TrueBlue, Inc. (TBI) Q3 2017 Earnings Report, Transcript and Summary

Good afternoon. My name is Rob, and I will be your conference operator today. At this time, I would like to welcome everyone to the TrueBlue Q3 2017 Earnings Conference Call. [Operator Instructions] Thank you. Mr. Derrek Gafford, Chief Financial Officer, you may begin your conference.

Good afternoon, everyone, and welcome to today's call. I'm here with our Chief Executive Officer, Steve Cooper; and our Chief Operating Officer, Patrick Beharelle who also leads our Mobile Strategy. Steve will provide a summary of our results and business strategies and Patrick will discuss the operational elements of our mobile strategy. I’ll finish off with further discussion on our results, trends, and outlook for the fourth quarter and then open the call for questions. Before we begin, I want to remind everyone that today's call and slide presentation contain several forward-looking statements, all of which are subject to risks and uncertainties, and we assume 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 in our SEC filings, could cause actual results to differ materially from those in our forward-looking statements. We use several non-GAAP measures when presenting our financial results. Please refer to the non-GAAP reconciliations in today's earnings release and on our website at trueblue.com under the Investor Relations section. Also, any comparisons made today are based on the comparison to the same period in the prior year, unless otherwise stated. Due to the reduction in the use of our services by Amazon, which was announced in 2016, we will continue to provide certain year-over-year comparisons, excluding this customer. We believe these comparisons are helpful in understanding the underlying trends in our business. I'll now turn the call over to Steve.

