Form: 8-K

Current report filing

July 29, 2015

Documents

Exhibit 99.1

 

 

BBSI Reports Second Quarter 2015 Financial Results

 

- Q2 Net Revenues up 21% to $182.4 Million, Drives 21% Increase in Diluted Earnings per Share to $1.19 -

 

VANCOUVER, Washington, July 28, 2015 – Barrett Business Services, Inc. (“BBSI” or the “Company”) (NASDAQ: BBSI), a leading provider of business management solutions, reported financial results for the second quarter ended June 30, 2015.

 

Second Quarter 2015 Financial Summary vs. Year-Ago Quarter

 

· Net revenues up 21% to $182.4 million

 

· Gross revenues up 22% to $971.9 million

 

· Net income increased 20% to $8.7 million

 

· Diluted earnings per share increased 21% to $1.19

 

Second Quarter 2015 Financial Results

 

Net revenues in the second quarter of 2015 increased 21% to $182.4 million compared to $151.1 million in the second quarter of 2014.

 

Total non-GAAP gross revenues in the second quarter of 2015 increased 22% to $971.9 million compared to $798.4 million in the second quarter of 2014 (see “Reconciliation of Non-GAAP Financial Measures” below). The increase was due primarily to the continued build in the Company’s co-employed client count and same-store sales growth.

 

Net income for the second quarter of 2015 increased 20% to $8.7 million compared to net income of $7.3 million in the year-ago quarter. Diluted earnings per share in the second quarter of 2015 increased 21% to $1.19 compared to $0.98 per diluted share in the year-ago quarter.

 

At June 30, 2015, the Company’s cash, cash equivalents, marketable securities, and restricted securities totaled $248.0 million compared to $239.1 million at December 31, 2014.

 

Management Commentary

 

“We are pleased with our Q2 results as they continue to be driven by the organic growth of our existing client companies and the expansion of our new client count,” said Michael Elich, president and CEO of BBSI. “Same-store sales grew 9.2% and we experienced a net build of 201 clients. We also continue to experience favorable trends related to workers’ compensation, while continuing to mature our base of operations and areas that support our growth.

 

“We reiterate our rolling 12-month outlook of 18% gross revenue growth due to the health of our clients’ businesses, the ability of our new business channels to convert high-quality companies to clients, and the scalability of our operations. Given this outlook, we look forward to a record year of financial and operational performance in 2015.”

 

1
 

 

12 Month Outlook

 

BBSI expects gross revenues for the next 12-month period to increase approximately 18%. Included in this expectation is a high single-digit contribution from same-store sales growth as well as growth from new business consistent with current trends.

 

Conference Call

 

BBSI will conduct a conference call tomorrow, July 29, 2015, at 12:00 p.m. Eastern time (9:00 a.m. Pacific time) to discuss its financial results for the second quarter ended June 30, 2015.

 

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, July 29, 2015

Time: 12:00 p.m. Eastern time (9:00 a.m. Pacific time)

Toll-free dial-in number: 1-888-510-1765

International dial-in number: 1-719-457-2689

Conference ID: 2075811

 

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=115474
 and via BBSI’s investor relations section of the BBSI website at www.barrettbusiness.com.

 

A replay of the conference call will be available after 3:00 p.m. Eastern time on the same day through August 29, 2015.

 

Toll-free replay number: 1-877-870-5176

International replay number: 1-858-384-5517

Replay ID: 2075811

 

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.

 

2
 

 

 

    (Unaudited)     (Unaudited)  
    Second Quarter Ended     Six Months Ended  
(in thousands)   June 30,     June 30,  
    2015     2014     2015     2014  
                         
Revenues:                        
Professional employer services   $ 929,521     $ 759,838     $ 1,787,281     $ 1,453,764  
Staffing services     42,347       38,566       81,513       72,017  
Total revenues     971,868       798,404       1,868,794       1,525,781  
Cost of revenues:                                
Direct payroll costs     815,773       672,078       1,570,208       1,285,398  
Payroll taxes and benefits     72,146       61,130       160,440       133,947  
Workers' compensation     47,785       35,344       93,006       67,278  
Total cost of revenues     935,704       768,552       1,823,654       1,486,623  
Gross margin   $ 36,164     $ 29,852     $ 45,140     $ 39,158  

  

A reconciliation of non-GAAP gross revenues to net revenues is as follows:

 

    (Unaudited)  
    Three Months Ended June 30,  
    Gross Revenue           Net Revenue  
(in thousands)   Reporting Method     Reclassification     Reporting Method  
    2015     2014     2015     2014     2015     2014  
Revenues:                                    
Professional                                                
employer services   $ 929,521     $ 759,838     $ (789,473 )   $ (647,335 )   $ 140,048     $ 112,503  
Staffing services     42,347       38,566       -       -       42,347       38,566  
Total revenues   $ 971,868     $ 798,404     $ (789,473 )   $ (647,335 )   $ 182,395     $ 151,069  
Cost of revenues   $ 935,704     $ 768,552     $ (789,473 )   $ (647,335 )   $ 146,231     $ 121,217  

