deferred tax assets and liabilities for the future tax consequences of events that
have been recognized in our financial statements or tax returns. These expected future tax consequences are measured based on provisions of tax law as currently enacted; the
effects of future changes in tax
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
laws are not anticipated. We recognize deferred tax assets to the extent we believe it is more likely than not the asset will be realized. We consider available positive and
negative evidence when making such determination, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning
strategies, carryback potential if permitted, and results of recent operations. When appropriate, we record a valuation allowance against deferred tax assets to reduce deferred tax
assets to the amount that is more likely than not to be realized.
Our liability for unrecognized tax benefits is recorded in other long-term liabilities on our Consolidated Balance Sheets. We recognize interest and penalties related to
unrecognized tax benefits within income tax expense (benefit) on the accompanying Consolidated Statements of Operations and Comprehensive Income (Loss). Accrued
interest and penalties are included within other long-term liabilities on the Consolidated Balance Sheets.
A significant driver of fluctuations in our effective income tax rate is the federal Work Opportunity Tax Credit (“WOTC”). WOTC is designed to encourage hiring of workers
from certain disadvantaged targeted categories and is generally calculated as a percentage of wages over a twelve month period up to worker maximum by targeted category.
Based on historical results and business trends, we estimate the amount of WOTC we expect to earn related to wages of the current year. However, the estimate is subject to
variation because: 1) a small percentage of our associates qualify for one or more of the many targeted categories; 2) the targeted categories are subject to different incentive
credit rates and limitations; 3) credits fluctuate depending on economic conditions and qualified worker retention periods; and 4) state and federal offices can delay their credit
certification processing and have inconsistent certification rates. We recognize an adjustment to prior year hiring credits if credits certified by government offices differ from
original estimates. The WOTC program has been approved through the end of 2025.
Deferred compensation plan
We offer a non-qualified defined contribution plan (the “Plan”) to eligible employees. Participating employees may elect to defer and contribute a portion of their eligible
compensation. The Plan allows participants to direct their account based on the investment options determined by TrueBlue and offers discretionary matching contributions.
The current portion of the deferred compensation liability is included in accrued wages and benefits on our Consolidated Balance Sheets. The total deferred compensation
liability is funded through company-owned life insurance policies recorded in restricted cash and investments on our Consolidated Balance Sheets. The carrying value of
company-owned life insurance policies is based on the cash surrender value of the policies, which approximates fair value. Changes in the cash surrender value, premiums
incurred, and proceeds received relating to the company-owned life insurance policies are recorded in SG&A expense on our Consolidated Statements of Operations and
Comprehensive Income (Loss). Prior to fiscal 2022, we also held mutual funds and money market funds to support the deferred compensation liability, which were measured at
fair value, with unrealized gains and losses recognized in SG&A expense, while realized gains and losses were recorded in interest and other income (expense), net on our
Consolidated Statements of Operations and Comprehensive Income (Loss). As of December 26, 2021, all of the mutual funds and money market funds had been converted into
company-owned life insurance policies.
Stock-based compensation
Compensation expense for restricted stock-based awards is generally recognized on a straight-line basis over the vesting period, based on our stock’s fair market value on the
grant date. For restricted stock-based awards with non-market performance conditions, compensation expense is recognized over each vesting period based on assessment of the
likelihood of meeting these conditions. Compensation expense for our employee stock purchase plan (“ESPP”) is based on the estimated fair value on the date of grant, using
the Black-Scholes valuation model, and is recognized on a straight-line basis over the offering period, which is over a calendar month. We recognize forfeitures as they occur.
In the event that there are changes to an employee’s requisite service period based on terms existing in the original award agreement, any unrecognized compensation expense is
recognized prospectively over the updated remaining requisite service period. In the case that terms of an existing stock award agreement are modified, the sum of any
unrecognized compensation expense as of the modification date and the modification charge will be expensed on a straight-line basis over the new requisite service period. The
modification charge is the incremental amount of the fair value of the award before the modification and the fair value after the modification.
Foreign currency
Our financial statements are reported in U.S. dollars. Assets and liabilities of foreign subsidiaries with non-U.S. dollar functional currencies are translated to U.S. dollars at the
exchange rates in effect on the balance sheet date. Revenues and expenses for each subsidiary are translated to U.S. dollars using a weighted average rate for the relevant
reporting period.
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Translation adjustments resulting from this process are included, net of tax, in accumulated other comprehensive loss on our Consolidated Statements of Operations and
Comprehensive Income (Loss), when applicable.
Revenue and expense transactions denominated in a currency other than our functional currency are converted to our functional currency using the exchange rate on the
transaction date. Gains or losses resulting from these transactions are included in interest and other income (expense), net on our Consolidated Statements of Operations and
Comprehensive Income (Loss).
Purchases and retirement of our common stock
We purchase our common stock under a program authorized by our Board of Directors (“Board”). Under applicable Washington State law, shares purchased are not displayed
separately as treasury stock on the Consolidated Balance Sheets and are treated as authorized but unissued shares. It is our accounting policy to first record these purchases and
the related excise tax as a reduction to our common stock account. Once the common stock account has been reduced to a nominal balance, remaining purchases are recorded as
a reduction to our retained earnings. Furthermore, activity in our common stock account related to stock-based compensation is also recorded to retained earnings until such
time as the reduction to retained earnings due to stock repurchases has been recovered.
Net income (loss) per share
Basic net income (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares outstanding during the period. Diluted net
income (loss) per share is calculated by dividing net income (loss) by the weighted average number of common shares and potential common shares outstanding during the
period. Potential common shares include the dilutive effects of vested and non-vested restricted stock, performance share units, and shares issued under the ESPP, except where
their inclusion would be anti-dilutive.
Anti-dilutive shares primarily include non-vested restricted stock and performance share units for which the sum of the assumed proceeds, including unrecognized
compensation expense, exceeds the average stock price during the periods presented.
Segments
Our operating segments are based on the organizational structure for which financial results are regularly reviewed by our chief operating decision-maker, our Chief Executive
Officer, to determine resource allocation and assess performance. We evaluate performance based on segment revenue and segment profit. Segment revenue is net of
intercompany eliminations. Segment profit includes revenue, related cost of services, and ongoing operating expenses directly attributable to the reportable segment. Segment
profit 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.
Government assistance
There is limited U.S. GAAP accounting guidance for for-profit business entities that receive government assistance that is not in the form of a loan, an income tax credit or
revenue from a contract with a client. We are permitted to utilize other accounting standards, and have elected to analogize to International Financial Reporting Standards
(“IFRS”), specifically International Accounting Standards (“IAS”) 20, Accounting for Government Grants and Disclosures of Government Assistance. Following IAS 20, we
recognize government assistance on a systematic basis over the periods in which we recognize the related costs for which the grant is intended to compensate, but only when
there is reasonable assurance we will comply with all conditions attached to the grant and there is reasonable assurance the assistance will be received. We have interpreted
“reasonable assurance” to mean “probable,” as defined in loss contingencies guidance in U.S. GAAP.
On March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief and Economic Security Act ("CARES Act"), which among other things, provided payroll tax
credits to eligible employers to address the negative economic impacts of the coronavirus pandemic (“COVID-19”) outbreak. Also during fiscal 2020, the Canadian and
Australian governments enacted subsidy programs to help employers offset a portion of wage and rent expenses for a limited period. During fiscal 2021, Canadian subsidies
reduced operating expenses by $3.9 million on our Consolidated Statement of Operations and Comprehensive Income (Loss). Based on the reasonable assurance criteria, we
have deferred recognition of certain benefits of $27.6 million and $21.8 million as of December 31, 2023 and December 25, 2022, respectively until recognition becomes
probable, and we have included these amounts in accrued wages and benefits on our Consolidated Balance Sheets.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Additionally, under the CARES Act, we were allowed to delay payments for the employer portion of social security taxes (6.2% of taxable wages) incurred between March 27,
2020 and December 31, 2020, for both our temporary associates and permanent employees. Deferred employer payroll taxes of $59.9 million were paid in full on September 15,
2021.
Business combinations
We account for our business acquisitions using the acquisition method of accounting. The fair value of the net assets acquired and the results of the acquired business are
included in the financial statements from the acquisition date forward. We are required to make estimates and assumptions that affect the reported amounts of assets and
liabilities and results of operations during the reporting period. Estimates are used in accounting for, among other things, the fair value of acquired net operating assets, property
and equipment, intangible assets, useful lives of property and equipment, and amortizable lives for acquired intangible assets. Any excess of the purchase consideration over the
identified fair value of the assets and liabilities acquired is recognized as goodwill. Goodwill acquired in business combinations is assigned to the reporting unit(s) expected to
benefit from the combination as of the acquisition date. We estimate the fair value of acquired assets and liabilities as of the date of the acquisition based on information
available at that time. The initial valuation of these tangible and identifiable intangible assets and liabilities is subject to further management review and may change between
the preliminary allocation and the final allocation.
All acquisition-related costs are expensed as incurred and recorded in SG&A expense on the Consolidated Statements of Operations and Comprehensive Income (Loss).
Additionally, we recognize liabilities for anticipated restructuring costs that will be necessary due to the elimination of excess capacity, redundant assets or unnecessary
functions, and record them as SG&A expense on the Consolidated Statements of Operations and Comprehensive Income (Loss).
Recently issued accounting pronouncements not yet adopted
Segments
In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, “Segment Reporting (Topic 280):
Improvements to Reportable Segment Disclosures,” which requires disclosure of incremental segment information on an interim and annual basis, primarily regarding
significant segment expenses and information used to assess segment performance. This ASU is effective for fiscal years beginning after December 15, 2023 (2024 for
TrueBlue), and interim periods beginning after December 15, 2024 (Q1 2025 for TrueBlue). Retrospective application is required for all periods presented. We are currently
evaluating the impact of this ASU on our required disclosures.
Income Taxes
In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740) - Improvements to Income Tax Disclosures,” which requires enhancements and further
transparency to certain income tax disclosures, primarily to the tax rate reconciliation and income taxes paid. This ASU is effective for fiscal years beginning after December
15, 2024 (2025 for TrueBlue), on a prospective basis with retrospective application permitted. We are currently evaluating the impact of this ASU on our required disclosures.
There are no other new accounting pronouncements, issued or effective during the fiscal year, that are expected to have a significant impact on our financial statements and
related disclosures.
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NOTE 2: FAIR VALUE MEASUREMENT
Assets measured at fair value on a recurring basis
Our assets measured at fair value on a recurring basis consisted of the following:
(in thousands)
Cash and cash equivalents
Restricted cash and cash equivalents
Cash, cash equivalents and restricted cash (1)
Municipal debt securities
Corporate debt securities
Agency mortgage-backed securities
U.S. government and agency securities
Restricted investments classified as held-to-maturity (2)
(in thousands)
Cash and cash equivalents
Restricted cash and cash equivalents
Cash, cash equivalents and restricted cash (1)
Municipal debt securities
Corporate debt securities
Agency mortgage-backed securities
U.S. government and agency securities
Restricted investments classified as held-to-maturity (2)
December 31, 2023
Quoted prices in
active markets for
identical assets (level
1)
Significant other
observable inputs
(level 2)
Total fair value
Significant unobservable
inputs (level 3)
61,885 $
37,421
99,306 $
31,804 $
74,912
13,235
962
120,913 $
61,885 $
37,421
99,306 $
— $
—
—
—
— $
— $
—
— $
31,804 $
74,912
13,235
962
120,913 $
—
—
—
—
—
—
—
—
December 25, 2022
Quoted prices in
active markets for
identical assets (level
1)
Significant other
observable inputs
(level 2)
Total fair value
Significant unobservable
inputs (level 3)
72,054 $
63,577
135,631 $
42,431 $
76,097
48
949
119,525 $
72,054 $
63,577
135,631 $
— $
—
—
—
— $
— $
—
— $
42,431 $
76,097
48
949
119,525 $
—
—
—
—
—
—
—
—
$
$
$
$
$
$
$
$
(1) Cash, cash equivalents and restricted cash include money market funds and deposits.
(2) Refer to Note 3: Restricted Cash and Investments for additional details on our held-to-maturity debt securities.
Assets measured at fair value on a nonrecurring basis
In addition to assets that are recorded at fair value on a recurring basis, annual and interim impairment tests may subject our reporting units with goodwill and other intangible
assets to nonrecurring fair value measurement. We performed our annual impairment tests for goodwill and indefinite-lived intangible assets as of the first day of our fiscal
second quarter of 2023. Refer to Note 5: Goodwill and Intangible Assets for additional details on the impairment charges, valuation methodologies, and inputs used in the fair
value measurements.
For our 2023 annual goodwill impairment test, the fair value of each reporting unit was estimated using a weighting of the income and market approaches, except for
PeopleScout MSP, which relied only on the income approach. The various inputs to these fair value models are considered Level 3. As a result of the test, goodwill with a
carrying value of $9.7 million associated with the PeopleScout MSP reporting unit was impaired, and an impairment charge of $8.9 million was recognized on our Consolidated
Statements of Operations and Comprehensive Income (Loss) for the fiscal year ended December 31, 2023.
For our 2023 annual indefinite-lived intangible asset impairment test, the fair value of our trade names/trademarks were estimated utilizing the relief from royalty method. The
various inputs to this fair value model are considered Level 3. As a result of the test, one of our trade names/trademarks with a carrying value of $3.9 million was written down
to its fair value, and an impairment charge of $0.6 million was recognized on our Consolidated Statements of Operations and Comprehensive Income (Loss) for the fiscal year
ended December 31, 2023.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
There were no goodwill or intangible asset impairment charges recorded during fiscal 2022 or 2021. Refer to Note 5: Goodwill and Intangible Assets for additional details on the
impairment charge and valuation methodologies.
NOTE 3: RESTRICTED CASH AND INVESTMENTS
The following is a summary of the carrying value of our restricted cash and investments:
(in thousands)
Cash collateral held by insurance carriers
Cash and cash equivalents held in Trust
Investments held in Trust
Company-owned life insurance policies
Other restricted cash and cash equivalents
Total restricted cash and investments
Held-to-maturity
December 31,
2023
December 25,
2022
$
$
23,598 $
12,703
122,659
32,905
1,120
192,985 $
29,567
30,857
123,678
26,479
3,153
213,734
Restricted cash and investments include collateral that has been provided or pledged to insurance carriers for workers’ compensation and state workers’ compensation programs.
Our insurance carriers and certain state workers’ compensation programs require us to collateralize a portion of our workers’ compensation obligation. The collateral typically
takes the form of cash and cash equivalents and highly rated investment grade securities, primarily in debt and asset-backed securities. The majority of our collateral obligations
are held in a Trust.
The amortized cost and estimated fair value of our held-to-maturity investments held in Trust, aggregated by investment category as of December 31, 2023 and December 25,
2022, were as follows:
(in thousands)
Municipal debt securities
Corporate debt securities
Agency mortgage-backed securities
U.S. government and agency securities
Total held-to-maturity investments
(in thousands)
Municipal debt securities
Corporate debt securities
Agency mortgage-backed securities
U.S. government and agency securities
Total held-to-maturity investments
$
$
$
$
Amortized cost
December 31, 2023
Gross unrealized gains Gross unrealized losses
4 $
(242) $
32,042 $
76,578
13,039
1,000
122,659 $
333
196
—
533 $
(1,999)
—
(38)
(2,279) $
Amortized cost
42,892 $
79,736
50
1,000
123,678 $
December 25, 2022
Gross unrealized gains Gross unrealized losses
2 $
4
—
—
6 $
(3,643)
(2)
(51)
(4,159) $
(463) $
Fair value
31,804
74,912
13,235
962
120,913
Fair value
42,431
76,097
48
949
119,525
The amortized cost and fair value by contractual maturity of our held-to-maturity investments are as follows:
(in thousands)
Due in one year or less
Due after one year through five years
Due after five years through ten years
Due after ten years
Total held-to-maturity investments
December 31, 2023
Amortized cost
Fair value
$
$
27,414 $
82,847
5,818
6,580
122,659 $
27,118
81,146
5,922
6,727
120,913
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Actual maturities may differ from contractual maturities because the issuers of certain debt securities have the right to call or prepay their obligations without penalty. We have
no significant concentrations of counterparties in our held-to-maturity investment portfolio.
Deferred compensation investments and company-owned life insurance policies
We hold company-owned life insurance policies to support our deferred compensation liability. During 2021, we also held mutual funds and money market funds, which were
converted into company-owned life insurance policies by the end of fiscal 2021. During the fiscal year ended December 31, 2023, we received proceeds from company-owned
life insurance policies of $1.7 million, of which $1.4 million was in excess of the cash surrender value of the related policies and recognized in SG&A expense on our
Consolidated Statements of Operations and Comprehensive Income (Loss). The unrealized gains and losses related to investments still held at December 31, 2023,
December 25, 2022 and December 26, 2021, included in SG&A expense on our Consolidated Statements of Operations and Comprehensive Income (Loss), were as follows:
(in thousands)
Unrealized gains (losses)
2023
2022
2021
$
4,383 $
(5,841) $
1,061
NOTE 4: SUPPLEMENTAL BALANCE SHEET INFORMATION
Accounts receivable allowance for credit losses
(in thousands)
Beginning balance
Current period provision
Write-offs
Foreign currency translation
Ending balance
Prepaid expenses and other current assets
(in thousands)
Prepaid software agreements
Other prepaid expenses
Assets held-for-sale
Other current assets
Prepaid expenses and other current assets
Other current liabilities
(in thousands)
Contract liabilities
Liabilities held-for-sale
Other current liabilities
Other current liabilities
2023
2022
2021
3,212 $
4,972
(6,184)
5
2,005 $
6,687 $
4,462
(7,917)
(20)
3,212 $
2,921
6,493
(2,713)
(14)
6,687
$
$
December 31,
2023
December 25,
2022
8,435 $
9,355
4,845
6,259
28,894 $
9,994
9,455
—
13,081
32,530
December 31,
2023
December 25,
2022
1,844 $
1,998
6,529
10,371 $
3,812
—
7,077
10,889
$
$
$
$
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Property and equipment
(in thousands)
Buildings and land
Software
Computers, furniture and equipment
Construction in progress
Gross property and equipment
Less accumulated depreciation
Property and equipment, net
December 31,
2023
December 25,
2022
$
$
46,818 $
201,235
38,706
2,670
289,429
(184,523)
104,906 $
49,359
150,198
48,670
31,958
280,185
(184,362)
95,823
Capitalized software costs, net of accumulated depreciation, were $73.3 million and $28.1 million as of December 31, 2023 and December 25, 2022, respectively, excluding
amounts in construction in progress. Construction in progress consists primarily of purchased and internally-developed software.
Depreciation expense of property and equipment totaled $20.6 million, $23.5 million and $20.9 million for the fiscal years ended December 31, 2023, December 25, 2022 and
December 26, 2021, respectively.
Assets and liabilities held-for-sale
During fiscal 2023, as part of our strategic initiative to simplify our organizational structure and sharpen our focus on core operations, management, with approval from the
Board, began actively marketing Labour Ready Temporary Services, Ltd. (“LRTS”). LRTS is a wholly-owned subsidiary of the company, and provides contingent staffing
solutions to clients in Canada under the PeopleReady brand. The operational results of LRTS are included as part of our PeopleReady operating segment and reportable segment
for all years presented. LRTS is not an individually significant component of the company.
As of December 31, 2023, all criteria for classifying this entity as held-for-sale were met, and did not result in recognition of a loss on our Consolidated Statements of
Operations and Comprehensive Income (Loss) for fiscal 2023. The assets and liabilities classified as held-for-sale as of December 31, 2023 are presented within other current
assets and other current liabilities, respectively, on our Consolidated Balance Sheets. The following represents the carrying amounts of the major classes of assets and liabilities
included as part of the disposal group classified as held-for-sale:
(in thousands)
Current assets held-for-sale:
Cash and cash equivalents
Accounts receivable, net
Prepaid expenses and other current assets
Income tax receivable
Property and equipment, net
Deferred income taxes, net
Goodwill (1)
Operating lease right-of-use assets, net
Total current assets held-for-sale
Current liabilities held-for-sale:
Accounts payable and other accrued expenses
Accrued wages and benefits
Operating lease liabilities
Other current liabilities
Total current liabilities held-for-sale
(1) Goodwill was allocated based on the relative fair value of LRTS to the total PeopleReady reporting unit prior to being reclassified as held-for-sale.
Page - 59
December 31,
2023
300
1,919
80
201
156
23
1,020
1,146
4,845
289
427
1,180
102
1,998
$
$
$
$
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The expected divestiture of our PeopleReady operations in Canada does not represent a strategic shift, nor do we expect it to have a major effect on the company’s operations
and financial results and, therefore will not be reported as discontinued operations in our Consolidated Balance Sheets or Consolidated Statements of Operations and
Comprehensive Income (Loss). A sale is expected to be finalized during the fiscal first quarter of 2024.
Subsequent event
On February 20, 2024, the company entered into a definitive share purchase agreement to sell LRTS to Vertical Staffing Resources. The transaction is expected to close during
the fiscal first quarter of 2024, subject to customary closing conditions.
NOTE 5: GOODWILL AND INTANGIBLE ASSETS
Goodwill
The following table reflects changes in the carrying amount of goodwill during the period by reportable segments:
(in thousands)
Balance at
December 26, 2021
Goodwill before impairment
Accumulated impairment charge
Goodwill, net
Foreign currency translation
Balance at
December 25, 2022
Goodwill before impairment
Accumulated impairment charge
Goodwill, net
Goodwill reclassified as held-for-sale (1)
Impairment charge
Foreign currency translation
Balance at
December 31, 2023
Goodwill before impairment
Accumulated impairment charge
Goodwill, net
PeopleReady
PeopleScout
PeopleManagement
Total company
$
$
106,304 $
(46,210)
60,094
—
106,304
(46,210)
60,094
(1,020)
—
—
105,284
(46,210)
59,074 $
142,710 $
(109,757)
32,953
(754)
141,956
(109,757)
32,199
—
(8,885)
235
142,191
(118,642)
23,549 $
81,092 $
(79,601)
1,491
—
81,092
(79,601)
1,491
—
—
—
81,092
(79,601)
1,491 $
330,106
(235,568)
94,538
(754)
329,352
(235,568)
93,784
(1,020)
(8,885)
235
328,567
(244,453)
84,114
(1) Refer to Note 4: Supplemental Balance Sheet Information for further discussion.
We performed our annual impairment test as of the first day of our fiscal second quarter of 2023, for our reporting segments with remaining goodwill: PeopleReady;
PeopleManagement Centerline; PeopleScout RPO; and PeopleScout MSP. The fair value of each reporting unit was estimated using a weighting of the income and market
valuation approaches. The income approach applied a fair value methodology to each reporting unit based on discounted cash flows. This analysis requires significant
judgments, including estimation of future cash flows, which is dependent on internally-developed forecasts of revenue and profitability, 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. The weighted average cost of capital used in our most recent impairment test ranged from 13.0% to 13.5%. We
also applied 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.
The income and market approaches were equally weighted in our most recent annual impairment test, except for PeopleScout MSP which relied only on the income approach.
