Press Releases

BBSI Reports Fourth Quarter and Full Year 2017 Financial Results

Q4 Net Revenues up 11% to $244.7 Million (Non-GAAP Gross Revenues up 14%)

VANCOUVER, Wash., Feb. 27, 2018 (GLOBE NEWSWIRE) -- Barrett Business Services, Inc. (“BBSI” or the “Company”) (NASDAQ:BBSI), a leading provider of business management solutions, reported financial results for the fourth quarter and full year ended December 31, 2017.

Fourth Quarter 2017 Financial Highlights vs. Year-Ago Quarter

  • Net revenues up 11% to $244.7 million.
  • Non-GAAP gross revenues up 14% to $1.4 billion.
  • Net income up 30% to $10.5 million, or $1.38 per diluted share, compared to net income of $8.0 million, or $1.08 per diluted share.

Full Year 2017 Financial Highlights vs. 2016

  • Net revenues up 9% to $920.4 million.
  • Non-GAAP gross revenues up 13% to $5.3 billion.
  • Net income up 34% to $25.2 million, or $3.33 per diluted share, compared to net income of $18.8 million, or $2.55 per diluted share.

“We had a strong finish to a strong year which is setting us up well for 2018 and beyond,” said Michael Elich, president and CEO of BBSI. “We delivered solid growth across all of our markets and added an additional 120 net new clients in the quarter for a total of 693 net new for the year. These results continue to be driven by the value we bring to our clients every day, our better-than-90% retention rate and the width of new business pipelines.”

Fourth Quarter 2017 Financial Results

Net revenues in the fourth quarter of 2017 increased 11% to $244.7 million compared to $221.1 million in the fourth quarter of 2016.  

Total non-GAAP gross revenues in the fourth quarter increased 14% to $1.4 billion compared to $1.3 billion in the same year-ago quarter (see “Reconciliation of Non-GAAP Financial Measures” below). The increase was primarily due to the continued build in the Company’s PEO client count and same-customer sales growth, which was partially offset by a decrease from staffing revenues.

Net income for the fourth quarter of 2017 increased 30% to $10.5 million, or $1.38 per diluted share, compared to net income of $8.0 million, or $1.08 per diluted share, in the year-ago quarter.

Full Year 2017 Financial Results

Net revenues in 2017 increased 9% to $920.4 million compared to $840.6 million in 2016.

Total non-GAAP gross revenues increased 13% to $5.3 billion compared to $4.7 billion in 2016. The increase was primarily due to the continued build in the Company’s PEO client count and same-customer sales growth, which was partially offset by a decrease in staffing revenues.

Net income in 2017 was $25.2 million or $3.33 per diluted share compared to $18.8 million or $2.55 per diluted share in 2016.  Net income for 2017 included approximately $0.10 per diluted share in costs associated with accounting and securities law issues compared to $0.69 in 2016.

Outlook

For the full year 2018, the Company expects diluted earnings per share to be approximately $4.45. This assumes approximately $0.06 per diluted share in estimated costs associated with outstanding accounting and securities law issues, as well as a lower effective tax rate of approximately 20% resulting from the passage of the Tax Cuts and Jobs Act.

BBSI expects non-GAAP gross revenues for the next 12-month period (through December 31, 2018) to increase approximately 14%.

Conference Call

BBSI will conduct a conference call tomorrow, February 28, 2018 at 12:00 p.m. Eastern time (9:00 a.m. Pacific time) to discuss its financial results for the fourth quarter and full year ended December 31, 2017. The Company’s President and CEO Michael Elich and CFO Gary Kramer will host the call, followed by a question and answer period.

Date: Wednesday, February 28, 2018
Time: 12:00 p.m. Eastern time (9:00 a.m. Pacific time)
Toll-free dial-in number: 1-866-548-4713
International dial-in number: 1-323-794-2093
Conference ID: 9063671

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios Group at 1-949-574-3860.

The conference call will be broadcast live and available for replay here and via the investor relations section of the BBSI website at www.barrettbusiness.com.

A replay of the conference call will be available after 3:00 p.m. Eastern time on the same day through March 28, 2018.

Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 9063671

Reconciliation of Non-GAAP Financial Measures

In addition to the results prepared in accordance with generally accepted accounting principles (“GAAP”), the Company is disclosing non-GAAP gross revenues.

We report PEO revenues net of direct payroll costs because we are not the primary obligor for wage payments to our clients’ employees. The gross revenues and cost of revenues information below, although not in accordance with 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)
    Fourth Quarter Ended   Year Ended
Non-GAAP (in thousands)   December 31,   December 31,
      2017     2016     2017     2016
                 
                 
Gross revenues:                
Professional employer services   $   1,387,389   $   1,211,584   $   5,138,298   $   4,526,225
Staffing services       43,995       44,856       162,386       166,662
Total gross revenues       1,431,384       1,256,440       5,300,684       4,692,887
Gross cost of revenues:                
Direct payroll costs       1,210,852       1,061,743       4,469,845       3,951,021
Payroll taxes and benefits       100,419       88,334       404,687       357,867
Workers' compensation       71,163       63,026       267,621       238,463
Total gross cost of revenues     1,382,434       1,213,103       5,142,153       4,547,351
Gross margin   $   48,950   $   43,337   $   158,531   $   145,536
                         

A reconciliation of net revenues to non-GAAP gross revenues is as follows:

 
  (Unaudited)         
  Quarter Ended December 31, 
  Net Revenue        Gross Revenue 
(in thousands) Reporting Method        Reporting Method 
  (GAAP) 
 
Non-GAAP Adjustments 
  (Non-GAAP) 
    2017     2016     2017     2016     2017     2016
 
