TBI 10-K & 10-Q changes, risk factors and insider trading

The demand for our workforce solutions is highly dependent upon the state of the economy and the workforce needs of our clients, which creates uncertainty and volatility in our operations. Our profitability is sensitive to decreases in demand. National and global economic activity is slowed by many factors, including rising interest rates, recessionary periods, inflation, changes in international trade policies, declining consumer confidence, political and legislative policy changes, reductions in government funding, international conflict or instability, epidemics, other significant health concerns,concerns and global trade uncertainties. As economic activity slows, companies tend to reduce their use of associates and recruitment of new employees. We work in a broad range of industries that primarily include construction, manufacturing and logistics, warehousing and distribution, waste and recycling, energy, transportation, retail and hospitality. Significant declines in demand from any region or industry in which we have a major presence, domestic or global supply chain disruptions, or decline in the financial health of our clients, significantly decreases our revenues and profits. For example, we experienced significantly reduced demand from our clients due to the coronavirus pandemic (“COVID-19”) and the resulting supply chain disruptions in the manufacturing and renewable energy sectors we serve. Global pandemics or other disruptions to the supply chain may impact our financial condition or results of operations and could have a material impact on the businesses or productivity of our clients, employees, associates and other partners.

A deterioration in real or perceived economic conditions, global supply chain issues, political instability, tariffs, rising energy prices, a recession or fear of a recession, and the related governmental responses to these concerns, or otherwise, could lead to a prolonged decline in demand for our services and negatively impact our business. DeteriorationDuring challenging economic times or in economicthe conditionsevent of a reduction or elimination of government funding, our clients, including but not limited to those that rely on government support, may face reduced demand for their services, reduced revenue, and issues gaining access to sufficient credit, which has resulted in and could in the financialfuture result in a reduction in the need for our services, or credit markets could also have an adverseimpairment impact on our clients’ financial health orof their ability to paymake payments to us, timely or otherwise, for services werendered. haveIf alreadythat provided.were to occur, it may adversely affect our results of operations.

The increased use of internet-basedinternet-based, mobile and mobileAI technology is attracting additional online, app-based companies and other non-traditional competitors and resources to our industry. Our associates, candidates and clients increasingly demand technological innovation to improve access to and delivery of our services. Our clients increasingly rely on automation, artificial intelligence (“AI”),AI, machine learning and other new technologies to reduce their dependence on labor needs, which may reduce demand for our staffing and recruiting services and impact our operations.

We face extensive pressure for lower prices and new service offerings and must continue to invest in and implement new technology and industry developmentsdevelopments, including AI, in order to remain relevant to our associates, candidates and clients. As a result of this increasing dependence upon technology, we must timely and effectively identify, develop, or license technology from third parties, and integrate such enhanced or expanded technologies into the solutions that we provide. In addition, our business relies on a variety of technologies, including those that support recruiting, hiring, paying, order management, billing, collecting, and associate data analytics and client data analytics. If we do not sufficiently invest in and implement new technology, or evolve our business at sufficient speed and scale, our business results may decline materially. Acquiring technological resources and Page - 12 expertise to develop new technologies for our business may require us to incur significant expenses and capital costs. These capital investments, including in AI, may not achieve their expected return. For some solutions, we depend on key vendors and partners to provide technology and support. If these third parties fail to perform their obligations or cease to work with us, our business operations could be negatively affected. Furthermore, there is risk of system failures, disruptions, or vulnerabilities that could compromise the integrity, security, or privacy of generated content. These limitations or failures could result in reputational damage, legal liabilities, or loss of user confidence. Developing, testing,testing and deploying these systems may require additional investment and increase our costs.

Our contingent staffing services employ associates for which we provide workers’ compensation insurance. Our workers’ compensation insurance policies are renewed annually. The majority of our insurance policies are with AIG. Our insurance carriers require us to collateralize a significant portion of our workers’ compensation obligation. The majority of our collateral is held in trust by a third-partythird party for the payment of these claims. The loss or decline in the value of our collateral could require us to seek additional sources of capital to pay our workers’ compensation claims. As our business grows or financial results deteriorate, we have seen the amount of collateral required increase and the timing of providing collateral accelerate, which could occur again in the future. Resources to meet these requirements may not be available. We cannot be certain we will be able to obtain appropriate types or levels of insurance in the future or that adequate replacement policies will be available on acceptable terms. The loss of our workers’ compensation insurance coverage would prevent us from operating as a staffing services business in the majority of our markets. Further, we cannot be certain that our current and former insurance carriers will be able to pay claims we make under such policies.

We self-insure, or otherwise bear financial responsibility for, a significant portion of expected losses under our workers’ compensation program. We have experienced unexpected changes in claim trends, including the severity and frequency of claims, changes in state laws regarding benefit levels and allowable claims, actuarial estimates, and medical cost inflation, and we may experience such changes in the future which could result in costs that are significantly different than initially anticipated or reported and could cause us to record adjustments to the reserves in our financial statements. There is a risk that we will not be able to increase the fees charged to our clients in a timely manner and in a sufficient amount to cover increased costs as a result of any changes in claims-related liabilities.

We experience a degree of revenue concentration with large clients and in certain industries. Generally, our contracts do not contain guarantees of minimum duration, revenue levels, or profitability. Our clients have in the past and could in the future terminate their contracts or materially reduce their requested levels of service at any time. Although we have no client that represents over 10% of our consolidated revenue, there may be clients that exceed 10% of revenue within some of our reportable segments. The deterioration of the financial condition of a large client or a particular industry could have a material adverse effect on our business, financial condition,condition and results of operations. In addition, a significant change to the business, staffing, or recruiting model of these clients, for example a decision to insource our services, has had, and could again have, a material adverse effect on our business, financial condition,condition and results of operations. Reduced demand for our services from larger clients or certain industries, or supply interruptions for manufacturing, have had, and could continue to have, a material adverse effect on our business, financial condition,condition and results of operations. Client concentration also exposes us to concentrated credit risk, as a significant portion of our accounts receivable may be from a small number of clients. If we are unable to collect our receivables, or are required to take additional reserves, our results and cash flows will be adversely affected.

Our business and operations have undergone, and will continue to undergo, significant change as we seek to improve our operational and support effectiveness, whichwhich, if not managed effectivelyeffectively, could have an adverse outcome on our business and results of operations.

We have significantly changed our operating structure and internal processes in recent periods, such as our continued development of technology to leverage our operational effectiveness, and we will continue making similar changes to improve our operational effectiveness. These efforts could strain our systems, management, administrative, operations and financial infrastructure. We believe these efforts are important to our long-term success. Managing and implementing these changes throughout the company will continue to require the further attention of our management team and refinements to our operational, financial and management controls, reporting systems and procedures. These activities will require ongoing expenditures and allocation of valuable management and employee resources. If we fail to manage these changes effectively, our costs and expenses may increase more than we expect and our business, financial condition,condition and results of operations may be harmed.

We expect to continue adjusting the composition of our business segments and entering into new business initiatives as part of our business strategy. New business initiatives, strategic business partners, or changes in the composition of our business mix can be distracting to our management and disruptive to our operations, causing our business and results of operations to suffer materially. New business initiatives in new end markets or new geographies, including initiatives outside of our core business offerings, could involve significant unanticipated challenges and risks includingsuch notas advancingfailing to advance our business strategy, not realizing our anticipated return on investment, experiencing difficulty in implementing initiatives, or diverting management’s attention from our other businesses. In particular, we have made significant investments to advance our technology, and we cannot be sure that those initiatives will be successful, will not interrupt our operations,operations or that we will achieve a return on our investment. These events could cause material harm to our business, operating results or financial condition.

