BBSI Announces Third Quarter 2008 Operating Results, Financial Guidance for 4Q08, Increase to Share Repurchase Program, Declaration of Quarterly Cash Dividend and Conference Call
VANCOUVER, Wash., Oct. 28, 2008 (GLOBE NEWSWIRE) -- Barrett Business Services, Inc. (Nasdaq:BBSI) reported today net income of $650,000 for the third quarter ended September 30, 2008, a decline of $5.6 million or 89.7% from net income of $6.3 million for the third quarter of 2007. Diluted earnings per share for the 2008 third quarter were $.06, as compared to diluted earnings per share of $.54 for the same quarter a year ago.
As previously reported, the Company recorded a non-cash, marked-to-market impairment charge of approximately $3.5 million, or $.32 per diluted share, in the third quarter of 2008 relating to its investment in four closed-end bond funds. The Company recorded no income tax benefit on this impairment charge given the uncertainty of the Company's ability to generate future taxable investment gains required to utilize these investment losses.
Net revenues for the third quarter ended September 30, 2008 totaled $77.5 million, a decrease of approximately $5.4 million or 6.6% from the $82.9 million for the same quarter in 2007.
($ in thousands, except per (Unaudited) (Unaudited)
share amounts) Third Quarter Ended Nine Months Ended
September 30, September 30,
------------------ ------------------
Results of Operations 2008 2007 2008 2007
----------------------------- -------- -------- -------- --------
Revenues:
Staffing services $ 44,468 $ 43,911 $120,891 $101,673
Professional employer service
fees 32,993 38,997 94,947 105,709
-------- -------- -------- --------
Total revenues 77,461 82,908 215,838 207,382
-------- -------- -------- --------
Cost of revenues:
Direct payroll costs 32,941 35,642 89,267 79,200
Payroll taxes and benefits 21,201 21,835 66,367 66,288
Workers' compensation 8,410 6,633 22,679 18,441
-------- -------- -------- --------
Total cost of revenues 62,552 64,110 178,313 163,929
-------- -------- -------- --------
Gross margin 14,909 18,798 37,525 43,453
Selling, general and
administrative expenses 10,007 9,530 27,841 24,645
Depreciation and amortization 385 350 1,143 1,015
-------- -------- -------- --------
Income from operations 4,517 8,918 8,541 17,793
Loss on impairment of
investments (3,483) -- (3,483) --
Other income, net 465 776 1,678 2,351
-------- -------- -------- --------
Income before taxes 1,499 9,694 6,736 20,144
Provision for income taxes 849 3,412 2,745 7,253
-------- -------- -------- --------
Net income $ 650 $ 6,282 $ 3,991 $ 12,891
======== ======== ======== ========
Basic earnings per share $ .06 $ .56 $ .36 $ 1.14
======== ======== ======== ========
Weighted average basic shares
outstanding 10,781 11,276 10,935 11,265
======== ======== ======== ========
Diluted earnings per share $ .06 $ .54 $ .36 $ 1.10
======== ======== ======== ========
Weighted average diluted shares
outstanding 10,997 11,691 11,214 11,687
======== ======== ======== ========
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)
Third Quarter Ended Nine Months Ended
(in thousands) September 30, September 30,
------------------ ------------------
2008 2007 2008 2007
-------- -------- -------- --------
Revenues:
Staffing services $ 44,468 $ 43,911 $120,891 $101,673
Professional employer
services 243,927 252,855 696,579 720,325
-------- -------- -------- --------
Total revenues 288,395 296,766 817,470 821,998
-------- -------- -------- --------
Cost of revenues:
Direct payroll costs 242,396 247,934 686,136 689,167
Payroll taxes and benefits 21,201 21,835 66,367 66,288
Workers' compensation 9,889 8,199 27,442 23,090
-------- -------- -------- --------
Total cost of revenues 273,486 277,968 779,945 778,545
======== ======== ======== ========
Gross margin $ 14,909 $ 18,798 $ 37,525 $ 43,453
======== ======== ======== ========
Gross revenues of $288.4 million for the third quarter ended September 30, 2008 declined 2.8% from the similar period in 2007. For the nine months of 2008, gross revenues of $817.5 million decreased 0.6% from the comparable 2007 period.
