Q1 2021 TrueBlue Inc Earnings Call
And and answer session, if you'd like to ask a question during that time simply press star and the number one on your telephone keypad, if you'd like to withdraw the question principally and Keith. Thank you you may begin your conference.
Good afternoon, everyone and thank you for joining today's call I'm joined by our Chief Executive Officer, Patrick Morrell.
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 and 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, or a true blue Dot 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 for the same period and the prior year unless otherwise.
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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.
With that I'll turn the call over to Patrick.
Thank you Derek and welcome everyone for today's call and.
And we can report we had a strong start for the year.
We delivered net income of $7 million and the first quarter versus a loss of $150 million and the first quarter of the prior year.
As a reminder for first quarter last year included a noncash asset impairment charge of $152 million net of tax.
Hello.
And the impairment charge was led by a series of new client wins.
And proving industry performance, including those.
Harvest last year and disciplined cost management.
I am pleased that on an adjusted basis, we experienced growth of $9 million and both adjusted net income and adjusted EBITDA year over year.
Before turning to the segment results I wanted to highlight.
New wins and successes at people management and people Scout and we're bigger.
Getting to see increased interest and clients using more variable labor.
And people management.
And on an annualized basis of $44 million. This year up from 16 million same time last year, mainly and manufacturing logistics and retail.
We are seeing similar growth and people scout for annualized wins, our $30 million this year.
For $3 million at the same time last year.
New client growth is coming from a variety of industries, including retail healthcare and transportation, which is very encouraging.
Now, let's turn to for our results by segment, starting with people that day.
Steve already is our largest segment, representing 59% of trailing 12 month revenue and 69% of segment profit.
People ready as the leading provider of on demand labor and skilled trades and the North American industrial staffing market.
And we service our clients via a national footprint and physical branch locations as well as our jobs that mobile app people ready and revenue was down 13% during the quarter versus down 18% and Q4.
People management, and the second largest segment representing 33%.
And 12 month revenue and 22% of segment profit.
People management provides onsite industrial staffing and commercial driving services and the North American industrial staffing market.
The essence of a typical people management engagement and supply and and outsource workforce and <unk>.
<unk> multi year multimillion dollar onsite or drive and relationships.
And can management revenue is reaching pre pandemic levels by Joe.
And 7% and the first quarter.
<unk> is up 5% and Q4.
Turning to our third segment people Scout represents 8% of trailing 12 month revenue and 9% and segment profit.
<unk> is a global leader in for permanent positions.
Our recruitment process outsourcing and managed service provider offerings.
Revenue was down 13% during the quarter versus down 24% and Q4.
Now I'd like to shift gears and update you on our key strategies by segment, starting with people right.
Our long term strategy and people ready and to further digitalize, our business model to gain market share and improve the efficiency of our service delivery cost structure.
Most of our competitors and this segment and a smaller mom and pops, but they will have the scale of capital to deploy something like our jobs back mobile app.
This along with our nationwide footprint and what makes us unique.
As a reminder, we began rolling out jobs that to our associates in 2017.
2018, we lost the client side and do that.
We now have digital flow rates north of 50 per cent.
And more than 26000 clients using the app.
And Q1 and 2021, we sold 716000 shifts via jobs back representing the digital flow rate of 58 per cent.
A quiet user count ended the quarter at 26000 and 500000.
<unk>, 13% versus Q1 and 2020.
So I think heavy client user growth continues to be our primary focus.
And heavy client user has 50 or more touches other jobs that per month.
Whether it's entering and order.
Creating a worker.
We're proving time.
Just ask heavy plant users continued to post better year over year revenue growth rates compared to the rest of the customer base.
And Q1 2021, the revenue growth differential between heavy client users and non users with over 35 percentage points on a same customer basis.
This growth differential and largely driven by wallet share takeaways from competitors and heavy credit users are telling us and major reason, we are moving share to people ready for beta.
Other jobs that unique capabilities.
Our focus on heavy client user growth is becoming more material and our overall results.
We increased our heavy <unk> user mix from 24% of people ready for business in fiscal 2020% to 31% and Q1 2021.
With the foundation of our digital strategy in place.