Thank you, Derrek, and good afternoon everyone. Revenue and adjusted EPS for the third quarter were both at the high end of our expectation. Total revenue for the quarter declined 5% or down 2%, excluding Amazon. We saw encouraging revenue improvement this quarter. We exited the quarter with a year-over-year growth rate of negative 3% for September, an improvement over the negative 9% exit rate for Q2 this year. The improving monthly results were due to better underlying trends across all of our segments. I want you to take a moment to acknowledge the personal impact the recent hurricanes have had on us here at TrueBlue. Several hundred of our employees and thousands of our associates were impacted across Texas, Florida, and Puerto Rico. All are safe and our ongoing safety will remain our number one priority. I couldn't be prouder of the preparation, the dedication of our employees that had and exhibited throughout. TrueBlue teams started preparing internally even before the storms hit. Bundling [indiscernible] were satellite phones, generators, pay cards, water and employee care packages. In the wake of the storms, we’ve been leveraging existing client relationships, and using resources like our mobile technology and recruiting vans to ramp up recruiting efforts and deliver much-needed workers. This is the work we do every day, but it is especially gratifying to be there when the communities we serve need us most. Overall, the hurricanes did have a modest positive impact on our top line results providing a 1% lift to total revenue. Turning to profitability, our third-quarter gross margin of 26% was 40 basis points higher than Q3 last year. This was the seventh consecutive quarter of year-over-year gross margin improvement. It’s important for us to balance discipline of pricing in the current rising wage environment with our desire to stay competitive. Our primary long-term focus is still centered on EBITDA margin expansion through disciplined pricing, smart cost management, and operating leverage associated with our higher organic revenue, and a focus on driving our higher margin services. Now I'm going to update you on our strategic initiatives and financial performance by segment. PeopleReady is our largest segment representing approximately 60% of total company revenue over the last four quarters and 56% of adjusted segment EBITDA and we’re especially pleased with its improving topline trends. PeopleReady’s local relationships and national footprint, our branch locations helps clients find contingent industrial labor quickly and efficiently. Over the past year, we completed the transition to a single specialized staffing brand, which makes PeopleReady offering simpler and more transparent for both the customer and the job seeker. Revenue trends have been down this year as we’ve grappled with a low growth microenvironment, as well as temporary disruptions from operational changes related to the brand transition. The good news is, the business is adjusting to the transition and the monthly trends improved considerably through a decline of 1% in September, compared to a decline of 9% in June. I'm very excited about the future of this segment, especially since PeopleReady is just beginning to leverage our mobile strategy, which we will speak to hear in a moment. PeopleManagement, representing approximately 33% of total company revenue over the last four quarters, and 20% of adjusted segment EBITDA offers on-site workforce management and productivity solutions such as cost per unit pricing through our staff management and SIMOS brands. We serve Amazon out of this segment and all that client has scaled back the business held steady in the third quarter on an ex-Amazon basis. Our first area of strategic focus for PeopleManagement is growing our workforce productivity solutions that carry a strong value proposition and a higher margin. For example, SIMOS our highest EBITDA margin business within PeopleManagement helps customers become more efficient and reduce labor cost by using cost per unit pricing rather than traditional hourly bill rate pricing, helping customers reduce their labor spend by 15% or more. The second area of strategic focus for PeopleManagement is the e-commerce vertical. e-commerce continues to show strong growth making the retail supply chain’s labor needs more volatile and increase in the demand for TrueBlue's ability to deliver a flexible, fully sourced, and managed workforce. PeopleScout represents approximately 7% of total company revenue over the last four quarters, and 24% of adjusted segment EBITDA. This segment primarily provides Recruitment Process Outsourcing services, also known as RPO as well as Managed Service Provider services or MSP. RPO and MSP are 87% and 13% of PeopleScout revenues respectively. Both services make it easy for companies to hire efficiently, improve the quality of hire and retention, reduce cost, stay competitive and prove visibility into their overall workforce spend. PeopleScout is performing very well with 10% revenue growth in Q3. At PeopleScout we leverage proprietary technology to provide a compelling value proposition for our clients in building their own teams. And this segment continues to generate our highest EBITDA margins. PeopleScout was recently recognized by the Everest Group as the largest RPO provider globally in terms of the number of higher annual people hired. PeopleScout was also recognized as a major contender in the Asia-Pacific region with our fast-growing presence there. PeopleScout was also recently recognized by HRO Today magazine and their independent customer satisfaction survey as one of the top enterprise RPO leaders and even more exciting is number three among healthcare RPO providers. This is the first year that PeopleScout has been ranked on the HRO Today’s top list for healthcare RPO providers. We are thrilled to have our growth and world-class service delivery for healthcare clients recognized. As we plan for 2018, we are focused on initiatives to enable PeopleScout to continue to increase our market share in this high-growth RPO segment. We are proud with the three service segments TrueBlue operates. PeopleReady, PeopleManagement, and PeopleScout and look forward to continued growth opportunities as businesses continue to turn to partners like TrueBlue to help manage their workforce needs. Today, we announced a $100 million share buyback authorization. With our growth strategies increasingly focused on organic growth, we expect more cash available to return to shareholders and intend to do that through strong share repurchase programs. We’re committed to driving higher shareholder returns through strong organic revenue growth strategies along with the strong share repurchase programs announced here. Next, I’d like to provide a high-level overview of the four important organic growth strategies. First, earlier this year, we realigned our business around three distinct segments that I discussed here with you today: PeopleReady, PeopleManagement, and PeopleScout. By simplifying our service offerings and clarifying our branding structure, we also laid the groundwork for an expanded cross selling effort. These efforts are now well underway. We’re sharpening our focus on strategic accounts, developing comprehensive account plans, and building institutional capacity to engrain cross-selling as part of the TrueBlue culture. We expect this will be a very significant opportunity and the good news is only starting just given that fewer than 20% of our top 100 clients are currently engaged with multiple TrueBlue service offerings. We expect we will be able to leverage some important cross-selling strategy to achieve greater growth throughout the entire organization. Second is our focus on the RPO space. With an industry growth rate of approximately 15% expected over the next five years, and an adjusted EBITDA margin at PeopleScout of approximately 20% we like our positioning. Our capabilities in full cycle recruitment process outsourcing and demonstrated abilities successfully and/or the largest RPO assignments continue to distinguish from the competition. We are the market leader in North America, which is the main focus of our organic growth plan. International acquisitions would complement our growth strategy and accelerate organic growth by increasing our ability to complete on multi-continent deals. Third is our focus on productivity based solutions such as, SIMOS, that provide customers with lower labor cost and a fixed per unit cost to help them improve productivity of their workforce. Our fourth area is our focus on the mobile strategy, which is currently focused on the PeopleReady segment. With our JobStack app, we’re creating a next generation digital exchange that efficiently connects workers with available jobs. Two key metrics we’re focused on this year are to the worker adoption and the mobile fill rates. Adoption rates track what percentage of our active workforce is downloading and using the app. And mobile fill rates track the percentage of orders being filled directly by the digital exchange versus traditional means or unfilled orders. We’ve seen steady progress in adoption and mobile fill rates as newly enrolled branches adapt their processes to leverage the power of the app. First way for branches we rolled out is now posting worker adoption rates north of 50%, and mobile fill rates north of 10%. In other words, in these branches, one out of every 10 available jobs is already being filled through our digital exchange. We have several branches were over 50% of their available jobs are being matched directly by the digital exchange. JobStack, our real time digital exchange to connect customers with high-quality workers is completing its roll out across North America. Now available across 70% of PeopleReady branch areas. JobStack is accessed through a free mobile app available to registered customers and workers. Workers from PeopleReady's talent pool can respond immediately to job opportunities posted by PeopleReady customers. In the fields and geographic areas, they prefer. And then be dispatched directly to the job site without having to visit a branch. This transformational matching technology enhances PeopleReady's position as one of the largest industrial staffers in the US, and as a leader in revolutionizing the way businesses connect with workers. With that, I’ll turn the call over to Patrick who will share some more details.

