What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-02-19 compared with 2024-02-21 · 354 added, 247 removed, 882 unchanged (41% of the section changed)

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To the Shareholders and the Board of Directors of TrueBlue, Inc.

Opinion on the Consolidated Financial Statements

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of TrueBlue, Inc.

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The Company bears the financial responsibility for a significant portion of expected losses under its workers’ compensation program and records reserves for workers’ compensation claims based on estimates of the future cost of claims and related expenses, which are discounted to their estimated net present value.

The determination of the undiscounted reserve requires significant estimates and assumptions related to the future cost of claims and related expenses for claims that have been reported but not settled, as well as those that have been incurred but not reported.

The undiscounted workers’ compensation reserve was $214.6 million as of December 31, 2023.

The determination of the workers’ compensation reserve requires significant estimates and assumptions related to the future cost of claims and related expenses for claims that have been reported but not settled, as well as those that have been incurred but not reported.

The workers’ compensation reserve, net of discount, was $139.8 million as of December 29, 2024.

Given the fact that changes in actuarial assumptions could have a significant impact on the reserve, auditing management judgments regarding the workers’ compensation reserve, including estimates of the future cost of claims and related expenses, involved a high degree of auditor judgment, including the need to involve our actuarial specialists.

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◦ Making selections of the underlying claims data that serves as the basis for the actuarial analysis, including claims payments and related expenses, to evaluate whether the inputs to the actuarial estimate were reasonable;

◦ Assessing whether changes in the business or environment, including regulatory or legislative developments, impacts of safety initiatives, type and location of work performed, and positive or adverse development of claims, were appropriately considered;

◦ Comparing management’s prior-year assumptions of expected future cost of claims and related expenses to actuals incurred during the current year to identify potential bias in the determination of the workers’ compensation reserve.

• With the assistance of our actuarial specialists, we developed independent estimates of the workers’ compensation reserve and compared our estimates to the Company’s recorded workers’ compensation reserve.

Goodwill - PeopleScout MSP Reporting Unit - Refer to Notes 1, 2, and 5 to the Financial Statements

Goodwill - PeopleReady Reporting Unit - Refer to Notes 1, 3, and 6 to the Financial Statements

Critical Audit Matter Description

The Company’s evaluation of goodwill for impairment involves the comparison of the fair value of each reporting unit to its carrying value.

The fair value of each reporting unit was estimated using a weighting of the income and market valuation approaches, except for the PeopleScout MSP reporting unit (“MSP”) which relied only on the income approach.

The income approach applied a fair value methodology to each reporting unit based on discounted cash flows, which requires management to make significant judgments related to the estimation of future revenue and profitability, and determination of the risk-adjusted weighted average cost of capital (“discount rate”).

Changes in these assumptions could have a significant impact on either the fair value of MSP and the related amount of the goodwill impairment charge.

The goodwill balance was $84.1 million as of December 31, 2023, of which $0.8 million was allocated to MSP.

A goodwill impairment charge of $8.9 million was recorded within MSP during the year ended December 31, 2023.

The MSP goodwill impairment recorded during the year ended December 31, 2023 was due to management’s revised internal revenue projections.

These projections were updated based on management’s current macroeconomic outlook and industry analysis, which indicates that MSP will underperform due to a strategic lack of investment in technology within an increasingly competitive market.

We identified goodwill for the MSP reporting unit as a critical audit matter because of the significant judgments made by management to estimate the fair value of MSP.

This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to selection of the discount rate and forecasts of future revenue and profitability.

The Company evaluates goodwill for impairment on an annual basis or whenever events or circumstances make it more likely than not that an impairment may have occurred.

Management performed an interim quantitative impairment test as of the last day of fiscal May 2024 as management determined that a triggering event had occurred due to a decline in demand for the Company’s services, prolonged economic uncertainty, and a further decrease in the Company’s stock price.

As a result of the interim impairment test as of the last day of fiscal May 2024, a goodwill impairment charge of $59.0 million was recorded related to the PeopleReady reporting unit (“PeopleReady”), representing the remaining goodwill balance for PeopleReady.

The Company’s quantitative evaluation of goodwill for impairment involved the comparison of the fair value of each reporting unit to its carrying value.

The fair value of PeopleReady was estimated using a weighting of the income and market valuation approaches.

The income approach applied a fair value methodology based on discounted cash flows of PeopleReady, which required management to make significant judgments related to the estimation of future revenue and profitability, and determination of the risk-adjusted weighted average cost of capital (“discount rate”).

The market approach developed a value correlation based on the market capitalization of similar publicly traded companies, referred to as a multiple, to apply to the estimated future revenue of PeopleReady.

The market approach requires management to make significant assumptions related to forecasted revenue and the selected revenue multiples for PeopleReady.

We identified goodwill for PeopleReady as a critical audit matter because of the significant judgments and assumptions made by management to estimate the fair value of PeopleReady and the sensitivity of PeopleReady’s business to changes in demand.

This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s estimates and assumptions related to forecasts of future revenue and profitability and the selection of the discount rate and revenue multiples.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to the discount rate and forecasts of future revenue and profitability used by management to estimate the fair value of MSP included the following, among others:

• We tested the effectiveness of controls over management’s goodwill impairment evaluation, including those over the determination of the fair value of MSP, such as controls related to management’s selection of the discount rate and forecasts of future revenues and profitability.

Our audit procedures related to the forecasts of future revenue and profitability, and the selection of the discount rate and revenue multiples to estimate the fair value of PeopleReady included the following, among others:

• We tested the effectiveness of controls over management’s goodwill impairment evaluation, including those over the determination of the fair value of PeopleReady, such as controls related to management’s forecasts of future revenues and profitability and selection of the discount rate and revenue multiples.

• We evaluated management’s ability to accurately forecast future revenues and profitability by comparing actual results to management’s historical forecasts.

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◦ Historical revenues and profitability.

◦ Internal communications to management and the Board of Directors, including related to strategic decisions that could impact MSP’s future revenues.

◦ Industry reports containing analyses of expected trends and the competitive environment in the industry in which MSP operates.

• With the assistance of our fair value specialists, we evaluated the reasonableness of (1) valuation methodology and (2) the discount rate by:

◦ Testing the source information underlying the determination of the discount rate and the mathematical accuracy of the calculation.

◦ Developing an independent estimate of the discount rate and comparing that estimate to the discount rate selected by management.

◦ Internal communications to management and the Board of Directors.

◦ Industry reports containing analyses of expected trends and the competitive environment in the industry in which PeopleReady operates.

• With the assistance of our fair value specialists, we evaluated the reasonableness of the (1) valuation methodology, (2) selected discount rate, including testing the source information underlying the determination of the discount rate, testing the mathematical accuracy of the calculation, and developing a range of independent estimates and comparing those to the discount rate selected by management, and (3) selected revenue multiples, including testing the underlying source information and mathematical accuracy of the calculations, and comparing the multiples selected by management to similar publicly traded companies.

/s/ Deloitte & Touche, LLP

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Cash and cash equivalents $ 22,536 $ 61,885

Accounts receivable, net of allowance of $ 2,005 and $ 3,212

Accounts receivable, net of allowance of $ 1,009 and $ 2,005 , respectively

214,704 252,538

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Property and equipment, net 89,602 104,906

Restricted cash and investments 192,985 213,734

Restricted cash, cash equivalents and investments 179,916 192,985

Deferred income taxes, net 886 35,465

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Workers’ compensation claims reserve, less current portion 105,063 151,649

Long-term debt 7,600 —

Long-term deferred compensation liabilities 38,109 35,205

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Selling, general and administrative expense 410,870 494,603 500,686

Depreciation and amortization 25,821 29,273 27,556

Depreciation and amortization (exclusive of depreciation included in cost of services)

28,624 25,821 29,273

Goodwill and intangible asset impairment charge 59,674 9,485 —

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Net income (loss) $ ( 125,748 ) $ ( 14,173 ) $ 62,273

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization 25,821 29,273 27,556

Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:

Depreciation and amortization (inclusive of depreciation included in cost of services)

29,561 25,821 29,273

Goodwill and intangible asset impairment charge 59,674 9,485 —

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Other accrued wages and benefits ( 19,147 ) ( 12,113 ) ( 7,938 )

Deferred employer payroll taxes — — ( 57,065 )

Workers’ compensation claims reserve ( 56,723 ) ( 54,495 ) ( 5,184 )

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Other liabilities 3,627 7,688 1,692

Net cash provided by operating activities 34,754 120,503 20,440

Net cash (used in) provided by operating activities

( 17,058 ) 34,754 120,503

Cash flows from investing activities:

Capital expenditures ( 24,151 ) ( 31,276 ) ( 30,626 )

Divestiture of business 3,099 — —

Payments for company-owned life insurance ( 4,000 ) ( 2,347 ) —

Proceeds from company-owned life insurance — 1,662 —

Purchases of restricted available-for-sale investments — — ( 43 )

Sales of restricted available-for-sale investments — — 7,333

Purchases of restricted held-to-maturity investments ( 11,242 ) ( 34,110 ) ( 18,031 )

Maturities of restricted held-to-maturity investments 33,841 33,749 27,712

Other — — 140

Net cash used in investing activities ( 2,453 ) ( 32,322 ) ( 20,945 )

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Common stock repurchases for taxes upon vesting of restricted stock ( 2,325 ) ( 4,161 ) ( 4,480 )

Net change in revolving credit facility 7,600 — —

Other ( 1,807 ) ( 100 ) ( 253 )

Net cash used in financing activities ( 17,087 ) ( 37,583 ) ( 64,692 )

Change in cash, cash equivalents and restricted cash reclassified to assets held-for-sale

Effect of exchange rate changes on cash, cash equivalents and restricted cash ( 874 ) ( 2,420 ) ( 521 )

Net change in cash, cash equivalents and restricted cash ( 36,325 ) 32,446 ( 15,427 )

Cash, cash equivalents and restricted cash, beginning of period 135,631 103,185 118,612

Cash, cash equivalents and restricted cash, end of period $ 99,306 $ 135,631 $ 103,185

Change in cash, cash equivalents and restricted cash and cash equivalents reclassified to assets held-for-sale — ( 300 ) —

Effect of exchange rate changes on cash, cash equivalents and restricted cash and cash equivalents ( 1,608 ) ( 874 ) ( 2,420 )

Net change in cash, cash equivalents and restricted cash and cash equivalents ( 38,206 ) ( 36,325 ) 32,446

Cash, cash equivalents and restricted cash and cash equivalents, beginning of period 99,306 135,631 103,185

Cash, cash equivalents and restricted cash and cash equivalents, end of period $ 61,100 $ 99,306 $ 135,631

Supplemental disclosure of cash flow information:

Cash paid (received) during the period for:

Cash paid during the period for:

Interest $ 1,044 $ 1,031 $ 1,123

Income taxes $ 5,171 $ 9,980 $ 9,773

Income taxes, net of refunds

$ 211 $ 5,171 $ 9,980

Operating lease liabilities $ 15,268 $ 15,799 $ 15,964

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Property and equipment purchased but not yet paid $ 1,422 $ 3,404 $ 4,502

Divestiture non-cash consideration $ 400 $ — $ —

Right-of-use assets obtained in exchange for new operating lease liabilities $ 9,977 $ 12,526 $ 9,637

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Contingent staffing

We recognize revenue for our PeopleReady and PeopleManagement contingent staffing services over time as services are performed in an amount that reflects the consideration we expect to be entitled to collect in exchange for our services, which is generally calculated as hours worked multiplied by the agreed-upon hourly bill rate.