   

 

    (Unaudited)  
    Six Months Ended June 30,  
    Gross Revenue           Net Revenue  
(in thousands)   Reporting Method     Reclassification     Reporting Method  
    2015     2014     2015     2014     2015     2014  
Revenues:                                    
Professional                                                
employer services   $ 1,787,281     $ 1,453,764     $ (1,519,482 )   $ (1,239,572 )   $ 267,799     $ 214,192  
Staffing services     81,513       72,017       -       -       81,513       72,017  
Total revenues   $ 1,868,794     $ 1,525,781     $ (1,519,482 )   $ (1,239,572 )   $ 349,312     $ 286,209  
Cost of revenues   $ 1,823,654     $ 1,486,623     $ (1,519,482 )   $ (1,239,572 )   $ 304,172     $ 247,051  

 

 

3
 

 

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 expectations for gross revenues for the next 12 months, 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, the potential for material deviations from expected 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, the carrying value of deferred income tax assets and goodwill, 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 2014 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.

 

 

4
 

  

Barrett Business Services, Inc.

Condensed Balance Sheets

(Unaudited)

 

    June 30,     December 31,  
(in thousands)   2015     2014  
Assets            
Current assets:            
Cash and cash equivalents   $ 4,439     $ 11,544  
Marketable securities     -       29,957  
Trade accounts receivable, net     137,862       102,627  
Income taxes receivable     8,737       11,421  
Prepaid expenses and other     5,689       3,813  
Restricted certifcates of deposit     26,015       -  
Restricted marketable securities and workers' compensation deposits     21,343       3,776  
Deferred income taxes     15,774       15,791  
Total current assets     219,859       178,929  
Marketable securities     6,048       20,930  
Property, equipment and software, net     22,648       22,675  
Restricted certificates of deposit     88,320       114,335  
Restricted marketable securities and workers' compensation deposits     101,828       58,533  
Other assets     4,840       5,306  
Goodwill     47,820       47,820  
    $ 491,363     $ 448,528  
                 
Liabilities and Stockholders' Equity                
Current liabilities:                
Line of credit   $ 3,223     $ -  
Current portion of long-term debt     27,220       25,220  
Accounts payable     2,419       2,719  
Accrued payroll, payroll taxes and related benefits     144,227       120,133  
Other accrued liabilities     1,896       1,917  
Workers' compensation claims liabilities     60,457       54,049  
Safety incentives liabilities     18,147       14,232  
Total current liabilities     257,589       218,270  
Long-term workers' compensation claims liabilities     169,154       161,933  
Long-term debt     14,723       19,833  
Deferred income taxes     8,159       8,159  
Customer deposits and other long-term liabilities     1,487       1,675  
Stockholders' equity     40,251       38,658  
    $ 491,363     $ 448,528  

 

 

5
 

 
Barrett Business Services, Inc.

Consolidated Statements of Operations

 

    (Unaudited)     (Unaudited)  
(in thousands, except per share amounts)   Second Quarter Ended     Six Months Ended  
    June 30,     June 30,  
    2015     2014     2015     2014  
Revenues:                        
Professional employer service fees   $ 140,048     $ 112,503     $ 267,799     $ 214,192  
Staffing services     42,347       38,566       81,513       72,017  
Total revenues     182,395       151,069       349,312       286,209  
Cost of revenues:                                
Direct payroll costs     32,188       29,311       61,952       54,728  
Payroll taxes and benefits     72,146       61,130       160,440       133,947  
Workers' compensation     41,897       30,776       81,780       58,376  
Total cost of revenues     146,231       121,217       304,172       247,051  
Gross margin     36,164       29,852       45,140       39,158  
Selling, general and administrative expenses     21,278       17,958       38,253       32,327  
Depreciation and amortization     709       613       1,392       1,197  
Income from operations     14,177       11,281       5,495       5,634  
Other income (expense), net     (479 )     106       (924 )     196  
Income before taxes     13,698       11,387       4,571       5,830  
Provision for income taxes     4,952       4,104       1,627       2,130  
Net income   $ 8,746     $ 7,283     $ 2,944     $ 3,700  
Basic income per common share   $ 1.22     $ 1.02     $ 0.41     $ 0.52  
Weighted average basic common shares outstanding     7,151       7,173       7,143       7,171  
Diluted income per common share   $ 1.19     $ 0.98     $ 0.40     $ 0.50  
Weighted average diluted common shares outstanding     7,327       7,421       7,328       7,444  

 

 

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

BBSI@liolios.com

 

6