Greetings, and welcome to the TrueBlue Second Quarter 2025 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.

Thank you, operator, and welcome, everyone, to today's call. I am joined by our Chief Financial Officer, Carl Schweihs. Before we turn to the financials, I'd like to take a few minutes to discuss TrueBlue's current market position and the actions we've taken to strengthen the company during this prolonged industry downturn. We have viewed this as a period of opportunity to create long- term competitive advantage and drive market share gains early by leaning into our core differentiators. We've been deliberate in streamlining operations and positioning TrueBlue to lead as the labor market evolves, expanding into high-growth, underpenetrated end markets with secular tailwinds, increasing our mix of skilled and professional roles, accelerating our digital transformation, diversifying revenue streams, and eliminating nonessential costs. So who is TrueBlue today? We're a leading provider of digitally enabled specialized workforce solutions that seamlessly connect employers and talent with precision and scale. Backed by decades of experience, we deliver total workforce solutions across recruitment, attraction, assessment and workforce management. We help clients improve workforce quality, streamline operations and meet evolving talent demands. We partner with over 55,000 customers and more than 300,000 workers annually. As an extension of our clients, we bring operational insight, local market expertise and disciplined execution to help solve complex workforce challenges. Our extensive national footprint includes approximately 500 branches, hundreds of on-site locations and tens of thousands of client work sites, enabled by a digital reach that spans every corner of the U.S. from major cities to small and rural communities. We tailor our solution to each client's footprint and operating model with extensive end market presence and delivery flexibility supported by a full spectrum offering and an expansive talent network. Our award-winning RPO capabilities further extend our reach across the globe, and we've strategically expanded our total addressable…

Thank you, Taryn. Total revenue for the quarter was $396 million, flat to the prior year and near the low end of our outlook range as uncertainty and client caution continue to weigh on the staffing industry. Included in these results is 4 percentage points of growth driven by our recent acquisition of HSP. As expected, temporary labor and permanent hiring volumes remain suppressed with clients navigating an unpredictable business landscape and staying cautious around business spend. While overall market demand was soft, we are capitalizing on growing markets and leveraging our deep expertise to create additional opportunities for growth. For example, as Taryn mentioned, our skilled businesses delivered double-digit growth for the quarter, and our on-site team recently secured one of its largest single site wins with a multinational e-commerce client. Gross margin was 23.6% for the quarter, down 280 basis points. The primary driver of the decline was changes in revenue mix with more favorable trends in our lower-margin PeopleManagement businesses and PeopleReady renewable energy work. As a reminder, renewable energy work carries a lower gross margin than the general PeopleReady business due to the pass-through travel costs involved. Certain software depreciation now being reported in cost of services also contributed to the margin decline. Keep in mind, software depreciation is noncash and excluded from our EBITDA and adjusted EBITDA calculations. We successfully reduced SG&A by 7%, largely outpacing the organic revenue decline and demonstrating our continued commitment to maintain cost discipline and enhance our profitability. We recognized the COVID-19 government subsidy benefit during the quarter, but since we reported a similar benefit in the prior year, it had no meaningful impact on the year-over-year decline. The real driver is our continued focus on the areas we can control to not only align with current market dynamics but…

Thank you, Carl. As you have heard from us today, our TrueBlue team has a proven track record of increasing market share and revenue through skilled and geographic expansion and a growing opportunity to accelerate impact through cross-portfolio solutions, sales function optimization and tech-driven innovation. We have a clear strategy that positions us to drive long-term sustainable value well aligned to secular tailwinds and an approximately $90 billion global total addressable market. Our leadership team and talented employees are energized by the opportunities ahead as we position TrueBlue for margin expansion and an outsized share of industry growth. This concludes our prepared remarks. Operator, please open the call now for questions.

[Operator Instructions] And our first question comes from Jeff Silber with BMO Capital Markets.

I was hoping you can give us a little bit more color on monthly trends in terms of how they tracked over the past few months, including into the current quarter. And I think, Carl, you talked about some green shoots. Maybe we can get a little bit more color there as well.

Jeff, thanks for the question. We're very encouraged by the momentum that we're seeing across the business, 3 particular areas: one, double-digit growth for our skilled businesses, overall signs of stabilization and a return to company-wide growth expected in the third quarter. Beyond that, we're confident that the cost actions we've taken during this downturn combined with our strategic focus will position us well to drive even stronger profitability as the industry demand returns.

