99.1
Published on April 27, 2006
Exhibit 99.1
NEWS RELEASE
| For Immediate Release | Contact: | William W. Sherertz |
| President and | ||
| Chief Executive Officer | ||
Telephone: |
(360) 828-0700 |
BBSI
ANNOUNCES FIRST QUARTER
2006 OPERATING RESULTS AND
FINANCIAL GUIDANCE FOR
2Q06
VANCOUVER, WASHINGTON, April 26, 2006 Barrett Business Services, Inc. (Nasdaq: BBSI) reported today net income of $1,357,000 for the first quarter ended March 31, 2006, an improvement of $426,000 or 45.8% over net income of $931,000 for the first quarter of 2005. Diluted earnings per share for the 2006 first quarter were $.12, as compared to diluted earnings per share of $.10 for the same quarter a year ago.
Net revenues for the first quarter ended March 31, 2006 totaled $58.3 million, an increase of approximately $9.1 million or 18.5% over the $49.2 million for the same quarter in 2005.
| ($ in thousands, except per share amounts) |
(Unaudited) First Quarter Ended March 31, |
|||||||
|---|---|---|---|---|---|---|---|---|
|
Results of Operations |
2006 |
2005 |
||||||
| Revenues: | ||||||||
| Staffing services | $ | 26,661 | $ | 28,542 | ||||
| Professional employer service fees | 31,624 | 20,702 | ||||||
| Total revenues | 58,285 | 49,244 | ||||||
| Cost of revenues: | ||||||||
| Direct payroll costs | 19,851 | 21,017 | ||||||
| Payroll taxes and benefits | 22,837 | 15,697 | ||||||
| Workers' compensation | 6,554 | 5,406 | ||||||
| Total cost of revenues | 49,242 | 42,120 | ||||||
| Gross margin | 9,043 | 7,124 | ||||||
| Selling, general and administrative expenses | 7,220 | 5,470 | ||||||
| Depreciation and amortization | 301 | 236 | ||||||
| Income from operations | 1,522 | 1,418 | ||||||
| Other income, net | 632 | 108 | ||||||
| Income before taxes | 2,154 | 1,526 | ||||||
| Provision for income taxes | 797 | 595 | ||||||
| Net income | $ | 1,357 | $ | 931 | ||||
| Basic earnings per share | $ | .12 | $ | .11 | ||||
| Weighted average basic shares outstanding | 11,076 | 8,645 | ||||||
| Diluted earnings per share | $ | .12 | $ | .10 | ||||
| Weighted average diluted shares outstanding | 11,661 | 9,352 | ||||||
- 1 -
Barrett Business
Services, Inc.
News Release First Quarter 2006
April 26, 2006
We report our PEO revenues on a net basis because we are not the primary obligor for the services provided by our 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 Companys business activity and more useful in managing its operations.
| (in thousands) |
(Unaudited) First Quarter March 31, |
|||||||
|---|---|---|---|---|---|---|---|---|
|
2006 |
2005 |
|||||||
| Revenues: | ||||||||
| Staffing services | $ | 26,661 | $ | 28,542 | ||||
| Professional employer services | 208,674 | 128,551 | ||||||
| Total revenues | 235,335 | 157,093 | ||||||
| Cost of revenues: | ||||||||
| Direct payroll costs | 195,965 | 127,397 | ||||||
| Payroll taxes and benefits | 22,837 | 15,697 | ||||||
| Workers' compensation | 7,490 | 6,875 | ||||||
| Total cost of revenues | 226,292 | 149,969 | ||||||
| Gross margin | $ | 9,043 | $ | 7,124 | ||||
Gross revenues of $235.3 million for the 2006 first quarter rose 49.8% over the comparable 2005 period.
A reconciliation of non-GAAP gross revenues to net revenues is as follows:
For the first quarters ended March 31, 2006 and 2005 (in thousands):
|
(Unaudited) Three Months Ended March 31, |
||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|
(in thousands) |
Gross Revenue Reporting Method |
Reclassification |
Net Revenue Reporting Method |
|||||||||||||||||
|
2006 |
2005 |
2006 |
2005 |
2006 |
2005 |
|||||||||||||||
| Revenues: | ||||||||||||||||||||
| Staffing services | $ | 26,661 | $ | 28,542 | $ | | $ | | $ | 26,661 | $ | 28,542 | ||||||||
| Professional | ||||||||||||||||||||
| employer | ||||||||||||||||||||
| services | 208,674 | 128,551 | (177,050 | ) | (107,849 | ) | 31,624 | 20,702 | ||||||||||||
| Total revenues | $ | 235,335 | $ | 157,093 | $ | (177,050 | ) | $ | (107,849 | ) | $ | 58,285 | $ | 49,244 | ||||||
| Cost of revenues: | $ | 226,292 | $ | 149,969 | $ | (177,050 | ) | $ | (107,849 | ) | $ | 49,242 | $ | 42,120 | ||||||
- 2 -
Barrett Business
Services, Inc.
