BBSI Reports Strong Third Quarter 2023 Financial Results

- Q3 2023 Net Income of $18.2 Million, or $2.68 per Diluted Share -

VANCOUVER, Wash., Nov. 01, 2023 (GLOBE NEWSWIRE) -- Barrett Business Services, Inc. (“BBSI” or the “Company”) (NASDAQ: BBSI), a leading provider of business management solutions, reported financial results for the third quarter ended September 30, 2023.

Third Quarter 2023 Financial Summary vs. Year-Ago Quarter

  • Revenues down 0.2% to $273.3 million.
  • Gross billings up 3% to $1.96 billion.
  • Average worksite employees (“WSEs”) up 1%.
  • Net income up to $18.2 million, or $2.68 per diluted share, compared to $17.4 million, or $2.45 per diluted share.

“We continued to generate strong results from our expanding client base and on-going roll-out of BBSI Benefits,” said BBSI President and CEO, Gary Kramer. “I’m proud of the success we’ve had adding net new clients as we've continued to experience results from our investments in marketing and new product offerings. We also continued to see positive results in our pricing and cost management strategies, resulting in strong, sustainable earnings growth.”

Third Quarter 2023 Financial Results

Revenues in the third quarter of 2023 decreased 0.2% to $273.3 million compared to $273.8 million in the third quarter of 2022. The slight decrease was driven by a decrease in staffing services revenue, which was primarily due to lower demand for staffing services and continued tight labor market conditions in the third quarter of 2023.

Total gross billings in the third quarter of 2023 increased 3% to $1.96 billion compared to $1.91 billion in the same year-ago quarter (see “Key Performance Metrics” below). The increase was driven by growth in PEO services resulting from increased WSEs from net new clients and higher average billings per WSE, offset in part by reductions in WSEs at existing clients.

Workers’ compensation expense as a percent of gross billings was 2.7% in the third quarter of 2023 and benefited from favorable prior year liability and premium adjustments of $2.2 million. This compares to 3.0% in the third quarter of 2022, which included favorable prior year liability and premium adjustments of $1.4 million.

Net income for the third quarter of 2023 was $18.2 million, or $2.68 per diluted share, compared to $17.4 million, or $2.45 per diluted share, in the year-ago quarter. The increase is primarily attributable to higher gross margin in the third quarter of 2023.


As of September 30, 2023, unrestricted cash and investments were $129.2 million compared to $159.7 million at the end of 2022. BBSI was debt free at quarter end.

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 December 1, 2023, to all stockholders of record as of November 17, 2023.

Continuing under the Company’s stock repurchase program established in July 2023, BBSI repurchased 115,400 shares in the third quarter at an average price of $94.60. At September 30, 2023, approximately $64.1 million remained available under the repurchase program.


BBSI now expects the following for 2023:

  • Gross billings growth of 4% to 5%
  • Growth in the average number of WSEs of 2% to 3%
  • Gross margin as a percent of gross billings of 3.1% to 3.15%
  • Effective annual tax rate of 27% to 28%

Conference Call

BBSI will conduct a conference call on Wednesday, November 1, 2023, at 5:00 p.m. Eastern time (2:00 p.m. Pacific time) to discuss its financial results for the quarter ended September 30, 2023.

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

Date: Wednesday, November 1, 2023
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: 13741346

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

A replay of the conference call will be available after 8:00 p.m. Eastern time on the same day through December 1, 2023.

Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 13741346

Key Performance Metrics

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 nine months ended September 30, 2023 and 2022.

    (Unaudited)     (Unaudited)  
    Three Months Ended September 30,     Nine Months Ended September 30,  
(in thousands)   2023     2022     2023     2022  
Gross billings   $ 1,963,462     $ 1,908,818     $ 5,664,230     $ 5,445,217  
PEO and staffing wages   $ 1,706,302     $ 1,656,580     $ 4,919,323     $ 4,727,772  

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 September 30,   Nine Months Ended September 30,
    2023   2022   2023   2022
PEO and staffing wages   86.9%   86.8%   86.9%   86.8%
Payroll taxes and benefits   6.9%   6.7%   7.3%   7.2%
Workers' compensation   2.7%   3.0%   2.7%   2.8%
Gross margin   3.5%   3.5%   3.1%   3.2%

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.

