Q2 2020 TrueBlue Inc Earnings Call
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Ladies and gentlemen, thank you for standing by welcome to the Trueblue second quarter 2020 earnings call. At this time all participants are in a listen only mode. After the speaker presentation. There will be a question answer session to ask a question during the session you'll need to press star one on your telephone.
If you require any further assistance. Please press star zero I would now like to hand, the copper and silver to your speaker today Derrek Gafford. Please go ahead.
Good afternoon, everyone and thank you for joining todays call.
I'm joined by our Chief Executive Officer, Patrick Burrell.
Before we begin I want to remind everyone that stays call on slide presentation.
Contains several forward looking statements.
All of which are subject to risks and uncertainties and we assume no obligation to update or revise any forward looking statements.
These risks and uncertainties some of which are described in today's press release and in our SEC filings.
Could cause actual results to differ materially from those in our forward looking statements.
We use non-GAAP measures when presenting our financial results.
We encourage you to review the non-GAAP reconciliations in today's earnings release.
Trueblue Dot com under the Investor Relations section, where 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 her prepared remarks on our web site at the conclusion of today's call.
And a full transcript an audio replay will also be available soon after the call.
With that I'll turn the call over to Patrick.
Thank you Dear and welcome everyone to todays call. We appreciate you joining us this afternoon as we all navigate these unpredictable timing.
I want to thank our employees associates and clients for their outstanding effort to safely serves the needs of our communities and essential businesses over the past several months.
We will continue to face revenue challenges until the economic recovery from covered 19 gained greater momentum and clients or more fully back on their feet.
But our access to reduce expenses are paying off while allowing us to help maintain our profitability and balance sheet strength.
Turning to our second quarter results, we experienced a significant decline in the demand for our services during the quarter.
Total revenue was down 39% and we posted a net loss of $8 million or 23 cents per share.
We saw moderate demand improvement towards the ended the quarter, which continued into July.
In light of these trends, we expect the second quarter to be our trough, though full recovery will take time and the pace of the recovery may vary by segment.
On that note, let's turn to our segment results.
People ready is a leading provider of on demand labor and skilled trades in the North American industrial staffing market.
People Reddys revenue was down 43% during the quarter and we saw modest intra quarter improvement with revenue down 39% in June versus down 46% in April.
People management as a provider of contingent onsite industrial staffing in commercial driving services in the North American industrial staffing market revenue for people management was down 23% during the quarter and snap back well is the quarter progressed with the top line down 16% in June versus down 30%.
In April.
And comparing people ready and people management's performance.
Or two key points to note.
First is client mix.
People ready has a higher exposure to hit sectors, such as hospitality and construction.
As people management's client mix towards more favorably supporting ecommerce supply chains for instance.
Second is an outsourced versus supplemental dynamic the essence of a typical people management engagement is supplying an outsourced workforce that involves multiyear multimillion dollar onsite relationships.
These type of client engagements tend not to be impacted as much as people ready typical engagement, which involves deploying supplemental labor were shorter duration assignments. We saw this dynamic in the previous recession as well.
Turning to our last segment Peoplescout is a global leader in filling permanent positions through our recruitment process outsourcing and managed service provider offerings revenue was down 53% during the quarter.
Peoplescout results were particularly impacted by exposure to large travel and leisure clients.
Now I'd like to shift gears and talk in more detail about our operations as strategic focus in the wake of the covered 19 crisis.
The health and safety of both our employees and our clients remains front and center and everything we're doing right now.
Last quarter, we talked about the comprehensive measures implemented across our brands to keep our workers and clients healthy unsafe, including heres the guidelines from the CDC WH go Osha and other key authorities.
The good news is that these plans are working.
I will go into all the detail on this call here a few highlights.
First trueblue is providing masks for all his staff and associates since the start of the crisis, we've distributed approximately 120000 masks across our staffing brands.
Second we have symptom checks before entering the building at all of our onsite locations and we've distributed over 600 infrared thermometers for branch offices and job sites that requested or required them.
Third as in any crisis communications is essential.
We've established a resource center for staff and safety specialists regularly meet with operational teams and clients to discuss the latest guidelines.
Fourth.
