SOURCE: Barrett Business Services, Inc.

Barrett Business Services, Inc.

July 28, 2015 16:10 ET

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, WA--(Marketwired - Jul 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."

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.

 
    (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
                                         

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.

 
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
             
             
             
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
                             

Contact Information

  • 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