Press Releases

BBSI Reports Fourth Quarter and Full Year 2021 Financial Results

- Q4 2021 Net Income of $10.6 Million, or $1.40 per Diluted Share -
- Full Year 2021 Net Income of $38.1 Million, or $5.00 per Diluted Share -
- Board of Directors Authorizes New $75 Million Share Repurchase Program Over Two Years -

VANCOUVER, Washington, March 02, 2022 (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, 2021.

Fourth Quarter 2021 Financial Summary vs. Year-Ago Quarter

  • Net revenues up 10% to $256.6 million.
  • Gross billings up 13% to $1.81 billion.
  • Average worksite employees (“WSEs”) up 7%.
  • Net income of $10.6 million, or $1.40 per diluted share, compared to $7.2 million, or $0.93 per diluted share.

Full Year 2021 Financial Summary vs. 2020

  • Net revenues up 8% to $955.2 million.
  • Gross billings up 11% to $6.57 billion.
  • Average WSEs up 4%.
  • Net income of $38.1 million, or $5.00 per diluted share, compared to $33.8 million, or $4.39 per diluted share.

“2021 was a tremendous year for our organization that ended with great momentum,” said BBSI President and CEO, Gary Kramer. “We continued our positive trend in billings growth, including the addition of more WSEs from net new clients than in any of the last four years. In fact, due to this growth, we finished the year with our highest-ever WSE count. Given our client momentum and the strength of our fourth quarter results, we are well positioned for another terrific year in 2022.”

Fourth Quarter 2021 Financial Results

Net revenues in the fourth quarter of 2021 increased 10% to $256.6 million compared to $233.2 million in the fourth quarter of 2020.

Total gross billings in the fourth quarter increased 13% to $1.81 billion compared to $1.60 billion in the same year-ago quarter (see “Key Performance Metrics and Non-GAAP Financial Measures” below). The increase was primarily due to higher average billings per WSE and an increase in average WSEs.

Non-GAAP gross workers’ compensation expense as a percent of gross billings was 3.1% in the fourth quarter of 2021 and benefited from a favorable one-time adjustment of prior accident year liability of $1.7 million. This compares to 3.7% in the fourth quarter of 2020.

Net income for the fourth quarter of 2021 increased to $10.6 million, or $1.40 per diluted share, compared to $7.2 million, or $0.93 per diluted share, in the year-ago quarter. The increase is primarily attributable to higher revenue in 2021.

Full Year 2021 Financial Results

Net revenues in 2021 increased 8% to $955.2 million compared to $880.8 million in 2020.

Total gross billings in 2021 increased 11% to $6.57 billion compared to $5.92 billion in 2020 (see “Key Performance Metrics and Non-GAAP Financial Measures” below). The increase was primarily due to higher average billings per WSE and an increase in average WSEs.

Non-GAAP gross workers’ compensation expense as a percent of gross billings was 3.0% in 2021 and benefited from favorable adjustments of prior accident year liability of $9.2 million. This compares to 3.8% in 2020.

Net income in 2021 increased to $38.1 million, or $5.00 per diluted share, compared to $33.8 million, or $4.39 per diluted share, in 2020. The increase is primarily attributable to higher revenue in 2021.

Liquidity

As of December 31, 2021, unrestricted cash and investments increased to $166.2 million compared to $115.6 million in the prior quarter. At year-end BBSI remained debt free apart from the $3.5 million mortgage on its corporate headquarters. Subsequent to year-end, BBSI entered into a revised credit agreement with Wells Fargo, its primary bank, which increased the borrowing limit of its credit facility to $50 million and extended the maturity date to June 2024. BBSI also paid off the remaining balance on its headquarters mortgage and is now completely debt free.

Capital Allocation

BBSI’s board of directors has confirmed its regular quarterly cash dividend of $0.30 per share. The cash dividend will be paid on April 1, 2022 to all stockholders of record as of March 18, 2022. The Company also repurchased an additional 91,104 shares in the fourth quarter at an average price of $71.48 per share.

BBSI’s board of directors also approved a new stock repurchase program, which will replace the $50 million repurchase program that was previously in effect. Under the newly announced program, BBSI is authorized to purchase up to $75 million of its stock over the next 24 months. Purchases under the program will be made in the open market, including in block trades.

