TrueBlue Inc (TBI) Q1 2023 Earnings Call Transcript

TrueBlue Inc (NYSE:TBI) Q1 2023 Earnings Call dated Apr. 24, 2023.

Corporate Participants:

Derrek Gafford — Chief Financial Officer

Steve Cooper — Chief Executive Officer

Taryn Owen — President and Chief Operating Officer

Analysts:

Kartik Mehta — Northcoast Research — Analyst

Jeff Silber — BMO Capital Markets — Analyst

Mark Marcon — Robert W. Baird & Co — Analyst

Marc Riddick — Sidoti & Company, LLC — Analyst

Presentation:

Operator

Greetings and welcome to the TrueBlue First Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Derrek Gafford, Chief Financial Officer. Thank you, Derek. You may begin.

Derrek Gafford — Chief Financial Officer

Good afternoon, everyone, and thank you for joining today’s call. I’m joined by our Chief Executive Officer, Steve Cooper, and our President and Chief Operating Officer, Taryn Owen.

Before we begin. I want to remind everyone that today’s call and slide presentation contain forward-looking statements. All of which are subject to risks and uncertainties, and we assume no obligation to update or revise any forward-looking statements. These risks and uncertainties, some of which are described in today’s press release and in our SEC filings could cause actual results to differ materially from those in our forward-looking statements. We use non-GAAP measures when presenting our financial results. Encourage you to review the non-GAAP reconciliations in today’s earnings release or at trueblue.com under the Investor Relations section for a complete understanding of these terms and their purpose. Any comparisons made today are based on a comparison to the same-period in the prior year. Unless otherwise stated. Lastly, we will be providing a copy of our prepared remarks on our website at the conclusion of today’s call and a full transcript and audio replay will also be available soon after the call.

Okay, let’s turn the call over to Steve.

Steve Cooper — Chief Executive Officer

Thank you, Derek, and welcome everyone to todays call. Given the macroeconomic climate, we are pleased that demand for our services, was right in-line with our expectation. Our PeopleReady business, is one of the first to feel the impact from a change in macroeconomic conditions. Given the short-duration of job assignments and the project-based nature of it services. After experiencing the first signs of a slowing demand during the second quarter last year. The underlying revenue trends at PeopleReady have been steady since October. As we expected our PeopleScout and PeopleManagement businesses followed suit with slower demand trends during the first quarter this year, as some clients trimmed their human capital spending due to macroeconomic uncertainty, despite many clients having open positions. This led to overall revenue of $465 million, down 16% compared to Q1 2022.

Because of these anticipated trends, the PeopleScout and PeopleManagement teams were proactive. Taking swift actions late in the quarter to reduce costs, to ensure the operating structure with more in-line with demand. Our teams were also able to maintain pricing discipline throughout the quarter and deliver another quarter of positive bill pay spreads in our PeopleReady business.

Turning to the segments, PeopleReady is our largest segment. It represents 56% of total trailing 12 month revenue and 57% of total segment profit. PeopleReady is a leading provider of on-demand labor and skilled trades in the North American industrial staffing market. We service our clients via national footprint of physical branch locations, supported by our JobStack mobile app. Revenue for the quarter was down 17%. As a reminder, in the first quarter of 2022, PeopleReady benefited from a demand surge across the business as our customers were in desperate need of labor during the post COVID recovery. Creating a year-over-year headwind.

Netting these factor aside, our sequential revenue trends remained consistent with typical historical patterns. PeopleScout is our highest margin segment, representing 14% of trailing 12 month revenue and 33% of total segment profit. PeopleScout is a global leader in filling permanent positions through our recruitment process outsourcing services. PeopleScout revenue declined 15% in Q1 as a result of a reduction of permanent job openings at our clients. We have seen some clients slow hiring, while others have paused activities altogether. PeopleManagement represents 30% of trailing 12 month revenue and 10% of total segment profit.

PeopleManagement provides on-site industrial staffing and commercial driver services in North-America. The essence of a typical PeopleManagement engagement is supplying an outsourced workforce that involves multiyear, multimillion dollar onsite or driver relationships. Revenue was down 13% in Q1. We have seen less volume at the e-commerce warehouses for our onsite retail clients as consumer spending patterns have shifted.