The combined fair values for all reporting units were then reconciled to our aggregate market value of our shares of common stock on the date of valuation, while considering a
reasonable control premium. We consider a reporting unit’s fair value to be substantially in excess of its carrying value at a 20% premium or greater. Based on our most recent
impairment test, all of our reporting units’ fair values were substantially in excess of their respective carrying values, except for PeopleScout MSP.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
As a result of our 2023 annual impairment test, we concluded that the carrying amount of the PeopleScout MSP reporting unit exceeded its fair value and we recorded a non-
cash goodwill impairment charge of $8.9 million, which was included in goodwill and intangible asset impairment charge on our Consolidated Statements of Operations and
Comprehensive Income (Loss) for the fiscal year ended December 31, 2023. The PeopleScout MSP goodwill impairment was related to our revised internal revenue projections,
which anticipated the current year declining trends would continue into future periods. These projections were updated based on our then-current outlook and recent industry
analysis, which indicated that our business would underperform due to a strategic lack of investment in technology within an increasingly competitive market. The remaining
goodwill balance for the PeopleScout MSP reporting unit was $0.8 million as of December 31, 2023.
Additionally, following performance of the annual impairment test, we did not identify any events or conditions that make it more likely than not that an additional impairment
may have occurred. Accordingly, no further impairment loss was recognized during the fiscal year ended December 31, 2023.
Intangible assets
Finite-lived intangible assets
The following table presents our purchased finite-lived intangible assets:
(in thousands)
Finite-lived intangible assets (1):
Customer relationships
Trade names/trademarks
Total finite-lived intangible assets
(1) Excludes assets that are fully amortized.
December 31, 2023
December 25, 2022
Gross carrying
amount
Accumulated
amortization
Net
carrying
amount
Gross carrying
amount
Accumulated
amortization
Net
carrying
amount
$
$
94,270 $
1,653
95,923 $
(90,149) $
(649)
(90,798) $
4,121 $
1,004
5,125 $
94,134 $
1,569
95,703 $
(84,994) $
(504)
(85,498) $
9,140
1,065
10,205
Amortization expense of our finite-lived intangible assets was $5.2 million, $5.7 million and $6.7 million for the fiscal years ended December 31, 2023, December 25, 2022 and
December 26, 2021, respectively.
The following table provides the estimated future amortization of finite-lived intangible assets as of December 31, 2023:
(in thousands)
2024
2025
2026
2027
2028
Thereafter
Total future amortization
$
$
4,049
309
118
118
118
413
5,125
We did not identify any events or conditions that make it more likely than not that an impairment of our finite-lived intangible assets may have occurred for the fiscal year
ended December 31, 2023.
Indefinite-lived intangible assets
We held indefinite-lived trade names/trademarks of $5.4 million and $6.0 million as of December 31, 2023 and December 25, 2022, respectively, related to businesses within
our PeopleScout and PeopleManagement segments.
As a result of our 2023 annual impairment test, we concluded that the carrying amount of a trade name/trademark related to the PeopleManagement segment exceeded its
estimated fair value and 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 fiscal year ended December 31, 2023. The charge was primarily the result of an increase in the discount
rate, as well as lower projected revenues given our then-current outlook. The remaining balance for this trade name/trademark was $3.3 million as of December 31, 2023.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Additionally, following performance of the annual impairment test, we did not identify any additional events or conditions that make it more likely than not that an additional
impairment may have occurred. Accordingly, no further impairment loss was recognized during the fiscal year ended December 31, 2023.
There were no goodwill or intangible asset impairment charges recorded during fiscal 2022 or 2021.
NOTE 6: WORKERS' COMPENSATION INSURANCE AND RESERVES
We provide workers’ compensation insurance for our associates and permanent employees. The majority of our current workers’ compensation insurance policies cover claims
for a particular event above our $5.0 million deductible limit, on a “per occurrence” basis. This results in our being substantially self-insured.
Our workers’ compensation reserve for claims below the deductible limit is discounted to its estimated net present value. The discount rates used to estimate net present value
are based on average returns of “risk-free” U.S. Treasury instruments available during the year in which the liability was incurred and the weighted average duration of the
payments against the self-insured claims. Payments made against self-insured claims are made over a weighted average period of approximately 5.5 years as of December 31,
2023. The weighted average discount rate was 2.4% and 2.0% at December 31, 2023 and December 25, 2022, respectively.
The following table presents a reconciliation of the undiscounted workers’ compensation reserve to the discounted workers’ compensation reserve for the periods presented:
(in thousands)
Undiscounted workers’ compensation reserve
Less discount on workers’ compensation reserve
Workers’ compensation reserve, net of discount
Less current portion
Long-term portion
December 31,
2023
December 25,
2022
$
$
214,611 $
18,096
196,515
44,866
151,649 $
270,468
19,458
251,010
50,005
201,005
Payments made against self-insured claims were $45.0 million, $39.4 million and $41.9 million for the fiscal years ended December 31, 2023, December 25, 2022 and
December 26, 2021, respectively.
Our workers’ compensation reserve includes estimated expenses related to claims above our self-insured limits (“excess claims”), and we record a corresponding receivable for
the insurance coverage on excess claims based on the contractual policy agreements we have with insurance carriers. We discount this reserve and corresponding receivable to
its estimated net present value using the discount rates based on average returns of “risk-free” U.S. Treasury instruments available during the year in which the liability was
incurred and the weighted average duration of the payments against the excess claims. The claim payments are made and the corresponding reimbursements from our insurance
carriers are received over an estimated weighted average period of approximately 18 years. The rates used to discount excess claims incurred during the fiscal years ended
December 31, 2023 and December 25, 2022 were 4.1% and 3.0%, respectively. The discounted workers’ compensation reserve for excess claims were $54.9 million and $76.7
million, as of December 31, 2023 and December 25, 2022, respectively. The discounted receivables from insurance companies, net of valuation allowance, were $ 53.8 million
and $75.2 million as of December 31, 2023 and December 25, 2022, respectively.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The table below presents the estimated future payout of our discounted workers’ compensation claims reserve for the next five years and thereafter as of December 31, 2023:
(in thousands)
2024
2025
2026
2027
2028
Thereafter
Sub-total
Excess claims (1)
Total
$
$
44,866
23,494
13,764
9,193
6,705
43,566
141,588
54,927
196,515
(1) Estimated expenses related to claims above our self-insured limits for which we have a corresponding receivable for the insurance coverage based on contractual policy agreements.
Workers’ compensation cost consists primarily of changes in self-insurance reserves net of changes in discount, monopolistic jurisdictions’ premiums, insurance premiums and
other miscellaneous expenses. Workers’ compensation cost of $ 20.1 million, $29.8 million and $39.8 million was recorded in cost of services on our Consolidated Statements
of Operations and Comprehensive Income (Loss) for the fiscal years ended December 31, 2023, December 25, 2022 and December 26, 2021, respectively.
NOTE 7: LONG-TERM DEBT
We have a revolving credit agreement with Bank of America, N.A., Wells Fargo Bank, N.A., PNC Bank, N.A., KeyBank, N.A. and HSBC Bank USA, N.A., which provides
for a revolving line of credit of up to $300.0 million, and matures on March 16, 2025 (“Revolving Credit Facility”). We have an option to increase the amount to $450.0 million,
subject to lender approval. Included in the Revolving Credit Facility is a $30.0 million sub-limit for “Swingline” loans and a $125.0 million sub-limit for letters of credit. At
December 31, 2023, $6.2 million was utilized by outstanding standby letters of credit, leaving $293.8 million unused under the Revolving Credit Facility, which is constrained
by our most restrictive covenant making $85.9 million available for additional borrowing. At December 25, 2022, $7.2 million was utilized by outstanding standby letters of
credit.
Under the terms of the Revolving Credit Facility, we pay a variable rate of interest on funds borrowed under the revolving line of credit in excess of the Swingline loans, based
on the Secured Overnight Financing Rate (“SOFR”), plus an adjustment of 0.10%, plus an applicable spread between 1.25% and 3.50%. Alternatively, at our option, we may
pay interest based on a base rate plus an applicable spread between 0.25% and 1.50%. The base rate is the greater of the prime rate (as announced by Bank of America), or the
federal funds rate plus 0.50%. The applicable spread is determined by the consolidated leverage ratio, as defined under the Revolving Credit Facility.
Under the terms of the Revolving Credit Facility, we are required to pay a variable rate of interest on funds borrowed under the Swingline loan based on the base rate plus
applicable spread between 0.25% and 1.50%, as described above.
A commitment fee between 0.25% and 0.50% is applied against the Revolving Credit Facility’s unused borrowing capacity, with the specific rate determined by the
consolidated leverage ratio, as defined in the second amendment to our credit agreement. Letters of credit are priced at a margin between 1.00% and 3.25%, plus a fronting fee
of 0.50%.
Obligations under the Revolving Credit Facility are guaranteed by TrueBlue and material U.S. domestic subsidiaries, and are secured by substantially all of the assets of
TrueBlue and material U.S. domestic subsidiaries. The second amendment to our credit agreement contains customary representations and warranties, events of default, and
affirmative and negative covenants, including, among others, financial covenants.
The following financial covenants, as defined in the second amendment to our credit agreement, were in effect as of December 31, 2023:
•
Consolidated leverage ratio less than 3.00, defined as our funded indebtedness divided by trailing twelve months consolidated EBITDA, as defined in the second
amendment to our credit agreement. As of December 31, 2023, our consolidated leverage ratio was 0.20.
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Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
•
Consolidated fixed charge coverage ratio greater than 1.25, defined as the trailing twelve months bank-adjusted cash flow divided by cash interest expense. As of
December 31, 2023, our consolidated fixed charge coverage ratio was 15.16.
As of December 31, 2023, and throughout fiscal 2023, we were in compliance with all effective covenants related to the Revolving Credit Facility.
Subsequent event
On February 9, 2024, we entered into an amended and restated revolving credit agreement with Bank of America, N.A., PNC Bank, N.A., HSBC Bank USA, N.A., Wells Fargo
Bank, N.A., and Key Bank, N.A. dated as of February 9, 2024 (the “2024 Revolving Credit Facility”). The 2024 Revolving Credit Facility provides for a revolving line of credit
of up to $255.0 million, and matures on February 9, 2029. We have an option to increase the amount to $405.0 million, subject to lender approval. Included in the 2024
Revolving Credit Facility is a $25.0 million sub-limit for “Swingline” loans and a $25.0 million sub-limit for letters of credit.
NOTE 8: COMMITMENTS AND CONTINGENCIES
Workers’ compensation commitments
We have provided our insurance carriers and certain states with commitments in the form and amounts listed below:
(in thousands)
Cash collateral held by workers’ compensation insurance carriers
Cash and cash equivalents held in Trust
Investments held in Trust
Letters of credit (1)
Surety bonds (2)
Total collateral commitments
December 31,
2023
December 25,
2022
$
$
17,737 $
12,703
122,659
6,077
20,725
179,901 $
23,716
30,857
123,678
6,077
20,806
205,134
(1) We have agreements with certain financial institutions to issue letters of credit as collateral.
(2) Our surety bonds are issued by independent insurance companies on our behalf and bear annual fees based on a percentage of the bond, which are determined by each independent surety
carrier. These fees do not exceed 2.0% of the bond amount, subject to a minimum charge. The terms of these bonds are subject to review and renewal every one to four years and most
bonds can be canceled by the sureties with as little as 60 days’ notice.
Operating leases
We have contractual commitments in the form of operating leases related to office space, vehicles and equipment. Our leases have remaining terms of up to 13 years. Most
leases include one or more options to renew, which can extend the lease term up to 10 years. The exercise of lease renewal options is at our sole discretion. Typically, at the
commencement of a lease, we are not reasonably certain we will exercise renewal options, and accordingly they are not considered in determining the initial lease term. Our
lease agreements do not contain any material residual value guarantees or material restrictive covenants. We rent or sublease real estate to third parties in limited circumstances.
Operating lease costs were comprised of the following:
(in thousands)
Operating lease costs
Short-term lease costs (1)
Other lease costs, net (2)
Total lease costs
(1) Excludes expenses related to leases with a lease term of less than one month.
(2) Other lease costs include variable lease costs, net of rental and sublease income.
Page - 64
2023
2022
$
$
14,710 $
6,915
3,748
25,373 $
14,994
7,487
4,501
26,982
Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Other information related to our operating leases was as follows:
Weighted average remaining lease term in years
Weighted average discount rate
December 31,
2023
7.6
4.9%
December 25,
2022
8.3
4.9%
Future non-cancelable minimum lease payments under our operating lease commitments as of December 31, 2023, are as follows for each of the next five years and thereafter:
(in thousands)
2024
2025
2026
2027
2028
Thereafter
Total undiscounted future non-cancelable minimum lease payments (1)
Less: Imputed interest (2)
Less: Present value of operating lease liabilities held-for-sale
Present value of lease liabilities
$
$
14,961
12,465
9,639
7,558
5,882
24,589
75,094
12,578
1,180
61,336
(1) Operating lease payments exclude approximately $0.2 million of legally binding minimum lease payments for leases signed but not yet commenced.
(2) Amount necessary to reduce net minimum lease payments to present value calculated using our incremental borrowing rates, which are consistent with the lease terms at adoption date (for
those leases in existence as of the adoption date of the new lease standard) or lease inception (for those leases entered into after the adoption date).
Purchase obligations
Purchase obligations include agreements to purchase goods and services in the ordinary course of business that are enforceable, legally binding and specify all significant terms.
Purchase obligations do not include agreements that are cancellable without significant penalty. We had $ 37.4 million of purchase obligations as of December 31, 2023, of
which $17.7 million are expected to be paid in 2024, $16.1 million in 2025, and the remaining $3.6 million in 2026.
Legal contingencies and developments
We are involved in various proceedings arising in the normal course of conducting business. We believe the liabilities included in our financial statements reflect the probable
loss that can be reasonably estimated and are immaterial. We also believe that the aggregate range of reasonably possible losses for the Company's exposure in excess of the
amount accrued is expected to be immaterial to the Company. It remains possible that despite our current belief, material differences in actual outcomes or changes in
management's evaluation or predictions could arise that could have a material effect on the Company's financial condition, results of operations or cash flows.
NOTE 9: SHAREHOLDERS' EQUITY
Common stock
Shares of common stock outstanding include shares of unvested restricted stock. Unvested restricted stock included in reportable shares outstanding was 0.1 million and 0.2
million shares as of December 31, 2023 and December 25, 2022, respectively.
On October 16, 2019, our Board authorized a $100.0 million addition to our share repurchase program for our outstanding common stock (“2019 authorization”). On January
31, 2022, our Board authorized a $100.0 million addition to our share repurchase program for our outstanding common stock (“2022 authorization”). The share repurchase
program does not obligate us to acquire any particular amount of common stock and does not have an expiration date. We may choose to purchase shares in the open market,
from individual holders, through an accelerated share repurchase agreement or otherwise.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Under the 2019 authorization, we repurchased shares during fiscal 2021 using $16.7 million, and during fiscal 2022 using the remaining $50.0 million. The 2019 authorization
was fully utilized as of April 2022. Under the 2019 authorization, we repurchased and retired a total of 4.7 million shares of our common stock over three fiscal years, at an
average share price of $21.09. Under the 2022 authorization we repurchased shares using $33.9 million during fiscal 2023 and $11.0 million during fiscal 2022.
The details of shares repurchased in the open market as part of the authorizations described above are as follows:
Amount authorized (in
millions)
Remaining available
(in millions)
$
$
100.0 $
100.0 $
—
55.1
2023
2022
2021
—
1,877
1,877
1,800
434
2,234
620
—
620
Shares repurchased
(in thousands)
Year ended
Authorization
2019 Authorization
2022 Authorization
Preferred stock
We have authorized 20.0 million shares of blank check preferred stock. The blank check preferred stock is issuable in one or more series, each with such designations,
preferences, rights, qualifications, limitations and restrictions as our Board may determine and set forth in supplemental resolutions at the time of issuance, without further
shareholder action. The initial series of blank check preferred stock authorized by the Board was designated as Series A Preferred Stock. We had no outstanding shares of
preferred stock in any of the years presented.
NOTE 10: STOCK-BASED COMPENSATION
We record stock-based compensation expense for restricted stock awards, restricted stock units, performance share units (collectively, “stock-based awards”), and shares
purchased under an employee stock purchase plan (“ESPP”).
Our 2016 Omnibus Incentive Plan (“Incentive Plan”), effective May 11, 2016, applies to directors, officers, employees and consultants of the Company and permits the
granting of nonqualified and incentive stock options, restricted stock awards, performance share units, restricted stock units and stock appreciation rights. At the time of
adoption, there were 1.5 million shares available for issuance. Effective May 9, 2018, an additional 1.8 million shares were authorized under the Incentive Plan. Additionally,
effective May 11, 2023, an additional 0.7 million shares were authorized under the Incentive Plan.
Stock-based awards
Under the Incentive Plan, stock-based awards are granted to the Board, executive officers and key employees. Stock-based awards granted to executive officers and key
employees generally vest annually over three or four years. Restricted stock units granted to members of our Board vest in the fourth quarter of the same fiscal year in which the
shares are granted. Receipt of the vested shares may be deferred until after a director leaves the Board. Compensation expense related to these grants is calculated based on the
grant-date fair value. We recognize compensation expense on a straight-line basis over the vesting period, net of forfeitures.
Performance share units are only granted to certain executive officers. Vesting of performance share units is contingent upon the achievement of return on equity, profitability,
or individual performance goals at the end of each performance period, which is generally three years. Each performance share unit is equivalent to one share of common stock.
Compensation expense for these grants is calculated based on the grant-date market value of our stock and is recognized ratably over the performance period only for the
performance share units expected to vest. Our estimate of the performance units expected to vest is reviewed and adjusted as appropriate each quarter.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Stock-based award activity for the fiscal year ended December 31, 2023, was as follows:
(shares in thousands)
Non-vested at beginning of period
Granted
Vested
Forfeited
Non-vested at the end of the period
Shares
Weighted-average grant-date
fair value
1,436 $
1,137 $
(761) $
(236) $
1,576 $
21.93
17.77
20.70
19.59
19.88
The following table summarizes the weighted-average grant-date fair value per share for stock-based awards granted:
Weighted-average grant-date fair value
2023
2022
2021
$17.77
$25.51
$20.21
As of December 31, 2023, total estimated unrecognized stock-based compensation expense was $14.2 million. We expect to recognize this expense over a weighted average
remaining period of 1.7 years. The total fair value of stock-based awards that vested during fiscal 2023, 2022 and 2021 was $12.2 million, $13.9 million and $20.6 million,
respectively.
Employee Stock Purchase Plan
At the time of adoption in 2010, there was 1.0 million shares of common stock authorized for purchase under our ESPP. Effective May 11, 2023, an additional 1.0 million
shares of common stock were authorized for purchase under our ESPP. The plan allows eligible employees to contribute up to 10% of their earnings toward the monthly
purchase of the company’s common stock. The employee’s purchase price is 85% of the lesser of the company’s common stock price on either the first day or the last day of
each calendar month. We consider our ESPP to be a component of stock-based compensation and accordingly we recognize compensation expense over the requisite service
period for stock purchases made under the plan. The requisite service period begins on the enrollment date and ends on the purchase date, the duration of which is one month.
The following table summarizes transactions under our ESPP:
(shares in thousands)
Shares issued
Average price per share
Stock-based compensation expense
2023
2022
2021
$
63
13.58 $
52
18.85 $
44
19.77
Total stock-based compensation expense for fiscal 2023, 2022 and 2021, which is included in SG&A expense on our Consolidated Statements of Operations and
Comprehensive Income (Loss), was $13.9 million, $9.7 million and $13.9 million, respectively. The related tax benefit was $2.9 million, $2.0 million and $2.9 million for fiscal
2023, 2022 and 2021, respectively.
NOTE 11: DEFINED CONTRIBUTION PLANS
We offer both qualified and non-qualified defined contribution plans to eligible employees. Participating employees may elect to defer and contribute a portion of their eligible
compensation. The plans offer discretionary matching contributions. The liability for the non-qualified plan was $41.0 million and $31.3 million as of December 31, 2023 and
December 25, 2022, respectively, of which $5.8 million and $5.1 million have been included in accrued wages and benefits on our Consolidated Balance Sheets. The net
expense related to our qualified and non-qualified deferred compensation plans totaled $4.1 million, $5.1 million and $6.5 million for fiscal 2023, 2022 and 2021, respectively,
and is recorded in SG&A expense on our Consolidated Statements of Operations and Comprehensive Income (Loss). The net expense includes changes in cash surrender value
of the company-owned life insurance policies held to support the deferred compensation liability, premiums incurred for and proceeds received from company-owned life
insurance, unrealized gains (losses) on deferred compensation liabilities, as well as our discretionary matching contributions. Refer to Note 3: Restricted Cash and Investments
for additional details on deferred compensation assets.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12: INCOME TAXES
The provision for income taxes is comprised of the following:
(in thousands)
Current taxes:
Federal
State
Foreign
Total current taxes
Deferred taxes:
Federal
State
Foreign
Total deferred taxes
Provision for income taxes
2023
2022
2021
$
329 $
582
2,817
3,728
(8,109)
(1,383)
(708)
(10,200)
$
(6,472) $
1,360 $
1,397
4,635
7,392
3,434
345
(28)
3,751
11,143 $
4,925
4,067
2,393
11,385
617
88
126
831
12,216
The items accounting for the difference between income taxes computed at the statutory federal income tax rate and income taxes reported on the Consolidated Statements of
Operations and Comprehensive Income (Loss) are as follows:
(in thousands, except percentages)
Income tax expense (benefit) based on statutory rate
Increase (decrease) resulting from:
State income taxes, net of federal benefit
Hiring tax credits, net
CARES Act
Uncertain tax positions
Non-deductible goodwill impairment charge
Non-deductible and non-taxable items
Foreign taxes
Other, net
Total income tax expense (benefit)
2023
%
2022
%
2021
%
$
(4,335)
21.0 % $
15,417
21.0 % $
15,508
21.0 %
(1,384)
(4,997)
—
(206)
2,287
1,178
587
398
(6,472)
$
6.7
24.2
—
1.0
(11.1)
(5.7)
(2.9)
(1.9)
31.3 % $
3,008
(7,911)
—
(1,336)
—
1,377
654
(66)
11,143
4.1
(10.8)
—
(1.8)
—
1.9
0.9
(0.1)
15.2 % $
3,548
(7,582)
(468)
(391)
—
589
211
801
12,216
4.8
(10.3)
(0.6)
(0.5)
—
0.8
0.3
1.0
16.5 %
Our effective tax rate for fiscal 2023 was 31.3%. The difference between the statutory federal income tax rate of 21.0% and our effective income tax rate results primarily from
tax benefits from hiring tax credits and state income taxes, partially offset by the non-deductible goodwill impairment charge and other non-deductible and non-taxable items.
Of the total goodwill and intangible asset impairment charge of $9.5 million recorded during fiscal 2023, $8.9 million (tax effect of $2.3 million) related to goodwill from a
stock acquisition, and accordingly was not deductible for tax purposes.
U.S. and foreign components of income (loss) before tax expense (benefit) was as follows:
(in thousands)
U.S.
Foreign
Income (loss) before tax expense (benefit)
2023
2022
2021
$
$
(27,773) $
7,128
(20,645) $
56,964 $
16,452
73,416 $
61,433
12,417
73,850
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The components of deferred tax assets and liabilities were as follows:
(in thousands)
Deferred tax assets:
Allowance for credit losses
Accounts payable and other accrued expenses
Net operating loss carryforwards
Tax credit carryforwards
Accrued wages and benefits
Deferred compensation
Lease liabilities
Other
Total
Valuation allowance
Total deferred tax asset, net of valuation allowance
Deferred tax liabilities:
Prepaid expenses, deposits and other current assets
Lease right-of-use assets
Depreciation and amortization
Workers’ compensation
Total deferred tax liabilities
Deferred income taxes, net
December 31,
2023
December 25,
2022
$
590 $
11,242
7,535
16,030
7,311
12,356
17,378
371
72,813
(834)
71,979
(655)
(14,052)
(21,958)
(192)
(36,857)
35,122 $
$
869
9,641
1,243
9,801
8,877
8,641
16,025
368
55,465
(2,152)
53,313
(583)
(12,909)
(14,100)
(347)
(27,939)
25,374
Since deferred tax assets and liabilities attributable to different jurisdictions cannot be offset, a deferred tax liability of $0.3 million is included in other long-term liabilities on
our Consolidated Balance Sheets as of December 31, 2023.