<unk> focus has turned and how we can better serve our existing customers and reach new clients.
Combining the strength of our geographic footprint with technology centralize work activities and we purpose job roles will allow us to achieve this goal with greater efficiency.
At the end of the first quarter, we launched to market pilots.
And pilots use the elements I mentioned to provide and altered the go to market approach and are intended to strengthen our local presence and the communities, where we do business.
While it is still too early to report results. We're encouraged by the progress made by the team.
We'll continue to update on this front as the pilot for vessels.
Turning to people management and our strategy is to focus on execution, although our client base.
Last year, we sharpened our vertical focus to target and essential manufacturers and made investments and our sales teams to enhance productivity.
And if these initiatives in flight, we have broadened our strategy to expand our geographic footprint by targeting more local and underserved markets.
We're seeing strong results as mentioned earlier with new and growth during the first quarter.
Finally, we are investing and customer and associate care programs and an effort to serve our client needs better and improve retention.
Turning to People's Scout the strategy Leverages, our strong brand reputation and captured opportunities and an industry poised for growth.
Before COVID-19 struck we along with our competitors.
The trend towards more in sourcing for some clients, bringing more recruitment functions in house.
Many of the and how things have been reduced or eliminated during the pandemic and.
And we're seeing companies moving to hybrid and fully outsource models as the economy recovers.
Capitalize on this trend we have made investments and our sales team.
We believe there's a big opportunity to increase wallet share, our and our existing clients and diversify their industry mix within our portfolio by adding new clients.
These efforts are already delivering results as shown by the $30 million and annualized new business wins across multiple sectors as I referenced earlier.
I'll now pass the call over to Derrek, who will share greater detail around our financial results.
Thank you Patrick.
Total revenue for Q1, 2021 was $459 million, representing a decline of 7%.
We posted net income of $7 million or <unk> <unk> per share.
<unk> to a net loss of $150 million and the prior year.
Which included a noncash impairment charge of $152 million net of tax.
On an adjusted basis, we delivered adjusted net income of 9 million or <unk> 25 per share and.
And increase of $9 million compared to Q1 2020.
The increase and adjusted net income was driven by a decline and SG&A expense.
Adjusted EBITDA was $13 million and increase of 189% compared to Q1 2020, and adjusted EBITDA margin was up 200 basis points.
Gross margin of 24, 1% was down 140 basis points.
Our staffing businesses contributed 150 basis points of compression with 130 basis points due to a benefit and the prior year for a reduction and expected health care costs.
Adjusting for this and our overall gross margin was nearly flat.
There are also some other offsetting gross margin trends and I would like to point out.
And our staffing businesses.
Higher pay rates in relation to fill rates and.
And sales mix provided 90 basis points of drag offset by 70 basis points of benefit from workers compensation expense.
Largely related to favorable development and our reserves.
People Scott also contributed 10 basis points of expansion.
Turning to SG&A expense, we delivered another quarter of strong results with expense down $20 million or 17%.
Maintaining our cost discipline is important.
But of equal importance is doing it in a way that preserves our operational strength to ensure the business is well positioned for growth as economic conditions continue to improve.
We are also implementing pilot projects to further reduce the cost of our people ready branch network through greater use of technology central.
Centralizing and work activities and repurposing of job growth.
And while maintaining the strength of the geographic footprint.
These pilots will occur throughout 2021, and if successful could lead to additional efficiencies in 2022.
Our effective income tax rate was a benefit of 2% and Q1 as a result of our job tax credits exceeding the income tax associated with our pre tax income.
Turning to our segments people ready saw revenue declined 13% while segment profit was up 55% due to lower expenses.
<unk> already experienced encouraging inter quarter revenue improvement with March down, 3% compared to January down 18%.
We were also pleased to see revenue trends improve and some of our hardest hit markets.
Nonresidential construction improved to a decline of 8% and March versus the decline of 24% and Q4 2020.
And hospitality improved to a decline of 9% from a decline of 49% for the same time periods.
California was our largest market pre COVID-19 and it was one of our hardest hit geographies.
California's revenue trend improved to a decline of 4% and March versus a decline of 27% and Q4 2020.
People management saw revenue increased 7%.