Thanks Steve. We’re very excited about the potential of our digital strategy to create value for our workers, for our clients, and for our shareholders. Our JobStack mobile app has the potential to add significant shareholder value by increasing our market share through a larger candidate pool, through a round-the-clock dispatch and through compellingly differentiated service in the marketplace. As our PeopleReady business generates EBITDA margins in excess of 15% on an incremental organic revenue growth, we’re excited about the potential of JobStack to be an accelerate in the future. We began the rollout of the job stack worker app earlier this year. The worker functionality is now live in approximately 450 branches or about 70% of our overall PeopleReady network. We expect our results to improve as we also press forward with the rollout of our client’s functionality. We began highlighting the average clients at the end of the second quarter 2017 and are receiving positive feedback from those clients. While it’s still too early to quantify the potential financial impact, I want to share some early indicators that underscore the value-creation potential. First, our workers who have downloaded the JobStack app are both more stick and more active than non-JobStack workers. We’ve been able to retain and dispatch a substantially higher percentage of workers using the JobStack app compared to workers connected via traditional branch interactions. This is particularly an important development given the tight labor market. Second, clients who have piled the app value of the additional visibility and quality control. Pilot clients have been very active in providing the ratings for workers placed on their jobs, but particularly interesting is that approximately 20% of the clients we’ve talked with have said they would be willing to pay a premium if their work approval or comprised entirely of four and five-star workers. Finally, we’re seeing a solid percentage of jobs filled via JobStack outside of business hours. This may not translate directly in the volume list and so many of these orders may have otherwise been filled during working hours, but it does underscore the greater efficiency and satisfaction inherent in round-the-clock job and order fulfilment. Bottom line, we’re extremely encouraged by the early success of our mobile strategy, and we hope to have even more good news to share in the near future. And with that, I’ll turn the call back to Derrek.