The client simultaneously receives and consumes the benefits of the services as they are provided.

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Cost of services refers to costs directly associated with the earning of revenue and primarily includes wages, payroll taxes, benefits, and workers’ compensation expenses for our associates and employees involved with the delivery of our services.

Cost of services also includes depreciation related to certain assets directly associated with earning revenue.

These costs differ fundamentally from selling, general and administrative ("SG&A") expenses in that they arise specifically from the action of providing services to clients, whereas SG&A costs are incurred regardless of whether or not we provide service to our clients.

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We have not experienced any losses related to these balances, and we believe credit risk to be minimal.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Accounts receivable and allowance for credit losses

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Based on an analysis of the risk characteristics of our clients and associated receivables, we have concluded our pools are as follows:

• PeopleReady and Centerline Drivers (“Centerline”) have a large, diverse set of clients, generally with frequent, low dollar invoices due to the daily nature of the work we perform.

• PeopleReady has a large, diverse set of clients, generally with frequent, low dollar invoices due to the daily nature of the work we perform.

This results in high turnover in accounts receivable.

• PeopleManagement On-Site has a smaller number of clients, and follows a contractual billing schedule.

The invoice amounts are higher than that of PeopleReady and Centerline, with longer payment terms.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

• PeopleScout has a smaller number of clients, and generally sends invoices on a consolidated basis for a client.

Invoice amounts are generally higher for PeopleScout than for PeopleManagement On-Site, with similar payment terms.

• Centerline Drivers (“Centerline”) has a mix of client sizes, many with low dollar weekly invoices, but other clients that are invoiced on a consolidated basis, resulting in a high concentration of revenue related to its top 10 clients.

Payment terms are slightly longer than PeopleReady.

• PeopleScout has a smaller number of clients, and generally sends monthly invoices on a consolidated basis for a client.

Invoice amounts are generally higher for PeopleScout than our other businesses, with longer payment terms than PeopleReady and Centerline.

• Staff Management | SMX and SIMOS Insourcing Solutions have a smaller number of clients, and follow a contractual billing schedule.

These clients have longer payment terms than our other businesses.

When specific clients are identified as no longer sharing the same risk profile as their current pool, they are removed from the pool and evaluated separately.

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Changes in the allowance for credit losses are recorded in SG&A expense on the Consolidated Statements of Operations and Comprehensive Income (Loss).

Restricted cash and investments

Cash and investments pledged as collateral and restricted for use in workers’ compensation insurance programs are included as restricted cash and investments on our Consolidated Balance Sheets.

Restricted cash, cash equivalents and investments

Cash and investments pledged as collateral and restricted for use in workers’ compensation insurance programs are included as restricted cash, cash equivalents and investments on our Consolidated Balance Sheets.

Our investments consist of highly rated investment grade debt securities, which at the time of purchase, were rated A1/P1 or higher for short-term securities and A or higher for long-term securities, by nationally recognized rating organizations.

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Assets and liabilities with unobservable inputs.

The carrying value of our cash and cash equivalents and restricted cash approximates fair value because of the short-term maturity of those instruments.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The carrying value of our cash and cash equivalents and restricted cash and cash equivalents approximates fair value because of the short-term maturity of those instruments.

We hold money market funds to support our workers’ compensation program, which are carried at fair value based on quoted market prices in active markets for identical assets.

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We typically determine the fair value of these items using internal estimates and assumptions that market participants would use in pricing the asset.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Property and equipment

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Computers, furniture and equipment 3 - 10

Leasehold improvements are amortized over the shorter of the related non-cancelable lease term or their estimated useful lives.

Leasehold improvements are depreciated over the shorter of the related non-cancelable lease term or their estimated useful lives.

Non-capital expenditures associated with opening new locations are expensed as incurred.

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Major renewals or replacements that substantially extend the useful life of an asset are capitalized and depreciated.

Costs associated with the acquisition or development of software for internal use, including internal and external labor costs, are capitalized and amortized over the expected useful life of the software, from three to eight years .

Costs associated with the acquisition or development of software for internal use, including internal and external labor costs, are capitalized and depreciated over the expected useful life of the software, from three to eight years .

Capitalization of costs begins when the preliminary project stage is complete, when management authorizes and commits to funding the project, and it is probable the project will be completed for the intended use.

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Lease expense for operating leases is recognized on a straight-line basis over the lease term and is included in SG&A expense on our Consolidated Statements of Operations and Comprehensive Income (Loss).

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Lease right-of-use assets and lease liabilities are measured using the present value of future minimum lease payments over the lease term at commencement date.

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In addition, for those leases where the right to cancel the lease is available to both TrueBlue (as the lessee) and the lessor, the lease term is the initial non-cancelable period plus the notice period, which is typically 90 days, and not greater than one year.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Goodwill and indefinite-lived intangible assets

We evaluate goodwill and indefinite-lived intangible assets for impairment on an annual basis as of the first day of our fiscal second quarter, or whenever events or circumstances make it more likely than not that an impairment may have occurred.

These events or circumstances could include a significant change in general economic conditions, deterioration in industry environment, changes in cost factors, declining operating performance indicators, legal factors, competition, client engagement, changes in the carrying amount of net assets, sale or disposition of a significant portion of a reporting unit, or a sustained decrease in share price.

We monitor the existence of potential impairment indicators throughout the fiscal year.

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We consider our operating segments to be our reporting units for goodwill impairment testing.

Our operating segments with remaining goodwill are PeopleReady, PeopleManagement Centerline, PeopleScout RPO and PeopleScout MSP.

Our reporting units with remaining goodwill as of the first day of our fiscal second quarter of 2024 were PeopleReady, Centerline, PeopleScout RPO and PeopleScout MSP.

When evaluating goodwill for impairment, we may first assess qualitative factors to determine whether it is more likely than not the fair value of a reporting unit is less than its carrying amount.

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If the fair value exceeds the carrying value, we conclude that no goodwill impairment has occurred.

If the carrying value of the reporting unit exceeds its fair value, we recognize an impairment loss in an amount equal to the excess, not to exceed the carrying value of the goodwill.

If the carrying value exceeds the fair value, we recognize an impairment charge in an amount equal to the excess, not to exceed the carrying value of the goodwill.

We consider a reporting unit’s fair value to be substantially in excess of its carrying value at a 20 % premium or greater.

We performed our annual impairment test for goodwill as of the first day of our fiscal second quarter of 2023.

We performed an interim impairment test as of the last day of the fiscal first quarter of 2024, as well as a qualitative assessment for our annual impairment test one day later, which did not result in impairment of goodwill for any reporting unit.

During the fiscal second quarter of 2024, management determined that a triggering event had occurred as a result of additional decline in demand for our services, prolonged economic uncertainty, and a further decrease in our stock price.

Therefore, we performed an additional interim impairment test as of the last day of fiscal May 2024.

Refer to Note 6:

Goodwill and Intangible Assets for additional details on the impairment charges, valuation methodologies, and inputs used in the fair value measurements.

Goodwill and Intangible Assets for additional details on the interim impairment test, valuation methodologies, and inputs used in the fair value measurements.

Indefinite-lived intangible assets

We have indefinite-lived intangible assets related to our Staff Management and PeopleScout trade names.

We have indefinite-lived intangible assets for trade names/trademarks related to businesses within our PeopleScout and PeopleManagement segments.

We evaluate our indefinite-lived intangible assets for impairment on an annual basis as of the first day of our fiscal second quarter, or whenever events or circumstances make it more likely than not that an impairment may have occurred.

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We monitor the existence of potential impairment indicators throughout the fiscal year.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

When evaluating indefinite-lived intangible assets for impairment, we may first assess qualitative factors to determine whether it is more likely than not the fair value of the indefinite-lived intangible is less than its carrying amount.

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If, after assessing the totality of events and circumstances, we determine that it is more likely than not the fair value of the indefinite-lived intangible asset is greater than its carrying amount, the quantitative impairment test is unnecessary.

The quantitative impairment test, if necessary, utilizes the relief from royalty method to determine the fair value of each of our trade names.

If the carrying value exceeds the fair value, we recognize an impairment loss in an amount equal to the excess, not to exceed the carrying value.

We performed our annual impairment test for indefinite-lived intangible assets as of the first day of our fiscal second quarter of 2023.

The quantitative impairment test, if necessary, utilizes the relief from royalty method to determine the fair value of each of our trade names/trademarks.

If the carrying value exceeds the fair value, we recognize an impairment charge in an amount equal to the excess, not to exceed the carrying value.

During the fiscal second quarter of 2024, we performed an impairment test for indefinite-lived intangible assets.

