Operator: Greetings, and welcome to the TrueBlue First Quarter 2026 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. At this time, I want to remind everyone that today’s call and slide presentation contain forward-looking statements, all of which are subject to risks and uncertainties, and management assumes no obligation to update or revise any forward-looking statements. These risks and uncertainties, some of which are described in today’s press release and SEC filings could cause actual results to differ materially from those in the forward-looking statements. Management uses non-GAAP measures when presenting financial results. You are encouraged to review the non-GAAP reconciliations in today’s earnings release or at trueblue.com under the Investor Relations section for a complete understanding of these terms and their purpose.

Any comparisons made today are based on a comparison to the same period in the prior year, unless otherwise stated. Lastly, a copy of the company’s prepared remarks will be provided on TrueBlue’s investor website at the conclusion of today’s call, and a full transcript and audio replay will be available soon after the call. It is now my pleasure to turn the call over to Taryn Owen, President and Chief Executive Officer. Please go ahead.

Taryn Owen: Thank you, operator, and welcome, everyone, to today’s call. I am joined by our Chief Financial Officer, Carl Schweihs. We entered this year focused on strengthening our sales reach, expanding in growing markets and leveraging our efficient operating structure to drive top line growth with enhanced margins. We have made meaningful progress and have clear momentum underway, but we have more work to do to improve performance. We delivered first quarter results toward the high end of expectations, driven by continued expansion in skilled verticals alongside stabilizing demand trends and disciplined operational execution to improve profitability. Our revenue in the energy sector more than doubled this quarter as we continue to leverage our strong market position and expertise to capture demand in this growing market.

There are an increasing number of secular growth drivers in the energy space, positioning us to capture further upside as we continue to expand into adjacent subsectors, including those supporting data centers and energy storage facilities. In fact, addressing the power needs of data centers now represents approximately 1/3 of our active energy projects. The sustained growth of our commercial driver business also speaks to our success expanding in attractive end markets. Our team continues to outperform the broader market, delivering its ninth consecutive quarter of growth. We have strong client relationships and deep expertise in high-demand skilled sectors, positioning us to help address the structural labor shortages leading to rising demand in skilled roles and end markets with energy and commercial driving being just 2 examples.

We are also expanding our presence in the government vertical, most notably with our RPO and talent advisory solutions. We recently secured a 9-year engagement serving a law enforcement agency in the U.K., further demonstrating our growth in the government sector alongside our previous U.K. Armed Forces win. We continue to diversify our business mix, building momentum to expand our market share and increase our revenue potential. Health care remains yet another significant long-term market opportunity for us with strong secular growth drivers. We continue to strengthen our position in the U.S. health care market with new business wins across our brand portfolio and geographic expansion of our health care staffing business as we leverage the combined strength of our deep expertise, recruitment agility and sophisticated technology to expand in this underpenetrated market.

We are also making significant progress enhancing our sales function to accelerate growth and capture incremental demand. We continue to strategically increase our sales capacity within our on-demand territory-based structure to further extend our market reach. Expanding our sales function enables more targeted localized sales strategy and deeper client engagement. Enhanced sales focus, coupled with our improved operating model positions us well to drive scalable growth. This expanded sales capacity is already delivering clear results with dedicated sales supported territories delivering stronger sequential performance. Our strategic partnership with a leading group purchasing organization is unlocking new client acquisition channels and fueling a robust pipeline that includes several multi-brand prospects.

During the quarter, our team secured roughly $11 million in annualized new business through this strategic partnership. Greater enterprise alignment and collaboration is also building stronger partnerships across our brand portfolio, leading to more cross-selling opportunities. Our teams recently secured new business, serving a global leader in health and medical devices with a tailored multiservice solution, highlighting the combined power of our brands and offering a full spectrum of specialized workforce solutions. While strategically investing in sales, we have continued to lower our total operating cost through disciplined and effective cost management as well as enhanced operational efficiencies enabled through our portfolio of proprietary technology platforms.

We continue to lead on the digital front with AI-powered features, predictive analytics and behavioral insights that enable us to connect people and work with speed, precision and scale. Advancing our digital ecosystem remains a priority, positioning us to deliver greater value to the customers and talent we serve with a differentiated experience and efficient solutions as we accelerate growth. As we continue to advance our long-term growth strategy, we remain committed to delivering improved profitability and sustainable growth. While our strategic priorities are taking hold, driving improved results and positioning us well to capitalize on the growth opportunities ahead, we are not done yet. The staffing market has significant untapped potential, and we are confident our strategic focus on enhancing our sales model, expanding our share in attractive end markets and unlocking efficiencies with technology and operational excellence will not only drive our improved performance in 2026, but also enable us to realize long-term sustainable value for our shareholders.