Revenues:  
Professional   
employer services  $ 200,731   $ 176,242   $ 1,186,658   $ 1,035,342   $ 1,387,389   $ 1,211,584
Staffing services   43,995     44,856      -       -      43,995     44,856
Total revenues $ 244,726   $ 221,098   $ 1,186,658   $ 1,035,342   $ 1,431,384   $ 1,256,440
Cost of revenues $ 195,776   $ 177,761   $ 1,186,658   $ 1,035,342   $ 1,382,434   $ 1,213,103
 
  (Unaudited) 
  Year Ended December 31, 
  Net Revenue        Gross Revenue 
(in thousands) Reporting Method        Reporting Method 
  (GAAP) 
 
Non-GAAP Adjustments 
  (Non-GAAP) 
    2017     2016     2017     2016     2017     2016
 
Revenues:  
Professional   
employer services  $ 758,046   $ 673,924   $ 4,380,252   $ 3,852,301   $ 5,138,298   $ 4,526,225
Staffing services   162,386     166,662      -       -      162,386     166,662
Total revenues $ 920,432   $ 840,586   $ 4,380,252   $ 3,852,301   $ 5,300,684   $ 4,692,887
Cost of revenues $ 761,901   $ 695,050   $ 4,380,252   $ 3,852,301   $ 5,142,153   $ 4,547,351
                                   

About BBSI

BBSI (NASDAQ:BBSI) is a leading provider of business management solutions, combining human resource outsourcing and professional management consulting to create a unique operational platform that differentiates it from competitors. The Company’s integrated platform is built upon expertise in payroll processing, employee benefits, workers’ compensation coverage, risk management and workplace safety programs, and human resource administration. BBSI’s partnerships help businesses of all sizes improve the efficiency of their operations. The Company works with more than 5,600 clients across all lines of business in 24 states. For more information, please visit www.barrettbusiness.com.

Forward-Looking Statements

Statements in this release about future events or performance, including expectations regarding revenue growth, costs related to outstanding accounting and securities law issues, future effective tax rates, and earnings per share, 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 retain current clients and attract new clients, the availability of financing or other sources of capital, the Company's relationship with its primary bank lender, the potential for material deviations from expected future workers' compensation claims experience, the workers’ compensation regulatory environment in  the Company’s primary markets, litigation costs, the ongoing investigation of accounting issues by the Securities and Exchange Commission and the United States Department of Justice, security breaches or failures in the Company's information technology systems, the collectability of accounts receivable, changes in executive management, the carrying value of deferred income tax assets and goodwill, and the effect of conditions in the global capital markets on the Company’s investment portfolio, among others. Other important factors that may affect the Company’s prospects are described in the Company’s 2016 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 are 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.

       
Barrett Business Services, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
       
  December 31,   December 31,
(in thousands) 2017   2016
       
Assets      
Current assets:      
Cash and cash equivalents $   59,835   $   50,768
Trade accounts receivable, net   136,664     126,484
Income taxes receivable   1,686     -
Prepaid expenses and other   5,724     3,899
Investments   674     5,675
Restricted cash and investments   103,652     48,557
Total current assets   308,235     235,383
Investments   1,199     642
Property, equipment and software, net   24,909     26,673
Restricted cash and investments   291,273     252,707
Goodwill   47,820     47,820
Other assets   3,215     9,293
Deferred income taxes   5,834     9,370
  $   682,485   $   581,888
       
Liabilities and Stockholders' Equity      
Current liabilities:      
Current portion of long-term debt $   221   $   221
Accounts payable   5,166     4,944
Accrued payroll, payroll taxes and related benefits   181,639     153,110
Income taxes payable   -     3,041
Other accrued liabilities   9,024     7,674
Workers' compensation claims liabilities   97,673     81,339
Safety incentives liability   28,532     24,835
Total current liabilities   322,255     275,164
Long-term workers' compensation claims liabilities   265,844     231,198
Long-term debt   4,171     4,392
Customer deposits and other long-term liabilities   1,381     1,441
Stockholders' equity   88,834     69,693
  $   682,485   $   581,888


       
Barrett Business Services, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)
       
(in thousands, except per share amounts) Fourth Quarter Ended   Year Ended
  December 31,   December 31,
    2017     2016       2017     2016  
               
Revenues:              
Professional employer service fees $   200,731   $   176,242     $    758,046   $   673,924  
Staffing services     43,995       44,856         162,386       166,662  
Total revenues     244,726       221,098         920,432       840,586  
Cost of revenues:              
Direct payroll costs     33,351       34,086         122,533       126,753  
Payroll taxes and benefits     100,419       88,334         404,687       357,867  
Workers' compensation     62,006       55,341         234,681       210,430  
Total cost of revenues     195,776       177,761          761,901       695,050  
Gross margin     48,950       43,337         158,531       145,536  
Selling, general and administrative expenses     34,543       32,508         123,138       113,342  
Depreciation and amortization     2,463       912         5,452       3,253  
Income from operations     11,944       9,917         29,941       28,941  
Other income (expense), net     1,522       (74 )       4,437       (3,355 )
Income before income taxes      13,466       9,843         34,378       25,586  
Provision for income taxes     2,980       1,796         9,208       6,787  
Net income $    10,486   $   8,047     $   25,170   $   18,799  
Basic income per common share $   1.44   $   1.11     $   3.46   $   2.60  
Weighted average basic common shares outstanding     7,300       7,244         7,275       7,226  
Diluted income per common share $   1.38   $   1.08     $   3.33   $   2.55  
Weighted average diluted common shares outstanding     7,585       7,460         7,551       7,378  

Investor Relations: 
Liolios 
Cody Slach 
Tel 1-949-574-3860 
BBSI@liolios.com

 

 

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Source: Barrett Business Services Inc