Our ability to attract and retain clients, associates, candidates and employees is affected by external perceptions of our brands and reputation. Negative perceptions or publicity could damage our reputation with current or prospective clients, associates, candidates and employees. Negative perceptions or publicity regarding our employees, business practices, vendors, clients, or business partners may adversely affect our brand and reputation. Undesirable actions by our competitors could adversely impact the reputation of the staffing industry as a whole, negatively impacting our brand. We may not be successful in detecting, preventing, or negating all changes in or impacts on our reputation, including reputational effects of negative social media use by our clients, employees, candidates, or associates. If any factor, including unethical behavior, illegal conduct, poor performance or negative publicity, whether or not true, hurts our reputation, we may experience reduced demand for our services, which could harm our business.

OurPart of our business strategy is focused on driving growth in our business segments by investing in innovative technology and initiatives which drive organic growth. These investments may not achieve our desired results, may be distracting to management or may be impacted by matters outside of our control. If we are unsuccessful in executing any of these strategies, or if these strategies fail to address the changing demands of the market, we may not achieve our goal of revenue and profit growth, which could negatively impact financial results.

We may make additional acquisitions as part of our business strategy.strategy, such as the acquisition of Healthcare Staffing Professionals, Inc., which we announced on February 4, 2025. However, this strategy may be impeded and we may not achieve our long-term growth goals if we cannot identify suitable acquisition candidates or if acquisition candidates are not available under acceptable terms. We may have difficulty integrating acquired companies into our operating, financial planning, and financial reporting systems and may not effectively manage acquired companies to achieve expected growth. Despite diligence and integration planning, acquisitions may also present challenges in bringing together different work cultures and personnel. Acquisitions into new markets could be more difficult for us to forecast or predict business trends, or may come with dependencies with which we have less experience. Difficulties in integrating our acquisitions, including attracting and retaining talent to grow and manage these acquired businesses, may adversely affect our results of operations.

Future acquisitions could result in incurring additional debt and contingent liabilities, an increase in interest expense, amortization expense,expense and charges related to integration costs. Additional indebtedness could also impact financial covenants or other restrictions that would impede our ability to manage our operations. We may also issue equity securities to pay for an acquisition, which could result in dilution to our shareholders. Any acquisitions we announce could be viewed negatively by investors, which may adversely affect the price of our common stock.

All of our acquisitions have involved purchase prices in excess of tangible net asset values, resulting in the creation of goodwill and other intangible assets. Future acquisitions may result in the addition of goodwill and intangible assets to our balance sheet. FutureWe review goodwill and indefinite-lived intangible assets for impairment at least annually, and when events or changes in circumstances indicate that the carrying amount may requirenot usbe recoverable. Intangible assets having finite lives are amortized over their useful lives and are tested for recoverability whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. We may be required to record a significantcharge, chargewhich could be material, in our financial statements during the period in which we determine an impairment ofhas occurred. Impairment charges could materially and adversely affect our acquiredresults goodwillof andoperations intangiblein assetsthe hasperiods occurred,that whichsuch wouldcharges negativelyare impact our financial results.recorded. The potential loss of key executives, employees, clients, suppliers, vendors,vendors and other business partners of businesses we acquire may adversely impact the value of the assets, operations, or businesses we acquire. These events could cause material harm to our business, operating results or financial condition.

Our revolving credit agreement (“Revolving Credit Facility”) contains restrictive covenants that require us to maintain certain financial conditions, which we may fail to meet if there is a material decrease in our profitability. Our failure to comply with these restrictive covenants could result in an event of default, which, if not curedcured, or waived, would require us to repay these borrowings before their due date. We may not have sufficient funds on hand to repay these loans, and if we are forced to refinance these borrowings on less favorable terms, or are unable to refinance at all, our results of operations and financial condition could be materially adversely affected by increased costs and rates.

Our principal sources of liquidity are funds generated from operating activities, available cash and cash equivalents, and borrowings under our Revolving Credit Facility. We must have sufficient sources of liquidity to meet our working capital requirements, fund any increases to our workers’ compensation collateral requirements, service our outstanding indebtedness,indebtedness and finance investment opportunities. Without sufficient liquidity, we could be forced to curtail our operations or we may not be able to pursue promising business opportunities.

If our debt level significantly increases in the future, it could have significant consequences for the operation of our business including requiring us to dedicate a significant portion of our cash flow from operations to servicing our debt rather than using it for our operations. It could also limit our ability to obtain additional debt financing for future working capital, capital expenditures, or other corporate purposes; our ability to take advantage of significant business opportunities, such as acquisitions; and our ability to react to changes in market or industry conditions; and it could put us at a disadvantage compared to competitors with less debt.

Our efforts to align our cost structure with the current state of the staffing and recruitment markets may not be successful. When revenue is negatively impacted by weakening client demand, we have previously and may again in the future find it necessary to take cost cutting measures to minimize the impact on our profitability, such as the workforce reductions we experienced in fiscal 2024.2024 and 2025. Failing to maintain a balance between our cost structure and our revenue could adversely affect our business, financial condition, and results of operations and lead to negative cash flows, which in turn might require us to obtain additional financing to meet our capital needs. If we are unable to secure such additional financing on favorable termsterms, our ability to fund our operations could be impaired, which could have a material adverse effect on our results of operations.

We are subject to federal taxes, a multitude of state and local taxes in the United States (“U.S.”), and taxes in foreign jurisdictions. Changes in the mix of our taxable income by jurisdiction, or an increase in the rate of those taxes, or utilization of tax credits could have a material impact on our financial condition or results of operations. Changes in interpretation of existing laws and regulations by a taxing authorityauthority, or a change in tax policy or regulations, could result in penalties and increased costs in the future. Taxing authorities may challenge our methodologies for valuing intercompany arrangements or may change their laws, policies or regulations, which could increase our worldwide effective tax rate and harm our financial position and results of operation.

The Organization for Economic Co-operation and Development (“the ”OECD”) has introduced a framework to implement a global minimum corporate tax of 15%, referred to as “Pillar Two” or “the minimum tax directive.” ManyIn aspectsJanuary of2026, the minimumOECD taxissued directiveadditional willguidance, beincluding effectivea beginningsafe inharbor fiscalframework yearsfor 2025certain andU.S.-parented 2026.groups. WhileEven itwith isthis uncertainsafe whether the U.S. will enact legislation responding to Pillar Two,harbor, certain countries in which we operate have or are in the process of adopting minimum tax legislation. While we do not currently expect the minimum tax directive to have a material impact on our effective tax rate, our analysis is ongoing as additional guidance is released. It is possible that these legislative changes could have an adverse impact on our effective tax rates or operations.

Failure to maintain adequate financial and management processes and controls could lead to errors in our financial reporting or failan inability to prevent or detect fraud.

We have experienced internal control deficiencies that have not had a material impact on our financial reporting; however, there is no assurance that the impacts of any future weaknesses or deficiencies will not be material. If our management is unable to certify the effectiveness of our internal controls, including those over our third-party vendors, our independent registered public accounting firm cannot render an opinion on the effectiveness of our internal controls over financial reporting, or if material weaknesses in our internal controls are identified, we could be subject to regulatory scrutiny, a loss of public confidence and litigation. In addition, if we do not maintain adequate financial, technology, and management personnel, processes and controls, we may not be able to accurately report our financial performance on a timely basis, or prevent or detect fraud which could cause our stock price to decline.

