Press Releases

BBSI Reports Third Quarter 2017 Financial Results

- Q3 Net Revenues up 7% to $240.1 Million (Non-GAAP Gross Revenues up 11%) -

VANCOUVER, Wash., Nov. 07, 2017 (GLOBE NEWSWIRE) -- Barrett Business Services, Inc. (“BBSI” or the “Company”) (NASDAQ:BBSI), a leading provider of business management solutions, reported financial results for the third quarter ended September 30, 2017.

Third Quarter 2017 Financial Summary vs. Year-Ago Quarter

  • Net revenues up 7% to $240.1 million.
  • Non-GAAP gross revenues up 11% to $1.4 billion.
  • Net income up to $14.8 million, or $1.96 per diluted share, compared to net income of $10.2 million, or $1.38 per diluted share.

“Strong continued performance yielded record earnings in the third quarter,” said Michael Elich, president and CEO of BBSI. “Additionally, we delivered solid growth marked by the addition of 169 net new PEO clients.

“Our top-line growth was slightly impacted by one less work day in the third quarter when compared to the same quarter last year. This tempered our revenue growth rate and same-customer sales, which came in at 5.9%. However, when adjusting for this difference, our non-GAAP gross revenues increased by 13% and same-customer sales were up 8.4%.”

Third Quarter 2017 Financial Results

Net revenues in the third quarter of 2017 increased 7% to $240.1 million compared to $225.1 million in the third quarter of 2016.

Total non-GAAP gross revenues in the third quarter increased 11% to $1.4 billion compared to $1.2 billion in the same year-ago quarter (see “Reconciliation of Non-GAAP Financial Measures” below). The increase was primarily due to the continued build in the Company’s PEO client count and same-customer sales growth, which was partially offset by a decrease from staffing revenues.

Net income for the third quarter of 2017 increased to $14.8 million, or $1.96 per diluted share, compared to net income of $10.2 million, or $1.38 per diluted share, in the year-ago quarter.

Revised Outlook

For the full year 2017, the Company continues to expect diluted earnings per share to be approximately $3.10. This continues to assume approximately $0.13 per diluted share in estimated costs associated with accounting and securities law issues, as well as the return to an effective tax rate of approximately 32.9%.

BBSI now expects non-GAAP gross revenues for the next 12-month period (through September 30, 2018) to increase approximately 14% (previous outlook was 15%). This revision is partially attributed to slight headwinds in staffing and a continued tightening of the labor market.

Conference Call

BBSI will conduct a conference call tomorrow, November 8, 2017 at 12:00 p.m. Eastern time (9:00 a.m. Pacific time) to discuss its financial results for the third quarter ended September 30, 2017. The Company’s President and CEO Michael Elich and CFO Gary Kramer will host the call, followed by a question and answer period.

Date: Wednesday, November 8, 2017
Time: 12:00 p.m. Eastern time (9:00 a.m. Pacific time)
Toll-free dial-in number: 1-800-930-1344
International dial-in number: 1-719-457-2085
Conference ID: 2614932

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios Group at 1-949-574-3860.

The conference call will be broadcast live and available for replay here and via the investor relations section of the BBSI website at www.barrettbusiness.com.

A replay of the conference call will be available after 3:00 p.m. Eastern time on the same day through December 8, 2017.

Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 2614932

Reconciliation of Non-GAAP Financial Measures

In addition to the results prepared in accordance with generally accepted accounting principles (“GAAP”), the Company is disclosing non-GAAP gross revenues.

The Company reports its Professional Employer Services revenues on a net basis because it is not the primary obligor for the services provided by the Company’s co-employed clients to their customers. The gross revenues and cost of revenues information below, although not in accordance with GAAP, is presented for comparison purposes and because management believes such information is more informative as to the level of the Company’s business activity and more useful in managing its operations.

                     
        (Unaudited)   (Unaudited)
        Three Months Ended   Nine Months Ended
Non-GAAP (in thousands)   September 30,   September 30,
        2017   2016   2017   2016
                     
                     
Gross revenues:                
  Professional employer services   $ 1,328,465   $ 1,184,159   $ 3,750,908   $ 3,314,641
  Staffing services     42,747     47,874     118,391     121,806
    Total gross revenues     1,371,212     1,232,033     3,869,299     3,436,447
Gross cost of revenues:                
  Direct payroll costs     1,154,012     1,036,769     3,258,993     2,889,278
  Payroll taxes and benefits     94,922     82,888     304,268     269,533
  Workers' compensation     67,361     62,817     196,457     175,437
    Total gross cost of revenues     1,316,295     1,182,474     3,759,718     3,334,248
Gross margin   $ 54,917   $ 49,559   $ 109,581   $ 102,199
                     

A reconciliation of net revenues to non-GAAP gross revenues is as follows:

       
      (Unaudited)
      Three Months Ended September 30,
      Net Revenue       Gross Revenue
(in thousands) Reporting Method           Reporting Method
      (GAAP)   Non-GAAP Adjustments   (Non-GAAP)
      2017   2016   2017   2016   2017   2016
                           
Revenues:                      
  Professional                      
    employer services $ 197,388   $ 177,229   $ 1,131,077   $ 1,006,930   $ 1,328,465   $ 1,184,159
  Staffing services   42,747     47,874     -     -     42,747     47,874
    Total revenues $ 240,135   $ 225,103   $ 1,131,077   $ 1,006,930   $ 1,371,212   $ 1,232,033
Cost of revenues $ 185,218   $ 175,544   $ 1,131,077   $ 1,006,930   $ 1,316,295   $ 1,182,474
                           