Yes. And then, Jeff, I can cover some of those inter-quarter trends there. So PeopleReady saw low single-digit weekly sequential revenue growth throughout the quarter, which was driven by our skilled businesses. Just to put this in perspective, PeopleReady exited Q1 at minus 8% and exited Q2 at minus 3%. Our monthly trends were kind of minus 8% in April and minus 3% as we work through the month. We're also very encouraged by the trends in July. PeopleReady returned to growth in July, and our weekly trends are in line with our outlook for the quarter. I think Taryn covered some of those green shoots in there as well. I'd just add in, as we said in the prepared remarks, too, our commercial driver services continues to do well for us in its fourth consecutive quarter of double-digit revenue growth as well.

I appreciate the color. If I could switch gears a bit, since you last reported, the company received an unsolicited buyout offer from HireQuest. I know your Board quickly rejected that. But can you talk about the reasons underlying that decision? And have you had any discussions with HireQuest since that time?

Yes. We'll refer you, Jeff, to our public disclosures regarding HireQuest, but do be assured that our Board is focused on maximizing value for our shareholders and will consider any approach to doing so. The team has done a tremendous amount of work to position TrueBlue to take advantage of the strongest market drivers as the industry recovers, and we will continue to act in the best interest of our shareholders.

Your next question comes from Kartik Mehta with Northcoast Research.

Taryn, you talked a little bit about third quarter being a positive quarter, seeing growth for the overall company. And I think, Carl, you talked about PeopleReady seeing some positive momentum in July. And I'm wondering, do you finally think we're at a point where now the company can sustain some revenue growth? Or is there anything unique happening in the third quarter, which would make you cautious?

Thank you for the question, Kartik. We're really encouraged with the momentum that we're seeing here coming into the third quarter and the signs of overall stabilization. So I would just say, overall, that stabilization is really encouraging to us. And we're seeing that same momentum and returning to growth among our clients, too. Our teams are focused on securing new wins and expansions, all good signs that customers are beginning to experience this positive momentum as well. As always, we stay very close to our clients and monitor industry trends, which are changing constantly in today's environment. I would say as far as an inflection point, customers continue to look for more certainty to feel more confident planning their workforce needs, and our best indicator is when clients say they need our help. So we're staying highly engaged to ensure that we're well positioned for that rebound.

And then just any type of pricing competition? I think the last quarter, you talked a little bit about some pricing competition. I'm wondering how that's trended this quarter.

Yes. Thanks for the question, Kartik. Look, we do always kind of see some pricing conversations, especially at this time in the market. But we are really encouraged. From a bill rate, pay rate spread, we saw pay rates up 1.2% in the quarter, bill rates up 1.8%, so returning to growth. That led to about a 10 bps improvement in margin. So I'd just say while there's still the pricing pressure that we would expect in this environment, we've been really disciplined with our pricing, and we continue to be watchful to ensure we don't, one, price ourselves out of the market and hamper our ability to continue to rebound quickly when the market does rebound. But I think that's an encouraging sign, especially with the growth that we're seeing.

And Kartik, if I could add as it relates to pricing, one of the new features that we enabled in our JobStack platform is where a customer can now receive a quote when placing a new order directly in the tool. And this is early days. We just launched this feature in June. But at this point, nearly 100% of the price quotes that have been offered through the tool have been accepted and ultimately resulted in an order since the launch of this feature. So that's encouraging. We're really excited about that new functionality and the fact that customers are buying based on the price that they're being given.

[Operator Instructions] Your next question comes from Mark Marcon with Baird.

First one is just the monthly trends, could we get that for PeopleManagement and for PeopleSolutions exclusive of the acquisition?

Yes. Let me get through that. So I gave you kind of -- let me just go back to PeopleReady was kind of minus 8%, minus 3% and 3%. When we look at our PeopleScout, that was pretty similar to what we reported for the quarter. And then PeopleManagement, also kind of continued trends, so kind of plus 3%, plus 4%, flattish in June and then returning to growth here in July as well.

Great. And are there any regional differences that you're seeing? Any differences between Cali versus Texas versus Florida?

Yes. As I said in kind of prepared remarks, Mark, I mean, look, if you just think about our largest geographic opportunities, it's going to be California, Florida, Texas. We did see improved trends in Florida and California during the quarter, which is encouraging. And we've also -- we've been seeing Texas do better than kind of what we've reported at a segment level as well. The only other thing maybe just to call out is even in a tight kind of manufacturing and construction market, we saw those kind of industries from an end market see a small improvement from Q1 to Q2 as well. But nothing else to call out from an end market other than just the general kind of improving trends as we move through the quarter.