We incur a risk of liability for claims relating to personal injury, wage and hour violations, immigration, discrimination, harassment, securities law matters, contractual obligations, malpractice, government inquiries and other claims. Some or all of these claims may give rise to negative publicity, investigations, litigation or settlements, which may cause us to incur costs or have other material adverse impacts on our financial statements. Additionally,Should newwe employmenthave anda labormaterial lawsinability andto regulationsproduce mayrecords bein proposedconnection with litigation or adopteda thatgovernment may increaseinquiry, the potentialcost exposureor consequences of employerssuch tomatters employment-relatedcould claimsbecome andmuch litigation.greater.

Certain clients have negotiated broad indemnification provisions regarding the services we provide. In addition, we may have liability to our clients for the action or inaction of our employees that may cause harm to our clients or third parties. In some cases, we must indemnify our clients for certain acts of our associates or arising from our associates’ presence on the client’s job site. We may also incur fines, penalties,penalties and losses that are not covered by insuranceinsurance, or we may experience negative publicity with respect to these matters.

We maintain insurance with respect to some potential claims and costs with deductibles. We cannot be certain we will be able to obtain appropriate types or levels of insurance in the future or that adequate replacement policies will be available on acceptable terms. Jury verdicts in some of the jurisdictions where we operate have become increasingly volatile and difficult to anticipate. Should the final judgments or settlements exceed our insurance coverage, they could have a material adverse effect on our business. Our ability to obtain insurance, its coverage levels, deductibles and premiums, are all dependent on market factors, our loss history, and insurance providers’ assessments of our overall risk profile. Further, we cannot be certain our current and former insurance carriers will be able to pay claims we make under such policies.

We have invested in developing specialized technology and intellectual property, proprietary systems, processes and methodologies that we believe provide us a competitive advantage in serving clients. We cannot guarantee that trade secret, trademark, patent,patent and copyright law protections are adequate to deter misappropriation of our intellectual property, which is an important part of our business. We may be unable to detect the unauthorized use of our intellectual property and take the necessary steps to enforce our rights. We cannot be sure that our servicesservices, products and products,proprietary software, or the products and software of others that we offer to our clients, do not infringe on the intellectual property rights or contractual rights of third parties, and we may have infringement claims, contractual claims,claims or intellectual property claims asserted against us or our clients. These claims may harm our reputation, result in financial liability or prevent us from offering some services or products to clients. The costs of supporting such litigation and disputes may be considerable, and there can be no assurances that a favorable outcome will be obtained. Intellectual property infringement, trade secret misappropriation, and other intellectual property claims and proceedings brought by or against us, whether successful or not, could require significant attention of management and resources and may result in substantial costs and harm to our brand, and may have an adverse effect on our business.

We could be exposed to fines and penalties under U.S.,U.S. foreign,federal, state, or local jurisdictionslaws, as well as foreign laws, for failure to adequately monitor operating requirements and changes thereto, including rules related to the employment and recruiting of associates and candidates. Failure to comply with laws in a particular market may result in substantial liability and could have a significant and negative effect not only on our business in that market, but also on our reputation generally. Although we have implemented policies, procedures and training programs designed to monitor, ensure compliance with and build awareness of these various regulations, we cannot be sure that our employees, contractors, vendors, or agents will not violate such policies. Any such violations could materially damage our reputation, brand, business and operating results.

Our workforce solutions are subject to extensive federal, state, local and foreign government regulation. The cost to comply, and any inability to comply with government regulation, could have a material adverse effect on our business and financial results. Increases or changes in government regulation of the workplace, contingent staffing, the employer-employee relationship, use of AI in the hiring process, immigration laws, procedures, and enforcement practices, or judicial or administrative proceedings related to such regulation, could materially harm our business. From time to time, the contingent staffing industry, in which we operate, has come under criticism from organizations and regulatory agencies which maintain that employment protections, such as wages and benefits, are subverted when clients use our services. For example, some states have addressed these concerns by making it more challenging for clients to use our services, or adding additional administrative burden to our industry. Our business is dependent on contingent staffing arrangements continuing to be a viable source of flexible labor for our clients and flexible employment opportunities for our associates. If additional jurisdictions adopt regulations to our industry due to pressure from organized labor, political groups, or regulatory agencies, it could have a material adverse impact on our business, results of operations and financial conditions.condition.

We compete to meet our clients’ needs for workforce solutions; therefore, we must continually attract qualified associates and candidates to fill positions. Attracting qualified associates and candidates depends on factors such as desirability of the assignment, position requirements, location, the associated wages and other benefits. Many of these factors are outside of our control, including the reputational effects of unfavorable comments on social media outlets about our business or a work site. When unemployment in the U.S. is low, it is challenging to find sufficient eligible associates and candidates to meet our clients’ orders. Generous unemployment benefits, stimulus payments and other direct payments to individuals,individuals have in the past negatively impacted our ability to recruit qualified associates and candidates. A return to similar benefits in the future could further negatively impact our ability to recruit qualified associates and candidates. Significant changes in immigration policy and regulations could increase the demand for workers legally authorized to work in the U.S. who would otherwise be our associates or candidates, and reduce the supply of associates and candidates available to fulfill client orders, which could have a negative impact on our business operations.

Our industry is highly competitive and rapidly innovating, with low barriers to entry. We compete in global, national, regional and local markets with full-service and specialized companies offering contingent staffing as well as business process outsourcing. New entrants to the market include online and app-based staffing providers.providers and AI recruiters. Our competitors offer a variety of flexible workforce solutions. Our clients in the past have decided, and we face the risk that our current or prospective clients may in the future decide, to insource the services we provide. TheAs increasedtechnology continues to evolve, an increasing number of tasks currently performed by people may be replaced by automation, robotics, AI, or other technology advances outside of our control. These technological changes, including advances in the availability andof maturationAI, may reduce demand for our services, enable the development of AIcompetitive toolsproducts mayor services, or enable clientsour current customers to reduce or bypass the use advanced automation capabilities in lieu of our services. Additionally, rapid changes in AI are increasing the competitiveness landscape. We may not be successful in anticipating or responding to these changes and there can be no assurance that we can integrate other technologies we use with AI or that material additional monetary and time expenditures will not be required. In addition, demand for our services could be further reduced by advanced technologies being deployed by our competitors. Therefore, there is no assurance that we will be able to retain clients or market share in the future, nor can there be any assurance that we will, in light of competitive pressures, be able to remain profitable or maintain our current profit margins.

Our business is subject to evolving regulations and stakeholders’ expectations, including environmental, social and governance (“ESG”) matters,expectations that could expose us to numerous risks.

Institutional, individual and other investors, proxy advisor services, regulatory authorities, politicians, clients, employees and other stakeholders are increasingly focused on the ESG practices of companies, including sustainability, diversity, equity, inclusion and belonging, human capital management, data privacy and security, supply chains (including human rights issues) and climate change, among other topics. These requirements, expectations, and/or frameworks, which can include assessments and ratings published by third-party firms, are not synchronizedsynchronized, are subject to frequent change, and vary by stakeholder, industry,industry and geography. Our reputation could be affected by our position, or silence, regarding one or more of these ESG initiatives.