Thank you, Patrick. For the third quarter of 2017 adjusted EPS of $0.60 was at the high-end of our $0.50 to $0.60 expectation, driven mostly by higher than expected revenue of $661 million, which exceeded the top end of our $645 million - $660 million expectation. Total revenue for the quarter was down 5%, or down 2%, excluding Amazon, which was an improvement from the second quarter of this year of minus 9% or minus 5%, excluding Amazon. We saw widespread improvement in monthly revenue trends across the business. Between September, which is our Q3 exit rate; and June, which is our Q2 exit rate; PeopleReady improved to minus 1% from minus 9%, PeopleManagement to minus 8% from minus 10% and PeopleScout to plus 7% from plus 2%. The recent hurricanes provided about one point of revenue lift for the third quarter, which we expect to carry into the fourth quarter. From our vertical industry perspective, the retail industry, excluding Amazon and hospitality based businesses continues to perform well for us with low double-digit growth and we saw improving trends in service based businesses. Manufacturing continues to be the biggest drag on our growth, down mid-single-digit, which is consistent with the trend in Q2 this year. Gross margin was up year-over-year for a seventh consecutive quarter and this quarter's results were driven by higher gross margin in our RPO business. SG&A expense was down about 3 million year-over-year from the absence of prior year integration and reorganization expenses, which was somewhat offset by hurricane related damages and mobilization response cost in the current year. Turning to the segments, PeopleReady revenue declined by 5% in the third quarter. Excluding the storm-related revenue, September was down 3% making for a strong finish to the quarter, compared to the Q2 exit rate in June this year of minus 9%. Adjusted EBITDA was down 30% as a result of negative operating leverage associated with the revenue decline and the storm-related cost I mentioned earlier. PeopleManagement revenue declined by 9% overall or flat growth on an ex-Amazon basis. The new business pipeline is healthy, particularly in the SIMOS business, but converted out of slower than expected pace in Q3 as customers make plans for the upcoming holiday season. Adjusted EBITDA was up 31% and related margin expanded by 110 basis points driven by faster growth in the higher margin SIMOS business and reduced costs in light of lower Amazon volumes. PeopleScout performed very well with 10% topline growth. Underlying the growth is a record level of new logo wins. Proprietary technology advances and a trusted reputation in the marketplace continue to differentiate our service offering with new clients. Adjusted EBITDA was up 23% and related margin, up 220 basis points from a continued focus on recruiting process efficiency. Our balance sheet and liquidity continue to strengthen. Year-to-date cash flow from operations was $81 million. Total debt stood at $135 million resulting in a debt-to-capital ratio of 20%. On a 12-month trailing basis, total debt-to-adjusted EBITDA stands at 1.0. Acquisitions have played a prominent role in our growth strategy. For example, the acquisition of SIMOS added a new higher margin service offering, and the Aon RPO acquisition added scale and efficiency to our core business. We believe RPO clients will increasingly seek providers that can deliver multi-continent service, which is why we are pursuing international deals in the space. They do not need to be large deals, just enough to create a physical presence and provide client references. Aside from this, our strategies are focused on organic growth. As Steve mentioned, today we announced that our Board of Directors authorized a new $100 million stock repurchase program. Cash flow from operations is strong at 129 million over the last 12 months and the balance sheet is in great shape. The new share authorization demonstrates our desire to return more cash to shareholders and our confidence in the long-term outlook of our business. Year-to-date, we repurchased $29 million of common stock, 14 million of which was purchased during the third quarter, completing the previous authorization, under which a total of $75 million of stock was repurchased at an average price of $15.52. Turning to our outlook for the fourth quarter of 2017, we expect a decrease in revenue of 8% to 10% or a decrease of 6% to 8%, excluding Amazon. Once the fourth quarter is complete, we will have passed the anniversary of the lower revenue run rate in the Amazon business that was announced in 2016. Our fourth quarter outlook for net income per share is $0.36 to $0.41 or $0.45 to $0.50 on an adjusted basis, which assumes a share count of $40.8 million. As a reminder, last year's fourth quarter included an extra 14th week, and we moved the quarter-ending date forward by two days from Friday to Sunday to better align with the work week of our customers. Revenue associated with nine extra days was $56 million and the estimated EPS contribution for that period was $0.04 or $0.05 on an adjusted basis. On a comparable week basis, our guidance applies a revenue decrease of 1% to 3% or minus 1% to plus 1%, excluding Amazon. Our businesses focused on three simple principles to increase shareholder value. One, increasing organic revenue growth to drive higher adjusted EBITDA margins. With the current focus of our mobile strategy at PeopleReady, we’re excited about the 15% plus incremental adjusted EBITDA margin, this segment is capable of producing with organic revenue growth. Two, aggressively growing services with higher adjusted EBITDA margins. Our RPO and productivity solutions continue to perform well and increase their share of our overall business mix. Three, returning more cash to shareholders through share repurchase to further improve shareholder returns. Okay, that concludes our prepared remarks for today. We can now open the call for questions.

[Operator Instructions] Your first question comes from the line of Jeff Silber with BMO Capital Markets. Your line is open.

