BBSI Announces Fourth Quarter 2007 Operating Results, Financial Guidance for 1Q08 and Conference Call
VANCOUVER, Wash., Feb. 8, 2008 (PRIME NEWSWIRE) -- Barrett Business Services, Inc. (Nasdaq:BBSI) reported today net income of $3.9 million for the fourth quarter ended December 31, 2007, a decline of $1.3 million or 25.1% from net income of $5.2 million for the fourth quarter of 2006. Diluted earnings per share for the 2007 fourth quarter were $.34, as compared to diluted earnings per share of $.45 for the same quarter a year ago.
Net revenues for the fourth quarter ended December 31, 2007 totaled $81.8 million, an increase of approximately $15.0 million or 22.5% over the $66.8 million for the same quarter in 2006.
($ in thousands, except (Unaudited) (Unaudited)
per share amounts) Fourth Quarter Ended Year Ended
December 31, December 31,
-------------------- --------------------
Results of Operations 2007 2006 2007 2006
----------------------- -------- -------- -------- --------
Revenues:
Staffing services $ 45,548 $ 32,766 $147,221 $123,500
Professional employer
service fees 36,283 34,055 141,992 135,684
-------- -------- -------- --------
Total revenues 81,831 66,821 289,213 259,184
-------- -------- -------- --------
Cost of revenues:
Direct payroll costs 34,250 24,849 113,450 92,676
Payroll taxes and
benefits 21,534 20,079 87,822 83,756
Workers' compensation 10,590 6,240 29,031 27,199
-------- -------- -------- --------
Total cost of
revenues 66,374 51,168 230,303 203,631
-------- -------- -------- --------
Gross margin 15,457 15,653 58,910 55,553
Selling, general and
administrative
expenses 10,043 8,140 34,688 31,604
Depreciation and
amortization 372 341 1,387 1,306
-------- -------- -------- --------
Income from operations 5,042 7,172 22,835 22,643
Other income, net 732 812 3,083 2,847
-------- -------- -------- --------
Income before taxes 5,774 7,984 25,918 25,490
Provision for income
taxes 1,859 2,755 9,112 9,154
-------- -------- -------- --------
Net income $ 3,915 $ 5,229 $ 16,806 $ 16,336
======== ======== ======== ========
Basic earnings per
share $ .35 $ .46 $ 1.49 $ 1.46
======== ======== ======== ========
Weighted average basic
shares outstanding 11,193 11,251 11,247 11,194
======== ======== ======== ========
Diluted earnings per
share $ .34 $ .45 $ 1.44 $ 1.40
======== ======== ======== ========
Weighted average
diluted shares
outstanding 11,555 11,680 11,654 11,671
======== ======== ======== ========
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)
Fourth Quarter Ended Year Ended
(in thousands) December 31, December 31,
-------------------- ------------------------
2007 2006 2007 2006
-------- -------- ---------- ----------
Revenues:
Staffing services $ 45,548 $ 32,766 $ 147,221 $ 123,500
Professional
employer
services 248,251 241,065 968,576 916,898
-------- -------- ---------- ----------
Total revenues 293,799 273,831 1,115,797 1,040,398
-------- -------- ---------- ----------
Cost of revenues:
Direct payroll
costs 246,530 230,555 935,697 869,410
Payroll taxes
and benefits 21,534 20,079 87,822 83,756
Workers'
compensation 10,278 7,544 33,368 31,679
-------- -------- ---------- ----------
Total cost of
revenues 278,342 258,178 1,056,887 984,845
-------- -------- ---------- ----------
Gross margin $ 15,457 $ 15,653 $ 58,910 $ 55,553
======== ======== ========== ==========
Gross revenues of $293.8 million for the fourth quarter ended December 31, 2007 rose 7.3% over the similar period in 2006. For the year ended December 31, 2007, gross revenues of $1.12 billion increased 7.2% over the comparable 2006 period.
