BBSI Announces Third Quarter 2006 Operating Results, Financial Guidance for 4Q06 and Investment Conference Presentation
VANCOUVER, Wash.--(BUSINESS WIRE)--Oct. 25, 2006--Barrett Business
Services, Inc. (NASDAQ:BBSI) reported today net income of $5,562,000
for the third quarter ended September 30, 2006, an improvement of
$1,222,000 or 28.2% over net income of $4,340,000 for the third
quarter of 2005. Diluted earnings per share for the 2006 third quarter
were $.48, as compared to diluted earnings per share of $.40 for the
same quarter a year ago.
Net revenues for the third quarter ended September 30, 2006
totaled $69.4 million, an increase of approximately $4.8 million or
7.4% over the $64.6 million for the same quarter in 2005.
(Unaudited) (Unaudited)
($ in thousands, except per
share amounts) Third Quarter Ended Nine Months Ended
September 30, September 30,
-------------------- ---------------------
Results of Operations 2006 2005 2006 2005
--------------------------- ----------- -------- ----------- ---------
Revenues:
Staffing services $33,506 $36,668 $90,734 $100,847
Professional employer
service fees 35,917 27,883 101,629 72,579
----------- -------- ----------- ---------
Total revenues 69,423 64,551 192,363 173,426
----------- -------- ----------- ---------
Cost of revenues:
Direct payroll costs 25,145 27,527 67,827 75,142
Payroll taxes and benefits 20,403 16,651 63,677 47,651
Workers' compensation 7,207 6,664 20,959 18,365
----------- -------- ----------- ---------
Total cost of revenues 52,755 50,842 152,463 141,158
----------- -------- ----------- ---------
Gross margin 16,668 13,709 39,900 32,268
Selling, general and
administrative
expenses 8,362 6,906 23,464 18,627
Depreciation and
amortization 335 239 965 692
----------- -------- ----------- ---------
Income from operations 7,971 6,564 15,471 12,949
Other income, net 733 325 2,035 228
----------- -------- ----------- ---------
Income before taxes 8,704 6,889 17,506 13,177
Provision for income taxes 3,142 2,549 6,399 5,001
----------- -------- ----------- ---------
Net income $5,562 $4,340 $11,107 $8,176
=========== ======== =========== =========
Basic earnings per share $.49 $.43 $.99 $.89
=========== ======== =========== =========
Weighted average basic
shares outstanding 11,247 10,209 11,176 9,190
=========== ======== =========== =========
Diluted earnings per share $.48 $.40 $.95 $.83
=========== ======== =========== =========
Weighted average diluted
shares outstanding 11,659 10,884 11,668 9,878
=========== ======== =========== =========
The Company reports its Professional Employer Organization
services ("PEO") revenues on a net basis because it is not the primary
obligor for the services provided by the Company's PEO clients to
their customers. The gross revenues and cost of revenues information
below, although not in accordance with generally accepted accounting
principles ("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)
Third Quarter Nine Months Ended
(in thousands) September 30, September 30,
-------------------- ---------------------
2006 2005 2006 2005
----------- -------- ----------- ---------
Revenues:
Staffing services $33,506 $36,668 $90,734 $100,847
Professional employer
services 240,314 175,404 675,833 451,900
----------- -------- ----------- ---------
Total revenues 273,820 212,072 766,567 552,747
----------- -------- ----------- ---------
Cost of revenues:
Direct payroll costs 228,643 172,994 638,855 449,318
Payroll taxes and benefits 20,403 16,651 63,677 47,651
Workers' compensation 8,106 8,718 24,135 23,510
----------- -------- ----------- ---------
Total cost of revenues 257,152 198,363 726,667 520,479
----------- -------- ----------- ---------
Gross margin $16,668 $13,709 $39,900 $32,268
=========== ======== =========== =========
Gross revenues of $273.8 million for the third quarter ended
September 30, 2006 rose 29.1% over the similar period in 2005. For the
nine months ended September 30, 2006, gross revenues of $766.6 million
increased 38.7% over the comparable period in 2005.
A reconciliation of non-GAAP gross revenues to net revenues is as
follows:
For the third quarters ended September 30, 2006 and 2005 (in
thousands):
(Unaudited)
Three Months Ended September 30,
----------------------------------------------------------
Gross Revenue Net Revenue
Reporting Method Reclassification Reporting Method
---------------------------------------- -----------------
2006 2005 2006 2005 2006 2005
--------- ------------------- ---------- -------- --------
Revenues:
Staffing
services $33,506 $36,668 $- $- $33,506 $36,668
Professional
employer
services 240,314 175,404 (204,397) (147,521) 35,917 27,883
--------- ------------------- ---------- -------- --------
Total
revenues $273,820 $212,072 $(204,397) $(147,521) $69,423 $64,551
========= =================== ========== ======== ========
Cost of
revenues: $257,152 $198,363 $(204,397) $(147,521) $52,755 $50,842
========= =================== ========== ======== ========
For the nine months ended September 30, 2006 and 2005 (in
thousands):
(Unaudited)
Nine Months Ended September 30,
----------------------------------------------------------
Gross Revenue Net Revenue
Reporting Method Reclassification Reporting Method
--------------------------------------- ------------------
2006 2005 2006 2005 2006 2005
---------------------------- ---------- ------------------
Revenues:
Staffing
services $90,734 $100,847 $- $- $90,734 $100,847
Professional
employer
services 675,833 451,900 (574,204) (379,321) 101,629 72,579
---------------------------- ---------- ------------------
Total
revenues $766,567 $552,747 $(574,204) $(379,321) $192,363 $173,426
============================ ========== ==================
Cost of
revenues: $726,667 $520,479 $(574,204) $(379,321) $152,463 $141,158
============================ ========== ==================
William W. Sherertz, President and Chief Executive Officer,
commented: "We are very pleased about achieving record levels for both
earnings and revenues during the third quarter, which bode well for a
strong 2007."
