BBSI Announces Second Quarter 2005 Operating Results and Financial Guidance for 3Q05
PORTLAND, Ore.--(BUSINESS WIRE)--Aug. 3, 2005--Barrett Business
Services, Inc. (Nasdaq:BBSI) reported today net income of $2,905,000
for the second quarter ended June 30, 2005, an improvement of
$1,065,000 or 57.9% over net income of $1,840,000 for the second
quarter of 2004. Diluted earnings per share for the 2005 second
quarter were $.31, as compared to diluted earnings per share of $.20
for the same quarter a year ago, which have been adjusted for a
3-for-2 stock split effected on May 19, 2005.
Net revenues for the second quarter ended June 30, 2005 totaled
$59.6 million, an increase of approximately $11.9 million or 24.9%
over the $47.7 million for the same quarter in 2004.
(Unaudited) (Unaudited)
($ in thousands) Second Quarter Six Months
Ended Ended
June 30, June 30,
--------------------------------------
Results of Operations 2005 2004 2005 2004
-------------------------------- -------- -------- -------- --------
Revenues:
Staffing services $ 35,637 $ 30,470 $ 64,179 $ 55,524
Professional employer service
fees 23,994 17,234 44,696 32,790
-------- -------- -------- --------
Total revenues 59,631 47,704 108,875 88,314
-------- -------- -------- --------
Cost of revenues:
Direct payroll costs 26,598 22,551 47,615 40,871
Payroll taxes and benefits 15,303 10,649 31,000 22,180
Workers' compensation 6,295 5,978 11,701 10,332
-------- -------- -------- --------
Total cost of revenues 48,196 39,178 90,316 73,383
-------- -------- -------- --------
Gross margin 11,435 8,526 18,559 14,931
Selling, general and
administrative
expenses 6,251 5,367 11,721 10,581
Depreciation and amortization 217 253 453 495
-------- -------- -------- --------
Income from operations 4,967 2,906 6,385 3,855
Other (expense) income, net (205) 38 (97) 59
-------- -------- -------- --------
Income before taxes 4,762 2,944 6,288 3,914
Provision for income taxes 1,857 1,104 2,452 1,468
-------- -------- -------- --------
Net income $ 2,905 $ 1,840 $ 3,836 $ 2,446
-------- -------- -------- --------
Basic earnings per share $ .33 $ .21 $ .44 $ .29
-------- -------- -------- --------
Weighted average basic shares
outstanding 8,717 8,573 8,681 8,565
-------- -------- -------- --------
Diluted earnings per share $ .31 $ .20 $ .41 $ .26
-------- -------- -------- --------
Weighted average diluted shares
outstanding 9,398 9,279 9,375 9,286
-------- -------- -------- --------
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)
Second Quarter Six Months Ended
(in thousands) June 30, June 30,
------------------- -------------------
2005 2004 2005 2004
-------- -------- -------- --------
Revenues:
Staffing services $ 35,637 $ 30,470 $ 64,179 $ 55,524
Professional employer
services 147,945 97,984 276,496 189,704
-------- -------- -------- --------
Total revenues 183,582 128,454 340,675 245,228
-------- -------- -------- --------
Cost of revenues:
Direct payroll costs 148,927 102,390 276,324 195,757
Payroll taxes and benefits 15,303 10,648 31,000 22,179
Workers' compensation 7,917 6,890 14,792 12,361
-------- -------- -------- --------
Total cost of revenues 172,147 119,928 322,116 230,297
-------- -------- -------- --------
Gross margin $ 11,435 $ 8,526 $ 18,559 $ 14,931
-------- -------- -------- --------
Gross revenues of $183.6 million for the second quarter ended June
30, 2005 rose 42.9% over the similar period in 2004. For the six
months ended June 30, 2005, gross revenues of $340.7 million increased
38.9% over the comparable period in 2004.