These evolving stakeholder expectations and our efforts and ability to respond to and manage these issues, provide updates on them, and establish and meet appropriate goals, commitments and targets related to ESGthese initiatives present numerous operational, regulatory, reputational, financial, legal, and other risks and impacts. Our efforts in this area may result in a significant increase in costs and may nevertheless not meet, or conflict with, investor, client or other stakeholder expectations and evolving standards or regulatory requirements. Such costs or conflicts may negatively impact our financial results, our reputation, our ability to attract and retain employees, and our attractiveness as a service provider, investment or business partner, or may expose us to government enforcement actions, litigation, and actions by shareholders or stakeholders.

Our business requires the use, processing,processing and storage of personal data and confidential information about candidates, associates, employees and clients. We use information technology and other computer resources to carry out operational and support activities and maintain our business records. We rely on information technology systems to process, transmit, and store electronic information and to communicate among our locations around the world and with our clients, vendors, associates,associates and employees. The breadth and complexity of this infrastructure increases the potential risk of security breaches which could lead to potential unauthorized disclosure of confidential information.

A material incident involving system failure, data loss or security breach could harm our reputation, disrupt our operations and the services we provide to clients, and subject us to significant monetary damages or losses, litigation, negative publicity, regulatory enforcement actions, fines, criminal prosecution, as well as liability under our contracts and laws that protect personal and/or confidential data. We may also incur additional expenses, including the cost of remediating incidents or improving security measures, the cost of identifying and retaining replacement vendors, increased costs of insurance, or ransomware payments. Our insurance coverage may not be sufficient to cover all such costs or consequences, and there can be no assurance that any insurance that we now maintain will remain available under acceptable terms.

Our primary technology systems, headquarters,offices, support facilities and operations are vulnerable to damage or interruption from power outages, employee errors, security breaches, natural disasters, extreme weather conditions, civil unrest and catastrophic events. Failure of our systems, or damage to our facilities, may cause significant interruption to our business and require significant additional capital and management resources to resolve, causing material harm to our business.

We currently use and may, in the future, further rely on AI, which introduces certain risks including dependency on accurate AI performance, potential data privacy and security breaches, challenges in regulatory compliance, ethical considerations, potential workforce disruption, the risk of intellectual property infringement,infringement and emerging technology risks. We use both internally developed AI, as well as various products into which our vendors have incorporated AI. The development, adoption, and use of AI are still in their early stages and ineffective,Ineffective, insufficient, or inadequate development or deployment practices by us or third-party vendors could result in harm to our business, financial condition and results of operations. For example, algorithms and models utilized by generative AI that we use may have limitations, including bias, errors,errors and the inability to handle certain data sets. They may also raise additional legal issues such as concerns regarding copyright protections or data protection.

While we have established a framework governing the Company’scompany’s use and development of AI, including policies and procedures, and we safeguard sensitive information, we cannot ensure that our employees and associates will adhere to those policies and procedures. Failure to address these risks adequately may negatively impact our operations, reputation and financial performance. Further, the company’s use of AI may also lead to novel and urgent cybersecurity risks, including access to or the misuse of personal and confidential data, all of which may adversely affect the company’s operations and reputation.

We depend on the efforts of our executive officers and certain key personnel. Our failure to develop an adequate succession plan for one or more of our executive officers or other key positions could deplete our institutional knowledge base and erode our competitive advantage during a transition. The loss or limited availability of the services of one or more of our executive officers or other key personnel, or our inability to recruit and retain qualified executive officers or other key personnel in the future, could, at least temporarily, have a material adverse effect on our operating results and financial condition. We have recently experienced a CEO and CFO transitiontransitions in addition to other executive team leadership changes, and could have additional executive leadership changes as part of our overall succession plans. Such leadership transitions can be inherently difficult to manage, and an inadequate transition could cause disruption to our business, including our relationships with our clients and employees and fluctuations in the price of our stock.

TrueBlue, Inc. (the “company,” “TrueBlue,” “we,” “us” and “our”) is a leading provider of specialized workforce solutions that helpconnect our clients improve productivityemployers and grow their businesses.talent. Client demand for contingent workforce solutions and outsourced recruiting services is cyclical and dependent on the overall strength of the economy and labor market, as well as trends in workforce flexibility. During periods of rising economic uncertainty, clients reduce their contingent labor in response to lower volumes and reduced appetite for expanding production or inventory, which reduces the demand for our services. That environment also reduces demand for permanent placement recruiting, whether outsourced or in-house. However, as the economy emerges from periods of uncertainty, contingent labor providers are uniquely positioned to respond quickly to increasing demand for labor and rapidly fill new or temporary positions, replace absent employees, and convert fixed labor costs to variable costs. Similarly, companies turn to hybrid or fully outsourced recruiting models during periods of rapid re-hiring and high employee turnover. Our business strategy is focused on growth in each of our business segments by accelerating our digital transformation, expanding in attractive end markets and simplifying our organizational structure, which will enable usgrowth to capture market share, deliverwhile more sustainable growth, and enhanceenhancing our long-term profitability. WeKey have implemented these core strategies for eachelements of this strategy include enhancing our businesssales segments:function, PeopleReady,expanding PeopleScoutin high-growth, less cyclical and PeopleManagement.under-penetrated end markets as well as high-value roles, and accelerating innovation with technology and operational excellence. For additional discussion on our business and strategy, refer to Business, found in Part I, Item 1 of this Annual Report on Form 10-K.

Total company gross profit as a percentage of revenue for the fiscal year ended December 29,28, 20242025 contracted 60310 basis points to 25.9%,22.8%, compared to the prior year. ChangesThe decline was primarily due to changes in revenue mix towardstoward our lower margin staffing businessesbusinesses, andas pricingwell pressuresas wereless partiallyfavorability offsetin byprior loweryear workers’ compensation costsreserve and recognition of certain COVID-19 government subsidies.adjustments.

Total company selling, general and administrative (“SG&A”) expense decreased 16.9%9.7% to $410.9$371.1 million for the fiscal year ended December 29,28, 2024,2025, compared to the prior year. SG&A expense decreased as a result of continued operational cost management actions in response to the decline in demand for our services, and the simplification of our organizational structure in line with our strategic plan. The additional week in fiscal 2023 contributed $6.6 million of expense.

WeIncome recordedtax aexpense goodwillwas and intangible asset impairment charge of $59.7$2.3 million duringfor the fiscal year ended December 29,28, 2024,2025, primarily relatedcompared to our$37.2 PeopleReadymillion reportingfor unit.the Thissame significant non-cash impairment charge, combined with U.S. and foreign pre-tax losses beginningperiod in 2023the andprior continuingyear. intoWe 2024, resulted in our conclusioncontinue to recordmaintain a valuation allowance against our U.S. federal, state,state and certain foreign deferred tax assets,assets whichinitially increasedestablished ourin the fiscal second quarter of 2024, resulting in no current period income tax expensebenefit byfor $63.7these million.jurisdictions.

As of December 29,28, 2024,2025, we had cash and cash equivalents of $22.5$24.5 million and $118.5outstanding debt of $65.8 million. As of December 28, 2025, $67.6 million was available under the most restrictive covenant of our revolving credit agreement (“Revolving Credit Facility”), for total liquidity of $141.1$92.1 million. As of December 29, 2024, $7.6 million was drawn on the Revolving Credit Facility as a Swingline loan.

