BBSI Announces Third Quarter 2010 Operating Results, Financial Guidance for 4Q10 and Conference Call

VANCOUVER, Wash., Oct. 26, 2010 (GLOBE NEWSWIRE) -- Barrett Business Services, Inc. (Nasdaq:BBSI) reported today net income of $3.7 million for the third quarter ended September 30, 2010 compared to a net income of $2.9 million for the third quarter of 2009. Diluted income per share for the 2010 third quarter was $.36, as compared to diluted earnings per share of $.28 for the same quarter a year ago. 

Net revenues for the third quarter ended September 30, 2010 totaled $73.9 million, an increase of approximately $8.4 million or 12.8% over the $65.5 million for the same quarter in 2009.

                          (Unaudited)                      (Unaudited)
      (in thousands, except per share amounts)
     Third Quarter Ended
    September 30,Nine Months Ended
    September 30,
                                 Results of Operations              2010              2009            2010             2009
                                             Revenues:                                                                 
                                     Staffing services         $ 33,954         $ 33,180       $ 92,991        $ 85,224
                    Professional employer service fees            39,922            32,314         106,577           88,607
                                        Total revenues            73,876            65,494         199,568          173,831
                                     Cost of revenues:                                                                 
                                  Direct payroll costs            25,846            25,095          70,519           64,291
                            Payroll taxes and benefits            24,501            20,399          71,990           62,460
                                 Workers' compensation             9,473             7,859          25,881           33,473
                                Total cost of revenues            59,820            53,353         168,390          160,224
                                          Gross margin            14,056            12,141          31,178           13,607
          Selling, general and administrative expenses             9,156             8,416          25,787           24,792
                         Depreciation and amortization               341               422           1,051            1,218
                         Income (loss) from operations             4,559             3,303           4,340         (12,403)
                                     Other income, net               588               965           1,253            1,373
                            Income (loss) before taxes             5,147             4,268           5,593         (11,030)
             Provision for (benefit from) income taxes             1,461             1,323           1,315          (4,069)
                                     Net income (loss)          $ 3,686          $ 2,945        $ 4,278       $ (6,961)
                         Basic income (loss) per share            $ .36            $ .28          $ .41         $ (.67)
             Weighted average basic shares outstanding            10,217            10,475          10,376           10,442
                       Diluted income (loss) per share            $ .36            $ .28          $ .41         $ (.67)
           Weighted average diluted shares outstanding            10,251            10,559          10,410           10,442
                                                                                                                      

The Company reports its Professional Employer Organization services ("PEO") revenues on a net basis because it is not the primary obligor for the services provided by the Company's PEO clients to their customers. The gross revenues and cost of revenues information below, although not in accordance with generally accepted accounting principles ("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)
                                                 (in thousands)
     Third Quarter Ended
    September 30,Nine Months Ended
    September 30,
                                                                                   2010              2009             2010             2009
                                                             Revenues:                                                                  
                                                     Staffing services        $ 33,954        $ 33,180       $ 92,991       $ 85,224
     Professional employer services                            298,941          239,872         799,557         663,847
                                                        Total revenues          332,895          273,052         892,548         749,071
                                                     Cost of revenues:                                                                  
                                                  Direct payroll costs          283,421          231,532         759,690         635,808
                                            Payroll taxes and benefits           24,501           20,399          71,990          62,460
                                               Workers' compensation            10,917            8,980          29,690          37,196
                                                Total cost of revenues          318,839          260,911         861,370         735,464
                                                          Gross margin        $ 14,056        $ 12,141       $ 31,178       $ 13,607

Gross revenues of $332.9 million for the third quarter ended September 30, 2010 increased 21.9% over the similar period in 2009. 

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

For the third quarters ended September 30, 2010 and 2009:

                                                                                              (Unaudited)
                                                                                                            Three Months Ended September 30,
                       (in thousands)Gross Revenue
    Reporting Method                      ReclassificationNet Revenue
    Reporting Method
                                                 2010             2009               2010               2009            2010            2009
                            Revenues:                                                                                                  
                    Staffing services       $ 33,954       $ 33,180             $ --             $ --      $ 33,954      $ 33,180
     Professional employer services          298,941         239,872         (259,019)         (207,558)         39,922         32,314
                       Total revenues      $ 332,895      $ 273,052      $ (259,019)      $ (207,558)      $ 73,876      $ 65,494
                     Cost of revenues      $ 318,839      $ 260,911      $ (259,019)      $ (207,558)      $ 59,820      $ 53,353