Which in combination with lower expense drove a $3 million increase and segment profit.
Default management also experienced encouraging intra quarter revenue improvement with March up 15%.
Per to 5% and January.
And the 44 million of annualized new business wins, Patrick mentioned $2 million was recorded in Q1.
And approximately $28 million as expected over the remainder of the year.
People Scott saw revenue declined 13% while segment profit increased 61% as a result of lower expense.
Sequentially revenue was up 11% compared to Q4 of 2020.
As Patrick noted.
We are encouraged by the new business wins and the results within our hardest hit industries, including travel and leisure, which went from a decline of over 50% and Q4 2022, a decline of about 25% in March.
We're also optimistic about the long term signals, we're seeing and these new wins.
First there are signs of a growing interest.
From clients to shift back from and in House model.
Two and outsourced model.
Second winter coming from a variety of industries, including retail healthcare and manufacturing.
Of the $30 million of annualized new business wins, Patrick mentioned $2 million was recorded in Q1 and approximately $14 million as expected over the remainder of the year.
Now, let's turn to the balance sheet and cash flows.
Our balance sheet is in excellent shape.
We finished the quarter with $88 million of cash and no outstanding debt and and unused credit facility.
While our profit stability increase compared to Q1 last year.
Cash flow from operations was flat largely due to less benefit from working capital associated with better revenue trends for this year.
Now I'd like to take a few minutes to discuss certain forward looking information, we are providing to help out investors form their own estimates.
This information and more can be found and the quarterly earnings presentation filed today.
And regards to the top line the historical sequential revenue growth.
From the first quarter to the second quarter has averaged about 10%.
This average excludes 2020.
Turning to gross margin for the second quarter, we expect expansion of 180 to 220 basis points.
Yeah.
Segment revenue mix and operating leverage from higher volumes that people scale and are expected to drive approximately 120 basis points of the improvement with the remainder coming from non repeating workforce reduction costs incurred in Q2 2020.
We expect gross margin expansion of 40 to 100 basis points for the full year.
For SG&A, we expect $108 million to $112 million for the second quarter and $446 million to $454 million for the full year.
I'd also like to remind everyone that we will anniversary most of our 2020 cost reduction actions and April of 2021.
For capital expenditures, we expect about $14 million for the second quarter, and 37% to $41 million for the year.
Included in our capital expenditure plan, our build out costs for our Chicago support Center.
Each of which will be reimbursed by our landlord.
Additional details are provided in our earnings presentation filed today.
Our outlook for fully diluted weighted average shares outstanding for the second quarter of 2021 is $35 1 million.
We expect our effective income tax rate for the full year before job tax credits to be about 26% to 30%.
And we expect the benefit from job tax credits to be $8 million to $10 million.
With the momentum of our first quarter results.
Our solid balance sheet, and a strong mix of operational and technology strategies and.
We feel we are well positioned to take advantage of growth opportunities during the recovery and beyond.
This concludes our prepared remarks, please open the call now for questions.
And as a reminder, if you'd like to ask a question. Please press star and the number one on your telephone keypad again to ask a question and a star then the number one.
First question is from the line of Josh Vogel.
Thank you good afternoon guys.
And really impressive results and see the recovery and the business here.
Last question.
And activity I know, it's still early but with vaccine rollout and and.
And the prospect for a brighter economy are you seeing.
Those who previously dropped out of the workforce are they starting to reengage and a meaningful way and if so which sectors are you seeing this happen.
Okay.
And there are credit you take a first shot at that and then I'll and I'll add some color. Thanks for the question Josh.
Hi, Joshua as far as the applicants go those that have dropped out of the workforce.
And I wouldn't say, we've seen anything meaningful coming back yet.
And.
There's a couple of challenges one that's newer and one that's been ongoing for a while.
The unemployment benefits and the extension of those particularly the federal unemployment benefits.
Benefits that go through September six that's still weighing in on the market for.
For somebody Thats, making.
$10 an hour.
The unemployment benefits can easily be more than you could be making.
And out of a job.
The second part is with the stimulus checks that have been coming in now this latest round at $1400 per person and plus dependent and we saw a noticeable decline and the number of people coming and what we refer to as the funnel and new applicants coming in.
