BBSI Announces Third Quarter 2005 Operating Results and Financial Guidance For 4Q05
PORTLAND, Ore.--(BUSINESS WIRE)--Oct. 26, 2005--Barrett Business
Services, Inc. (Nasdaq:BBSI) reported today net income of $4,340,000
for the third quarter ended September 30, 2005, an improvement of
$1,892,000 or 77.3% over net income of $2,448,000 for the third
quarter of 2004. Diluted earnings per share for the 2005 third quarter
were $.40, as compared to diluted earnings per share of $.26 for the
same quarter a year ago. Per share amounts for 2004 have been adjusted
for a 3-for-2 stock split effected on May 19, 2005.
Net revenues for the third quarter ended September 30, 2005
totaled $64.6 million, an increase of approximately $9.9 million or
18.1% over the $54.7 million for the same quarter in 2004.
(Unaudited) (Unaudited)
(in thousands, except per Third Quarter Ended Nine Months Ended
share amounts) September 30, September 30,
-------------------- --------------------
Results of Operations 2005 2004 2005 2004
---------------------------- ----------- -------- ----------- --------
Revenues:
Staffing services $36,668 $35,673 $100,847 $91,197
Professional employer
service fees 27,883 19,006 72,579 51,796
----------- -------- ----------- --------
Total revenues 64,551 54,679 173,426 142,993
----------- -------- ----------- --------
Cost of revenues:
Direct payroll costs 27,527 26,436 75,142 67,307
Payroll taxes and
benefits 16,651 11,376 47,651 33,556
Workers' compensation 6,664 6,505 18,365 16,837
----------- -------- ----------- --------
Total cost of
revenues 50,842 44,317 141,158 117,700
----------- -------- ----------- --------
Gross margin 13,709 10,362 32,268 25,293
Selling, general and
administrative
expenses 6,906 5,993 18,627 16,574
Depreciation and
amortization 239 257 692 752
----------- -------- ----------- --------
Income from operations 6,564 4,112 12,949 7,967
Other income, net 325 73 228 132
----------- -------- ----------- --------
Income before taxes 6,889 4,185 13,177 8,099
Provision for income taxes 2,549 1,737 5,001 3,205
----------- -------- ----------- --------
Net income $4,340 $2,448 $8,176 $4,894
=========== ======== =========== ========
Basic earnings per share $.43 $.28 $.89 $.57
=========== ======== =========== ========
Weighted average basic
shares outstanding 10,209 8,608 9,190 8,580
=========== ======== =========== ========
Diluted earnings per share $.40 $.26 $.83 $.53
=========== ======== =========== ========
Weighted average diluted
shares outstanding 10,884 9,295 9,878 9,289
=========== ======== =========== ========
The Company changed its reporting of PEO revenues from a gross
basis to a net basis in 2002. The gross revenues and cost of revenues
information below, although not in accordance with generally accepted
accounting principles ("GAAP"), are 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 Ended Nine Months Ended
(in thousands) September 30, September 30,
-------------------- --------------------
2005 2004 2005 2004
----------- -------- ----------- --------
Revenues:
Staffing services $36,668 $35,673 $100,847 $91,197
Professional employer
services 175,404 109,435 451,900 299,139
----------- -------- ----------- --------
Total revenues 212,072 145,108 552,747 390,336
----------- -------- ----------- --------
Cost of revenues:
Direct payroll costs 172,994 115,580 449,318 311,337
Payroll taxes and
benefits 16,651 11,376 47,651 33,555
Workers' compensation 8,718 7,790 23,510 20,151
----------- -------- ----------- --------
Total cost of
revenues 198,363 134,746 520,479 365,043
----------- -------- ----------- --------
Gross margin $13,709 $10,362 $32,268 $25,293
=========== ======== =========== ========
Gross revenues of $212.1 million for the third quarter ended
September 30, 2005 rose 46.2% over the similar period in 2004. For the
nine months ended September 30, 2005, gross revenues of $552.7 million
increased 41.6% over the comparable period in 2004.
