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BBSI Reports Strong First Quarter 2024 Financial Results

- Revenues of $265.8 Million With Gross Billings up 7% -

VANCOUVER, Wash., May 01, 2024 (GLOBE NEWSWIRE) -- Barrett Business Services, Inc. (“BBSI” or the “Company”) (NASDAQ: BBSI), a leading provider of business management solutions, reported financial results for the first quarter ended March 31, 2024.

First Quarter 2024 Financial Summary vs. Year-Ago Quarter

  • Revenues up 4% to $265.8 million.
  • Gross billings up 7% to $1.91 billion.
  • Average worksite employees (“WSEs”) up 3%.
  • Net loss of $0.1 million, or $(0.02) per diluted share, compared to net income of $0.8 million, or $0.12 per diluted share.

“We started the year on a strong note, with growth from net client adds driving gross billings expansion in line with our target,” said BBSI President and CEO Gary Kramer. “We continue to see positive momentum from our marketing initiatives and new product offerings, and the roll-out of BBSI Benefits continues to perform well. We are executing to our plan and expect 2024 to be another strong year.”

First Quarter 2024 Financial Results

Revenues in the first quarter of 2024 increased 4% to $265.8 million compared to $254.7 million in the first quarter of 2023.

Total gross billings in the first quarter of 2024 increased 7% to $1.91 billion compared to $1.79 billion in the same year-ago quarter (see “Key Performance Metrics” below). The increase was driven by growth in professional employer ("PEO") services, specifically resulting from increased WSEs from net new clients and higher average billings per WSE.

Workers’ compensation expense as a percent of gross billings was 2.6% in the first quarter of 2024 and benefited from favorable prior year liability and premium adjustments of $3.0 million. This compares to 2.9% in the first quarter of 2023, which included favorable prior year liability and premium adjustments of $1.1 million.

Net loss for the first quarter of 2024 was $0.1 million, or $(0.02) per diluted share, compared to net income of $0.8 million, or $0.12 per diluted share, in the year-ago quarter. The decrease is primarily attributable to an increase in payroll taxes, partially offset by decreased workers' compensation expense and an increase in investment income. Due to seasonality in payroll tax expense, the Company typically incurs lower margins at the beginning of each year.

Liquidity

As of March 31, 2024, unrestricted cash and investments were $123.7 million compared to $152.2 million at the end of 2023. BBSI remained debt free at quarter end.

Capital Allocation

BBSI’s board of directors has confirmed its regular quarterly cash dividend of $0.30 per share. The cash dividend will be paid on May 31, 2024, to all stockholders of record as of May 17, 2024.

Continuing under the Company’s stock repurchase program established in July 2023, BBSI repurchased 58,877 shares in the first quarter at an average price of $119.83. At March 31, 2024, approximately $51.9 million remained available under the repurchase program.

Outlook

BBSI continues to expect the following for 2024:

  • Gross billings growth of 6% to 8%
  • Growth in the average number of WSEs of 4% to 5%
  • Gross margin as a percent of gross billings of 2.95% to 3.15%
  • Effective annual tax rate to remain at 26% to 27%

Conference Call

BBSI will conduct a conference call on Wednesday, May 1, 2024, at 5:00 p.m. Eastern time (2:00 p.m. Pacific time) to discuss its financial results for the quarter ended March 31, 2024.

BBSI’s CEO Gary Kramer and CFO Anthony Harris will host the conference call, followed by a question and answer period.

Date: Wednesday, May 1, 2024
Time: 5:00 p.m. Eastern time (2:00 p.m. Pacific time)
Toll-free dial-in number: 1-877-407-4018
International dial-in number: 1-201-689-8471
Conference ID: 13746013

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 Gateway Investor Relations at 1-949-574-3860.

The conference call will be broadcast live and available for replay here and via the Investors section of the BBSI website at ir.bbsi.com.

A replay of the conference call will be available after 8:00 p.m. Eastern time on the same day through June 1, 2024.

Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 13746013

Key Performance Metrics

We report PEO revenues net of direct payroll costs because we are not the primary obligor for wage payments to our clients’ employees. However, management believes that gross billings and wages are useful in understanding the volume of our business activity and serve as important performance metrics in managing our operations, including the preparation of internal operating forecasts and establishing executive compensation performance goals. We therefore present for purposes of analysis gross billings and wage information for the three months ended March 31, 2024 and 2023.

 (Unaudited) 
 Three Months Ended March 31, 
(in thousands)2024  2023 
Gross billings$1,907,549  $1,789,218 
PEO and staffing wages$1,656,443  $1,551,352 
        

In monitoring and evaluating the performance of our operations, management also reviews the following ratios, which represent selected amounts as a percentage of gross billings. Management believes these ratios are useful in understanding the efficiency and profitability of our service offerings.