Now I’m going to spend a few minutes talking about our strategies. Our strategy at PeopleReady is to digitalize the business model, to gain market-share, improve efficiency and take the friction out of each step of the transaction with associates and customers. The United States temporary day labor market is highly fragmented and primarily made up of smaller competitors in the industrial staffing segment where PeopleReady operates. This market is also less complex than other types of staffing and has the best opportunity for digitalization. Our smaller, more regional competitors lack the ability to invest in digital applications like JobStack. When combined with our expansive brick-and-mortar branch network, we are a one-stop shop for national and local accounts. Making us a leading provider within the on-demand industrial staffing market.

At PeopleScout, our aim is to capitalize on the strong service reputation and ability to hire in high volumes to gain market-share within the RPO industry that has consistently produced double-digit annual revenue growth in favorable economic conditions. PeopleScout is a market-leader in the RPO space as a result of its people and Affinix our recruiting platform. Those enables us and place better talent faster in all types of market conditions. As we move forward, we plan to target new high-growth sectors for us, such as life sciences and technology. Our positive track-record of penetrating health-care, depth of experience and our technology makes this possible. PeopleManagement strategy is to supplement our traditional onsite staffing services with higher-margin product offerings like onsite workforce solutions and commercial trucking, as well as expand geographically within the United States to increased market-share.

We believe we are positioned well for a strong recovery as we serve customers in some of the fastest growing segment and we have taken the proper steps we nimble, yet strong in our preparation to be the supplier of choice in connecting people and work.

Now. I will turn the call over to Taryn, who will discuss specifics on some key priorities this year.

Taryn Owen — President and Chief Operating Officer

Thank you, Steve. From a big-picture perspective this quarter provided a solid proof point for the value of our flexible business model. We struck a careful balance between ongoing investments in our people and technology and cost actions to align with client demand. At PeopleReady, the investments in our people are paying-off. First, we have made a concerted effort to maintain staffing levels in the field. In addition, we have enhanced our sales training with the on-demand business and have embedded account managers to cover new markets within skilled trades. These tactics are playing a key role in the steadiness of our underlying revenue trends.

At PeopleScout and PeopleManagement, we have leveraged our scalable model to align with lower hiring activity from our clients. We scaled down with agility late in the first quarter in an effort to bring our cost structure in-line with demand. And just as we did during the COVID downturn, we are staying extremely close to our clients so that when they return to expansion mode, we will be there to meet their needs and scale back up with the same urgency and effectiveness.

Now. I would like to provide some updates on the priorities I discussed during our last call. We are in the midst of a multi year digital transformation. Investments in our platforms are essential and will help us better service our clients, attract workers and support our people. Our PeopleReady JobStack application and PeopleScout Affinix recruiting platform enables us to provide differentiated experiences to those we serve. With JobStack, we are focused on attracting and retaining more associates by enhancing their overall experience. We are on track with various upgrades, including faster associate registration and simplifying the time entry process. These product enhancements will lead to increased client fill rates and increased associate retention, both of which will lead to higher customer satisfaction and ultimately more wallet share. Affinix is our PeopleScout recruiting platform designed to meet candidate expectations for a seamless experience. Affinix combines many facets of the recruiting process including recruitment marketing, applicant tracking, Candidate Relationship Management and interviewing to quickly bring a highly qualified talent pool to our clients. As I mentioned the flexibility of our business model, it’s critical to our clients. The agility of Affinix that fills this need, allowing us to scale-up and down to meet their hiring needs.

While, technology is an important business enabler, our relationships with our clients, candidates, associates, and employees are essential to our success. Our employees fulfill our mission to connect people and work each and every day. Our team has worked hard to ensure that our people have the right tool, training and skills to meet our clients’ needs and they continue to broaden the depth of our learning and development activities with a concentration on-sales effectiveness. By enhancing the team’s ability to bring solutions to our clients, while maintaining the appropriate staffing levels across our business, we are positioned to meet our clients’ demands across all business cycles. I look-forward to providing further updates on our technology and people priorities on future calls.

I’ll now pass the call over to Derrek, who will share further details around our financial results.