Thank you so much and congratulations on the quarter, good results. You mentioned the impact of the Hurricane in the third quarter and you expect some potential benefits going forward, is it possible to quantify that and I’m also curious in past disasters, how long did this - I’m also curious in past disasters how long did this clean-up work last?

Hi, thanks Jeff. I appreciate that. Storm-based work it’s got - first it’s negative impact because all businesses are shut down during that period of time and then we have a great impact that’s cleanup work and then obviously the next stage is the longer-term work that involves more skilled labor. So, we’re through most of the quick impact that comes from the cleanup in those areas and by the way as mentioned that quick cleanup work isn't always the most profitable work either because of the extra cost it takes for all that additional recruiting. So, we like contributing to those communities, we’re glad we’re there for them to get them rebuilt and cleaned up as fast as possible, but our long-term impact isn't all that great Jeff. It is something that we do, and we love to do and most of that impact is behind us. However, that last stage is the rebuild and we look to participate and we are pushing hard to get some long term skilled people out there to help to rebuild in those areas. That one is harder to quantify.

And are you… I’m sorry go ahead.

I just wanted to catch the backend of your question about the impact. So for the third quarter that was about a point of lift associated with the hurricanes and we have got about the same amount of lift in our guidance for the fourth quarter.

Okay. I appreciate that Derrek. You mentioned in terms of having the fine people to do this work, is it becoming more difficult, are you getting sort of new type of folks doing this, or you kind of cannibalizing your existing business to find these people to work on these projects.

I don’t this it is cannibalizing. There is plenty of workforce out there to go do general labor. That is one of the things through the history of our company that with the message that we are using, where we are and how we recruit. We can round the quantity of people up almost in any environment. So, there is some extra transportation to move people in because those that are impacted in those areas aren’t ready to go back to work quickly, so we need to transport teams into help with the cleanup.

Okay great. And shifting gears to JobStack, it sounds like you are really making some progress there, I know early on that we have some internal issues in terms of getting some of your folks at the branches to adopt it, I am just curious how that has been going, how you have been able to overcome that?

Yes, thanks for the question Jeff, this is Patrick. We made a lot of progress there. We’ve got 450 branches now that are on the app, we’ve got over 400 clients that we’ve been working with. We are seeing clients add at a pretty healthy clip. So, I think we have gotten past that largely, it is a pretty significant change effort, so it shouldn’t be underestimated, but I think we are doing a pretty good job on it now and we are starting to see some pretty significant results in terms of the number of associates that are adopting the number of clients athat are adopting and our internal personal as well. So we feel pretty good about where we are at.

Okay, great. And then just a quick numbers questions Derrek, I appreciate the color on the guidance, is it possible to give us any color in terms of gross margins and adjusted EBITDA that is embedded in your fourth quarter guidance? Thanks.

Let’s see here Jeff.

I can always follow-up offline if you don’t have it, don’t worry about it.

Well I’ve got it here, I mean we are looking for gross margins roughly in alignment with where they were in the fourth quarter of last year, maybe down a little bit there. As Steve mentioned, there is some transportation cost or some other things here to service some of this hurricane related work. What was your question on adjusted EBITDA though [indiscernible]?

Yes, the same kind of thing and just in terms of guidance for the fourth quarter.

We’re looking at, I’ll call it roughly about 30.5 to 34.5 million in adjusted EBITDA.

Okay, great that’s really helpful. Thank you so much.

Your next question comes from the line of Kevin McVeigh with Deutsche Bank. Your line is open.

Thank you so much and let me add my congrats on the quarter. Hey Derek, you came in at the high-end of the range, was that kind of the incremental step-up of the hurricane work or any other context around that just as we think about it relative to Q4?

A good portion of the beat was, what pushed us higher was PeopleScout continued to perform really strong and some lower corporate expenses. The extra revenue beat for the quarter was driven by the hurricane related work that we talked about that provided some extra lift. However, we had some extra SG&A that came along with that revenue. Some of it normal that you would expect incremental, but roughly about $2 million of extra SG&A that came. Half of that roughly related to, damaged to our branch offices, which won’t carry a portion of Q4 and just some start-up cost. Mobilization cost getting some more recruiting centers and some other things going. So that really leaves you with the beat on the PeopleScout results from a little bit higher in revenue and strong performance on the adjusted EBITDA margin side.