I will now pass the call over to Carl, who will share further details around our financial results and outlook.

Carl Schweihs: Thank you, Taryn. Total revenue for the quarter was $399 million, up 8% and near the high end of our outlook range. Organic revenue increased 7% with our acquisition of HSP in January 2025, contributing 1 percentage point of inorganic growth year-over-year. Our skilled businesses continue to outperform the broader market, delivering double-digit growth for the fourth consecutive quarter due in large part to our continued success capturing rising demand in the energy vertical. As demand for skilled trades remains strong, broader demand trends continue to stabilize, driving solid momentum as we advance our growth strategy. Gross margin was 19.8% for the quarter, down from 23.3% in the prior year period as anticipated, primarily due to less favorability in prior year workers’ comp reserve adjustments and changes in revenue mix.

As you may recall, last year’s gross margin benefited from a significant reduction in workers’ compensation costs due to favorable development of prior year reserves. As expected, that degree of favorability did not repeat this year. For the revenue mix impact, this stems from outsized growth in PeopleReady Energy Work. As a reminder, energy work carries a lower gross margin than the general PeopleReady business due to pass-through travel costs involved. Outside of these costs, the underlying margin for energy work is consistent with other large PeopleReady accounts. We successfully reduced SG&A by 8%, even while revenue grew 8% for the quarter. This improved leverage demonstrates our commitment to effectively manage costs and deliver enhanced profitability.

We’ve made significant progress, creating greater flexibility to scale and driving efficiencies that position us well to deliver strong incremental margins as industry demand improves and we continue to advance our growth initiatives. We reported a net loss of $20 million this quarter, which included a noncash goodwill impairment charge of $4 million, driven largely by our lower share price and market capitalization during the quarter. Our results also included a small amount of income tax expense primarily associated with our foreign operations and essentially 0 income tax benefit on U.S. operations due to the valuation allowance in effect on our U.S. deferred tax assets. As a reminder, the impairment charge and valuation allowance have no impact on our operations or liquidity.

Adjusted net loss was $12 million, while adjusted EBITDA was negative $3 million for the quarter. Now let’s turn to our segments. PeopleReady grew 19%, driven by continued outperformance in the energy vertical. Revenue in the energy sector more than doubled for the third consecutive quarter as our team continues to leverage our strong market position and deep client relationships to capture share in this growing market. Our on-demand business is also showing improved trends, especially in the territories where we have invested in sales resources, and we were encouraged to see the East region of the U.S. return to growth this quarter. Despite the workers’ compensation headwind I mentioned earlier, PeopleReady segment profit margin was up 10 basis points, driven by targeted cost actions to deliver efficiencies and improve profitability.

PeopleManagement revenue declined 6% due to lower on-site volumes, primarily in the retail vertical and consistent with the macro conditions in that space. While client volumes declined for the quarter, we are building momentum having secured $13 million in annualized new business wins during the first quarter alone and positioning the business well to drive revenue expansion. Our commercial driver business also continues to outperform, delivering its ninth consecutive quarter of growth as our strong client relationships and deep expertise drive continued success capturing rising demand. PeopleManagement segment profit margin was up 50 basis points due to disciplined cost management actions to drive improved efficiencies and greater scalability.

PeopleSolutions revenue grew 2%, with HSP performing in line with expectations and driving the year-over-year growth. On an organic basis, PeopleSolutions declined 7% as overall hiring volumes remain subdued. While clients continue to navigate evolving market conditions, we are encouraged to see signs of stabilization with growing momentum in new business wins and expansions. We are adding new clients to our portfolio and expanding existing relationships, especially with higher skilled roles and serving growing end markets with long-term secular tailwinds. As client hiring volumes return, the scale of these engagements position us well to accelerate growth. PeopleSolutions segment profit margin was up 150 basis points, primarily driven by cost actions to deliver efficiencies and greater operating leverage.

Now let’s turn to the balance sheet. We finished the quarter with $24 million in cash, $74 million of debt and $36 million unused on our borrowing base, resulting in total liquidity of $60 million. Effective January 30, we transitioned our revolving credit agreement to an asset-backed structure, creating greater flexibility given our strong working capital position. We also reduced the size of the facility to better align with our capital priorities, resulting in cost savings as we lowered the fees associated with the unused portion of the facility. We remain committed to managing a strong liquidity position and financial foundation to ensure we are well positioned to capitalize on the growth opportunities ahead. Looking ahead to the second quarter of ’26, we expect revenue growth of 2% to 8% year-over-year as we continue to build on our success in recent quarters.