We have creatively adapting the way we run the business, including the introduction of driving job fairs, and supporting our corporate staff. So they can work from home.
Turning to our key initiatives the progress we've made on our digital strategies is more important than ever is helping to serve our clients by connecting people with work, we filled 551000 shifts to be a job stack in Q2 2020, representing an all time high digital fill rate of 53%.
Our client user count ended the quarter 24300.
Up 38% versus Q2 2019.
Rob Tech has the obvious advantage of allowing us to remotely dispatch workers straight from home to the job site.
But it has also become a cornerstone to keep our contingent employees safe by providing routine and job specific health and safety notifications.
The other initiative, we've been working on as digital Onboarding, which allows associates to complete their application entirely on their smartphone.
Rather than physically going into a branch office.
This new technology has been deployed in all 50 states and early results are favorable.
Digital Onboarding has resulted in people ready cutting the medium time to complete and application in half.
And not surprisingly, we're seeing substantially higher percentages of workers, completing the hiring process and being put to work.
It's still early days for digital Onboarding, and we'll have more to share in coming months.
Last quarter, I mentioned that our sales and operations teams, we're developing former bounce back strategies to assure we are well positioned when our economy's begin their reopening efforts and I'd like to take another minute to share a few highlights.
And people ready, we're focusing our sales efforts on heightening the areas such as Reconfigurations for social distancing.
And change outs for out of season merchandise, we won several new client engagements from these efforts.
We've also implemented centralized tracking of competitor closures. So we can target customers, who need a new supplier of labor.
In addition, we're working on tapping a broader worker pool as digital Onboarding becomes a reality.
At people management, we're targeting essential manufacturers and leveraging our strength in E. Commerce. These are verticals that have held up well relative to decline and non essential goods at traditional bricks and mortar retailers.
At the same time.
We're also focused on consolidating client wallet share since consolidation brings natural economies of scale.
Finally at Peoplescout, where supply work supporting clients that laid off their in house recruitment teas and it had some recent success is focused on project higher.
In closing I remind everyone that even if the covert 19 pandemic, an economic crisis have forced everyone to rethink.
The way they do business, our underline mission here at Trueblue remains the same.
Connecting people with work is more important than ever we remain dedicated to the health and safety of both our employees and our clients. We're committed to our digital strategies, and we're making choices to preserve and enhance the long term strength of our operations.
Ill now pass the call over to Dare, who will share greater detail around our financial results.
Thank you Patrick.
Total revenue for Q2 2020.
359 million.
Representing a decline of 39%.
We posted a net loss of 8 million or 23 cents per share.
Adjusted net loss of 4 million or 12 cents per share.
Adjusted EBITDA was a loss of 5 million down from a profit of 34 million in Q2, 2019, primarily due to lower revenue and gross margin.
Gross margin of 23.2% was down 340 basis points.
Peoplescout contributed 240 basis points of compression.
With 80 basis points from severance.
And 160 basis points from client mix and lower volume.
Our staffing businesses contributed another 100 big voices points of compression.
From unfavorable mix and from pricing.
While bill rate inflation was consistent with our trend over the last couple of quarters.
Saw an increase in pay rates that were necessary to attract associates, given cobot 19 health concerns.
And supplemental federal unemployment benefits.
We do not expect gross margin compression in the back half of 2020 to be as pronounce it was in Q2.
Which I will discuss more on my future outlook commentary.
Turning to SGN, a I'm pleased to report that our cost management strategies are on track.
A quick actions, we took in March reduced expense by 29 million.
Or by 23% compared to Q2 2019.
We had an income tax benefit this quarter.
A 13 million.
Which equates to a 62% effective rate on our pre tax loss of 22 million.
Given our losses. This year, we expect our income tax benefit rate to stay elevated this year due to the semi sticks nature of work opportunity tax credits.
And the carriers Act, which allows us to carry back pre tax losses to periods when the federal income tax rate was 35%.
Beginning in Q2, 2020, we will not be making any adjustment to the GAAP tax rate.
In our adjusted net income calculation until our profitability rises to a more substantial level.
Additional information on the components of our effective tax rate is available in our 10-Q filed today.