Refer to Note 6:

Goodwill and Intangible Assets for additional details on the impairment charges, valuation methodologies, and inputs used in the fair value measurements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Goodwill and Intangible Assets for additional details on the impairment test, valuation methodologies, and inputs used in the fair value measurements.

Other long-lived assets

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Other long-lived assets include property and equipment, lease right-of-use assets, finite-lived intangible assets and capitalized implementation costs for cloud computing arrangements that are service contracts.

There were no material other long-lived asset impairment charges recorded during the fiscal year ended December 31, 2023.

Other than $ 0.5 million of lease right-of-use asset impairment charges recorded, there were no material other long-lived asset impairment charges recorded during the fiscal year ended December 29, 2024.

Workers’ compensation claims reserves

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These estimates include claims that have been reported but not settled and claims that have been incurred but not reported.

These reserves, which reflect potential liabilities to be paid in future periods based on estimated payment patterns, are discounted to estimated net present value using discount rates based on average returns of “risk-free” United States of America (“U.S.”) Treasury instruments available during the year in which the liability was incurred, which are evaluated on a quarterly basis.

Treasury instruments available during the year in which the liability was incurred, which are evaluated on a quarterly basis.

We evaluate the reserves regularly throughout the year and make adjustments accordingly.

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• positive or adverse development of claims.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Legal contingency reserves and regulatory liabilities

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These expected future tax consequences are measured based on provisions of tax law as currently enacted;

the effects of future changes in tax

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

laws are not anticipated.

the effects of future changes in tax laws are not anticipated.

We recognize deferred tax assets to the extent we believe it is more likely than not the asset will be realized.

We consider available positive and negative evidence when making such determination, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, carryback potential if permitted, and results of recent operations.

We consider available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit the use of existing deferred tax assets when making such determination, including future reversals of existing taxable temporary differences, projected future taxable income, tax-planning strategies, carryback potential if permitted, and results of recent operations.

A significant piece of objective negative evidence is the existence of a three-year cumulative loss.

Such objective negative evidence limits the ability of management to consider other subjective evidence, such as projected taxable income.

When appropriate, we record a valuation allowance against deferred tax assets to reduce deferred tax assets to the amount that is more likely than not to be realized.

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Accrued interest and penalties are included within other long-term liabilities on the Consolidated Balance Sheets.

A significant driver of fluctuations in our effective income tax rate is the federal Work Opportunity Tax Credit (“WOTC”).

WOTC is designed to encourage hiring of workers from certain disadvantaged targeted categories and is generally calculated as a percentage of wages over a twelve month period up to worker maximum by targeted category.

Based on historical results and business trends, we estimate the amount of WOTC we expect to earn related to wages of the current year.

However, the estimate is subject to variation because:

1) a small percentage of our associates qualify for one or more of the many targeted categories;

2) the targeted categories are subject to different incentive credit rates and limitations;

3) credits fluctuate depending on economic conditions and qualified worker retention periods;

and 4) state and federal offices can delay their credit certification processing and have inconsistent certification rates.

We recognize an adjustment to prior year hiring credits if credits certified by government offices differ from original estimates.

The WOTC program has been approved through the end of 2025.

Deferred compensation plan

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The current portion of the deferred compensation liability is included in accrued wages and benefits on our Consolidated Balance Sheets.

The total deferred compensation liability is funded through company-owned life insurance policies recorded in restricted cash and investments on our Consolidated Balance Sheets.

The total deferred compensation liability is funded through company-owned life insurance policies recorded in restricted cash, cash equivalents and investments on our Consolidated Balance Sheets.

The carrying value of company-owned life insurance policies is based on the cash surrender value of the policies, which approximates fair value.

Changes in the cash surrender value, premiums incurred, and proceeds received relating to the company-owned life insurance policies are recorded in SG&A expense on our Consolidated Statements of Operations and Comprehensive Income (Loss).

Prior to fiscal 2022, we also held mutual funds and money market funds to support the deferred compensation liability, which were measured at fair value, with unrealized gains and losses recognized in SG&A expense, while realized gains and losses were recorded in interest and other income (expense), net on our Consolidated Statements of Operations and Comprehensive Income (Loss).

As of December 26, 2021, all of the mutual funds and money market funds had been converted into company-owned life insurance policies.

Stock-based compensation

Compensation expense for restricted stock-based awards is generally recognized on a straight-line basis over the vesting period, based on our stock’s fair market value on the grant date.

For restricted stock-based awards with non-market performance conditions, compensation expense is recognized over each vesting period based on assessment of the likelihood of meeting these conditions.

Compensation expense for restricted stock awards and restricted stock units is based on the grant-date fair value of our stock and is generally recognized on a straight-line basis over the vesting period.

Compensation expense for performance share units which are contingent upon achievement of a non-market-based performance condition is based on the grant-date fair value of our stock, and expense is recognized on a straight-line basis over the performance period adjusted for the ultimate number of shares expected to be issued as of the end of each reporting period.

Compensation expense for performance share units which are contingent upon achievement of a market-based performance condition is based on the grant-date fair value utilizing a Monte Carlo simulation, and is generally recognized on a straight-line basis over the performance period.

Compensation expense for all stock-based awards is adjusted for forfeitures as they occur.

Compensation expense for our employee stock purchase plan (“ESPP”) is based on the estimated fair value on the date of grant, using the Black-Scholes valuation model, and is recognized on a straight-line basis over the offering period, which is over a calendar month.

We recognize forfeitures as they occur.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

In the event that there are changes to an employee’s requisite service period based on terms existing in the original award agreement, any unrecognized compensation expense is recognized prospectively over the updated remaining requisite service period.

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dollars using a weighted average rate for the relevant reporting period.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Translation adjustments resulting from this process are included, net of tax, in accumulated other comprehensive loss on our Consolidated Statements of Operations and Comprehensive Income (Loss), when applicable.

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Anti-dilutive shares primarily include non-vested restricted stock and performance share units for which the sum of the assumed proceeds, including unrecognized compensation expense, exceeds the average stock price during the periods presented.

Our operating segments are based on the organizational structure for which financial results are regularly reviewed by our chief operating decision-maker, our Chief Executive Officer, to determine resource allocation and assess performance.

Our operating segments are based on the organizational structure for which financial results are regularly reviewed by our chief operating decision-maker (“CODM”), our Chief Executive Officer, to determine resource allocation and assess performance.

We evaluate performance based on segment revenue and segment profit.

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Segment profit includes revenue, related cost of services, and ongoing operating expenses directly attributable to the reportable segment.

Segment profit excludes goodwill and intangible asset impairment charges, depreciation and amortization expense, unallocated corporate general and administrative expense, interest expense, other income and expense, income taxes, and other costs and benefits not considered to be ongoing.

Segment profit excludes goodwill and intangible asset impairment charges, depreciation and amortization expense, unallocated corporate general and administrative expense, interest and other income (expense), income taxes, and other costs and benefits not considered to be ongoing.

Our CODM uses both segment revenue and segment profit during the annual budget and quarterly forecasting processes.

On a monthly basis, our CODM reviews segment revenue and segment profit results compared to the prior forecast in order to make decisions about allocation of operating capital resources to each segment.

Segment profit is also used to determine the compensation of certain employees.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Government assistance

There is limited U.S.

GAAP accounting guidance for for-profit business entities that receive government assistance that is not in the form of a loan, an income tax credit or revenue from a contract with a client.

We are permitted to utilize other accounting standards, and have elected to analogize to International Financial Reporting Standards (“IFRS”), specifically International Accounting Standards (“IAS”) 20, Accounting for Government Grants and Disclosures of Government Assistance.

GAAP accounting guidance for for-profit business entities that receive government assistance, we have elected to analogize to International Financial Reporting Standards (“IFRS”), specifically International Accounting Standards (“IAS”) 20, Accounting for Government Grants and Disclosures of Government Assistance.

Following IAS 20, we recognize government assistance on a systematic basis over the periods in which we recognize the related costs for which the grant is intended to compensate, but only when there is reasonable assurance we will comply with all conditions attached to the grant and there is reasonable assurance the assistance will be received.

We have interpreted “reasonable assurance” to mean “probable,” as defined in loss contingencies guidance in U.S.

On March 27, 2020, the U.S.

government enacted the Coronavirus Aid, Relief and Economic Security Act ("CARES Act"), which among other things, provided payroll tax credits to eligible employers to address the negative economic impacts of the coronavirus pandemic (“COVID-19”) outbreak.

Also during fiscal 2020, the Canadian and Australian governments enacted subsidy programs to help employers offset a portion of wage and rent expenses for a limited period.

During fiscal 2021, Canadian subsidies reduced operating expenses by $ 3.9 million on our Consolidated Statement of Operations and Comprehensive Income (Loss).

Based on the reasonable assurance criteria, we have deferred recognition of certain benefits of $ 27.6 million and $ 21.8 million as of December 31, 2023 and December 25, 2022, respectively until recognition becomes probable, and we have included these amounts in accrued wages and benefits on our Consolidated Balance Sheets.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Additionally, under the CARES Act, we were allowed to delay payments for the employer portion of social security taxes (6.2% of taxable wages) incurred between March 27, 2020 and December 31, 2020, for both our temporary associates and permanent employees.

Deferred employer payroll taxes of $ 59.9 million were paid in full on September 15, 2021.

During fiscal 2024, management determined the reasonable assurance criteria was met for certain payroll tax credits for which recognition was previously deferred.

As a result, $ 2.9 million and $ 7.6 million was recognized within cost of services and SG&A expense, respectively, on the Consolidated Statements of Operations and Comprehensive Income (Loss) for the fiscal year ended December 29, 2024.

This also resulted in a reversal of previously accrued interest related to these benefits of $ 1.1 million, offset by recognition of related professional fees of $ 0.8 million, which were recorded within interest and other income (expense), net and SG&A expense, respectively, on the Consolidated Statements of Operations and Comprehensive Income (Loss) for the fiscal year ended December 29, 2024

Based on the reasonable assurance criteria, we deferred recognition of certain benefits of $ 15.7 million and $ 27.6 million as of December 29, 2024 and December 31, 2023, respectively until recognition becomes probable, which are included in accrued wages and benefits on our Consolidated Balance Sheets.