 (Unaudited)
 Percentage of Gross Billings
 Three Months Ended March 31,
  2024   2023 
PEO and staffing wages 86.8%  86.7%
Payroll taxes and benefits 8.5%  8.1%
Workers' compensation 2.6%  2.9%
Gross margin 2.1%  2.3%
        

We refer to employees of our PEO clients as WSEs. Management reviews average and ending WSE growth to monitor and evaluate the performance of our operations. Average WSEs are calculated by dividing the number of unique individuals paid in each month by the number of months in the period. Ending WSEs represents the number of unique individuals paid in the last month of the period.

 (Unaudited)
 Three Months Ended March 31,
 2024  % Change 2023  % Change
Average WSEs 123,050   3.1%  119,313   2.7%
Ending WSEs 124,785   2.8%  121,363   2.9%
                

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. For more information, please visit www.bbsi.com.

Forward-Looking Statements

Statements in this release about future events and financial outlook are forward-looking statements. Such statements 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 lingering effects of the COVID-19 pandemic; the effects of inflation on our operating expenses and those of our clients; the availability of certain fully insured medical and other health and welfare benefits to qualifying worksite employees; the effect of changes in the Company’s mix of services on gross margin; the Company’s ability to attract and retain clients and to achieve revenue growth; the availability of financing or other sources of capital; the Company’s relationship with its primary bank lender; the potential for material deviations from expected future workers’ compensation claims experience; changes in the workers’ compensation regulatory environment in the Company’s primary markets; litigation costs; security breaches or failures in the Company’s information technology systems; the collectability of accounts receivable; changes in executive management; changes in effective payroll tax rates and federal and state income tax rates; the carrying value of deferred income tax assets and goodwill; the effects of conditions in the global capital markets on the Company’s investment portfolio; and the potential for and effect of acquisitions, among others. Other important factors that may affect the Company’s prospects are described in the Company’s 2023 Annual Report on Form 10-K and in subsequent reports filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934. 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 Consolidated Balance Sheets
(Unaudited)
 
 March 31,  December 31, 
(in thousands)2024  2023 
ASSETS     
Current assets:     
Cash and cash equivalents$51,267  $71,168 
Investments 72,410   81,027 
Trade accounts receivable, net 200,368   171,407 
Income taxes receivable 7,727   7,987 
Prepaid expenses and other 18,513   18,443 
Restricted cash and investments 125,010   97,470 
Total current assets 475,295   447,502 
Property, equipment and software, net 51,222   50,295 
Operating lease right-of-use assets 20,719   19,898 
Restricted cash and investments 141,609   145,583 
Goodwill 47,820   47,820 
Other assets 6,346   6,222 
Deferred income taxes 4,789   4,218 
Total assets$747,800  $721,538 
LIABILITIES AND STOCKHOLDERS' EQUITY     
Current liabilities:     
Accounts payable$5,697  $6,593 
Accrued payroll, payroll taxes and related benefits 256,061   234,080 
Current operating lease liabilities 6,345   6,623 
Current premium payable 65,820   35,276 
Other accrued liabilities 7,516   10,674 
Workers' compensation claims liabilities 46,555   50,006 
Total current liabilities 387,994   343,252 
Long-term workers' compensation claims liabilities 111,499   117,757 
Long-term premium payable 33,435   37,812 
Long-term operating lease liabilities 15,594   14,590 
Customer deposits and other long-term liabilities 9,689   8,987 
Stockholders' equity 189,589   199,140 
Total liabilities and stockholders' equity$747,800  $721,538 


Barrett Business Services, Inc.
Consolidated Statements of Operations
(Unaudited)
 
   
 Three Months Ended 
 March 31, 
(in thousands, except per share amounts)2024  2023 
Revenues:     
Professional employer services$246,189  $232,307 
Staffing services 19,593   22,360 
Total revenues 265,782   254,667 
Cost of revenues:     
Direct payroll costs 14,717   16,871 
Payroll taxes and benefits 161,895   144,582 
Workers' compensation 49,603   51,670 
Total cost of revenues 226,215   213,123 
Gross margin 39,567   41,544 
Selling, general and administrative expenses 42,414   41,226 
Depreciation and amortization 1,852   1,677 
Loss from operations (4,699)  (1,359)
Other income (expense):     
Investment income, net 3,274   2,315 
Interest expense (44)  (38)
Other, net 66   36 
Other income, net 3,296   2,313 
(Loss) income before income taxes (1,403)  954 
(Benefit from) provision for income taxes (1,267)  135 
Net (loss) income$(136) $819 
Basic (loss) income per common share$(0.02) $0.12 
Weighted average basic common shares outstanding 6,570   6,866 
Diluted (loss) income per common share$(0.02) $0.12 
Weighted average diluted common shares outstanding 6,570   6,985 
 

Investor Relations:
Gateway Group, Inc.
Cody Slach
Tel 1-949-574-3860
BBSI@gateway-grp.com


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