A reconciliation of non-GAAP gross revenues to net revenues is as follows:
For the fourth quarters ended December 31, 2007 and 2006:
(Unaudited)
Three Months Ended December 31,
-------------------------------------------------------
Gross Revenue Net Revenue
(in thousands) Reporting Method Reclassification Reporting Method
----------------- -------------------- ---------------
2007 2006 2007 2006 2007 2006
-------- -------- --------- --------- ------- -------
Revenues:
Staffing
services $ 45,548 $ 32,766 $ -- $ -- $45,548 $32,766
Professional
employer
services 248,251 241,065 (211,968) (207,010) 36,283 34,055
-------- -------- --------- --------- ------- -------
Total
revenues $293,799 $273,831 $(211,968) $(207,010) $81,831 $66,821
======== ======== ========= ========= ======= =======
Cost of
revenues $278,342 $258,178 $(211,968) $(207,010) $66,374 $51,168
======== ======== ========= ========= ======= =======
For the years ended December 31, 2007 and 2006:
(Unaudited)
Year Ended December 31,
-------------------------------------------------------------
(in Gross Revenue Net Revenue
thousands) Reporting Method Reclassification Reporting Method
--------------------- -------------------- -----------------
2007 2006 2007 2006 2007 2006
---------- ---------- --------- --------- -------- --------
Revenues:
Staffing
serv-
ices $ 147,221 $ 123,500 $ -- $ -- $147,221 $123,500
Profess-
ional
employer
serv-
ices 968,576 916,898 (826,584) (781,214) 141,992 135,684
---------- ---------- --------- --------- -------- --------
Total
reve-
nues $1,115,797 $1,040,398 $(826,584) $(781,214) $289,213 $259,184
========== ========== ========= ========= ======== ========
Cost of
reve-
nues $1,056,887 $ 984,845 $(826,584) $(781,214) $230,303 $203,631
========== ========== ========= ========= ======== ========
The following summarizes the unaudited consolidated balance sheets at December 31, 2007 and December 31, 2006.
Dec. 31, Dec. 31,
(in thousands) 2007 2006
-------- --------
Assets
------
Current assets:
Cash and cash equivalents $ 62,779 $ 69,874
Marketable securities 1,717 3,159
Trade accounts receivable, net 36,673 31,328
Prepaid expenses and other 1,773 1,940
Deferred income taxes 5,471 4,699
Workers' compensation receivables for
insured claims 225 225
-------- --------
Total current assets 108,638 111,225
Marketable securities 417 406
Goodwill, net 41,508 27,536
Intangibles, net 119 75
Property, equipment and software, net 16,136 13,502
Restricted marketable securities and workers'
compensation deposits 2,750 2,616
Other assets 1,530 2,143
Workers' compensation receivables for insured
claims 3,896 4,678
-------- --------
$174,994 $162,181
======== ========
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Accounts payable $ 1,516 $ 1,545
Accrued payroll, payroll taxes and related
benefits 33,553 33,372
Other accrued liabilities 1,064 516
Workers' compensation claims liabilities 6,031 3,843
Workers' compensation claims liabilities
for insured claims 225 225
Safety incentives liabilities 5,911 7,519
-------- --------
Total current liabilities 48,300 47,020
Customer deposits 752 817
Long-term workers' compensation claims
liabilities 4,021 5,295
Long-term workers' compensation liabilities
for insured claims 2,464 3,011
Deferred income taxes 5,038 1,545
Deferred gain on sale and leaseback 671 793
Stockholders' equity 113,748 103,700
-------- --------
$174,994 $162,181
======== ========
Outlook for First Quarter 2008
The Company also disclosed today limited financial guidance with respect to its operating results for the first quarter ending March 31, 2008. The Company expects gross revenues for the first quarter of 2008 to range from $263 million to $268 million, as compared to $257.5 million for the first quarter of 2007, and anticipates diluted earnings per share for the first quarter of 2008 to range from $.08 to $.12 per share, as compared to $.15 per share for the same period a year ago. A reconciliation of estimated gross revenues to estimated GAAP net revenues for the first quarter of 2008 is not included because PEO revenues and cost of PEO revenues for the period are not reasonably estimable.
Conference Call
On February 8 at 9:00 a.m. Pacific Time, William W. Sherertz and Michael D. Mulholland will host an investor telephone conference call to discuss fourth quarter 2007 operating results. To participate in the call, dial (877) 356-3717. The call identification number is 34721913. 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 Friday, February 8, 2008 at 12:00 p.m. PT and ending on February 15, 2008. To listen to the recording, dial (800) 642-1687 and enter conference identification code 34721913.
Statements in this release about future events or performance, including gross revenues and earnings expectations for the first quarter of 2008, 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 and the collectibility of accounts receivable, 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.
CONTACT: Barrett Business Services, Inc.
William W. Sherertz, President and Chief Executive Officer
(360) 828-0700
Released February 8, 2008