                           
      (Unaudited)
      Nine Months Ended September 30,
      Net Revenue       Gross Revenue
(in thousands) Reporting Method           Reporting Method
      (GAAP)   Non-GAAP Adjustments   (Non-GAAP)
      2017   2016   2017   2016   2017   2016
                           
Revenues:                      
  Professional                      
    employer services $ 557,315   $ 497,682   $ 3,193,593   $ 2,816,959   $ 3,750,908   $ 3,314,641
  Staffing services   118,391     121,806     -     -     118,391     121,806
    Total revenues $ 675,706   $ 619,488   $ 3,193,593   $ 2,816,959   $ 3,869,299   $ 3,436,447
Cost of revenues $ 566,125   $ 517,289   $ 3,193,593   $ 2,816,959   $ 3,759,718   $ 3,334,248
                           

About BBSI

BBSI (NASDAQ: BBSI) is a leading provider of business management solutions, combining human resource outsourcing and professional management consulting to create a unique operational platform that differentiates it from competitors. The Company’s integrated platform is built upon expertise in payroll processing, employee benefits, workers’ compensation coverage, risk management and workplace safety programs, and human resource administration. BBSI’s partnerships help businesses of all sizes improve the efficiency of their operations. The Company works with more than 5,000 clients across all lines of business in 20 states. For more information, please visit www.barrettbusiness.com.

Forward-Looking Statements

Statements in this release about future events or performance, including expectations regarding revenue growth and earnings per share, are forward-looking statements which involve known and unknown risks, uncertainties and other factors that may cause the actual results of the Company to be materially different from any future results expressed or implied by such forward-looking statements. Factors that could affect future results include changes in executive management, the ineffectiveness of the Company’s internal control over financial reporting, the Company’s relationship with its primary bank lender, current and future shareholder litigation, the ongoing investigation of accounting issues by the Securities and Exchange Commission and the United States Department of Justice, economic conditions in the Company's service areas, the effect of changes in the Company's mix of services on gross margin, the Company's ability to retain current clients and attract new clients, the availability of financing or other sources of capital, the potential for material deviations from expected future workers' compensation claims experience, the effect of changes in the workers’ compensation regulatory environment in one or more of the Company’s primary markets, the collectability of accounts receivable, the carrying value of deferred income tax assets and goodwill, and the effect of conditions in the global capital markets on the Company’s investment portfolio, among others. Other important factors that may affect the Company’s prospects are described in the Company’s 2016 Annual Report on Form 10-K. Although forward-looking statements help to provide complete information about the Company, readers should keep in mind that forward-looking statements are less reliable than historical information. The Company undertakes no obligation to update or revise forward-looking statements in this release to reflect events or changes in circumstances that occur after the date of this release.

 
Barrett Business Services, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
             
        September 30,   December 31,
(in thousands) 2017   2016
             
Assets      
Current assets:      
  Cash and cash equivalents $   35,570   $   50,768
  Trade accounts receivable, net   156,368     126,484
  Prepaid expenses and other   6,605     3,899
  Investments   796     5,675
  Restricted cash and investments   90,681     48,557
    Total current assets   290,020     235,383
Investments     1,191     642
Property, equipment and software, net   26,296     26,673
Restricted cash and investments   281,286     252,707
Goodwill     47,820     47,820
Other assets   3,376     9,293
Deferred income taxes   9,241     9,370
        $ 659,230   $   581,888
             
Liabilities and Stockholders' Equity      
Current liabilities:      
  Current portion of long-term debt $   221   $   221
  Accounts payable   4,033     4,944
  Accrued payroll, payroll taxes and related benefits   182,267     153,110
  Income taxes payable   6,781     3,041
  Other accrued liabilities   7,407     7,674
  Workers' compensation claims liabilities   89,601     81,339
  Safety incentives liability   27,559     24,835
    Total current liabilites   317,869     275,164
Long-term workers' compensation claims liabilities   255,084     231,198
Long term debt   4,226     4,392
Customer deposits and other long-term liabilities   1,389     1,441
Stockholders' equity   80,662     69,693
        $ 659,230   $   581,888
             

             
Barrett Business Services, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
             
(in thousands, except per share amounts)   Three Months Ended   Nine Months Ended
        September 30,   September 30,
     2017    2016     2017    2016 
                     
Revenues:                
  Professional employer service fees   $   197,388   $   177,229     $   557,315   $   497,682  
  Staffing services       42,747       47,874         118,391       121,806  
    Total revenues       240,135       225,103         675,706       619,488  
Cost of revenues:                
  Direct payroll costs       31,986       37,017         89,182       92,667  
  Payroll taxes and benefits       94,922       82,888         304,268       269,533  
  Workers' compensation       58,310       55,639         172,675       155,089  
    Total cost of revenues       185,218       175,544         566,125       517,289  
Gross margin       54,917       49,559         109,581       102,199  
Selling, general and administrative expenses       33,925       30,440         88,595       80,834  
Depreciation and amortization       1,062       823         2,989       2,341  
Income from operations       19,930       18,296         17,997       19,024  
Other income (expense), net       1,514       (3,280 )       2,915       (3,281 )
Income before income taxes       21,444       15,016         20,912       15,743  
Provision for income taxes       6,659       4,783         6,228       4,991  
Net income   $   14,785   $   10,233     $   14,684   $   10,752  
Basic income per common share   $   2.03   $   1.41     $   2.02   $   1.49  
Weighted average basic common shares outstanding       7,296       7,243         7,266       7,220  
Diluted income per common share   $   1.96   $   1.38     $   1.95   $   1.46  
Weighted average diluted common shares outstanding       7,527       7,405         7,539       7,350  
                     

Investor Relations: 
Liolios
Cody Slach
Tel 1-949-574-3860 
BBSI@liolios.com

Source: Barrett Business Services Inc