BBSI Announces Fourth Quarter 2006 Operating Results, Financial Guidance for 1Q07 and Conference Call
VANCOUVER, Wash.--(BUSINESS WIRE)--
Barrett Business Services, Inc. (Nasdaq: BBSI) reported today net income of $5.2 million for the fourth quarter ended December 31, 2006, an improvement of $915,000 or 21.2% over net income of $4.3 million for the fourth quarter of 2005. Diluted earnings per share for the 2006 fourth quarter were $.45, as compared to diluted earnings per share of $.37 for the same quarter a year ago.
Net revenues for the fourth quarter ended December 31, 2006 totaled $66.8 million, an increase of approximately $8.8 million or 15.2% over the $58.0 million for the same quarter in 2005.
(Unaudited) (Unaudited)
($ in thousands, except per Fourth Quarter Year
share amounts) Ended Ended
December 31, December 31,
----------------- -------------------
Results of Operations 2006 2005 2006 2005
-------------------------------- -------- -------- --------- ---------
Revenues:
Staffing services $32,766 $29,251 $123,500 $130,098
Professional employer service
fees 34,055 28,712 135,684 101,291
-------- -------- --------- ---------
Total revenues 66,821 57,963 259,184 231,389
-------- -------- --------- ---------
Cost of revenues:
Direct payroll costs 24,849 21,864 92,676 97,006
Payroll taxes and benefits 20,079 16,238 83,756 63,889
Workers' compensation 6,240 6,302 27,199 24,667
-------- -------- --------- ---------
Total cost of revenues 51,168 44,404 203,631 185,562
-------- -------- --------- ---------
Gross margin 15,653 13,559 55,553 45,827
Selling, general and
administrative
expenses 8,140 7,043 31,604 25,670
Depreciation and amortization 341 282 1,306 974
-------- -------- --------- ---------
Income from operations 7,172 6,234 22,643 19,183
Other income, net 812 519 2,847 747
-------- -------- --------- ---------
Income before taxes 7,984 6,753 25,490 19,930
Provision for income taxes 2,755 2,439 9,154 7,440
-------- -------- --------- ---------
Net income $ 5,229 $ 4,314 $ 16,336 $ 12,490
-------- -------- --------- ---------
Basic earnings per share $ .46 $ .39 $ 1.46 $ 1.29
-------- -------- --------- ---------
Weighted average basic shares
outstanding 11,251 11,018 11,194 9,647
-------- -------- --------- ---------
Diluted earnings per share $ .45 $ .37 $ 1.40 $ 1.21
-------- -------- --------- ---------
Weighted average diluted shares
outstanding 11,680 11,739 11,671 10,343
-------- -------- --------- ---------
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 Year Ended
(in thousands) December 31, December 31,
------------------- ---------------------
2006 2005 2006 2005
--------- --------- ----------- ---------
Revenues:
Staffing services $ 32,766 $ 29,251 $ 123,500 $130,098
Professional employer
services 241,065 183,843 916,898 635,743
--------- --------- ----------- ---------
Total revenues 273,831 213,094 1,040,398 765,841
--------- --------- ----------- ---------
Cost of revenues:
Direct payroll costs 230,555 175,924 869,410 625,242
Payroll taxes and benefits 20,079 16,237 83,756 63,888
Workers' compensation 7,544 7,374 31,679 30,884
--------- --------- ----------- ---------
Total cost of revenues 258,178 199,535 984,845 720,014
--------- --------- ----------- ---------
Gross margin $ 15,653 $ 13,559 $ 55,553 $ 45,827
--------- --------- ----------- ---------
Gross revenues of $273.8 million for the fourth quarter ended December 31, 2006 rose 28.5% over the similar period in 2005. For the year ended December 31, 2006, gross revenues of $1.04 billion increased 35.9% over 2005.