With strong momentum in attractive markets, we expect growth across all of our skilled businesses and a return to double-digit segment profit margins for our PeopleSolutions segment. We expect sequential gross margin expansion of 130 to 170 basis points, paired with continued cost discipline, leading to improved profitability. Also keep in mind that we typically see our highest volumes in the second half of the year due to the seasonality of our business. So while we expect improved operating leverage in the second quarter, our lean cost structure will lead to further margin improvement as we move through 2026. Additional information on our outlook can be found in our earnings presentation shared on our website today. Before we open the call up for questions, I want to turn it back over to Taryn for some closing remarks.

Taryn Owen: Thank you, Carl. And as you have heard from us today, our strategic focus is producing meaningful results, and there is still more work to be done. We are executing our growth strategy with discipline and focus, strengthening our market position with an enhanced sales model and market expansion while unlocking efficiencies through technology and operational excellence to deliver sustainable, profitable growth. We have the right people, structure and strategy to propel TrueBlue forward. And as our focused actions drive improved results, we are well positioned to deliver on our commitment to accelerate growth, enhance shareholder value and advance our mission to connect people and work. This concludes our prepared remarks. Operator, please open the call now for questions.

Operator: [Operator Instructions] And our first question today will come from Kartik Mehta with Northcoast Research.

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Kartik Mehta: Maybe we could just talk a little bit about the core on-demand business. Maybe your perspective on how the business is doing. I apologize for that. And if you look at it, are we at a positive inflection point for that business?

Taryn Owen: Kartik, thank you for the question. We are encouraged by the positive results we’re seeing in our PeopleReady on-demand business. We continue to see strong performance across our territories and sales organization with results reflecting improved growth and profitability. A majority of our territories in PeopleReady on-demand have returned to growth for the year, driven by local account business growth. Weekly trends have been improving. And while there’s more work ahead, we are confident in our ability to continue building on this momentum.

Carl Schweihs: And just to build on that with a few data points here, Kartik. As we mentioned in prepared remarks, our PeopleReady East region returned to growth in Q1. And I’d also say that the momentum is shifting positively across the U.S. While it’s not uniform, we’re seeing those more territories move back into growth each month as we move on. We’ve also been able to make these sales investments while managing our costs. SG&A for PeopleReady declined 10% for the first quarter, reflecting a more efficient cost structure. So I’d say the progress is really a result of our ongoing efforts to optimize our fixed cost base, enhance our digital capabilities, which will give us room to invest in growth while protecting our margins.

And I’ll just leave you with momentum does continue to build in PeopleReady on-demand, and our outlook for the second quarter reflects trends that are aligned to our historical sequential performance when we start to build this business from spring into the summer.

Kartik Mehta: Yes. Taryn, the one question almost all my companies are getting, as you can imagine, is AI. And I’m wondering, if you look at TrueBlue, one, how maybe TrueBlue might be using AI to become a little bit more efficient, maybe how you’re using it to better serve your customers? And just from a competitive standpoint, if you’re seeing AI have an impact on your ability to serve your customers?

Taryn Owen: Sure. Thanks for the question. We’re embracing AI, and it is differentiating TrueBlue services in ways that improve scalability, productivity and satisfaction, ultimately increasing value for our customers and our associates. AI is embedded across all of our proprietary technologies. So that’s JobStack, Affinix and StaffTrack. And it’s really helping us to enhance every stage of the staffing life cycle. As importantly, AI is driving significant growth in demand for data centers. What often gets overlooked is that AI depends on physical infrastructure. Data centers require enormous amounts of reliable power and that power and the skilled workforce behind it is where we have an opportunity to play a critical role. We’ve seen increased project volume in our utility scale solar business and addressing the power needs of data centers now represent approximately 1/3 of our active energy projects.

And then our PeopleReady skilled trades business has also seen an increase in revenue from the construction of data centers.

Carl Schweihs: And just to add a little bit on to this and talk about kind of the P&L benefits that we’re seeing of this work as well. From a revenue perspective, as Taryn just mentioned, we’ve seen our skilled business outperform the market with about 50% growth in Q1. From a cost and efficiency perspective, we’re seeing positive trends in some of the important metrics we track. Our cost of delivery has gone down with revenue per head count increasing. We’ve also seen increased fill rates and lower costs due to recruiter efficiency. So really, we’ve seen kind of both top line growth and margin expansion as a result of AI opportunity.

Kartik Mehta: Yes. And then just one last question, Taryn. Maybe just a pricing environment as the job market maybe isn’t as tight as it used to be. Are you seeing any pricing competition for any of the segments?