Great. And then can you talk a little bit about what you're seeing in the renewable business and energy broadly speaking, so clean energy versus energy in general? And then any sort of changes passed -- since the Big Beautiful Bill passed?

Mark, thank you for the question. In regards to the Big Beautiful Bill as it relates to energy, it does officially roll back or sunset the key IRA incentives by 2027, reducing policy support for clean energy. With that being said, our renewable pipeline remains very, very strong. In the second quarter, we signed multiple new deals encompassing multiyear projects, and so we've continued to see really strong performance there and a strong pipeline. Beyond that, you may recall that one area of focus for us is to grow in the energy sector beyond renewable. Particularly we're very focused on solar and large kind of utility scale projects. And we do have some nice potential for expansion across all TrueBlue brands into additional energy end markets such as commercial solar, full-scale energy and then nonrenewable sources like oil and gas. And I'm happy to report that we had wins in energy across all of our segments in Q2, so we are gaining some nice momentum there.

Yes. And Mark, just to add on to that, look, I mean, we've got a decade of experience here on energy as an end market, not just renewables, and it continues to be about 10% of our portfolio and feel really good. We don't think the energy usage here in the U.S. is going down anytime soon. So feel good about that opportunity as we move forward.

Your next question comes from Marc Riddick with Sidoti & Company.

So you actually touched on a couple of things already, but I wanted to circle back. You made mention kind of about the -- some new features being introduced. And maybe you could talk a little bit about some of the opportunities that you see there, either new features on JobStack that have just been rolled out or that you're planning to roll out and client receptivity and how that's -- and how much that fuels the optimism of organic growth expectations.

Absolutely. Thanks for the question, Marc. We are really excited to have our own proprietary JobStack app that allows us to control the road map and really quickly address the feedback that we hear from our customers. And our road map is really focused on delivering a better experience for our customers. I talked about that ability for them to receive a quote and place an order in the app. That has been very well received, also helping us to improve our sales effectiveness and increasing operational efficiency. So those are the 3 areas of, I would say, focus in our road map. In addition to the pricing estimate, we've talked a little bit about the PeopleReady matching technology, which helps match the job requirements with a pool of reliable candidates, qualified workers and really makes it easy for our customers to invite the best workers to the jobs. Our fill rates at PeopleReady are at an all-time high. And part of that is that matching technology that we have in JobStack. I will point, though, to a nice example where we recently secured a win with a project in a remote location with a large food services customer that's over 3 hours from our nearest branch. And so our JobStack platform has really allowed us to be able to deliver that far away from a branch and help us meet our customer needs in that way. So I would just say all of those road map features are continuing to enhance our ability to serve customers like that.

Great. And then I was wondering if we could talk a little bit about maybe your thoughts and views on candidate availability and the skill availability out there and that's changed much since the beginning of the year or if you're seeing any pockets that might be worth calling out there.

Yes. I would say that there hasn't been a significant change in terms of the candidate availability. Our fill rates still remain high. One area that I'll point to that the team has done a really nice job, we've talked about the expansion of our skilled businesses, and that is where there is, I would say, tighter candidate availability. There are a couple of things that we're doing in the organization to help that. First, we have a workup program that provides skill development opportunities for workers that allow them to build careers and skilled trades and also it helps us expand our talent pool. And then secondly, our apprenticeship program provides opportunities for people with minimal experience to build careers, particularly in energy that helps add to that talent pool and ensure that we're able to meet our clients' needs.

Okay. And do you get a sense that the amount of folks that are taking these opportunities, these apprenticeship type opportunities, has that changed much during the year? Or are you seeing an influx of new folks? Or is it similar to maybe what you've seen historically?

I would say it's similar.

And ladies and gentlemen, there are no further questions at this time, so I'll hand the floor back to Taryn Owen for closing remarks.

Thank you, operator, and thank you, everyone, for joining us today. I do want to take an opportunity to thank the entire TrueBlue team for their resilience and dedication to providing our customers and associates with exceptional service as well as their commitment to advancing our mission to connect people and work. We do look forward to speaking with you all at upcoming investor events and on our next quarterly call. If you have questions, please don't hesitate to reach out. Thank you.

This concludes today's conference. All parties may disconnect. Have a good day.