Derrek Gafford — Chief Financial Officer

Thank you, Taryn. Total revenue for Q1 2023 was $465 million, a decrease of 16% and in-line with our outlook. As we’ve mentioned PeopleReady benefited from a demand surge in the prior year period as the peak of the post COVID recovery left our customers in desperate need for labor. As expected, the surge did not repeat this year contributing 9 percentage points of total revenue decline. The remaining 7 point decline reflects the company’s underlying revenue trend.

Given the macroeconomic climate, we are pleased to see another quarter of steady underlying revenue trends in our PeopleReady business. With weekly sequential revenue trends following typical historical patterns. As we mentioned last quarter, during times of macroeconomic uncertainty, we typically see the first signs of slowing demand in our PeopleReady business due to the project based nature of the work and short length of job assignments. And that is exactly how things have played out over the last 12 months. PeopleReady was the first to experience slowing demand and the PeopleScout and PeopleManagement businesses followed suit this quarter.

We posted a net loss of $4 million this quarter, down from net income of $11 million in Q1 last year, while adjusted EBITDA declined to $3 million versus $23 million in Q1 last year, due — primarily due to the revenue decline. As a reminder, Q1 is seasonally our lowest revenue quarter, creating a more pronouncing impact on year-over-year profitability. The net loss experienced this quarter is not indicative of our expectations for the remaining quarters this year.

Gross margin of 26.5% was up 110 basis points. The expansion was driven by better workers’ compensation results from the favorable development of prior year reserves. As well as disciplined pricing in our PeopleReady business. Our PeopleReady business delivered its eighth consecutive quarter of positive spread between bill rate and pay rate inflation.

SG&A as a percentage of revenue increased 450 basis points, mostly due to operational deleveraging, given the revenue drop, which is magnified by the first quarter being our seasonal low-point in revenue. SG&A dollars increased $2 million or 2%, primarily due to people investments in the PeopleReady business. As discussed on prior calls, we believe, we reduced our staffing levels too low during the recession of 2020, leaving some of our PeopleReady branches without adequate resources to acquire new customers and maintain strong relationships with existing customers. Q1 head count this year is consistent with head count in Q3 and Q4 of last year, but up a bit from Q1 last year. While we are not planning on making additional investments in our staffing levels at this time, we do believe the people investments we made last year have had a role in maintaining a steady underlying revenue trend over the last two quarters, despite economic uncertainty increasing.

For PeopleScout and PeopleManagement, we’ve taken a different path. Revenues softened during the quarter and we took action to reduce our costs. As a result, we expect to yield of $11 million in cost-savings over the remainder of 2023. About a quarter of the savings will flow-through cost of services with the remainder flowing through SG&A. Our effective income tax-rate was a benefit of 13% and in-line with our outlook.

Now lets turn to the specific results of our segments. PeopleReady revenue decreased 17%, while segment profit decreased 95% and segment profit margin was down 500 basis-points. As we’ve mentioned, PeopleReady benefited from advanced search in the prior year period, which accounted for 16 points of year-over-year decline. The remaining decline of one point reflects PeopleReady’s underlying revenue trend for the quarter, which was roughly in-line with the underlying revenue decline for this business unit in Q4 2022.

The drop-in segment profit and related margin came from the revenue decline and operational deleveraging, which were partially offset by lower workers compensation expense and favorable bill pay spreads. Bill pay spreads have remained strong with bill rates up 7.9% and pay rates up 7.1% resulting in a positive spread of 80 basis-points. PeopleScout revenue decreased 15%, while segment profit decreased 19% and segment profit margin was down 60 basis-points. As expected, RPO business volumes declined this quarter as clients responded to the macroeconomic environment. We’ve seen some clients slow hiring, while others have paused their hiring activity is taking a wait-and-see approach. With the cost-reduction actions previously discussed, our goal is to generate a segment profit margin of 10% to 15% over the remainder of 2023 assuming stable macroeconomic conditions.

PeopleManagement revenue decreased 13% with segment profit dropping to breakeven and segment profit margin was down 190 basis-points. Demand declined in both onsite and commercial driving services as economic uncertainty led to lower client volumes. Most notably in retail and transportation, the decline in segment profit and related margin was mainly due to the decrease in revenue and the associated operational deleveraging.

Now let’s turn to the balance sheet and cash flows. Our balance sheet is in great shape. We finished the quarter with $47 million in cash and no outstanding debt. The business produced cash-flow from operations totaling $9 million. We repurchased $25 million of common stock during the quarter, leaving $64 million remaining under our authorization.