Taryn Owen: I would say that we’re seeing the typical pricing pressure that we would in this type of environment, not only from competitive forces, but also our clients are remaining very cost conscious during what remains an uncertain time. Our team is doing a great job of managing pricing discipline and continuing to look for ways to make sure that we’re delivering enhanced efficiencies and values so that we can remain competitive across all of our service offerings.

Operator: Our next question, we’ll hear from Mark Marcon with Baird.

Mark Marcon: Really nice to see the revenue growth. So good job there. Wondering if you can talk a little bit more about the elements of the revenue growth. So specifically, on the energy side, can you please size that for us? Like, how big was it this quarter, this past quarter? How big was it a year ago?

Carl Schweihs: Yes. Thanks for the question, Mark. Our renewable energy business, as we mentioned, kind of more than doubled for the third consecutive quarter. Renewables is part of our skilled trades business within PeopleReady. We’ve noted in previous quarters that our skilled businesses represent about 1/4 of our staffing businesses. With the significant growth that we’ve experienced, that’s going to be approaching about 1/3.

Mark Marcon: So 1/3 of both PeopleReady and Managed?

Carl Schweihs: Yes, that’s a good proxy across both of those segments.

Mark Marcon: And a year ago, it would have been 1/4 of it?

Carl Schweihs: Yes.

Mark Marcon: Okay. So really good growth there. And then is the element that is tied to data centers increasing at an even faster rate? Or is it a fairly — I mean, obviously, doubling is great. But — and how sustainable or how long do you think the runway is for that growth?

Carl Schweihs: Yes. No, I think we’ve got a really strong pipeline in our renewable business. We stay really close to our customers here. So I’d say a solid pipeline in renewables. We have several projects expected to ramp in Q2, supporting our outlook for the quarter. And longer term, we think that there’s an incredible amount of need for energy in the space, and we’re well positioned to capture that.

Mark Marcon: And then can you talk a little bit about on the driver’s side, how big is drivers at this point?

Carl Schweihs: That’s about 1/3, Mark, in the PeopleManagement segment that we’re talking about. One thing I will say and just add on to there is that our commercial driver business has been doing well for us. We’re in our ninth consecutive quarter of growth in Q1. And it’s been coming at a very challenging environment for transportation. A really encouraging sign for us is at the end of the quarter and into April, we saw an increase in our order volume, which is going to provide some incremental growth opportunity for that. As really historically over the last couple of years, we’ve been talking about taking share in our managed offering. So this will provide some future growth in our flex and on-demand side.

Mark Marcon: Yes. I mean, according to our transportation analysts on our shops, transportation is actually starting to pick up. So if you’ve got a growing market and share gains, that’s obviously a huge positive. And then with regards to the overall revenue guide, so you did 7% growth organically this quarter. You’re guiding to 2% to 8% on an organic perspective. Is there — what segments would you expect to slow?

Carl Schweihs: Yes. So thanks. Great question. So it’s kind of 5 points at the midpoint. When we look at it, we should see some improvement in our PeopleManagement as we had a slower quarter in Q1, a little bit in PeopleSolutions as well as we move into the quarter. And then for PeopleReady, as we’ve talked about, our on-demand has seen good trends as we move into spring to summer, but we’re starting to lap some of those really large quarter growths in our renewable business. So there’s a little bit less growth coming on that side within our PeopleReady segment.

Mark Marcon: Okay. So we’re basically going up against tougher comps, and so that’s going to slow things down a little bit. So you’re not expecting the energy business to continue doubling?

Carl Schweihs: Not doubling, but we expect for it to continue to grow and grow sizably.

Mark Marcon: Okay. And then shifting to gross margins. Just how big was the impact of the workers’ comp? I know it basically subtracted 220 bps relative to a year ago. But like what was the actual reversal last year? And what did you experience this year?

Carl Schweihs: Yes, there’d be about $7 million differential between the quarters.

Mark Marcon: And then can you talk a little bit about bill pay spread and like what percentage increase you ended up seeing in the bill rate and the pay rate?

Carl Schweihs: Yes, happy to, Mark. Pay rates were up about 7.5%, while bill rates were up 6.7%. So it led to about a 20 bps decline in margin for the quarter. The pay rate increase was largely due to statutory minimum wage increases as well as it’s been driven by some role-specific skill scarcity rather than really general labor shortages. So as Taryn mentioned earlier, while there’s still some pricing pressure that we’d expect, we’ve been really disciplined in our pricing. And I’d also add what we typically see in the seasonality of our business is that bill pay spread gets better as we move into the second and third quarter, and we’re already starting to see that in April.

