BBSI Reports Third Quarter 2013 Financial Results
Q3 Net Revenues up 33% to $148.0 Million Drives 49% Increase in Diluted Earnings per Share to $1.21
VANCOUVER, WA -- (Marketwired) -- 10/29/13 -- Barrett Business Services, Inc. ("BBSI" or the "Company") (NASDAQ: BBSI), a leading provider of business management solutions, reported financial results for the third quarter ended September 30, 2013.
Third Quarter 2013 Financial Highlights vs. Year-Ago Quarter
- Net revenues up 33% to $148.0 million
- Gross revenues up 37% to $764.1 million
- Net income increased 55% to $9.0 million
- Diluted earnings per share increased 49% to $1.21
Third Quarter 2013 Financial Results
Net revenues in the third quarter of 2013 increased 33% to $148.0 million compared to $111.1 million in the third quarter of 2012. The increase was due primarily to the continued build in the Company's co-employed client count and same-store sales growth.
Total non-GAAP gross revenues in the third quarter of 2013 increased 37% to $764.1 million compared to $558.0 million in the third quarter of 2012 (see "Reconciliation of Non-GAAP Financial Measures" below).
Net income in the third quarter of 2013 increased 55% to $9.0 million compared to net income of $5.8 million in the year-ago quarter. Diluted earnings per share in the third quarter of 2013 increased 49% to $1.21 compared to $0.81 per diluted share in the year-ago quarter.
At September 30, 2013, the Company's cash, cash equivalents and marketable securities totaled $48.0 million, compared to $72.4 million at December 31, 2012. During the second quarter of 2013, the Company posted $63.9 million in restricted certificates of deposit to collateralize a letter of credit issued to satisfy a surety requirement for its self-insured workers' compensation program in the state of California. At September 30, 2013, the Company had no outstanding borrowings on its revolving credit facility.
Management Commentary
"During the third quarter, gross revenues grew by more than 30% for the seventh consecutive quarter and were the highest in the company's history by nearly $90 million," said Michael Elich, president and CEO of BBSI. "We continue to mature BBSI's brand in the marketplace complemented by our strong referral channels helping to drive new business as well as healthy organic growth from our existing client base. Our three-tier partnership platform and operational focus also continues to drive an industry-leading 90+% retention rate. While we are pleased with the quarter's strong results, it is important to note that we continue to reinvest in our company to ultimately support a much larger and more mature organization."
Fourth Quarter 2013 Outlook
For the fourth quarter of 2013, the Company expects gross revenues to increase at least 30% to between $780 million and $790 million compared to $596.7 million in the fourth quarter of 2012. Diluted income per common share in the fourth quarter of 2013 is expected to increase at least 43% to between $1.15 and $1.20 compared to $0.80 in the fourth quarter of 2012.
Conference Call
BBSI will host a conference call tomorrow, Wednesday, October 30, 2013 at 12:00 p.m. Eastern time (9:00 a.m. Pacific time) to discuss its financial results for the third quarter ended September 30, 2013. The Company's president and CEO Michael Elich and CFO James Miller will host the call, followed by a question and answer period.
Date: Wednesday, October 30, 2013
Time: 12:00 p.m. Eastern time (9:00 a.m. Pacific time)
Toll-free dial-in number: 1-877-941-8416
International dial-in number: 1-480-629-9808
Conference ID: 4644742
Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Liolios Group at 1-949-574-3860.
The conference call will be broadcast live and available for replay at http://public.viavid.com/index.php?id=106326 and via BBSI's investor relations section of the Company's website at www.barrettbusiness.com.
A replay of the call will be available after 3:00 p.m. Eastern time on the same day through November 30, 2013.
Toll-free replay number: 1-877-870-5176
International replay number: 1-858-384-5517
Replay ID: 4644742
Reconciliation of Non-GAAP Financial Measures
In addition to the results prepared in accordance with generally accepted accounting principles ("GAAP"), the Company is disclosing non-GAAP gross revenues.