Outlook

In 2022, BBSI expects the following:

  • Gross billings growth of 7% to 9%
  • Growth in the average number of WSEs of 3% to 4%
  • Gross margin as a percent of gross billings of 3.0% to 3.1%
  • Effective annual tax rate of 24% to 25%

Conference Call

BBSI will conduct a conference call on Wednesday, March 2, 2022, at 5:00 p.m. Eastern time (2:00 p.m. Pacific time) to discuss its financial results for the fourth quarter and the full year ended December 31, 2021.

BBSI’s CEO Gary Kramer and CFO Anthony Harris will host the conference call, followed by a question and answer period.

Date: Wednesday, March 2, 2022
Time: 5:00 p.m. Eastern time (2:00 p.m. Pacific time)
Toll-free dial-in number: 1-877-407-4018
International dial-in number: 1-201-689-8471
Conference ID: 13726898

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 Gateway Investor Relations at 1-949-574-3860.

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

A replay of the conference call will be available after 8:00 p.m. Eastern time on the same day through April 2, 2022

Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 13726898

Key Performance Metrics and Non-GAAP Financial Measures        

We report PEO revenues net of direct payroll costs because we are not the primary obligor for wage payments to our clients’ employees. However, management believes that gross billings and wages are useful in understanding the volume of our business activity and serve as an important performance metric in managing our operations, including the preparation of internal operating forecasts and establishing executive compensation performance goals. We therefore present for purposes of analysis gross billings and wage information for the three and twelve months ended December 31, 2021 and 2020.

    (Unaudited)     (Unaudited)  
    Three Months Ended December 31,     Year Ended December 31,  
(in thousands)   2021     2020     2021     2020  
Gross billings   $ 1,807,793     $ 1,603,521     $ 6,569,986     $ 5,924,539  
PEO and staffing wages   $ 1,574,668     $ 1,387,816     $ 5,693,903     $ 5,098,604  

Because safety incentives represent consideration payable to PEO customers, safety incentive costs are netted against PEO revenue in our consolidated statements of operations. We therefore present below for purposes of analysis non-GAAP gross workers’ compensation expense, which represents workers’ compensation costs including safety incentive costs. We believe this non-GAAP measure is useful in evaluating the total costs of our workers’ compensation program. In July 2020, the Company began limiting its safety incentive offering in certain markets, resulting in a substantial reduction in safety incentive costs.

    (Unaudited)     (Unaudited)  
    Three Months Ended December 31,     Year Ended December 31,  
(in thousands)   2021     2020     2021     2020  
Workers' compensation   $ 55,256     $ 54,624     $ 196,949     $ 200,744  
Safety incentive costs     822       4,394       2,985       23,544  
Non-GAAP gross workers' compensation   $ 56,078     $ 59,018     $ 199,934     $ 224,288  
                                 

In monitoring and evaluating the performance of our operations, management also reviews the following ratios, which represent selected amounts as a percentage of gross billings. Management believes these ratios are useful in understanding the efficiency and profitability of our service offerings.

    (Unaudited)     (Unaudited)  
    Percentage of Gross Billings     Percentage of Gross Billings  
    Three Months Ended December 31,     Year Ended December 31,  
    2021       2020       2021       2020    
PEO and staffing wages   87.1%       86.5%       86.7%       86.1%    
Payroll taxes and benefits   6.7%       6.6%       7.2%       7.1%    
Non-GAAP gross workers' compensation   3.1%       3.7%       3.0%       3.8%    
Gross margin   3.1%       3.2%       3.1%       3.1%    

We refer to employees of our PEO clients as WSEs. Management reviews average and ending WSE growth to monitor and evaluate the performance of our operations. Average WSEs are calculated by dividing the number of unique individuals paid in each month by the number of months in the period. Ending WSEs represents the number of unique individuals paid in the last month of the period.

    (Unaudited)  
    Year Ended December 31,  
    2021     % Change     2020     % Change     2019  
Average WSEs     112,928     4.3 %       108,249     -5.3 %       114,341  
Ending WSEs     116,154     6.3 %       109,292     -4.6 %       114,584  

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 7,600 clients across all lines of business in 47 states. For more information, please visit www.bbsi.com.