The following summarizes the unaudited consolidated balance sheets
at September 30, 2006 and December 31, 2005.
September December
30, 31,
(in thousands) 2006 2005
--------- ---------
Assets
------------------------------------------------
Current assets:
Cash and cash equivalents $60,083 $61,361
Marketable securities 2,291 3,548
Trade accounts receivable, net 35,265 26,328
Prepaid expenses and other 3,106 2,514
Deferred income taxes 6,153 5,864
Workers' compensation receivables for insured
claims 242 242
--------- ---------
Total current assets 107,140 99,857
Marketable securities 404 396
Goodwill, net 26,536 22,516
Intangibles, net 82 5
Property, equipment and software, net 13,587 13,071
Restricted marketable securities and workers'
compensation deposits 2,492 2,041
Deferred income taxes 141 341
Other assets 3,041 1,528
Workers' compensation receivables for insured
claims 4,389 4,546
--------- ---------
$157,812 $144,301
========= =========
Liabilities and Stockholders' Equity
---------------------------------------------------
Current liabilities:
Accounts payable $1,323 $1,366
Accrued payroll, payroll taxes and related
benefits 31,910 28,650
Other accrued liabilities 908 360
Workers' compensation claims liabilities 4,575 5,729
Workers' compensation claims liabilities for
insured claims 242 242
Safety incentives liabilities 7,534 7,687
Current portion of long-term debt - 348
--------- ---------
Total current liabilities 46,492 44,382
Long-term debt, net of current portion - 1,094
Customer deposits 783 663
Long-term workers' compensation claims liabilities 7,791 8,532
Long-term workers' compensation liabilities for
insured claims 2,709 2,866
Deferred gain on sale and leaseback 823 914
Stockholders' equity 99,214 85,850
--------- ---------
$157,812 $144,301
========= =========
Outlook for Fourth Quarter 2006
The Company also disclosed today limited financial guidance with
respect to its operating results for the fourth quarter ending
December 31, 2006. The Company expects gross revenues for the fourth
quarter of 2006 to range from $273 million to $278 million, an
increase of approximately 29% over the fourth quarter of 2005, and
anticipates diluted earnings per share for the fourth quarter of 2006
to range from $.43 to $.46 per share, an increase of approximately 20%
over the $.37 per share for the same period a year ago. A
reconciliation of estimated gross revenues to estimated GAAP net
revenues for the fourth quarter of 2006 is not included because PEO
revenues and cost of PEO revenues for the period are not reasonably
estimable.
Conference Call
On October 26, 2006 at 9:00 a.m. Pacific Time, William W. Sherertz
and Michael D. Mulholland will host an investor telephone conference
call to discuss third quarter 2006 operating results. To participate
in the call, dial (877) 356-3717. The call identification number is
8556697. The conference call will also be webcast live at
ww.barrettbusiness.com. To access the webcast, click on the Investor
Relations section of the Web site and select Webcast. A replay of the
call will be available beginning Thursday, October 26, 2006 at 12:00
p.m. PT and ending on November 3, 2006. To listen to the recording,
dial (800) 642-1687 and enter conference identification code 8556697.
Investment Conference Presentation
William Sherertz will speak to the investment community at the
SunTrust Robinson Humphrey Business Services Conference to be held
Thursday, November 9, 2006 in New York City at the LeParker Meridien
Hotel.
Statements in this release about future events or performance,
including earnings expectations for the fourth quarter of 2006, 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 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 successfully
integrate acquired businesses with its existing operations, future
workers' compensation claims experience, the effect of changes in the
workers' compensation regulatory environment in one or more of our
primary markets, collectibility of accounts receivable, and the use of
net proceeds of approximately $33 million and other effects of the
Company's 2005 follow-on equity offering, among others. Other
important factors that may affect the Company's future prospects are
described in the Company's 2005 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 may be 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.
BBSI provides a comprehensive range of human resource management
solutions to large and small companies throughout many regions of the
United States.
CONTACT: Barrett Business Services, Inc.
William W. Sherertz, President and Chief Executive
Officer, 360-828-0700
SOURCE: Barrett Business Services, Inc.
Released October 25, 2006