Now I’d like to take a moment to provide additional color on some forward-looking items. We expect a revenue decline of 14% to 10% in Q2 2023, which is an improvement to the 16% decline posted in Q1 this year. The improvement is tied to a less challenging prior year comparison. One last thing before I wrap up. As a reminder, the 2023 fiscal year will have 53 weeks, which is a typical occurrence every five to six years since we operate on a 52 week fiscal year versus a calendar year. This extra week will provide incremental revenue for the year of $22 million to $27 million, but will not contribute additional profit as the 53rd week is an annual low-point for weekly revenue.

For additional details on our outlook, please see our earnings presentation posted to our website today. This concludes our prepared remarks. Operator, please open the call for questions.

Questions and Answers:

Operator

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions]. One moment please while we poll for questions. Thank you. Our first question is from Karthik Mehta with Northcoast Research. Please proceed with your question.

Kartik Mehta — Northcoast Research — Analyst

Thank. Maybe just your thoughts on what the first few weeks of April’s look like and maybe the trends you saw coming out of the quarter in start of the next quarter, if you saw any changes?

Derrek Gafford — Chief Financial Officer

Hi, Kartik, it’s Derrek here. So let me just touch on that question for the quarter, the monthly trends, and maybe then I’ll just ease into April to ramble together. So the monthly trends in Q1, are very similar to the 16% decline, everything was within a point or two of that. So not much volatility in that and we finished right around that level. Going into April, the year-over-year decline at PeopleReady is diminishing, that’s really though, all about the prior year comparison being less challenging. We’ve talked about the surge that we’ve had in our prior year comparison for Q4 and here in Q1 that gets less challenging as we move into Q2. Now that’s really for the staffing side of the house from PeopleScout perspective while we haven’t posted our revenue any — here in Q2 we bill monthly. One thing that. I will bring up is, we do expect a year-over-year decline to increase for PeopleScout. It’s less about the sequential revenue dropping off more, although there might be $2 million or $3 million. It’s more due to Q2 of last year was a record quarter for PeopleScout everywhere, both in revenue. bottom line, dollars. The segment profit margin of 23% was a high point. So that — that’s providing a more challenging comparison across a few fronts, most notably on the revenue line. So you might see PeopleScout up closer to a 25% decline in Q2.

Kartik Mehta — Northcoast Research — Analyst

And then. Just from your perspective as you look at your end-markets, what differences are you’re seeing in end-markets, if any?

Derrek Gafford — Chief Financial Officer

Sure, well, there’s probably two or three high points and some low points. I guess you could call it here dependent on your take, given the environment. Probably one of the biggest movers for us was in the area of retail. The retail business for us is down 40% year-over-year here in Q1. The majority of that is about the prior year comparison, we had a lot of projects in this surge that we had in the prior year period at PeopleReady, a lot of it had to do with retail. That said, there is a little bit of softening in the run-rate with retail as well, while retail spending on the consumer side is actually holding up pretty well if you talk to our customers, the main thing we’re seeing is some slow downs in retail, it’s really about inventory levels, which. I think is pretty consistent with the increase from a broader perspective on inventory levels across the United States. So that’s on the manufacturing and the retail side, a high point. Is our energy business. Our energy business, renewable energy business is up about 45%. That’s a business that it’s about an $80 million run-rate and an increasing. It’s one that we’re very excited about and bullish about.

So maybe I’ll turn that one over to Taryn and — give you a little bit more operational color on that, that Business unit.

Taryn Owen — President and Chief Operating Officer

Sure, thanks, Derek. Certainly the government incentives that were put in-place this year have helped fuel some opportunities for us in the renewable energy space, particularly within solar farms. We are a leader in this space with over a decade of experience. But when we start to look at our new business wins and the pipeline that has been growing here, we’ve got just a tremendous pipeline, it’s grown 10 times over prior year and our RFP volume is really healthy. We’re responding to over 10 opportunities each and every week here as we exit Q1. So we’re really bullish on this on this opportunity for PeopleReady.

