TrueBlue, Inc. Aktie

Greetings, and welcome to the TrueBlue First Quarter 2026 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. Please go ahead.

Thank you, operator, and welcome, everyone, to today's call. I am joined by our Chief Financial Officer, Carl Schweihs. We entered this year focused on strengthening our sales reach, expanding in growing markets and leveraging our efficient operating structure to drive top line growth with enhanced margins. We have made meaningful progress and have clear momentum underway, but we have more work to do to improve performance. We delivered first quarter results toward the high end of expectations, driven by continued expansion in skilled verticals alongside stabilizing demand trends and disciplined operational execution to improve profitability.

Our revenue in the energy sector more than doubled this quarter as we continue to leverage our strong market position and expertise to capture demand in this growing market. There are an increasing number of secular growth drivers in the energy space, positioning us to capture further upside as we continue to expand into adjacent subsectors, including those supporting data centers and energy storage facilities. In fact, addressing the power needs of data centers now represents approximately 1/3 of our active energy projects. The sustained growth of our commercial driver business also speaks to our success expanding in attractive end markets. Our team continues to outperform the broader market, delivering its ninth consecutive quarter of growth.

We have strong client relationships and deep expertise in high-demand skilled sectors, positioning us to help address the structural labor shortages leading to rising demand in skilled roles and end markets with energy and commercial driving being just 2 examples. We are also expanding our presence in the government vertical, most notably with our RPO and talent advisory solutions. We recently secured a 9-year engagement serving a law enforcement agency in the U.K., further demonstrating our growth in the government sector alongside our previous U.K. Armed Forces win. We continue to diversify our business mix, building momentum to expand our market share and increase our revenue potential.

Health care remains yet another significant long-term market opportunity for us with strong secular growth drivers. We continue to strengthen our position in the U.S. health care market with new business wins across our brand portfolio and geographic expansion of our health care staffing business as we leverage the combined strength of our deep expertise, recruitment agility and sophisticated technology to expand in this underpenetrated market. We are also making significant progress enhancing our sales function to accelerate growth and capture incremental demand. We continue to strategically increase our sales capacity within our on-demand territory-based structure to further extend our market reach.

Expanding our sales function enables more targeted localized sales strategy and deeper client engagement. Enhanced sales focus, coupled with our improved operating model positions us well to drive scalable growth. This expanded sales capacity is already delivering clear results with dedicated sales supported territories delivering stronger sequential performance. Our strategic partnership with a leading group purchasing organization is unlocking new client acquisition channels and fueling a robust pipeline that includes several multi-brand prospects. During the quarter, our team secured roughly $11 million in annualized new business through this strategic partnership.

Greater enterprise alignment and collaboration is also building stronger partnerships across our brand portfolio, leading to more cross-selling opportunities. Our teams recently secured new business, serving a global leader in health and medical devices with a tailored multiservice solution, highlighting the combined power of our brands and offering a full spectrum of specialized workforce solutions. While strategically investing in sales, we have continued to lower our total operating cost through disciplined and effective cost management as well as enhanced operational efficiencies enabled through our portfolio of proprietary technology platforms.

We continue to lead on the digital front with AI-powered features, predictive analytics and behavioral insights that enable us to connect people and work with speed, precision and scale. Advancing our digital ecosystem remains a priority, positioning us to deliver greater value to the customers and talent we serve with a differentiated experience and efficient solutions as we accelerate growth. As we continue to advance our long-term growth strategy, we remain committed to delivering improved profitability and sustainable growth. While our strategic priorities are taking hold, driving improved results and positioning us well to capitalize on the growth opportunities ahead, we are not done yet.

The staffing market has significant untapped potential, and we are confident our strategic focus on enhancing our sales model, expanding our share in attractive end markets and unlocking efficiencies with technology and operational excellence will not only drive our improved performance in 2026, but also enable us to realize long-term sustainable value for our shareholders.

I will now pass the call over to Carl, who will share further details around our financial results and outlook.

Thank you, Taryn. Total revenue for the quarter was $399 million, up 8% and near the high end of our outlook range. Organic revenue increased 7% with our acquisition of HSP in January 2025, contributing 1 percentage point of inorganic growth year-over-year. Our skilled businesses continue to outperform the broader market, delivering double-digit growth for the fourth consecutive quarter due in large part to our continued success capturing rising demand in the energy vertical. As demand for skilled trades remains strong, broader demand trends continue to stabilize, driving solid momentum as we advance our growth strategy.

Gross margin was 19.8% for the quarter, down from 23.3% in the prior year period as anticipated, primarily due to less favorability in prior year workers' comp reserve adjustments and changes in revenue mix. As you may recall, last year's gross margin benefited from a significant reduction in workers' compensation costs due to favorable development of prior year reserves. As expected, that degree of favorability did not repeat this year. For the revenue mix impact, this stems from outsized growth in PeopleReady Energy Work. As a reminder, energy work carries a lower gross margin than the general PeopleReady business due to pass-through travel costs involved. Outside of these costs, the underlying margin for energy work is consistent with other large PeopleReady accounts.

We successfully reduced SG&A by 8%, even while revenue grew 8% for the quarter. This improved leverage demonstrates our commitment to effectively manage costs and deliver enhanced profitability. We've made significant progress, creating greater flexibility to scale and driving efficiencies that position us well to deliver strong incremental margins as industry demand improves and we continue to advance our growth initiatives. We reported a net loss of $20 million this quarter, which included a noncash goodwill impairment charge of $4 million, driven largely by our lower share price and market capitalization during the quarter.

Our results also included a small amount of income tax expense primarily associated with our foreign operations and essentially 0 income tax benefit on U.S. operations due to the valuation allowance in effect on our U.S. deferred tax assets. As a reminder, the impairment charge and valuation allowance have no impact on our operations or liquidity. Adjusted net loss was $12 million, while adjusted EBITDA was negative $3 million for the quarter.

Now let's turn to our segments. PeopleReady grew 19%, driven by continued outperformance in the energy vertical. Revenue in the energy sector more than doubled for the third consecutive quarter as our team continues to leverage our strong market position and deep client relationships to capture share in this growing market. Our on-demand business is also showing improved trends, especially in the territories where we have invested in sales resources, and we were encouraged to see the East region of the U.S. return to growth this quarter. Despite the workers' compensation headwind I mentioned earlier, PeopleReady segment profit margin was up 10 basis points, driven by targeted cost actions to deliver efficiencies and improve profitability.

PeopleManagement revenue declined 6% due to lower on-site volumes, primarily in the retail vertical and consistent with the macro conditions in that space. While client volumes declined for the quarter, we are building momentum having secured $13 million in annualized new business wins during the first quarter alone and positioning the business well to drive revenue expansion.

Our commercial driver business also continues to outperform, delivering its ninth consecutive quarter of growth as our strong client relationships and deep expertise drive continued success capturing rising demand. PeopleManagement segment profit margin was up 50 basis points due to disciplined cost management actions to drive improved efficiencies and greater scalability. PeopleSolutions revenue grew 2%, with HSP performing in line with expectations and driving the year-over-year growth. On an organic basis, PeopleSolutions declined 7% as overall hiring volumes remain subdued. While clients continue to navigate evolving market conditions, we are encouraged to see signs of stabilization with growing momentum in new business wins and expansions.

We are adding new clients to our portfolio and expanding existing relationships, especially with higher skilled roles and serving growing end markets with long-term secular tailwinds. As client hiring volumes return, the scale of these engagements position us well to accelerate growth. PeopleSolutions segment profit margin was up 150 basis points, primarily driven by cost actions to deliver efficiencies and greater operating leverage.

Now let's turn to the balance sheet. We finished the quarter with $24 million in cash, $74 million of debt and $36 million unused on our borrowing base, resulting in total liquidity of $60 million. Effective January 30, we transitioned our revolving credit agreement to an asset-backed structure, creating greater flexibility given our strong working capital position. We also reduced the size of the facility to better align with our capital priorities, resulting in cost savings as we lowered the fees associated with the unused portion of the facility. We remain committed to managing a strong liquidity position and financial foundation to ensure we are well positioned to capitalize on the growth opportunities ahead.