Based on our deferred tax asset realizability analysis, we have determined that a valuation allowance is appropriate for certain tax credits and net operating losses (“NOLs”) that
we expect will not be utilized within the permitted carryforward periods as of December 31, 2023 and December 25, 2022. Changes to deferred taxes related to foreign currency
translation were immaterial for fiscal 2023, 2022 and 2021. The following table summarizes our credit carryforwards and NOLs along with their respective valuation allowance
as of December 31, 2023:
(in thousands)
Year-end tax attributes:
Federal WOTCs
State NOLs
Federal NOLs
Foreign alternative minimum tax credits
Total
The activity related to the income tax valuation allowance was as follows:
(in thousands)
Beginning balance
Charged to expense
Release of allowance
Ending balance
Carryover tax
benefit
Valuation allowance
Expected
benefit
Year expiration begins
$
$
16,030 $
2,808
4,727
287
23,852 $
— $
(834)
—
—
(834) $
16,030
1,974
4,727
287
23,018
2039
Various
Indefinite
2033
2023
2022
2021
$
$
2,152 $
(58)
(1,260)
834 $
2,368 $
(216)
—
2,152 $
3,072
26
(730)
2,368
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following table summarizes the activity related to our unrecognized tax benefits:
(in thousands)
Beginning balance
Increases for tax positions related to the current year
Decreases for tax positions related to prior years
Reductions due to lapsed statute of limitations
Ending balance
2023
2022
2021
830 $
124
—
(362)
592 $
1,881 $
53
—
(1,104)
830 $
1,930
188
(52)
(185)
1,881
$
$
As of December 31, 2023, our liability for unrecognized tax benefits was $0.6 million. If recognized, $0.5 million would impact our effective tax rate. We do not believe the
amounts of unrecognized tax benefits will significantly increase or decrease within 12 months of the fiscal year ended December 31, 2023. In general, the tax years 2020
through 2022 remain open to examination by the major taxing jurisdictions where we conduct business.
Interest and penalties accrued related to the unrecognized tax benefits noted above were immaterial as of December 31, 2023.
NOTE 13: NET INCOME (LOSS) PER SHARE
Diluted common shares were calculated as follows:
(in thousands, except per share data)
Net income (loss)
Weighted average number of common shares used in basic net income (loss) per common share
Dilutive effect of non-vested stock-based awards
Weighted average number of common shares used in diluted net income (loss) per common share
Net income (loss) per common share:
Basic
Diluted
Anti-dilutive shares
$
$
$
2023
2022
2021
(14,173) $
62,273 $
61,634
31,317
—
31,317
(0.45) $
(0.45) $
1,343
32,889
558
33,447
1.89 $
1.86 $
394
34,798
636
35,434
1.77
1.74
36
As we reported a loss for the fiscal year ended December 31, 2023, all potentially dilutive securities were antidilutive and accordingly, basic net loss per share and diluted net
loss per share were equal.
NOTE 14: SEGMENT INFORMATION
Segment information
Our operating segments and reportable segments are described below:
Our PeopleReady reportable segment provides blue-collar, contingent staffing through the PeopleReady operating segment. PeopleReady provides on-demand and skilled labor
in a broad range of industries that include construction, transportation, manufacturing, retail, hospitality and renewable energy.
Our PeopleScout reportable segment provides high-volume, permanent employee recruitment process outsourcing, employer branding services and management of outsourced
labor service providers through the following operating segments, which we have aggregated into one reportable segment in accordance with U.S. GAAP:
•
•
PeopleScout RPO: Outsourced recruitment of permanent employees on behalf of clients and employer branding services; and
PeopleScout MSP: Management of multiple third-party staffing vendors on behalf of clients.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Our PeopleManagement reportable segment provides contingent labor and outsourced industrial workforce solutions, primarily on-site at the client’s facility, through the
following operating segments, which we have aggregated into one reportable segment in accordance with U.S. GAAP:
•
•
PeopleManagement On-Site: On-site management and recruitment for the contingent industrial workforce of manufacturing, warehousing and distribution facilities; and
PeopleManagement Centerline: Recruitment and management of contingent and dedicated commercial drivers to the transportation and distribution industries.
The following table presents our revenue disaggregated by major source and segment and a reconciliation of segment revenue from services to total company revenue:
(in thousands)
Revenue from services:
Contingent staffing
PeopleReady
PeopleManagement
Human resource outsourcing
PeopleScout
Total company
The following table presents a reconciliation of segment profit to income (loss) before tax expense (benefit):
(in thousands)
Segment profit:
PeopleReady
PeopleManagement
PeopleScout
Total segment profit
Corporate unallocated
Third-party processing fees for hiring tax credits
Amortization of software as a service assets
Goodwill and intangible asset impairment charge
Gain on deferred compensation assets
PeopleReady technology upgrade costs
Executive leadership transition costs
COVID-19 government assistance, net
Other benefits (costs)
Depreciation and amortization
Income (loss) from operations
Interest and other income (expense), net
Income (loss) before tax expense (benefit)
2023
2022
2021
1,096,318 $
580,591
1,272,852 $
663,814
229,334
1,906,243 $
317,518
2,254,184 $
1,270,928
639,741
262,953
2,173,622
2023
2022
2021
26,606 $
6,963
26,922
60,491
(31,507)
(253)
(4,117)
(9,485)
—
(1,342)
(5,788)
(525)
(5,503)
(25,821)
(23,850)
3,205
(20,645) $
87,743 $
15,811
44,771
148,325
(31,326)
(594)
(2,985)
—
—
(7,935)
1,422
—
(5,449)
(29,273)
72,185
1,231
73,416 $
82,398
13,196
36,163
131,757
(27,937)
(734)
(2,709)
—
(2,897)
(1,300)
(232)
4,222
(4,172)
(27,556)
68,442
5,408
73,850
$
$
$
$
Asset information by reportable segment is not presented since we do not manage our segments on a balance sheet basis.
Domestic and international revenue
Our international operations are primarily in Canada, the United Kingdom, and Australia. Revenue by region was as follows:
(in thousands, except percentages)
United States
International operations
Total revenue from services
2023
1,750,427
155,816
1,906,243
$
$
%
91.8 % $
8.2
100.0 % $
2022
2,073,596
180,588
2,254,184
%
92.0 % $
8.0
100.0 % $
2021
2,017,529
156,093
2,173,622
%
92.8 %
7.2
100.0 %
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Concentrations of client risk
No single client represented more than 10.0% of total company revenue for fiscal 2023, 2022 or 2021. Client concentration for our reportable segments was as follows:
•
•
•
No single client represented 10.0% or more of our PeopleReady reportable segment revenue for fiscal 2023, 2022, or 2021.
One client represented 11.8%, 13.1% and 10.9% of our PeopleScout reportable segment revenue for fiscal 2023, 2022 and 2021, respectively.
One client represented 12.3% and 10.6% of our PeopleManagement reportable segment revenue for fiscal 2023 and 2022, respectively. No single client represented
10.0% or more of our PeopleManagement reportable segment revenue for fiscal 2021.
Property and equipment located in international operations was approximately 3.5% and 4.6% of total property and equipment, net as of December 31, 2023 and December 25,
2022, respectively.
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Item 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
Not applicable.
Item 9A.
CONTROLS AND PROCEDURES
Disclosure controls and procedures
Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of
our disclosure controls and procedures as required by Rule 13a-15(b) of the Securities Exchange Act of 1934, as amended as of the end of the period covered by this report.
Based on that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective as of December 31,
2023.
Report of management on internal control over financial reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process to
provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with accounting
principles generally accepted in the United States of America. Internal control over financial reporting includes maintaining records that in reasonable detail accurately and
fairly reflect our transactions and disposition of assets; providing reasonable assurance that transactions are recorded as necessary to permit preparation of our financial
statements in accordance with accounting principles generally accepted in the United States of America; providing reasonable assurance that receipts and expenditures are made
only in accordance with management and director authorization; and providing reasonable assurance that unauthorized acquisition, use or disposition of company assets that
could have a material effect on our financial statements would be prevented or detected on a timely basis. Because of its inherent limitations, internal control over financial
reporting is not intended to provide absolute assurance that a misstatement of our financial statements would be prevented or detected.
Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework and criteria established in Internal Control -
Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission. This evaluation included review of the documentation of
controls, evaluation of the design effectiveness of controls, testing of the operating effectiveness of controls and a conclusion on this evaluation. Based on this evaluation,
management concluded that our internal control over financial reporting was effective as of December 31, 2023. Our internal control over financial reporting as of
December 31, 2023 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in their report which is included herein.
There were no material changes in our internal control over financial reporting during the quarter ended December 31, 2023 that have materially affected, or are reasonably
likely to materially affect, our internal control over financial reporting.
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of TrueBlue, Inc.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of TrueBlue, Inc. and subsidiaries (the “Company”) as of December 31, 2023, based on criteria established in
Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company
maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated
Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as
of and for the year ended December 31, 2023, of the Company and our report dated February 21, 2024, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over
financial reporting, included in the accompanying Report of Management on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the
Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with
respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk,
and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those
policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the
company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;
and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material
effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to
future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures
may deteriorate.
/s/ Deloitte & Touche, LLP
Seattle, Washington
February 21, 2024
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Item 9B.
OTHER INFORMATION
Trading plans
During the fiscal fourth quarter ended December 31, 2023, none of our directors or executive officers adopted or terminated a “Rule 10b5-1 trading arrangement” or a “non-
Rule 10b5-1 trading arrangement,” as such terms are defined in paragraphs (a) and (c), respectively, of Item 408 of Regulation S-K.
Item 9C.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
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PART III
Item 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Information regarding our directors and nominees for directorship is presented under the heading “Proposal 1. Election of Directors” in our definitive proxy statement for use in
connection with the 2024 Annual Meeting of Shareholders (the “Proxy Statement”) to be filed within 120 days after our fiscal year ended December 31, 2023, and is
incorporated herein by this reference thereto. Information concerning our executive officers is set forth under the heading “Executive Officers” in our Proxy Statement, and is
incorporated herein by reference thereto. Information regarding compliance with Section 16(a) of the Securities Exchange Act of 1934, as amended, our Code of Conduct and
Business Ethics and certain information related to the company’s Audit Committee and Corporate Governance and Nominating Committee, including any material changes to
the procedures by which shareholders may recommend nominees to the Board of Directors, is set forth under the heading “Corporate Governance” in our Proxy Statement, and
is incorporated herein by reference thereto.
Item 11.
EXECUTIVE COMPENSATION
Information regarding the compensation of our directors and executive officers and certain information related to the company’s Compensation Committee is set forth under the
headings “Executive Compensation Tables,” “Compensation of Directors,” “Compensation Discussion and Analysis,” “CEO Pay Ratio,” “Pay Versus Performance,”
“Compensation Committee Report” and “Compensation Committee Interlocks and Insider Participation” in our Proxy Statement, and is incorporated herein by this reference
thereto.
Item 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
STOCKHOLDER MATTERS
Information with respect to security ownership of certain beneficial owners and management and related stockholder matters is set forth under the headings “Security
Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information” in our Proxy Statement, and is incorporated herein by this reference
thereto.
Item 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Information regarding certain relationships and related transactions and director independence is presented under the heading “Corporate Governance” in our Proxy Statement,
and is incorporated herein by this reference thereto.
Item 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES
Information concerning principal accounting fees billed to us by our principal accountant, Deloitte & Touche LLP (PCAOB ID No. 34), is presented under the heading “Fees
Paid to Independent Registered Public Accountant for Fiscal Years 2022 and 2023” in our Proxy Statement, and is incorporated herein by this reference thereto. Information
concerning the Audit Committee’s pre-approval policies and procedures is presented under the heading “Policy on Audit Committee Pre-Approval of Audit and Permissible
Non-Audit Services of Independent Registered Public Accounting Firm” in our Proxy Statement, and is incorporated herein by this reference thereto.
Page - 76
Table of Contents
PART IV
Item 15.
EXHIBITS
a) The following documents are filed as a part of this 10-K:
1. Financial statements
Financial statements can be found under Item 8 of Part II of this Form 10-K.
2. Financial statement schedules
All schedules have been omitted because the required information is presented in the financial statements or notes thereto, the amounts involved are not significant or the
schedules are not applicable.
3. Exhibits
The exhibits are listed in the Index to Exhibits, which can be found on the following page.
Page - 77
Table of Contents
Exhibit number
Exhibit description
Filed herewith
Form
File no.
Date of first filing
Incorporated by reference
INDEX TO EXHIBITS
3.1
3.2
4.1
10.1
10.2
10.3
10.4*
10.5*
10.6*
10.7*
10.8*
10.9*
10.10*
10.11*
10.12*
10.13*
10.14*
10.15*
10.16*
10.17*
10.18*
10.19*
10.20*
10.21*
Amended and Restated Articles of Incorporation.
Amended and Restated Bylaws.
Description of Securities.
Assumption and Novation Agreement among TrueBlue, Inc. and Lumbermen’s
Mutual Casualty Company, American Motorist Insurance Company, American
Protection Insurance Company and American Manufacturers Mutual Insurance
Company and National Union Fire Insurance Company of Pittsburgh, PA, dated
December 29, 2004.
Indemnification Agreement between TrueBlue, Inc. and National Union Fire
Insurance Company of Pittsburgh, PA dated December 29, 2004.
Amended and Restated Credit Agreement, effective February 9, 2024.
Employment Agreement between TrueBlue, Inc. and Taryn Owen, dated August 11,
2023.
Change-In-Control Agreement between TrueBlue, Inc. and Taryn Owen, dated
August 11, 2023.
Form Non-Competition Agreement between TrueBlue, Inc. and Taryn Owen,
effective September 27, 2022.
Executive Employment Agreement between TrueBlue, Inc and Steven C. Cooper,
effective July 8, 2022.
Executive Change in Control Agreement between TrueBlue, Inc and Steven C.
Cooper effective July 8, 2022.
Non-Competition Agreement between TrueBlue, Inc. and Steven C. Cooper, effective
July 8, 2022.
Executive Employment Agreement between TrueBlue, Inc. and Carl R. Schweihs,
dated October 9, 2023.
Executive Non-Competition Agreement between TrueBlue, Inc. and Carl R.
Schweihs, dated October 9, 2023.
Executive Employment Agreement between TrueBlue, Inc. and Derrek L. Gafford,
dated December 31, 2006.
First Amendment to Executive Employment Agreement between TrueBlue, Inc. and
Derrek L. Gafford, dated February 13, 2023.
Form Executive Non-Competition Agreement between TrueBlue, Inc. and Derrek L.
Gafford.
Form Executive Change in Control Agreement between TrueBlue, Inc. and Derrek L.
Gafford, Carl Schweihs, and Garrett Ferencz.
Form Non-Competition Agreement between TrueBlue, Inc. and Garrett Ferencz.
Form Executive Indemnification Agreement between TrueBlue, Inc. and Steven C.
Cooper, Derrek L. Gafford, Taryn R. Owen, Carl Schweihs, and Garrett Ferencz.
Executive Employment Agreement between TrueBlue, Inc. and Garrett Ferencz, as
amended July 1, 2020.
Equity Retainer and Deferred Compensation Plan For Non- Employee Directors,
effective January 1, 2010.
2010 Employee Stock Purchase Plan.
TrueBlue, Inc. Nonqualified Deferred Compensation Plan.
Page - 78
X
8-K
10-Q
—
10-K
001-14543
001-14543
—
05/12/2016
10/30/2017
—
001-14543
03/11/2005
10-K
001-14543
03/11/2005
8-K
8-K
8-K
8-K
8-K/A
8-K/A
8-K/A
8-K
8-K
10-Q
10-K
10-Q
10-Q
10-K
10-K
10-Q
S-8
S-8
10-K
001-14543
001-14543
02/12/2024
08/15/2023
001-14543
08/15/2023
001-14543
09/27/2022
001-14543
07/14/2022
001-14543
07/14/2022
001-14543
07/14/2022
001-14543
10/10/2023
001-14543
10/10/2023
001-14543
05/04/2007
001-14543
02/15/2023
001-14543
05/04/2007
001-14543
05/04/2007
001-14543
001-14543
02/24/2020
02/24/2020
001-14543
07/27/2020
333-164614
02/01/2010
333-167770
001-14543
06/25/2010
02/22/2012
Table of Contents
Exhibit number
Exhibit description
Filed herewith
Form
File no.
Date of first filing
Incorporated by reference
10.22*
10.23*
10.24*
10.25*
10.26*
10.27*
10.28*
10.29*
10.30*
10.31*
2016 TrueBlue Omnibus Incentive Plan.
2016 TrueBlue Omnibus Incentive Plan, as amended and restated, effective May 9,
2018.
2010 Employee Stock Purchase Plan, as amended and restated, effective May 11,
2023.
2016 Omnibus Incentive Plan, as amended and restated, effective May 11, 2023.
Form 2021 Restricted Share Unit Award Notice between TrueBlue, Inc. and Steven C.
Cooper, Derrek L. Gafford, Taryn R. Owen, Carl Schweihs, and Garrett Ferencz.
Form 2021 Performance Share Unit Award Notice between TrueBlue, Inc. and Derrek
L. Gafford, Taryn R. Owen, Carl Schweihs, and Garrett Ferencz.
Form 2022 Restricted Share Unit Award Notice between TrueBlue, Inc. and Derrek L.
Gafford, Taryn R. Owen, Carl Schweihs, and Garrett Ferencz.
Form 2022 Performance Share Unit Grant Notice between Derrek L. Gafford, Taryn
R. Owen, Carl Schweihs, and Garrett Ferencz.
Form 2023 Restricted Share Unit Award Notice between TrueBlue, Inc. and Steven C.
Cooper, Derrek L. Gafford, Taryn R. Owen, Carl Schweihs, and Garrett Ferencz.
Form 2023 Performance Share Unit Grant Notice between Steven C. Cooper, Derrek
L. Gafford, Taryn R. Owen, Carl Schweihs, and Garrett Ferencz.
10.32*
Letter of Separation and Resignation between TrueBlue, Inc. and Derrek L. Gafford.
21.1
23.1
31.1
31.2
32.1
97.1
101
Subsidiaries of TrueBlue, Inc.
Consent of Deloitte & Touche LLP - Independent Registered Public Accounting Firm.
Certification of Taryn R. Owen, Chief Executive Officer of TrueBlue, Inc., Pursuant
to Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
Certification of Carl R. Schweihs, Chief Financial Officer of TrueBlue, Inc., Pursuant
to Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of
2002.
Certification of Taryn R. Owen, Chief Executive Officer of TrueBlue, Inc. and Carl
R. Schweihs, Chief Financial Officer of TrueBlue, Inc., Pursuant to 18 U.S.C. Section
1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Incentive Compensation Recovery Policy, dated September 14, 2023.
The following financial statements from the Company’s 10-K, formatted as Inline
XBRL: (i) Consolidated Balance Sheets, (ii) Consolidated Statements of Operations
and Comprehensive Income (Loss), (iii) Consolidated Statements of Shareholders’
Equity, (iv) Consolidated Statements of Cash Flows, and (v) Notes to consolidated
financial statements.
104
Cover page interactive data file - The cover page from this Annual Report on Form 10-
K is formatted as Inline XBRL
*
Indicates a management contract or compensatory plan or arrangement
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
S-8
S-8
10-Q
10-Q
333-211737
333-238093
06/01/2016
05/08/2020
001-14543
07/24/2023
001-14543
07/24/2023
—
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—
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Copies of Exhibits may be obtained upon request directed to Mr. Garrett Ferencz, TrueBlue, Inc., PO Box 2910, Tacoma, Washington, 98401 and many are available
at the SEC’s website found at www.sec.gov.
Page - 79
Table of Contents
Item 16.
FORM 10-K SUMMARY
None.
Page - 80
Table of Contents
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SIGNATURES
TrueBlue, Inc.
/s/ Taryn R. Owen
Signature
By: Taryn R. Owen, Chief Executive Officer and President
2/21/2024
Date
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed by the following persons on behalf of the registrant and in the capacities and on
the dates indicated.
/s/ Taryn R. Owen
Signature
Taryn R. Owen, Chief Executive Officer and President
/s/ Richard B. Christensen
Signature
Richard B. Christensen, Chief Accounting Officer, Treasurer
and Senior Vice President
2/21/2024
Date
/s/ Carl R. Schweihs
Signature
Carl R. Schweihs, Chief Financial Officer and Executive Vice
President
2/21/2024
Date
/s/ Jeffrey B. Sakaguchi
Signature
Jeffrey B. Sakaguchi, Chairman of the Board
/s/ Colleen B. Brown
Signature
Colleen B. Brown, Director
/s/ Kim Harris Jones
Signature
Kim Harris Jones, Director
/s/ Sonita F. Lontoh
Signature
Sonita F. Lontoh, Director
/s/ Kristi A. Savacool
Signature
Kristi A. Savacool, Director
2/21/2024
Date
/s/ William C. Goings
Signature
William C. Goings, Director
2/21/2024
Date
/s/ Robert C. Kreidler
Signature
Robert C. Kreidler, Director
2/21/2024
Date
/s/ Paul G. Reitz
Signature
Paul G. Reitz, Director
2/21/2024
Date
Page - 81
2/21/2024
Date
2/21/2024
Date
2/21/2024
Date
2/21/2024
Date
2/21/2024
Date
DESCRIPTION OF THE REGISTRANT’S SECURITIES
REGISTERED PURSUANT TO SECTION 12 OF THE
SECURITIES EXCHANGE ACT OF 1934
EXHIBIT 4.1
As of December 31, 2023, TrueBlue, Inc. has one class of securities registered under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange
Act”): our common stock.
Description of Common Stock
The following description of our common stock is a summary and does not purport to be complete. It is subject to and qualified in its entirety by reference to our
Amended and Restated Articles of Incorporation (the “Articles of Incorporation”) and our Amended and Restated Bylaws (the “Bylaws”), each of which are incorporated by
reference as an exhibit to the Annual Report on Form 10-K of which this Exhibit 4.1 is a part. We encourage you to read our Articles of Incorporation, our Bylaws and the
applicable provisions of Washington Business Corporation Act, Title 23B of the Revised Code of Washington, for additional information.
Authorized Capital Shares
Our authorized capital shares consist of 100,000,000 shares of common stock, no par value per share, and 20,000,000 shares of preferred stock, issuable in series, at a
par value per share determined by our board of directors at the time of authorization of such series of preferred stock. All issued and outstanding shares of our common stock
are fully paid and nonassessable.
Voting Rights
Common shareholders are entitled to one vote for each share held on all matters submitted to them. The common stock does not have cumulative voting rights.
Dividend Rights
Each share of common stock is entitled to participate equally in dividends as and when declared by our board of directors. The payment of dividends on our common
stock may be limited by obligations we may have to holders of any preferred stock, as well as under various agreements to which we are a party.