PeopleManagement revenue declinedgrew 6.6%0.4% to $542.2$544.4 million for the fiscal year ended December 29,28, 2024,2025, compared to the prior year. Revenue declinedgrew as clientsa inresult ourof on-sitestrong businesses continued to be hesitant to make significant changes to their workforce strategies after taking steps to reduce their dependence on variable labor, primarily within the retail industry. These declines were partially offset by growthdemand within our commercial driving business, partially offset by volume declines within our OnSite business. The additional week in fiscal 2023 contributed $7.6 million in revenue. Despite the challenging market dynamics,OnSite new business wins during fiscal 20242025 significantly outperformed fiscal 2023,2024, most of which wewere expectwon toin contributethe tosecond half of fiscal 2025, positioning this business for future revenue growth.

Gross profit as a percentage of revenue contracted 60310 basis points to 25.9%22.8% for the fiscal year ended December 29,28, 2024,2025, compared to 26.5%25.9% for the prior year. Changes in revenue mix resulted in a contraction of 90200 basis points, primarily driven in part by revenue shiftsgrowth towardin renewable energy clients within our lowerPeopleReady marginsegment, staffingas businesses.well Ouras staffingsoftness businessesin contributedRPO revenue and the acquisition of Healthcare Staffing Professionals, Inc. within our PeopleSolutions segment. Higher workers’ compensation costs, driven by less favorable workers’ compensation reserve adjustments, resulted in an additional 1090 basis points of contractioncontraction. asIn aaddition, resultdepreciation of pricingcertain pressuresoftware typicalwithin PeopleSolutions, reported in cost of aservices, low demand environment. These contractions were partially offset bycontributed 20 basis points of expansion from lower workers’ compensation costs driven by favorable development of prior year reserves, as well as 20 basis points of expansion from recognition of certain COVID-19 government subsidies in the current year.contraction.

Total company SG&A expense decreasedimproved by $83.7$39.8 million or 16.9%9.7% for the fiscal year ended December 29,28, 2024,2025, compared to the prior year. We have continued to execute operationalOperational cost management actions have resulted in responsea leaner cost structure, which strategically positions us to thedrive declinestrong inprofitability as industry demand for our services, and simplify our organizational structure in line with our strategic plan.rebounds. SG&A expense in the current year included a benefit, net of related fees, of $6.8$5.4 million for recognition of certain COVID-19 government subsidies, offsetcompared byto a benefit of $6.8 million included in the prior year. SG&A expense in fiscal year 2024 included $6.4 million of accelerated third-party licensing fees associated with the previous version of our JobStack® app. SG&A expense in the prior year included $5.8 million of accelerated compensation costs related to transitions in our executive leadership, as well as an additional week which added $6.6 million of expense.

We performed anour annual impairment test duringas of the first day of our fiscal second quarter of 2024.2025. As a result of this impairment test, we concluded that a trade name/trademark related to our PeopleManagement segment exceeded its estimated fair value and we recorded a non-cash impairment charge of $0.6$0.2 million, which was included in goodwill and intangible asset impairment charge on our Consolidated Statements of Operations and Comprehensive Income (Loss) for the fiscal year ended December 29,28, 2024.2025. The charge was primarily driven by recentan revenueincrease performance ofin the relateddiscount business given a decline in demand and overall economic uncertainty. No further impairment charges were recognized during the fiscal year ended December 29, 2024.rate. The remaining balance for this trade name/trademark was $2.7$2.5 million as of December 29,28, 2024.2025. See Note 6: Goodwill and Intangible Assets, to our consolidated financial statements found in Item 8 of this Annual Report on Form 10-K, for additional details.

Our tax provision and our effective tax rate are subject to variation due to several factors, including variability in our pre-tax and taxable income or loss by jurisdiction, tax credits, government audit developments, changes in laws, regulations and administrative practices, valuation allowances recorded on deferred tax assets, and relative changes in expenses or losses for which tax benefits are not recognized. Additionally, our effective tax rate can be more or less volatile based on the amount of pre-tax income or loss. For example, the impact of discrete items, tax credits, and non-deductible expenses and valuation allowance on our effective tax rate iscan be greater when our pre-tax income or loss is lower.

Significant fluctuations in our effective tax rate forFor the fiscal year ended December 29,28, 20242025, wereour income tax expense is related primarily dueto our foreign operations. We continue to changesmaintain in thea valuation allowance against our U.S. federal, state and certain foreign deferred tax assets, asinitially wellestablished as tax benefits from hiring credits. Based on our deferred tax asset realizability assessments performed duringin the fiscal yearsecond endedquarter December 29,of 2024, weresulting recordedin additionalno valuation allowances against U.S. federal, state and certain foreign deferredincome tax assets.benefit for these jurisdictions. Our conclusion to maintain a valuation allowance was driven by U.S. and certain foreign pre-tax losses beginning in fiscal 2023 and continuing intothrough 2024,fiscal 2025, combined with the significant non-cash goodwill impairment charge of $59.1 million recorded during the fiscal year ended December 29, 2024.

We evaluate segment performance based on segment revenue and segment profit. Segment profit includes revenue, related cost of services, and ongoing operating expenses directly attributable to the reportable segment. Segment profit excludes goodwill and intangible asset impairment charges, depreciation and amortization expense, unallocated corporate general and administrative expense, interest and other income (expense), income taxes, and other costs and benefits not considered to be ongoing. See Note 15: Segment Information, to our consolidated financial statements found in Item 8 of this Annual Report on Form 10-K, for additional details on our reportable segments, including a reconciliation of segment profit to income (loss) before tax expense (benefit).

PeopleManagement segment profit grew $8.2$2.7 million and grew as a percentage of revenue for the fiscal year ended December 29,28, 2024,2025, compared to the prior year. This growthGrowth was primarily duedriven toby thehigher decreaserevenue from our commercial driving business, coupled with a reduction in SG&A expense, which was the result of disciplined cost management actions to simplify and streamline our organizational structure to improve efficiency.

•For the fiscal first quarter of 2025,2026, we expect revenue to declinegrow between 13%3% and 7%9% as compared to the same period in the prior year. The decline assumes current market conditions continue, andgrowth includes approximately 1% headwind due to the sale of Labour Ready Temporary Services, Ltd. (“PeopleReady Canada”) in early 2024, partially offset by approximately 3% inorganic growth from the acquisition of Healthcare Staffing Professionals, Inc. (“HSP”) in late January 2025.

•For the fiscal first quarter of 20252026 we anticipate gross profit as a percentage of revenue to decline between 70350 and 30310 basis points as compared to the same period in the prior year, primarily due to continuedprior changesyear inworkers’ businesscompensation mix.reserve adjustments not expected to repeat at the same level.

•For fiscal 2025,2026, capital expenditures and spendingcapitalized forcosts associated with the development of software as a service assets are expected to be between $19$13 million and $23$17 million, with approximately $3$1 million of this amount relating to spending for software as a service assets.