Looking ahead to the second quarter of '26, we expect revenue growth of 2% to 8% year-over-year as we continue to build on our success in recent quarters. With strong momentum in attractive markets, we expect growth across all of our skilled businesses and a return to double-digit segment profit margins for our PeopleSolutions segment. We expect sequential gross margin expansion of 130 to 170 basis points, paired with continued cost discipline, leading to improved profitability.

Also keep in mind that we typically see our highest volumes in the second half of the year due to the seasonality of our business. So while we expect improved operating leverage in the second quarter, our lean cost structure will lead to further margin improvement as we move through 2026. Additional information on our outlook can be found in our earnings presentation shared on our website today.

Before we open the call up for questions, I want to turn it back over to Taryn for some closing remarks.

Thank you, Carl. And as you have heard from us today, our strategic focus is producing meaningful results, and there is still more work to be done. We are executing our growth strategy with discipline and focus, strengthening our market position with an enhanced sales model and market expansion while unlocking efficiencies through technology and operational excellence to deliver sustainable, profitable growth. We have the right people, structure and strategy to propel TrueBlue forward. And as our focused actions drive improved results, we are well positioned to deliver on our commitment to accelerate growth, enhance shareholder value and advance our mission to connect people and work.

This concludes our prepared remarks. Operator, please open the call now for questions.

[Operator Instructions]

And our first question today will come from Kartik Mehta with Northcoast Research.

Maybe we could just talk a little bit about the core on-demand business. Maybe your perspective on how the business is doing. I apologize for that. And if you look at it, are we at a positive inflection point for that business?

Kartik, thank you for the question. We are encouraged by the positive results we're seeing in our PeopleReady on-demand business. We continue to see strong performance across our territories and sales organization with results reflecting improved growth and profitability. A majority of our territories in PeopleReady on-demand have returned to growth for the year, driven by local account business growth. Weekly trends have been improving. And while there's more work ahead, we are confident in our ability to continue building on this momentum.

And just to build on that with a few data points here, Kartik. As we mentioned in prepared remarks, our PeopleReady East region returned to growth in Q1. And I'd also say that the momentum is shifting positively across the U.S. While it's not uniform, we're seeing those more territories move back into growth each month as we move on. We've also been able to make these sales investments while managing our costs. SG&A for PeopleReady declined 10% for the first quarter, reflecting a more efficient cost structure.

So I'd say the progress is really a result of our ongoing efforts to optimize our fixed cost base, enhance our digital capabilities, which will give us room to invest in growth while protecting our margins. And I'll just leave you with momentum does continue to build in PeopleReady on-demand, and our outlook for the second quarter reflects trends that are aligned to our historical sequential performance when we start to build this business from spring into the summer.

Yes. Taryn, the one question almost all my companies are getting, as you can imagine, is AI. And I'm wondering, if you look at TrueBlue, one, how maybe TrueBlue might be using AI to become a little bit more efficient, maybe how you're using it to better serve your customers? And just from a competitive standpoint, if you're seeing AI have an impact on your ability to serve your customers?

Sure. Thanks for the question. We're embracing AI, and it is differentiating TrueBlue services in ways that improve scalability, productivity and satisfaction, ultimately increasing value for our customers and our associates. AI is embedded across all of our proprietary technologies. So that's JobStack, Affinix and StaffTrack. And it's really helping us to enhance every stage of the staffing life cycle. As importantly, AI is driving significant growth in demand for data centers. What often gets overlooked is that AI depends on physical infrastructure.

Data centers require enormous amounts of reliable power and that power and the skilled workforce behind it is where we have an opportunity to play a critical role. We've seen increased project volume in our utility scale solar business and addressing the power needs of data centers now represent approximately 1/3 of our active energy projects. And then our PeopleReady skilled trades business has also seen an increase in revenue from the construction of data centers.

And just to add a little bit on to this and talk about kind of the P&L benefits that we're seeing of this work as well. From a revenue perspective, as Taryn just mentioned, we've seen our skilled business outperform the market with about 50% growth in Q1. From a cost and efficiency perspective, we're seeing positive trends in some of the important metrics we track. Our cost of delivery has gone down with revenue per head count increasing. We've also seen increased fill rates and lower costs due to recruiter efficiency. So really, we've seen kind of both top line growth and margin expansion as a result of AI opportunity.

Yes. And then just one last question, Taryn. Maybe just a pricing environment as the job market maybe isn't as tight as it used to be. Are you seeing any pricing competition for any of the segments?

I would say that we're seeing the typical pricing pressure that we would in this type of environment, not only from competitive forces, but also our clients are remaining very cost conscious during what remains an uncertain time. Our team is doing a great job of managing pricing discipline and continuing to look for ways to make sure that we're delivering enhanced efficiencies and values so that we can remain competitive across all of our service offerings.

Our next question, we'll hear from Mark Marcon with Baird.

Really nice to see the revenue growth. So good job there. Wondering if you can talk a little bit more about the elements of the revenue growth. So specifically, on the energy side, can you please size that for us? Like, how big was it this quarter, this past quarter? How big was it a year ago?

Yes. Thanks for the question, Mark. Our renewable energy business, as we mentioned, kind of more than doubled for the third consecutive quarter. Renewables is part of our skilled trades business within PeopleReady. We've noted in previous quarters that our skilled businesses represent about 1/4 of our staffing businesses. With the significant growth that we've experienced, that's going to be approaching about 1/3.

So 1/3 of both PeopleReady and Managed?

Yes, that's a good proxy across both of those segments.

And a year ago, it would have been 1/4 of it?

Yes.

Okay. So really good growth there. And then is the element that is tied to data centers increasing at an even faster rate? Or is it a fairly -- I mean, obviously, doubling is great. But -- and how sustainable or how long do you think the runway is for that growth?

Yes. No, I think we've got a really strong pipeline in our renewable business. We stay really close to our customers here. So I'd say a solid pipeline in renewables. We have several projects expected to ramp in Q2, supporting our outlook for the quarter. And longer term, we think that there's an incredible amount of need for energy in the space, and we're well positioned to capture that.

And then can you talk a little bit about on the driver's side, how big is drivers at this point?

That's about 1/3, Mark, in the PeopleManagement segment that we're talking about. One thing I will say and just add on to there is that our commercial driver business has been doing well for us. We're in our ninth consecutive quarter of growth in Q1. And it's been coming at a very challenging environment for transportation. A really encouraging sign for us is at the end of the quarter and into April, we saw an increase in our order volume, which is going to provide some incremental growth opportunity for that. As really historically over the last couple of years, we've been talking about taking share in our managed offering. So this will provide some future growth in our flex and on-demand side.

Yes. I mean, according to our transportation analysts on our shops, transportation is actually starting to pick up. So if you've got a growing market and share gains, that's obviously a huge positive. And then with regards to the overall revenue guide, so you did 7% growth organically this quarter. You're guiding to 2% to 8% on an organic perspective. Is there -- what segments would you expect to slow?

Yes. So thanks. Great question. So it's kind of 5 points at the midpoint. When we look at it, we should see some improvement in our PeopleManagement as we had a slower quarter in Q1, a little bit in PeopleSolutions as well as we move into the quarter. And then for PeopleReady, as we've talked about, our on-demand has seen good trends as we move into spring to summer, but we're starting to lap some of those really large quarter growths in our renewable business. So there's a little bit less growth coming on that side within our PeopleReady segment.

Okay. So we're basically going up against tougher comps, and so that's going to slow things down a little bit. So you're not expecting the energy business to continue doubling?

Not doubling, but we expect for it to continue to grow and grow sizably.

Okay. And then shifting to gross margins. Just how big was the impact of the workers' comp? I know it basically subtracted 220 bps relative to a year ago. But like what was the actual reversal last year? And what did you experience this year?

Yes, there'd be about $7 million differential between the quarters.

And then can you talk a little bit about bill pay spread and like what percentage increase you ended up seeing in the bill rate and the pay rate?

Yes, happy to, Mark. Pay rates were up about 7.5%, while bill rates were up 6.7%. So it led to about a 20 bps decline in margin for the quarter. The pay rate increase was largely due to statutory minimum wage increases as well as it's been driven by some role-specific skill scarcity rather than really general labor shortages. So as Taryn mentioned earlier, while there's still some pricing pressure that we'd expect, we've been really disciplined in our pricing. And I'd also add what we typically see in the seasonality of our business is that bill pay spread gets better as we move into the second and third quarter, and we're already starting to see that in April.

