Good day, ladies and gentlemen, and welcome to the First Quarter 2015 TrueBlue Earnings Conference Call. My name is Denise, and I'll be the operator for today. At this time, all participants are in listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions]. As a reminder, this conference is being recorded for replay purposes. I would now like to turn the conference over to Stacey Burke, Vice President of Corporate Communications. Please proceed.

Thank you, and welcome. We appreciate everyone joining us on our call today. Please note that on this conference call, management will reiterate forward-looking statements contained in today's press release and may make or refer to additional forward-looking statements relating to the company's financial results and operations in the future. Although we believe the expectations reflected in these statements are reasonable, actual results may be materially different from the forward-looking statements set forth in today's press release and presentation slides, which were filed in an 8-K today. Examples of factors which could cause results to differ materially can also be found in our most recent filings with the Securities and Exchange Commission. The discussion today also contains certain non-GAAP financial measures. Information relating to comparable GAAP financial measures may be found in the press release and presentation slides, which were posted on our Web site at www.trueblue.com. We encourage you to review that information in conjunction with today's discussion. On this call today is TrueBlue's CEO and President, Steve Cooper; and CFO, Derrek Gafford. I’ll now turn the call over to TrueBlue's CEO, Steve Cooper.

Thank you. Good afternoon, everyone. Today, we reported our first quarter 2015 revenue grew 45% to $573 million, which produced $19 million of adjusted EBITDA, an increase of 156% compared to a year earlier. Both revenue and earnings exceeded expectations this quarter. We were encouraged by the momentum we felt at the end of the quarter and here into the beginning of the second quarter. The first quarter had severe weather impacts along with negative impacts of the ports being closed for some period of time. Even with those setbacks, we are pleased with the success of our growth strategies, which produced record first quarter revenue and net income. The recruitment process outsourcing, RPO business, and the outsourced workforce management, OWM business, that we acquired on the first day of the third quarter in 2014 are continuing to win in the marketplace and are delivering impressive results. In addition, strategies we have implemented over the past year in our staffing businesses have produced 50% growth in adjusted EBITDA from these operations. TrueBlue is well positioned for continued growth in our staffing businesses given our capabilities to serve small local companies in over 400 industry classifications and to serve large national companies in focused industries such as construction, logistics, manufacturing and hospitality along with many more. We see ourselves positioned in the right growing industries with the right service capabilities to continue our momentum in this expanding economic environment. Businesses are searching for and finding the right mix of contingents and permanent workers to drive their businesses forward. In this regard, we can now offer more to our customers than ever before. And serve new customers because of the investments we’ve made this past year. It remains a great environment to be a leader in delivering world-class talent solutions that improve…

Thanks, Steve. As a reminder, we purchased Seaton Corp. effective the first day of the third quarter of 2014. In addition to our consolidated reporting, we have also provided standalone reporting for the legacy TrueBlue and Seaton businesses. We believe this approach provides the most transparency to help investors assess our performance. Once we have a full year of ownership to provide prior period comparisons, we will provide reporting for two new business segments. The first, managed services, will include the recruitment process outsourcing and managed service provider businesses. The second, staffing services, will include all of our staffing operations. Until we reach the anniversary of the Seaton acquisition, we will continue to discuss the business from a legacy perspective. In my commentary, I will reference two non-GAAP terms; adjusted earnings per share and adjusted EBITDA. Adjusted earnings per share excludes nonrecurring acquisition and integration costs, amortization of intangible assets and adjust income tax expense to a 40% marginal rate. Adjusted EBITDA excludes nonrecurring integration and acquisition costs. These are measurements used by management that in our opinion enhance prior period comparability and provide additional value to shareholders in assessing performance. Adjusted earnings per share for the quarter, up $0.20 or $0.07 above our midpoint expectation. Higher revenue in the acquired service lines contribute to half of the outperformance with the remainder from higher gross margin and lower operating expenses in the legacy TrueBlue business. The strong across-the-board performance this quarter expanded adjusted EBITDA by 150 basis points. Now let’s take a closer look at this quarter’s results starting with revenue. Total revenue grew by 45%, driven primarily by the Seaton acquisition. The acquired on-premise staffing and RPO businesses are performing very well. They continue to deliver impressive results and revenue pipelines are strong, particularly on the RPO side. Revenue…

[Operator Instructions]. Our first question comes from Sara Gubins with Bank of America Merrill Lynch. Please proceed.

This is actually Fatom Bagole [ph] calling in for Sara. Can you just provide us – can you quantify for us the impact that weather had in the quarter?

Yes, the impact of weather, it was at least a point of revenue headwind. It’s a little challenging to estimate the port shutdown impact but I think it’s safe to call it 1% plus for the quarter.

Got it, okay. And can you also give us a little bit more color on what drove the strong performance in Seaton?

Could you repeat the back part of that question a little louder?

Sure. Could you give us a little bit more color on what drove the strong performance in Seaton?

Yes, I think it’s just general market conditions that larger companies are continuing to grow and that’s what driving our outsourced business, which really is serving large contingent needs of some of the fastest growing companies here in North America and those – the battle for labor at all is getting pretty strong out there, and the fact that we have a delivery mechanism to deliver to these large implementations, these large onsite implementations is really powerful. So we’re winning in the marketplace on those large contingent orders on-premise. On the permanent side, there’s just a lot of demand. Companies are running out of avenues to find their own people and they’re turning to outsourcers to help bring the sourcing to the market. PeopleScout just happens to have a world-class delivery model, award-winning service delivery here in North America and they’re winning a lot of proposals. So the combination of a labor market that’s shrinking with two service models that are powerful and proven I think is providing great results for us.

