BBSI Announces Second Quarter 2007 Operating Results, Financial Guidance for 3Q07 and Conference Call
VANCOUVER, Wash.--(BUSINESS WIRE)--
Barrett Business Services, Inc. (Nasdaq:BBSI) reported today net income of $4.9 million for the second quarter ended June 30, 2007, an improvement of $693,000 or 16.5% over net income of $4,188,000 for the second quarter of 2006. Diluted earnings per share for the 2007 second quarter were $.42, as compared to diluted earnings per share of $.36 for the same quarter a year ago.
Net revenues for the second quarter ended June 30, 2007 totaled $63.9 million, a decrease of approximately $769,000 or 1.2% from the $64.7 million for the same quarter in 2006.
(Unaudited) (Unaudited)
($ in thousands, except per Second Quarter Ended Six Months Ended
share amounts)
June 30, June 30,
-------------------- ------------------
Results of Operations 2007 2006 2007 2006
----------------------------- ----------- -------- --------- --------
Revenues:
Staffing services $29,747 $ 30,567 $ 57,762 $ 57,228
Professional employer
service fees 34,139 34,088 66,712 65,712
----------- -------- --------- --------
Total revenues 63,886 64,655 124,474 122,940
----------- -------- --------- --------
Cost of revenues:
Direct payroll costs 22,416 22,831 43,558 42,682
Payroll taxes and benefits 20,542 20,437 44,453 43,274
Workers' compensation 5,964 7,198 11,808 13,752
----------- -------- --------- --------
Total cost of revenues 48,922 50,466 99,819 99,708
----------- -------- --------- --------
Gross margin 14,964 14,189 24,655 23,232
Selling, general and
administrative
expenses 7,727 7,882 15,115 15,102
Depreciation and amortization 316 329 665 630
----------- -------- --------- --------
Income from operations 6,921 5,978 8,875 7,500
Other income, net 790 670 1,575 1,302
----------- -------- --------- --------
Income before taxes 7,711 6,648 10,450 8,802
Provision for income taxes 2,830 2,460 3,841 3,257
----------- -------- --------- --------
Net income $ 4,881 $ 4,188 $ 6,609 $ 5,545
----------- -------- --------- --------
Basic earnings per share $ .43 $ .37 $ .58 $ .50
----------- -------- --------- --------
Weighted average basic shares
outstanding 11,263 11,203 11,259 11,140
----------- -------- --------- --------
Diluted earnings per share $ .42 $ .36 $ .57 $ .48
----------- -------- --------- --------
Weighted average diluted
shares
outstanding 11,690 11,683 11,686 11,672
----------- -------- --------- --------
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)
Second Quarter Ended Six Months Ended
(in thousands) June 30, June 30,
-------------------- --------------------
2007 2006 2007 2006
----------- -------- ----------- --------
Revenues:
Staffing services $ 29,747 $ 30,567 $ 57,762 $ 57,228
Professional employer
services 237,957 226,845 467,470 435,519
----------- -------- ----------- --------
Total revenues 267,704 257,412 525,232 492,747
----------- -------- ----------- --------
Cost of revenues:
Direct payroll costs 224,605 214,247 441,233 410,212
Payroll taxes and benefits 20,542 20,437 44,453 43,274
Workers' compensation 7,593 8,539 14,891 16,029
----------- -------- ----------- --------
Total cost of revenues 252,740 243,223 500,577 469,515
----------- -------- ----------- --------
Gross margin $ 14,964 $ 14,189 $ 24,655 $ 23,232
----------- -------- ----------- --------
Gross revenues of $267.7 million for the second quarter ended June 30, 2007 rose 4.0% over the similar period in 2006. For the first six months of 2007, gross revenues of $525.2 million increased 6.6% over the comparable 2006 period.