Turning to our segments Peopleready, our largest segment representing 62% the trailing 12 month revenue and 71% of segment profit.
About 43% decline in revenue and segment profit was down 97%.
We did see modest intra quarter improvement with June revenue down, 39% compared to 46% in April.
For the first three weeks in July Peopleready was down 31%.
For 33%, excluding the benefit from fourth of July falling on Saturday this year versus Thursday last year.
We are cautiously optimistic that of revenue trends for staffing businesses will continue to improve.
However, we recognize the rising number of cobot, 19 cases, and the potential negative business impacts from corrective actions to reverse these trends.
On a positive now.
We believe that there could be upside to the demand for our services once the paycheck protection program loan forgiveness incentive.
Which is available to small businesses for obtaining employees runs its course.
People management, representing 28%, a trailing 12 month revenue and 9% of segment profit.
Top 23% decline in revenue and segment profit was down 56%.
People management experienced encouraging intra quarter improvement.
But june revenue down, 15% compared to 30% in April.
Month to date for July people management was down 11% or 12%, excluding the timing benefit from the fourth of July.
Peoplescout, representing 10% a trailing 12 month revenue and 20% does segment profit.
Soft 53% decline in revenue.
Segment profit was down 125%.
Intra quarter revenue declines were similar to the decline for the quarter.
As Patrick noted.
Peoplescout results were adversely impacted by exposure to travel and leisure clients.
Which made up roughly 30% to the prior year mix.
Revenue for this vertical was down 80% year over year.
Now, let's turn to the balance sheet and cash flows.
Cash flow from operations was 103 million, which was higher than Q2 last year of 37 million.
Due to the deleveraging of accounts receivable.
At the end of Q2 2020.
Our cash exceeded our debt by 47 million.
Compared to our debt exceeding our cash by 29 million at the end of Q1 this year.
For Q2, our total debt to capital ratio was 10% and our total debt to trailing 12 month adjusted EBITDA multiple stood at 0.8.
While we would have been in compliance with our prior banking covenants at the end of Q2.
We thought it was prudent to amend the covenants to provide additional flexibility given the amount of economic uncertainty.
Under our recently commit completed amendment, our lenders agreed to suspend testing of our debt to EBITDA ratio and fixed charge coverage ratio through June 27 2021.
These covenants have been temporarily replaced with a minimum asset coverage ratio.
Minimum liquidity calculation.
And minimum EBITDA amounts.
Specific calculations for these covenants can be found in the 8-K filed on June 26.
And our Q2 covenant calculations can be found in the 10-Q filed today.
A couple of last thoughts on the balance sheet and capital return.
With an adequate supply of liquidity in the banking system and our covenant negotiations behind us.
We plan to run the company with about $30 million of cash and apply any excess cash towards debt.
Also as a reminder, we executed 52 million of share repurchases in Q1 prior to the cobot 19 impact.
We do not plan to repurchase additional shares until economic conditions improve.
Now I'd like to take a few minutes to discuss our future outlook.
Due to continuing uncertainty surrounding cobot 19.
And its impact on the business environment, we're not providing customary guidance.
However, the company is providing certain forward looking information to help investors form their own estimates, which can be found in the quarterly earnings presentation filed today.
I'll provide some highlights on this information.
Commencing in March we took swift action to reduce operating expense in 2020.
Our cost management strategies are on track and we expect expense to be down 90 to 100 million in comparison with 2019.
All in this would produce a decrease in SGN a expense of about 20% in 2020.
As noted in our Q2 results.
We consider any government expense subsidies related to covert 19 to be non core to our performance and we will continue to exclude these amounts from our adjusted net income and adjusted EBITDA calculations.
Please see the earnings release deck filed today for additional information on the full year end Q3 outlook for this item as well as other outlook items discussed today.
Turning to fiscal year 2020 gross margin.
We expect a contraction a 202 140 basis points.
This implies that we expect less contraction for the remainder of the year in comparison with Q2.
Due to favorable mix.
Absence of severance the anniversary and Q3 of the loss of a highly profitable peoplescout client and less recruiting staff in our Peoplescout business given current revenue volume.
For capital expenditures.
We expect about 22 million for the full year.