So March was down about 25 per cent compared to February.
Now we have seen that rebound and with our last couple of weeks. So for adults. So I wouldn't say at this point, we've seen anything meaningful coming back Josh primarily in our opinion to do those two factors that I just mentioned.
Yeah.
Okay. That's helpful. Thank you.
And the other side you know there's a lot of talk recently about how U S employers and might have trouble hiring workers fast enough and in coming months with project bid.
And the ore demand growth.
Certainly make.
Working with you even more beneficial irrelevant you gave some good numbers around business wins I was wondering if you could just talk a little bit about the client pipeline and recently with existing clients both around their activity and the size or demands of their orders.
Okay.
Yes, Josh this is Patrick.
You mentioned earlier.
Vaccination rates are rising.
And so does the confidence.
The underlying economy, many clients right now or.
Or if theyre doing their planning and Theyre looking past, the pandemic and they're planning their hiring needs around.
At least the conversations we're having around a pretty strong recovery. So demand is clearly picking up.
And across the vast majority.
Of the verticals that we're supporting and related to new wins.
Yeah.
And a lot of wins and manufacturing.
Transportation, Inc.
Hospitality.
And you might expect the pipelines for those are also particularly strong.
As you rightly noted when it becomes more difficult.
To hire people like the situation, we find ourselves and know where there's a supply demand imbalance that and our view is temporary.
And the need for services.
And one of the true Blue provides became more pronounced and so the challenge right now is.
Making sure we've got enough candidates to fill the roles.
And when you look and fill rates are.
For our big onsite clients.
And they're typically delivered through our people manage their business R.
Our fill rates have been holding pretty strong we're running and.
90% range or so.
And it's pretty good considering.
And the environment, we're operating and you see a little bit more of a challenge in.
Some of the shorter notice type assignments that you see out of people ready and we're.
And getting a lot a short notice request for clients.
And that's why we exist as a firm is to help support those.
But we definitely see a little.
And have a pullback and the fill rate.
For those shorter term short burst assignments so headlines are.
There is a bit of a supply demand imbalance right now.
Or there's not enough supply, but we think it's temporary temporary tightening and you shouldn't should normalize fairly quickly as Derrek mentioned and we saw our applications spike right back up and.
In April after we saw that dip when the additional stimulus came in and March.
Thank you I appreciate all the insights on that.
Shifting to the guidance.
With Q2 revenue.
What what has to happen to get towards the higher brand at 12%.
<unk>.
We expect.
And going back and seasonal trends and the path for the year based on <unk> and kind of fill and a fluid situation, but are you seeing the sequential tick up.
And just a structural shift in demand or is there just pent up demand coming out of the pandemic just wanted to get a sense of how you feel about the backpack and the year as well as Q2.
Yes, thanks for the question Josh.
Well to get to the upper end of the.
Outlook that we provided and whatnot.
Outlook that Josh is referring to is we just provided a historical perspective.
Sequentially, how our Q2 revenue.
Bills in comparison with Q1, excluding 2020, so roughly that's about 10% I think the range. We put on it was about 7% to 12 for so called a midpoint and 10%.
To get to the upper end of that range, we just need some additional momentum coming from increased demand.
So along with that demand.
The areas, where we would need it the most we've really we've got great momentum and our people and management business, we've had that going.
It's this is more about people scout and and people ready.
So we've we had a great Q1 was one of our strongest showings and a long long time as far as the number of new business wins and people scout.
So the thing with our people scale business, though is those new business wins can take a quarter, maybe two quarters to actually get them in place.
Charles that won't make a meaningful difference and our sequential.
Revenue build from Q2 versus Q1, but there should be a sizable amount that falls in the back half from the people scale business.
For people ready.
Continuing really to execute on our other cargo back.
The growth strategy we.
And we got close to that in Q and and March Josh.
And we just need to keep executing I think we've made the right adjustments from a cost structure.
You know our teams are really focused on going to market and serving the customers really well. So I think we're positioned really well to just go and execute strong on the initiatives and strategies that we've got underway.
Alright, great and if I could.