A reconciliation of non-GAAP gross revenues to net revenues is as follows:
For the third quarters ended September 30, 2008 and 2007:
(Unaudited)
Three Months Ended September 30,
-------------------------------------------------------
(in Gross Revenue Net Revenue
thousands) Reporting Method Reclassification Reporting Method
----------------- -------------------- ----------------
2008 2007 2008 2007 2008 2007
-------- -------- --------- --------- ------- -------
Revenues:
Staffing
services $ 44,468 $ 43,911 $ -- $ -- $44,468 $43,911
Professional
employer
services 243,927 252,855 (210,934) (213,858) 32,993 38,997
-------- -------- --------- --------- ------- -------
Total
revenues $288,395 $296,766 $(210,934) $(213,858) $77,461 $82,908
======== ======== ========= ========= ======= =======
Cost of
revenues $273,486 $277,968 $(210,934) $(213,858) $62,552 $64,110
======== ======== ========= ========= ======= =======
For the nine months ended September 30, 2008 and 2007:
(Unaudited)
Nine Months Ended September 30,
----------------------------------------------------------
(in Gross Revenue Net Revenue
thousands) Reporting Method Reclassification Reporting Method
----------------- -------------------- -----------------
2008 2007 2008 2007 2008 2007
-------- -------- --------- --------- -------- --------
Revenues:
Staffing
services $120,891 $101,673 $ -- $ -- $120,891 $101,673
Professional
employer
services 696,579 720,325 (601,632) (614,616) 94,947 105,709
-------- -------- --------- --------- -------- --------
Total
revenues $817,470 $821,998 $(601,632) $(614,616) $215,838 $207,382
======== ======== ========= ========= ======== ========
Cost of
revenues $779,945 $778,545 $(601,632) $(614,616) $178,313 $163,929
======== ======== ========= ========= ======== ========
The following summarizes the unaudited consolidated balance sheets at September 30, 2008 and December 31, 2007.
September 30, December 31,
(in thousands) 2008 2007
------------ ------------
Assets
------
Current assets:
Cash and cash equivalents $ 28,302 $ 9,777
Marketable securities 22,967 50,364
Trade accounts receivable, net 47,866 36,673
Prepaid expenses and other 1,776 2,336
Deferred income taxes 2,163 3,138
Workers' compensation receivables for
insured claims 225 225
------------ ------------
Total current assets 103,299 102,513
Marketable securities 4,648 4,772
Goodwill, net 47,338 41,508
Property, equipment and software, net 15,746 16,136
Restricted marketable securities and
workers' compensation deposits 3,821 2,750
Other assets 1,656 1,649
Workers' compensation receivables for
insured claims 3,412 3,896
------------ ------------
$ 179,920 $ 173,224
============ ============
Liabilities and Stockholders' Equity
------------------------------------
Current liabilities:
Accounts payable $ 1,207 $ 1,516
Accrued payroll, payroll taxes and related
benefits 41,323 33,553
Income taxes payable 475 --
Other accrued liabilities 919 1,064
Workers' compensation claims liabilities 7,935 6,031
Workers' compensation claims liabilities
for insured claims 225 225
Safety incentives liabilities 4,895 5,911
------------ ------------
Total current liabilities 56,979 48,300
Customer deposits 698 752
Long-term workers' compensation claims
liabilities 4,918 4,021
Long-term workers' compensation liabilities
for insured claims 2,317 2,464
Deferred income taxes 3,269 3,268
Deferred gain on sale and leaseback 579 671
Stockholders' equity 111,160 113,748
------------ ------------
$ 179,920 $ 173,224
============ ============
Outlook for Fourth Quarter 2008
The Company also disclosed today limited financial guidance with respect to its operating results for the fourth quarter ending December 31, 2008. The Company expects gross revenues for the fourth quarter of 2008 to range from $274 million to $278 million, as compared to $293.8 million for the fourth quarter of 2007, and anticipates diluted earnings per share for the fourth quarter of 2008 to range from $.30 to $.34 per share, as compared to $.34 per share for the same period a year ago. A reconciliation of estimated gross revenues to estimated GAAP net revenues for the fourth quarter of 2008 is not included because PEO revenues and cost of PEO revenues for the period are not reasonably estimable.
Increase in Share Repurchase Program and Declaration of Quarterly Cash Dividend
The Company announced today that its board of directors has increased the number of shares the Company is authorized to repurchase under its share repurchase program from one million shares to three million shares.
The Company's board also declared a regular quarterly cash dividend of $0.08 per share. The cash dividend will be paid on December 12, 2008 to all stockholders of record as of November 28, 2008.
Conference Call
On October 29 at 9:00 a.m. Pacific Time, William W. Sherertz, Michael L. Elich and James D. Miller will host an investor telephone conference call to discuss third quarter 2008 operating results. To participate in the call, dial (877) 356-3717. The call identification number is 70239519. 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 29, 2008 at 12:00 p.m. PT and ending on Wednesday, November 5, 2008. To listen to the recording, dial (800) 642-1687 and enter conference identification code 70239519.
Statements in this release about future events or performance, including gross revenues and earnings expectations for the fourth 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, 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 2007 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 October 28, 2008