Okay. Great. And then in terms of the actual SG&A, obviously, it's projected to -- it will be down relative to a year ago. How much more room do you have in terms of taking the SG&A down relative to the midpoint of what you're projecting for the second quarter? Or how should we think about the incremental margin improvement as we go into the second half?

Yes. Here's what I'll say, Mark. Look, our adjusted SG&A was down about 8% in Q1, and we continue to manage costs very closely. We guided to about minus 7% year-over-year. So an improvement there. In Q2, we're guiding to a midpoint of $87 million or down 3%. That includes about $2 million or so of adjustments. So on an adjusted basis, that will look more close to $85 million or down 4%. I think there's an important call out is just if you remember on a reported basis, the prior year did include a $5 million benefit from government subsidies that we didn't expect to repeat. But overall, we continue to manage our costs very closely. And we feel like with our optimized fixed cost base, we're poised for significant incremental margins and expanding profitability as we exit this lowest volume quarter in Q1 and the demand improves into the year.

Can you just elaborate a little bit on the incremental margins that you might expect during the second half?

Yes. I think -- I mean, we'll expand it. We're looking to double from our guide in Q2 here. And as we continue to move through the period, we'd expect to see incremental margin, but we guide a quarter at a time, Mark.

[Operator Instructions]

And next, we'll move to Marc Riddick with Sidoti & Company.

I wanted to start maybe with -- if we could talk a little bit about the partnership with the leading group purchasing organization that we referred to. Maybe I guess, maybe in baseball terms, what inning are we in as far as that opportunity? Is it -- are we sort of early stage? What do we think is the type of opportunity and what type of runway we might have there? And then maybe you could also talk about the scope of it a little bit as far as the reach? Are we talking a nationwide reach? Is it a regional reach? What should we be looking at there?

Yes. Thanks for the question, Marc. We're just at the tip of the iceberg here, and we're very encouraged by the progress that we're seeing with this strategic partnership. It's driving new business opportunities and expanding our reach nationwide. As I mentioned in prepared remarks, we have secured approximately $11 million of annualized new business wins in the quarter, and the partnership continues to build momentum as we expand the relationship, both into new sectors and across all of our service offerings. We had a couple of recent wins with 2 nationwide retail stores with work that we expect to begin here in the next couple of quarters. So overall, we're very excited about the strong pipeline of opportunities ahead with this partnership.

Great. And then sort of along those lines, could you talk a little bit about the -- you mentioned in your prepared remarks about the international growth. Maybe talk a little bit about the opportunity set there and maybe what we might see internationally? And then I have one last follow-up.

Absolutely. We -- as I mentioned, we won a deal with the U.K. law enforcement here in the last quarter in our PeopleScout business to support them with hiring. And this follows the landmark deal that we won in the U.K. to provide employer brand and candidate attraction services for the U.K. armed forces. Just as a reminder, that deal is in the transitionary phase now. We'll start to see the full value of that opportunity in the early part of 2027 in regards to the new law enforcement agency win. We'll start to see revenue come online here this year.

Okay. Great. And then the last one for me, maybe you could shift gears over toward cash usage. Maybe you could talk a little bit about acquisition pipeline and appetite. Maybe if you're seeing things there and maybe what valuations look like as well as share repurchase appetite in the -- given sort of where we are at this point.

Thanks, Marc. Yes, look, we're focused on balancing ample liquidity first, making strategic growth investments into the business. And then as we've historically done, returning excess capital to shareholders via the share repurchases. Currently, with any excess cash and as free cash flow improves through the year, we're looking to pay down our debt first. We continue to manage our fixed cost base down. Our capital spend is now under 1% of revenue. And with the business returning to organic growth, we'd expect to pay down our debt throughout the year.

Just as you asked kind of about share repurchases, they remain important, but balanced with first, maintaining a strong balance sheet. We've got about $34 million remaining under our current authorization.

Currently, there are no further questions. I would like to turn the floor back to Taryn Owen for any additional or closing remarks.

Thank you, operator, and thank you, everyone, for joining us today. I do want to take this opportunity to thank the entire TrueBlue team for their disciplined execution of our enterprise strategy and for their commitment to advancing our mission to connect people and work. We look forward to speaking with you at upcoming investor events and on our next quarterly call. If you have any questions, please don't hesitate to reach out. Thank you.

Thank you. This does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time.

Greetings, and welcome to the TrueBlue Fourth 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. Please go ahead.

Thank you, operator, and welcome, everyone, to today's call. I am joined by our Chief Financial Officer, Carl Schweihs.

Before we discuss our fourth quarter results, I'd like to take a step back and reflect on the year. During 2025, we executed on our strategic priorities with discipline and focus, forming a strong foundation to build upon as we advance towards sustainable, profitable growth. We restructured our business model to expand our sales capability, unlock additional growth opportunities and improve profitability while tightly managing costs.

For our on-demand staffing business, we executed a comprehensive reorganization of our operating model, transitioning to a more efficient territory-based structure and investing in sales resources to expand our reach in key markets. This structure and increased sales capacity enable more targeted, localized sales strategies and deeper client engagement. As a result, our sales-enabled territories continue to deliver stronger sequential performance.

We've also focused on strategic partnerships and cross-selling initiatives as we continue to prioritize our return to growth. We launched an enterprise-wide strategic partnership with a leading group purchasing organization, unlocking new client acquisition channels and fueling a growing pipeline of multi-brand opportunities across our portfolio. This partnership has led to approximately $15 million of annualized new business wins and continues to build momentum as we expand the relationship into new sectors.

We are also fostering stronger partnerships across our brand portfolio. Greater enterprise alignment and collaboration continue to create more cross-selling opportunities, allowing us to better serve client needs and accelerate growth with our full spectrum of specialized workforce solutions. For example, collaboration between our PeopleReady and PeopleManagement teams continues to deliver results, with our commercial driver business securing 3 additional new locations serving a leading energy solutions manufacturer.

Market expansion was a significant performance contributor over the past year as we leveraged our strong market position and expertise to capture demand in attractive verticals with strong growth drivers. Our energy sector revenue grew 60%, while our commercial driver business continued to outperform the broader market, delivering its second consecutive year of double-digit growth. Structural labor shortages and strong secular forces in the energy space signal further growth potential as we continue to capture market share with our skilled businesses, both geographically as well as in adjacent subsectors such as the construction of energy storage facilities and data centers.

Our RPO solutions continue to expand coverage in attractive verticals, such as engineering and technology, through higher-skilled roles. We increased our professional hires this year, building momentum as we diversify our business mix to grow market share. Health care also remains a significant long-term market opportunity, with strong secular growth drivers. We have made meaningful progress expanding our presence in the health care market with new business wins spanning across our brands as well as the addition of health care staffing professionals to the TrueBlue's portfolio.

Since joining TrueBlue, HSP has expanded into 3 new states, and we are committed to thoughtfully scaling this business to capture sustained demand. Leveraging our deep expertise, extensive reach and sophisticated technology, we continue to strengthen our position in the U.S. health care market.

A key factor in our ability to deliver a differentiated user experience while also driving operational efficiencies is our portfolio of proprietary technology platforms. We've made significant progress enhancing the capabilities of our digital ecosystem with advancements that include embedded AI-powered job matching, predictive analytics and behavioral insights across the talent life cycle. Recently, we launched an AI-enabled bill rate feature within our JobStack app that provides personalized data-driven bill rates in seconds, supporting businesses in making faster, more confident staffing decisions.

Our technology is a key contributor in delivering smarter workforce solutions, creating greater value for the customers and talent we serve while supporting efficiency at scale. It enables us to reduce operating costs, extend our reach and continue investing in strategic sales initiatives as we accelerate growth.

We are confident in our strategic plan to enhance our sales model, expand our share in attractive end markets and accelerate efficiency with technology and operational excellence positions us well to capitalize on the growth opportunities ahead.

Our continued actions to drive top line growth and margin expansion underpin our overarching commitment to realize long-term sustainable value for our shareholders. Our ability to execute this strategy is strengthened by the experience and expertise of our Board and leadership team who are committed to serving the best interest of all shareholders and positioning TrueBlue for long-term success.