A reconciliation of non-GAAP gross revenues to net revenues is as
follows:
For the third quarters ended September 30, 2005 and 2004 (in
thousands):
(Unaudited)
Third Quarters Ended September 30,
---------------------------------------------------------
Net
Gross Revenue Revenue
(in Reporting Method Reclassification Reporting Method
thousands) 2005 2004 2005 2004 2005 2004
---------------- ---------------- ----------------
Revenues:
Staffing
services $36,668 $35,673 $- $- $36,668 $35,673
Professional
employer
services 175,404 109,435 (147,521) (90,429) 27,883 19,006
----------- --------- ---------- --------- -------- -------
Total
revenues $212,072 $145,108 $(147,521) $(90,429) $64,551 $54,679
=========== ========= ========== ========= ======== =======
Cost of
revenues: $198,363 $134,746 $(147,521) $(90,429) $50,842 $44,317
=========== ========= ========== ========= ======== =======
For the nine months ended September 30, 2005 and 2004 (in
thousands):
(Unaudited)
Nine Months Ended September 30,
---------------------------------------------------------
Net
Gross Revenue Revenue
(in Reporting Method Reclassification Reporting Method
thousands) 2005 2004 2005 2004 2005 2004
---------------- ----------------- -----------------
Revenues:
Staffing
services $100,847 $91,197 $- $- $100,847 $91,197
Professional
employer
services 451,900 299,139 (379,321) (247,343) 72,579 51,796
----------- --------- ---------- ---------- --------- ---------
Total
revenues $552,747 $390,336 $(379,321) $(247,343) $173,426 $142,993
=========== ========= ========== ========== ========= =========
Cost of
revenues:$520,479 $365,043 $(379,321) $(247,343) $141,158 $117,700
=========== ========= ========== ========== ========= =========
William W. Sherertz, President and Chief Executive Officer,
commented that: "We are pleased with another solid quarter of
operating results which were driven by continued strong growth in
revenues."
The following summarizes the unaudited consolidated balance sheets
at September 30, 2005 and December 31, 2004.
September December
30, 31,
(in thousands) 2005 2004
--------- --------
Assets
Current assets:
Cash and cash equivalents $50,408 $12,153
Marketable securities 3,680 4,630
Trade accounts receivable, net 35,558 23,840
Prepaid expenses and other 1,507 1,364
Deferred income taxes 6,484 4,100
Workers' compensation receivables for insured
claims 213 213
--------- --------
Total current assets 97,850 46,300
Marketable securities 394 -
Goodwill, net 22,516 22,516
Intangibles, net 10 25
Property, equipment and software, net 12,950 4,301
Restricted marketable securities and workers'
compensation deposits 2,052 1,702
Deferred income taxes 124 582
Other assets 400 401
Workers' compensation receivables for insured claims 3,949 4,158
--------- --------
$140,245 $79,985
======== ========
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $1,350 $994
Accrued payroll, payroll taxes and related
benefits 28,040 17,427
Income taxes payable 1,261 -
Other accrued liabilities 464 414
Workers' compensation claims liabilities 6,062 4,946
Workers' compensation claims liabilities for
insured claims 213 213
Safety incentives liabilities 7,834 4,807
Current portion of long-term debt 348 348
--------- --------
Total current liabilities 45,572 29,149
Long-term debt, net of current portion 1,131 1,441
Customer deposits 663 608
Long-term workers' compensation claims liabilities 6,913 4,840
Long-term workers' compensation liabilities for
insured claims 3,949 4,158
Deferred gain on sale and leaseback 945 1,036
Stockholders' equity 81,072 38,753
--------- --------
$140,245 $79,985
======== ========
Outlook for Fourth Quarter 2005
The Company also disclosed today limited financial guidance with
respect to its operating results for the fourth quarter ending
December 31, 2005. The Company expects gross revenues for the fourth
quarter of 2005 to range from $204 million to $208 million, an
increase of approximately 35% over the fourth quarter of 2004, and
anticipates diluted earnings per share for the fourth quarter of 2005
to range from $.35 to $.37 per share, an increase of approximately 33%
over $.27 per share for the same period a year ago, on a
split-adjusted basis. Management's outlook for fourth quarter of 2005
gross revenues as compared to the third quarter of 2005 reflects
anticipated seasonality. A reconciliation of estimated gross revenues
to estimated GAAP net revenues for the fourth quarter of 2005 is not
included because the details of total gross revenues, such as PEO
revenues and cost of PEO revenues, for the period are not reasonably
estimable.
On October 27, 2005 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 2005 operating results. To participate
in the call, dial (877) 356-3717. The call identification number is
1259435. 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 October 27, 2005 at 11:00 a.m. and
ending on November 3, 2005. To listen to the recording, dial (800)
642-1687 and enter conference identification code 1259435.
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 fourth quarter of 2005, 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, 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 $33.1 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 2004 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, Chief Executive Officer
503-220-0988
SOURCE: Barrett Business Services, Inc.
Released October 26, 2005