Business combinations

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The initial valuation of these tangible and identifiable intangible assets and liabilities is subject to further management review and may change between the preliminary allocation and the final allocation.

Our acquisitions may include contingent consideration, which require us to recognize the fair value of the estimated liability at the time of the acquisition.

Subsequent changes in the estimate of the amount to be paid under the contingent consideration arrangement are recognized on the Consolidated Statements of Operations and Comprehensive Income (Loss).

Cash payments for contingent or deferred consideration not made soon after the acquisition date are classified within cash flows from financing activities for the purchase price fair value of the contingent consideration, while amounts paid in excess are classified within cash flows from operating activities on the Consolidated Statements of Cash Flows.

Alternatively, our acquisitions may include contingent payments to employees that are selling shareholders, which would be considered a transaction separate from the business combination, and therefore are accounted for as compensation expense.

All acquisition-related costs are expensed as incurred and recorded in SG&A expense on the Consolidated Statements of Operations and Comprehensive Income (Loss).

Additionally, we recognize liabilities for anticipated restructuring costs that will be necessary due to the elimination of excess capacity, redundant assets or unnecessary functions, and record them as SG&A expense on the Consolidated Statements of Operations and Comprehensive Income (Loss).

Recently issued accounting pronouncements not yet adopted

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Recently adopted accounting pronouncements

Segment disclosures

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, “Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures ,” which requires disclosure of incremental segment information on an interim and annual basis, primarily regarding significant segment expenses and information used to assess segment performance.

This ASU is effective for fiscal years beginning after December 15, 2023 (2024 for TrueBlue), and interim periods beginning after December 15, 2024 (Q1 2025 for TrueBlue).

This ASU is effective for fiscal years beginning after December 15, 2023 (fiscal 2024 for TrueBlue), and interim periods beginning after December 15, 2024 (Q1 2025 for TrueBlue).

Retrospective application is required for all periods presented.

We adopted this guidance for fiscal 2024, with retrospective application for fiscal 2023 and 2022.

The adoption of the new standard did not have a material impact on our financial statements.

Refer to Note 15:

Segment Information for revised segment disclosures.

Recently issued accounting pronouncements not yet adopted

Disaggregation of income statement expenses

In November 2024, the FASB issued ASU 2024-03, “Income Statement (Subtopic 220-40):

Disaggregation of Income Statement Expenses,” and in January 2025, the FASB issued ASU 2025-01, “Income Statement (Subtopic 220-40):

Clarifying the Effective Date.” ASU 2024-03 requires disclosures about specific types of expenses included in the expense captions presented in the income statement as well as disclosure about selling expenses.

ASU 2024-03, as clarified by ASU 2025-01, is effective for fiscal years beginning after December 15, 2026 (2027 for TrueBlue) and interim periods beginning after December 15, 2027 (Q1 2028 for TrueBlue).

We are currently evaluating the impact of this ASU on our required disclosures.

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We are currently evaluating the impact of this ASU on our required disclosures.

In March 2024, the Securities and Exchange Commission (“SEC”) issued its final climate disclosure rule, which requires the disclosure of Scope 1 and Scope 2 greenhouse gas emissions and other climate-related topics in annual reports and registration statements, when material.

Disclosure requirements will begin phasing in for fiscal years beginning on or after January 1, 2025.

While the SEC issued an order to stay the final rule in April 2024 due to certain legal challenges, we continue to evaluate the impact of this new rule on our required disclosures.

There are no other new accounting pronouncements, issued or effective during the fiscal year, that are expected to have a significant impact on our financial statements and related disclosures.

Effective February 26, 2024, we entered into a share purchase agreement (the “Agreement”) to sell Labour Ready Temporary Services, Ltd.

(“PeopleReady Canada”) to Vertical Staffing Resources (“Vertical”) for a sale price of $ 4.3 million, plus contingent consideration of up to $ 2.5 million based on the achievement of the results of the business as specified in the Agreement.

We received cash proceeds of $ 3.1 million, net of $ 0.8 million of transaction costs and $ 0.4 million held in escrow until expiration of the indemnification period.

We recognized a pre-tax gain on the divestiture of $ 0.7 million, which is included in interest and other income (expense), net on the Consolidated Statements of Operations and Comprehensive Income (Loss) for the fiscal year ended December 29, 2024.

The operating results for PeopleReady Canada were reported in the PeopleReady reportable segment through the closing date, including $ 2.6 million in revenue for the fiscal year ended December 29, 2024.

The divestiture of PeopleReady Canada did not represent a strategic shift with a major effect on the company's operations and financial results and, therefore was not reported as a discontinued operation, nor was it an individually significant component of the company.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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Restricted cash and cash equivalents 38,564 38,564 — —

Cash, cash equivalents and restricted cash (1) $ 99,306 $ 99,306 $ — $ —

Cash, cash equivalents and restricted cash and cash equivalents (1) $ 61,100 $ 61,100 $ — $ —

Municipal debt securities $ 22,355 $ — $ 22,355 $ —

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Restricted cash and cash equivalents 37,421 37,421 — —

Cash, cash equivalents and restricted cash (1) $ 135,631 $ 135,631 $ — $ —

Cash, cash equivalents and restricted cash and cash equivalents (1) $ 99,306 $ 99,306 $ — $ —

Municipal debt securities $ 31,804 $ — $ 31,804 $ —

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Restricted investments classified as held-to-maturity (2) $ 120,913 $ — $ 120,913 $ —

(1) Cash, cash equivalents and restricted cash include money market funds and deposits.

(1) Cash, cash equivalents and restricted cash and cash equivalents include money market funds and deposits.

(2) Refer to Note 4:

Restricted Cash and Investments for additional details on our held-to-maturity debt securities.

Restricted Cash, Cash Equivalents and Investments for additional details on our held-to-maturity debt securities.

Assets measured at fair value on a nonrecurring basis

In addition to assets that are recorded at fair value on a recurring basis, annual and interim impairment tests may subject our reporting units with goodwill and other intangible assets to nonrecurring fair value measurement.

We performed our annual impairment tests for goodwill and indefinite-lived intangible assets as of the first day of our fiscal second quarter of 2023.

Refer to Note 5:

Goodwill and Intangible Assets for additional details on the impairment charges, valuation methodologies, and inputs used in the fair value measurements.

For our 2023 annual goodwill impairment test, the fair value of each reporting unit was estimated using a weighting of the income and market approaches, except for PeopleScout MSP, which relied only on the income approach.

For our 2024 interim goodwill impairment test as of the last day of fiscal May 2024, the fair value of each reporting unit was estimated using a weighting of the income and market approaches, except for PeopleScout MSP, which relied only on the income approach.

The various inputs to these fair value models are considered Level 3.

As a result of the test, goodwill with a carrying value of $ 9.7 million associated with the PeopleScout MSP reporting unit was impaired, and an impairment charge of $ 8.9 million was recognized on our Consolidated Statements of Operations and Comprehensive Income (Loss) for the fiscal year ended December 31, 2023.

For our 2023 annual indefinite-lived intangible asset impairment test, the fair value of our trade names/trademarks were estimated utilizing the relief from royalty method.

As a result of the test, goodwill with a carrying value of $ 59.1 million associated with the PeopleReady reporting unit was impaired, and an impairment charge of $ 59.1 million was recognized on our Consolidated Statements of Operations and Comprehensive Income (Loss) for the fiscal year ended December 29, 2024.

For our 2024 indefinite-lived intangible asset impairment test performed during the fiscal second quarter of 2024, the fair values of our trade names/trademarks were estimated utilizing the relief from royalty method.

The various inputs to this fair value model are considered Level 3.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

There were no goodwill or intangible asset impairment charges recorded during fiscal 2022 or 2021.

For our 2023 annual goodwill impairment test performed as of the first day of our fiscal second quarter of 2023, the fair value of each reporting unit was estimated using a weighting of the income and market approaches, except for PeopleScout MSP, which relied only on the income approach.

The various inputs to these fair value models are considered Level 3.

For our 2023 annual indefinite-lived intangible asset impairment test performed as of the first day of our fiscal second quarter of 2023, the fair value of our trade names/trademarks were estimated utilizing the relief from royalty method.

The various inputs to this fair value model are considered Level 3.

As a result of the test, one of our trade names/trademarks with a carrying value of $ 3.9 million was written down to its fair value, and an impairment charge of $ 0.6 million was recognized on our Consolidated Statements of Operations and Comprehensive Income (Loss) for the fiscal year ended December 31, 2023.

There were no goodwill or intangible asset impairment charges recorded during fiscal 2022.

Refer to Note 6:

Goodwill and Intangible Assets for additional details on the impairment charge and valuation methodologies.

RESTRICTED CASH AND INVESTMENTS

The following is a summary of the carrying value of our restricted cash and investments:

Goodwill and Intangible Assets for additional details on the impairment charges, valuation methodologies, and inputs used in the fair value measurements.

RESTRICTED CASH, CASH EQUIVALENTS AND INVESTMENTS

The following is a summary of the carrying value of our restricted cash, cash equivalents and investments:

(in thousands) December 29,

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Other restricted cash and cash equivalents 771 1,120

Total restricted cash and investments $ 192,985 $ 213,734

Total restricted cash, cash equivalents and investments $ 179,916 $ 192,985

Held-to-maturity

Restricted cash and investments include collateral that has been provided or pledged to insurance carriers for workers’ compensation and state workers’ compensation programs.

Restricted cash, cash equivalents and investments include collateral that has been provided or pledged to insurance carriers for workers’ compensation and state workers’ compensation programs.

Our insurance carriers and certain state workers’ compensation programs require us to collateralize a portion of our workers’ compensation obligation.

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Total held-to-maturity investments $ 99,506 $ 212 $ ( 1,126 ) $ 98,592

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2023

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Total held-to-maturity investments $ 99,506 $ 98,592

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Actual maturities may differ from contractual maturities because the issuers of certain debt securities have the right to call or prepay their obligations without penalty.

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We hold company-owned life insurance policies to support our deferred compensation liability.