Washington Takeover Statute
Washington law imposes restrictions on certain transactions between a corporation and certain significant shareholders. Chapter 23B.19 of the WBCA generally
prohibits a “target corporation” from engaging in certain significant business transactions with an “acquiring person,” which is defined as a person or group of persons that
beneficially owns 10% or more of the voting securities of the target corporation, for a period of five years after the date the acquiring person first became a 10% beneficial
owner of the voting securities of the target corporation, unless the business transaction or the acquisition of shares is approved by a majority of the members of the target
corporation’s board of directors prior to the time the acquiring person first became a 10% beneficial owner of the target corporation’s voting securities. Such prohibited
transactions include, among other things:
•
•
•
a merger or consolidation with, disposition of assets to, or issuance or redemption of stock to or from, the acquiring person;
termination of 5% or more of the employees of the target corporation as a result of the acquiring person’s acquisition of 10% or more of the shares; or
receipt by the acquiring person of any disproportionate benefit as a shareholder.
After the five-year period, a “significant business transaction” may occur if it complies with “fair price” provisions specified in the statute. A corporation may not
“opt out” of this statute. We expect the existence of this provision to have an antitakeover effect with respect to transactions that our board of directors does not approve in
advance and may discourage takeover attempts that might result in the payment of a premium over the market price for common stock held by shareholders or otherwise might
benefit shareholders.
Liquidation Rights
If we liquidate or dissolve our business, the holders of common stock will share ratably in the distribution of assets available for distribution to shareholders after
creditors are paid and preferred shareholders receive their distributions.
Other Rights and Preferences
The shares of common stock have no preemptive rights and are not convertible, redeemable or assessable or entitled to the benefits of any sinking fund.
Listing
The common stock is listed on The New York Stock Exchange and trades under the symbol “TBI.”
TRUEBLUE, INC.
RESTRICTED STOCK UNIT GRANT NOTICE
Three-Year Vesting
(“Grant Notice”)
(TrueBlue 2016 Omnibus Incentive Plan as Amended and Restated)
EXHIBIT 10.26
TrueBlue, Inc. (the “Company”), pursuant to its TrueBlue 2016 Omnibus Incentive Plan as Amended and Restated (the “Plan”), grants to Participant
named below, as of the Date of Grant, the number of restricted share units (“Restricted Share Units” or “RSUs”) set forth below. Each RSU represents the
contingent right to receive a share of the Company’s common stock (“Share”) if the RSU becomes vested. The RSUs granted hereunder are subject to certain
vesting and transfer restrictions as set forth below, the Terms and Conditions (“Terms and Conditions”) included herein, and to the terms of the Plan, both of
which are incorporated by reference herein in their entirety. Copies of the Plan are available upon request. Subject to the limitations contained herein, the details
and terms of your award are as follows:
Participant: «Full_Name»
Number of RSUs Granted: «Shares»
Date of Grant: February 5, 2021
Grant Notice Confirmation Date: March 5, 2021
1. VESTING TERMS: Three-Year Vesting. The RSUs vest in three equal installments. One-third of the RSUs will vest on each successive annual anniversary
of the Date of Grant, becoming 100% vested on the third annual anniversary of the Date of Grant, so long as you are employed with the Company or a
subsidiary or affiliate of the Company at such time.
2. ISSUANCE OF SHARES OF STOCK: Within 30 days following the earlier of (i) the applicable vesting date set forth in Section 1 and (ii) Participant’s
“separation from service” from the Company (within the meaning of Code Section 409A), the Company shall issue to the Participant, on a one-for-one basis, a
number of Shares equal to the number of RSUs that have vested pursuant to this Grant Notice, provided in each case that Participant has satisfied its tax
withholding obligations with respect to such vesting as described below. Shares, in a number equal to the number of RSUs that have so vested, will be issued
by the Company in the name of Participant by electronic book-entry transfer or credit of such shares to Participant’s account maintained with such brokerage
firm or other custodian as the Company determines. Participant shall thereafter have all the rights of a stockholder of the Company with respect to such shares.
Notwithstanding the foregoing, the exact settlement date of the Shares underlying a vested RSU shall be determined by the Company in its sole discretion (and
Participant shall not have a right to designate the time of payment).
3. VESTING AND FORFEITURE OF RESTRICTED STOCK UNITS.
( a ) Termination of Employment . Subject to the limitations contained herein, you will vest in your RSUs over the period noted above, provided that
vesting will cease upon the termination of your employment with the Company and its subsidiaries and affiliates. Any RSUs in which you are not vested when
you terminate employment with the Company and its subsidiaries and affiliates shall be forfeited and void on your employment termination date, unless provided
for otherwise in your employment agreement.
(b) Change of Control. If there is a Change of Control while you are employed by the Company or any subsidiary or affiliate of the Company, and you
are terminated without Cause or you Terminate for Good Reason before the third anniversary of such Change in Control, your RSUs shall become immediately
100% vested upon such Change of Control and subsequent termination.
(c) Retirement. If you retire (voluntarily terminate your employment) from the Company, and are: (i) at least 55 years of age, and (ii) have completed
10 years of service with the Company, then at the time of your retirement, RSUs that would normally vest at the next scheduled vesting will be prorated based
on the days worked since the last vesting date and will vest on your retirement.
4. NUMBER OF RESTRICTED STOCK UNITS. The number of RSUs referenced in your Grant Notice may be adjusted from time to time for changes in the
Company’s capital structure at the Board’s sole discretion, as provided in the Plan.
5. DIVIDEND EQUIVALENTS. On each date that a cash dividend is paid to holders of Shares during the Vesting Period, an amount (the “Dividend Equivalent
Amount” ) equal to the cash dividend that is paid on each Share, multiplied by the number of unvested RSUs and any Dividend Equivalent RSUs (as defined
below) that
RSU Grant Notice 2021
remain unvested and outstanding as of the dividend payment date, shall be credited for the benefit of the Participant, and such credited amount shall be
converted into an additional number of RSUs (“Dividend Equivalent RSUs” ) determined by dividing the Dividend Equivalent Amount by the Fair Market Value of
a Share on the dividend payment date, rounded up or down to the nearest whole number. During the period beginning immediately following the last day of the
Vesting Period and ending on the date the RSUs granted hereunder are paid, Dividend Equivalent RSUs will accrue on any RSUs and any Dividend Equivalent
RSUs. Dividend Equivalent RSUs will be subject to the same conditions as the underlying RSUs with respect to which Dividend Equivalent RSUs were paid,
including, without limitation, the vesting conditions and the provisions governing time and form of settlement applicable to the underlying RSUs. Unless
expressly provided otherwise, as used elsewhere in this Agreement, “RSUs” shall include any Dividend Equivalent RSUs that have been credited to the
Participant’s account. However, any amounts that may become payable in respect of this Section 5 shall be treated separately from the RSUs and the rights
arising in connection therewith for purposes of Code Section 409A.
6. OWNERSHIP AND TAXATION UPON VESTING IN RESTRICTED STOCK UNITS.
(a) Until you vest in your RSUs, the RSUs shall be held by the Company on your behalf. Your ownership of the RSUs shall be evidenced by
appropriate entry on the books of the Company or of a duly authorized agent of the Company, or other appropriate means as determined by the Company.
(b) You shall pay, or make adequate arrangements satisfactory to the Company or a subsidiary or affiliate of the Company to pay, any sums required
to satisfy the federal, state, local, and foreign tax withholding obligations of the Company or a subsidiary or affiliate of the Company, if any, which arise in
connection with your vesting in or settlement of the RSUs. You hereby authorize the Company (or a subsidiary or affiliate of the Company that employs you) to
withhold from payroll and any other amounts payable to you, and otherwise agree to make adequate provision for, sums to satisfy the required tax withholdings.
Alternatively, or in addition, if permissible under local law, the Company may (i) sell or arrange for the sale of a portion of the RSUs to satisfy the withholding
obligation and/or (ii) reclaim ownership of a portion of the RSUs, provided that the Company shall retake ownership in only the amount of RSUs necessary to
satisfy the minimum withholding amount. To the extent that any FICA tax withholding obligations arise in connection with the RSUs prior to the date on which
such RSUs should otherwise become payable to you, then the Company may accelerate the payment of a number of RSUs sufficient to satisfy (but not in
excess of) such tax withholding obligations and any tax withholding obligations associated with such accelerated payment, and the Company or a subsidiary or
affiliate may withhold such amounts in satisfaction of such withholding obligations. You shall pay to the Company (or the subsidiary or affiliate of the Company
that employs you) any amount needed to pay the tax withholding obligations that cannot be satisfied by the means previously described. The Company may
refuse to release the transfer restrictions on the RSUs if you fail to meet your tax withholding obligations.
(c) In lieu of releasing restrictions on fractional RSUs, on the vesting of a fraction of a RSU, the Company shall vest the entire RSU where the fraction
represents 0.5 or more of the RSU and shall not vest any of the RSU where such fraction represents less than 0.5 of the RSU.
(d) By accepting the Grant Notice through accepting the RSU grant at the Merrill Lynch website, you agree not to sell any of the Shares in which you
become vested at a time when applicable laws or Company policies prohibit a sale.
(e) All RSUs are only convertible into Shares. At the time of vesting and converting of RSUs into Shares, you have no right to convert any RSU
directly into cash. After RSUs have been converted into Shares, you may sell, trade, or otherwise dispose of such Shares as you wish, subject to applicable
laws, rules, and agreements regarding such Shares.
(f) In the event ownership of RSUs is prohibited due to foreign exchange, securities regulations, or other provisions of applicable law, you shall
receive cash proceeds in an amount equal to the value of the Shares otherwise distributable to you upon vesting in the RSUs, net of the satisfaction of the
requirements of Section 6(b) above.
7. TRANSFERABILITY. Your right in the RSUs awarded under the Grant Notice and any interest therein may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner, other than by will or by the laws of descent or distribution, prior to the settlement of such RSUs.
8. RESTRICTED STOCK UNIT AWARD NOT A SERVICE CONTRACT. Your award of RSUs is not an employment or service contract, and nothing in your
award shall be deemed to create in any way whatsoever any obligation on your part to continue in the employ of the Company or a subsidiary or affiliate of the
Company, or any obligation on the part of the Company or a subsidiary or affiliate of the Company to continue your employment. In addition, nothing in your
award shall obligate the Company or a subsidiary or affiliate of the
RSU Grant Notice 2021
Company, their respective shareholders, boards of directors, officers, or employees to continue any relationship that you might have as a Director or Consultant
for the Company or a subsidiary or affiliate of the Company.
9. GOVERNING PLAN DOCUMENT. Your RSU award is subject to all the provisions of the Plan, the provisions of which are hereby made a part of your
award, and is further subject to all interpretations, amendments, rules, and regulations which may from time to time be promulgated and adopted pursuant to the
Plan. In the event of any conflict between the provisions of your award or your employment agreements and those of the Plan, the provisions of the Plan shall
control. Participant further acknowledges that as of the Date of Grant, this Grant Notice, Participant’s employment agreement, and the Plan set forth the entire
understanding between Participant and the Company regarding the acquisition of the RSUs granted hereunder and supersede all prior oral and written
agreements on that subject. Establishing a brokerage account as set forth below and/or accepting the RSUs granted hereunder shall constitute agreement to
the terms above and any other referenced terms.
10. ACKNOWLEDGEMENTS: Unless Participant contacts the Company’s Chief Legal Officer’s office in writing within 30 days of the date of this Grant Notice,
Participant acknowledges receipt of, and understands and agrees to, this Grant Notice and the attached Restricted Stock Units Grant Terms and Conditions,
and understands that a copy of the Plan is available upon request.
11. NO RIGHTS AS A STOCKHOLDER. Neither the RSUs nor these Terms and Conditions shall entitle Participant to any voting rights or other rights as a
stockholder of the Company until Shares have been issued in settlement thereof.
12. BROKERAGE ACCOUNT: Participant agrees to establish and maintain a brokerage account with a financial institution designated by the Company,
which is currently Merrill Lynch. The Participant will not be able to accept the award or sell any shares vested under this agreement until such a brokerage
account is created.
13. DISCLAIMER: The Company undertakes no duty or responsibility for providing periodic updates to you in the future as it relates to this award.
14. GOLDEN PARACHUTE TAXES. In the event that any amounts paid or deemed paid to you pursuant to the Grant Notice are deemed to constitute
“excess parachute payments” as defined in Code Section 280G (taking into account any other payments made to you under the Plan and any other
compensation paid or deemed paid to you), or if you are deemed to receive an “excess parachute payment” by reason of the acceleration of vesting of your
RSUs granted under the Plan due to a Change of Control, the amount of such payments or deemed payments shall be reduced (or, alternatively, the number of
RSUs that become 100% vested shall be reduced), so that no such payments or deemed payments shall constitute excess parachute payments. The
determination of whether a payment or deemed payment constitutes an excess parachute payment shall be in the sole discretion of the Company’s Board.
15. CODE SECTION 409A. This award and payments made pursuant to these Terms and Conditions and the Plan are intended to qualify for an exemption
from or comply with Code Section 409A. Notwithstanding any other provision in these Terms and Conditions and the Plan, the Company, to the extent it deems
necessary or advisable in its sole discretion, reserves the right, but shall not be required, to unilaterally amend or modify these Terms and Conditions and/or the
Plan so that the RSUs granted to the Participant qualify for exemption from or comply with Code Section 409A; provided, however, that the Company makes no
representations that the RSUs shall be exempt from or comply with Code Section 409A and makes no undertaking to preclude Code Section 409A from
applying to the RSUs. Nothing in these Terms and Conditions or the Plan shall provide a basis for any person to take action against the Company or any
Subsidiary or Affiliate based on matters covered by Code Section 409A, including the tax treatment of any amount paid or Award made under these Terms and
Conditions, and neither the Company nor any of its Subsidiaries or Affiliates shall under any circumstances have any liability to any Participant or his or her
estate or any other party for any taxes, penalties or interest imposed under Code Section 409A for any amounts paid or payable under these Terms and
Conditions. Notwithstanding anything to the contrary in this Grant Notice, no amounts shall be paid to you under this Grant Notice during the six (6)-month
period following your “separation from service” (within the meaning of Code Section 409A) to the extent that the Company determines you are a “specified
employee” (within the meaning of Code Section 409A) at the time of such separation from service and that paying such amounts at the time or times indicated in
this Grant Notice would be a prohibited distribution under Code Section 409A(a)(2)(B)(i). If the payment of any such amounts is delayed as a result of the
previous sentence, then on the first business day following the end of such six (6)-month period (or such earlier date upon which such amount can be paid
under Code Section 409A without being subject to such additional taxes), the Company shall pay you in a lump sum all amounts that would have otherwise
been payable to you during such six (6)-month period under this Grant Notice.
16. DATA PRIVACY CONSENT. In order to administer the Plan and to implement or structure future equity grants, the Company and certain agents thereof
(together, the “Relevant Companies”) may process any and all
RSU Grant Notice 2021
personal or professional data, including but not limited to Social Security or other identification numbers, home address, and telephone number, date of birth,
and other information that is necessary or desirable for the administration of the Plan (the “Relevant Information”). By receiving the Grant Notice, the Participant
(i) authorizes the Company to collect, process, register and transfer to the Relevant Companies all Relevant Information; (ii) waives any privacy rights the
Participant may have with respect to the Relevant Information; (iii) authorizes the Relevant Companies to store and transmit such information in electronic form;
and (iv) authorizes the transfer of the Relevant Information to any jurisdiction in which the Relevant Companies consider appropriate. The Participant shall have
access to, and the right to change, the Relevant Information. Relevant Information will only be used in accordance with applicable law.
RSU Grant Notice 2021
TRUEBLUE, INC.
PERFORMANCE SHARE UNIT GRANT NOTICE
(“Grant Notice”)
(TrueBlue 2016 Omnibus Incentive Plan as Amended and Restated)
EXHIBIT 10.27
TrueBlue, Inc. (the “Company”), pursuant to its TrueBlue 2016 Omnibus Incentive Plan as Amended and Restated (the “Plan”), grants to Participant
named below, as of the Date of Grant, the number of performance share units (“Performance Share Units,” “PSUs,” or “Units”) set forth below (the “Award”).
Each Performance Share Unit granted represents the contingent right to receive one share of the Company’s common stock (“Share”). The PSUs granted
hereunder are subject to certain vesting, performance, and transfer restrictions as set forth below. The Performance Share Units are subject to all of the Terms
and Conditions included herein and the terms of the Plan, both of which are incorporated by reference herein in their entirety. Copies of the Plan are available
upon request.
Participant: «Full_Name»
Target Number of Performance Share Units Granted: «Units»
Date of Grant: February 5, 2021
Performance Period: Fiscal Years 2021 through 2023
Grant Notice Confirmation Date: March 5, 2021
1. VESTING TERMS: Performance Vesting. The PSUs will vest, if and as provided below, two days after the disclosure of earnings for the final fiscal
year of the Performance Period. The number of PSUs under the Award that actually vest and that will be settled shall be determined pursuant to a two-step
process: (i) first the maximum number of PSUs that are eligible to vest shall be determined as provided in Section 1(a) below, on the basis of the level at which
the Performance Goals specified on the attached Schedule I are actually attained, and (ii) then the maximum number of these PSUs (calculated under clause
(i)) that will actually vest shall be determined on the basis of the Participants completion of the requirements set forth in Section 1(b) below. The number of
PSUs that vest are referred to as the “Vested PSUs”.
(a) Performance Determination. The attached Schedule I specifies the Performance Goals required to be attained during the Performance Period in
order for the PSUs to become eligible to vest. As soon as reasonably practicable following the end of the Performance Period, the Committee shall determine
in its sole discretion the attainment level of the Performance Goals. On the basis of the determined level of attainment of the Performance Goals, the Target
PSUs will be multiplied by the applicable percentage determined in accordance with the performance a matrix set forth in Schedule 1. The number of PSUs
resulting from such determination shall constitute that maximum number of PSUs in which the Participant may vest under this Award (the “Earned PSUs”);
( b ) Continual Employment. Subject to the terms and conditions of this Award and any specific terms contained in Participant’s employment
agreement, a number of PSUs will vest as detailed the attached schedule I of this Grant Notice, so long as the Participant is an active employee of the
Company.
2. ISSUANCE OF SHARES OF STOCK: As soon as practicable following each vesting date (but in no event later than thirty (30) days after the
vesting date and in all cases by the earlier of the March 15 following the applicable vesting date and the March 15th following the end of the Performance
Period), the Company shall issue to the Participant, on a one-for-one basis, a number of Shares equal to the number of Vested PSUs, provided in each case
that Participant has satisfied its tax withholding obligations with respect to such vesting as described below (the “Settlement Date”). Shares, in a number equal
to the number of Vested PSUs, will be issued by the Company in the name of Participant by electronic book-entry transfer or credit of such shares to
Participant’s account maintained with such brokerage firm or other custodian as the Company determines. Participant shall thereafter have all the rights of a
stockholder of the Company with respect to such Shares.
th
3. VESTING AND FORFEITURE OF PERFORMANCE SHARE UNITS.
(a) Termination of Employment.
(i) If you are terminated with Cause by the Company, or its subsidiaries or affiliates, or you terminate your employment with the Company, or its
subsidiaries or affiliates, without Good Reason all vesting in Units will cease and any Units which are not vested shall be forfeited and ownership of
such Units shall return to the Company on your employment termination date.
PSU Grant Notice 2021
(ii) For the purposes of determining the vesting of Units only, if you are terminated by the Company, or its subsidiaries or affiliates, without Cause,
or you terminate your employment with the Company, or its subsidiaries or affiliates, for Good Reason, or if your employment with the Company, or
its subsidiaries or affiliates, terminates by reason of death, disability, or retirement, you will receive vested Units at the completion of the applicable
performance period if the performance vesting provisions set forth in this Grant Notice are met. However, the actual number of shares of common
stock you may receive upon conversion of a vested Unit will be pro-rated based on the portion of the Performance Period you were employed, as
increased by any period of accelerated vesting to which you are entitled in your employment agreements, if any.
(b) Change in Control. If there is a Change of Control while you are employed by the Company or any subsidiary or affiliate of the Company, and
you are terminated without Cause or you Terminate for Good Reason before the third anniversary of such Change in Control (all as defined in your Change in
Control Agreement), your Units shall become immediately 100% vested at the target levels upon such Change of Control, provided that the Compensation
Committee of the Board of Directors (the “Committee”) shall have the discretion to determine that the performance goals shall be deemed to have been
performed at the maximum level. In determining the extent to which the performance targets have been satisfied, the Committee shall make reasonable
adjustment for the unbudgeted impact of: (i) asset write-downs or impairment charges; (ii) litigation or claim costs, judgments, or settlements; (iii) the effect of
changes in tax laws, accounting principles, or other laws or provisions affecting reported results; (iv) restatements occurring as a result of errors that arise
from events other than fraud or failures in performance; (v) accruals for reorganization and restructuring programs; (vi) extraordinary nonrecurring items as
described in Accounting Principles Board Opinion No. 30 and/or in management’s discussion and analysis of financial condition and results of operations
appearing in the Company’s annual report to stockholders for the applicable year; (vii) acquisitions or divestitures; and (viii) foreign exchange gains and
losses.
(c) Retirement. If you retire (voluntarily terminate your employment) from the Company and are (i) at least 55 years of age, and (ii) have completed
10 years of service to the Company, then the PSU awards that are payable after the last day of employment will be prorated based on the number of days
worked during the Performance Period. PSU awards will be paid at the regularly scheduled payout date, post-employment, at this prorated amount.
4. DIVIDEND EQUIVALENTS. In addition to the PSUs, the Company hereby grants to Participant, with respect to each Vested PSU, an amount equal
to the cash dividend the Company pays on each Share between the Date of Grant and the Settlement Date (each a “Dividend Equivalent Amount”). Following
the Date of Grant, the Company will establish a bookkeeping account (a “Dividend Equivalent Account”) and credit the Dividend Equivalent Amounts to such
account through the Settlement Date. On the Settlement Date, the balance in your Dividend Equivalent Account shall be converted into an additional number of
Vested PSUs determined by dividing the balance of the Dividend Equivalent Account by the Fair Market Value of a Share on the Settlement Date, rounded up
or down to the nearest whole number. Your Dividend Equivalent Account will be subject to the same conditions as the underlying PSUs with respect to which
Dividend Equivalent Amounts were paid, including, without limitation, the vesting conditions and the provisions governing time and form of settlement applicable
to the underlying PSUs. Unless expressly provided otherwise, as used elsewhere in this Grant Notice, “PSUs” shall include any Dividend Equivalent Amounts
payable on such PSUs under this Grant Notice.
5. NUMBER OF SHARES OF PERFORMANCE SHARE UNITS. The number of Units referenced in your Grant Notice may be adjusted from time to
time for changes in the Company’s capital structure at the Board’s sole discretion, as provided in the Plan.
6. OWNERSHIP AND TAXATION UPON VESTING IN PERFORMANCE SHARE UNITS.
(a) Until you vest in your Units, the Units shall be held by the Company on your behalf. Your ownership of the Units shall be evidenced by an
appropriate entry on the books of the Company or of a duly authorized agent of the Company, or other appropriate means as determined by the Company. In
the event ownership of Company common stock is prohibited due to foreign exchange, securities regulations, or other provisions of applicable law, you, or in
the event of your death, your legal representative, shall receive cash proceeds in an amount equal to the value of the shares of common stock otherwise
distributable to you upon vesting of the Units, net of the satisfaction of the requirements of Section 6(b) below.