Which is net of 4 million and Buildout costs for our Chicago headquarters that are to be reimbursed by our landlord in 2020.
Our outlook for weighted average shares outstanding for fiscal year 2020 on an anti dilutive basis is 35.3 million.
We are providing shares on an anti dilutive basis since the noncash goodwill and intangible asset impairment charge. We took in Q1 this year will more than offset any profits we posted in 2020.
In conclusion.
I'd like to ESCO, Patrick by offering my thanks to our employees and associates for all of their outstanding efforts. During this challenging time.
We've taken the right actions to address our costs, while preserving our operational strength and technology strategy is to ensure we are prepared to bounce back strong as the economy recovers.
This concludes our prepared remarks.
Please open the call now for questions.
At this time I would like to remind everyone in order to ask a question. Please press Star then the number one on your Touchtone keypad. If he would like withdraw your question. Please press the pound keep.
And your first question comes from Jeff Silber BMO capital markets. Please go ahead.
Thank you so low I appreciate the framework that you gave in terms of your outlook, but looking last quarter. I believe you gave us some information regarding potential revenue changes.
Based on potential changes in GDP does that framework still hold have there been any changes.
Hi, Jeff. Thanks for the question on that you know the what we what we found is and we thought might be the case is that you know when the history that we were looking at it didn't have any at least much at all of this type of significant.
Oh, you know revenue decline in many regression analysis that we did.
So.
If you'd applied that to most GDP estimates it would have put you in the range of I revenue decline of about 60%, which is of course significantly more than 39% that we posted this quarter. So I think you got to treat that with some skepticism, but a as a directional asked amount.
You know you could probably still use it but maybe not down the.
The the impact by a third and that would be one guy post that you could use but we elected not to provide that again, because we felt like it would be over magnifying, though the revenue decline looking forward, particularly in comparison with where we posted this quarter wouldn't make much sense.
Okay. That's that's really helpful. I appreciate that they're working in your remarks, I think he said something about the contraction in the second half not being as bad as you saw in the second quarter. We modeled by segment I know you get a little color, there, but where would we see I guess the rate of improvement or the rate of things getting less worse in which are the three.
Yes.
Sure well a big piece of it is gonna be in the RPL group.
So there were theres two things that's going on in our gross margin related to our P.O. that will step itself down one is the fact that.
When it came to doing some of the head count reductions those did not all occur at the very beginning of the quarter, whereas with our staffing groups most of those did.
With that with the RPL business, we had to treat that client by client and talk us through with each of our clients on what they were really expecting for the year. So that we will square thoughtful about the head count reductions to make sure that we didnt.
Peanut butter those reductions across our client.
Mix, and we really tailored to each client so what that did as it delayed some of the head count reductions when it comes to recruiters.
So that's a piece of it.
Also with a with Boeing.
That we used to that we used to serve.
The head count.
Or excuse me the the profit reduction there a that we were facing is a headwind of about 50 basis points in Q2, and about 25 basis points. In Q3. So that also steps itself down and then the severance we at 80 basis points of severance.
I'm speaking at an enterprise level related to the head count reductions that we had in our appeal. So.
So you take all of that and take a look for it they the the pickups that you see in the gross margin will mostly be in the RPL area for people scale.
Okay. That's a that's very helpful.
Just sneak one went in and then I'll get back into queue.
Typically on labor ready you cited in the peso recovery lagging a bit because of higher exposure to hospitality I think we all understand that but you also sided construction and and I guess, we've seen you know kind of a mixed bag in terms of Russ construction recovery throughout the country I would've thought you might have been seen trends get a little bit less.
It's worse because the construction if you could just comment on that that'll be great. Thanks, well that could be a possibility as we move into the back half of the year. So are we saw as we went through the quarter.
Improvements in most all of the industries with the exception of construction. So keep in mind that with construction or about two thirds of our mix. There is nonresidential and about a third of residential so no doubt the the June a building permit news that came out was was very positive.
So that was permits although residential has had its share of some some good news even in the amount of investments is taking place in the country.
So for US, though when you think about nonresidential don't think about.