A reconciliation of non-GAAP gross revenues to net revenues is as follows:
For the second quarters ended June 30, 2007 and 2006:
(Unaudited)
Three Months Ended June 30,
-------------------------------------------------------
Gross Revenue Net Revenue
(in Reporting Method Reclassification Reporting
thousands) Method
----------------- --------------------- ---------------
2007 2006 2007 2006 2007 2006
-------- -------- ---------- ---------- ------- -------
Revenues:
Staffing
services $ 29,747 $ 30,567 $ - $ - $29,747 $30,567
Professional
employer
services 237,957 226,845 (203,818) (192,757) 34,139 34,088
-------- -------- ---------- ---------- ------- -------
Total
revenues $267,704 $257,412 $(203,818) $(192,757) $63,886 $64,655
-------- -------- ---------- ---------- ------- -------
Cost of
revenues $252,740 $243,223 $(203,818) $(192,757) $48,922 $50,466
-------- -------- ---------- ---------- ------- -------
For the six months ended June 30, 2007 and 2006:
(Unaudited)
Six Months Ended June 30,
---------------------------------------------------------
Gross Revenue Net Revenue
(in Reporting Method Reclassification Reporting Method
thousands)
----------------- --------------------- -----------------
2007 2006 2007 2006 2007 2006
-------- -------- ---------- ---------- -------- --------
Revenues:
Staffing
services $ 57,762 $ 57,228 $ - $ - $ 57,762 $ 57,228
Professional
employer
services 467,470 435,519 (400,758) (369,807) 66,712 65,712
-------- -------- ---------- ---------- -------- --------
Total
revenues $525,232 $492,747 $(400,758) $(369,807) $124,474 $122,940
-------- -------- ---------- ---------- -------- --------
Cost of
revenues $500,577 $469,515 $(400,758) $(369,807) $ 99,819 $ 99,708
-------- -------- ---------- ---------- -------- --------
William W. Sherertz, President and Chief Executive Officer, commented: "We are pleased with our record second quarter earnings and anticipate a stronger performance in the third quarter."
The following summarizes the unaudited consolidated balance sheets at June 30, 2007 and December 31, 2006.
June 30, Dec. 31,
(in thousands) 2007 2006
--------- ---------
Assets
-----------------------------------------------
Current assets:
Cash and cash equivalents $ 71,025 $ 69,874
Marketable securities 3,625 3,159
Trade accounts receivable, net 36,906 31,328
Prepaid expenses and other 2,109 1,940
Deferred income taxes 4,182 4,699
Workers' compensation receivables for insured
claims 225 225
--------- ---------
Total current assets 118,072 111,225
Marketable securities 411 406
Goodwill, net 28,036 27,536
Intangibles, net 62 75
Property, equipment and software, net 13,279 13,502
Restricted marketable securities and workers'
compensation deposits 2,656 2,616
Other assets 1,893 2,143
Workers' compensation receivables for insured
claims 4,295 4,678
--------- ---------
$168,704 $162,181
--------- ---------
Liabilities and Stockholders' Equity
--------------------------------------------------
Current liabilities:
Accounts payable $ 1,327 $ 1,545
Accrued payroll, payroll taxes and related
benefits 34,788 33,372
Income taxes payable 847 -
Other accrued liabilities 937 516
Workers' compensation claims liabilities 3,253 3,843
Workers' compensation claims liabilities for
insured claims 225 225
Safety incentives liabilities 7,815 7,519
--------- ---------
Total current liabilities 49,192 47,020
Customer deposits 689 817
Long-term workers' compensation claims
liabilities 3,976 5,295
Long-term workers' compensation liabilities for
insured claims 2,931 3,011
Deferred income taxes 2,449 1,545
Deferred gain on sale and leaseback 732 793
Stockholders' equity 108,735 103,700
--------- ---------
$168,704 $162,181
--------- ---------
Outlook for Third Quarter 2007
The Company also disclosed today limited financial guidance with respect to its operating results for the third quarter ending September 30, 2007. The Company expects gross revenues for the third quarter of 2007 to range from $296 million to $302 million, an increase of approximately 9.2% over the third quarter of 2006, and anticipates diluted earnings per share for the third quarter of 2007 to range from $.56 to $.59 per share, an increase of approximately 19.8% over the $.48 per share for the same period a year ago. These projected operating results include the effect of the July 2, 2007 acquisition of Strategic Staffing, Inc. A reconciliation of estimated gross revenues to estimated GAAP net revenues for the third quarter of 2007 is not included because PEO revenues and cost of PEO revenues for the period are not reasonably estimable.
Conference Call
On July 26 at 9:00 a.m. Pacific Time, William W. Sherertz and Michael D. Mulholland will host an investor telephone conference call to discuss second quarter 2007 operating results. To participate in the call, dial (877) 356-3717. The call identification number is 7359648. 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, July 26, 2007 at 12:00 p.m. PT and ending on August 2, 2007. To listen to the recording, dial (800) 642-1687 and enter conference identification code 7359648.
Statements in this release about future events or performance, including earnings expectations for the third 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 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.
Source: Barrett Business Services, Inc.
Released July 25, 2007