(b) You shall pay, or make adequate arrangements satisfactory to the Company to pay, any sums required to satisfy the federal, state, local, and
foreign tax withholding obligations of the Company or its subsidiaries or affiliates, if any, which arise in connection with your vesting in or settlement of the
Units. You hereby authorize the Company (or a subsidiary or affiliate of the Company that employs you), to withhold from payroll and any other amounts
payable to you, and otherwise agree to make adequate provision for, sums to
PSU Grant Notice 2021
satisfy the required tax withholdings. Alternatively, or in addition, if permissible under local law, the Company may (i) sell or arrange for the sale of a portion of
the earned shares to satisfy the withholding obligation and/or (ii) reclaim ownership of a portion of the Units, provided that the Company shall retake
ownership in only the amount of shares necessary to satisfy the minimum withholding amount. You shall pay to the Company (or the subsidiary or affiliate of
the Company that employs you) any amount needed to pay the tax withholding obligations that cannot be satisfied by the means previously described.
(c) Until your Units are converted to shares of common stock and are evidenced by a stock certificate, appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company, or other appropriate means, you shall have no right to vote or receive dividends or any other
rights as a shareholder with respect to such Units. No adjustment will be made for a dividend or other right for which the record date is prior to the date you
are recorded as the owner of the Shares, unless the Committee provides you with a dividend equivalent right pursuant to the Plan.
(d) By accepting the Grant Notice through accepting the PSU grant at the Merrill Lynch website, you agree not to sell any of the Shares in which
you become vested at a time when applicable laws or Company policies prohibit a sale.
(e) All Units are only convertible into Shares. At the time of vesting and converting of Units into Shares, you have no right to convert any Unit
directly into cash. After Units have been converted into Shares, you may sell, trade, or otherwise dispose of such Shares as you wish, subject to applicable
laws, rules, and agreements regarding such Shares.
7. TRANSFERABILITY. Your right in the Units awarded under this PSU grant and any interest therein may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner, other than by will or by the laws of descent or distribution, prior to the settlement of such Units.
8. PERFORMANCE SHARE UNIT AWARD IS NOT A SERVICE CONTRACT. Your award of Units is not an employment or service contract, and
nothing in your award shall be deemed to create in any way whatsoever any obligation on your part to continue in the employ of the Company or a subsidiary or
affiliate of the Company, or any obligation on the part of the Company or a subsidiary or affiliate of the Company to continue your employment. In addition,
nothing in your award shall obligate the Company or a subsidiary or affiliate of the Company, their respective shareholders, boards of directors, officers, or
employees to continue any relationship that you might have as a Director or Consultant for the Company or a subsidiary or affiliate of the Company.
9. GOVERNING PLAN DOCUMENT. Your Units award is subject to all the provisions of the Plan, the provisions of which are hereby made a part of
your award and is further subject to all interpretations, amendments, rules, and regulations which may from time to time be promulgated and adopted pursuant
to the Plan. In the event of any conflict between the provisions of your award or your employment agreements and those of the Plan, the provisions of the Plan
shall control. Participant further acknowledges that as of the Date of Grant, this Grant Notice, Participant’s employment agreement, and the Plan set forth the
entire understanding between Participant and the Company regarding the acquisition of the PSU granted hereunder and supersede all prior oral and written
agreements on that subject. Establishing a brokerage account as set forth below and/or accepting the PSU granted hereunder shall constitute agreement to the
terms above and any other referenced terms.
10. ACKNOWLEDGEMENTS: Unless Participant contacts the Company’s Chief Legal Officer’s office in writing within 30 days of the date of this
Grant Notice, Participant acknowledges receipt of, and understands and agrees to, this Grant Notice and the attached Performance Share Unit Grant Terms and
Conditions, and understands that a copy of the Plan is available upon request.
11. STOCKHOLDER RIGHTS. You will not be deemed to be the holder of, and will not have any of the rights of a holder or owner of any Shares
represented by your Units until your Units have been earned and converted into Shares and ownership of such Shares is evidenced as set forth in Section 3
above. Units do not make you eligible to receive any dividends, voting powers, or any other shareholder rights associated with Shares.
12. GOLDEN PARACHUTE TAXES. In the event that any amounts paid or deemed paid to you in connection with the Units are deemed to constitute “excess
parachute payments” as defined in Code Section 280G (taking into account any other payments made to you under the Plan and any other compensation paid
or deemed paid to you), or if you are deemed to receive an “excess parachute payment” by reason of the acceleration of vesting of your Units granted under the
Plan due to a Change of Control, the amount of such payments or deemed payments shall be reduced (or, alternatively, the number of Performance Share Units
that become 100% earned shall be reduced), so that no such payments or deemed payments shall constitute excess parachute payments. The determination of
whether a payment or deemed payment constitutes an excess parachute payment shall be in the sole discretion of the Company’s Board.
PSU Grant Notice 2021
13. CODE SECTION 409A. This award shall be interpreted in such a manner that all provisions relating to the settlement of the award are exempt
from the requirements of Code Section 409A as “short-term deferrals” as described in Code Section 409A. This award and payments made pursuant to these
Terms and Conditions and the Plan are intended to qualify for an exemption from or comply with Code Section 409A. Notwithstanding any other provision in
these Terms and Conditions and the Plan, the Company, to the extent it deems necessary or advisable in its sole discretion, reserves the right, but shall not be
required, to unilaterally amend or modify these Terms and Conditions and/or the Plan so that the RSUs granted to the Participant qualify for exemption from or
comply with Code Section 409A; provided, however, that the Company makes no representations that the RSUs shall be exempt from or comply with Code
Section 409A and makes no undertaking to preclude Code Section 409A from applying to the RSUs. Nothing in these Terms and Conditions or the Plan shall
provide a basis for any person to take action against the Company or any Subsidiary or Affiliate based on matters covered by Code Section 409A, including the
tax treatment of any amount paid or Award made under these Terms and Conditions, and neither the Company nor any of its Subsidiaries or Affiliates shall
under any circumstances have any liability to any Participant or his or her estate or any other party for any taxes, penalties or interest imposed under Code
Section 409A for any amounts paid or payable under these Terms and Conditions.
14. DATA PRIVACY CONSENT. In order to administer the Plan and to implement or structure future equity grants, the Company and certain agents
thereof (together, the “Relevant Companies”) may process any and all personal or professional data, including but not limited to Social Security or other
identification numbers, home address, and telephone number, date of birth, and other information that is necessary or desirable for the administration of the
Plan (the “Relevant Information”). By receiving the Grant Notice, the Participant (i) authorizes the Company to collect, process, register and transfer to the
Relevant Companies all Relevant Information; (ii) waives any privacy rights the Participant may have with respect to the Relevant Information; (iii) authorizes
the Relevant Companies to store and transmit such information in electronic form; and (iv) authorizes the transfer of the Relevant Information to any jurisdiction
in which the Relevant Companies consider appropriate. The Participant shall have access to, and the right to change, the Relevant Information. Relevant
Information will only be used in accordance with applicable law.
PSU Grant Notice 2021
TRUEBLUE, INC.
PERFORMANCE SHARE UNIT GRANT NOTICE
Schedule I
(TrueBlue 2016 Omnibus Incentive Plan as Amended and Restated)
Your Performance Share Units are not immediately vested. Performance Share Units (“PSUs”) are awarded based upon the Company’s performance on key
financial metrics over a three-year period (“Performance Period”). Except as otherwise set forth in the Grant Notice, the PSUs will vest and be converted into
Company common stock based upon the Company meeting certain performance metrics calculated at the completion of the Performance Period, as set forth
below. Performance metrics are established by the Compensation Committee of the Board of Directors at the beginning of the Performance Period.
The performance metric during the Performance Period is the 3-year Adjusted EBITDA Compound Annual Growth Rate (“CAGR”).
Performance Period
Fiscal Years 2021 through 2023 (1)
Maximum
Target
Threshold
45% Adjusted EBIDTA CAGR
35% Adjusted EBIDTA CAGR
25% Adjusted EBIDTA CAGR
% of Shares
Awarded (2)
150%
100%
50%
(1) Calculation of Adjusted EBITDA for Performance Share Units
a. EBITDA Threshold, Target, and Maximum amounts are set in Adjusted EBITDA dollars.
b. EBITDA will be calculated based on U.S. GAAP and may be adjusted to reflect the adjustments to EBITDA presented to investors.
c. In addition, the calculation of EBITDA for compensation purpose may be adjusted by the Compensation Committee to exclude the impact of charges such
as restructuring, discontinued operations, debt redemption or retirement, asset impairments or write downs, material litigation or claim judgments or
settlements, acquisitions or divestitures, significant foreign exchange gains and losses, and other unusual non-recurring items, and the cumulative effects
of tax or accounting changes.
d. Adjusted EBITDA will not include the effect of acquisitions or divestitures during the 12 months after an acquisition.
(2) Award levels will be extrapolated based on straight-line interpolation between levels beginning at the threshold level.
PSU Grant Notice 2021
TRUEBLUE, INC.
RESTRICTED STOCK UNIT GRANT NOTICE
Three-Year Vesting
(“Grant Notice”)
(TrueBlue 2016 Omnibus Incentive Plan as Amended and Restated)
EXHIBIT 10.28
TrueBlue, Inc. (the “Company”), pursuant to its TrueBlue 2016 Omnibus Incentive Plan as Amended and Restated (the “Plan”), grants to Participant
named below, as of the Date of Grant, the number of restricted share units (“Restricted Share Units” or “RSUs”) set forth below. Each RSU represents the
contingent right to receive a share of the Company’s common stock (“Share”) if the RSU becomes vested. The RSUs granted hereunder are subject to the
terms and conditions in this Grant Notice and to the terms of the Plan, which is incorporated by reference herein in its entirety. Copies of the Plan are available
upon request. Subject to the limitations contained herein, the details and terms of your award are as follows:
Participant: «Full_Name»
Number of RSUs Granted: «Shares»
Date of Grant: February 4, 2022
Grant Notice Confirmation Date: March 4, 2022
1. VESTING TERMS: Three-Year Vesting. The RSUs vest in three equal installments. One-third of the RSUs will vest on each successive annual anniversary
of the Date of Grant, becoming 100% vested on the third annual anniversary of the Date of Grant, so long as you are employed with the Company or a
subsidiary or affiliate of the Company at such time.
2. ISSUANCE OF SHARES OF STOCK: Within 30 days following the earlier of (i) the applicable vesting date set forth in Section 1 and (ii) Participant’s
“separation from service” from the Company (within the meaning of Code Section 409A), the Company shall issue to the Participant, on a one-for-one basis, a
number of Shares equal to the number of RSUs that have vested pursuant to this Grant Notice, provided in each case that Participant has satisfied its tax
withholding obligations with respect to such vesting as described below. Shares, in a number equal to the number of RSUs that have so vested, will be issued
by the Company in the name of Participant by electronic book-entry transfer or credit of such shares to Participant’s account maintained with such brokerage
firm or other custodian as the Company determines. Participant shall thereafter have all the rights of a stockholder of the Company with respect to such shares.
Notwithstanding the foregoing, the exact settlement date of the Shares underlying a vested RSU shall be determined by the Company in its sole discretion (and
Participant shall not have a right to designate the time of payment).
3. VESTING AND FORFEITURE OF RESTRICTED STOCK UNITS.
(a) Termination of Employment. Subject to the limitations contained herein, you will vest in your RSUs over the period noted above, provided that
vesting will cease upon the termination of your employment with the Company and its subsidiaries and affiliates. Any RSUs in which you are not vested
when you terminate employment with the Company and its subsidiaries and affiliates shall be forfeited and void on your employment termination date,
unless provided for otherwise in your employment agreement.
(b) Change of Control. If there is a Change of Control while you are employed by the Company or any subsidiary or affiliate of the Company, and
you are terminated without Cause or you Terminate for Good Reason before the third anniversary of such Change in Control, your RSUs shall become
immediately 100% vested upon such Change of Control and subsequent termination.
(c) Retirement. If you retire (voluntarily terminate your employment) from the Company, and are: (i) at least 55 years of age, and (ii) have
completed 10 years of service with the Company, then at the time of your retirement, RSUs that would normally vest at the next scheduled vesting will be
prorated based on the days worked since the last vesting date and will vest on your retirement.
4. NUMBER OF RESTRICTED STOCK UNITS. The number of RSUs referenced in your Grant Notice may be adjusted from time to time for changes in the
Company’s capital structure at the Board’s sole discretion, as provided in the Plan.
RSU Grant Notice 2022
5. DIVIDEND EQUIVALENTS. On each date that a cash dividend is paid to holders of Shares during the Vesting Period, an amount (the “Dividend Equivalent
Amount” ) equal to the cash dividend that is paid on each Share, multiplied by the number of unvested RSUs and any Dividend Equivalent RSUs (as defined
below) that remain unvested and outstanding as of the dividend payment date, shall be credited for the benefit of the Participant, and such credited amount shall
be converted into an additional number of RSUs (“Dividend Equivalent RSUs” ) determined by dividing the Dividend Equivalent Amount by the Fair Market
Value of a Share on the dividend payment date, rounded up or down to the nearest whole number. During the period beginning immediately following the last
day of the Vesting Period and ending on the date the RSUs granted hereunder are paid, Dividend Equivalent RSUs will accrue on any RSUs and any Dividend
Equivalent RSUs. Dividend Equivalent RSUs will be subject to the same conditions as the underlying RSUs with respect to which Dividend Equivalent RSUs
were paid, including, without limitation, the vesting conditions and the provisions governing time and form of settlement applicable to the underlying RSUs.
Unless expressly provided otherwise, as used elsewhere in this Agreement, “RSUs” shall include any Dividend Equivalent RSUs that have been credited to the
Participant’s account. However, any amounts that may become payable in respect of this Section 5 shall be treated separately from the RSUs and the rights
arising in connection therewith for purposes of Code Section 409A.
6. OWNERSHIP AND TAXATION UPON VESTING IN RESTRICTED STOCK UNITS.
(a) Until you vest in your RSUs, the RSUs shall be held by the Company on your behalf. Your ownership of the RSUs shall be evidenced by
appropriate entry on the books of the Company or of a duly authorized agent of the Company, or other appropriate means as determined by the
Company.
(b) You shall pay, or make adequate arrangements satisfactory to the Company or a subsidiary or affiliate of the Company to pay, any sums
required to satisfy the federal, state, local, and foreign tax withholding obligations of the Company or a subsidiary or affiliate of the Company, if any, which
arise in connection with your vesting in or settlement of the RSUs. You hereby authorize the Company (or a subsidiary or affiliate of the Company that
employs you) to withhold from payroll and any other amounts payable to you, and otherwise agree to make adequate provision for, sums to satisfy the
required tax withholdings. Alternatively, or in addition, if permissible under local law, the Company may (i) sell or arrange for the sale of a portion of the
RSUs to satisfy the withholding obligation and/or (ii) reclaim ownership of a portion of the RSUs, provided that the Company shall retake ownership in
only the amount of RSUs necessary to satisfy the minimum withholding amount. To the extent that any FICA tax withholding obligations arise in
connection with the RSUs prior to the date on which such RSUs should otherwise become payable to you, then the Company may accelerate the
payment of a number of RSUs sufficient to satisfy (but not in excess of) such tax withholding obligations and any tax withholding obligations associated
with such accelerated payment, and the Company or a subsidiary or affiliate may withhold such amounts in satisfaction of such withholding obligations.
You shall pay to the Company (or the subsidiary or affiliate of the Company that employs you) any amount needed to pay the tax withholding obligations
that cannot be satisfied by the means previously described. The Company may refuse to release the transfer restrictions on the RSUs if you fail to meet
your tax withholding obligations.
(c) In lieu of releasing restrictions on fractional RSUs, on the vesting of a fraction of a RSU, the Company shall vest the entire RSU where the
fraction represents 0.5 or more of the RSU and shall not vest any of the RSU where such fraction represents less than 0.5 of the RSU.
(d) By accepting the Grant Notice through accepting the RSU grant at the Merrill Lynch website, you agree not to sell any of the Shares in
which you become vested at a time when applicable laws or Company policies prohibit a sale.
(e) All RSUs are only convertible into Shares. At the time of vesting and converting of RSUs into Shares, you have no right to convert any RSU
directly into cash. After RSUs have been converted into Shares, you may sell, trade, or otherwise dispose of such Shares as you wish, subject to
applicable laws, rules, and agreements regarding such Shares.
(f) In the event ownership of RSUs is prohibited due to foreign exchange, securities regulations, or other provisions of applicable law, you shall
receive cash proceeds in an amount equal to the value of the Shares otherwise distributable to you upon vesting in the RSUs, net of the satisfaction of
the requirements of Section 6(b) above.
RSU Grant Notice 2022
7. TRANSFERABILITY. Your right in the RSUs awarded under the Grant Notice and any interest therein may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner, other than by will or by the laws of descent or distribution, prior to the settlement of such RSUs.
8. RESTRICTED STOCK UNIT AWARD NOT A SERVICE CONTRACT. Your award of RSUs is not an employment or service contract, and nothing in your
award shall be deemed to create in any way whatsoever any obligation on your part to continue in the employ of the Company or a subsidiary or affiliate of the
Company, or any obligation on the part of the Company or a subsidiary or affiliate of the Company to continue your employment. In addition, nothing in your
award shall obligate the Company or a subsidiary or affiliate of the Company, their respective shareholders, boards of directors, officers, or employees to
continue any relationship that you might have as a Director or Consultant for the Company or a subsidiary or affiliate of the Company.
9. GOVERNING PLAN DOCUMENT. Your RSU award is subject to all the provisions of the Plan, the provisions of which are hereby made a part of your
award, and is further subject to all interpretations, amendments, rules, and regulations which may from time to time be promulgated and adopted pursuant to the
Plan. In the event of any conflict between the provisions of your award or your employment agreements and those of the Plan, the provisions of the Plan shall
control. Participant further acknowledges that as of the Date of Grant, this Grant Notice, Participant’s employment agreement, and the Plan set forth the entire
understanding between Participant and the Company regarding the acquisition of the RSUs granted hereunder and supersede all prior oral and written
agreements on that subject. Establishing a brokerage account as set forth below and/or accepting the RSUs granted hereunder shall constitute agreement to
the terms above and any other referenced terms.
10. ACKNOWLEDGEMENTS: Unless Participant contacts the Company’s Chief Legal Officer’s office in writing within 30 days of the date of this Grant Notice,
Participant acknowledges receipt of, and understands and agrees to, this Grant Notice, and understands that a copy of the Plan is available upon request.
11. NO RIGHTS AS A STOCKHOLDER. Neither the RSUs nor this Grant Notice shall entitle Participant to any voting rights or other rights as a stockholder of
the Company until Shares have been issued in settlement thereof.
12. BROKERAGE ACCOUNT: Participant agrees to establish and maintain a brokerage account with a financial institution designated by the
Company, which is currently Merrill Lynch. The Participant will not be able to accept the award or sell any shares vested under this agreement until such a
brokerage account is created.
13. DISCLAIMER: The Company undertakes no duty or responsibility for providing periodic updates to you in the future as it relates to this award.
14. GOLDEN PARACHUTE TAXES. In the event that any amounts paid or deemed paid to you pursuant to the Grant Notice are deemed to constitute
“excess parachute payments” as defined in Code Section 280G (taking into account any other payments made to you under the Plan and any other
compensation paid or deemed paid to you), or if you are deemed to receive an “excess parachute payment” by reason of the acceleration of vesting of your
RSUs granted under the Plan due to a Change of Control, the amount of such payments or deemed payments shall be reduced (or, alternatively, the number of
RSUs that become 100% vested shall be reduced), so that no such payments or deemed payments shall constitute excess parachute payments. The
determination of whether a payment or deemed payment constitutes an excess parachute payment shall be in the sole discretion of the Company’s Board.
15. CODE SECTION 409A. This award and payments made pursuant to this Grant Notice and the Plan are intended to qualify for an exemption from or
comply with Code Section 409A. Notwithstanding any other provision in this Grant Notice and the Plan, the Company, to the extent it deems necessary or
advisable in its sole discretion, reserves the right, but shall not be required, to unilaterally amend or modify this Grant Notice and/or the Plan so that the RSUs
granted to the Participant qualify for exemption from or comply with Code Section 409A; provided, however, that the Company makes no representations that
the RSUs shall be exempt from or comply with Code Section 409A and makes no undertaking to preclude Code Section 409A from applying to the RSUs.
Nothing in this Grant Notice or the Plan shall provide a basis for any person to take action against the Company or any Subsidiary or Affiliate based on matters
covered by Code Section 409A, including the tax treatment of any amount paid or Award made under this Grant Notice, and neither the Company nor any of its
Subsidiaries or Affiliates shall under any circumstances have any liability to any Participant or his or her estate or any other party for any taxes,
RSU Grant Notice 2022
penalties or interest imposed under Code Section 409A for any amounts paid or payable under this Grant Notice. Notwithstanding anything to the contrary in
this Grant Notice, no amounts shall be paid to you under this Grant Notice during the six (6)-month period following your “separation from service” (within the
meaning of Code Section 409A) to the extent that the Company determines you are a “specified employee” (within the meaning of Code Section 409A) at the
time of such separation from service and that paying such amounts at the time or times indicated in this Grant Notice would be a prohibited distribution under
Code Section 409A(a)(2)(B)(i). If the payment of any such amounts is delayed as a result of the previous sentence, then on the first business day following the
end of such six (6)-month period (or such earlier date upon which such amount can be paid under Code Section 409A without being subject to such additional
taxes), the Company shall pay you in a lump sum all amounts that would have otherwise been payable to you during such six (6)-month period under this Grant
Notice.
16. DATA PRIVACY CONSENT. In order to administer the Plan and to implement or structure future equity grants, the Company and certain agents thereof
(together, the “Relevant Companies”) may process any and all personal or professional data, including but not limited to Social Security or other identification
numbers, home address, and telephone number, date of birth, and other information that is necessary or desirable for the administration of the Plan (the
“Relevant Information”). By receiving the Grant Notice, the Participant (i) authorizes the Company to collect, process, register and transfer to the Relevant
Companies all Relevant Information; (ii) waives any privacy rights the Participant may have with respect to the Relevant Information; (iii) authorizes the
Relevant Companies to store and transmit such information in electronic form; and (iv) authorizes the transfer of the Relevant Information to any jurisdiction in
which the Relevant Companies consider appropriate. The Participant shall have access to, and the right to change, the Relevant Information. Relevant
Information will only be used in accordance with applicable law.
Name: Garrett R. Ferencz
Title: EVP, Chief Legal Officer
Date: February 4, 2022
RSU Grant Notice 2022
TRUEBLUE, INC.
PERFORMANCE SHARE UNIT GRANT NOTICE
(“Grant Notice”)
(TrueBlue 2016 Omnibus Incentive Plan as Amended and Restated)
EXHIBIT 10.29
TrueBlue, Inc. (the “Company”), pursuant to its TrueBlue 2016 Omnibus Incentive Plan as Amended and Restated (the “Plan”), grants to Participant
named below, as of the Date of Grant, the number of performance share units (“Performance Share Units,” “PSUs,” or “Units”) set forth below (the “Award”).
Each Performance Share Unit granted represents the contingent right to receive one share of the Company’s common stock (“Share”). The PSUs granted
hereunder are subject to the terms and conditions in this Grant Notice and the terms of the Plan, which is incorporated by reference herein in its entirety. Copies
of the Plan are available upon request.