Office spaces in downtown Oftentimes a good portion of this is not in residential that surrounds communities that are being built so if a you know, though the residential trends continue to do well, we would expect to see a more business. Coming then were then we're serving right now on the on the non.
Residential space.
Okay, Great that's really helpful. Thanks, so much.
Your next question comes from Marc Mcconnell with Baird. Please go ahead.
Hi, good afternoon. Thanks for taking my question with regards to.
Two peoplescout I'm, sorry, I missed b, what we exited the quarter in terms. The July month to date do you have any data for that.
We don't Mark Oh, we don't do our billings a weekly there we just do them monthly.
You know, but I can say that for May and June excuse me, Yes may and June four Peoplescout, we were at 54%.
We are you know, it's it's gonna, it's going to trail a little bit here until some of the hospitality and airlines a turnaround.
You know or what we've also seen before as we've seen corridors, where we've been down significantly.
You know as much as 15 or 20% and then two quarters later flip back to 15% growth.
No it doesn't take a lot as far as client activity a couple of big wins to either put it back around to the upside or flip. It you know to the negative it's pretty choppy, but what we can say right. Now is that you know the the pipeline that we've got in here has been pretty steady with what we saw at the end of last year there is not.
Anything that significant on the horizon that would change the trends are we we'd give some some outlook towards that at least as as well as we ended up the quarter.
So so if we take a look at June that would probably be.
A reasonable gas for like where.
We are the third quarter could end up.
Oh, the I mean, I think that'd be a reasonable a guesstimate. We you know, we're not providing any guidance but.
You know we haven't provided anything that would suggest or otherwise you know when you take a look at our other businesses you can you've got more of a trajectory to.
Look at improvement you know, we got our Peoplescout, our people management business.
In April down, 30%, we ended the quarter at a in June down, 15%, where that 30% was in April so 15 points of improvement and.
One month to date in July down 12, the people really trends are arclight.
Encouraging here at the ended the quarter you know we saw seven points of improvement between June in April.
On through the first three weeks of July we saw six points of improvement month to date.
Versus what we saw in June so almost as much improvement in the year over year trend between month to date results in July versus what we posted in June so.
Those are encouraging results and ER and the most recent trends for people ready.
Sure do you think that that's sort of trends could potentially continue or how are you thinking about you know kind of the.
You know the recent and obviously the coal goods.
Discounts and you know hospitalizations or you know changing by the day have you seen any sort of.
Change in terms of like how clients are talking about things as there was a recent resurgence and you know in some states. It also looks like there might be some you know leveling off and maybe pulling back so.
You do have a rapid response business to what extent or you are you seeing changes.
You know real time.
Yeah. Thanks for that question Yeah. There certainly is a lot going on out there isn't there a lot of factors going on well.
No the part that as we saw the cases rising that concerned as the mouse was our exposure to Florida, Texas, and California for people ready that makes up about 35% of the business.
That said if I take a look at the last week of where we.
Ended the quarter for Q2, so weak 13.
Yeah for each one of those states and look at where we came in in week three of July.
The July year over year decline for each of those three states is better than it was for the week that we ended the quarter and the week of that we ended the quarter. There was no anonymously there. It was a pretty steady decrease you know throughout the month of June so hard to say Mark I as I saw those rising I thought we might see a bit more in.
Packed in those three states or have not seen anything reverse course, a yet in those three states and I would say if you took a look at our top 10 states. The the statistic that I just gave about week three people ready being better than the last week of the quarter was true for virtually all of those unless you had a unique issue of above.
The loss customer a big customer that a cut demand, but the underlying trends for those top 10 states were directionally on par with what I, just talked about for California, Florida and Texas.
And it was great to see the.
Got covenants restructured can you can you talk a little bit about what you were seeing you did a good job in terms of collections you know, we typically harvest a or when when these sorts of situations occurred any change in terms or collections in terms, Oh that progress through the quarter any signs of stress.
On the client base or how do you think about cash flow coming into into this quarter.
Yeah. Thanks for that question well, let me just hit briefly hit the the covenants and then I'll talk about that collection pattern. Yeah. We did move to a change in covenants for the next four quarters. There's a couple different covenants, but the main one is as an asset coverage ratio. So you take your accounts receivable times, 60% on the numerator and the amount of debt.
