BBSI Announces First Quarter 2007 Operating Results, Financial Guidance for 2Q07 and Conference Call
VANCOUVER, Wash.--(BUSINESS WIRE)--
Barrett Business Services, Inc. (Nasdaq: BBSI) reported today net income of $1.7 million for the first quarter ended March 31, 2007, an improvement of $371,000 or 27.3% over net income of $1.4 million for the first quarter of 2006. Diluted earnings per share for the 2007 first quarter were $.15, as compared to diluted earnings per share of $.12 for the same quarter a year ago.
Net revenues for the first quarter ended March 31, 2007 totaled $60.6 million, an increase of approximately $2.3 million or 4.0% over the $58.3 million for the same quarter in 2006.
(Unaudited)
($ in thousands, except per share amounts) First Quarter Ended
March 31,
--------------------
Results of Operations 2007 2006
------------------------------------------------- ----------- --------
Revenues:
Staffing services $28,015 $26,661
Professional employer service fees 32,573 31,624
----------- --------
Total revenues 60,588 58,285
----------- --------
Cost of revenues:
Direct payroll costs 21,142 19,851
Payroll taxes and benefits 23,911 22,837
Workers' compensation 5,844 6,554
----------- --------
Total cost of revenues 50,897 49,242
----------- --------
Gross margin 9,691 9,043
Selling, general and administrative expenses 7,388 7,220
Depreciation and amortization 349 301
----------- --------
Income from operations 1,954 1,522
Other income, net 785 632
----------- --------
Income before taxes 2,739 2,154
Provision for income taxes 1,011 797
----------- --------
Net income $ 1,728 $ 1,357
----------- --------
Basic earnings per share $ .15 $ .12
----------- --------
Weighted average basic shares outstanding 11,255 11,076
----------- --------
Diluted earnings per share $ .15 $ .12
----------- --------
Weighted average diluted shares outstanding 11,681 11,661
----------- --------
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)
First Quarter
(in thousands) March 31,
---------------------
2007 2006
----------- ---------
Revenues:
Staffing services $ 28,015 $ 26,661
Professional employer services 229,513 208,674
----------- ---------
Total revenues 257,528 235,335
----------- ---------
Cost of revenues:
Direct payroll costs 216,628 195,965
Payroll taxes and benefits 23,911 22,837
Workers' compensation 7,298 7,490
----------- ---------
Total cost of revenues 247,837 226,292
----------- ---------
Gross margin $ 9,691 $ 9,043
----------- ---------
Gross revenues of $257.5 million for the first quarter ended March 31, 2007 rose 9.4% over the similar period in 2006.
A reconciliation of non-GAAP gross revenues to net revenues is as follows:
For the first quarters ended March 31, 2007 and 2006 (in thousands):
(Unaudited)
Three Months Ended March 31,
-----------------------------------------------------------
Gross Net
Revenue Revenue
(in Reporting Reclassification Reporting
thousands) Method Method
------------------- --------------------- -----------------
2007 2006 2007 2006 2007 2006
--------- --------- ---------- ---------- -------- --------
Revenues:
Staffing
services $ 28,015 $ 26,661 $ - $ - $28,015 $26,661
Professional
employer
services 229,513 208,674 (196,940) (177,050) 32,573 31,624
--------- --------- ---------- ---------- -------- --------
Total
revenues $257,528 $235,335 $(196,940) $(177,050) $60,588 $58,285
--------- --------- ---------- ---------- -------- --------
Cost of
revenues: $247,837 $226,292 $(196,940) $(177,050) $50,897 $49,242
--------- --------- ---------- ---------- -------- --------
William W. Sherertz, President and Chief Executive Officer, commented: "We are pleased with our record-level results for the first quarter both in terms of earnings and revenues."
The following summarizes the unaudited consolidated balance sheets at March 31, 2007 and December 31, 2006.
March 31, December 31,
(in thousands) 2007 2006
--------- ------------
Assets
----------------------------------------------
Current assets:
Cash and cash equivalents $ 69,707 $ 69,874
Marketable securities 3,845 3,159
Trade accounts receivable, net 35,420 31,328
Prepaid expenses and other 2,551 1,940
Deferred income taxes 4,719 4,699
Workers' compensation receivables for insured
claims 225 225
--------- ------------
Total current assets 116,467 111,225
Marketable securities 409 406
Goodwill, net 28,036 27,536
Intangibles, net 69 75
Property, equipment and software, net 13,383 13,502
Restricted marketable securities and workers'
compensation deposits 2,703 2,616
Other assets 1,718 2,143
Workers' compensation receivables for insured
claims 4,629 4,678
--------- ------------
$167,414 $162,181
--------- ------------
Liabilities and Stockholders' Equity
------------------------------------------------
Current liabilities:
Accounts payable $ 1,842 $ 1,545
Accrued payroll, payroll taxes and related
benefits 38,133 33,372
Income taxes payable 216 -
Other accrued liabilities 752 516
Workers' compensation claims liabilities 3,441 3,843
Workers' compensation claims liabilities for
insured claims 225 225
Safety incentives liabilities 7,447 7,519
--------- ------------
Total current liabilities 52,056 47,020
Customer deposits 685 817
Long-term workers' compensation claims
liabilities 4,751 5,295
Long-term workers' compensation liabilities for
insured claims 2,962 3,011
Deferred income taxes 1,545 1,545
Deferred gain on sale and leaseback 762 793
Stockholders' equity 104,653 103,700
--------- ------------
$167,414 $162,181
--------- ------------
Outlook for Second Quarter 2007
The Company also disclosed today limited financial guidance with respect to its operating results for the second quarter ending June 30, 2007. The Company expects gross revenues for the second quarter of 2007 to range from $268 million to $273 million, an increase of approximately 5.1% over the second quarter of 2006, and anticipates diluted earnings per share for the second quarter of 2007 to range from $.40 to $.43 per share, an increase of approximately 15.3% over the $.36 per share for the same period a year ago. A reconciliation of estimated gross revenues to estimated GAAP net revenues for the second quarter of 2007 is not included because PEO revenues and cost of PEO revenues for the period are not reasonably estimable.
Conference Call
On April 26, 2007 at 9:00 a.m. Pacific Time, William W. Sherertz and Michael D. Mulholland will host an investor telephone conference call to discuss first quarter 2007 operating results. To participate in the call, dial (877) 356-3717. The call identification number is 5714299. 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 Thursday, April 26, 2007 at 12:00 p.m. PT and ending on May 4, 2007. To listen to the recording, dial (800) 642-1687 and enter conference identification code 5714299.
Statements in this release about future events or performance, including earnings expectations for the second quarter of 2007, 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 successfully integrate acquired businesses with its existing operations, future workers' compensation claims experience, the effect of changes in the workers' compensation regulatory environment in one or more of its primary markets, collectibility of accounts receivable, and the use of $74 million in cash and marketable securities, among others. Other important factors that may affect the Company's future prospects are described in the Company's 2006 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.
Source: Barrett Business Services, Inc.
Released April 25, 2007