Form: 8-K

Current report filing

February 9, 2007

Exhibit 99.1

NEWS RELEASE

 

For Immediate Release

Contact:

William W. Sherertz

President and

Chief Executive Officer

 

Telephone:

(360) 828-0700

BBSI

ANNOUNCES FOURTH QUARTER 2006 OPERATING RESULTS,

FINANCIAL GUIDANCE FOR 1Q07 AND CONFERENCE CALL

 

VANCOUVER, WASHINGTON, February 8, 2007 - 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)

 

 

 

 

 

Fourth Quarter Ended

 

 

 

Year 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

 

 

 


Barrett Business Services, Inc.

News Release – Fourth Quarter 2006

February 8, 2007

 

 

       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

 

 

 


Barrett Business Services, Inc.

News Release – Fourth Quarter 2006

February 8, 2007

 

 

For the years ended December 31, 2006 and 2005 (in thousands):

 

 

 

(Unaudited)
Year Ended December 31,

 

 

 

Gross Revenue

 

 

 

 

 

 

 

Net Revenue

 

 

 

Reporting Method

 

 

 

Reclassification

 

 

 

Reporting Method

 

 

 

2006

 

 

 

2005

 

 

 

2006

 

 

 

2005

 

 

 

2006

 

 

 

2005

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Staffing services

 

$

123,500

 

 

 

$

130,098

 

 

 

$

—

 

 

 

$

—

 

 

 

$

123,500

 

 

 

$

130,098

 

Professional 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.

 


Barrett Business Services, Inc.

News Release – Fourth Quarter 2006

February 8, 2007

 

 

 

 

December 31,

 

 

 

December 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%

 


Barrett Business Services, Inc.

News Release – Fourth Quarter 2006

February 8, 2007

 

 

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.

 

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