Just sneak in one more and only if you have it at your fingertips, but can you share with a five year historical average was for sequential growth from Q2 to three and Q3 to four if you have it.
I don't have that one hand and Josh.
Okay. No worries. Thank you guys for taking my questions and are certainly looking forward to seeing how raws and the rest of the year progresses.
Thanks, Josh.
Yes.
Okay.
Again, if you'd like to ask a question can you maybe to start and then the number one and your next question is from Milan and Mark Mark Hahn.
Hey, good afternoon guys.
Encouraging results.
Wondering if you can talk a little bit about job stack.
And you know what are you seeing there just as we think about things sequentially what drove the sequential trend and how do you think things are progressing towards the later ends of book.
Later parts of the quarter in terms of.
And going into April you kind of gave some weekly figures in your presentation, but just wondering specific to job stack, how that's going.
Hey, Mark and as Patrick I'll go ahead, and take that one and.
And maybe we just start with our longer term vision for job stack and people ready, which is essentially to transform our business and our industry in terms of how we do it.
Gauge with with our associates and with with clients.
And when you think about the types of positions that were feeling and people ready many of them don't have pre requirements and so it.
It really lends itself well to leveraging the digital platform and artificial intelligence.
Two creates and competitive advantage.
And we're seeing that and the growth rates for.
For the what we term heavy users and essentially clients that are.
Using a tool and their day to day interactions with with people ready and.
And we're seeing the share being moved if.
If you look at the.
The heavy users.
And we're seeing growth rates that are moving.
More than 35 points higher than those clients that are maybe not using jobs back and so what we've been focused on.
And in recent quarters and getting the percentage of.
Clients that use the tool to use it and a heavy way.
And so we've seen some pretty nice.
Movement, there were up over 30% now in terms of our revenue stream and people ready coming from heavy users and that's up about seven points from where we were.
A year ago at this time, our expectation is that by December.
We'd have that number in the vicinity of 50 per cent.
And so you can do the math, there and it starts to get more significant and more compelling.
And as the percentage of people ready and business.
And being engaged with heavy users and so that's where we're spending our sales and marketing efforts to a large degree on our installed base and obviously.
Where I'm, sorry, net of new clients as well.
So.
That's probably the biggest focus and are targeting towards that 50% and heavy user number by the end of the year and.
We've got over 26000 clients that are using a tool that's up about 10% year over year, we're expecting that number to decline pretty significantly throughout the year.
So those are those are some of the headlines on.
And jobs that are happy to answer any more detailed questions for Derek if you have anything you'd like to add to free.
Okay.
So this one we think about growth.
The sequential pattern I mean from a year over year perspective, clearly better and obviously Q1 is the smaller people ready quarter than Q4. So that's one other things, but just wondering like.
Is there is there anything that we should look at it from a sequential perspective, you mentioned the short term assignments like.
How how easy is it to the book.
Bill rates coming off of job stack, when you mentioned kind of the March dynamic.
Net.
In terms of the stimulus checks did that end up impacting things at all or how should we think about that.
Well, yes in terms of from a supply side perspective, and just leave and jobs back aside for a moment.
There are definitely some headwinds mark in terms of the amount of effort that we're having to put in along with everyone in the industry by the way of getting.
Positions filled.
We saw.
And 8% decline and people ready in terms of fill rates and as I mentioned earlier.
A 2% decline for.
For people management, so there's clearly.
And our supply demand imbalance right now.
And as I mentioned earlier I think it's very temporary and in fact, we saw a pretty big bounce back and the number of applicants Derrek mentioned, we saw about a 20% decline and applicant flow and March compared to February net.
Right back.
Here and the last couple of weeks and in April so.
Not to say we are out of the woods, yet on the supply side, but we saw a pretty nice bounce back related to jobs packages just helps us.
In terms of.
And how we engage those workers and a 24 by seven manner, we can do push notifications to them and we're marketing to them hard.
Anytime a new position opens up that would make sense for them potentially and so it just gives us a better.
The better way to engage with our clients and our and our workers in terms of any kind of guidance and Q2 related to jobs deck and I would just.
Think about you know and.
And as most simplistic terms of heavy users if we're at.