During 2021, we also held mutual funds and money market funds, which were converted into company-owned life insurance policies by the end of fiscal 2021.

During the fiscal year ended December 31, 2023, we received proceeds from company-owned life insurance policies of $ 1.7 million, of which $ 1.4 million was in excess of the cash surrender value of the related policies and recognized in SG&A expense on our Consolidated Statements of Operations and Comprehensive Income (Loss).

The unrealized gains and losses related to investments still held at December 29, 2024, December 31, 2023 and December 25, 2022, included in SG&A expense on our Consolidated Statements of Operations and Comprehensive Income (Loss), were as follows:

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Prepaid expenses and other current assets $ 31,786 $ 28,894

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Other current liabilities

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$ 6,975 $ 10,371

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Assets and liabilities held-for-sale

During the fiscal year ended December 29, 2024, following an evaluation of our office space and business requirements, all criteria for classifying our Tacoma headquarters office building as held-for-sale were met, and we ceased recording depreciation expense.

Completion of the sale of the building is expected within a year from December 29, 2024.

The estimated fair value of the disposal group, less estimated costs to sell, exceeds its carrying value of $ 11.8 million, and therefore no impairment charge was recorded during the fiscal year ended December 29, 2024.

Assets and liabilities held-for-sale as of December 31, 2023 represented the amounts included as part of the disposal group related to the eventual divestiture of PeopleReady Canada, which was finalized during the fiscal first quarter of 2024.

Refer to Note 2:

Divestiture for additional details.

Property and equipment

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Construction in progress consists primarily of purchased and internally-developed software.

Depreciation expense of property and equipment totaled $ 20.6 million, $ 23.5 million and $ 20.9 million for the fiscal years ended December 31, 2023, December 25, 2022 and December 26, 2021, respectively.

Assets and liabilities held-for-sale

During fiscal 2023, as part of our strategic initiative to simplify our organizational structure and sharpen our focus on core operations, management, with approval from the Board, began actively marketing Labour Ready Temporary Services, Ltd.

LRTS is a wholly-owned subsidiary of the company, and provides contingent staffing solutions to clients in Canada under the PeopleReady brand.

The operational results of LRTS are included as part of our PeopleReady operating segment and reportable segment for all years presented.

LRTS is not an individually significant component of the company.

As of December 31, 2023, all criteria for classifying this entity as held-for-sale were met, and did not result in recognition of a loss on our Consolidated Statements of Operations and Comprehensive Income (Loss) for fiscal 2023.

The assets and liabilities classified as held-for-sale as of December 31, 2023 are presented within other current assets and other current liabilities, respectively, on our Consolidated Balance Sheets.

The following represents the carrying amounts of the major classes of assets and liabilities included as part of the disposal group classified as held-for-sale:

(in thousands) December 31,

Current assets held-for-sale:

Cash and cash equivalents

Accounts receivable, net

Prepaid expenses and other current assets

Income tax receivable

Property and equipment, net

Deferred income taxes, net

Operating lease right-of-use assets, net

Total current assets held-for-sale

Current liabilities held-for-sale:

Accounts payable and other accrued expenses

Accrued wages and benefits

Operating lease liabilities

Other current liabilities 102

Total current liabilities held-for-sale

(1) Goodwill was allocated based on the relative fair value of LRTS to the total PeopleReady reporting unit prior to being reclassified as held-for-sale.

Depreciation expense for property and equipment, inclusive of depreciation included in cost of services, totaled $ 25.5 million, $ 20.6 million and $ 23.5 million for the fiscal years ended December 29, 2024, December 31, 2023 and December 25, 2022, respectively.

For the fiscal year ended December 29, 2024, depreciation expense of $ 0.9 million was included in cost of services.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The expected divestiture of our PeopleReady operations in Canada does not represent a strategic shift, nor do we expect it to have a major effect on the company’s operations and financial results and, therefore will not be reported as discontinued operations in our Consolidated Balance Sheets or Consolidated Statements of Operations and Comprehensive Income (Loss).

A sale is expected to be finalized during the fiscal first quarter of 2024.

Subsequent event

On February 20, 2024, the company entered into a definitive share purchase agreement to sell LRTS to Vertical Staffing Resources.

The transaction is expected to close during the fiscal first quarter of 2024, subject to customary closing conditions.

GOODWILL AND INTANGIBLE ASSETS

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Accumulated impairment charge ( 46,210 ) ( 109,757 ) ( 79,601 ) ( 235,568 )

Goodwill, net 60,094 32,953 1,491 94,538

60,094 32,199 1,491 93,784

Goodwill reclassified as held-for-sale (1)

( 1,020 ) — — ( 1,020 )

Impairment charge — ( 8,885 ) — ( 8,885 )

Foreign currency translation — 235 — 235

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Accumulated impairment charge ( 46,210 ) ( 118,642 ) ( 79,601 ) ( 244,453 )

Goodwill, net 60,094 32,199 1,491 93,784

Goodwill reclassified as held-for-sale (1)

59,074 23,549 1,491 84,114

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Accumulated impairment charge ( 105,284 ) ( 118,642 ) ( 79,601 ) ( 303,527 )

Goodwill, net $ 59,074 $ 23,549 $ 1,491 $ 84,114

$ — $ 23,052 $ 1,491 $ 24,543

(1) Goodwill was allocated based on the relative fair value of PeopleReady Canada to the total PeopleReady reporting unit prior to being reclassified as held-for-sale.

Refer to Note 2:

Supplemental Balance Sheet Information for further discussion.

We performed our annual impairment test as of the first day of our fiscal second quarter of 2023, for our reporting segments with remaining goodwill:

PeopleManagement Centerline;

PeopleScout RPO;

and PeopleScout MSP.

Divestiture for additional details.

2024 impairments

Annual impairment test

We performed an interim impairment test as of the last day of the fiscal first quarter of 2024, as management determined that a triggering event had occurred as a result of continued decline for our services, overall economic uncertainty, and a sustained decrease in our stock price, which did not result in impairment of goodwill for any reporting unit.

Given the proximity of our first quarter interim impairment measurement date to our annual goodwill impairment measurement date (first day of the fiscal second quarter), we performed a qualitative assessment to determine whether it was more likely than not that the fair value of any of our reporting units was less than the carrying value.

We considered the current and expected future economic and market conditions and concluded it was unlikely the goodwill associated with our reporting units was impaired as of the first day of our fiscal second quarter.

Interim impairment test

During the fiscal second quarter of 2024, subsequent to our annual test as of the first day of our fiscal second quarter, management determined that a triggering event had occurred as a result of additional decline in demand for our services, prolonged economic uncertainty, and a further decrease in our stock price.

Therefore, we performed an interim impairment test as of the last day of fiscal May 2024 for our reporting units with remaining goodwill.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The fair value of each reporting unit was estimated using a weighting of the income and market valuation approaches.

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The weighted average cost of capital used in our most recent impairment test ranged from 13.5 % to 14.5 %.

We also applied a market approach, which develops a value correlation based on the market capitalization of similar publicly traded companies, referred to as a multiple, to apply to the operating results of the reporting units.

The primary market multiples to which we compare are revenue and earnings before interest, taxes, depreciation, and amortization.

The income and market approaches were equally weighted in our most recent annual impairment test, except for PeopleScout MSP which relied only on the income approach.

The combined fair values for all reporting units were then reconciled to our aggregate market value of our shares of common stock on the date of valuation, while considering a reasonable control premium.

The primary market multiples considered for the market approach are revenue and earnings before interest, taxes, depreciation, and amortization.

In our most recent impairment test, the market multiples were based on earnings before interest, taxes, depreciation, and amortization for Centerline and PeopleScout RPO, while market multiples based on revenue were used for PeopleReady.

The income and market approaches for each reporting unit were equally weighted in our most recent annual impairment test, except for PeopleScout MSP which relied only on the income approach.

The combined fair values for all reporting units were then reconciled to the aggregate market value of our shares of common stock on the date of valuation, while considering a reasonable control premium.

We consider a reporting unit’s fair value to be substantially in excess of its carrying value at a 20 % premium or greater.

Based on our most recent impairment test, all of our reporting units’ fair values were substantially in excess of their respective carrying values, except for PeopleScout MSP.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Based on our most recent impairment test, all of our reporting units’ fair values were substantially in excess of their respective carrying values, except PeopleReady.

As a result of our May 2024 interim impairment test, we concluded that the carrying amount of the PeopleReady reporting unit exceeded its fair value.

Thus, we recorded a non-cash goodwill impairment charge of $ 59.1 million, representing the remaining goodwill balance for PeopleReady, which was included in goodwill and intangible asset impairment charge on our Consolidated Statements of Operations and Comprehensive Income (Loss) for the fiscal year ended December 29, 2024.

The goodwill impairment was primarily driven by recent performance of the PeopleReady reporting unit and the temporary industrial staffing industry since our annual impairment testing date, as well as a delay in the projected timing of recovery.

Additionally, following performance of the annual impairment test, we did not identify any events or conditions that make it more likely than not that an additional impairment may have occurred.

Accordingly, no further impairment charges were recognized during the fiscal year ended December 29, 2024.

2023 impairments

Annual impairment test

As a result of our 2023 annual impairment test, we concluded that the carrying amount of the PeopleScout MSP reporting unit exceeded its fair value and we recorded a non-cash goodwill impairment charge of $ 8.9 million, which was included in goodwill and intangible asset impairment charge on our Consolidated Statements of Operations and Comprehensive Income (Loss) for the fiscal year ended December 31, 2023.

The PeopleScout MSP goodwill impairment was related to our revised internal revenue projections, which anticipated the current year declining trends would continue into future periods.

The PeopleScout MSP goodwill impairment was related to our revised internal revenue projections, which anticipated the 2023 declining trends would continue into future periods.

These projections were updated based on our then-current outlook and recent industry analysis, which indicated that our business would underperform due to a strategic lack of investment in technology within an increasingly competitive market.

The weighted average cost of capital used in the 2023 annual impairment test ranged from 13.0 % to 13.5 %.

The remaining goodwill balance for the PeopleScout MSP reporting unit was $ 0.8 million as of December 31, 2023.