Or the amount of borrowings that you have outstanding which is gonna be dead and letters of credit on on the denominator that needs to be above one so.
That a that gives us a lot of flexibility in our covenants.
It's a favorable covenant to have in a time, where.
The profitability levels are lower so that that just gives us more cushion and breathing room, even though we had plenty of room as it is right now.
When it comes to the collection side, a you know weve been really pleased with what we've seen we have had in our people management business some of our more well capitalized customers stretching payment terms out either because in some circumstances. We have some terms. It said they were it's 30 days and they said hey, that's just not.
Because we're changing it for all of our vendors to 60 or some where.
They have more.
Elongated supply chains, and they're getting stretch, though they stretched our terms, but what I would say in those circumstances, we don't see any systematic risk to that portion of the credit profile.
Well, we have arguably the most risk is in our people ready business.
Because of the small business proportion a highly proportion a mix of the business that exist within that business unit.
There we saw idea so only increased by about a day.
So overall DSL was up by four days predominantly because of those people management situations I just mentioned, but the people ready.
So staying up about one day.
That compares to you know to go back in 2009 or are there DSO was up about five days.
There's about 30 basis points more of a bad debt expense.
So hopefully that gives you have some some thoughts on.
Credit risk collections and the cash flow cycle.
Great. Thank you.
Hey, Mark this is Patrick.
Wanted to follow up on the question that you had about clients.
One of the things that we're seeing is.
New types of engagements that we have seen in the past.
Yeah, we mentioned in our prepared remarks around some bounce back strategies that we had developed.
Secondly, targeting retailers that had need to.
You know widen aisles in reconfigure their facilities to be more socially distant for their customers to keep people safe and.
We've seen some pretty sizable wins.
You know kind of late in the second quarter and part of that's driving what you're seeing.
In people ready it's improvement in July versus the exit rate for the quarter is there's a there's some demand coming from engagements that we have seen in the past specifically around social distant seen in reconfiguration. So that's been that's been a bright spot for effort Peopleready business.
As a reminder, if you'd like to ask the questions. Please press Star then the number one on your telephone keypad. Your next question comes from Josh Vogel with Sidoti and company. Please go ahead.
Thank you good afternoon, guys I apologize I hopped on late so if any of this is a repeat for you might my apologies.
You know looking at your end markets in client pieces. You know was your own internal operations can you give me a sense of what.
What percent is operating virtually today and are you are there any lessons being learned we maybe able to maintain this virtual component longer term.
Well I did Josh I'm not sure I fully understand the question if you're if you're asking about you know us being able to operate virtually all of our corporate staff for operation operating virtually.
Our branches that were open for business.
And our onsite through people management are open for business and what we've been doing those be we've been leveraging technology, particularly our jobs tax technology.
And our digital Onboarding to engage with our associates in a in a.
A left in person way and the more digital way, a and put them to work. We've also put in place some pretty innovative approaches to.
Recruiting and our people management business, we've run dozens of well what I would describe the sort of drive through job fairs are people drive up we handled the.
And I pad they fill out the information we do a quick interview, while they're in the car isn't.
Just with the window crafting we've been hiring a lot of people in fact, we've seen four times as many people hired from our drive through job fairs versus what we would normally do very regular job fair. So we're innovating here's how we're engaging candidate syn <unk> and how we're engaging clients and we're obviously able to do that.
In a modified way today versus versus pre pandemic I don't know if that answers your question or not though.
No that's perfect Patrick Thank you and I kind of leads into my next question is being able to kind of reduced reliance on on the branch structure, where the realistic footprint are you finding that there's any pockets of opportunity in certain markets, where you can you know scale back the the branches and continue to.
Engage through the technology in into more digital away.
Yeah, well today, we've now we've got close any branches and that was very purposeful in our hard but I'll get to the thrust of your question, which is from a longer term perspective.
The crisis testing our approach to how we run the business.
Particularly in people ready.
Previously, we wouldn't have been willing to run a peopleready branch with less than three people and now we're exploring different approaches and finding that we're able to achieve some operating leverage, especially in urban areas, where we have branches that are clustered.