A reconciliation of non-GAAP gross revenues to net revenues is as follows:
For the fourth quarters ended December 31, 2006 and 2005 (in thousands):
(Unaudited)
Three Months Ended December 31,
---------------------------------------------------------
Gross Revenue Net Revenue
Reporting Method Reclassification Reporting Method
---------------------------------------------------------
2006 2005 2006 2005 2006 2005
--------- ------------------- ------------------ --------
Revenues:
Staffing
services $ 32,766 $ 29,251 $ - $ - $32,766 $29,251
Professional
employer
services 241,065 183,843 (207,010) (155,131) 34,055 28,712
--------- ------------------- ------------------ --------
Total
revenues $273,831 $213,094 $(207,010) $(155,131)$66,821 $57,963
--------- ------------------- ------------------ --------
Cost of
revenues: $258,178 $199,535 $(207,010) $(155,131)$51,168 $44,404
--------- ------------------- ------------------ --------
For the years ended December 31, 2006 and 2005 (in thousands):
(Unaudited)
Year Ended December 31,
----------------------------------------------------------
Gross Revenue Net Revenue
Reporting Reclassification Reporting
Method Method
----------------------------------------------------------
2006 2005 2006 2005 2006 2005
----------------------------------------------------------
Revenues:
Staffing
services $ 123,500 $130,098 $ - $ - $123,500 $130,098
Pro-
fessional
employer
services 916,898 635,743 (781,214) (534,452) 135,684 101,291
----------------------------------------------------------
Total
revenues$1,040,398 $765,841 $(781,214)$(534,452)$259,184 $231,389
----------------------------------------------------------
Cost
of
revenues: $ 984,845 $720,014 $(781,214)$(534,452)$203,631 $185,562
----------------------------------------------------------
William W. Sherertz, President and Chief Executive Officer, commented: "We are pleased with another strong quarter and surpassing the $1 billion milestone in gross revenues for 2006."
The following summarizes the unaudited consolidated balance sheets at December 31, 2006 and December 31, 2005.
December December
31, 31,
(in thousands) 2006 2005
--------- ---------
Assets
------------------------------------------------
Current assets:
Cash and cash equivalents $ 69,874 $ 61,361
Marketable securities 3,159 3,548
Trade accounts receivable, net 31,328 26,328
Prepaid expenses and other 1,940 2,514
Deferred income taxes 4,699 5,864
Workers' compensation receivables for insured
claims 225 242
--------- ---------
Total current assets 111,225 99,857
Marketable securities 406 396
Goodwill, net 27,536 22,516
Intangibles, net 75 5
Property, equipment and software, net 13,502 13,071
Restricted marketable securities and workers'
compensation deposits 2,616 2,041
Deferred income taxes - 341
Other assets 2,143 1,528
Workers' compensation receivables for insured
claims 4,678 4,546
--------- ---------
$162,181 $144,301
--------- ---------
Liabilities and Stockholders' Equity
---------------------------------------------------
Current liabilities:
Accounts payable $ 1,545 $ 1,366
Accrued payroll, payroll taxes and related
benefits 33,372 28,650
Other accrued liabilities 516 360
Workers' compensation claims liabilities 3,843 5,729
Workers' compensation claims liabilities for
insured claims 225 242
Safety incentives liabilities 7,519 7,687
Current portion of long-term debt - 348
--------- ---------
Total current liabilities 47,020 44,382
Long-term debt, net of current portion - 1,094
Customer deposits 817 663
Long-term workers' compensation claims liabilities 5,295 8,532
Long-term workers' compensation liabilities for
insured claims 3,011 2,866
Deferred income taxes 1,545 -
Deferred gain on sale and leaseback 793 914
Stockholders' equity 103,700 85,850
--------- ---------
$162,181 $144,301
--------- ---------
Outlook for First Quarter 2007
The Company also disclosed today limited financial guidance with respect to its operating results for the first quarter ending March 31, 2007. The Company expects gross revenues for the first quarter of 2007 to range from $260 million to $265 million, an increase of approximately 12% over the first quarter of 2006, and anticipates diluted earnings per share for the first quarter of 2007 to range from $.13 to $.15 per share, an increase of approximately 17% over the $.12 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 2007 is not included because PEO revenues and cost of PEO revenues for the period are not reasonably estimable.
The company also announced that it has incorporated a wholly-owned fully licensed captive insurance company, effective January 1, 2007, which will participate in providing BBSI with excess workers' compensation and other insurance coverages. Management expects the captive will provide opportunities to participate in more competitive and cost effective insurance markets and provide additional flexibility in risk management.
Conference Call
On February 9, 2007 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 2006 operating results. To participate in the call, dial (877) 356-3717. The call identification number is 8622054. 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 9, 2007 at 12:00 p.m. PT and ending on February 16, 2007. To listen to the recording, dial (800) 642-1687 and enter conference identification code 8622054.
Statements in this release about future events or performance, including earnings expectations for the first 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 $73 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 2005 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 February 8, 2007