Mark Marcon: Okay. Great. And then in terms of the actual SG&A, obviously, it’s projected to — it will be down relative to a year ago. How much more room do you have in terms of taking the SG&A down relative to the midpoint of what you’re projecting for the second quarter? Or how should we think about the incremental margin improvement as we go into the second half?

Carl Schweihs: Yes. Here’s what I’ll say, Mark. Look, our adjusted SG&A was down about 8% in Q1, and we continue to manage costs very closely. We guided to about minus 7% year-over-year. So an improvement there. In Q2, we’re guiding to a midpoint of $87 million or down 3%. That includes about $2 million or so of adjustments. So on an adjusted basis, that will look more close to $85 million or down 4%. I think there’s an important call out is just if you remember on a reported basis, the prior year did include a $5 million benefit from government subsidies that we didn’t expect to repeat. But overall, we continue to manage our costs very closely. And we feel like with our optimized fixed cost base, we’re poised for significant incremental margins and expanding profitability as we exit this lowest volume quarter in Q1 and the demand improves into the year.

Mark Marcon: Can you just elaborate a little bit on the incremental margins that you might expect during the second half?

Carl Schweihs: Yes. I think — I mean, we’ll expand it. We’re looking to double from our guide in Q2 here. And as we continue to move through the period, we’d expect to see incremental margin, but we guide a quarter at a time, Mark.

Operator: [Operator Instructions] And next, we’ll move to Marc Riddick with Sidoti & Company.

Marc Riddick: I wanted to start maybe with — if we could talk a little bit about the partnership with the leading group purchasing organization that we referred to. Maybe I guess, maybe in baseball terms, what inning are we in as far as that opportunity? Is it — are we sort of early stage? What do we think is the type of opportunity and what type of runway we might have there? And then maybe you could also talk about the scope of it a little bit as far as the reach? Are we talking a nationwide reach? Is it a regional reach? What should we be looking at there?

Taryn Owen: Yes. Thanks for the question, Marc. We’re just at the tip of the iceberg here, and we’re very encouraged by the progress that we’re seeing with this strategic partnership. It’s driving new business opportunities and expanding our reach nationwide. As I mentioned in prepared remarks, we have secured approximately $11 million of annualized new business wins in the quarter, and the partnership continues to build momentum as we expand the relationship, both into new sectors and across all of our service offerings. We had a couple of recent wins with 2 nationwide retail stores with work that we expect to begin here in the next couple of quarters. So overall, we’re very excited about the strong pipeline of opportunities ahead with this partnership.

Marc Riddick: Great. And then sort of along those lines, could you talk a little bit about the — you mentioned in your prepared remarks about the international growth. Maybe talk a little bit about the opportunity set there and maybe what we might see internationally? And then I have one last follow-up.

Taryn Owen: Absolutely. We — as I mentioned, we won a deal with the U.K. law enforcement here in the last quarter in our PeopleScout business to support them with hiring. And this follows the landmark deal that we won in the U.K. to provide employer brand and candidate attraction services for the U.K. armed forces. Just as a reminder, that deal is in the transitionary phase now. We’ll start to see the full value of that opportunity in the early part of 2027 in regards to the new law enforcement agency win. We’ll start to see revenue come online here this year.

Marc Riddick: Okay. Great. And then the last one for me, maybe you could shift gears over toward cash usage. Maybe you could talk a little bit about acquisition pipeline and appetite. Maybe if you’re seeing things there and maybe what valuations look like as well as share repurchase appetite in the — given sort of where we are at this point.

Carl Schweihs: Thanks, Marc. Yes, look, we’re focused on balancing ample liquidity first, making strategic growth investments into the business. And then as we’ve historically done, returning excess capital to shareholders via the share repurchases. Currently, with any excess cash and as free cash flow improves through the year, we’re looking to pay down our debt first. We continue to manage our fixed cost base down. Our capital spend is now under 1% of revenue. And with the business returning to organic growth, we’d expect to pay down our debt throughout the year. Just as you asked kind of about share repurchases, they remain important, but balanced with first, maintaining a strong balance sheet. We’ve got about $34 million remaining under our current authorization.

Operator: Currently, there are no further questions. I would like to turn the floor back to Taryn Owen for any additional or closing remarks.

Taryn Owen: Thank you, operator, and thank you, everyone, for joining us today. I do want to take this opportunity to thank the entire TrueBlue team for their disciplined execution of our enterprise strategy and for their commitment to advancing our mission to connect people and work. We look forward to speaking with you at upcoming investor events and on our next quarterly call. If you have any questions, please don’t hesitate to reach out. Thank you.

Operator: Thank you. This does conclude today’s teleconference. We thank you for your participation. You may disconnect your lines at this time.

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