Additionally, following performance of the annual impairment test, we did not identify any events or conditions that make it more likely than not that an additional impairment may have occurred.

Accordingly, no further impairment loss was recognized during the fiscal year ended December 31, 2023.

There were no goodwill impairment charges recorded during fiscal 2022.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Intangible assets

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We held indefinite-lived trade names/trademarks of $ 4.8 million and $ 5.4 million as of December 29, 2024 and December 31, 2023, respectively, related to businesses within our PeopleScout and PeopleManagement segments.

2024 impairments

During the fiscal second quarter of 2024, we concluded that the carrying amount of a trade name/trademark related to the PeopleManagement segment exceeded its estimated fair value and recorded a non-cash impairment charge of $ 0.6 million, which was included in goodwill and intangible asset impairment charge on our Consolidated Statements of Operations and Comprehensive Income (Loss) for the fiscal year ended December 29, 2024.

The charge was primarily driven by recent revenue performance of the related business given a decline in demand and overall economic uncertainty.

The remaining balance for this trade name/trademark was $ 2.7 million as of December 29, 2024.

As of our fiscal second quarter impairment test, the fair value of the trade name/trademark related to the PeopleScout segment was substantially in excess of its carrying amount of $ 2.1 million, and therefore did not result in an impairment.

Additionally, following performance of the annual impairment test, we did not identify any additional events or conditions that make it more likely than not that an additional impairment may have occurred.

Accordingly, no further impairment charges were recognized during the fiscal year ended December 29, 2024.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2023 impairments

As a result of our 2023 annual impairment test, we concluded that the carrying amount of a trade name/trademark related to the PeopleManagement segment exceeded its estimated fair value and recorded a non-cash impairment charge of $ 0.6 million, which was included in goodwill and intangible asset impairment charge on our Consolidated Statements of Operations and Comprehensive Income (Loss) for the fiscal year ended December 31, 2023.

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The remaining balance for this trade name/trademark was $ 3.3 million as of December 31, 2023.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Accordingly, no further impairment loss was recognized during the fiscal year ended December 31, 2023.

There were no goodwill or intangible asset impairment charges recorded during fiscal 2022 or 2021.

There were no intangible asset impairment charges recorded during fiscal 2022.

WORKERS' COMPENSATION INSURANCE AND RESERVES

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Undiscounted workers’ compensation reserve (1)

$ 152,803 $ 214,611

Less discount on workers’ compensation reserve 13,011 18,096

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Long-term portion $ 105,063 $ 151,649

(1) Amounts shown are net of discount related to claims above our self-insured limits (“excess claims”) of $ 24.7 million and $ 33.2 million for fiscal years ended December 29, 2024 and December 31, 2023, respectively.

Payments made against self-insured claims were $ 42.1 million, $ 45.0 million and $ 39.4 million for the fiscal years ended December 29, 2024, December 31, 2023 and December 25, 2022, respectively.

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LONG-TERM DEBT

We have a revolving credit agreement with Bank of America, N.A., Wells Fargo Bank, N.A., PNC Bank, N.A., KeyBank, N.A.

and HSBC Bank USA, N.A., which provides for a revolving line of credit of up to $ 300.0 million, and matures on March 16, 2025 (“Revolving Credit Facility”).

We have a revolving credit agreement with Bank of America, N.A., PNC Bank, N.A., HSBC Bank USA, N.A., Wells Fargo Bank, N.A., and Key Bank, N.A.

dated as of February 9, 2024 (the “Revolving Credit Facility”).

The Revolving Credit Facility provides for a revolving line of credit of up to $ 255.0 million, and matures on February 9, 2029.

We have an option to increase the amount to $ 405.0 million, subject to lender approval.

Included in the Revolving Credit Facility is a $ 25.0 million sub-limit for “Swingline” loans and a $ 25.0 million sub-limit for letters of credit.

At December 31, 2023, $ 6.2 million was utilized by outstanding standby letters of credit, leaving $ 293.8 million unused under the Revolving Credit Facility, which is constrained by our most restrictive covenant making $ 85.9 million available for additional borrowing.

At December 25, 2022, $ 7.2 million was utilized by outstanding standby letters of credit.

Under the terms of the Revolving Credit Facility, we pay a variable rate of interest on funds borrowed under the revolving line of credit in excess of the Swingline loans, based on the Secured Overnight Financing Rate (“SOFR”), plus an adjustment of 0.10 %, plus an applicable spread between 1.25 % and 3.50 %.

Alternatively, at our option, we may pay interest based on a base rate plus an applicable spread between 0.25 % and 1.50 %.

The base rate is the greater of the prime rate (as announced by Bank of America), or the federal funds rate plus 0.50 %.

The applicable spread is determined by the consolidated leverage ratio, as defined under the Revolving Credit Facility.

Under the terms of the Revolving Credit Facility, we are required to pay a variable rate of interest on funds borrowed under the Swingline loan based on the base rate plus applicable spread between 0.25 % and 1.50 %, as described above.

A commitment fee between 0.25 % and 0.50 % is applied against the Revolving Credit Facility’s unused borrowing capacity, with the specific rate determined by the consolidated leverage ratio, as defined in the second amendment to our credit agreement.

Letters of credit are priced at a margin between 1.00 % and 3.25 %, plus a fronting fee of 0.50 %.

As of December 29, 2024, $ 7.6 million was drawn on the Revolving Credit Facility as a Swingline loan and $ 2.7 million was utilized by outstanding standby letters of credit, leaving $ 244.7 million unused under the Revolving Credit Facility, which is constrained by our most restrictive covenant making $ 118.5 million available for additional borrowing.

As of December 31, 2023, $ 6.2 million was utilized by outstanding standby letters of credit under our prior revolving credit agreement with Bank of America, N.A., Wells Fargo Bank, N.A., PNC Bank, N.A., KeyBank, N.A.

and HSBC Bank USA, N.A., which provided for a revolving line of credit of up to $300.0 million and included a $30.0 million sub-limit for “Swingline” loans and a $125.0 million sub-limit for letters of credit.

Under the terms of the Revolving Credit Facility, we have the option to borrow funds under the revolving line of credit as a Term Secured Overnight Financing Rate (“SOFR”) Loan, for a one-, three or six-month term, or as a Base Rate Loan, as defined in the Revolving Credit Facility.

Under a Term SOFR Loan, we are required to pay a variable rate of interest on funds borrowed based on the Term SOFR Screen Rate two days prior for the equivalent term, plus an adjustment of 0.10 %, plus an applicable spread between 1.75 % and 3.50 %.

Under a Base Rate Loan we are required to pay a variable rate of interest on funds borrowed based on a base rate plus an applicable spread between 0.75 % and 2.50 %.

The base rate is the greater of the one-month Term SOFR Screen Rate two days prior plus 1.0 %, the prime rate (as announced by Bank of America), or the federal funds rate plus 0.50 %.

The applicable spread is determined by the consolidated leverage ratio, as defined in the Revolving Credit Facility.

Under a Swingline loan, we are required to pay a variable rate of interest on funds borrowed based on the base rate plus applicable spread between 0.75 % and 2.50 %, as described above.

At December 29, 2024, the applicable spread on the base rate was 0.75 % and the base rate was 7.50 %, resulting in an interest rate of 8.25 %.

A commitment fee between 0.35 % and 0.50 % is applied against the Revolving Credit Facility’s unused borrowing capacity, with the specific rate determined by the consolidated leverage ratio, as defined in the Revolving Credit Facility.

Letters of credit are priced at a margin between 1.50 % and 3.25 %, with the specific rate determined by the consolidated leverage ratio, plus a fronting fee of 0.25 %.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Obligations under the Revolving Credit Facility are guaranteed by TrueBlue and material U.S.

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domestic subsidiaries.

The second amendment to our credit agreement contains customary representations and warranties, events of default, and affirmative and negative covenants, including, among others, financial covenants.

The following financial covenants, as defined in the second amendment to our credit agreement, were in effect as of December 31, 2023:

• Consolidated leverage ratio less than 3.00 , defined as our funded indebtedness divided by trailing twelve months consolidated EBITDA, as defined in the second amendment to our credit agreement.

As of December 31, 2023, our consolidated leverage ratio was 0.20 .

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The Revolving Credit Facility contains customary representations and warranties, events of default, and affirmative and negative covenants, including, among others, financial covenants.

The following financial covenants, as defined in the Revolving Credit Facility, were in effect as of December 29, 2024:

• Consolidated fixed charge coverage ratio greater than 1.25 , defined as the trailing twelve months bank-adjusted cash flow divided by cash interest expense.

As of December 29, 2024, our consolidated fixed charge coverage ratio was 4.92 .

As of December 31, 2023, and throughout fiscal 2023, we were in compliance with all effective covenants related to the Revolving Credit Facility.

Subsequent event

On February 9, 2024, we entered into an amended and restated revolving credit agreement with Bank of America, N.A., PNC Bank, N.A., HSBC Bank USA, N.A., Wells Fargo Bank, N.A., and Key Bank, N.A.

dated as of February 9, 2024 (the “2024 Revolving Credit Facility”).

The 2024 Revolving Credit Facility provides for a revolving line of credit of up to $ 255.0 million, and matures on February 9, 2029.

We have an option to increase the amount to $ 405.0 million, subject to lender approval.

Included in the 2024 Revolving Credit Facility is a $ 25.0 million sub-limit for “Swingline” loans and a $ 25.0 million sub-limit for letters of credit.

• Asset coverage ratio greater than 1.00 , defined as the ratio of (a) 60 % of accounts receivable to (b) total debt outstanding less unrestricted cash in excess of $ 50.0 million, subject to certain minimums.

Under this covenant we are limited to $ 25.0 million in aggregate share repurchases in any twelve-month period.

As of December 29, 2024, our asset coverage ratio was 12.52 .

The following financial covenant, as defined in the Revolving Credit Facility, will replace the asset coverage ratio beginning the fiscal first quarter of 2026, or earlier at our discretion, subject to the terms of the agreement:

• Consolidated leverage ratio less than 3.00 , defined as our funded indebtedness divided by trailing twelve months consolidated EBITDA, as defined in the Revolving Credit Facility.