Participant: «Full_Name»
Target Number of Performance Share Units Granted: «Units» (“Target PSUs”)
Date of Grant: February 4, 2022
Performance Period: Fiscal Years 2022 through 2024
Grant Notice Confirmation Date: March 4, 2022
1. VESTING TERMS: Performance Vesting. The PSUs will vest, if and as provided below, two days after the disclosure of earnings for the final fiscal
year of the Performance Period. The number of PSUs under the Award that actually vest and that will be settled shall be determined pursuant to a two-step
process: (i) first the maximum number of PSUs that are eligible to vest shall be determined as provided in Section 1(a) below, on the basis of the level at which
the performance metric specified on the attached Schedule I is actually attained, and (ii) then the maximum number of these PSUs (calculated under clause (i))
that will actually vest shall be determined on the basis of the Participant’s completion of the requirements set forth in Section 1(b) below. The number of PSUs
that vest are referred to as the “Vested PSUs”.
( a ) Performance Determination. The attached Schedule I specifies the performance metric required to be attained during the Performance
Period in order for the PSUs to become eligible to vest. As soon as reasonably practicable following the end of the Performance Period, the
Compensation Committee of the Board of Directors of the Company (the “Committee”) shall determine in its sole discretion the attainment level of the
performance metric. On the basis of the determined level of attainment of the performance metric, the Target PSUs will be multiplied by the applicable
percentage determined in accordance with the performance matrix set forth in Schedule 1. The number of PSUs resulting from such determination shall
constitute that maximum number of PSUs in which the Participant may vest under this Award (the “Earned PSUs”);
(b) Continual Employment. Subject to this Grant Notice and any specific terms contained in Participant’s employment agreement, a number of
PSUs will vest based on the achievement of the performance metrics detailed in the attached Schedule I of this Grant Notice, so long as the Participant is
an active employee of the Company.
2. ISSUANCE OF SHARES OF STOCK: As soon as practicable following each vesting date (but in no event later than thirty (30) days after the
vesting date and in all cases by the earlier of the March 15 following the applicable vesting date and the March 15 following the end of the Performance
Period), the Company shall issue to the Participant, on a one-for-one basis, a number of Shares equal to the number of Vested PSUs, provided in each case
that Participant has satisfied its tax withholding obligations with respect to such vesting as described below (the “Settlement Date”). Shares, in a number equal
to the number of Vested PSUs, will be issued by the Company in the name of Participant by electronic book-entry transfer or credit of such shares to
Participant’s account maintained with such brokerage firm or other custodian as the Company determines. Participant shall thereafter have all the rights of a
stockholder of the Company with respect to such Shares.
th
th
3. VESTING AND FORFEITURE OF PERFORMANCE SHARE UNITS.
(a) Termination of Employment.
(i) If you are terminated with Cause by the Company, or its subsidiaries or affiliates, or you terminate your employment with the Company, or
its subsidiaries or affiliates, without Good Reason all vesting in Units will cease and any Units which are not vested shall be forfeited and ownership of
such Units shall return to the Company on your employment termination date.
PSU Grant Notice 2022
(ii) For the purposes of determining the vesting of Units only, if you are terminated by the Company, or its subsidiaries or affiliates, without
Cause, or you terminate your employment with the Company, or its subsidiaries or affiliates, for Good Reason, or if your employment with the Company,
or its subsidiaries or affiliates, terminates by reason of death, disability, or retirement, you will receive that number of Vested PSUs at the completion of
the Performance Period that are earned pursuant to the performance vesting provisions set forth in this Grant Notice and on Schedule I hereto, pro-rated
based on the portion of the Performance Period you were employed, as increased by any period of accelerated vesting to which you are entitled in your
employment agreements, if any. Any such pro-rated number of Vested PSUs will be settled in Shares in accordance with Section 2.
(b) Change in Control. If there is a Change of Control while you are employed by the Company or any subsidiary or affiliate of the Company,
and you are terminated without Cause or you are terminated for Good Reason before the third anniversary of such Change in Control (all as defined in
your Change in Control Agreement), your Units shall become immediately 100% vested at the target levels upon such Change of Control, provided that
the Committee shall have the discretion to determine that the performance metric shall be deemed to have been performed at the maximum level. In
determining the extent to which the performance targets have been satisfied, the Committee shall make reasonable adjustment for the unbudgeted
impact of: (i) asset write-downs or impairment charges; (ii) litigation or claim costs, judgments, or settlements; (iii) the effect of changes in tax laws,
accounting principles, or other laws or provisions affecting reported results; (iv) restatements occurring as a result of errors that arise from events other
than fraud or failures in performance; (v) accruals for reorganization and restructuring programs; (vi) extraordinary nonrecurring items as described in
Accounting Principles Board Opinion No. 30 and/or in management’s discussion and analysis of financial condition and results of operations appearing in
the Company’s annual report to stockholders for the applicable year; (vii) acquisitions or divestitures; and (viii) foreign exchange gains and losses.
( c ) Retirement. If you retire (voluntarily terminate your employment) from the Company and are (i) at least 55 years of age, and (ii) have
completed 10 years of service to the Company, then the PSU awards that are payable after the last day of employment will be prorated based on the
number of days worked during the Performance Period. PSU awards will be paid at the regularly scheduled payout date, post-employment, at this
prorated amount.
4. DIVIDEND EQUIVALENTS. In addition to the PSUs, the Company hereby grants to Participant, with respect to each Vested PSU, an amount equal
to the cash dividend the Company pays on each Share between the Date of Grant and the Settlement Date (each a “Dividend Equivalent Amount”). Following
the Date of Grant, the Company will establish a bookkeeping account (a “Dividend Equivalent Account”) and credit the Dividend Equivalent Amounts to such
account through the Settlement Date. On the Settlement Date, the balance in your Dividend Equivalent Account shall be converted into an additional number of
Vested PSUs determined by dividing the balance of the Dividend Equivalent Account by the Fair Market Value of a Share on the Settlement Date, rounded up
or down to the nearest whole number. Your Dividend Equivalent Account will be subject to the same conditions as the underlying PSUs with respect to which
Dividend Equivalent Amounts were paid, including, without limitation, the vesting conditions and the provisions governing time and form of settlement applicable
to the underlying PSUs. Unless expressly provided otherwise, as used elsewhere in this Grant Notice, “PSUs” shall include any Dividend Equivalent Amounts
payable on such PSUs under this Grant Notice.
5. NUMBER OF SHARES OF PERFORMANCE SHARE UNITS. The number of Units referenced in your Grant Notice may be adjusted from time to
time for changes in the Company’s capital structure at the Board’s sole discretion, as provided in the Plan.
6. OWNERSHIP AND TAXATION UPON VESTING IN PERFORMANCE SHARE UNITS.
(a) Until you vest in your Units, the Units shall be held by the Company on your behalf. Your ownership of the Units shall be evidenced by an
appropriate entry on the books of the Company or of a duly authorized agent of the Company, or other appropriate means as determined by the
Company. In the event ownership of Company common stock is prohibited due to foreign exchange, securities regulations, or other provisions of
applicable law, you, or in the event of your death, your legal representative, shall receive cash proceeds in an amount equal to the value of the shares of
common stock otherwise distributable to you upon vesting of the Units, net of the satisfaction of the requirements of Section 6(b) below.
(b) You shall pay, or make adequate arrangements satisfactory to the Company to pay, any sums required to satisfy the federal, state, local,
and foreign tax withholding obligations of the Company or its subsidiaries or affiliates, if any, which arise in connection with your vesting in or settlement
of the Units. You
PSU Grant Notice 2022
hereby authorize the Company (or a subsidiary or affiliate of the Company that employs you), to withhold from payroll and any other amounts payable to
you, and otherwise agree to make adequate provision for, sums to satisfy the required tax withholdings. Alternatively, or in addition, if permissible under
local law, the Company may (i) sell or arrange for the sale of a portion of the earned shares to satisfy the withholding obligation and/or (ii) reclaim
ownership of a portion of the Units, provided that the Company shall retake ownership in only the amount of shares necessary to satisfy the minimum
withholding amount. You shall pay to the Company (or the subsidiary or affiliate of the Company that employs you) any amount needed to pay the tax
withholding obligations that cannot be satisfied by the means previously described.
(c) Until your Units are converted to Shares and are evidenced by a stock certificate, appropriate entry on the books of the Company or of a
duly authorized transfer agent of the Company, or other appropriate means, you shall have no right to vote or receive dividends or any other rights as a
shareholder with respect to such Units. No adjustment will be made for a dividend or other right for which the record date is prior to the date you are
recorded as the owner of the Shares, unless the Committee provides you with a dividend equivalent right pursuant to the Plan
(d) By accepting the Grant Notice through accepting the PSU grant at the Merrill Lynch website, you agree not to sell any of the Shares in
which you become vested at a time when applicable laws or Company policies prohibit a sale.
(e) All Units are only convertible into Shares. At the time of vesting and converting of Units into Shares, you have no right to convert any Unit
directly into cash. After Units have been converted into Shares, you may sell, trade, or otherwise dispose of such Shares as you wish, subject to
applicable laws, rules, and agreements regarding such Shares.
7. TRANSFERABILITY. Your right in the Units awarded under this PSU grant and any interest therein may not be sold, pledged, assigned,
hypothecated, transferred, or disposed of in any manner, other than by will or by the laws of descent or distribution, prior to the settlement of such Units.
8. PERFORMANCE SHARE UNIT AWARD IS NOT A SERVICE CONTRACT. Your award of Units is not an employment or service contract, and
nothing in your award shall be deemed to create in any way whatsoever any obligation on your part to continue in the employ of the Company or a subsidiary or
affiliate of the Company, or any obligation on the part of the Company or a subsidiary or affiliate of the Company to continue your employment. In addition,
nothing in your award shall obligate the Company or a subsidiary or affiliate of the Company, their respective shareholders, boards of directors, officers, or
employees to continue any relationship that you might have as a Director or Consultant for the Company or a subsidiary or affiliate of the Company.
9. GOVERNING PLAN DOCUMENT. Your Units award is subject to all the provisions of the Plan, the provisions of which are hereby made a part of
your award and is further subject to all interpretations, amendments, rules, and regulations which may from time to time be promulgated and adopted pursuant
to the Plan. In the event of any conflict between the provisions of your award or your employment agreements and those of the Plan, the provisions of the Plan
shall control. Participant further acknowledges that as of the Date of Grant, this Grant Notice, Participant’s employment agreement, and the Plan set forth the
entire understanding between Participant and the Company regarding the acquisition of the PSU granted hereunder and supersede all prior oral and written
agreements on that subject. Establishing a brokerage account as set forth below and/or accepting the PSU granted hereunder shall constitute agreement to the
terms above and any other referenced terms.
10. ACKNOWLEDGEMENTS: Unless Participant contacts the Company’s Chief Legal Officer’s office in writing within 30 days of the date of this
Grant Notice, Participant acknowledges receipt of, and understands and agrees to, this Grant Notice and understands that a copy of the Plan is available upon
request.
11. STOCKHOLDER RIGHTS. You will not be deemed to be the holder of and will not have any of the rights of a holder or owner of any Shares
represented by your Units until your Units have been earned and converted into Shares and ownership of such Shares is evidenced as set forth in Section 2
above. Units do not make you eligible to receive any dividends, voting powers, or any other shareholder rights associated with Shares.
12. GOLDEN PARACHUTE TAXES. In the event that any amounts paid or deemed paid to you in connection with the Units are deemed to constitute
“excess parachute payments” as defined in Code Section 280G (taking into account any other payments made to you under the Plan and any other
compensation paid or deemed paid to you), or if you are deemed to receive an “excess parachute payment” by reason of the acceleration of vesting of your
Units granted under the Plan due to a Change of Control, the amount of such payments or deemed payments shall be reduced (or, alternatively, the number of
Performance Share Units that become 100% earned shall be reduced), so that
PSU Grant Notice 2022
no such payments or deemed payments shall constitute excess parachute payments. The determination of whether a payment or deemed payment constitutes
an excess parachute payment shall be in the sole discretion of the Company’s Board.
13. CODE SECTION 409A. This award shall be interpreted in such a manner that all provisions relating to the settlement of the award are exempt
from the requirements of Code Section 409A as “short-term deferrals” as described in Code Section 409A. This award and payments made pursuant to this
Grant Notice and the Plan are intended to qualify for an exemption from or comply with Code Section 409A. Notwithstanding any other provision in this Grant
Notice and the Plan, the Company, to the extent it deems necessary or advisable in its sole discretion, reserves the right, but shall not be required, to
unilaterally amend or modify this Grant Notice and/or the Plan so that the RSUs granted to the Participant qualify for exemption from or comply with Code
Section 409A; provided, however, that the Company makes no representations that the RSUs shall be exempt from or comply with Code Section 409A and
makes no undertaking to preclude Code Section 409A from applying to the RSUs. Nothing in this Grant Notice or the Plan shall provide a basis for any person
to take action against the Company or any Subsidiary or Affiliate based on matters covered by Code Section 409A, including the tax treatment of any amount
paid or Award made under this Grant Notice, and neither the Company nor any of its Subsidiaries or Affiliates shall under any circumstances have any liability to
any Participant or his or her estate or any other party for any taxes, penalties or interest imposed under Code Section 409A for any amounts paid or payable
under this Grant Notice.
14. DATA PRIVACY CONSENT. In order to administer the Plan and to implement or structure future equity grants, the Company and certain agents
thereof (together, the “Relevant Companies”) may process any and all personal or professional data, including but not limited to Social Security or other
identification numbers, home address, and telephone number, date of birth, and other information that is necessary or desirable for the administration of the
Plan (the “Relevant Information”). By receiving the Grant Notice, the Participant (i) authorizes the Company to collect, process, register and transfer to the
Relevant Companies all Relevant Information; (ii) waives any privacy rights the Participant may have with respect to the Relevant Information; (iii) authorizes
the Relevant Companies to store and transmit such information in electronic form; and (iv) authorizes the transfer of the Relevant Information to any jurisdiction
in which the Relevant Companies consider appropriate. The Participant shall have access to, and the right to change, the Relevant Information. Relevant
Information will only be used in accordance with applicable law.
PSU Grant Notice 2022
TRUEBLUE, INC.
PERFORMANCE SHARE UNIT GRANT NOTICE
Schedule I
(TrueBlue 2016 Omnibus Incentive Plan as Amended and Restated)
Your Performance Share Units (“PSUs”) are not immediately vested. PSUs are earned based upon the Company’s performance on key financial metrics over a
three-year period specified in the Grant Notice (“Performance Period”). Except as otherwise set forth in the Grant Notice, the PSUs will vest and be converted
into Company common stock based upon the Company meeting certain performance metrics calculated at the completion of the Performance Period, as set
forth below. Performance metrics are established by the Compensation Committee of the Board of Directors of the Company (the “Committee”) at the beginning
of the Performance Period.
The performance metric during the Performance Period is Return on Equity (“ROE”).
Performance Period
Fiscal Years 2022 through 2024
(1)
Maximum
Target
Threshold
18% ROE
14% ROE
10% ROE
% of Shares
(2)
Awarded
150%
100%
50%
(1) Calculation of ROE for Performance Share Units
a. ROE is calculated over a three-year Performance Period.
b. ROE equals Adjusted Net Income divided Equity, each defined below.
c. Equity is calculated as the average across all 12 quarters of the Performance Period (“Equity”).
d. Net Income will be calculated using U.S. GAAP and is anticipated to include the impact of acquisitions and may be adjusted to exclude the impact of
charges for restructuring, discontinued operations, debt redemption or retirement, asset impairments or write downs, material litigation, or claim
judgements or settlements, significant foreign exchange gains and losses, and other unusual non-recurring items, and the cumulative effects of tax or
accounting changes (“Adjusted Net Income”).
(2) Award levels will be extrapolated based on straight-line interpolation between levels beginning at the threshold level.
PSU Grant Notice 2022
TRUEBLUE, INC.
RESTRICTED STOCK UNIT GRANT NOTICE
Three-Year Vesting
(“Grant Notice”)
(TrueBlue 2016 Omnibus Incentive Plan as Amended and Restated)
EXHIBIT 10.30
TrueBlue, Inc. (the “Company”), pursuant to its TrueBlue 2016 Omnibus Incentive Plan as Amended and Restated (the “Plan”), grants to Participant
named below, as of the Date of Grant, the number of restricted share units (“Restricted Share Units” or “RSUs”) set forth below. Each RSU represents the
contingent right to receive a share of the Company’s common stock (“Share”) if the RSU becomes vested. The RSUs granted hereunder are subject to the
terms and conditions in this Grant Notice and to the terms of the Plan, which is incorporated by reference herein in its entirety. Copies of the Plan are available
upon request. Subject to the limitations contained herein, the details and terms of your award are as follows:
Participant: «Full_Name»
Number of RSUs Granted: «Shares»
Date of Grant: February 3, 2023
Grant Notice Confirmation Date: May 3, 2023
1. VESTING TERMS: Three-Year Vesting. The RSUs vest in three equal installments. One-third of the RSUs will vest on each successive annual anniversary
of the Date of Grant, becoming 100% vested on the third annual anniversary of the Date of Grant, so long as you are employed with the Company or a
subsidiary or affiliate of the Company at such time.
2. ISSUANCE OF SHARES OF STOCK: Within 30 days following the earlier of (i) the applicable vesting date set forth in Section 1 and (ii) Participant’s
“separation from service” from the Company (within the meaning of Code Section 409A), the Company shall issue to the Participant, on a one-for-one basis, a
number of Shares equal to the number of RSUs that have vested pursuant to this Grant Notice, provided in each case that Participant has satisfied its tax
withholding obligations with respect to such vesting as described below. Shares, in a number equal to the number of RSUs that have so vested, will be issued
by the Company in the name of Participant by electronic book-entry transfer or credit of such shares to Participant’s account maintained with such brokerage
firm or other custodian as the Company determines. Participant shall thereafter have all the rights of a stockholder of the Company with respect to such shares.
Notwithstanding the foregoing, the exact settlement date of the Shares underlying a vested RSU shall be determined by the Company in its sole discretion (and
Participant shall not have a right to designate the time of payment).
3. VESTING AND FORFEITURE OF RESTRICTED STOCK UNITS.
(a) Termination of Employment . Subject to the limitations contained herein, you will vest in your RSUs over the period noted above, provided
that vesting will cease upon the termination of your employment with the Company and its subsidiaries and affiliates. Any RSUs in which you are not vested
when you terminate employment with the Company and its subsidiaries and affiliates shall be forfeited and void on your employment termination date, unless
provided for otherwise in your employment agreement.
(b) Change in Control. If there is a Change in Control (as defined in your Change in Control Agreement) while you are employed by the
Company or any subsidiary or affiliate of the Company, and you are terminated without Cause or you Terminate for Good Reason (each as defined in your
Change in Control Agreement) before the third anniversary of such Change in Control, your RSUs shall become immediately 100% vested upon such Change in
Control and subsequent termination.
(c) Retirement. If you retire (voluntarily terminate your employment) from the Company, and are: (i) at least 55 years of age, and (ii) have
completed 10 years of service with the Company, then at the time of your retirement, RSUs that would normally vest at the next scheduled vesting will be
prorated based on the days worked since the last vesting date and will vest on your retirement.
4. NUMBER OF RESTRICTED STOCK UNITS. The number of RSUs referenced in your Grant Notice may be adjusted from time to time for changes in the
Company’s capital structure at the Board’s sole discretion, as provided in the Plan.
5. DIVIDEND EQUIVALENTS. On each date that a cash dividend is paid to holders of Shares during the Vesting Period, an amount (the “Dividend Equivalent
Amount” ) equal to the cash dividend that is paid on each Share, multiplied
RSU Grant Notice 2023
by the number of unvested RSUs and any Dividend Equivalent RSUs (as defined below) that remain unvested and outstanding as of the dividend payment date,
shall be credited for the benefit of the Participant, and such credited amount shall be converted into an additional number of RSUs (“Dividend Equivalent RSUs”
) determined by dividing the Dividend Equivalent Amount by the Fair Market Value of a Share on the dividend payment date, rounded up or down to the nearest
whole number. During the period beginning immediately following the last day of the Vesting Period and ending on the date the RSUs granted hereunder are
paid, Dividend Equivalent RSUs will accrue on any RSUs and any Dividend Equivalent RSUs. Dividend Equivalent RSUs will be subject to the same conditions
as the underlying RSUs with respect to which Dividend Equivalent RSUs were paid, including, without limitation, the vesting conditions and the provisions
governing time and form of settlement applicable to the underlying RSUs. Unless expressly provided otherwise, as used elsewhere in this Agreement, “RSUs”
shall include any Dividend Equivalent RSUs that have been credited to the Participant’s account. However, any amounts that may become payable in respect of
this Section 5 shall be treated separately from the RSUs and the rights arising in connection therewith for purposes of Code Section 409A.
6. OWNERSHIP AND TAXATION UPON VESTING IN RESTRICTED STOCK UNITS.
(a) Until you vest in your RSUs, the RSUs shall be held by the Company on your behalf. Your ownership of the RSUs shall be evidenced by
appropriate entry on the books of the Company or of a duly authorized agent of the Company, or other appropriate means as determined by the
Company.
(b) You shall pay, or make adequate arrangements satisfactory to the Company or a subsidiary or affiliate of the Company to pay, any sums
required to satisfy the federal, state, local, and foreign tax withholding obligations of the Company or a subsidiary or affiliate of the Company, if any, which
arise in connection with your vesting in or settlement of the RSUs. You hereby authorize the Company (or a subsidiary or affiliate of the Company that
employs you) to withhold from payroll and any other amounts payable to you, and otherwise agree to make adequate provision for, sums to satisfy the
required tax withholdings. Alternatively, or in addition, if permissible under local law, the Company may (i) sell or arrange for the sale of a portion of the
RSUs to satisfy the withholding obligation and/or (ii) reclaim ownership of a portion of the RSUs, provided that the Company shall retake ownership in
only the amount of RSUs necessary to satisfy the minimum withholding amount. To the extent that any FICA tax withholding obligations arise in
connection with the RSUs prior to the date on which such RSUs should otherwise become payable to you, then the Company may accelerate the
payment of a number of RSUs sufficient to satisfy (but not in excess of) such tax withholding obligations and any tax withholding obligations associated
with such accelerated payment, and the Company or a subsidiary or affiliate may withhold such amounts in satisfaction of such withholding obligations.
You shall pay to the Company (or the subsidiary or affiliate of the Company that employs you) any amount needed to pay the tax withholding obligations
that cannot be satisfied by the means previously described. The Company may refuse to release the transfer restrictions on the RSUs if you fail to meet
your tax withholding obligations.
(c) In lieu of releasing restrictions on fractional RSUs, on the vesting of a fraction of a RSU, the Company shall vest the entire RSU where the
fraction represents 0.5 or more of the RSU and shall not vest any of the RSU where such fraction represents less than 0.5 of the RSU.
(d) By accepting the Grant Notice through accepting the RSU grant at the Merrill Lynch website, you agree not to sell any of the Shares in
which you become vested at a time when applicable laws or Company policies prohibit a sale.
(e) All RSUs are only convertible into Shares. At the time of vesting and converting of RSUs into Shares, you have no right to convert any
RSU directly into cash. After RSUs have been converted into Shares, you may sell, trade, or otherwise dispose of such Shares as you wish, subject to
applicable laws, rules, and agreements regarding such Shares.
(f) In the event ownership of RSUs is prohibited due to foreign exchange, securities regulations, or other provisions of applicable law, you shall
receive cash proceeds in an amount equal to the value of the Shares otherwise distributable to you upon vesting in the RSUs, net of the satisfaction of
the requirements of Section 6(b) above.
7. TRANSFERABILITY. Your right in the RSUs awarded under the Grant Notice and any interest therein may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner, other than by will or by the laws of descent or distribution, prior to the settlement of such RSUs.