Excellent. All right, that’s all I had. Thank you.

All right, thank you.

[Operator Instructions]. Our next question comes from Ato Garrett with Deutsche Bank. Please proceed.

Good afternoon. I had a question about the 60 basis points improvement in operating costs at legacy TrueBlue, I wanted to see how much of that was from branch closures or if there was anything else that contributed to that?

Yes, that’s mostly what it is. So this quarter too as I said is a smaller revenue quarter for us and the leverage can be moved quite substantially with some change in costs. We’re talking about a couple million dollars of cost reduction here year-over-year and most of that was driven by the branch consolidations that we did last year.

Okay, great. And also looking at Seaton, can you give us – by how much was Seaton growing in the first quarter?

Seaton’s been growing at a healthy 15% clip. That’s really if we average it since we bought the company. And it’s been pretty equal growth across both businesses; both the RPO side and the on-premise staffing business.

Okay, great. And then finally, can you just give us an update on what you’re seeing in construction end market and then remind us of what percentage – what’s your overall exposure on a consolidated basis to the end market?

Sure. So with construction, as far as the momentum of the overall sales trends, those have been relatively consistent. So in our – I’ll speak right now to our general labor brand, Labor Ready, which most of it is concentrated. The revenue trend in that business has been flat to slightly negative here for the last couple of quarters. Not much changed here this quarter. And that’s the way it appears on the surface. There are some underlying trends that we’re excited about. California for us makes up approximately 15% of our construction business. We have seen accelerating trends in the California area predominately middle and southern California and those reached over 10% this quarter. So that was a nice trend we met for us compared to last year maybe running at about 5% growth. Texas makes up about 5% of our revenue in construction. That went the other way. It’s been influenced by oil certainly. And the other big one for us is Florida. Florida makes up about 15%. And if we were look back to last year that trend was in the negative mid-single digits underperforming from our perspective. And we have seen a nice balance there particularly coming into the second quarter of growth at 5% and approaching 10%. Early into the second quarter, so that’s only 3% [ph] of information but we’re encouraged and that’s a big focus area for us to get this construction trend turned in the direction that it should be and that we’re capable of delivering.

Okay, great. And then also just as a percentage of overall revenues, what’s your exposure to construction?

On the legacy TrueBlue side, let’s call it trailing 1.7 billion of revenue. This constitutes about 25%, so let’s call it the lower 400 million.

Okay. Thank you.

Our next question comes from Randy Reece with Avondale Partners. Please proceed.

Good afternoon.

Hi, Randy.

Hi, Randy.

I was wondering if I could get into a little more in the Seaton side the difference in performance between your managed services business and in the outsourced workforce management business. I understand in outsource workforce management you had some customers you were expecting to ramp up in the beginning of this year. Did that happen as expected? And then how was the performance in PeopleScout?

Thanks for that question, Randy. My understanding we’re going to compare and contrast a bit PeopleScout and staff management of what’s going on there. And we have different buzz words and different industry words, so I just want to clarify that of what we’re talking about here. Yes, they’re both ramping nicely. As Derrek talked, both are growing at similar rates. They definitely got different metrics that drives them though. The EBITDA margins in our RPO business are 20% plus where EBITDA margins in the outsource workforce management, the staff management are pretty close to the company averages, just slightly less. So we like to see that growth in that RPO and that’s one of the reasons we’re all excited seeing that and the performance of that, where it’s going and actually the global opportunities to see the growth capacity that’s left while we’re just getting started in this category. And for us to have integrated so quickly with PeopleScout and interacting, that’s good. On the staff management side to one of your questions, are we continuing to ramp up and how is the existing accounts and new accounts growing? Bottom line there, they’re both growing nicely. The existing accounts we have we continue to expand our scope and take on more sites for those accounts. And we’re continuing to win at the RFP level at staff management. So we’re encouraged by both aspects that existing accounts are buying more and we’re still finding more customers there. So that’s exciting. Over on the RPO, the PeopleScout, the level of RFP activity is increasing. The number of large customers that are turning to outsource their recruiting and sourcing needs is expanding faster than any other avenue or any other aspect of the human capital space. And here in North America, especially we’re participating in winning our fair share of those RFPs that are come into play. Our big strategic initiative here and push, which won’t come in just one quick quarter then yet, but is to build a worldwide capacity to serve this need that’s growing. As we all know, these large customers that we’re serving have operations around the world and this tightening labor market and the need to find great talent in the right spot, at the right time is – that demand exists around the world. So the level of global RFPs that are starting to appear is growing and we have a great operation down in Australia that can help service the Pac-Asia rim. And for North America we can serve Europe. However, we feel like we need stronger teams and we’re looking for an opportunity to actually build a larger operation in Europe and a larger operation in Asia around this, because that category is growing faster than any of the others.

Very good. Thank you very much.

We have no further questions. I will now turn the call back over to Mr. Steve Cooper for any closing remarks. Please proceed, sir.

Yes. We appreciate you joining us on your busy afternoon here and to be able to update you on our strategies that we’re working on here at TrueBlue. We remain really excited about the platforms that we’re operating and the strategies that are behind that. And the results that are coming together of the investments we have made over the past two years are continuing to pay off, and we really are on the frontend of something pretty exciting here. So thank you for joining us this afternoon.