We believe we have a strong financial position and sufficient sources of funding to meet our short- and long-term obligations. As of December 29,28, 2024,2025, we had $22.5$24.5 million in cash and cash equivalents and $7.6$65.8 million debt outstandingoutstanding. as a Swingline loan underUnder the Revolving Credit Facility.Facility, Anan additional $2.7$11.4 million of the Revolving Credit Facility was utilized by outstanding standby letters of credit, leaving $244.7$177.8 million unused, of which $118.5$67.6 million is available for additional borrowing after considering our most restrictive covenant. WeSee haveNote an8: optionLong-Term Debt, to increaseour theconsolidated totalfinancial linestatements found in Item 8 of creditthis amountAnnual underReport theon Form 10-K, for details on our Revolving Credit Facility from $255.0 million to $405.0 million, subject to lender approval.Facility.

Cash generated through our core operations is generally our primary source of liquidity. Our principal ongoing cash needs are to finance working capital, fund capital expenditures, repay outstanding Revolving Credit Facility balances,balances and execute share repurchases. We may also need cash to fund future acquisitions. We manage working capital through timely collection of accounts receivable, which we achieve through focused collection efforts and tightly monitoring trends in days sales outstanding. While client payment terms are generally 90 days or less, we pay our associates daily and weekly, so additional financing through the use of our Revolving Credit Facility is sometimes necessary to support working capital needs in times of revenue growth. We also manage working capital through efficient cost management and strategically timing payments of accounts payable.

Outside of ongoing cash needed to support core operations, our insurance carriers and certain state workers’ compensation programs require us to collateralize a portion of our workers’ compensation obligation, for which they become responsible should we become insolvent. On a regular basis, these entities assess the amount of collateral they will require from us relative to our workers’ compensation obligation. Such amounts can increase or decrease independent of our assessments and reserves. We continue to have risk that these collateral requirements may be increased by our insurers due to our loss history and market dynamics. We generally anticipate that our collateral commitments will grow as our business grows. We pay our premiums and deposit our collateral, if required, in installments. The collateral typically takes the form of cash and cash-backed instruments, highly rated investment grade securities, letters of credit,credit and surety bonds. Restricted cash, cash equivalents and investments supporting our self-insured workers’ compensation obligation are held in a trust at the Bank of New York Mellon (“Trust”) and are used to pay workers’ compensation claims as they are filed. See Note 7: Workers' Compensation Insurance and Reserves, and Note 4: Restricted Cash, Cash Equivalents and Investments, to our consolidated financial statements found in Item 8 of this Annual Report on Form 10-K, for details on our workers’ compensation program as well as the restricted cash, cash equivalents and investments held in Trust.

Total collateral commitments decreased $24.5$45.5 million during the fiscal year ended December 29,28, 20242025 primarily due to the use of collateral to satisfy workers’ compensation claims, as well as a decrease in collateral levels required by our insurance carriers, asconsistent well aswith the use$43.0 ofmillion collateraldecrease to satisfyin workers’ compensation claims.claims reserve. See Note 9: Commitments and Contingencies, to our consolidated financial statements found in Item 8 of this Annual Report on Form 10-K, for additional details on our workers’ compensation commitments. We continue to actively manage workers’ compensation costs by focusing on improving our associate safety programs,programs and actively control costs with our network of service providers. These actions have had a positive impact creating favorable adjustments to workers’ compensation liabilities recorded in the prior periods, as well as lowering our required collateral levels. Continued favorable adjustments to our prior year workers’ compensation liabilities are dependent on our ability to continue to aggressively lower accident rates and costs of our claims. Due to our progress in worker safety improvements and the resulting reduction in the frequency and severity of accident rates, we expect diminishing favorable adjustments to our workers’ compensation liabilities going forward.

Operating cash flows consist of net income (loss) adjusted for non-cash benefits and expenses, and changes in operating assets and liabilities.

As client demand declines,improves, the result is agenerally deleveragingan ofincrease in accounts receivable and accounts payable. Accrued wages and benefits can fluctuate based on whether the period end requires the accrual of one or two weeks of payroll, the amount and timing of bonus payments,payments and timing of payroll tax payments.

Net cash providedused by accounts receivable collections through deleveraging during the fiscal year ended December 29,28, 20242025 was partiallyprimarily offsetdue byto increased revenue, as well as an increase in days sales outstanding of approximately threetwo days compared to 2023,fiscal year ended December 29, 2024, primarily due to a shift in business mix towards clients with longer payment terms. Net cash used for payments on accounts payable and other accrued expenses was primarily related to timing of payments to vendorsvendors. In addition, our workers’ compensation claims reserve decreases as wellclaims are paid, and as a decreaseresult of favorable adjustments of prior year reserves, both of which were the case in certain accrued expenses that fluctuate with revenue. Net cash used for payments on accrued wages and benefits was primarily due to the releasecurrent of certain COVID-19 government subsidy reserves.period.

Investing cash flows consist of capital expenditures, cash used for business acquisitions, net proceeds from divestitures, and purchases, sales and maturities of restricted investments, which are managed in line with our workers’ compensation collateral funding requirements and timing of claim payments.

CapitalThe expendituresprimary use of cash for investing activities during the fiscal year ended December 29,28, 20242025 was the acquisition of Healthcare Staffing Professionals, Inc. Capital expenditures included continued investments to upgrade our PeopleReady on-demand technology platform. OurCash capitalused expenditures werewas partially offset by cash provided by maturities of restricted investmentsinvestments, which were not reinvested due to paylower workers’ compensation claimscollateral exceeding purchases of new restricted investments.requirements.

Financing cash flows consist primarily of repurchases of common stock as part of our publicly announced share repurchase program, amounts to satisfy employee tax withholding obligations upon the vesting of restricted stock, and the net change in our Revolving Credit Facility.Facility, and proceeds from the sale of common stock through our employee stock purchase plan.

Net cash usedprovided inby financing activities during the fiscal year ended December 29,28, 20242025 was primarily due to usedraws on our Revolving Credit Facility, primarily to fund the acquisition of $21.3Healthcare millionStaffing Professionals, Inc. and to repurchasefinance ourworking commoncapital stockneeds inas revenue increased. While we have not executed share repurchases during the openfiscal market.year As ofended December 29,28, 2024,2025, $33.5 million remains available for repurchase under existing authorization,authorization thoughas weof December 28, 2025. We are limited to $25.0 million in aggregate share repurchases in any twelve-month period by our financial covenants. Common stock repurchases were partially offset by a net increase in debt outstanding under our Revolving Credit Facility.

This Quarterly Report on Form 10-Q should be read in conjunction with the risk factors set forth in Part I, Item 1A of our Annual Report filed on Form 10-K for the year ended December 28, 2025. With the exception of the risk factorfactors noted below, which updatesupdate the specific risk factorfactors in our Annual Report filed on Form 10-K for the year ended December 28, 2025, there have been no material changes from the risk factors previously disclosed therein.

Investing in our securities involves risk. In addition to the updated risk factorfactors below and all other information set forth in this Quarterly Report on Form 10-Q, the risk factors described in Part I, Item 1A of our Annual Report filed on Form 10-K for the year ended December 28, 2025 should be considered in evaluating our future prospects. If any of the events described herein or therein occur, our business, financial condition, results of operations, liquidity, or access to the capital markets could be materially and adversely affected.

We value constructive input from investors and regularly engage in dialogue with our shareholders regarding strategy and performance. Activist shareholders or others who disagree with the composition of the Board of Directors,Board, our strategy or the way the companyCompany is managed have sought and may again seek to effect change through various strategies and channels, such as through commencing a proxy contest, making public statements critical of our performance or business, or engaging in other similar activities.