8. RESTRICTED STOCK UNIT AWARD NOT A SERVICE CONTRACT. Your award of RSUs is not an employment or service contract, and nothing in your
award shall be deemed to create in any way whatsoever any obligation on your part to continue in the employ of the Company or a subsidiary or affiliate of the
Company, or any obligation on the part
RSU Grant Notice 2023
of the Company or a subsidiary or affiliate of the Company to continue your employment. In addition, nothing in your award shall obligate the Company or a
subsidiary or affiliate of the Company, their respective shareholders, boards of directors, officers, or employees to continue any relationship that you might have
as a Director or Consultant for the Company or a subsidiary or affiliate of the Company.
9. GOVERNING PLAN DOCUMENT. Your RSU award is subject to all the provisions of the Plan, the provisions of which are hereby made a part of your
award, and is further subject to all interpretations, amendments, rules, and regulations which may from time to time be promulgated and adopted pursuant to the
Plan. In the event of any conflict between the terms of an employment agreement, Change in Control Agreement, this Grant Notice, and the Plan, the
documents shall govern in the order listed herein, to the extent permitted by the terms of the Plan. Participant further acknowledges that as of the Date of Grant,
this Grant Notice, Participant’s employment agreement, and the Plan set forth the entire understanding between Participant and the Company regarding the
acquisition of the RSUs granted hereunder and supersede all prior oral and written agreements on that subject. Establishing a brokerage account as set forth
below and/or accepting the RSUs granted hereunder shall constitute agreement to the terms above and any other referenced terms.
10. ACKNOWLEDGEMENTS: Unless Participant contacts the Company’s Chief Legal Officer’s office in writing within 30 days of the date of this Grant Notice,
Participant acknowledges receipt of, and understands and agrees to, this Grant Notice, and understands that a copy of the Plan is available upon request.
11. NO RIGHTS AS A STOCKHOLDER. Neither the RSUs nor this Grant Notice shall entitle Participant to any voting rights or other rights as a stockholder of
the Company until Shares have been issued in settlement thereof.
12. BROKERAGE ACCOUNT: Participant agrees to establish and maintain a brokerage account with a financial institution designated by the Company,
which is currently Merrill Lynch. The Participant will not be able to accept the award or sell any shares vested under this agreement until such a brokerage
account is created.
13. DISCLAIMER: The Company undertakes no duty or responsibility for providing periodic updates to you in the future as it relates to this award.
14. GOLDEN PARACHUTE TAXES. In the event that any amounts paid or deemed paid to you pursuant to the Grant Notice are deemed to constitute
“excess parachute payments” as defined in Code Section 280G (taking into account any other payments made to you under the Plan and any other
compensation paid or deemed paid to you), or if you are deemed to receive an “excess parachute payment” by reason of the acceleration of vesting of your
RSUs granted under the Plan due to a Change in Control or Corporate Transaction (as defined in the Plan), the amount of such payments or deemed payments
shall be reduced (or, alternatively, the number of RSUs that become 100% vested shall be reduced), so that no such payments or deemed payments shall
constitute excess parachute payments. The determination of whether a payment or deemed payment constitutes an excess parachute payment shall be in the
sole discretion of the Company’s Board.
15. CODE SECTION 409A. This award and payments made pursuant to this Grant Notice and the Plan are intended to qualify for an exemption from or
comply with Code Section 409A. Notwithstanding any other provision in this Grant Notice and the Plan, the Company, to the extent it deems necessary or
advisable in its sole discretion, reserves the right, but shall not be required, to unilaterally amend or modify this Grant Notice and/or the Plan so that the RSUs
granted to the Participant qualify for exemption from or comply with Code Section 409A; provided, however, that the Company makes no representations that
the RSUs shall be exempt from or comply with Code Section 409A and makes no undertaking to preclude Code Section 409A from applying to the RSUs.
Nothing in this Grant Notice or the Plan shall provide a basis for any person to take action against the Company or any Subsidiary or Affiliate based on matters
covered by Code Section 409A, including the tax treatment of any amount paid or Award made under this Grant Notice, and neither the Company nor any of its
Subsidiaries or Affiliates shall under any circumstances have any liability to any Participant or his or her estate or any other party for any taxes, penalties or
interest imposed under Code Section 409A for any amounts paid or payable under this Grant Notice. Notwithstanding anything to the contrary in this Grant
Notice, no amounts shall be paid to you under this Grant Notice during the six (6)-month period following your “separation from service” (within the meaning of
Code Section 409A) to the extent that the Company determines you are a “specified employee” (within the meaning of Code Section 409A) at the time of such
separation from service and that paying such amounts at the time or times indicated in this Grant Notice would be a prohibited distribution under Code Section
409A(a)(2)(B)(i). If the payment of any such amounts is delayed as a result of the previous sentence, then on the first business day following the end of such six
(6)-month period (or such earlier date upon which such amount can be paid under Code Section 409A without being subject to such additional taxes), the
Company shall pay you in a lump sum all amounts that would have otherwise been payable to you during such six (6)-month period under this Grant Notice.
RSU Grant Notice 2023
16. DATA PRIVACY CONSENT. In order to administer the Plan and to implement or structure future equity grants, the Company and certain agents thereof
(together, the “Relevant Companies”) may process any and all personal or professional data, including but not limited to Social Security or other identification
numbers, home address, and telephone number, date of birth, and other information that is necessary or desirable for the administration of the Plan (the
“Relevant Information”). By receiving the Grant Notice, the Participant (i) authorizes the Company to collect, process, register and transfer to the Relevant
Companies all Relevant Information; (ii) waives any privacy rights the Participant may have with respect to the Relevant Information; (iii) authorizes the
Relevant Companies to store and transmit such information in electronic form; and (iv) authorizes the transfer of the Relevant Information to any jurisdiction in
which the Relevant Companies consider appropriate. The Participant shall have access to, and the right to change, the Relevant Information. Relevant
Information will only be used in accordance with applicable law.
RSU Grant Notice 2023
TRUEBLUE, INC.
PERFORMANCE SHARE UNIT GRANT NOTICE
(“Grant Notice”)
(TrueBlue 2016 Omnibus Incentive Plan as Amended and Restated)
EXHIBIT 10.31
TrueBlue, Inc. (the “Company”), pursuant to its TrueBlue 2016 Omnibus Incentive Plan as Amended and Restated (the “Plan”), grants to Participant
named below, as of the Date of Grant, the number of performance share units (“Performance Share Units,” “PSUs,” or “Units”) set forth below (the “Award”).
Each Performance Share Unit granted represents the contingent right to receive one share of the Company’s common stock (“Share”). The PSUs granted
hereunder are subject to the terms and conditions in this Grant Notice and the terms of the Plan, which is incorporated by reference herein in its entirety. Copies
of the Plan are available upon request.
Participant: «Full_Name»
Target Number of Performance Share Units Granted: «Units» (“Target PSUs”)
Date of Grant: March 10, 2023
Performance Period: Fiscal Years 2023 through 2025
Grant Notice Confirmation Date: May 10, 2023
1. VESTING TERMS: Performance Vesting. The PSUs will vest, if and as provided below, two days after the disclosure of earnings for the final fiscal year of
the Performance Period. The number of PSUs under the Award that actually vest and that will be settled shall be determined pursuant to a two-step process: (i)
first the maximum number of PSUs that are eligible to vest shall be determined as provided in Section 1(a) below, on the basis of the level at which the
performance metric specified on the attached Schedule I is actually attained, and (ii) then the maximum number of these PSUs (calculated under clause (i)) that
will actually vest shall be determined on the basis of the Participant’s completion of the requirements set forth in Section 1(b) below. The number of PSUs that
vest are referred to as the “Vested PSUs”.
( a ) Performance Determination. The attached Schedule I specifies the performance metric required to be attained during the Performance
Period in order for the PSUs to become eligible to vest. As soon as reasonably practicable following the end of the Performance Period, the
Compensation Committee of the Board of Directors of the Company (the “Committee”) shall determine in its sole discretion the attainment level of the
performance metric. On the basis of the determined level of attainment of the performance metric, the Target PSUs will be multiplied by the applicable
percentage determined in accordance with the performance matrix set forth in Schedule 1. The number of PSUs resulting from such determination shall
constitute that maximum number of PSUs in which the Participant may vest under this Award (the “Earned PSUs”);
(b) Continual Employment. Subject to this Grant Notice and any specific terms contained in Participant’s employment agreement, a number of
PSUs will vest based on the achievement of the performance metrics detailed in the attached Schedule I of this Grant Notice, so long as the Participant is
an active employee of the Company.
2. ISSUANCE OF SHARES OF STOCK: As soon as practicable following each vesting date (but in no event later than thirty (30) days after the vesting date
and in all cases by the earlier of the March 15 following the applicable vesting date and the March 15 following the end of the Performance Period), the
Company shall issue to the Participant, on a one-for-one basis, a number of Shares equal to the number of Vested PSUs, provided in each case that Participant
has satisfied its tax withholding obligations with respect to such vesting as described below (the “Settlement Date”). Shares, in a number equal to the number of
Vested PSUs, will be issued by the Company in the name of Participant by electronic book-entry transfer or credit of such shares to Participant’s account
maintained with such brokerage firm or other custodian as the Company determines. Participant shall thereafter have all the rights of a stockholder of the
Company with respect to such Shares.
th
th
3. VESTING AND FORFEITURE OF PERFORMANCE SHARE UNITS.
(a) Termination of Employment.
(i) If you are terminated with Cause by the Company, or its subsidiaries or affiliates, or you terminate your employment with the Company, or
its subsidiaries or affiliates, without Good Reason all vesting in Units will cease and any Units which are not vested shall be forfeited and ownership of
such Units shall return to the Company on your employment termination date.
PSU Grant Notice 2023
(ii) For the purposes of determining the vesting of Units only, if you are terminated by the Company, or its subsidiaries or affiliates, without
Cause, or you terminate your employment with the Company, or its subsidiaries or affiliates, for Good Reason, or if your employment with the Company,
or its subsidiaries or affiliates, terminates by reason of death, disability, or retirement, you will receive that number of Vested PSUs at the completion of
the Performance Period that are earned pursuant to the performance vesting provisions set forth in this Grant Notice and on Schedule I hereto, pro-rated
based on the portion of the Performance Period you were employed, as increased by any period of accelerated vesting to which you are entitled in your
employment agreements, if any. Any such pro-rated number of Vested PSUs will be settled in Shares in accordance with Section 2.
( b ) Change in Control. If there is a Change in Control (as defined your Change in Control Agreement) while you are employed by the
Company or any subsidiary or affiliate of the Company, and you are terminated without Cause or you are terminated for Good Reason (each as defined
in your Change in Control Agreement) before the third anniversary of such Change in Control, your Units shall become immediately 100% vested at the
target levels upon such Change in Control, provided that the Committee shall have the discretion to determine that the performance metric shall be
deemed to have been performed at the maximum level. In determining the extent to which the performance targets have been satisfied, the Committee
shall make reasonable adjustment for the unbudgeted impact of: (i) asset write-downs or impairment charges; (ii) litigation or claim costs, judgments, or
settlements; (iii) the effect of changes in tax laws, accounting principles, or other laws or provisions affecting reported results; (iv) restatements occurring
as a result of errors that arise from events other than fraud or failures in performance; (v) accruals for reorganization and restructuring programs; (vi)
extraordinary nonrecurring items as described in Accounting Principles Board Opinion No. 30 and/or in management’s discussion and analysis of
financial condition and results of operations appearing in the Company’s annual report to stockholders for the applicable year; (vii) acquisitions or
divestitures; and (viii) foreign exchange gains and losses.
( c ) Retirement. If you retire (voluntarily terminate your employment) from the Company and are (i) at least 55 years of age, and (ii) have
completed 10 years of service to the Company, then the PSU awards that are payable after the last day of employment will be prorated based on the
number of days worked during the Performance Period. PSU awards will be paid at the regularly scheduled payout date, post-employment, at this
prorated amount.
4. DIVIDEND EQUIVALENTS. In addition to the PSUs, the Company hereby grants to Participant, with respect to each Vested PSU, an amount equal to the
cash dividend the Company pays on each Share between the Date of Grant and the Settlement Date (each a “Dividend Equivalent Amount”). Following the
Date of Grant, the Company will establish a bookkeeping account (a “Dividend Equivalent Account”) and credit the Dividend Equivalent Amounts to such
account through the Settlement Date. On the Settlement Date, the balance in your Dividend Equivalent Account shall be converted into an additional number of
Vested PSUs determined by dividing the balance of the Dividend Equivalent Account by the Fair Market Value of a Share on the Settlement Date, rounded up
or down to the nearest whole number. Your Dividend Equivalent Account will be subject to the same conditions as the underlying PSUs with respect to which
Dividend Equivalent Amounts were paid, including, without limitation, the vesting conditions and the provisions governing time and form of settlement applicable
to the underlying PSUs. Unless expressly provided otherwise, as used elsewhere in this Grant Notice, “PSUs” shall include any Dividend Equivalent Amounts
payable on such PSUs under this Grant Notice.
5. NUMBER OF SHARES OF PERFORMANCE SHARE UNITS. The number of Units referenced in your Grant Notice may be adjusted from time to time for
changes in the Company’s capital structure at the Board’s sole discretion, as provided in the Plan.
6. OWNERSHIP AND TAXATION UPON VESTING IN PERFORMANCE SHARE UNITS.
(a) Until you vest in your Units, the Units shall be held by the Company on your behalf. Your ownership of the Units shall be evidenced by an
appropriate entry on the books of the Company or of a duly authorized agent of the Company, or other appropriate means as determined by the
Company. In the event ownership of Company common stock is prohibited due to foreign exchange, securities regulations, or other provisions of
applicable law, you, or in the event of your death, your legal representative, shall receive cash proceeds in an amount equal to the value of the shares of
common stock otherwise distributable to you upon vesting of the Units, net of the satisfaction of the requirements of Section 6(b) below.
(b) You shall pay, or make adequate arrangements satisfactory to the Company to pay, any sums required to satisfy the federal, state, local,
and foreign tax withholding obligations of the Company or its
PSU Grant Notice 2023
subsidiaries or affiliates, if any, which arise in connection with your vesting in or settlement of the Units. You hereby authorize the Company (or a
subsidiary or affiliate of the Company that employs you), to withhold from payroll and any other amounts payable to you, and otherwise agree to make
adequate provision for, sums to satisfy the required tax withholdings. Alternatively, or in addition, if permissible under local law, the Company may (i) sell
or arrange for the sale of a portion of the earned shares to satisfy the withholding obligation and/or (ii) reclaim ownership of a portion of the Units,
provided that the Company shall retake ownership in only the amount of shares necessary to satisfy the minimum withholding amount. You shall pay to
the Company (or the subsidiary or affiliate of the Company that employs you) any amount needed to pay the tax withholding obligations that cannot be
satisfied by the means previously described.
(c) Until your Units are converted to Shares and are evidenced by a stock certificate, appropriate entry on the books of the Company or of a
duly authorized transfer agent of the Company, or other appropriate means, you shall have no right to vote or receive dividends or any other rights as a
shareholder with respect to such Units. No adjustment will be made for a dividend or other right for which the record date is prior to the date you are
recorded as the owner of the Shares, unless the Committee provides you with a dividend equivalent right pursuant to the Plan
(d) By accepting the Grant Notice through accepting the PSU grant at the Merrill Lynch website, you agree not to sell any of the Shares in
which you become vested at a time when applicable laws or Company policies prohibit a sale.
(e) All Units are only convertible into Shares. At the time of vesting and converting of Units into Shares, you have no right to convert any Unit
directly into cash. After Units have been converted into Shares, you may sell, trade, or otherwise dispose of such Shares as you wish, subject to
applicable laws, rules, and agreements regarding such Shares.
7. TRANSFERABILITY. Your right in the Units awarded under this PSU grant and any interest therein may not be sold, pledged, assigned, hypothecated,
transferred, or disposed of in any manner, other than by will or by the laws of descent or distribution, prior to the settlement of such Units.
8. PERFORMANCE SHARE UNIT AWARD IS NOT A SERVICE CONTRACT. Your award of Units is not an employment or service contract, and nothing in
your award shall be deemed to create in any way whatsoever any obligation on your part to continue in the employ of the Company or a subsidiary or affiliate of
the Company, or any obligation on the part of the Company or a subsidiary or affiliate of the Company to continue your employment. In addition, nothing in your
award shall obligate the Company or a subsidiary or affiliate of the Company, their respective shareholders, boards of directors, officers, or employees to
continue any relationship that you might have as a Director or Consultant for the Company or a subsidiary or affiliate of the Company.
9. GOVERNING PLAN DOCUMENT. Your Units award is subject to all the provisions of the Plan, the provisions of which are hereby made a part of your
award and is further subject to all interpretations, amendments, rules, and regulations which may from time to time be promulgated and adopted pursuant to the
Plan. In the event of any conflict between the terms of an employment agreement, Change in Control Agreement, this Grant Notice, and the Plan, the
documents shall govern in the order listed herein, to the extent permitted by the terms of the Plan. Participant further acknowledges that as of the Date of Grant,
this Grant Notice, Participant’s employment agreement, and the Plan set forth the entire understanding between Participant and the Company regarding the
acquisition of the PSU granted hereunder and supersede all prior oral and written agreements on that subject. Establishing a brokerage account as set forth
below and/or accepting the PSU granted hereunder shall constitute agreement to the terms above and any other referenced terms.
10. ACKNOWLEDGEMENTS: Unless Participant contacts the Company’s Chief Legal Officer’s office in writing within 30 days of the date of this Grant Notice,
Participant acknowledges receipt of, and understands and agrees to, this Grant Notice and understands that a copy of the Plan is available upon request.
11. STOCKHOLDER RIGHTS. You will not be deemed to be the holder of and will not have any of the rights of a holder or owner of any Shares represented
by your Units until your Units have been earned and converted into Shares and ownership of such Shares is evidenced as set forth in Section 2 above. Units do
not make you eligible to receive any dividends, voting powers, or any other shareholder rights associated with Shares.
12. GOLDEN PARACHUTE TAXES. In the event that any amounts paid or deemed paid to you in connection with the Units are deemed to constitute “excess
parachute payments” as defined in Code Section 280G (taking into account any other payments made to you under the Plan and any other compensation paid
or deemed paid to you), or if you are deemed to receive an “excess parachute payment” by reason of the acceleration of vesting of your Units granted under
PSU Grant Notice 2023
the Plan due to a Change in Control (as defined in the Change in Control Agreement) or a Corporate Transaction (as defined in the Plan), the amount of such
payments or deemed payments shall be reduced (or, alternatively, the number of Performance Share Units that become 100% earned shall be reduced), so that
no such payments or deemed payments shall constitute excess parachute payments. The determination of whether a payment or deemed payment constitutes
an excess parachute payment shall be in the sole discretion of the Company’s Board.
13. CODE SECTION 409A. This award shall be interpreted in such a manner that all provisions relating to the settlement of the award are exempt from the
requirements of Code Section 409A as “short-term deferrals” as described in Code Section 409A. This award and payments made pursuant to this Grant Notice
and the Plan are intended to qualify for an exemption from or comply with Code Section 409A. Notwithstanding any other provision in this Grant Notice and the
Plan, the Company, to the extent it deems necessary or advisable in its sole discretion, reserves the right, but shall not be required, to unilaterally amend or
modify this Grant Notice and/or the Plan so that the RSUs granted to the Participant qualify for exemption from or comply with Code Section 409A; provided,
however, that the Company makes no representations that the RSUs shall be exempt from or comply with Code Section 409A and makes no undertaking to
preclude Code Section 409A from applying to the RSUs. Nothing in this Grant Notice or the Plan shall provide a basis for any person to take action against the
Company or any Subsidiary or Affiliate based on matters covered by Code Section 409A, including the tax treatment of any amount paid or Award made under
this Grant Notice, and neither the Company nor any of its Subsidiaries or Affiliates shall under any circumstances have any liability to any Participant or his or
her estate or any other party for any taxes, penalties or interest imposed under Code Section 409A for any amounts paid or payable under this Grant Notice.
14. DATA PRIVACY CONSENT. In order to administer the Plan and to implement or structure future equity grants, the Company and certain agents thereof
(together, the “Relevant Companies”) may process any and all personal or professional data, including but not limited to Social Security or other identification
numbers, home address, and telephone number, date of birth, and other information that is necessary or desirable for the administration of the Plan (the
“Relevant Information”). By receiving the Grant Notice, the Participant (i) authorizes the Company to collect, process, register and transfer to the Relevant
Companies all Relevant Information; (ii) waives any privacy rights the Participant may have with respect to the Relevant Information; (iii) authorizes the
Relevant Companies to store and transmit such information in electronic form; and (iv) authorizes the transfer of the Relevant Information to any jurisdiction in
which the Relevant Companies consider appropriate. The Participant shall have access to, and the right to change, the Relevant Information. Relevant
Information will only be used in accordance with applicable law.
PSU Grant Notice 2023
TRUEBLUE, INC.
PERFORMANCE SHARE UNIT GRANT NOTICE
Schedule I
(TrueBlue 2016 Omnibus Incentive Plan as Amended and Restated)
Your Performance Share Units (“PSUs”) are not immediately vested. PSUs are earned based upon the Company’s performance on key financial metrics over a
three-year period specified in the Grant Notice (“Performance Period”). Except as otherwise set forth in the Grant Notice, the PSUs will vest and be converted
into Company common stock based upon the Company meeting certain performance metrics calculated at the completion of the Performance Period, as set
forth below. Performance metrics are established by the Compensation Committee of the Board of Directors of the Company (the “Committee”) at the beginning
of the Performance Period.
The performance metric during the Performance Period is Return on Equity (“ROE”).
Performance Period
Fiscal Years 2023 through 2025
(1)
Maximum
Target
Threshold
18% ROE
14% ROE
8% ROE
% of Shares
(2)
Awarded
150%
100%
25%
(1) Calculation of ROE for Performance Share Units
a. ROE is calculated over a three-year Performance Period.
b. ROE equals Adjusted Net Income divided Equity, each defined below.
c. Equity is calculated as the average across all 12 quarters of the Performance Period (“Equity”).
d. Net Income will be calculated using U.S. GAAP and is anticipated to include the impact of acquisitions and may be adjusted to exclude the
impact of charges for restructuring, discontinued operations, debt redemption or retirement, asset impairments or write downs, material litigation, or claim
judgements or settlements, significant foreign exchange gains and losses, and other unusual non-recurring items, and the cumulative effects of tax or
accounting changes (“Adjusted Net Income”).
(2) Award levels will be extrapolated based on straight-line interpolation between levels beginning at the threshold level.
PSU Grant Notice 2023
Letter of Separation and Resignation between TrueBlue, Inc. and Derrek L. Gafford
EXHIBIT 10.32
Confidential
October 9, 2023
Derrek L. Gafford
1015 A Street
Tacoma, WA 98335
Re: Separation of Employment
Dear Derrek:
This letter agreement (the “Agreement”) confirms our respective understanding with regard to the separation of your employment with
TrueBlue, Inc. and its subsidiaries (collectively, the “Company”). We anticipate that your last day of employment in the role of Executive Vice President
and Chief Financial Officer shall be October 30, 2023, (the “Transition Date”) at which point your employment will transition to the role of an Advisor
to the new Chief Financial Officer, to provide transitory services through December 31, 2023 (the “Separation Date”). Notwithstanding the foregoing,
subject to the conditions below, the Company may specify an earlier separation date to you in writing, which shall then become the Separation Date for
purposes of this Agreement.
