BBSI Announces Second Quarter 2006 Operating Results and Financial Guidance for 3Q06
VANCOUVER, Wash.--(BUSINESS WIRE)--July 26, 2006--Barrett Business
Services, Inc. (Nasdaq:BBSI) reported today net income of $4,188,000
for the second quarter ended June 30, 2006, an improvement of
$1,283,000 or 44.2% over net income of $2,905,000 for the second
quarter of 2005. Diluted earnings per share for the 2006 second
quarter were $.36, as compared to diluted earnings per share of $.31
for the same quarter a year ago.
Net revenues for the second quarter ended June 30, 2006 totaled
$64.7 million, an increase of approximately $5.1 million or 8.6% over
the $59.6 million for the same quarter in 2005.
(Unaudited) (Unaudited)
($ in thousands) Second Quarter Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
Results of Operations 2006 2005 2006 2005
--------------------------- -------- ------- -------- --------
Revenues:
Staffing services $ 30,567 $35,637 $ 57,228 $ 64,179
Professional employer
service fees 34,088 23,994 65,712 44,696
-------- ------- -------- --------
Total revenues 64,655 59,631 122,940 108,875
-------- ------- -------- --------
Cost of revenues:
Direct payroll costs 22,831 26,598 42,682 47,615
Payroll taxes and
benefits 20,437 15,303 43,274 31,000
Workers' compensation 7,198 6,295 13,752 11,701
-------- ------- -------- --------
Total cost of revenues 50,466 48,196 99,708 90,316
-------- ------- -------- --------
Gross margin 14,189 11,435 23,232 18,559
Selling, general and
administrative expenses 7,882 6,251 15,102 11,721
Depreciation and
amortization 329 217 630 453
-------- ------- -------- --------
Income from operations 5,978 4,967 7,500 6,385
Other income, net 670 (205) 1,302 (97)
-------- ------- -------- --------
Income before taxes 6,648 4,762 8,802 6,288
Provision for income taxes 2,460 1,857 3,257 2,452
-------- ------- -------- --------
Net income $ 4,188 $ 2,905 $ 5,545 $ 3,836
======== ======= ======== ========
Basic earnings per share $ .37 $ .33 $ .50 $ .44
======== ======= ======== ========
Weighted average basic
shares outstanding 11,203 8,717 11,140 8,681
======== ======= ======== ========
Diluted earnings per share $ .36 $ .31 $ .48 $ .41
======== ======= ======== ========
Weighted average diluted
shares outstanding 11,683 9,398 11,672 9,375
======== ======= ======== ========
The Company reports its 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)
Second Quarter Six Months Ended
(in thousands) June 30, June 30,
-------------------- --------------------
2006 2005 2006 2005
-------- -------- -------- --------
Revenues:
Staffing services $ 30,567 $ 35,637 $ 57,228 $ 64,179
Professional employer
services 226,845 147,945 435,519 276,496
-------- -------- -------- --------
Total revenues 257,412 183,582 492,747 340,675
-------- -------- -------- --------
Cost of revenues:
Direct payroll costs 214,247 148,927 410,212 276,324
Payroll taxes and
benefits 20,437 15,303 43,274 31,000
Workers' compensation 8,539 7,917 16,029 14,792
-------- -------- -------- --------
Total cost of revenues 243,223 172,147 469,515 322,116
-------- -------- -------- --------
Gross margin $ 14,189 $ 11,435 $ 23,232 $ 18,559
======== ======== ======== ========
Gross revenues of $257.4 million for the second quarter ended June
30, 2006 rose 40.2% over the similar period in 2005. For the six
months ended June 30, 2006, gross revenues of $492.7 million increased
44.6% over the comparable period in 2005.