Now let's review our fourth quarter performance. We delivered our second consecutive quarter of organic revenue growth, driven by continued success growing our skilled businesses and greater stability in general demand trends. While we further grow the top line, we remain committed to driving improved profitability, as evidenced by our continued cost discipline leading to reduced operating costs for the quarter. As our strategic focus drives improved results, we are well positioned to capitalize on the untapped potential of the staffing market and deliver greater shareholder value.

I will now pass the call over to Carl, who will share further details around our financial results and outlook.

Thank you, Taryn. Total revenue for the quarter was $418 million, up 8% and near the high end of our outlook range. Organic revenue increased 5%, with the acquired HSP business contributing 3 percentage points of growth. Robust results in skilled trades fueled organic growth as overall market conditions showed ongoing signs of stabilization. Our skilled businesses continue to outperform the broader market, delivering double-digit growth for the third consecutive quarter, driven by our team's success in capturing rising demand in the energy vertical. Our other business lines are also showing improved trends and solid momentum going into 2026 as we maintain our strategic focus on accelerating growth.

Gross margin was 21.5% for the quarter, down from 26.6% in the prior year period, primarily due to less favorability in the prior year workers' compensation reserve adjustments and the changes in revenue mix. As you may recall, last year's gross margin benefited from a significant reduction in workers' compensation costs due to favorable development of prior year reserves. As expected, that degree of favorability did not repeat this year.

For the revenue mix impact, this stems for more favorable trends in our staffing businesses and outsized growth in PeopleReady renewable energy work. As a reminder, renewable energy work carries a lower gross margin than the general PeopleReady business due to pass-through travel costs involved. Outside of these costs, the underlying margin for renewable energy work is consistent with other large PeopleReady accounts.

We successfully reduced SG&A by 11%, even while revenue grew 8% for the quarter. This improved leverage demonstrates our continued commitment to managing costs and delivering enhanced profitability. We've made significant progress, creating greater flexibility to scale and driving efficiencies that position us well to deliver strong incremental margins as industry demand rebounds and we further advance our growth initiatives.

We reported a net loss of $32 million this quarter, which included a noncash long-lived asset impairment charge of $18 million associated with the sublease of our Chicago support office. As a reminder, this reduction in corporate office space unlocks over $30 million of cash flow over the remaining 10 years of the lease, providing greater flexibility as we target compelling growth opportunities.

Our results also included a small amount of income tax expense primarily associated with our foreign operations and essentially 0 income tax benefit on U.S. operations due to the valuation allowance in effect on our U.S. deferred tax assets. As a reminder, the impairment charge and valuation allowance had no impact on our operations or liquidity.

Adjusted net loss was $8 million, while adjusted EBITDA was $2 million for the quarter.

Now let's turn to our segments. PeopleReady grew 11%, driven by continued outperformance in the energy sector. Revenue more than doubled in the energy vertical for the second consecutive quarter as our strong market position and deep client relationships continue to drive success in this growing market. Our on-demand business is also showing improved trends, especially in our local business where we have invested in sales resources, signaling building momentum as we enter 2026.

PeopleReady's segment profit margin was down 370 basis points, mainly due to the favorable prior year workers' compensation reserve adjustments not repeating at the same level, as well as changes in business mix with outsized growth in renewable energy work, as I mentioned earlier.

People Management revenue declined 2% due to lower on-site volumes, primarily in the retail vertical and consistent with the macro conditions in that space. While client volumes declined for the quarter, our teams are building momentum, with 13 new sites launched during the quarter and continued success in new wins, positioning the business well to drive revenue expansion in 2026. Our commercial driver business also continues to outperform, delivering its eighth consecutive quarter of growth as we leverage our strong client relationships and deep expertise to capture rising demand.

PeopleManagement's segment profit margin was up 50 basis points due to disciplined cost management actions to drive improved efficiencies and greater scalability.

PeopleSolutions revenue grew 42%, with HSP performing in line with expectations and driving the year-over-year growth. On an organic basis, PeopleSolutions was flat to the prior year as overall hiring volumes remain subdued. While clients continue to navigate budget restraints and evolving workforce needs, we are encouraged to see signs of stabilization with our new business wins and expansions. We continue to win and expand with new clients, especially with higher-skilled roles and serving growing end markets with long-term secular tailwinds.

PeopleSolutions segment profit margin was up 180 basis points, primarily driven by cost actions to deliver efficiencies and greater operating leverage.

Now let's turn to the balance sheet. We finished the quarter with $25 million in cash, $66 million of debt and $68 million of borrowing availability, resulting in total liquidity of $92 million. During the quarter, we reduced our debt position by $2 million, while increasing working capital by $2 million, as we maintain our focus on delivering operational efficiency and enhanced financial flexibility.

With the recent amendment to our credit facility effective January 30, we have increased our borrowing availability for the remainder of the agreement term by transitioning to an asset-backed structure. We remain committed to managing a strong liquidity position and financial foundation to ensure we are well positioned to capitalize as market demand rebounds.

Looking ahead to the first quarter of 2026, we expect revenue growth of 3% to 9% year-over-year as we continue to build on the success we've achieved in recent quarters. This includes 1 percentage point of inorganic growth from HSP.

I'd also like to provide additional context around workers' compensation headwind reflected in our first quarter margin outlook. As we've discussed, prior year periods benefited from outsized favorability in workers' compensation reserve adjustments. These trends have since normalized, resulting in year-over-year margin compression for the fourth quarter and a similar headwind expected for the first quarter of 2026. This represents a return to a more normalized run rate rather than a change in underlying trends.

Given the expected revenue mix and the fact that the first quarter is seasonally our lowest revenue quarter, we expect a lower margin in the first quarter, but our lean cost structure will drive improved margins as we move through the year. Additional information on our outlook can be found in our earnings presentation shared on our website today.

Before we open up the call for questions, I want to turn it back over to Taryn for some closing remarks.

Thank you, Carl. Before turning to Q&A, I want to touch briefly on the recent announced changes to our Board of Directors. Over the course of several months, TrueBlue engaged with shareholders as part of a deliberate Board refreshment process.

In early 2026, we welcomed 2 highly qualified independent directors with deep operational and commercial experience and announced that 2 current directors would step down at or before our 2026 Annual Meeting. This refreshment strengthens and broadens the Board's capabilities while reinforcing our commitment to shareholder engagement and effective oversight.

As you have heard from us today, we have a clear strategy to drive long-term sustainable value and it is producing results. We have executed on this strategy with discipline and focus, strengthening our market position, diligently managing our cost structure and building momentum to fuel future growth.

In 2026, we are acutely focused on capturing market share as we further strengthen our sales reach and expand in growing markets, leveraging our efficient and scalable operating structure to deliver improved profitability. We are confident we have the right people, structure and strategy to drive TrueBlue forward, accelerating our growth, enhancing shareholder value and advancing our mission to connect people and work.

This concludes our prepared remarks. Operator, please open the call now for questions.

[Operator Instructions] Our first question is from Marc Riddick with Sidoti & Company.

So I wanted to maybe start where you left off there with the margin discussion. Maybe you could talk a little bit about how, given the sort of the different rates that we're seeing of business recovery and client demand improvements, how that might impact the overall firm-wide margin trajectory as we sort of move forward through the year? And this is -- we're putting aside the prior year workers' comp part of the conversation, but maybe you can sort of talk about the margin trajectory going forward.

Yes. Marc, I'll take that. We've done a really good job managing costs in controlling what we can in this market. And we've mentioned this in the past, we feel like with the optimized cost base that we have, we're poised for significant incremental margins and expanding our profitability as demand rebounds. Just historically, our incremental margin has been between 15% and 20% kind of across the portfolio. But with the actions that we've made, we believe we'll do a little bit north of that range and depending on obviously the segment which it comes in. So kind of all told, if we're in that normalized industry growth rates, we'd expect to expand our EBITDA margin percentage upon those sort of growth rates.

Right now though, our entire focus is really around controlling what we can control. Whether or not we see a faster recovery or a slower recovery, we're going to continue to be driving growth and productivity and focused on driving increased profitability in the business.

Okay. Great. And then maybe you could sort of shift over to the energy activity and renewals, in particular, with the top line growth that you're seeing there. Can you talk a little bit about the visibility and sustainability of that growth in activity? And then maybe you could talk a little bit about what you're seeing as far as new business wins and the current pipeline and maybe sort of the strategic approach that you're taking there to sort of maintain growth going forward there?

