TrueBlue, Inc. Q2 FY2026 earnings call

• Strategic Sales and Operating Model Improvements

  • Transitioned the on-demand business to a more effective territory-based operating structure
  • Strategically increased sales capacity to enable targeted localized strategies and deeper client engagement
  • All three segments expanded margins and delivered higher profitability even as total revenue grew 12% year-over-year

• Growth through Partnerships and Cross-Selling

  • Enterprise-wide strategic partnership programs have opened new client channels and built a strong multi-brand growth pipeline
  • Increased cross-company collaboration has created more cross-selling opportunities to deepen existing client relationships
  • The landmark UK Armed Forces engagement partnership is ramping, with full value expected in 2027

• Targeted Vertical Market Expansion

  • Captured strong share in high-demand skilled verticals: energy grew for a fifth consecutive quarter (nearly doubling in Q2), and commercial driver grew for a 10th consecutive quarter
  • Identifies adjacent growth subsectors including data centers and energy storage, as well as long-term growth opportunities in government and healthcare to diversify the business
  • Made meaningful market share progress in the government sector, and is thoughtfully scaling in the U.S. healthcare market leveraging existing recruitment and technology strengths

• Digital Transformation and Efficiency

  • Continued to enhance the company's proprietary digital ecosystem with AI-powered features across the full talent lifecycle
  • AI improvements have reduced time-to-fill, cut manual work, and improved experiences for both clients and talent, while also enabling higher operational efficiency
  • Achieved a 7% reduction in SG&A despite 12% revenue growth, demonstrating successful operating leverage from cost discipline and technology enablement

1. PeopleReady: Total revenue grew 23% year-over-year, driven by near-doubling growth in the energy vertical and a return to growth in the core on-demand business. Segment profit margin increased 260 basis points year-over-year, supported by targeted cost actions and improved operating leverage from revenue growth. It contributed the majority of the quarter's double-digit top-line outperformance. 2. People Management: Revenue was flat year-over-year, as 10 consecutive quarters of growth in commercial driving services were offset by lower on-site volumes. On-site volume trends improved month-over-month, returning to growth in June. Segment profit margin increased 60 basis points year-over-year from disciplined cost management and efficiency gains. 3. People Solutions: Revenue declined 5% year-over-year due to subdued broader hiring trends, though the segment saw stabilization and improved new business momentum exiting the quarter, with growth in new client acquisition and expansion for higher-skilled roles in high-growth end markets. Segment profit margin returned to double digits, increasing 510 basis points year-over-year from deliberate cost-cutting and efficiency actions.

• Overall third quarter 2026 revenue is expected to grow 7% to 11% year-over-year, a tightened guidance range that reflects current improving demand trends
• Segment-level Q3 2026 growth guidance: PeopleReady is expected to grow 11% to 15%, PeopleManagement is expected to grow 3% to 8%, and People Solutions is expected to range from -6% to +3%
• Management expects adjusted EBITDA drop-through rates from gross margin dollars to continue expanding in Q3 and beyond, driven by the company's lean cost structure and improving demand
• Management targets outperformance at the upper end of the published guidance range

• Forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from projections, as detailed in the company's SEC filings and earnings press release
• The challenging commercial real estate market led to a $3 million non-cash write-down of the company's Tacoma headquarters, though management noted this has no impact on core operations or liquidity
• Broader macroeconomic market conditions continue to suppress hiring volumes for the People Solutions segment

Q: Is the overall demand environment at a positive inflection point, or is it still too early to confirm sustained improvement? / A: Management notes that the core on-demand business returned to growth in Q2, with all four regions growing and a majority of territories achieving year-to-date growth, driven by the new sales territory strategy. The demand recovery is now broad-based across most large geographies, including improvement in previously slow markets like California, Florida, and Texas, rather than being limited to a few isolated markets. Management emphasizes that double-digit top-line growth was achieved alongside expanded margins across all three segments and significantly higher adjusted EBITDA, confirming profitable momentum.\n\nQ: How consistent was energy's strong growth through Q2, and what is the current pacing of this business? / A: Growth trends accelerated throughout Q2: PeopleReady's overall growth improved from 16% at the end of Q1 to 30% at the end of Q2, with monthly improvements across all segments, and PeopleManagement moved from -7% growth exiting Q1 to +4% exiting Q2. July 2026 trends have remained consistent with the strong Q2 exit rate, and the guidance includes the expected typical seasonal Q3 build. Growth is broad across the business: strong demand from new adjacent areas like data centers and battery storage, with a large new battery storage client deal signed just that week through the PeopleScout business.\n\nQ: How are the company's strategic channel partnerships progressing, and what is the pipeline from these initiatives? / A: Strategic channel partnerships have become a key lever to extend sales reach and accelerate growth, with the previously announced leading group purchasing organization partnership continuing to build momentum and fill a strong revenue pipeline. The partnership wins highlighted last quarter have already begun converting to revenue, contributing to Q2's stronger results. The previously announced UK Armed Forces engagement is currently ramping up, and is expected to reach its full contract value in 2027.\n\nQ: How will incremental margins trend as growth continues over the next several quarters? / A: Management will continue to selectively invest in high-return growth opportunities, but the business's current lean cost structure positions it to deliver meaningfully higher incremental margins as demand improves. Adjusted EBITDA drop-through rates from gross margin dollars have improved steadily in Q2, and management expects this improvement to continue into Q3 and future quarters.