A reconciliation of non-GAAP gross revenues to net revenues is as
follows:
For the second quarters ended June 30, 2006 and 2005 (in thousands):
(Unaudited)
Three Months Ended June 30,
-----------------------------------------------------------
(in Gross Revenue Net Revenue
thousands) Reporting Method Reclassification Reporting Method
------------------- --------------------- -----------------
2006 2005 2006 2005 2006 2005
-------- -------- --------- --------- ------- -------
Revenues:
Staffing
services $ 30,567 $ 35,637 $ - $ - $30,567 $35,637
Profess-
ional
employer
services 226,845 147,945 (192,757) (123,951) 34,088 23,994
-------- -------- --------- --------- ------- -------
Total
revenues $257,412 $183,582 $(192,757) $(123,951) $64,655 $59,631
======== ======== ========= ========= ======= =======
Cost of
revenues: $243,223 $172,147 $(192,757) $(123,951) $50,466 $48,196
======== ======== ========= ========= ======= =======
For the six months ended June 30, 2006 and 2005 (in thousands):
(Unaudited)
Six Months Ended June 30,
------------------------------------------------------------
(in Gross Revenue Net Revenue
thousands) Reporting Method Reclassification Reporting Method
------------------- --------------------- ------------------
2006 2005 2006 2005 2006 2005
-------- -------- --------- --------- -------- --------
Revenues:
Staffing
services $ 57,228 $ 64,179 $ - $ - $ 57,228 $ 64,179
Profess-
ional
employer
services 435,519 276,496 (369,807) (231,800) 65,712 44,696
------- ------- --------- --------- ------- ------
Total
revenues $492,747 $340,675 $(369,807) $(231,800) $122,940 $108,875
======= ======== ========= ========= ======== =======
Cost of
revenues: $469,515 $322,116 $(369,807) $(231,800) $ 99,708 $ 90,316
======= ======== ========= ========= ======== =======
William W. Sherertz, President and Chief Executive Officer,
commented that: "The Company continues to effectively execute its
business plan and we look forward to a strong second half of the
year."
The following summarizes the unaudited consolidated balance sheets
at June 30, 2006 and December 31, 2005.
June 30, Dec. 31,
($ in thousands) 2006 2005
-------- --------
Assets
--------------------------------------------------
Current assets:
Cash and cash equivalents $ 57,604 $ 61,361
Marketable securities 3,545 3,548
Trade accounts receivable, net 33,023 26,328
Prepaid expenses and other 4,538 2,514
Deferred income taxes 6,171 5,864
Workers' compensation receivables for insured
claims 242 242
-------- --------
Total current assets 105,123 99,857
Marketable securities 401 396
Goodwill, net 26,536 22,516
Intangibles, net 89 5
Property, equipment and software, net 13,633 13,071
Restricted marketable securities and workers'
compensation deposits 2,347 2,041
Deferred income taxes 141 341
Other assets 3,054 1,528
Workers' compensation receivables for insured
claims 4,437 4,546
-------- --------
$155,761 $144,301
======== ========
Liabilities and Stockholders' Equity
---------------------------------------------------
Current liabilities:
Accounts payable $ 1,811 $ 1,366
Accrued payroll, payroll taxes and related
benefits 32,924 28,650
Other accrued liabilities 1,957 360
Workers' compensation claims liabilities 4,796 5,729
Workers' compensation claims liabilities for
insured claims 242 242
Safety incentives liabilities 7,864 7,687
Current portion of long-term debt - 348
-------- --------
Total current liabilities 49,594 44,382
Long-term debt, net of current portion - 1,094
Customer deposits 794 663
Long-term workers' compensation claims liabilities 8,179 8,532
Long-term workers' compensation liabilities for
insured claims 2,757 2,866
Deferred gain on sale and leaseback 854 914
Stockholders' equity 93,583 85,850
-------- --------
$155,761 $144,301
======== ========
Outlook for Third Quarter 2006
The Company also disclosed today limited financial guidance with
respect to its operating results for the third quarter ending
September 30, 2006. The Company expects gross revenues for the third
quarter of 2006 to range from $273 million to $278 million, an
increase of approximately 30% over the third quarter of 2005, and
anticipates diluted earnings per share for the third quarter of 2006
to range from $.47 to $.49 per share, as compared to $.40 per share
for the same period a year ago. Management expectations for diluted
earnings per share for the third quarter of 2006 equate to increases
over the third quarter of 2005 of approximately 30% in net income and
approximately 20% in diluted earnings per share. The percentage
increase is lower on a per share basis because the dilutive effect of
the late July 2005 follow-on equity offering only applied to
approximately two months of the 2005 third quarter. A reconciliation
of estimated gross revenues to estimated GAAP net revenues for the
third quarter of 2006 is not included because PEO revenues and cost of
PEO revenues for the period are not reasonably estimable.
On July 27, 2006, at 9:00 a.m. Pacific time, William W. Sherertz
and Michael D. Mulholland will host an investor telephone conference
call to discuss second quarter 2006 operating results. To participate
in the call, dial 877-356-3717. The call identification number is
3113032. The conference call will also be webcast live at
www.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, July 27, 2006, at 12:00
p.m. PT and ending on August 3, 2006. To listen to the recording, dial
800-642-1687 and enter conference identification code 3113032.
BBSI provides a comprehensive range of human resource management
solutions to large and small companies throughout many regions of the
United States.
Statements in this release about future events or performance,
including earnings expectations for the third 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.
CONTACT: Barrett Business Services, Inc.
William W. Sherertz, 360-828-0700
SOURCE: Barrett Business Services, Inc.
Released July 26, 2006