Kartik Mehta — Northcoast Research — Analyst

And there are two — one last question, as you look at, trying to right-size the business we’ve made cost cuts. I wonder how much will play into not losing quality people, since it’s been so hard. So do you think this time around, you might be a little bit conservative and not right-size the business as much as it was a normal type of recession or a normal type of labor environment?

Derrek Gafford — Chief Financial Officer

Yeah, I’m glad you asked that question, you know, when when we’re drilling we’re we’re investing and when we’re not growing we’re making adjustments and you saw some of those adjustments that we made here this quarter in our PeopleManagement particular our PeopleScout business. Those are hard adjustments for us to make, but we think they were smart adjustments to make and what. I mean by that is, whenever we’re doing any type of cost to work, we’re trying to make a balance between the benefits that will come from reducing the cost structure and our ability to grow long-term gross profit dollars. In this particular case actions that we took in Q1, while tough, impact to some people, which we don’t like to do. We don’t think that that made any hampering of our ability to spring back strong after, well we’ll see if we go into recession, but when things get to better times and the economy starts growing, more robust pace, we think that won’t hold us back at all.

Over on the PeopleReady side, we’ve taken a different route. We have not cut positions there. matter of fact, our head count is up about 121 or 130 over Q1 last year, but stable with where we were in Q3 and Q4. And we cut a lot of costs in 2020. A lot of those costs are still out-of-the business and at the end-of-the day, we look-back at what we did in 2020 and just said we cut too far, we can’t run branches in the way that we want in local markets without branch managers. We can’t run branches with two people, at least not effectively. So we want to keep ourselves positioned really well for the long-term and hold onto good people that know our business. They know-how to interact with customers and as much as we’re making progress on the digital front, this is still a relationship business and we’re going to stay true to that. So, that’s kind of how we’re taking a look at things, Kartik.

Kartik Mehta — Northcoast Research — Analyst

Thank you very much for your thoughts. I appreciate it.

Operator

Thank you. Our next question comes from Jeff Silber with BMO Capital Markets. Please proceed with your question.

Jeff Silber — BMO Capital Markets — Analyst

Thanks so much. That’s close enough. Derrek you were kind of enough to give us a little bit of color on the segment data in terms of revenues. I think you mentioned PeopleScout, can we get the same kind of color for both PeopleReady and PeopleManagement for 2Q guidance?

Derrek Gafford — Chief Financial Officer

Oh! as far as what we’re expecting from a revenue perspective that’s embedded in the overall guidance?

Jeff Silber — BMO Capital Markets — Analyst

Yes please.

Derrek Gafford — Chief Financial Officer

Yeah, you bet. So we gave ranges. I’m not going to quote ranges to you. I’m just going to go with the midpoint of the ranges and give you some numbers. So we’d expect PeopleReady to be down about 7%[Phonetic]. PeopleScout to be down about 25% and PeopleManagement to be down around 10%.

Jeff Silber — BMO Capital Markets — Analyst

Okay, forgive me if you gave that, I must have missed that, I appreciate it. In the quarter, you had a workers’ comp benefit in terms of I guess it’s a recouping some of the reserve. What drove this and can you remind us when you update this reserve, is it quarterly or semi-annually and should this be something we should expect going-forward?

Derrek Gafford — Chief Financial Officer

Well, we get an independent — actually we report every quarter. So we always keep a watchful eye on the workers’ compensation reserves. Both the current year reserves and we should be [Technical Issues] going forward, as well as where reserves should be in prior years. Yeah, so we did get a sizable decrease to reserves in the prior years. As we take a look at the rest of the year, we’d expect there to be a little bit of a headwind from workers’ comp. We’ve put up some sizable benefits to in the back-half of 2022, and so if you take a look at our gross margin guidance while we’re up Q1 — this year over Q1 last year, we’re expecting gross margin to be about flat for the year. Some of that because of workers compensation, some of that’s because of — we expect bill-pay spreads. they still stay positive but diminished some as we move through the quarter. So that gives you a little bit of color on workers’ compensation. Jeff and expanded to cover the gross margin line and whole.

Jeff Silber — BMO Capital Markets — Analyst

Okay, that’s really helpful. If I could sneak in one more. You have applied here about the strength in your balance sheet and again, very impressive, especially in this kind of environment. From a capital allocation perspective, I know you bought back about $25 million in shares last quarter. What should we expect going-forward, more of the same? Are you taking advantage of maybe some did you know what’s going on in the market to potentially pick-up some M&A, any color would be great?