    Three Months Ended September 30,
    2023     % Change   2022     % Change
Average WSEs     127,232     1.1%     125,813     8.2%
Ending WSEs     128,448     0.9%     127,297     9.8%

    Nine Months Ended September 30,
    2023     % Change   2022     % Change
Average WSEs     123,577     1.8%     121,415     8.8%
Ending WSEs     128,448     0.9%     127,297     9.8%

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. For more information, please visit

Forward-Looking Statements

Statements in this release about future events and financial outlook 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 lingering effects of the COVID-19 pandemic; the effects of inflation on operating expenses; the availability of certain fully insured medical and other health and welfare benefits to qualifying worksite employees; the effect of changes in the Company’s mix of services on gross margin; the Company’s ability to attract and retain 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; changes in effective payroll tax rates and federal and state income tax rates; the carrying value of deferred income tax assets and goodwill; the effects of 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 2022 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
(In Thousands)

  September 30,     December 31,  
  2023     2022  
Current assets:          
Cash and cash equivalents $ 41,579     $ 91,423  
Investments   87,653       68,325  
Trade accounts receivable, net   205,217       163,838  
Prepaid expenses and other   17,136       19,787  
Restricted cash and investments   75,876       110,989  
Total current assets   427,461       454,362  
Property, equipment and software, net   48,679       45,954  
Operating lease right-of-use assets   18,428       19,804  
Restricted cash and investments   131,619       104,277  
Goodwill   47,820       47,820  
Other assets   3,765       3,281  
Deferred income taxes   12,236       11,440  
Total assets $ 690,008     $ 686,938  
Current liabilities:          
Accounts payable $ 5,268     $ 8,264  
Accrued payroll, payroll taxes and related benefits   247,454       222,331  
Income taxes payable   786       610  
Current operating lease liabilities   6,753       6,957  
Current premium payable   18,853       18,920  
Other accrued liabilities   6,904       12,683  
Workers' compensation claims liabilities   53,622       62,917  
Safety incentives liability   1,469       2,049  
Total current liabilities   341,109       334,731  
Long-term workers' compensation claims liabilities   124,180       153,070  
Long-term premium payable   23,301       -  
Long-term operating lease liabilities   13,049       14,225  
Customer deposits and other long-term liabilities   7,923       7,070  
Stockholders' equity   180,446       177,842  
Total liabilities and stockholders' equity $ 690,008     $ 686,938  

Barrett Business Services, Inc.
Condensed Consolidated Statements of Operations
(In Thousands, Except Per Share Amounts)

    Three Months Ended     Nine Months Ended  
    September 30,     September 30,  
    2023     2022     2023     2022  
Professional employer services   $ 251,423     $ 244,567     $ 727,986     $ 694,174  
Staffing services     21,905       29,255       64,639       88,202  
Total revenues     273,328       273,822       792,625       782,376  
Cost of revenues:                        
Direct payroll costs     16,318       22,112       48,299       66,491  
Payroll taxes and benefits     135,704       128,459       414,395       390,677  
Workers' compensation     52,977       56,350       153,012       151,069  
Total cost of revenues     204,999       206,921       615,706       608,237  
Gross margin     68,329       66,901       176,919       174,139  
Selling, general and administrative expenses     44,160       43,001       129,194       125,438  
Depreciation and amortization     1,867       1,554       5,273       4,585  
Income from operations     22,302       22,346       42,452       44,116  
Other income (expense):                        
Investment income, net     2,412       1,584       6,856       4,790  
Interest expense     minus(80 )     minus(35 )     minus(118 )     minus(102 )
Other, net     38       19       93       70  
Other income, net     2,370       1,568       6,831       4,758  
Income before income taxes     24,672       23,914       49,283       48,874  
Provision for income taxes     6,453       6,476       13,229       13,134  
Net income   $ 18,219     $ 17,438     $ 36,054     $ 35,740  
Basic income per common share   $ 2.72     $ 2.48     $ 5.32     $ 4.96  
Weighted average basic common shares outstanding     6,699       7,036       6,772       7,201  
Diluted income per common share   $ 2.68     $ 2.45     $ 5.24     $ 4.91  
Weighted average diluted common shares outstanding     6,795       7,127       6,885       7,286  

Investor Relations:
Gateway Group, Inc.
Cody Slach
Tel 1-949-574-3860

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Source: Barrett Business Services Inc