For the nine months ended September 30, 2010 and 2009:

                                                                                                (Unaudited)
                                                                                                                Nine Months Ended September 30,
                        (in thousands)Gross Revenue
    Reporting Method                      Reclassification  Net Revenue
    Reporting Method
                                                  2010             2009               2010               2009             2010             2009
                             Revenues:                                                                                                    
                     Staffing services       $ 92,991       $ 85,224             $ --             $ --       $ 92,991       $ 85,224
     Professional employer services          799,557         663,847         (692,980)         (575,240)         106,577          88,607
                        Total revenues      $ 892,548      $ 749,071      $ (692,980)      $ (575,240)      $ 199,568      $ 173,831
                      Cost of revenues      $ 861,370      $ 735,464      $ (692,980)      $ (575,240)      $ 168,390      $ 160,224

The following summarizes the unaudited consolidated balance sheets at September 30, 2010 and December 31, 2009.

(in thousands)     September 30,
    2010     December 31,
    2009
                                                                  Assets                                                   
                                                         Current assets:                                                   
                                               Cash and cash equivalents                  $ 18,261                 $ 36,671
                                                   Marketable securities                     24,227                    13,766
                                          Trade accounts receivable, net                     56,483                    33,070
                                                 Income taxes receivable                      3,898                     4,274
                                              Prepaid expenses and other                      1,772                       979
                                                   Deferred income taxes                      4,271                     4,071
                                                    Total current assets                    108,912                    92,831
                                                   Marketable securities                      7,166                     7,473
                                   Property, equipment and software, net                     14,929                    14,795
     Restricted marketable securities and workers' compensation deposits                      9,305                     2,666
                                                            Other assets                      3,091                     3,104
                    Workers' compensation receivables for insured claims                      3,610                     3,865
                                                           Goodwill, net                     47,820                    47,338
                                                                                        $ 194,833                $ 172,072
                                                                                                                          
                                    Liabilities and Stockholders' Equity                                                   
                                                    Current liabilities:                                                   
                                                        Accounts payable                   $ 1,042                  $ 1,117
                     Accrued payroll, payroll taxes and related benefits                     52,288                    30,244
                                               Other accrued liabilities                        370                       499
                              Workers' compensation claims liabilities                      11,018                    10,509
                                           Safety incentives liabilities                      4,753                     4,437
                                               Total current liabilities                     69,471                    46,806
                    Long-term workers' compensation claims liabilities                      16,351                    14,560
          Long-term workers' compensation liabilities for insured claims                      2,665                     2,729
                                                   Deferred income taxes                      6,322                     6,323
                       Customer deposits and other long-term liabilities                      1,451                     1,527
                                                    Stockholders' equity                     98,573                   100,127
                                                                                        $ 194,833                $ 172,072

Outlook for Fourth Quarter 2010

The Company also disclosed today limited financial guidance with respect to its operating results for the fourth quarter ending December 31, 2010. The Company expects gross revenues for the fourth quarter of 2010 to range from $321 million to $326 million, as compared to $270.8 million for the fourth quarter of 2009, and anticipates diluted earnings for the fourth quarter of 2010 to range from $.28 to $.32 per share, as compared to diluted income per share of $.21 for the same period a year ago. A reconciliation of estimated gross revenues to estimated GAAP net revenues for the fourth quarter of 2010 is not included because PEO revenues and cost of PEO revenues for the period are not reasonably estimable.

Conference Call

On Wednesday, October 27 at 9:00 a.m. Pacific Time, William W. Sherertz and James D. Miller will host an investor telephone conference call to discuss third quarter 2010 operating results. To participate in the call, dial (877) 356-3717. The call identification number is 19477114. 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 Wednesday, October 27, 2010 at 12:00 p.m. PT and ending on Wednesday, November 3, 2010. To listen to the recording, dial (800) 642-1687 and enter conference identification code 19477114.

Statements in this release about future events or performance, including gross revenues and earnings expectations for the fourth quarter of 2010, 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 customers and attract new customers, future workers' compensation claims experience, the effect of changes in the workers' compensation regulatory environment in one or more of the Company's primary markets, the collectibility of accounts receivable, 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 future prospects are described in the Company's 2009 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.

BBSI provides a comprehensive range of human resource management solutions to large and small companies throughout many regions of the United States.

CONTACT:  Barrett Business Services, Inc.
          William W. Sherertz, President and Chief Executive Officer
          (360) 828-0700