Derrek Gafford — Chief Financial Officer

Yeah. You bet. Well, when it comes to capital allocation strategies. Our first priority is reinvesting in the business and we’ve got a healthy amount of capex, that’s not an area that we have cut-back on and when I say capex, the vast majority of this is about technology. Our business and industry is becoming more digitalized all the time. We’re a leader there. We want to stay a leader in that. And. We’re going to stay committed to that, both to differentiate ourselves in the marketplace and take advantage of the strong operating leverage that we’ve got, but also to increase our efficiency. So that’s job number-one.

Job number two would be on the acquisition side. Probably less so on the staffing business side, we got our hands full with a lot of great stuff digitalizing the business, and we think that’s our best return at this particular moment, is just continuing our focus there. On the RPO side, that’s a different — that’s a different ballgame. We are interested in doing some acquisitions that would give us a greater presence in different niches of different industries. To get us into more deals, win more deals and potentially some on an international basis that would increase our likelihood of winning multinational deals. And then lastly, as you pointed out here, return on capital back to shareholders is important to us, especially, advantageous prices and we think our company right now at this particular moment is valued very economically. So we did buy back $25 million of stock. We also see when you take a look at the 10-Q in-between the close of the quarter and the end of last week, we bought back about another $10 million. So, that’s kind of how we see our capital priorities at this point in time, Jeff.

Jeff Silber — BMO Capital Markets — Analyst

Okay, thank you so much for the color.

Operator

Thank you. Our next question comes from Mark Marcon with Baird. Please proceed with your question.

Mark Marcon — Robert W. Baird & Co — Analyst

Hi. Good afternoon, everybody. Wondering. Steve or Taryn can you talk a little bit more about some of the markers in terms of the digitalization strategy and JobStack and what further improvements should we see with regards to the ease for people to register and what do you think that would translate to from a business perspective.

Steve Cooper — Chief Executive Officer

Hey, thanks, Mark. For the question. Here, it’s an important topic for us taking the friction out-of-the transaction between our associates and ourselves. Not making it so difficult. So your question is right in the middle of the bull’s-eye of what we think is important and what we’re working on for digitization. The — with the customer, it’s not appearing to be the most important thing, but we still want to take friction out of that transaction and help them be able to order workers as fast as possible. So let me have Taryn talk a bit more about those specifics, but I kind of wanted to chime in first, to let you know that. It remains our highest priority taking this friction out of it — a pretty complicated process of finding a job for somebody and we can make it easier and we stay committed to that.

Taryn Owen — President and Chief Operating Officer

Yeah, I’ll just add some color. Certainly JobStack has allowed us to maintain constant contact with our customers and our associates and when we look at some of the — some of the enhancements that we’re making, it’s really around taking some of that friction out as you mentioned, Mark, in terms of allowing associates to register for a job faster, which just really reduces the time it takes to get them on assignment and to get paid.

One of the other key enhancements, we’re working on is to improve the ease of time entry and approval. So again, our associates can get paid faster and be ready to take their next assignment with us. But when you think about kind of everything that we’re doing in the product to enhance that experience, it’s really about taking that friction out and ensuring that our associates and customers can engage with us in an effective way in the way in which they want to engage.

Mark Marcon — Robert W. Baird & Co — Analyst

Can you elaborate a little bit on that Taryn, just like — how long does it take the average person to register? How — what’s the goal in terms of like registration speed? And then you used to give us some metrics in terms of the percentage of jobs that were filled through JobStack on the PeopleReady side, do you have any updates there, just in terms of some of the typical metrics that you used to give us?

Taryn Owen — President and Chief Operating Officer

Yeah, sure. So when we think about the amount of jobs that are filled through the app about 2/3 of all of our jobs at PeopleReady are filled through that experience. We have up to 90% of our associates utilizing the app and we’ve had 30,000 customers engaging at any given time. So that’s remained pretty consistent for us. In terms of registration, we are — we’re just looking to reduce the number of steps it takes for an associate to to get registered with us. So, we want them to be able to register and get out on assignment with — in 10 minutes or less ideally for us to go through the process and it really depends on what kind of a job and associates looking for and what kind of pre-employment qualifications are required for any particular customer, but when you think about an associate being able to register quickly and get engaged, see jobs take jobs with the appropriate requirements we want them to do that very quickly.