Roughly 31% now and we're planning on being at 50 by the end of the year. You can you can start to do some math in terms of how much of a larger portion that makes up of our total.
And.
And with those higher growth rates it should be a nice tailwind for us and Q2 and beyond.
I appreciate that and.
For the for those who aren't converting to becoming a heavy user of what's the what's the problem.
The most significant reason and and what's changed that is.
Because it sounds like you're you're starting to see a nice ramp on that so.
And the biggest improvement.
We are in some cases it's.
Our requirement.
And without getting into too much detail Mark I imagine a scenario, where a client has a number of requirements for a job. So as an example, if youre working and the cafeteria and hospital do you need to have a recent tetanus shot you need to have a recent hepatitis C shot you need so we need fields for all of the different requirements and.
And in some cases, we didn't have fields.
To track where every worker.
And every.
Thanks for your requirements of those jobs and we can't put on jobs, because we don't want to send someone out to the to the assignment that isn't prequalified for the role what's been happening over time as we've been adding fields and every every quarter that goes by to reduce the number of positions.
And that arent eligible for John stack because of the complications of having pre requirements. So thats. One reason why we're seeing some lift and we will continue to work through those until as many of those pre requirements. We've got data for all of our workers.
And the second thing is it is getting out with our clients and <unk>.
And I'm more comfortable with it and and sharing success stories with them.
Because the second biggest hesitancy is just people are comfortable picking up the phone and calling the branch as opposed to <unk>.
And an order or a proving time and on their phone and so that's been the second biggest challenge market is just getting people comfortable with not picking up the phone for important matters like <unk>.
And orders for workers.
And then I.
You mentioned.
The really nice wins, both in terms of people management and people scout for for those wins the majority of them.
Could you say whether or not there.
They're brand new to basically either using services like simple management or people scout for are they were.
Where they were.
And where they are companies that have in sourced and now they're going back to the outsourcing how would how would you characterize things.
So it's a little different between people scout and people management and people Scouts case, one of the things we're pretty excited about is about half the wins that we had.
For first time buyers Mark so it just kind of goes with that theme that we're starting to see a reversal of what were some in sourcing trends in 2019 pre pandemic.
And we're seeing a lot of that and commit being reversed out so have the wins and people Scott were first time buyers and that had never.
And never had and RPM engagement for the other half were takeaways from for head on competitors and people management case.
Most of the.
And the engagements that we won were takeaways or a new site.
And being brought on board.
It isn't.
And it's pronounced as people scout, where its a first time user.
<unk>.
Staffing services.
Great and then can you just talk about regionally what you're seeing just in terms of.
And you know broadly.
Are there any big discrepancies across the country in terms of areas that have come back faster.
And relative to others.
So why don't we have derrek cover that and when he is he's probably got all the details of his fingertips.
Well one thing we talked about regionally that we're really excited about and prepared comments, mark and state of California.
So.
State of California has.
Probably been one of our.
Biggest struggles as far as the rebound.
Throughout 2020.
California's revenue decline average I don't know somewhere probably between let's call. It about on average about 10 points worse.
And the overall people ready trend and you know as we got into March we saw that dropped down to about a decline of about 3% and in California.
And so pretty close to the people already.
Overall revenue decline we've.
And we've seen other places like for like Florida, making really nice progress as well.
Florida actually got to growth in March.
I mentioned those two in particular, just because of the size those are our two largest markets.
And and Texas became close to flat by March as well, our third largest market.
Great.
Are there any.
Was there anything in the quarter.
You viewed as basically being and hey, there was that a one time boost in terms of revenue from any one.
A particular client or.
Broadly speaking the economy is getting better but are there any clients that you currently have.
Could potentially have some sort of a dislocation.
And so.
Shelves or with you.
And you know because every once in a while others over the years there have been some elements that have been lumpy and less predictable or less transparent.
Yes, there really wasn't any of that kind of contribution.
This quarter any large projects anything significant you'd like to call those out when they do happen because we firstly, we anniversary those want to make sure that youre all aware of them.
And then from a from a customer size perspective, we just don't have anything and.
And there have been times, where we've had a customer approached 10% of our revenue.
And also as we see and hear today, we've got a couple of customers that have been with us for.