As of December 29, 2024, we were in compliance with all effective covenants related to the Revolving Credit Facility.

COMMITMENTS AND CONTINGENCIES

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The terms of these bonds are subject to review and renewal every one to four years and most bonds can be canceled by the sureties with as little as 60 days’ notice.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Operating leases

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(2) Other lease costs include variable lease costs, net of rental and sublease income.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Other information related to our operating leases was as follows:

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Imputed interest (2)

Present value of operating lease liabilities held-for-sale

Present value of lease liabilities

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Purchase obligations do not include agreements that are cancellable without significant penalty.

We had $ 37.4 million of purchase obligations as of December 31, 2023, of which $ 17.7 million are expected to be paid in 2024, $ 16.1 million in 2025, and the remaining $ 3.6 million in 2026.

We had $ 41.3 million of purchase obligations as of December 29, 2024, of which $ 24.1 million are expected to be paid in 2025, $ 12.8 million in 2026, $ 2.3 million in 2027, $ 1.0 million in 2028, $ 1.0 million in 2029, and remaining $ 0.1 million thereafter.

Of the amounts expected to be paid in 2025, $6.4 million relates to non-cancellable third-party licensing fees for software we ceased using during 2024, and therefore were fully expensed in 2024.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Legal contingencies and developments

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Shares of common stock outstanding include shares of unvested restricted stock.

Unvested restricted stock included in reportable shares outstanding was 0.1 million and 0.2 million shares as of December 31, 2023 and December 25, 2022, respectively.

Unvested restricted stock included in reportable shares outstanding was 8.2 thousand and 69.0 thousand shares as of December 29, 2024 and December 31, 2023, respectively.

On October 16, 2019, our Board authorized a $ 100.0 million addition to our share repurchase program for our outstanding common stock (“2019 authorization”).

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We may choose to purchase shares in the open market, from individual holders, through an accelerated share repurchase agreement or otherwise.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Under the 2019 authorization, we repurchased shares during fiscal 2021 using $ 16.7 million, and during fiscal 2022 using the remaining $ 50.0 million.

Under the 2019 authorization, we repurchased shares using the remaining $ 50.0 million during fiscal 2022.

The 2019 authorization was fully utilized as of April 2022.

Under the 2019 authorization, we repurchased and retired a total of 4.7 million shares of our common stock over three fiscal years, at an average share price of $ 21.09 .

Under the 2022 authorization we repurchased shares using $ 33.9 million during fiscal 2023 and $ 11.0 million during fiscal 2022.

Under the 2022 authorization, we repurchased shares, excluding excise tax, using $ 21.1 million, $ 33.9 million and $ 11.0 million during fiscal 2024, 2023, and 2022, respectively.

The details of shares repurchased in the open market as part of the authorizations described above are as follows:

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We record stock-based compensation expense for restricted stock awards, restricted stock units, performance share units (collectively, “stock-based awards”), and shares purchased under an employee stock purchase plan (“ESPP”).

Our 2016 Omnibus Incentive Plan (“Incentive Plan”), effective May 11, 2016, applies to directors, officers, employees and consultants of the Company and permits the granting of nonqualified and incentive stock options, restricted stock awards, performance share units, restricted stock units and stock appreciation rights.

Refer to Note 1:

Summary of Significant Accounting Policies for more information on how we measure and recognize stock-based compensation expense.

Our 2016 Omnibus Incentive Plan (“Incentive Plan”), effective May 11, 2016, applies to directors, officers, employees and consultants of the Company and permits the granting of nonqualified and incentive stock options, restricted stock awards, performance share units (“PSUs”), restricted stock units and stock appreciation rights.

At the time of adoption, there were 1.5 million shares available for issuance.

Effective May 9, 2018, an additional 1.8 million shares were authorized under the Incentive Plan.

Additionally, effective May 11, 2023, an additional 0.7 million shares were authorized under the Incentive Plan.

Additional shares were authorized under the Incentive Plan of 1.8 million shares on May 9, 2018, 0.7 million shares on May 11, 2023, and 0.8 million shares on May 15, 2024.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Stock-based awards

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Receipt of the vested shares may be deferred until after a director leaves the Board.

Compensation expense related to these grants is calculated based on the grant-date fair value.

We recognize compensation expense on a straight-line basis over the vesting period, net of forfeitures.

Performance share units are only granted to certain executive officers.

Vesting of performance share units is contingent upon the achievement of return on equity, profitability, or individual performance goals at the end of each performance period, which is generally three years .

Each performance share unit is equivalent to one share of common stock.

Compensation expense for these grants is calculated based on the grant-date market value of our stock and is recognized ratably over the performance period only for the performance share units expected to vest.

Our estimate of the performance units expected to vest is reviewed and adjusted as appropriate each quarter.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

PSUs are only granted to certain executive officers.

Vesting of PSUs is contingent upon the achievement of return on equity, profitability, individual performance, or relative total shareholder return (“rTSR”) goals at the end of each performance period, which is generally three years .

Each PSU is equivalent to one share of common stock.

The grant-date fair value of PSUs that are contingent on rTSR is calculated using a Monte Carlo simulation.

The following assumptions were used in estimating this fair value of these awards granted in 2024:

Risk-free interest rate (1)

Expected dividend yield (2)

Expected term (years)

Expected volatility (3)

(1) The average risk-free interest rate was based on the zero-coupon rate derived from the Treasury Constant Maturities yield curve corresponding to the expected term in effect as of the grant date.

(2) The expected dividend yield was not relevant as we did not pay dividends on common stock and do not currently expect to pay dividends during the term of the stock awards granted.

(3) We determined expected volatility using the change in our stock price over the historical expected term.

Stock-based award activity for the fiscal year ended December 29, 2024, was as follows:

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Non-vested at beginning of period 1,576 $ 19.88

Granted 1,137 $ 17.77

1,220 $ 11.19

Vested ( 511 ) $ 18.39

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Non-vested at the end of the period 2,008 $ 15.29

(1) Includes 0.1 million shares of PSUs that are contingent on a market-based performance criteria.

These shares had a fair market value of $10.00 using the Monte Carlo simulation discussed above.

The following table summarizes the weighted-average grant-date fair value per share for stock-based awards granted:

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The requisite service period begins on the enrollment date and ends on the purchase date, the duration of which is one month .

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes transactions under our ESPP:

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Total stock-based compensation expense for fiscal 2024, 2023 and 2022, which is included in SG&A expense on our Consolidated Statements of Operations and Comprehensive Income (Loss), was $ 7.6 million, $ 13.9 million and $ 9.7 million, respectively.

The related tax benefit was $ 2.9 million, $ 2.0 million and $ 2.9 million for fiscal 2023, 2022 and 2021, respectively.

The related tax benefit, calculated using our statutory tax rate, was $ 1.6 million, $ 2.9 million and $ 2.0 million for fiscal 2024, 2023 and 2022, respectively.

DEFINED CONTRIBUTION PLANS

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Refer to Note 4:

Restricted Cash and Investments for additional details on deferred compensation assets.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Restricted Cash, Cash Equivalents and Investments for additional details on deferred compensation assets.

The provision for income taxes is comprised of the following:

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Provision for income taxes $ 37,224 $ ( 6,472 ) $ 11,143

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Our tax provision and our effective tax rate are subject to variation due to several factors, including variability in our pre-tax and taxable income or loss by jurisdiction, tax credits, government audit developments, changes in laws, regulations and administrative practices, valuation allowances recorded on deferred tax assets, and relative changes in expenses or losses for which tax benefits are not recognized.

Additionally, our effective tax rate can be more or less volatile based on the amount of pre-tax income or loss.

For example, the impact of discrete items, tax credits, and non-deductible expenses on our effective tax rate is greater when our pre-tax income or loss is lower.

The items accounting for the difference between income taxes computed at the statutory federal income tax rate and income taxes reported on the Consolidated Statements of Operations and Comprehensive Income (Loss) are as follows:

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Hiring tax credits, net ( 4,123 ) 4.7 ( 4,997 ) 24.2 ( 7,911 ) ( 10.8 )

CARES Act — — — — ( 468 ) ( 0.6 )

Valuation allowance

56,792 ( 64.1 ) — — — —

Uncertain tax positions ( 99 ) 0.1 ( 206 ) 1.0 ( 1,336 ) ( 1.8 )

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Our effective tax rate for fiscal 2024 was ( 42.0 )%.

The difference between the statutory federal income tax rate of 21.0 % and our effective income tax rate results primarily from tax benefits from hiring tax credits and state income taxes, partially offset by the non-deductible goodwill impairment charge and other non-deductible and non-taxable items.

The difference between the statutory federal income tax rate of 21.0 % and our effective income tax rate was primarily due to the valuation allowance against our U.S.

federal and state deferred tax assets.

Of the total goodwill and intangible asset impairment charge of $ 9.5 million recorded during fiscal 2023, $ 8.9 million (tax effect of $ 2.3 million) related to goodwill from a stock acquisition, and accordingly was not deductible for tax purposes.

The federal Work Opportunity Tax Credit (“WOTC”), our primary hiring tax credit, is designed to encourage employers to hire workers from certain targeted groups with higher than average unemployment rates.

WOTC is generally calculated as a percentage of wages over a twelve-month period up to worker maximums by targeted groups.

Based on historical results and business trends, we estimate the amount of WOTC we expect to earn related to wages of the current year.

However, the estimate is subject to variation because 1) a small percentage of our workers qualify for one or more of the many targeted groups;

2) the targeted groups are subject to different incentive credit rates and limitations;

3) credits fluctuate depending on economic conditions and qualified worker retention periods;

and 4) state and federal offices can delay their credit certification processing and have inconsistent certification rates.

We recognize an adjustment to prior year hiring tax credits if credits certified by government offices differ from original estimates.

Congress has approved the WOTC program through the end of 2025.

and foreign components of income (loss) before tax expense (benefit) was as follows:

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Deferred income taxes, net $ 537 $ 35,122

Since deferred tax assets and liabilities attributable to different jurisdictions cannot be offset, a deferred tax liability of $ 0.3 million is included in other long-term liabilities on our Consolidated Balance Sheets as of December 31, 2023.

