BBSI Announces First Quarter 2006 Operating Results and Financial Guidance for 2Q06
VANCOUVER, Wash.--(BUSINESS WIRE)--April 26, 2006--Barrett
Business Services, Inc. (Nasdaq:BBSI) reported today net income of
$1,357,000 for the first quarter ended March 31, 2006, an improvement
of $426,000 or 45.8% over net income of $931,000 for the first quarter
of 2005. Diluted earnings per share for the 2006 first quarter were
$.12, as compared to diluted earnings per share of $.10 for the same
quarter a year ago.
Net revenues for the first quarter ended March 31, 2006 totaled
$58.3 million, an increase of approximately $9.1 million or 18.5% over
the $49.2 million for the same quarter in 2005.
(Unaudited)
($ in thousands, except per share amounts) First Quarter Ended
March 31,
--------------------
Results of Operations 2006 2005
------------------------------------------------- -------- ---------
Revenues:
Staffing services $ 26,661 $ 28,542
Professional employer service fees 31,624 20,702
-------- ---------
Total revenues 58,285 49,244
-------- ---------
Cost of revenues:
Direct payroll costs 19,851 21,017
Payroll taxes and benefits 22,837 15,697
Workers' compensation 6,554 5,406
-------- ---------
Total cost of revenues 49,242 42,120
-------- ---------
Gross margin 9,043 7,124
Selling, general and administrative expenses 7,220 5,470
Depreciation and amortization 301 236
-------- ---------
Income from operations 1,522 1,418
Other income, net 632 108
-------- ---------
Income before taxes 2,154 1,526
Provision for income taxes 797 595
-------- ---------
Net income $ 1,357 $ 931
======== =========
Basic earnings per share $ .12 $ .11
======== =========
Weighted average basic shares outstanding 11,076 8,645
======== =========
Diluted earnings per share $ .12 $ .10
======== =========
Weighted average diluted shares outstanding 11,661 9,352
======== =========
We report our PEO revenues on a net basis because we are not the
primary obligor for the services provided by our 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)
First Quarter
(in thousands) March 31,
--------------------
2006 2005
--------- ---------
Revenues:
Staffing services $ 26,661 $ 28,542
Professional employer services 208,674 128,551
--------- ---------
Total revenues 235,335 157,093
--------- ---------
Cost of revenues:
Direct payroll costs 195,965 127,397
Payroll taxes and benefits 22,837 15,697
Workers' compensation 7,490 6,875
--------- ---------
Total cost of revenues 226,292 149,969
--------- ---------
Gross margin $9,043 $7,124
========= =========
Gross revenues of $235.3 million for the 2006 first quarter rose
49.8% over the comparable 2005 period.
A reconciliation of non-GAAP gross revenues to net revenues is as
follows:
For the first quarters ended March 31, 2006 and 2005 (in thousands):
(Unaudited)
Three Months Ended March 31,
-----------------------------------------------------------
Gross Revenue Net Revenue
(in thous- Reporting Method Reclassification Reporting Method
ands) ------------------- --------------------- -----------------
2006 2005 2006 2005 2006 2005
-------- -------- --------- --------- ------- -------
Revenues:
Staffing
services $ 26,661 $ 28,542 $ - $ - $26,661 $28,542
Profes-
sional
employer
services 208,674 128,551 (177,050) (107,849) 31,624 20,702
-------- -------- --------- --------- ------- -------
Total
rev-
enues $235,335 $157,093 $(177,050) $(107,849) $58,285 $49,244
--------- --------- --------- --------- ------- -------
Cost of
revenues: $226,292 $149,969 $(177,050) $(107,849) $49,242 $42,120
-------- -------- --------- --------- ------- -------
The following summarizes the unaudited consolidated balance sheets at
March 31, 2006 and December 31, 2005.
(Unaudited)
------------------------
March 31, December 31,
(in thousands) 2006 2005
---------- -----------
Assets
------
Current assets:
Cash and cash equivalents $ 59,357 $ 61,361
Marketable securities 3,664 3,548
Trade accounts receivable, net 29,353 26,328
Prepaid expenses and other 4,755 2,514
Deferred income taxes 6,175 5,864
Workers' compensation receivables for
insured claims 242 242
---------- -----------
Total current assets 103,546 99,857
Marketable securities 399 396
Goodwill, net 26,536 22,516
Intangibles, net 96 5
Property, equipment and software, net 13,538 13,071
Restricted marketable securities and workers'
compensation deposits 2,133 2,041
Deferred income taxes 141 341
Other assets 3,034 1,528
Workers' compensation receivables for insured
claims 4,496 4,546
---------- -----------
$ 153,919 $ 144,301
========== ===========
Liabilities and Stockholders' Equity
----------------------------------------------
Current liabilities:
Accounts payable $ 1,809 $ 1,366
Accrued payroll, payroll taxes and related
benefits 33,733 28,650
Other accrued liabilities 3,559 360
Workers' compensation claims liabilities 5,399 5,729
Workers' compensation claims liabilities for
insured claims 242 242
Safety incentives liability 7,516 7,687
Current portion of long-term debt 148 348
---------- -----------
Total current liabilities 52,406 44,382
Long-term debt, net of current portion 1,057 1,094
Customer deposits 782 663
Long-term workers' compensation claims
liabilities 8,114 8,532
Long-term workers' compensation liabilities
for insured claims 2,816 2,866
Deferred gain on sale and leaseback 884 914
Stockholders' equity 87,860 85,850
---------- -----------
$ 153,919 $ 144,301
========== ===========
Outlook for Second Quarter 2006
The Company also disclosed today limited financial guidance with
respect to its operating results for the second quarter ending June
30, 2006. The Company expects gross revenues for the second quarter of
2006 to range from $250 million to $255 million, an increase of
approximately 37.5% over the second quarter of 2005, and anticipates
diluted earnings per share for the second quarter of 2006 to range
from $.33 to $.35 per share. Management expectations for diluted
earnings per share for the second quarter of 2006 equate to increases
over the second quarter of 2005 of approximately 36.9% in net income
and approximately 9.7% in diluted earnings per share. The percentage
increase in expected net income for the 2006 second quarter exceeds
the percentage increase in expected diluted earnings per share due to
the dilutive effect of the July 2005 follow-on equity offering. A
reconciliation of estimated gross revenues to estimated GAAP net
revenues for the second quarter of 2006 is not included because PEO
revenues and cost of PEO revenues for the period are not reasonably
estimable.
On April 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 first quarter 2006 operating results. To participate
in the call, dial 877-356-3717. The call identification number is
8171396. 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 April 27, 2006 at 12:00 p.m. and
ending May 3, 2006. To listen to the recording, dial 800-642-1687 and
enter conference identification code 8171396.
BBSI provides 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 second 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 recent 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 April 26, 2006