Got it. Now is that - where some of those cost being shared Derrek, will you be able to recover them from your carriers [ph]?

No, most of these are not any big items at any individual branches, our branches are pretty small and this is largely going to fall underneath the deductibles, so this is our pocket expense for us.

Got it. And then just as we’re thinking about the new buyback any way to think about the cadence of that, and how much of that gave down into the Q4 guidance?

Yes, thanks for asking that question, I’m glad you did. We don't speak any share repurchase activity - at least future activity into the guidance that we set. From a strategic perspective, on the share buybacks, this is something that, as Steve alluded to in his comments with more of our organic strategies or more of our growth strategies focused on organic business plans, I was going to free up quite a bit of capital for us. So, we plan to be active here in share repurchase every year going forward. I will be, we have a big acquisition here or even a small one that take some capital out that might slow down the pace for a bit. And then we’ve always been opportunistic in how we buy it. So not a stated stock price or stated level on a quarterly basis, but we do plan to be active going forward on an annual basis with us makes some good progress at it.

Super. And then just my last one, any other thoughts on minimum wage increases or anything else that may need to think about as we get into 2018 or what type of progress you’re making on some of that kind of margin? I know there have been compression earlier in the year.

Yes, I just expected the pace on the minimum wage side will continue into next year. California has been the biggest presence of this. There will be some continuation of that next year, probably not to the same level that it has been in the past. From a long-term outlook, the increase in the minimum wage we think is incrementally positive for the industry on a longer-term basis. As those wages go up, the customers - we feel will look for more and more options to make their workforce more productive and certainly the service offering we’ve got helps with that. However, you need a little bit of a break in some of these areas to catch some wins. So, if you have got year upon year upon year it is hard to see that translating into additional industry growth because there is some cutback in hours. But, I think we will see about the same level for next year as far as minimum wage increases that we saw this year and I think our teams are well prepared to handle that. We saw this process in August and continue to the rest of the year. So, we’ll be in good shape.

Awesome. Thank you very much.

[Operator Instructions] Your next question comes from the line of Mark Marcon from RW Baird. Your line is open.

Hi, good afternoon. I was wondering if you could just breakdown PeopleReady, PeopleManagement, and PeopleScout in terms of the growth on a comparable basis, I think I can see what it is, but I just wanted to confirm how it comes out and then I’ve got some follow-ups?

You're talking about the guidance we’ve set Mark for the fourth quarter?

Right. So, for example total is minus 1 or minus 3 on a comparable period basis, so I’m assuming PeopleReady is minus 2 to minus 4 on a comparable basis, but I just wanted to confirm that thing with PeopleManagement and PeopleScout.

Sure. So, what I’m going to do here is I’m just going to give a complete story of the guidance starting at the total consolidated level just so everybody has got it and I am going to back in and finish off with the question that you asked here mark. On a GAAP basis total company, we’re looking at a decline for the fourth quarter in our outlook of minus 8% to minus 10%. On a comparable basis for the total company, we’re looking at a decline of 1% to 3% or on an ex-Amazon basis total company plus 1% to minus 1%, on a comparable basis. For each of the segments on a comparable basis PeopleReady at flat to minus 3%. PeopleManagement at minus 4% to minus 6%, and PeopleScout at 5% growth to 15% growth.

Okay great. And then with regards to just PeopleReady in terms of - it sounds like you are starting to see some positive traction with regards to the JobStack, can you talk about how that bakes into that comparable growth and basically what are you seeing here in terms of October?

So, we've finished the quarter from an exit rate, PeopleReady at minus 1%. If we excluded the storm related revenue out of that we were looking at a decline in September of let’s call it minus 3% and then in the outlook that we just shared on a comparable basis for PeopleReady we’re at 0 to minus 3%. So, a slight pickup in the growth rate assumption for the fourth quarter, compared to where we've finished the third quarter.