Marc, we're very encouraged by the momentum in our energy business, especially in renewables. Expanding in high-growth underpenetrated markets is a key strategic priority for us across the brand portfolio, and energy is a great example of this. We're seeing strength across commercial solar and full-scale renewable projects. And we're also focused on expanding into nonrenewable energy sectors as well.

As mentioned in our prepared remarks, our energy business more than doubled for the second quarter in a row, really driven by our expertise and the strong client relationships that we've built with these clients over the past decade. In quarter 4 alone, we secured several multimillion dollar project wins, and our pipeline remains very healthy, positioning us very well for continued growth in this space.

Yes, if I could just add a couple of points here. And Taryn mentioned kind of that decade of experience here, so we feel good about kind of what we've done. But it does expand just beyond the renewables. And energy as an end market for us reached 15% of our portfolio at the end of '25 here. It was 10% as of 2024. So we don't think the energy usage here in the U.S. is going down anytime soon, so we feel good about that opportunity as we move forward.

Okay. Great. And then you made a commentary during your prepared remarks around the contributions with HSP and what you're seeing in health care wise. Can you maybe talk a little bit about how you view that vertical? And sort of as an offshoot, as far as prepared potential cash usage, is there room for inorganic pursuits in that space or any that you see as attractive at this point?

Marc, let me take that first one. So yes, in Q4, HSP delivered about $40 million of inorganic growth, reflecting really our growing traction in that market and strong progress of our integration work. We remain confident in the strategic value of the acquisition and intend to continue our expansion in the high-growth end markets.

This acquisition was accretive to us. It allows us to continue to capitalize on secular growth opportunities in the health care space, and think that that's going to be a long-term driver for our business.

As we just kind of look back on the original kind of strategy with our HSP acquisition, as a regional West Coast-based firm, that we had plans to expand into more states and more geographies. And as Taryn mentioned on the prepared remarks, we added another state, so we're in our third new state since launch, and feel good about this one continuing to be a good driver for us going forward.

And Marc, to answer your question regarding M&A, right now, we're not prioritizing M&A, but instead focusing on managing the business to cash flow positive. We'll continuously, of course, evaluate any opportunities to maximize shareholder value and position TrueBlue for long-term success.

Our next question is from Mark Marcon with Baird.

Just want to start with the energy business. So Carl, you said it's 15% of the total portfolio at this point. Is that correct?

That's energy as an end market. So that's kind of across all of our portfolios. It's 15% across PeopleSolutions, PeopleManagement, PeopleReady as well.

Got it. And what about just the renewable energy within PeopleReady?

Yes, that's about 1/3 of our business probably.

And just trying to dig down into the gross margins, if we take a look at that business, because you've got some pass-through, how much of that business is passed through?

Yes. No, great question. It does have pass-through costs, and that's what we kind of called out in the remarks as well, Mark. So as you kind of think about that significant growth, it resulted in about 200 bps of gross margin contraction, as we've got those pass-through costs that go into that business. So our on-demand business obviously has a bit higher gross margin. But it's important to note that this is still a high EBITDA margin business for us.

And what percentage of the revenue from that is pass-through?

What percentage of the revenue of that is pass-through, is that the question?

Yes.

I don't have the numbers in front of me, Mark. But it's about 1/3. And I'd say the gross margins probably 60% of the rates of our on-demand business.

Okay. That's helpful. Great. And then can you talk -- just in PeopleReady, we're starting to hear and see some signs of economic recovery. If we strip out that renewable energy business, and maybe even stripping out the commercial driver business, on the PeopleReady side, what are you seeing in terms of organic growth outside of those 2 spaces? Are you seeing any signs of improvement?

Yes, Mark. So yes, PeopleReady did see kind of improved trends with our kind of weekly sequential revenue growth during the quarter. Now it was driven by that skilled businesses that we had talked about. Just to kind of put this in perspective, we exited Q4 at a similar rate to Q3. So plus 16% in Q4, plus 18% in Q3.

I'll kind of give a couple of other just trends across the portfolio as well. In our PeopleManagement business, those kind of monthly trends were largely in line with our quarterly results. And then as we kind of moved into January, I know this is -- tends to be one of the ones you guys are thinking about, strong results in January as well, then they were offset by a little bit of weather impact that we saw across the country.

The last thing that I'd just call out here too, Mark, is in our PeopleReady on-demand business, which is one of your questions, we did see stronger performance in our local business versus our national accounts. So really driven by a lot of the sales investments that we've made in there. And then from an end market perspective, I'd say the biggest improvements we saw across our portfolio: energy, hospitality and manufacturing.

And then just going back to the gross margin, what was the difference in terms of what changed the level of favorability in terms of the accrual reversals a year ago relative to this year?

No change in our expectations, so we guided to that as well. It had about 290 basis points impact to Q4 results, Mark. But we have called those out in Q4 of '24 as well. They were really our prior year reserve credits that impacted it. So that's the impact.

I'm just trying to get to what caused the change. In other words, are you starting to see a higher level of workers' comp claims? Are the cost of the claims potentially changing at all? What's going on underneath the surface?

Yes. Great. Great question. So no, from a worker safety perspective, this is really important to our business. We continue to manage our safety and claims processes very, very closely. A lot of what we saw was some of the mix shift in business that we have through kind of our energy business that we talked about, lower revenue models in our on-demand versus our renewables. But nothing changed to the underlying fundamentals. Once we work through Q1, which we guided to as well, this normalizes.

Okay. So it will normalize starting in Q2?

That's right.

Okay. Great. And then you mentioned the noncash impairment charge of $18 million with regards to the Chicago support center. How much is that going to save you in cash going forward?

About $30 million over the next 10 years.

Is that $3 million per year?

It's -- rent escalations a little bit. So I'd say between $3 million and $5 million through those terms.

The other thing to just call out on here is ongoing SG&A savings, about $1.5 million in '26, we'll have about $3 million in '27. And then kind of following those cash things that we talked about, is $3 million to $5 million thereafter.

And then are you including a WOTC credit in your projections for 2026 or not?

We do. We have a small WOTC credit included in there.

Why? It hasn't passed legislation yet.

Not in our guidance. We don't have anything in our guidance, Mark. We had that in Q4.

Our next question is from Jessica Loos with Northcoast Research.

I wanted to comment, I know that you mentioned that there are some stronger signs within the local business over national. And I'm curious how you would characterize your conversations with customers today versus if you look back about 6 months ago.

Yes. Great question. I would say overall, our customer sentiment remains cautious due to ongoing uncertainties in the environment. With that said, we're really encouraged to see the positive momentum in the business and signs of that stabilization, particularly in our on-demand business with our second quarter organic revenue growth here in Q4.

We are seeing momentum and a return to growth among some clients and geographies with our teams securing new wins, customer expansions, really all good signs that customers are beginning to experience positive momentum, tempered with some of that uncertainty we talked about.

Perfect. And then just one brief follow-up, how would you describe the current pricing environment? Is there anything that stands out right now?

Yes. From a pricing standpoint, we continue to see kind of some pricing pressure in the business. We had our pay rates were up about 3.8% in the quarter, while bill rates were up 2.5%, it led to about a 40 bps decline in our margin during the quarter. Really pay rates were kind of largely in line with where they were in Q3, Jessica, and really increasingly driven by kind of role-specific skills rather than general labor shortages.

So while there's still some pricing pressure in the business that we'd expect in this environment, we continue to be disciplined with pricing, watchful to ensure that we're not pricing ourselves out of the market. But feeling good about being able to pass through our bill rate increases.

Thank you. There are no further questions at this time. I'd like to hand the floor back over to management for any closing comments.

Thank you, operator, and thank you, everyone, for joining us today. I want to take this opportunity to thank the entire TrueBlue team for their tremendous effort providing our customers and associates with exceptional service and their commitment to advancing our mission to connect people and work.

We look forward to speaking with you at upcoming investor events and on our next quarterly call. If you have any questions, please don't hesitate to reach out.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

Greetings, and welcome to the TrueBlue Third 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 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'm joined by our Chief Financial Officer, Carl Schweihs.