Mark Marcon — Robert W. Baird & Co — Analyst

Great. And then I’m wondering just from a macro perspective, it’s great to hear that you’re trends particularly on the PeopleReady side had been consistent with normal historical seasonal patterns on a week-by-week basis and kind of holding flat. How do you — where do you think we are from a from a macro perspective, because a lot of the data points that our national and mildly disseminated seem to be getting a little bit worse, and so, do you think we’ve seen the worst of it or how are you thinking about that?

Derrek Gafford — Chief Financial Officer

Hi Mark, it’s Derrek here, I’ll take that one. If you talk to our customers, lot of our customers have to say, there is an increasing amount of uncertainty. Some of it’s about those data points that are edging themselves down. A lot of it too has to do with an accumulation of a lot of negative press. Over the last 20 years, I don’t think there’s been any recession If we — in fact, we have one that’s been misanticipated. So there’s been a lot of news out there and it accumulates and it makes an impact on confidence. And that uncertainty has showed up in some other metrics. You take a look at the back-half of last year and the economy did grow at a pretty decent cliff, all things considered, but it’s all coming from the consumer. Business investment was negative. I’ve never seen our industry grow when business investment is negative. So those are the cloud, I think, you know the bright spot the sun breaks, if this is a weather forecast is the job market.

The talent pools are still really tight, most of our customers expect them to remain that way and they are holding onto their employees. They are holding on their employees and employees are getting some confidence from that, they’re continuing to spend. I mentioned that because what it comes down to for a lot of our customers is if there is a recession, because of where we’re at with tight labor pools and a reluctance to lay people off, which as you know most every severe recession has widespread job layoffs. The job layoffs has a cascading impact on consumer spending and then adding the business investment. And most of our customers are just aren’t anticipating that. So, I don’t know, Mark, if we’re through the worst of it or not, but from what we’re hearing from our customers if we do get into something, most are expecting this to be relatively shallow to what we’ve seen recessions over the past 20 years.

Mark Marcon — Robert W. Baird & Co — Analyst

Great. And then can you give us an update with regards on the PeopleReady side, what you’re seeing on the construction side.

Derrek Gafford — Chief Financial Officer

Yeah, construction has actually been a little — one of the more resilient industries. So. Taryn already talked to you about our renewable energy, that part of construction, which has been growing quite nicely for us and we’re optimistic about. When it comes to construction overall, excluding that piece of the business. So kind of your bread-and-butter, commercial and residential that was down 7%, which was a slight improvement to being down 11% in Q4 of last year.

Mark Marcon — Robert W. Baird & Co — Analyst

That’s great to hear. And on the renewable side, how big could that part of the business, get to over the next couple of years?

Derrek Gafford — Chief Financial Officer

Well, it’s, it’s hard for us to say but — to give a number on this. But the amount of investment that — incentives that were put through last year it’s huge. Our pipeline is — is continuing to grow, we’ve got a lot of experience in this industry. So there have been times when in this industry where we’ve had other peaks. This is something with the level of reinvestment, that’s coming from the incentives that are out there. This is something that we can see can have multiple years and lots of legs behind it. So hard for us to give a number on it, but I can tell you that we grew 45% here in Q1. Our guidance for Q2 in that particular segment is to grow about a similar amount. So what we’re seeing right now looks pretty good, Mark?

Mark Marcon — Robert W. Baird & Co — Analyst

That’s great to hear. Thank you.

Steve Cooper — Chief Executive Officer

Yeah, I’ll throw on that, Mark. Hesitate to talk about our own preparedness. Not just the size of the environment or the size of the opportunity that’s growing. I don’t believe we’ve ever been as prepared as we are for an opportunity like this, so. I think you match the two up. And it’s real solid.

Operator

Thank you. Our next question is from Marc Riddick with Sidoti and Company. Please proceed with your question.

Marc Riddick — Sidoti & Company, LLC — Analyst

Hi, good evening, everyone.

Derrek Gafford — Chief Financial Officer

Hey Marc.