News Release First Quarter 2006
April 26, 2006
The following summarizes the unaudited consolidated balance sheets at March 31, 2006 and December 31, 2005.
|
(Unaudited) |
||||||||
|---|---|---|---|---|---|---|---|---|
| (in thousands) |
March 31, 2006 |
December 31, 2005 |
||||||
| Assets | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 59,357 | $ | 61,361 | ||||
| Marketable securities | 3,664 | 3,548 | ||||||
| Trade accounts receivable, net | 29,353 | 26,328 | ||||||
| Prepaid expenses and other | 4,755 | 2,514 | ||||||
| Deferred income taxes | 6,175 | 5,864 | ||||||
| Workers' compensation receivables for insured claims | 242 | 242 | ||||||
| Total current assets | 103,546 | 99,857 | ||||||
| Marketable securities | 399 | 396 | ||||||
| Goodwill, net | 26,536 | 22,516 | ||||||
| Intangibles, net | 96 | 5 | ||||||
| Property, equipment and software, net | 13,538 | 13,071 | ||||||
| Restricted marketable securities and workers' | ||||||||
| compensation deposits | 2,133 | 2,041 | ||||||
| Deferred income taxes | 141 | 341 | ||||||
| Other assets | 3,034 | 1,528 | ||||||
| Workers' compensation receivables for insured claims | 4,496 | 4,546 | ||||||
| $ | 153,919 | $ | 144,301 | |||||
| Liabilities and Stockholders' Equity | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 1,809 | $ | 1,366 | ||||
| Accrued payroll, payroll taxes and related benefits | 33,733 | 28,650 | ||||||
| Other accrued liabilities | 3,559 | 360 | ||||||
| Workers' compensation claims liabilities | 5,399 | 5,729 | ||||||
| Workers' compensation claims liabilities for insured claims | 242 | 242 | ||||||
| Safety incentives liability | 7,516 | 7,687 | ||||||
| Current portion of long-term debt | 148 | 348 | ||||||
| Total current liabilities | 52,406 | 44,382 | ||||||
| Long-term debt, net of current portion | 1,057 | 1,094 | ||||||
| Customer deposits | 782 | 663 | ||||||
| Long-term workers' compensation claims liabilities | 8,114 | 8,532 | ||||||
| Long-term workers' compensation liabilities for insured claims | 2,816 | 2,866 | ||||||
| Deferred gain on sale and leaseback | 884 | 914 | ||||||
| Stockholders' equity | 87,860 | 85,850 | ||||||
| $ | 153,919 | $ | 144,301 | |||||
Outlook for Second Quarter 2006
The Company also disclosed today limited financial guidance with respect to its operating results for the second quarter ending June 30, 2006. The Company expects gross revenues for the second quarter of 2006 to range from $250 million to $255 million, an increase of approximately 37.5% over the second quarter of 2005, and anticipates diluted earnings per share for the second quarter of 2006 to range from $.33 to $.35 per share. Management expectations for diluted earnings per share for the second quarter of 2006 equate to increases over the second quarter of 2005 of approximately 36.9% in net income and approximately 9.7% in diluted earnings per share. The percentage increase in expected net income for the 2006 second quarter exceeds the percentage increase in expected diluted earnings per share due to the dilutive effect of the July 2005 follow-on equity offering. A reconciliation of estimated gross revenues to estimated GAAP net revenues for the second quarter of 2006 is not included because PEO revenues and cost of PEO revenues for the period are not reasonably estimable.
- 3 -
Barrett Business
Services, Inc.
News Release First Quarter 2006
April 26, 2006
On April 27, 2006 at 9:00 a.m. Pacific Time, William W. Sherertz and Michael D. Mulholland will host an investor telephone conference call to discuss first quarter 2006 operating results. To participate in the call, dial (877) 356-3717. The call identification number is 8171396. 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 April 27, 2006 at 12:00 p.m. and ending May 3, 2006. To listen to the recording, dial (800) 642-1687 and enter conference identification code 8171396.
BBSI provides human resource management solutions to large and small companies throughout many regions of the United States.
Statements in this release about future events or performance, including earnings expectations for the second quarter of 2006, 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 Companys service areas, the effect of changes in the Companys mix of services on gross margin, the Companys 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 our primary markets, collectibility of accounts receivable, and the use of net proceeds of approximately $33 million and other effects of the Companys recent follow-on equity offering, among others. Other important factors that may affect the Companys future prospects are described in the Companys 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.
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