The period of time between the Transition Date and the Separation Date would be a transition period (the "Transition Period") during which you
would perform the obligations set forth in the Transition Plan attached as Exhibit A (the “Transition Plan Obligations”). In consideration of the
Transition Plan Obligations, the Company agrees to extend your employment termination date to the Separation Date.
Subject to the terms and conditions of the Executive Employment Agreement between you and the Company dated December 31, 2006, and
amended February 13, 2023 (collectively, the “Employment Agreement”), the Company would provide you with payment of any unpaid wages and for
unused accrued paid time off earned through the Separation Date. It is the intent that all benefits outlined in your employment agreement related to a
“without cause” separation would be provided for by the Company including but not limited to:
•
18 months of severance paid as specified per the agreement;
• Accelerated vesting in any previously awarded stock options, restricted stock and other equity awards, except for awards that are scheduled to vest
based on attainment of specified performance goals over a performance period; and
•
For any equity award that is scheduled to vest based on attainment of specified performance goals over a performance period, the award shall vest
and be paid after the end of the applicable performance period based on actual performance results, and shall be prorated for the portion of the
performance period employed, and for that purpose Executive shall be deemed to have continued employment with the Company for a period of
eighteen (18) months following the date of Executive’s Separation Date or other termination of employment, whichever is later.
Also, subject to both the terms and conditions of the Employment Agreement and your completion of the Transition Plan Obligations, the
Company would agree to also provide you with the following benefits (collectively, the “Additional Benefits”):
• Any cash bonus earned under the 2023 Short Term Incentive Plan to be paid on the date when such bonus is otherwise to be paid, as well as any
other consideration due under your Employment Agreement.
• You would be eligible for enrollment in COBRA beginning on the Separation Date at your sole expense for twenty-four (24) months following
the Separation Date. You would be required to follow the Company’s normal COBRA election and enrollment procedures.
•
Provided the Company makes discretionary deferred compensation matches for 2023, you would be eligible for the Company match of
contributions made by you to the non-qualified deferred compensation plan for 2023 subject to the plan terms and conditions with the exception of
any requirement to be employed on the date of payment.
• Neither you nor the Company would make statements to any third parties including but not limited to any Company customers, suppliers,
employees, or investors that are in any way disparaging or negative towards the other party to this Agreement, or such party’s products and
services. As used herein, the term ‘disparaging’ means any statement, utterance or depiction which would reasonably seen to diminish the social,
professional or business reputation of a party.
• You would be provided with an advance version of any proposed press release issued by the Company related to your separation as well as any
internal messaging. The Company would consider your timely input prior to any final announcement being made.
To be entitled to the benefits outlined in this Agreement you must (a) within twenty-one (21) days of the Separation Date, sign and deliver to the
Company’s Chief Legal Officer the Release of Claims attached as Exhibit B and thereafter not revoke it, and (b) be in full compliance with the
Employment Agreement, your Non-Competition Agreement, this Agreement, and with any other covenants with Company entered into by you
(collectively, “Employment Agreements”). Also, on or before the Separation Date, you would need to make arrangements with the Company’s Chief
Legal Officer for the return of all Company property in your possession.
The Company will not specify a Separation Date which is sooner than December 31, 2023 unless (i) the Company terminates your employment
for conduct constituting “Cause” as that term is defined in your Employment Agreement or (ii) you fail to perform the Transition Plan Obligations and,
in either case, you do not cure, after written notice of any “Cause”, such conduct or failure within ten (10) business days after written notice from the
Company.
Derrek, thank you for your service to the Company, and I wish you success in your endeavors following the Separation Date should you decide
to leave the Company.
Sincerely, ACKNOWLEDGED & AGREED TO BY:
TRUEBLUE, INC.,
Garrett Ferencz Derrek Gafford
Chief Legal Officer
Exhibit A
Transition Plan
• Unless and until directed otherwise by the Company, you will:
◦
◦
◦
From the date of this letter through the Transition Date: You agree to continue to perform the day-to-day functions of your job as Chief
Financial Officer, including all key duties and responsibilities, as specified by the Company;
From the Transition Date through the Separation Date: Support the Company in the transition of all of your duties and responsibilities to
your replacement, as applicable and as directed by the Company (the “Transition”); and
From the Transition Date through the Separation Date: Support the Company in your role as an Advisor to the CEO, CFO, and CLO
regarding all key Company initiates and strategies.
Exhibit B
RELEASE OF CLAIMS
This Release of Claims (“Release”) is hereby executed by Derrek L. Gafford (“Executive”) and TrueBlue, Inc. (“Employer” or “Company”) in
accordance with the Executive Employment Agreement between Executive and the Company dated December 31, 2006, as amended by the First
Amendment thereto dated February 13, 2023 (collectively, the “Employment Agreement”).
A. Employer and Executive are parties to the Employment Agreement.
RECITALS
B. The Employment Agreement provides for certain benefits to Executive upon termination of Executive’s employment under certain circumstances,
provided that Executive signs and delivers to Employer upon such termination a Release in substantially the form of this Release and does not revoke the
same.
C. Executive desires for Employer to provide such benefits in accordance with the Employment Agreement and therefore executes this Release.
1. Waivers and Releases.
TERMS
(a) Waiver, Release and Covenant by Executive . On behalf of Executive and Executive’s marital community, heirs, executors,
administrators and assigns, Executive expressly waives, releases, discharges and acquits any and all claims against Employer and Employer’s
present, former and future affiliates, related entities, predecessors, successors and assigns, and all of its present, former and future officers,
directors, stockholders, employees, agents, partners, and members, in their individual and representative capacities (collectively “Released
Parties”) that arise from or relate to Executive’s employment with Employer and/or the termination of such employment (“Released Claims”).
This waiver and release includes any and all Released Claims (including claims to attorneys’ fees), damages, causes of action or disputes, whether
known or unknown, based upon acts or omissions occurring or that could be alleged to have occurred before the execution of this Release. Released
Claims include, without limitation, claims for wages, employee benefits, and damages of any kind whatsoever arising out of any: contract, express or
implied; tort; discrimination; wrongful termination; any federal, state, local or other governmental statute or ordinance, including, without limitation,
Title VII of the Civil Rights Act of 1964, as amended; the Age Discrimination in Employment Act, as amended (“ADEA”); the Employee Retirement
Income Security Act of 1974; and any other legal limitation on the employment relationship. Executive also covenants and promises never to file,
press or join in any complaint or lawsuit for personal relief or any amounts of any nature based on any Released Claim and agrees that any such
claim, if filed by Executive, shall be dismissed, except that this covenant and promise does not apply to any claim of Executive challenging the
validity of this Release in connection with claims arising under the ADEA and/or the Older Workers’ Benefit Protection Act of 1990 (“OWBPA”).
Executive represents and warrants that he is the sole owner of all Released Claims and has not assigned, transferred, or otherwise disposed of
Executive’s right or interest in those matters. Notwithstanding the foregoing, this waiver and release does not apply to claims for indemnity
through contracts of insurance, operation of law, corporate policies or by-laws, claims that arise after the date that the release is executed,
claims to vested benefits under ERISA, workers’ compensation claims or any other claims that may not be released under this Release in
accordance with applicable law.
(b) Waiver, Release and Covenant by Employer. Employer expressly waives, releases, discharges, and acquits any and all claims, (including
claims to attorneys’ fees) against Executive that arise from or relate to Executive’s negligence in the course of performing his duties for Employer.
Employer also covenants and promises never to file, press or join in any complaint or lawsuit for relief or any amounts of any nature based on any
claim for negligence in the performance of Executive’s duties and agrees that any such claim, if filed by Employer, shall be dismissed. Employer
represents and warrants that it is the sole owner of any claim for negligence in the performance of Executive’s duties and has not assigned, transferred, or
otherwise disposed of Employer’s right or interest in those matters. Notwithstanding the foregoing, this waiver and release does not apply to claims that
arise after the date that the release is executed or any other claims that may not be released under this Release in accordance with applicable law.
2. Acknowledgment of Sufficiency of Consideration. Executive acknowledges and agrees that in the absence of Executive’s execution of or
compliance with this Release and the Employment Agreement, Employer is not obligated to provide Executive with the Additional Benefits as defined in
the Agreement between Company and Executive dated [October 5, 2023], and Executive further acknowledges and agrees that the Additional Benefits
are adequate consideration for the covenants and release herein.
3. Covenants and Obligations under Employment Agreement . Nothing in this Release supersedes or restricts any obligations that Executive owes
to Employer, including, without limitation, the obligation to protect Employer’s interests in Confidential Information and trade secrets and inventions
under the Employment Agreement and/or under applicable law, and/or TrueBlue’s Non-Competition Agreement executed by Executive. Executive
expressly agrees to comply with all covenants that Executive has entered into with Company.
4. Review and Revocation Period. Executive has a period of seven (7) calendar days after delivering the executed Release to Employer to revoke the
Release. To revoke, Executive must deliver a notice revoking Executive’s agreement to this Release to the Company’s Chief Legal Officer. This Release
shall become effective on the eighth day after delivery of this executed Release by Executive to Employer (“Effective Date”), provided that Executive
has not revoked the Release. Employer shall have no obligation to provide Executive with the Additional Benefits or any other benefits if Executive
revokes this Release.
5. Governing Law. This Release shall be interpreted in accordance with the law of the State of Washington, without regard to the conflicts of law
provisions of such laws.
6. Severability. If any provision of this Release constitutes a violation of any law or is or becomes unenforceable or void, then such provision, to the
extent only that it is in violation of law, unenforceable or void, shall be deemed modified to the extent necessary so that it is no longer in violation of law,
unenforceable or void, and such provision will be enforced to the fullest extent permitted by law. If such modification is not possible, such provision, to
the extent that it is in violation of law, unenforceable or void, shall be deemed severable from the remaining provisions of this Release, which shall
remain binding.
7. Knowing and Voluntary Agreement . Executive hereby warrants and represents that (a) Executive has carefully read this Release and finds that it
is written in a manner that he understands; (b) Executive knows the contents hereof; (c) Executive has been advised to consult with Executive’s personal
attorney regarding the Release and its effects and has done so; (d) Executive understands that Executive is giving up all Released Claims and all
damages and disputes that have arisen before the date of this Release, except as provided herein; (e) Executive has had ample time to review and analyze
this entire Release; (f) Executive did not rely upon any representation or statement concerning the subject matter of this Release, except as expressly
stated in the Release; (g) Executive has been given at least twenty-one (21) days to consider this Release and seven (7) days to revoke this Release; (h)
Executive understands the Release’s final and binding effect; (i) Executive has signed this Release as Executive’s free and voluntary act.
8. Arbitration and Venue . Employer and Executive agree that any claim arising out of or relating to this Release of Claims, or the breach of this
Release of Claims, shall be submitted to and resolved by binding arbitration under the Federal Arbitration Act. Employer and Executive agree that all
claims shall be submitted to arbitration including, but not limited to, claims based on any alleged violation of Title VII or any other federal or state laws;
claims of discrimination, harassment, retaliation, wrongful termination, compensation due or violation of civil rights; or any claim based in tort, contract,
or equity. Any arbitration between Employer and Executive will be administered by the American Arbitration Association (AAA) under its Employment
Arbitration Rules then in
effect. The arbitration shall occur in either Pierce or King County, Washington, as determined by the Arbitrator. The award entered by the arbitrator will
be based solely upon the law governing the claims and defenses pleaded and will be final and binding in all respects. Judgment on the award may be
entered in any court having jurisdiction. In any such arbitration, neither Executive nor Employer shall be entitled to join or consolidate claims in
arbitration or arbitrate any claim as a representative or member of a class. Employer agrees to pay for the arbiter’s fees where required by law or rules of
the AAA. In any claim or jurisdiction where this agreement to arbitrate is not enforced, Employer and Executive waive any right either may have to
bring or join a class action or representative action, and further waive any right either may have under statute or common law or any other legal doctrine
to a jury trial. Where the parties have mutually waived their right to arbitration in writing or have not yet sought to enforce their right to compel
arbitration, venue for any legal action in connection with this Release of Claims will be limited exclusively to the Washington State Superior Court for
Pierce County, or the United States District Court for the Western District of Washington at Tacoma or a proper superior court or United State District
Court in the jurisdiction in which Executive last worked. Executive agrees to submit to the personal jurisdiction of the courts identified herein, and
agrees to waive any objection to personal jurisdiction in these courts including but not limited to any claim that any such suit, action or proceeding has
been brought in an inconvenient forum.
Executed this date:
Acknowledged & Agreed to by:
Derrek L. Gafford TrueBlue, Inc.
__________________________ _________________________________
Signature Garrett Ferencz
EVP, Chief Legal Officer
CORPORATE NAME
Centerline Drivers, LLC
Labor Ready Holdings, Inc.
Labour Ready Temporary Services, Ltd.
PeopleReady, Inc.
PeopleReady Florida, Inc.
PeopleScout, Inc.
PeopleScout MSP, LLC
PeopleScout Pty, Ltd
PeopleScout Singapore Pte. Ltd.
RenewableWorks, LLC
SIMOS Insourcing Solutions, LLC
SMX, LLC
Spartan Staffing Puerto Rico, LLC
Staff Management Solutions, LLC
Staffing Solutions Holdings, Inc.
TBI Outsourcing Canada, Inc.
TBI Outsourcing Poland, Sp. z o.o.
PeopleScout Limited
TrueBlue Enterprises, Inc.
TrueBlue India LLP
TrueBlue Netherlands I, B.V.
TrueBlue Netherlands II, B.V.
TrueBlue Services, Inc.
Worker’s Assurance of Hawaii, Inc.
SUBSIDIARIES OF TRUEBLUE, INC.
EXHIBIT 21.1
Incorporated in
state/country of:
Nevada
Nevada
Canada
Washington
Washington
Delaware
Nevada
Australia
Singapore
Washington
Delaware
Illinois
Puerto Rico
Illinois
Delaware
Canada
Poland
United Kingdom
Nevada
India
Netherlands
Netherlands
Delaware
Hawaii
TrueBlue, Inc. has several additional subsidiaries not named above. The unnamed subsidiaries, considered in the aggregate as a single subsidiary, would not constitute a
significant subsidiary at the end of the year covered by this report.
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in Registration Statement No. 333-258182 on Form S-3 and Registration Statement Nos. 333-164614, 333-167770, 333-190220,
333-211737, 333-238093 and 333-273399 on Form S-8 of our reports dated February 21, 2024, relating to the financial statements of TrueBlue, Inc. and the effectiveness of
TrueBlue, Inc’s internal control over financial reporting appearing in this Annual Report on Form 10-K for the year ended December 31, 2023.
EXHIBIT 23.1
/s/ Deloitte & Touche LLP
Seattle, Washington
February 21, 2024
CERTIFICATION
EXHIBIT 31.1
I, Taryn R. Owen, certify that:
1. I have reviewed this Annual Report on Form 10-K of TrueBlue, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results
of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the
registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal
control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and
the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely
affect the registrant's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial
reporting.
Date: February 21, 2024
/s/ Taryn R. Owen
Taryn R. Owen
Chief Executive Officer
(Principal Executive Officer)
CERTIFICATION
EXHIBIT 31.2
I, Carl R. Schweihs, certify that:
1. I have reviewed this Annual Report on Form 10-K of TrueBlue, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of
the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results
of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)
and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period
in which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles;
(c) Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the
disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the
registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal
control over financial reporting; and
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and
the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely
affect the registrant's ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial
reporting.
Date: February 21, 2024
/s/ Carl R. Schweihs
Carl R. Schweihs
Chief Financial Officer
(Principal Financial Officer)
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
EXHIBIT 32.1
We, Taryn R. Owen, the chief executive officer of TrueBlue, Inc. (the “company”), and Carl R. Schweihs, the chief financial officer of the company, certify, pursuant
to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:
(1) The Annual Report of the company on Form 10-K, for the fiscal period ended December 31, 2023 (the “Report”), fully complies with the requirements of Section
13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the company.
/s/ Taryn R. Owen
Taryn R. Owen
Chief Executive Officer
(Principal Executive Officer)
February 21, 2024
/s/ Carl R. Schweihs
Carl R. Schweihs
Chief Financial Officer
(Principal Financial Officer)
A signed original of this written statement required by Section 906 has been provided to TrueBlue, Inc. and will be retained by TrueBlue, Inc. and furnished to the
Securities and Exchange Commission or its staff upon request.
Incentive Compensation Recovery Policy
EXHIBIT 97.1
Policy Criteria
Brief Policy Description: To describe the process by which the Company may recover erroneously awarded incentive-based compensation
Effective Date: September 14, 2023
Version Control: Version 1
Approved by: Compensation Committee
Policy Contact: Corporate Secretary
Applies to: Section 16 Insiders
Purpose
The purpose of this Incentive Compensation Recovery Policy (this “ Policy”) is to provide for the recovery of certain Incentive-Based Compensation in the event
of an Accounting Restatement.
Policy for Recovery of Erroneously Awarded Compensation
In the event of an Accounting Restatement, the Company will recover reasonably promptly the amount of any Erroneously Awarded Compensation Received by
an Executive Officer during the Recovery Period.
Administration
1. This Policy shall be administered by the Compensation Committee, or any other person or group that the Compensation Committee designates. The
Compensation Committee is authorized to interpret and construe this Policy and to make all determinations necessary, appropriate, or advisable for the
administration of this Policy.
2. The Compensation Committee is authorized to take appropriate steps to implement this Policy and may effect recovery hereunder by: (i) requiring
payment to the Company, (ii) set-off, (iii) reducing compensation, or (iv) such other means or combination of means as the Compensation Committee
determines to be appropriate.
3. The Company need not recover Erroneously Awarded Compensation if and to the extent that the Compensation Committee determines that such
recovery is impracticable and not required under Rule 10D-1 and the Listing Standards because: (i) the direct expense paid to a third party to assist in
enforcing this Policy would exceed the amount to be recovered after making a reasonable attempt to recover, (ii) recovery would violate home country law
adopted prior to November 28, 2022, after obtaining the opinion of home country counsel acceptable to NYSE, or (iii) recovery would likely cause an
otherwise tax-qualified broad-based retirement plan to fail the requirements of Section 401(a)(13) or Section 411(a) of the Internal Revenue Code of
1986, as amended, and regulations thereunder.
4. Any determinations made by the Compensation Committee under this Policy shall be final and binding on all affected individuals and need not be uniform
with respect to each individual covered by this Policy.
5. This Policy is intended to comply with, and to be administered and interpreted consistent with, Section 10D of the Securities Exchange Act of 1934, as
amended (the “Exchange Act”), Rule 10D- 1 promulgated under the Exchange Act (“ Rule 10D-1”) and Listing Standard 303A.14 adopted by the New
York Stock Exchange (“NYSE”) (the “Listing Standards ”). Unless otherwise defined in this Policy, capitalized terms shall have the meanings set forth in
Section 10 below.
Any right of recovery pursuant to this Policy is in addition to, and not in lieu of, any other remedies or rights of recovery that may be available to the Company
under applicable law or pursuant to the terms of any other compensation recovery policy of the Company that may be in effect from time to time, including in any
employment agreement, plan or award agreement, or similar agreement and any other legal remedies available to the Company. Nothing contained in this
Policy and no recovery hereunder shall limit any claims, damages, or other legal remedies the Company may have against an individual arising out of or
resulting from any actions or omissions by such individual.
Reporting and Disclosure
The Company shall file all disclosures with respect to this Policy in accordance with the requirements of federal securities laws.
Indemnification Prohibition
Notwithstanding the terms of any indemnification or insurance policy or any contractual arrangement that may be interpreted to the contrary, the Company shall
not indemnify any individual with respect to amount(s) recovered under this Policy or claims relating to the enforcement of this Policy, including any payment or
reimbursement for the cost of third-party insurance purchased by such individual to fund potential clawback obligations hereunder.
Amendment; Termination
The Board or the Compensation Committee may amend or terminate this Policy from time to time in its discretion as it deems appropriate and shall amend this
policy as it deems necessary to comply with applicable law or any rules or standards adopted by a national securities exchange or association on which the
Company’s securities are listed; provided, however, that no amendment or termination of this Policy shall be effective to the extent it would cause the Company
to violate any federal securities laws, Securities and Exchange Commission rule or the rules or standards of any national securities exchange or association on
which the Company’s securities are listed.
Successors
This Policy shall be binding and enforceable against all individuals who are or were Executive Officers and their beneficiaries, heirs, executors, administrators, or
other legal representatives.
Effective Date
This Policy is effective only for Incentive-Based Compensation Received by an Executive Officer on or after September 14, 2023.
Definitions
For purposes of this Policy, the following terms shall have the meanings set forth below:
1.
2.
3.
4.
5.
6.
“Accounting Restatement” means an accounting restatement of the Company’s financial statements due to the Company’s material noncompliance with
any financial reporting requirement under the securities laws, including any accounting restatement required to correct an error in previously issued
financial statements that is material to the previously issued financial statements, or that would result in a material misstatement if the error were
corrected in the current period or left uncorrected in the current period.
“Company” means TrueBlue, Inc., a Washington corporation, and its affiliates.
“Committee” means the Compensation Committee of the Board.
“Erroneously Awarded Compensation” means the amount, as determined by the Compensation Committee, of Incentive-Based Compensation
received by an Executive Officer that exceeds the amount of Incentive-Based Compensation that would have been received by the Executive Officer had
it been determined based on the restated amounts. For Incentive-Based Compensation based on stock price or total shareholder return (“TSR”) the
Compensation Committee will determine the amount based on a reasonable estimate of the effect of the Accounting Restatement on the stock price or
TSR upon which the Incentive-Based Compensation was received, and the Company will maintain documentation of the determination of that reasonable
estimate and provide the documentation to NYSE. In all cases, the amount to be recovered will be calculated without regard to any taxes paid by the
Executive Officer with respect of the Erroneously Awarded Compensation.
“Executive Officers” means any executive officer designated as a “Section 16 Insider” under the Insider Trading Policy.
“Financial Reporting Measure” means (i) any measure that is determined and presented in accordance with the accounting principles used in preparing
the Company’s financial statements and any measure derived wholly or in part from such a measure, and (ii) any measure based wholly or in part on the
Company’s stock price or total shareholder return. A Financial Reporting Measure need not be presented within the Company’s financial statements or
included in a filing with the Securities and Exchange Commission.
7.
8.
9.
“Incentive-Based Compensation” means any compensation granted, earned, or vested based in whole or in part on the Company’s attainment of a
Financial Reporting Measure that was Received by an individual (i) on or after the Effective Date and after such individual began service as an Executive
Officer, (ii) who served as an Executive Officer at any time during the performance period for the Incentive-Based Compensation and (iii) while the
Company had a listed class of securities on a national securities exchange or association.
Incentive-Based Compensation is deemed to be “ Received” in the Company’s fiscal period during which the Financial Reporting Measure specified in
the Incentive-Based Compensation award is attained, even if the payment or grant of such Incentive-Based Compensation occurs after the end of that
period.
“Recovery Period” means the three completed fiscal years immediately preceding the date that the Company is required to prepare the applicable
Accounting Restatement and any “transition period” as described under Rule 10D-1 and the Listing Standards. For purposes of this Policy, the “date that
the Company is required to prepare the applicable Accounting Restatement” is the earlier to occur of (i) the date the Board, a committee of the
Board, or the officer or officers of the Company authorized to take such action if Board action is not required, concludes, or reasonably should have
concluded, that the Company is required to prepare an Accounting Restatement, or (ii) the date a court, regulator, or other legally authorized body directs
the Company to prepare an Accounting Restatement.