Forward-Looking Statements

Statements in this release about future events or performance, including future growth in gross billings and average number of WSEs, gross margin as a percentage of gross billings and effective annual tax rates, are forward-looking statements. Such statements 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 effects of governmental orders responding to the effects of the COVID-19 pandemic, 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 and to achieve revenue growth, 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, changes in the workers’ compensation regulatory environment in the Company’s primary markets, litigation costs, 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, the effects of the pandemic and conditions in the global capital markets on the Company’s investment portfolio, and the potential for and effect of acquisitions, among others. Other important factors that may affect the Company’s prospects are described in the Company’s 2020 Annual Report on Form 10-K and in subsequent reports filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934. 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)   2021     2020  
Assets                
Current assets:                
Cash and cash equivalents   $ 69,405     $ 68,688  
Investments     96,763       101,244  
Trade accounts receivable, net     155,707       118,506  
Income taxes receivable           6,485  
Prepaid expenses and other     17,606       15,961  
Restricted cash and investments     67,238       96,991  
Total current assets     406,719       407,875  
Property, equipment and software, net     36,277       34,916  
Operating lease right-of-use assets     20,697       23,025  
Restricted cash and investments     232,965       258,153  
Goodwill     47,820       47,820  
Other assets     2,474       3,161  
    $ 746,952     $ 774,950  
Liabilities and Stockholders' Equity                
Current liabilities:                
Current portion of long-term debt   $ 3,510     $ 221  
Accounts payable     4,485       4,746  
Accrued payroll, payroll taxes and related benefits     199,067       149,989  
Income taxes payable     1,673        
Current operating lease liabilities     7,191       7,539  
Other accrued liabilities     15,120       7,275  
Workers' compensation claims liabilities     80,028       102,040  
Safety incentives liability     4,322       18,827  
Total current liabilities     315,396       290,637  
Long-term workers' compensation claims liabilities     199,379       255,706  
Long-term debt           3,510  
Deferred income taxes     1,687       4,518  
Long-term operating lease liabilities     14,598       16,419  
Customer deposits and other long-term liabilities     7,362       5,925  
Stockholders' equity     208,530       198,235  
    $ 746,952     $ 774,950  
                 


Barrett Business Services, Inc.
Condensed Consolidated Statements of Operations
(Unaudited)

           
(in thousands, except per share amounts) Three Months Ended     Year Ended  
  December 31,     December 31,  
  2021     2020     2021     2020  
Revenues:                              
Professional employer service fees $ 223,528     $ 204,268     $ 843,815     $ 777,430  
Staffing services   33,040       28,908       111,351       103,394  
Total revenues   256,568       233,176       955,166       880,824  
Cost of revenues:                              
Direct payroll costs   25,003       22,055       83,821       78,380  
Payroll taxes and benefits   120,374       105,518       469,888       418,793  
Workers' compensation   55,256       54,624       196,949       200,744  
Total cost of revenues   200,633       182,197       750,658       697,917  
Gross margin   55,935       50,979       204,508       182,907  
Selling, general and administrative expenses   41,320       40,959       155,259       141,916  
Depreciation and amortization   1,359       1,332       5,326       4,844  
Income from operations   13,256       8,688       43,923       36,147  
Other income, net   1,616       756       6,738       6,449  
Income before income taxes   14,872       9,444       50,661       42,596  
Provision for income taxes   4,258       2,293       12,582       8,831  
Net income $ 10,614     $ 7,151     $ 38,079     $ 33,765  
Basic income per common share $ 1.42     $ 0.94     $ 5.05     $ 4.46  
Weighted average basic common shares outstanding   7,482       7,590       7,540       7,577  
Diluted income per common share $ 1.40     $ 0.93     $ 5.00     $ 4.39  
Weighted average diluted common shares outstanding   7,559       7,686       7,621       7,688  
                               

Investor Relations:
Gateway Group
Cody Slach
Tel 1-949-574-3860
BBSI@gatewayir.com


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Source: Barrett Business Services Inc