Great. And then can you just talk a little bit about any sort of regional developments that you are seeing, like obviously you’ve called out the hurricane impact, but can you talk about like California is an example areas where minimum wages have been going up, has that stabilized in terms of the impact?

Yes, certainly from a regional perspective, geographical perspective as you would guess the Southeast wars our strongest showing related to the hurricane, so many areas of south-east Texas, Florida got into double-digit growth, lower double-digit growth. From a state perspective, I am going to look at these numbers here real quick, so I don't miss both of them. California has been in a decline for us over the last couple quarters and finished the third quarter at flat revenue growth. So, there’s been a pickup in the trajectory of the trends so at least an improvement from the negative sales results getting to almost flat at the end of the quarter. So, those are probably the two biggest highlights from a regional perspective. When you take a look at the rest of the country it’s just been slight tick-ups across the country, pretty broad based and pretty even.

Great. And then a question for Patrick, it sounds like you're making good progress on JobStack, if we fast forward to six months from now, some of the stats that were mentioned in terms of number of associates, number of branches actually getting orders through the program where would you expect it to be say in six months from now and then maybe a year from now?

Yes, so six months from now, as I mentioned earlier we’ve got 450 branches that are on the associated Apple [ph]. We will have all of the PeopleReady branches on there within that six-month window so we’ll be at over 500. Same with the client rollout. We’re in the early stages of that client rollout, but within the next six months all of our PeopleReady branches will be on the app. In terms of a year from now, it’s hard to predict, but I can tell you from a value creation perspective, what we are seeing in the early days are we’re seeing a little bit of lift in fill rate in part because, as I mentioned in my prepared remarks, the number of workers that we’re bringing on through JobStack they tend to be more sticky. And they tend to be more active in terms of taking more SIMOS that just creates a larger supply tool for us to fill demand in our tight candidate market, that’s going to drive higher fill rates. The second thing that we’re seeing is, clients are giving us additional positions we otherwise might not had. So, it’s too early to quantify the impact, but certainly clients are giving us scope we otherwise wouldn't have had. And then obviously we’ve got something to go and talk about clients now that we haven't had in the past. And so, acquiring new clients are retaining our existing clients we think those are the real value levers for the capability we’ve developed, but I think it’s too early right now to try to quantify what the impact is going to be six and 12 months out.

Can you just talk a little bit about the adoption among clients in some of the branches that have had JobStack the longest?

I think the headline is for every 10 clients that we’re talking with three your signing up, so the adoption rate is pretty high. This is sort of like, you know when we go on talk with the client it is certainly like taking cold water into the desert, and giving them something that they are really excited about. So, this is a really a challenge for us that they are really excited about. This is really a challenge for us is in terms of signing up clients, and signing up workers. The challenge for us is in the execution, making sure that we’re converting that capability into value both for our clients and our associates. So that’s the real challenge for us, but I would expect over time we're going to see increased fill rates, more physicians they otherwise would have had and more clients than we otherwise would have had, as well as workers that are more sticky.

What sort of fill rates are you getting out of the ones that are coming across JobStack?

So, on average we’re running around 10% of the - as Steve mentioned in his prepared remarks, for our highest performing branches we are a little bit North of 50% in terms of those branches.

In terms of fill rates [indiscernible]?

In terms of the number of positions that are being filled.

Right. I’m asking about just to fill rates in terms of the - so of the orders that are coming through JobStack what percentage of those are getting filled. Next?

Well we tend to - well it’s probably not the easiest way to think about because we can fill them through the app and in some cases, we're filling them through our branch network as well. So, our overall fill rates tend to grow on in the low 80s, but in terms of the physicians that are on the app, 10% on average and 50% on our highest performing branches.

Okay great. Got some other questions, but I’ll follow up off-line. Thanks.

There are no further questions at this time. I will turn the call back over to the presenters.

Thank you. We appreciate you being with us today and as you can tell we’re excited about the organic growth opportunities and strategies that we have ahead and the share repurchase authorization that was announced today and we look forward to updating you in February as we complete fourth quarter. Thank you.

This concludes today's conference call. Please be advised that any portion of today's call that you may have missed will be made available on the replay shortly. On the IR portion of trueblue.com. Thank you and you know may disconnect.