We're also expanding our centralized delivery efforts our virtual processes.
Our enhanced digital solutions, and all of which in my view position us.
Very nicely to take some substantial cost out of our branch network overtime, but what we're not doing his closing branches today and the reason for that is.
In the last recession, we closed a lot of branches.
And one of the things we learned is that if we close the branch it becomes hard to open it up customers don't forget that that you had a branch and then you close the down and it just becomes harder to get it all started up again and so instead, what we're doing is we're keeping our branches open now preserving that revenue stream and then laying the groundwork.
Through some of the digital capabilities, we have in the virtualized processes as well a centralized delivery and support that's going to allow us to take some cost out.
In the future in and that's really a multiyear journey, that's not something that you will see massive resulted in Q3 in Q4, but in the coming years.
It will absolutely be material.
Right and that makes sense and I saw the comment in the slide presentation at year, you're tracking competitors closures at people ready.
So when I think about that are you seeing a meaningful amount of competitors closing in in key markets and if so is there anything you can maybe quantify with regard to how that's improving your candidate pool, maybe what it looked like or what it looks like today versus a few months ago.
Yes, so we yeah, we've got a formal tracking mechanism for competitors and the numbers you know up data are not huge we've got to over 30 closures that we've been tracking mostly from mom and pop type companies that weren't particularly well capitalize.
Yes in.
That's 30, 40% revenue hit could put them out of business and so we've certainly seen that and then what we're doing is we're we're approaching their clients, let them know that we'd like their business and we've got some nice wins come out of it I wouldn't say, it's been enough to you know to move the needle in a significant way, but it's early days.
In my view is that.
We're going to continue to see pressure on the industry, particularly some of the smaller mom and pop type providers, but just aren't as well capitalize the some of the the big staffers and so it's primarily with smaller companies and we've had some some early success.
But but I wouldn't describe it is material yet.
Okay.
And lastly in and you probably already did cover this but maybe give a cross section of how results are trending across each industry over the past month or so relative to or your end markets versus you know what half what you saw in Q2 and what you're seeing today.
What do we have derica their take that when he's got the details.
Hey, Josh Thanks, Thanks for joining us.
Well when you take a look at our industry trends I would say the one that has moved the least is our construction business.
So our construction business overall for the company, which is really primarily driven almost it's almost entirely actually by by people ready is down 48%.
ER and south throughout the quarter those everything it was for that that part of the business was down in the fortys, which might be a little surprising with some of the new news that has come out on construction improving trends, particularly in the residential space at something that we briefly talked about Josh was that most of.
Our mix there is on the non residential side not necessarily office buildings, but.
Manufacturing facilities warehouse facilities and often times.
Businesses retail businesses and other support surrounding residential development. So we.
We'd expect.
That one to improve more as those neighborhoods get built and more nonresidential gets built around those neighborhoods.
With the rest of our business units, a you know in manufacturing transportation.
Services, we saw improving trends in and almost all of those those businesses.
<unk> retail not so much an improvement, but it's it's a it's been a standout really all quarter long retail for us was down 2%.
For the quarter, which was really driven by a couple of main areas. There's a lot to this but one is help.
In frontline operations of retail or with surges undergo run grocery and other industries, where we've been supplying labor within the store and then also on the.
Supporting the.
So the distribution of retail products, particularly in the or staff management business or the retail aspect. There is very E. Commerce, driven so we actually had growth in retail there, which it was all coming from distribution operations.
That's really helpful. Thank for taking my questions guys.
Thanks, Josh.
As a reminder, have you would like to ask a question at this time. Please press Star then the number one on your telephone keypad and we'll pause briefly to compile any remaining questions.
[laughter].
There are currently no further telephonic questions at this time I'll turn the call back to management for closing remarks.
Thank you operator, I'd like to just take a moment to say how proud I am of three blues employees.
And associates as to how they've risen to the channel so admirably during the pandemic.
They just don't a tremendous job serving our over 100000 clients and I'm really appreciate it and thanks, everyone listening in to the second quarter earnings call I look forward to chatting again next quarter have a great week, everyone. In a please be sure to stay say thank you.
This concludes today's conference call. Thank you for joining you may now disconnect.
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