Our third quarter performance exceeded expectations as business trends continued to stabilize and we gained traction with our strategic focus. We've made meaningful progress advancing our growth strategy, including enhanced performance in attractive end markets, most notably within our skilled businesses. Energy sector revenue more than doubled this quarter, reflecting our continued success and strong position in this growing market.

Our commercial driver business delivered its fifth consecutive quarter of double-digit growth. This growth is driven by our decades of commercial driver industry experience and deep expertise in the skilled trades labor market, where we are helping to address structural labor shortages and serving rising demand that is aligned with strong secular growth drivers.

Our results demonstrate our commitment to realizing improved profitability. We continue to execute with operational discipline, driving efficiencies, leveraging technology to scale and positioning the business for sustainable margin expansion. These efforts are delivering results.

We reduced our operating costs while growing revenue as our targeted actions to streamline our cost structure are translating into stronger leverage and enhanced profitability.

We continue to lead on the digital front. Across the enterprise, we are integrating enhancements to our full suite of proprietary technology platforms to deliver faster, more precise and transparent workforce solutions. This progress has earned us strong industry recognition and third-party validation for our intuitive, high-performing digital platforms, which are focused on improving engagement across the client and talent life cycle.

One recent enhancement I'd like to highlight is the price estimate feature we enabled within our PeopleReady JobStack platform. This feature allows existing customers to view and accept a price quote directly in the app when placing new orders, enhancing transparency and improving efficiency of the overall workflow. The new functionality has been well received by our existing customer base, and we are expanding this feature to new customers later this quarter as we continue to elevate the user experience.

Advancing our digital ecosystem remains a priority, positioning us to meet the evolving needs of employers and talent while driving higher engagement, satisfaction and retention. Alongside our digital transformation, we continue to optimize and expand our sales function to accelerate growth and capture demand.

In our on-demand staffing business, our transition to a territory-based go-to-market structure with expanded sales resources is driving improved results, enabling us to pursue opportunities in priority markets more effectively and to accelerate new client acquisition. By reorganizing our sales model, we have been able to expand our sales capacity in the field by 50% and deploy localized sales strategies while maintaining operational excellence and discipline. This investment in local sales is driving favorable progress with our on-demand business showing improved sequential trends at both the state and regional level.

We continue to see momentum in our enterprise-wide strategic partnership program and cross-selling initiatives as well. Our recently announced strategic partnership with a leading group purchasing organization is unlocking new client acquisition channels and generating opportunities across our brands. The robust pipeline includes several multi-brand prospects and has already resulted in multiple new business wins.

Greater enterprise alignment and collaboration is also building stronger partnerships across our brand portfolio. For example, collaboration between our PeopleReady and commercial driver business teams recently helped secure a multimillion-dollar deal with a leading energy solutions manufacturer, strengthening our enterprise relationship and fueling future growth.

As we continue to build on this momentum, we are also successfully expanding our share in high-growth and underpenetrated markets. Since our acquisition of Healthcare Staffing Professionals earlier this year, we have continued to strengthen our position and expertise in the U.S. health care market. As a TrueBlue brand, HSP has expanded into 3 new states, highlighting the growth potential when backed by TrueBlue's extensive reach, technology and recruitment agility.

Health care remains a significant long-term market opportunity with strong secular tailwinds, and we are scaling this business thoughtfully to capture sustained demand.

We are also capturing market share with our commercial driver business in underpenetrated and growing geographies, while our RPO solutions continue to expand coverage in attractive verticals such as engineering and technology through higher skilled roles. For example, after implementing an RPO engagement earlier this year with a large U.S. industrial distributor for engineering roles, we have now expanded to encompass 100% of their hiring needs, driven by our team's exceptional service and execution. This reflects the transformative value of our specialized and scalable workforce solutions.

In summary, this quarter underscores the progress we're making on our long-term enterprise strategy as TrueBlue continues to strengthen performance, anticipate market shifts and advance towards sustainable, profitable growth. Our key priorities are taking hold as we further expand in high-growth markets, accelerate our digital transformation and optimize our sales function. The staffing market is large and highly fragmented with significant untapped potential, and TrueBlue is well positioned to capitalize on these growth opportunities and deliver greater shareholder value as the market rebounds.

I will now pass the call over to Carl, who will share further details around our financial results and outlook.

Thank you, Taryn. Total revenue for the quarter was $431 million, up 13% and exceeding our outlook, driven in large part by our skilled businesses, which continue to outperform the broader market with double-digit growth. Overall, business conditions continue to stabilize with our on-demand, on-site and RPO businesses, all showing improved sequential trends.

Our recently acquired HSP business drove 4 percentage points of year-over-year growth with solid momentum going into the fourth quarter. These are all encouraging signs that our strong value position is enabling us to both capture demand and to build on this momentum as we finish out the year and enter 2026.

Gross margin was 22.7% for the quarter, down from 26.2% in the prior year period, primarily due to the changes in revenue mix and less favorability in prior year workers' compensation reserve adjustments. The revenue mix impact stems from more favorable trends in our lower-margin staffing businesses and outsized growth in 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.

As for the workers' compensation impact, you may recall last year's gross margin benefited from a significant reduction in workers' compensation costs due to a favorable development of prior year reserves. As expected, that degree of favorability did not repeat this year.

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.

As Taryn mentioned, even while revenue grew double digits this quarter, we successfully reduced our SG&A by 8%. This improved leverage demonstrates our continued discipline in managing costs and driving efficiencies. We've made significant progress in creating greater flexibility to scale and are well positioned to drive enhanced profitability with our simplified cost structure and improved efficiencies as industry demand rebounds.

We reported a net loss of $2 million this quarter, which included a small amount of income tax expense primarily associated with our foreign operations and essentially zero income tax benefit on U.S. operations due to the valuation allowance and effect on our U.S. deferred tax assets. As a reminder, the valuation allowance has no impact on our operations or liquidity. Adjusted net income was $1 million, while adjusted EBITDA was $11 million.

Now let's turn to the segments. PeopleReady grew 17%, driven by heightened demand in the energy sector. Revenue more than doubled in the energy vertical as we continue to leverage our deep expertise and strong client relationships to capture demand. Our on-demand business is also showing improved trends with sequential growth during the quarter and the Eastern region of the U.S. returning to year-over-year growth as we exited Q3. PeopleReady segment profit margin was up 180 basis points as our disciplined cost management and increased efficiencies drove improved operating leverage.

PeopleManagement grew for the third consecutive quarter with revenue up 2%. This growth was driven by continued outperformance with our commercial driver business, which delivered its fifth consecutive quarter of double-digit growth. While on-site client volumes declined for the quarter, our team continues to outperform the prior year in new business wins, securing $27 million of annualized wins during the quarter and positioning the business for a strong start to 2026. PeopleManagement segment profit margin was up 90 basis points as our disciplined cost management actions continue to drive improved efficiencies and greater operating leverage.

PeopleSolutions revenue grew 28%, with HSP performing in line with expectations and contributing 39 percentage points of growth, offsetting the segment's organic decline of 11%. While overall hiring volumes remain subdued, our teams are doing a great job of adding new clients to our portfolio and expanding existing relationships, especially with higher skilled roles and serving attractive end markets such as health care, engineering and technology. As customers' hiring volumes return, the scale of these engagements positions us well to drive further revenue expansion aligned with long-term secular trends. PeopleSolutions segment profit margin was up 200 basis points, largely driven by cost actions to deliver efficiencies and greater scalability.

Now let's turn to the balance sheet. We finished the quarter with $20 million in cash, $68 million of debt and $75 million of borrowing availability, resulting in total liquidity of $95 million. During the quarter, we increased our working capital by $19 million, demonstrating our continued focus on operational efficiency and enhanced financial flexibility. We maintain a very focused capital strategy, managing a strong liquidity position and financial foundation to ensure we're well positioned to capitalize as market demand rebounds.

Looking ahead to the fourth quarter, we expect revenue growth of 4% to 10% year-over-year as we continue to build on the progress achieved in the third quarter. Our recently acquired HSP business is expected to grow sequentially from the third quarter, contributing 4 percentage points of growth in the fourth quarter and position us well going into 2026.

I also want to provide additional details around the sublease agreement for our Chicago support center referenced in our 10-Q filed today. Our extensive national footprint differentiates us in the market. We're always evaluating our real estate portfolio for opportunities to maximize our reach, which includes both our branch locations and support offices.