•PeopleReady provides clients with dependable access to qualified associates for their on-demand, contingent general and skilled labor needs to supplement their permanent workforce,workforce across a broad range of industries including construction, transportation, manufacturing, retail, hospitality and energy. PeopleReady connects our clients with individuals looking for on-demand, general temporary and temp-to-hire positions through our vast network of physical branches across all 50 states in the United States (“U.S.”) and Puerto Rico. Augmenting our branch network, our proprietary mobile app, JobStack®, connects people with on-demand work 24 hours a day, seven days a week. PeopleReady also connects skilled tradespeople with temporary work across a wide range of trades, including carpentry, electrical, plumbing, welding and energy installation positions through our PeopleReady Skilled Trades and RenewableWorks brands.

•PeopleManagement provides and manages contingent associates at our clients’ facilities through our Staff Management | SMX (“Staff Management”) and SIMOS Insourcing Solutions (“SIMOS”) branded servicesbrands throughout the U.S., Canada and Puerto Rico. Our client engagements include scalable recruiting, screening, hiring and management of the contingent workforce. We deploy dedicated management and service teams that work side-by-side with a client’s full-time workforce and specialize in labor-intensive manufacturing, warehousing and distribution. Our proprietary hiring and workforce management software, Stafftrack®, enables us to recruit and connect the best candidates with on-site assignments. PeopleManagement also provides dedicated and contingent commercial drivers to the transportation and distribution industries through our Centerline Drivers (“Centerline”) brand. Centerline matches drivers to each client’s specific needs, allowing them to improve productivity, control costs, ensure compliance and deliver improved service.

•PeopleSolutions provides clients with services focusing on professional and specialized talent acquisition, as well as workforce management and compliance, across a wide variety of industries andindustries, primarily in the U.S., Canada, the United Kingdom and Australia. PeopleSolutions provides recruitment process outsourcing (“RPO”), healthcare talent acquisition services, managed service provider (“MSP”) solutions,solutions and talent advisory services through our PeopleScout brand. PeopleSolutions also facilitates the placement of skilled healthcare professionals in extended roles with governmental agencies, healthcare systems and educational institutions through our Healthcare Staffing Professionals (“HSP”) brands.brand. HSP streamlines hiring for employers while connecting job seekers with opportunities to grow and advance their careers. Assisting our PeopleSolutions recruiting teams is our proprietary technology platform, Affinix®, which rapidly sources a qualified talent pool, and further engages candidates through a seamless digital experience.

Fiscal firstsecond quarter of 2026 summary

The following results are for the thirteen weeks ended MarchJune 29,28, 2026, compared to the same period in the prior year:

•Total companyCompany selling, general and administrative (“SG&A”) expense improveddeclined 7.7%6.6% to $87.3$83.8 million, compared to $94.6$89.8 million.

•We recorded a goodwillnon-cash impairmentloss chargeon assets held-for-sale of $3.7$3.0 million related to our HSPTacoma reporting unit.headquarters.

•As of MarchJune 29,28, 2026, we had cash and cash equivalents of $24.1$23.3 million, outstanding debt of $73.9$82.4 million, and $36.0$56.2 million was unused on our borrowing base of our revolving credit agreement (“Amended Revolving Credit Facility”), resulting in total liquidity of $60.2$79.5 million.

Total companyCompany revenue grew 7.6%11.8% to $398.6$443.0 million for the thirteen weeks ended MarchJune 29,28, 2026, and grew 9.8% to $841.6 million for the twenty-six weeks ended June 28, 2026, compared to the same periodperiods in the prior year. The increase in revenue was primarily driven by growth within our skilled businesses, specifically in the energy and commercial driving industries. This growthGrowth was partially offset by declines within on-demand, on-site and permanent hiring, as business conditions continue to stabilize within these offerings. Growth for the twenty-six weeks ended June 28, 2026 was also partially offset by declines within our on-demand business; however, this business returned to growth for the thirteen weeks ended June 28, 2026.

PeopleReady revenue grew 18.9%23.0% to $225.1$262.3 million for the thirteen weeks ended MarchJune 29,28, 2026, and grew 21.1% to $487.4 million for the twenty-six weeks ended June 28, 2026, compared to the same periodperiods in the prior year,year. The increase in revenue for both periods was primarily as a result of growth within our skilled businesses, specifically the energy industry. Growth from our skilled businesses was partially offset by declines within ourOur on-demand business,business as broader market conditions continuecontributed to stabilize.growth during the thirteen weeks ended June 28, 2026.

Gross profit as a percentage of revenue declined 350290 basis points to 19.8%20.7% for the thirteen weeks ended MarchJune 29,28, 2026, compared to the same period in the prior year. Higher workers’ compensation costs, driven by less favorable workers’ compensation reserve adjustments, resulted in 220120 basis points of contraction. Additionally, changesChanges in revenue mix resulted in 13090 basis points of contraction, primarily driven by revenue shifts toward our lower margin staffing businesses. Additionally, the thirteen weeks ended June 29, 2025 included a benefit for recognition of certain COVID-19 government subsidies, resulting in 80 basis points of contraction for the thirteen weeks ended June 28, 2026.

Total companyCompany SG&A expense improveddeclined by 7.7%,6.6%, or $7.3$6.0 million, for the thirteen weeks ended MarchJune 29,28, 2026, and declined by 7.2%, or $13.3 million, for the twenty-six weeks ended June 28, 2026, compared to the same periodperiods in the prior year,year. reflecting the effectiveness of the operational costCost management actions we have implemented. These actions have enhanced the efficiency of our cost structure and position us to deliver stronger profitability as industry demand rebounds.

Depreciation and amortization increaseddecreased for the thirteen and twenty-six weeks ended MarchJune 29,28, 2026, compared to the same periodperiods in the prior year. This wasyear, primarily due to highercertain amortizationassets expensebecoming relatedfully todepreciated theduring acquisition of Healthcare Staffing Professionals, Inc. on January 31, 2025, which resulted in an additional month of amortization expense in the current period.2025.

We performed an interim impairment test as of the last day of our fiscal first quarter of 2026. As a result of this impairment test, we concluded that the carrying amount of the HSP reporting unit exceeded its estimated fair value. Thus, we recorded a non-cash goodwill impairment charge of $3.7 million, which was included in goodwill impairment charge on our Consolidated Statements of Operations and Comprehensive Income (Loss) for the thirteentwenty-six weeks ended MarchJune 29,28, 2026. The goodwill impairment was primarily driven by downward revisions to future projections associated with our HSP reporting unit, an increase in discountthe rate,weighted average cost of capital selected, and a decline in the market capitalization of similar publicly traded companies. The remaining goodwill balance for HSP as of MarchJune 29,28, 2026 was $13.7 million. See Note 6: Goodwill and Intangible Assets to our consolidated financial statements found in Item 1 of this Quarterly Report on Form 10-Q, for additional details.

For the thirteentwenty-six weeks ended MarchJune 29,28, 2026, our income tax expense is related primarily to our foreign operations. We continue to maintain a valuation allowance against our U.S. federal, state and certain foreign deferred tax assets, initially established in the fiscal second quarter of 2024, resulting in no income tax benefit for these jurisdictions. Our conclusions to maintain a valuation allowance were driven by U.S. and foreign pre-tax losses beginning in 2023 and continuing into 2026, combined with the significant non-cash goodwill impairment charge of $59.1 million recorded during fiscal 2024.