Based on our deferred tax asset realizability analysis, we have determined that a valuation allowance is appropriate for certain tax credits and net operating losses (“NOLs”) that we expect will not be utilized within the permitted carryforward periods as of December 31, 2023 and December 25, 2022.

Since deferred tax assets and liabilities attributable to different jurisdictions cannot be offset, deferred tax liabilities of $ 0.3 million and $ 0.3 million were included in other long-term liabilities on our Consolidated Balance Sheets as of December 29, 2024 and December 31, 2023, respectively.

Our valuation allowance relates to certain deferred tax balances that we expect will not be utilized within the permitted carryforward periods as of December 29, 2024 and December 31, 2023.

Based on our deferred tax asset realizability assessments performed during the fiscal year ended December 29, 2024, we recorded a valuation allowance against U.S.

federal, state and certain foreign deferred tax assets.

Our conclusion was driven by U.S.

and foreign pre-tax losses beginning in 2023 and continuing into 2024, combined with the significant non-cash goodwill impairment charge of $ 59.1 million recorded during the fiscal year ended December 29, 2024.

Changes to deferred taxes related to foreign currency translation were immaterial for fiscal 2024, 2023 and 2022.

The following table summarizes our credit carryforwards and NOLs along with their respective valuation allowance as of December 31, 2023:

The following table summarizes our credit carryforwards and net operating losses (“NOLs”) along with their respective valuation allowance as of December 29, 2024:

(in thousands) Carryover tax benefit Valuation allowance Expected

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Federal NOLs 12,944 ( 12,944 ) — Indefinite

Foreign NOLs 185 ( 185 ) — Indefinite

Foreign alternative minimum tax credits 392 — 392 2034

Total $ 39,841 $ ( 39,449 ) $ 392

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The activity related to the income tax valuation allowance was as follows:

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Ending balance $ 64,488 $ 834 $ 2,152

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The following table summarizes the activity related to our unrecognized tax benefits:

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If recognized, $ 0.4 million would impact our effective tax rate.

We do not believe the amounts of unrecognized tax benefits will significantly increase or decrease within 12 months of the fiscal year ended December 31, 2023.

We do not believe the amounts of unrecognized tax benefits will significantly increase or decrease within twelve months of the fiscal year ended December 29, 2024.

In general, the tax years 2021 through 2023 remain open to examination by the major taxing jurisdictions where we conduct business.

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Anti-dilutive shares 1,406 1,343 394

As we reported a loss for the fiscal year ended December 31, 2023, all potentially dilutive securities were antidilutive and accordingly, basic net loss per share and diluted net loss per share were equal.

As we reported a loss for the fiscal years ended December 29, 2024 and December 31, 2023, all potentially dilutive securities were antidilutive and accordingly, basic net loss per share and diluted net loss per share were equal.

SEGMENT INFORMATION

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Our PeopleReady reportable segment provides blue-collar, contingent staffing through the PeopleReady operating segment.

PeopleReady provides on-demand and skilled labor in a broad range of industries that include construction, transportation, manufacturing, retail, hospitality and renewable energy.

PeopleReady provides on-demand and skilled labor in a broad range of industries that include construction, transportation, manufacturing, retail, hospitality and energy.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Our PeopleScout reportable segment provides high-volume, permanent employee recruitment process outsourcing, employer branding services and management of outsourced labor service providers through the following operating segments, which we have aggregated into one reportable segment in accordance with U.S.

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Management of multiple third-party staffing vendors on behalf of clients.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Our PeopleManagement reportable segment provides contingent labor and outsourced industrial workforce solutions, primarily on-site at the client’s facility, through the following operating segments, which we have aggregated into one reportable segment in accordance with U.S.

• PeopleManagement On-Site :

On-site management and recruitment for the contingent industrial workforce of manufacturing, warehousing and distribution facilities;

• PeopleManagement Centerline :

• Centerline :

Recruitment and management of contingent and dedicated commercial drivers to the transportation and distribution industries.

The following table presents our revenue disaggregated by major source and segment and a reconciliation of segment revenue from services to total company revenue:

(in thousands) 2023 2022 2021

Revenue from services:

Contingent staffing

PeopleReady $ 1,096,318 $ 1,272,852 $ 1,270,928

The following tables present our revenue from services by segment, with a reconciliation to total company revenue.

Also, the tables present significant segment expense categories regularly provided to the CODM and included in the calculation of segment profit.

Refer to Note 1:

Summary of Significant Accounting Policies for definition of segment profit.

Cost of services and SG&A expense for the individual segments, as presented in the tables below, exclude certain costs and benefits that are also excluded from the calculation of segment profit.

Lastly, the tables include a reconciliation of segment profit to income (loss) before tax expense (benefit).

(in thousands) PeopleReady

PeopleManagement

Human resource outsourcing

PeopleScout 229,334 317,518 262,953

Total Company

The following table presents a reconciliation of segment profit to income (loss) before tax expense (benefit):

(in thousands) 2023 2022 2021

Segment profit:

PeopleReady $ 26,606 $ 87,743 $ 82,398

Revenue from services

$ 868,549 $ 156,643 $ 542,201 $ 1,567,393

Cost of services

614,860 91,484 456,096

Selling, general and administrative expense

247,906 53,007 70,986

Total segment profit

$ 5,783 $ 12,152 $ 15,119 $ 33,054

Corporate unallocated ( 21,887 )

Third-party processing fees for hiring tax credits ( 240 )

Amortization of software as a service assets ( 6,162 )

Goodwill and intangible asset impairment charge ( 59,674 )

PeopleReady technology upgrade costs ( 8,807 )

COVID-19 government subsidies, net of fees

Other costs, net

Depreciation and amortization (inclusive of depreciation included in cost of services)

Income (loss) from operations ( 92,775 )

Interest and other income (expense), net 4,251

Income (loss) before tax expense (benefit) $ ( 88,524 )

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands) PeopleReady

PeopleManagement

PeopleScout 26,922 44,771 36,163

Total Company

Revenue from services

$ 1,096,318 $ 229,334 $ 580,591 $ 1,906,243

Cost of services

772,058 137,551 488,692

Selling, general and administrative expense

297,654 64,861 84,936

Total segment profit

$ 26,606 $ 26,922 $ 6,963 $ 60,491

Corporate unallocated ( 31,507 )

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Goodwill and intangible asset impairment charge ( 9,485 )

Gain on deferred compensation assets — — ( 2,897 )

PeopleReady technology upgrade costs ( 1,342 )

Executive leadership transition costs ( 5,788 )

COVID-19 government assistance, net ( 525 ) — 4,222

Other benefits (costs) ( 5,503 ) ( 5,449 ) ( 4,172 )

COVID-19 government subsidies, net of fees

Other costs, net

Depreciation and amortization ( 25,821 )

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Income (loss) before tax expense (benefit) $ ( 20,645 )

(in thousands) PeopleReady

PeopleManagement

Total Company

Revenue from services

$ 1,272,852 $ 317,518 $ 663,814 $ 2,254,184

Cost of services

892,322 200,861 558,857

Selling, general and administrative expense

292,787 71,886 89,146

Total segment profit

$ 87,743 $ 44,771 $ 15,811 $ 148,325

Corporate unallocated ( 31,326 )

Third-party processing fees for hiring tax credits ( 594 )

Amortization of software as a service assets ( 2,985 )

PeopleReady technology upgrade costs ( 7,935 )

Executive leadership transition costs 1,422

Other costs, net

Depreciation and amortization ( 29,273 )

Income (loss) from operations 72,185

Interest and other income (expense), net 1,231

Income (loss) before tax expense (benefit) $ 73,416

Asset information by reportable segment is not presented since we do not manage our segments on a balance sheet basis.

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Total revenue from services $ 1,567,393 100.0 % $ 1,906,243 100.0 % $ 2,254,184 100.0 %

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Concentrations of client risk

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Client concentration for our reportable segments was as follows:

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

• No single client represented 10.0% or more of our PeopleReady reportable segment revenue for fiscal 2024, 2023, or 2022.

• No single client represented 10.0% or more of our PeopleScout reportable segment revenue for fiscal 2024.

One client represented 11.8 % and 13.1 % of our PeopleScout reportable segment revenue for fiscal 2023 and 2022, respectively.

• One client represented 11.4 %, 12.3 % and 10.6 % of our PeopleManagement reportable segment revenue for fiscal 2024, 2023 and 2022, respectively.

No single client represented 10.0% or more of our PeopleManagement reportable segment revenue for fiscal 2021.

Property and equipment located in international operations was approximately 3.2 % and 3.5 % of total property and equipment, net as of December 29, 2024 and December 31, 2023, respectively.

SUBSEQUENT EVENTS

Effective January 31, 2025 , we acquired all of the outstanding equity interests of Healthcare Staffing Professionals, Inc.

(“HSP”) for a preliminary cash purchase price of $ 42.0 million, subject to adjustment based on HSP’s final closing working capital balance.

HSP is a long-term temporary and permanent staffing solutions provider primarily focused on health care positions including nursing, allied health, behavioral health, and various research, IT and administrative roles.

With operations across the country, HSP specializes in serving state and local government entities with a focus on public health departments and agencies, correctional institutions, and education systems.

This acquisition advances our strategic priority to expand in health care, and combines HSP’s health care staffing expertise with our sales network, technology and recruitment functions.

To help fund the acquisition, we borrowed $ 35.0 million under the Revolving Credit Facility as a Term SOFR loan.

As part of the share purchase agreement, certain HSP employees can earn up to an additional $ 14.0 million based on the financial performance of the business over the next two years .

We incurred acquisition costs of $ 0.6 million, which are included in SG&A expense on the Consolidated Statements of Operations and Comprehensive Income (Loss) for the year ended December 29, 2024.

We are currently evaluating the accounting for this transaction and expect to complete our preliminary allocation of the purchase consideration to the assets acquired and liabilities assumed by the end of our fiscal first quarter of 2025.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data