While there will be a noncash expense to align our right-of-use and leasehold improvement assets with the sublease terms, this reduction in corporate office space unlocks over $30 million of cash flow over the remaining 10 years of the lease. By continuing to optimize our fixed cost structure, we are better able to invest in the markets with the greatest opportunities for growth.

Additional information on our outlook can be found on our earnings presentation shared on our website today.

Before we open up the call for questions, I want to turn it back over to Taryn for some closing remarks.

Thank you, Carl. As you have heard from us today, our strategic focus is driving meaningful results, strengthening our market position and unlocking new avenues for growth. Our digitally enabled specialized workforce solutions are uniquely positioned to help businesses solve complex talent challenges with precision, scale and agility. By continuing to execute our long-term strategy, we're not only accelerating growth and enhancing shareholder value, but also advancing our mission to connect people and work.

This concludes our prepared remarks. Operator, please open the call now for questions.

[Operator Instructions] And your first question comes from Marc Riddick with Sidoti & Company.

So I was wondering maybe we could start with the strength that you're seeing, the improvement in on-demand that you shared in prepared remarks. Maybe you could talk a little bit about maybe parse that a bit as to how much of that is being driven by the PeopleReady sales territories initiative and maybe how much of that is sort of just general broader market demand growth?

Great. Thanks for the question, Marc. We continue to see strong performance across our sales-enabled territories and throughout our on-demand organization with metrics that highlight both sequential growth and year-over-year profit improvement. Our sales-enabled territories saw stronger sequential growth versus the comp group, and we saw improved profitability in those territories.

As I mentioned in prepared remarks, we have increased our sales capacity by 50% this year and aligned those sales reps in high-value MSAs. You might have also saw our announcement today that we have added a new Head of Sales to our PeopleReady on-demand business. Mike joins us with a track record of more than 25 years of sales, operations and growth experience, and he comes from companies like ServiceMaster and Aramark. So we're really excited about his addition and he'll be a strong complement to that local sales strategy that we've implemented.

Okay. Great. And then maybe to switch gears a bit. You talked about maybe some of the client verticals and positives that you're seeing there. Maybe you could share a little bit as far as differences between geographies or national or local customers. Maybe you could talk a little bit about those trends and maybe how that paced through the quarter and then maybe into the beginning of the fourth quarter as well.

Great. Thanks, Marc. Let me take that first. I'll kind of give end market geography and then we'll go into intra-quarter trends following that up. Look, in our PeopleReady on-demand business, we saw a stronger performance actually in our local business versus our national accounts, which has really driven a lot of those sales investments that Taryn just walked through. From an end market perspective, we saw the biggest improvements in our energy sector, hospitality and manufacturing. Retail continues to be -- continues to show some softness for us.

One other thing that's really important to note is our East region within our PeopleReady on-demand business achieved year-over-year growth in September, really marking the first region to do so in 2025. Notably, it's about a majority of our markets in this region grew year-over-year, so more widespread with some of them even achieving double-digit growth.

From an intra-quarter trend, PeopleReady exited Q2 at minus 3%. We exited Q3 at plus 18%, and the monthly trends were plus 14%, plus 19, plus 18%. Our PeopleManagement monthly trends were largely in line with the results for the quarter. And as you're kind of thinking about outlook, look, our outlook typically reflects kind of the seasonal step down that we see in Q4, along with some known headwinds. PeopleReady has historically seen some weather impact in Q4, specifically in our skilled businesses, and that impact is factored into our outlook.

PeopleManagement's decline in Q4 is driven by some site shutdowns due to supplier disruption in the automotive industry, which is going to lead to about 2 points of that impact in the quarter as well as some softness -- continued softness in retail. But as we mentioned in the prepared remarks, a lot of new site implementations are positioning that business really well for a strong start to 2026.

Great. And then the last one for me. I'd be remiss if I didn't ask about my drivers. I think you mention of double-digit growth, I believe, on commercial driver. Maybe talk a little bit about what's leading to that as well as current bandwidth for taking advantage of further growth opportunities there.

Yes. Thanks, Marc. Yes, we're really pleased with this business. Our commercial driver services delivered its fifth consecutive quarter of double-digit revenue growth in Q3, and it's coming at a time in a very challenging environment for transportation. We're really getting this largely due to taking share in our managed offering. And we feel that we're really well positioned that when volumes do rebound across the transportation market, we'd expect more opportunity for growth in Centerline as much of that growth has been coming from that managed offering.

And your next question comes from Jeff Silber with BMO Capital Markets.

Just a follow-up on that line of questioning. There's still a lot of uncertainty out there in the marketplace. I'm just wondering from a conversational or tone perspective, what are your clients telling you? Are things getting a little bit more certain or less uncertain? I'm just curious what they're saying.

Yes. Thanks for the question, Jeff. We're seeing early signs of momentum and a return to growth among some of our clients and geographies. As you know, we stay very close to our clients to hear what they're saying. Generally, we understand an inflection point when we're hearing from our customers that they need staff. But I would say, overall, that the customer sentiment remains cautious due to ongoing uncertainties. So it's certainly still a cautious environment.

Okay. That's helpful. And I get this question from investors, so I'll just ask it to you. There's been a lot of noise about immigration reform, ICE rates, et cetera. Any impact on your business either from a positive or negative perspective?

Yes, it's a great question. We're seeing a mix of tailwinds as well as some challenges. So when we're looking at kind of the opportunities, particularly for us in the Southwest, it's created some opportunities for us where we have added a handful of new customers that are really focused on ensuring that they have a compliant workforce.

Conversely, we do have some regional impacts tied to ICE activity where we're experiencing higher absenteeism from some of our staff as are our customers from a full-time staff perspective, even when workers are E-Verify compliant. So we're definitely seeing a mix of headwinds and tailwinds. We feel really good about TrueBlue's position in this space. The changes that we're seeing will create longer-term demand for a compliant staffing solution, which is a key strength of ours.

Your next question comes from Kartik Mehta with Northcoast Research.

Carl, you've made a lot of progress on the SG&A leverage. And I know we've talked about this in the past, but as revenue stabilizes, how much incremental margin expansion would you expect before you have to start reinvesting in the business? I know Taryn said you've hired some salespeople. So I guess I'm trying to figure out maybe capacity and margin opportunity before you have to start reinvesting.

Yes. Thanks for the question, Kartik. Look, we've done a really good job kind of managing costs and controlling what we can in this market. I think Q3 was a good example of kind of our abilities to drive incremental margins, right? We ended up delivering better incremental margins here in this quarter based on increased revenue than we thought in our guide. And I think that pointed to over that 20% incremental margins when we've talked about historically between 15% and 20%. We feel like with our cost actions, we'll do north of that. So we've done that this quarter, and I think we continue to expect that.

We will continue to look for opportunities for growth, as we've talked about, investing in sales and other areas to drive the top line. But we feel like with our optimized fixed cost base, we're poised for significant incremental margins and expanding our profitability as demand rebounds.

And then just, Taryn, just the pricing environment out there. I know in certain areas, there's been a little bit greater price competition than others. And I'm wondering, as you're competing with some of the smaller players, what the environment is.

Yes, it's a great question, Kartik. We're seeing the typical pricing pressure that you would expect in this kind of environment, not only from competitive forces, but also our clients are looking to -- they're remaining very cost conscious during this uncertain time as well. I think the team has done a really nice job of maintaining pricing discipline and really continuing to look for ways to drive enhanced efficiencies so that we can remain competitive there.

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 want to take an opportunity to thank the TrueBlue team for their tremendous efforts 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 look forward to speaking with you at upcoming investor events and on our next quarterly call. If you have any questions, please don't hesitate to reach out.

Thank you. And this concludes today's conference. All parties may disconnect. Have a good day.

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 market from roughly $45 billion to $90 billion and growing, with our recent acquisition of health care staffing professionals.

While the market itself is highly fragmented, TrueBlue stands out in its ability to serve both large national accounts and local businesses and is trusted by clients to deliver consistent high-quality results. We've proven ourselves as industry innovators, developing a suite of proprietary digital platforms that lead the industry in user experience, engagement and operational efficiency. Our digital ecosystem powered by data and intelligent agent frameworks creates a durable competitive advantage that extends the reach of our digital-first staffing and recruitment solutions, supporting scalable growth, cost efficiency and margin expansion.