The Company reports its Professional Employer Service revenues on a net basis because it is not the primary obligor for the services provided by the Company's co-employed clients to their customers. The gross revenues and cost of revenues information below, although not in accordance with 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,
--------------------- ---------------------
2013 2012 2013 2012
---------- ---------- ---------- ----------
Revenues:
Professional employer services $ 722,387 $ 521,836 $1,923,533 $1,391,357
Staffing services 41,727 36,195 106,764 92,793
========== ========== ========== ==========
Total revenues 764,114 558,031 2,030,297 1,484,150
---------- ---------- ---------- ----------
Cost of revenues:
Direct payroll costs 643,482 470,950 1,711,020 1,256,477
Payroll taxes and benefits 57,977 42,915 170,583 125,239
Workers' compensation 32,469 22,602 86,471 57,972
---------- ---------- ---------- ----------
Total cost of revenues 733,928 536,467 1,968,074 1,439,688
========== ========== ========== ==========
Gross margin $ 30,186 $ 21,564 $ 62,223 $ 44,462
========== ========== ========== ==========
A reconciliation of non-GAAP gross revenues to net revenues is as follows:
(Unaudited)
Three Months Ended September 30,
-----------------------------------------------------------
Gross Revenue Net Revenue
(in thousands) Reporting Method Reclassification Reporting Method
------------------- -------------------- -----------------
2013 2012 2013 2012 2013 2012
-------- ---------- --------- --------- -------- --------
Revenues:
Professional
employer
services $722,387 $ 521,836 $(616,143) $(446,962) $106,244 $ 74,874
Staffing
services 41,727 36,195 - - 41,727 36,195
-------- ---------- --------- --------- -------- --------
Total
revenues $764,114 $ 558,031 $(616,143) $(446,962) $147,971 $111,069
======== ========== ========= ========= ======== ========
Cost of revenues $733,928 $ 536,467 $(616,143) $(446,962) $117,785 $ 89,505
======== ========== ========= ========= ======== ========
(Unaudited)
Nine Months Ended September 30,
-----------------------------------------------------------------
(in Gross Revenue Net Revenue
thousands) Reporting Method Reclassification Reporting Method
--------------------- ------------------------ -----------------
2013 2012 2013 2012 2013 2012
---------- ---------- ----------- ----------- -------- --------
Revenues:
Professional
employer
services $1,923,533 $1,391,357 $(1,641,977) $(1,195,159) $281,556 $196,198
Staffing
services 106,764 92,793 - - 106,764 92,793
---------- ---------- ----------- ----------- -------- --------
Total
revenues $2,030,297 $1,484,150 $(1,641,977) $(1,195,159) $388,320 $288,991
========== ========== =========== =========== ======== ========
Cost of
revenues $1,968,074 $1,439,688 $(1,641,977) $(1,195,159) $326,097 $244,529
========== ========== =========== =========== ======== ========
About BBSI
BBSI (NASDAQ: BBSI) is a leading provider of business management solutions, combining human resource outsourcing and professional management consulting to create a unique operational platform that differentiates it from competitors. The Company's integrated platform is built upon expertise in payroll processing, employee benefits, workers' compensation coverage, risk management and workplace safety programs, and human resource administration. BBSI's partnerships help businesses of all sizes improve the efficiency of their operations. The Company works with more than 3,000 clients across all lines of business in 23 states. For more information, please visit www.barrettbusiness.com.
Forward-Looking Statements
Statements in this release about future events or performance, including gross revenues and earnings expectations for the fourth quarter of 2013, 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 retain current clients and attract new clients, the availability of financing or other sources of capital, future workers' compensation claims experience, the effect of changes in the workers' compensation regulatory environment in one or more of the Company's primary markets, the collectability 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 2012 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 are 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.
Barrett Business Services, Inc.
