TrueBlue, Inc. Earnings Q3, 2015
POSTED BY CAPITALCUBE ON NOVEMBER 6, 2015 IN EARNINGS ANALYSIS, YAHOO FINANCE | 8 VIEWS | LEAVE A RESPONSE
TrueBlue, Inc. reports financial results for the quarter ended September 30, 2015.
We analyze the earnings along side the following peers of TrueBlue, Inc. – Barrett Business Services, Inc., ManpowerGroup Inc., Robert Half International Inc., Kforce Inc., Kelly Services, Inc. Class A, On Assignment, Inc., Hudson Global, Inc. and Mastech Holdings, Inc. (BBSI-US, MAN-US, RHI-US, KFRC-US, KELYA-US, ASGN-US, HSON-US and MHH-US) that have also reported for this period.
Highlights
Summary numbers: Revenues of USD 683.92 million, Net Earnings of USD 20.09 million, and Earnings per Share (EPS) of USD 0.48.
Gross margins narrowed from 23.66% to 23.16% compared to the same quarter last year, operating (EBITDA) margins now 6.40% from 6.57%.
Year-on-year change in operating cash flow of -56.04% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
Narrowing of operating (EBIT) margins contributed to decline in earnings, despite some positive contribution from one-time items.
The table below shows the preliminary results and recent trends for key metrics such as revenues and net income growth:
2014-09-30 2014-12-31 2015-03-31 2015-06-30 2015-09-30
Relevant Numbers (Quarterly)
Revenues (mil) 633.37 691.39 573.32 627.71 683.92
Revenue Growth (%YOY) 40.38 54 44.75 38.5 7.98
Earnings (mil) 20.91 27.02 5.72 17.27 20.09
Earnings Growth (%YOY) 10.33 86.22 245.17 7.41 -3.92
Net Margin (%) 3.3 3.91 1 2.75 2.94
EPS 0.51 0.65 0.14 0.42 0.48
Return on Equity (%) 19.53 23.78 4.84 14.22 15.85
Return on Assets (%) 9.57 10.46 2.23 6.92 7.76
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Market Share Versus Profits
Revenues History
Earnings History
TBI-US‘s change in revenue this quarter compared to the same quarter last year of 7.98% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that TBI-US is holding onto its market share. Also, for comparison purposes, revenues changed by 8.95% and earnings by 16.31% compared to the immediate last quarter.
Revenues Growth Versus Earnings Growth
Earnings Growth Analysis
The company’s year-on-year decline in earnings was influenced by a weakening in gross margins from 23.66% to 23.16%, as well as issues with cost controls. As a result, operating margins (EBITDA margins) went from 6.57% to 6.40% in this time frame. For comparison, gross margins were 22.55% and EBITDA margins were 5.43% in the previous period.
Gross Margin Versus EBITDA Margin
Gross Margin Trend
Companies sometimes sacrifice improvements in revenues and margins in order to extend friendlier terms to customers and vendors. Capital Cube probes for such activity by comparing the changes in gross margins with any changes in working capital. If the gross margins improved without a worsening of working capital, it is possible that the company’s performance is a result of truly delivering in the marketplace and not simply an accounting prop-up using the balance sheet.
Gross Margin History
Working Capital Days History
TBI-US‘s decline in gross margins were offset by some improvements on the balance sheet. The management of working capital, for example, shows progress. The company’s working capital days have fallen to 25.42 days from 33.68 days for the same period last year. This leads Capital Cube to conclude that the gross margin decline is not altogether bad.
Gross Margin Versus Working Capital Days
Cash Versus Earnings – Sustainable Performance?
TBI-US‘s change in operating cash flow of -56.04% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.
Operating Cash Flow Growth Versus Earnings Growth
Margins
The company’s earnings fell, largely because of the narrowing in operating margins, which decreased from 5.03% to 4.86%. The decline in earnings probably would have been worse, were it not for some one-time items that improved pretax margins from 4.60% to 4.81%.