We've advanced a robust innovation pipeline focused on integrating responsible AI into our platform strategies to transform how we attract, engage and deploy talent. Our ability to deliver digitally enabled total workforce solutions spanning staffing, RPO, talent advisory and more uniquely positions us to serve as a single strategic partner across the entire workforce life cycle. And by aligning talent, technology and data-driven engagement across our portfolio, we unlock cross-selling opportunities, better meet evolving client needs and drive profitable growth. The high free cash flow nature of our business, paired with a limited CapEx profile further enables us to pursue future growth opportunities. Our competitive offering and positioning are clear and well differentiated. Now let's turn to our strategic plan for delivering greater shareholder value over time.

Our strategy is anchored in our key priorities to accelerate our digital transformation, grow our share in high-growth end markets and attractive skilled trades and professional talent segments and optimize our sales function to accelerate growth and capture demand, all while maintaining operational excellence to deliver efficiencies and long-term profitability. Together, these priorities position TrueBlue well in today's environment and to capitalize on long-term secular trends to deliver sustained growth over time.

We've also proactively implemented targeted cost reductions to improve efficiency, expand margins and enhance profitability. We have simplified our organizational structure through the divestiture of our Canadian operations, streamlined global leadership and removed structural inefficiencies. Altogether, these actions have delivered approximately $90 million in permanent SG&A savings from our 2022 base, creating durable cost leverage and enabling strong incremental margin expansion as revenue recovers. But we haven't simply cut costs and waited for conditions to improve. Drawing on our decades of experience and data-driven insights, we've identified high potential areas for long-term sustainable growth and while maintaining our strong balance sheet, have strategically invested to position TrueBlue ahead of secular tailwinds.

We've made significant progress in optimizing our sales function to accelerate growth and capture demand as the market rebounds. This includes a full reorganization of our sales model, decoupling sales from operations and transitioning to a territory-based go-to-market structure that empowers integrated local leadership and enhances client focus, disciplined execution and productivity. We've expanded field sales capacity in high-priority markets and rolled out localized enablement strategies and territory-specific campaigns to improve market relevance and activation. We deployed Salesforce CRM across our field organization, improving pipeline visibility, territory coordination and proactive sales execution.

As part of our broader commercial strategy, we've launched an enterprise-wide strategic partnership program to unlock new client acquisition channels and deepen enterprise client relationships. A key example of this is our recently announced partnership with OMNIA Partners, one of the largest group purchasing organizations in the U.S. This relationship has opened access to a broad high-value member network and is fueling a growing pipeline of multi-brand opportunities across our portfolio.

As we continue to diversify and scale our business, we're expanding into high-growth, underpenetrated end markets aligned to secular demand trends. Already a leader in U.S. industrial and skilled trade staffing, we're well positioned to support manufacturing reshoring and help address structural labor shortages. A strong example is our commercial driver business, which continues to outperform, delivering its fourth consecutive quarter of double-digit revenue growth. We're also expanding our presence in the energy sector, where ongoing infrastructure investment is fueling sustained demand for skilled labor.

Through our acquisition of HSP, TrueBlue has established a strong foothold in health care, one of the fastest-growing and most resilient sectors of the labor market. Health care continues to benefit from strong macro drivers, including an aging population, increased patient volumes and persistent labor shortages. HSP not only expands our client base and revenue streams but also brings deep expertise in compliance and clinician management, capabilities we are well positioned to scale. With early traction, we believe TrueBlue is ideally equipped to serve the health care industry with the same blend of technology, service and national reach that drives success in our core verticals.

We're also expanding our presence in professional roles by broadening our RPO solution to deliver higher skilled, higher value placements. Over the past year, we've grown our mix of RPO services in sectors such as health care, engineering and technology, driven by both new client wins and account expansion. In 2024, we achieved an 8% increase in the number of clients engaging us for professional roles and a 29% increase in the number of IT-related hires, reinforcing our position in this expanding segment. As we look ahead, deepening our footprint across these high-value roles remains a key strategic priority.

The digital transformation of our business has been essential to delivering faster, more precise and transparent workforce solutions. We've embedded AI-powered job matching, predictive analytics and behavioral insights across the talent life cycle to enable journey-based personalization that improves responsiveness while prompting timely action, whether that's placing an order, extending a contract or accepting a role. Combined with our existing market presence and deep industry expertise, these innovations position TrueBlue to deliver smarter, more personalized experience, driving reliability, profitability and long-term competitive advantage. Our ability to execute on this strategy is underpinned by the strength and experience of our leadership team. With decades of relevant industry knowledge and direct operational expertise, our executive team brings hands-on leadership to every facet of the business.

Now turning towards the quarter. We are encouraged to see positive momentum with double-digit growth for our skilled businesses, overall signs of stabilization and a return to company-wide growth expected in the third quarter. We are confident that the cost actions we have taken position us well to drive even stronger profitability as industry demand expands.

I will now pass the call over to Carl, who will share further details around our financial results and outlook.

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 also create greater flexibility to scale. We have made significant progress simplifying our cost structure and creating efficiencies, which will drive enhanced profitability as industry demand rebounds.

We reported a net loss of $0.2 million for this quarter, which included a noncash intangible asset impairment charge of $0.2 million as well as a small amount of income tax expense primarily associated with our foreign operations and essentially 0 income tax benefit on U.S. operations due to the valuation allowance in effect on our U.S. deferred tax assets. As a reminder, these charges have no impact on our operations, liquidity or debt covenants. Adjusted net loss was $2 million, while adjusted EBITDA was $3 million.

Now let's turn to our segments. PeopleReady revenue declined 5%, driven by reduced client volumes across most verticals and geographies. While overall market demand remains soft, our skilled businesses grew double digits for the quarter due to the healthy project ramp and minimal schedule disruptions. We are also encouraged to see improved on-demand trends in 2 of our largest states with results in California and Florida indicating growing momentum as we exited the quarter. PeopleReady segment profit margin was up 50 basis points, largely driven by cost actions to deliver efficiencies and greater scalability.

PeopleManagement grew for the second consecutive quarter, with revenue up 2%. This growth was driven by strong results from our commercial drivers business, which delivered its fourth consecutive quarter of double-digit growth. While On-site client volumes declined for the quarter, continued strength in new business wins and customer expansions is generating solid momentum as we enter the back half of the year. PeopleManagement segment profit margin was up 50 basis points as our disciplined cost management actions continue to drive improved efficiencies.

PeopleSolutions revenue grew 20%, with HSP performing in line with expectations and contributing 40 percentage points of inorganic growth, offsetting the segment's organic decline of 20%. Also included in these results is 9 percentage points of decline from the client loss we discussed in previous quarters. Overall, hiring volumes remain subdued as clients face evolving market conditions and uncertainty around their workforce needs, but our teams are doing a great job helping existing customers navigate these labor dynamics and adding new clients to our portfolio, especially in high-value professional roles in attractive end markets. Our strong client relationships position us well to drive further revenue expansion as customers' hiring volumes return. PeopleSolutions segment profit margin was down 320 basis points due to the lower operating leverage as revenue declined.

Now let's turn to the balance sheet. We finished the quarter with $22 million in cash, $54 million of debt and $79 million of borrowing availability, resulting in total liquidity of $101 million. During the quarter, $15 million of workers' compensation collateral was released, and we reduced our debt position by $4 million while increasing working capital by $14 million as we maintain a very focused and balanced capital strategy. We continue to manage a strong liquidity position, providing us with great flexibility and ensuring we are well positioned as market demand rebounds.

Turning to our outlook for the third quarter. We expect revenue growth of 5% to 11% year-over-year. This includes 4 percentage points of growth from the acquisition of HSP. Our outlook reflects a continuation of current market trends because while there are some green shoots and early signs of improvement, the broader business landscape remains unpredictable. Also keep in mind, given the seasonality of our business, we typically see our highest volumes in the second half of the year, corresponding with improved operating leverage and bolstered by our lean cost structure that we expect to drive additional margin improvement as we move through the year. Additional information on our outlook can be found in our earnings presentation shared on our website today.

Before we open up the call for questions, I want to turn it back over to Taryn for some closing remarks.

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.