Over 2000 and call it 20 years that for each 3%.
Total company revenue, we've got one that's at 2% and then everything else.
Falls off pretty rapidly there. So there can always be something that happens with a customer out there.
And our business happens, but theres no rumblings from any customers that I'm aware of to bring your attention to and and not any anomalies as far as our big project contribution and.
This quarters results.
Great. Thank you very much.
Yeah.
Your next question is from the line of Jeff Silver.
Thank you so much and wanted to go back to the early discussion about supply constraints and forgive me. If you guys talked about this but can you talk about what's going on from wage inflation and potential impact on billing rates or spreads.
Yeah, Hi, Geoff I'll take that one.
Well you know the bill pay rate spread it's something we spent a lot of time talking about during 2020 less of a challenge when it came to our people management business, but much more of a challenge when it came to our people ready business because of the short duration of the job assignment many of them.
These things as you know are really short term projects.
Not on contract.
And so what we were seeing throughout 2020.
Now if I take a look at Q3 and Q4, we had.
Pay rates outpacing bill rates by about three percentage points.
As we moved into the first quarter.
And that that gap narrowed.
We had bill rates.
Excuse me pay rates outpacing bill rates by about one percentage point, so it's been cut down quite a bit.
We've talked about our take on and on the industrial staffing market. What we saw last year. We think is what typically happens and a business like ours, particularly people already and then as we swing back to growth get more pricing power and start closing that gap and then start moving onto <unk>.
Recover some of the.
Bill pay rate erosion to the gross margin and our outlook.
Outlook for the for the year anticipates that that will continue to happen, meaning that will what.
And we'll continue to get some gross margin back by positive Bill pay spreads as we get.
And of the year.
Okay Fantastic you actually took my follow up question. So I appreciate that.
You gave us some historical trends.
Sequential growth in revenue and <unk> kind of you use as a framework for the guidance for the current quarter anything to call out by the specific line items or would it just makes sense and acute historical trends and your different segments, taking place this quarter.
I don't have anything really particular to call out you know I think the historical sequential trends of course day outside of 2020 give that to older years those are pretty.
Indicative for us.
The one that has the most variability sequentially as the people ready business because of the.
The increased mix of outside work you could see revenue lift by up to 25% sequentially. If you compare Q3 of a given year to Q1, we do anticipate that what's still happen.
This year, so no key callouts, there, Jeff and I think our historical sequential.
Comparisons are helpful here and while we're not giving revenue guidance, we did want to at least get the sequential trend from Q2 versus Q1, just because.
Q2 last year, it's not that helpful from a prior year comparison.
Okay I appreciate that that framework.
And finally, I've been getting a number of questions and.
And by and it has a mountain and infrastructure plan and I know, it's still way early but do you think there is anything in there and that your company might benefit from.
Well, we've got our eye on that too and we think that.
And while it's difficult to ascertain how much benefit if you just think about it conceptually there is a lot of goodness and that we think for our company when it comes to construction and there would be some projects we would participate on.
And not the majority many of those public works projects for Union presence that wouldn't be a place where we would have people on site with the construction.
But.
We're a 90% of our business is industrial staffing serving the blue collar and industry. So those industries that are manufacturing.
The goods, who are transporting and and warehousing and them.
Now those are those all speak to center suite of the industry sectors that we serve so well.
We think there could be possibly some nice 10 gentle benefit to our business as a result of it.
Great that's really helpful. Thanks, so much.
I think I'll, just add one thing to that as well and which would be cool.
You said there in addition would be around solar and wind.
And a pretty strong position by the referenced simple clients and the solar sector and.
And.
Depending on how the bill shakes out I would suspect that and we would benefit nicely from more solar projects.
Absolutely.
Okay.
Again star one to ask a question.
Yeah.
And there are no further questions at this time.
Well, thank you operator, and closing I'd, just like to thank our employees, our associates and our clients for <unk>.
And thereafter, it's throughout the pandemic and I. Thank everyone for attending we look forward to speaking with you at the next quarterly earnings call and have a great rest of the week everyone.
That does conclude today's conference. Thank you for participating you may now disconnect.
Yeah.