A reconciliation of non-GAAP gross revenues to net revenues is as
follows:
For the second quarters ended June 30, 2005 and 2004 (in
thousands):
(Unaudited)
Three Months Ended June 30,
---------------------------------------------------------
(in Gross Revenue Net Revenue
thousands) Reporting Method Reclassification Reporting Method
------------------- -------------------- ----------------
2005 2004 2005 2004 2005 2004
-------- -------- --------- -------- ------- ------
Revenues:
Staffing
services $ 35,637 $ 30,470 $ - $ - $35,637 $30,470
Professional
employer
services 147,945 97,984 (123,951) (80,750) 23,994 17,234
-------- -------- --------- -------- ------- ------
Total
revenues $183,582 $128,454 $(123,951) $(80,750) $59,631 $47,704
-------- -------- --------- -------- ------- ------
Cost of
revenues: $172,147 $119,928 $(123,951) $(80,750) $48,196 $39,178
-------- -------- --------- -------- ------- ------
For the six months ended June 30, 2005 and 2004 (in thousands):
(Unaudited)
Six Months Ended June 30,
-----------------------------------------------------------
(in Gross Revenue Net Revenue
thousands) Reporting Method Reclassification Reporting Method
------------------- --------------------- -----------------
2005 2004 2005 2004 2005 2004
-------- -------- --------- --------- -------- ------
Revenues:
Staffing
services $ 64,179 $ 55,524 $ - $ - $ 64,179 $55,524
Pro-
fessional
employer
services 276,496 189,704 (231,800) (156,914) 44,696 32,790
-------- -------- --------- --------- -------- ------
Total
revenues $340,675 $245,228 $(231,800) $(156,914) $108,875 $88,314
-------- -------- --------- --------- -------- ------
Cost of
revenues: $322,116 $230,297 $(231,800) $(156,914) $ 90,316 $73,383
-------- -------- --------- --------- -------- ------
William W. Sherertz, President and Chief Executive Officer,
commented that: "We had a great quarter and our business continues to
grow. Our management team is proud that we were recently named the
number one company in The Seattle Times's Northwest Top 100, as well
as of our recent inclusion in the new Russell Microcap Index."
The following summarizes the unaudited consolidated balance sheets
at June 30, 2005 and December 31, 2004.
June 30, December 31,
($ in thousands) 2005 2004
--------- ---------
Assets
------
Current assets:
Cash and cash equivalents $ 21,662 $ 12,153
Marketable securities 5,568 4,630
Trade accounts receivable, net 36,420 23,840
Prepaid expenses and other 2,074 1,364
Deferred income taxes 5,588 4,100
Workers' compensation receivables for insured
claims 213 213
--------- ---------
Total current assets 71,525 46,300
Goodwill, net 22,516 22,516
Intangibles, net 16 25
Property, equipment and software, net 4,161 4,301
Restricted marketable securities and workers'
compensation deposits 2,060 1,702
Unrestricted marketable securities 391 -
Deferred income taxes 336 582
Other assets 405 401
Workers' compensation receivables for insured
claims 4,019 4,158
--------- ---------
$ 105,429 $ 79,985
--------- ---------
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Current portion of long-term debt $ 348 $ 348
Income taxes payable 1,264 -
Accounts payable 585 994
Accrued payroll, payroll taxes and related
benefits 32,200 17,427
Workers' compensation claims liabilities 5,648 4,946
Workers' compensation claims liabilities for
insured claims 213 213
Safety incentives liabilities 6,758 4,807
Other accrued liabilities 1,255 414
--------- ---------
Total current liabilities 48,271 29,149
Long-term debt, net of current portion 1,168 1,441
Customer deposits 670 608
Long-term workers' compensation claims
liabilities 6,712 4,840
Long-term workers' compensation liabilities for
insured claims 4,019 4,158
Deferred gain on sale and leaseback 976 1,036
Stockholders' equity 43,613 38,753
--------- ---------
$ 105,429 $ 79,985
--------- ---------
Outlook for Third Quarter 2005
The Company also disclosed today limited financial guidance with
respect to its operating results for the third quarter ending
September 30, 2005. The Company expects gross revenues for the third
quarter of 2005 to range from $198 million to $201 million, an
increase of approximately 38% over the third quarter of 2004, and
anticipates diluted earnings per share for the third quarter of 2005,
including the approximate effect of its recent follow-on equity
offering, 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. Excluding the approximate effect of its
recent follow-on equity offering, anticipated diluted earnings per
share for the third quarter of 2005 would range from $.40 to $.42 per
share, an increase of approximately 52% over $.27 per share for the
same period last year, on a split-adjusted basis. Calculation of the
approximate effect of the Company's recent follow-on equity offering
is based on the issuance of 1,864,000 shares of common stock on August
2, 2005, as well as the issuance of an additional 320,850 shares
assuming exercise of the underwriters' over-allotment option prior to
its expiration on August 26, 2005. A reconciliation of estimated gross
revenues to estimated GAAP net revenues for the third quarter of 2005
is not included because PEO revenues and cost of PEO revenues for the
period are not reasonably estimable.
On August 4, 2005 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 2005 operating results. To participate
in the call, dial 877-356-3717. The call identification number is
8219159. 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 August 4, 2005 at 11:00 a.m. and
ending on August 11, 2005. To listen to the recording, dial
800-642-1687 and enter conference identification code 8219159.
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 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 effect of our 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, 503-220-0988
SOURCE: Barrett Business Services, Inc.
Released August 3, 2005