Marc Riddick — Sidoti & Company, LLC — Analyst

So what is the — first of all, thank you for the forward-looking commentary in the presentation and certainly and prepared remarks. I was wanted to talk a little bit about. I think you made mentioned as far as bill-pay spreads and the positive of what you saw there, I was wondering how that figures into your forward commentary maybe what you’re — what you’re thinking for the second quarter/remainder of the year as far as bill-pay spreads? And how resilient that can be? And then I have one last follow.

Derrek Gafford — Chief Financial Officer

Yeah, thanks for that question, Marc. So the spread between bill rates and pay rates was 80 basis-points here in Q1. Our outlook for the entire year of 60 basis-points. So that gives you some idea of how we’re expecting things to kind of phased down a little bit throughout the year. We expect bill pay spreads to remain positive, because we’re not expecting widespread job cuts. If that were to happen, that’s a whole different ballgame. The reason that we’ve got some diminishing bill pay spreads, It’s just the environment that we’re in. Look the Fed has been really clear about their monetary policies, pretty restrictive policy. it’s going to be with us for a little bit and because of that, we would expect some more belt tightening to happen with with our customers.

That said, we think we’re providing a really good value in our PeopleReady business, labor is still tight, we’re able to find it quickly and we’re finding really good talent for our clients. And the economics are showing themselves in the bill pay spreads. So that’s kind of how we would expect to see it play-out. The rest of this year, Marc, the other thing is we we want, we want to be compensated for the value that we’re providing, but we also want to make sure that we don’t price ourselves out-of-the market. This — everything is going to turn at some point and we want to make sure our business, we have the right people in-place, we have the right technology investments and then our price point, we don’t want to be the cheapest in-town, by any means, but we don’t want to be head and shoulders above the rest when things turn to make sure that we’re still in the right ballpark when it comes to pricing, to capture the opportunities that come with a rebounding economy.

Marc Riddick — Sidoti & Company, LLC — Analyst

Excellent. And then I would be remiss to not sort of acknowledge there has been some announcements of leadership and appointments in various areas over last few quarters as well. So just a couple of weeks ago. So, I was wondering you could talk a little bit about some of of those and maybe if there are other sort of key areas that may need still to be filled and maybe sort of where we are in that process, because certainly congratulations to those who are in the roles, but I’m sort of wondering sort of kind of your sort of toward the end of that process. As far as the those important leadership appointments.

Steve Cooper — Chief Executive Officer

Well, Marc, thank you for the question and. I know it’s not an easy one to ask, but we are excited about the three promotions that were announced a few weeks ago. All very much. Customer and operations focused roles and it really excites us to to see people prepared inside, well-trained, ready, been here experience been in multiple positions before they were promoted. I’m going to Taryn talk about these three roles that we just announced a couple of weeks ago, they report to her and they’re helping her meet her objectives and operations. I think it’s best coming from her to talk about these three people, but yeah, it’s really exciting. So thank you for the question there.

Taryn Owen — President and Chief Operating Officer

Yeah, thank you, Mark, really happy to talk about this. So Kristy Willis was promoted to the president of PeopleReady. Kristy has been with PeopleReady since 2018, recently serving as our Head of Sales and Operations. She brings 20 years of experience in all aspects of the staffing industry. Rick Betori has been promoted to the president of PeopleScout, Rick has been with TrueBlue since 2011 and has broad experience across our business units, both in digital transformation and in operations. He most recently served as PeopleScout’s Managing Director of the Americas. And then, Caroline Sabetti was promoted to the Chief Marketing and Communications Officer for TrueBlue. She has been with us since 2002, and she has served as Chief Marketing Officer for PeopleReady and PeopleScout and as the Senior Vice-President of Communications for TrueBlue. So we couldn’t be more excited for these three individuals or for the organization as they take on this role.

Marc Riddick — Sidoti & Company, LLC — Analyst

Excellent, thank you very much.

Operator

Thank you. There are no further questions at this time. I would like to turn the floor back over to Steve Cooper for closing comments.

Steve Cooper — Chief Executive Officer

Thank you. We sure appreciate you dialing-in and your questions and your interest in TrueBlue and and we remain committed to the shareholder. At this point in time on these principles, we’ve talked about today and look-forward to updating you on our next call.

Operator

[Operator Closing Remarks]