Condensed Balance Sheets
(Unaudited)
September 30, December 31,
(in thousands) 2013 2012
-------------- --------------
Assets
Current assets:
Cash and cash equivalents $ 34,978 $ 45,747
Marketable securities 7,108 16,748
Trade accounts receivable, net 98,717 63,921
Income taxes receivable 2,307 -
Prepaid expenses and other 1,444 4,854
Restricted certificates of deposit 63,944 -
Deferred income taxes 8,172 8,148
-------------- --------------
Total current assets 216,670 139,418
Marketable securities 5,876 9,899
Property, equipment and software, net 20,383 18,489
Restricted marketable securities and workers'
compensation deposits 10,472 9,726
Other assets 3,132 3,509
Goodwill 47,820 47,820
-------------- --------------
$ 304,353 $ 228,861
============== ==============
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt $ 220 $ 220
Line of credit - 4,532
Accounts payable 2,721 1,995
Accrued payroll, payroll taxes and related
benefits 107,060 69,568
Income taxes payable - 272
Other accrued liabilities 953 306
Workers' compensation claims liabilities 32,068 24,541
Safety incentives liabilities 11,947 9,842
-------------- --------------
Total current liabilities 154,969 111,276
Long-term workers' compensation claims
liabilities 63,912 46,023
Long term debt 5,108 5,273
Deferred income taxes 10,607 10,607
Customer deposits and other long-term
liabilities 1,789 1,786
Stockholders' equity 67,968 53,896
-------------- --------------
$ 304,353 $ 228,861
============== ==============
Barrett Business Services, Inc.
Consolidated Statements of Operations
(in thousands, except per share (Unaudited) (Unaudited)
amounts) Third Quarter Ended Nine Months Ended,
September 30, September 30,
--------------------- ---------------------
2013 2012 2013 2012
---------- ---------- ---------- ----------
Revenues:
Professional employer service
fees $ 106,244 $ 74,874 $ 281,556 $ 196,198
Staffing services 41,727 36,195 106,764 92,793
---------- ---------- ---------- ----------
Total revenues 147,971 111,069 388,320 288,991
---------- ---------- ---------- ----------
Cost of revenues:
Direct payroll costs 31,585 27,158 80,492 69,653
Payroll taxes and benefits 57,977 42,915 170,583 125,239
Workers' compensation 28,223 19,432 75,022 49,637
---------- ---------- ---------- ----------
Total cost of revenues 117,785 89,505 326,097 244,529
---------- ---------- ---------- ----------
Gross margin 30,186 21,564 62,223 44,462
Selling, general and
administrative expenses 16,808 12,745 43,113 33,058
Depreciation and amortization 521 372 1,487 1,076
---------- ---------- ---------- ----------
Income from operations 12,857 8,447 17,623 10,328
Other income, net 109 156 306 568
---------- ---------- ---------- ----------
Income before taxes 12,966 8,603 17,929 10,896
Provision for income taxes 3,972 2,791 5,598 3,554
---------- ---------- ---------- ----------
Net income $ 8,994 $ 5,812 $ 12,331 $ 7,342
========== ========== ========== ==========
Basic income per common share $ 1.26 $ 0.83 $ 1.74 $ 0.92
========== ========== ========== ==========
Weighted average basic common
shares outstanding 7,150 7,007 7,085 7,959
========== ========== ========== ==========
Diluted income per common share $ 1.21 $ 0.81 $ 1.67 $ 0.91
========== ========== ========== ==========
Weighted average diluted common
shares outstanding 7,425 7,184 7,371 8,069
========== ========== ========== ==========
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Company Contact: Michael L. Elich President and CEO Tel 1-360-828-0700 Investor Relations: Liolios Group, Inc. Scott Liolios or Cody Slach Tel 1-949-574-3860 Email Contact
Source: Barrett Business Services, Inc.
Released October 29, 2013