We evaluate performance based on segment revenue and segment profit (loss). Segment revenue is net of intercompany eliminations. Segment profit (loss) includes revenue, related cost of services, and ongoing operating expenses directly attributable to the reportable segment. Segment profit (loss) excludes loss on assets held-for-sale, goodwill and intangible asset impairment charges, depreciation and amortization expense, unallocated corporate general and administrative expense, interest and other income (expense), income taxes, and other costs and benefits not considered to be ongoing. See Note 13: Segment Information, to our consolidated financial statements found in Item 1 of this Quarterly Report on Form 10-Q, for additional details on our reportable segments, as well as a reconciliation of segment profit (loss) to loss before tax expense.

PeopleManagement segment profit grew $0.4$0.9 million and $1.2 million for the thirteen and twenty-six weeks ended MarchJune 29,28, 2026, and also improved as a percentage of revenue, compared to the same periodperiods in the prior year.year, respectively. Growth was primarily driven by a reduction in SG&A expense, which was the result of disciplined cost management actions to streamline our organizational structure and improve efficiency.

PeopleSolutions segment profit grew $0.7$2.3 million and $3.0 million for the thirteen and twenty-six weeks ended MarchJune 29,28, 2026, and also grew as a percentage of revenue, compared to the same periodperiods in the prior year.year, respectively. Growth was primarily driven by cost management actions to improvedeliver efficiency and scalability,improve as well as inorganic growth from the acquisition of Healthcare Staffing Professionals, Inc.profitability.

We believe we have a strong financial position and sufficient sources of funding to meet our short- and long-term obligations. Our Amended Revolving Credit Facility provides for a revolving line of credit of up to $175.0 million, with an option to increase the amount by $150.0 million, subject to lender approval. As of MarchJune 29,28, 2026, we had $24.1$23.3 million in cash and cash equivalents and $73.9$82.4 million debt outstanding. Under the Amended Revolving Credit Facility, $11.4$11.3 million was utilized by outstanding standby letters of credit. As of MarchJune 29,28, 2026, our borrowing base was $121.3$150.0 million, leaving $36.0$56.2 million unused on our borrowing base.

Total collateral commitments decreased $5.8$20.4 million during the thirteen-weektwenty-six-week period ended MarchJune 29,28, 2026, primarily due to the use of collateral to satisfy workers’ compensation claims, as well as a decrease in collateral levels required by our insurance carriers, consistent with the $8.6$10.8 million decrease in workers’ compensation claims reserve. See Note 9: Commitments and Contingencies, to our consolidated financial statements found in Item 1 of this Quarterly Report on Form 10-Q, for additional details on our workers’ compensation commitments. We continue to actively manage workers’ compensation cost by focusing on improving our associate safety programs and actively control costs with our network of service providers. These actions have had a positive impact creating favorable adjustments to workers’ compensation liabilities recorded in prior periods. Continued favorable adjustments to our prior year workers’ compensation liabilities are dependent on our ability to continue to aggressively lower accident rates and costs of our claims. Due to our progress in worker safety improvements and the resulting reduction in the frequency and severity of accident rates, we expect diminishing favorable adjustments to our workers' compensation liabilities going forward.

Net cash used by accounts receivable during the thirteentwenty-six weeks ended MarchJune 29,28, 2026 was primarily due to an increase in revenue coupled with an increase in days sales outstanding of approximately fourtwo days compared to the fiscal fourth quarter of 2025, both reflecting ashifts higherin percentagerevenue ofand corresponding receivables mix toward clients with longer payment terms, partially offset by a decrease in revenue.terms. In addition, our workers’ compensation claims reserve for estimated claims decreasesdecreased as claims are paid, as wasover the caseperiod, indriven theby currentprior-year period.claim payments.

Investing cash flows consist of capital expenditures, business acquisitions, net proceeds from divestiture, and purchases, sales, and maturities of restricted investments, which are managed in line with our workers’ compensation collateral funding requirements and timing of claim payments.

Net cash provided by investing activities during the thirteentwenty-six weeks ended MarchJune 29,28, 2026 was primarily due to maturities of restricted investments, which were only partially reinvested due to lower workers’ compensation collateral requirements. Cash provided was partially offset by capital expenditures including continued investments to upgrade our PeopleReady on-demand technology platform.

Net cash provided by financing activities during the thirteentwenty-six weeks ended MarchJune 29,28, 2026 was due to draws on our Amended Revolving Credit Facility, primarily to finance working capital needs as revenue increased. While we did not execute share repurchases during the thirteentwenty-six weeks ended MarchJune 29,28, 2026, $33.5 million remains available for repurchase under existing authorizations as of MarchJune 29,28, 2026.

Our critical accounting estimates are discussed in Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations; Summary of Critical Accounting Estimates” in our Annual Report on Form 10-K for the fiscal year ended December 28, 2025. The following has been updated to reflect changes made during the thirteentwenty-six weeks ended MarchJune 29,28, 2026.

We evaluate goodwill and indefinite-lived intangible assets for impairment on an annual basis as of the first day of our fiscal second quarter, or whenever events or circumstances make it more likely than not that an impairment may have occurred. These events or circumstances could include a significant change in general economic conditions, deterioration in industry environment, changes in cost factors, declining operating performance indicators, legal factors, competition, client engagement, changes in the carrying amount of net assets, a sale or disposition of a significant portion of a reporting unit, or a sustained decrease in stock price. We monitor the existence of potential impairment indicators throughout the fiscal year.

We test for goodwill impairment at the reporting unit level. We consider our reporting units to be our operating segments or one level below that (the component level) based on our organizational structure. Our reporting units with remaining goodwill as of MarchJune 29,28, 2026 were Centerline, PeopleScout, and HSP.

During the thirteenfiscal weeksfirst endedquarter March 29,of 2026, managementthe determinedsustained thatdecrease ain triggering event had occurred at our HSP reporting unit as a result of a lower Company stockshare price and resulting decrease in market capitalization.capitalization, Anas additionalwell impairment indicator wasas downward revisions to future revenue and profitability projections associatedrelated withto ourthe HSP reporting unit,unit asdue a result ofto reductions in government funding that has impacted certain HSP clients.clients, resulted in management determining that a triggering event occurred for the HSP reporting unit. Therefore, we performed an interim goodwill impairment test for this reporting unit as of the last day of our fiscal first quarter.quarter of 2026. The weighted average cost of capital used in our most recent impairment test was 16.5%, which was risk-adjusted to reflect the specific risk profile of the HSP reporting unit and was 16.5%.unit.

Based on our interim impairment test as of the last day of our fiscal first quarter of 2026, we concluded that the carrying amount of the HSP reporting unit exceeded its estimated fair value. Thus, we recorded a non-cash goodwill impairment charge of $3.7 million, which was included in goodwill and intangible asset impairment charge on our Consolidated Statements of Operations and Comprehensive Income (Loss) for the thirteentwenty-six weeks ended MarchJune 29,28, 2026. The goodwill impairment was primarily driven by downward revisions to future projections associated with our HSP reporting unit, aan declineincrease in discountthe rate,weighted average cost of capital selected, and a decline in market capitalization of similar publicly traded companies. The remaining goodwill balance for HSP as of MarchJune 29,28, 2026 was $13.7 million. Any significant adverse change in our near- or long-term projections or macroeconomic conditions could result in future impairment charges. We will continue to closely monitor the operational performance of this reporting unit.