EX-99.1 2 v446511_ex99-1.htm EXHIBIT 99.1

 

Exhibit 99.1

 

 

 

BBSI Reports Second Quarter 2016 Financial Results

 

- Q2 Net Revenues up 12% to $203.4 Million (Non-GAAP Gross Revenues up 17%) -

 

VANCOUVER, Washington, August 9, 2016 – 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, 2016.

 

Second Quarter 2016 Financial Summary vs. Year-Ago Quarter

 

·Net revenues up 12% to $203.4 million.

 

·Non-GAAP gross revenues up 17% to $1.1 billion.

 

·Net income of $8.5 million or $1.16 per diluted share, compared to net income of $8.9 million or $1.21 per diluted share. Net income in the second quarter of 2016 included $0.24 per diluted share in legal and accounting costs associated with financial restatements, outside investigations and legal proceedings related to securities law issues.

 

“We are seeing consistency in our performance, which we believe is the result of focused attention on our referral channels and the depth of our operational teams,” said Michael Elich, president and CEO of BBSI. “In the second quarter, we saw 8.7% same-store sales growth, and added 266 net new clients, supporting 17% gross revenue growth. We continue to execute on our plan as we look towards the remainder of 2016 and beyond.”

 

Second Quarter 2016 Financial Results

 

Net revenues in the second quarter of 2016 increased 12% to $203.4 million compared to $182.0 million in the second quarter of 2015.

 

Total non-GAAP gross revenues in the second quarter of 2016 increased 17% to $1.1 billion compared to $971.9 million in the same year-ago quarter (see “Reconciliation of Non-GAAP Financial Measures” below). The increase was primarily due to the continued build in the Company’s client count and same-store sales growth, partially offset by an 11% decline in staffing services revenue.

 

Net income for the second quarter of 2016 was $8.5 million or $1.16 per diluted share, compared to net income of $8.9 million or $1.21 per diluted share in the year-ago quarter. The second quarter of 2016 included $0.24 per diluted share in legal and accounting costs associated with financial restatements, outside investigations and legal proceedings related to securities law issues.

 

At June 30, 2016, the Company’s restricted and unrestricted cash, cash equivalents, marketable securities, and restricted securities totaled $296.7 million compared to $305.3 million at December 31, 2015. Total debt was $12.2 million compared to $19.8 million at the end of 2015.

 

12-Month Outlook

 

BBSI continues to expect non-GAAP gross revenues for the next 12-month period (through June 30, 2017) to increase approximately 18%. For the full year 2016, the Company continues to expect diluted earnings per share to be $3.50, which includes an estimate of $6.4 million (approximately $0.57 per diluted share) for legal and accounting costs associated with financial restatements, outside investigations and legal proceedings related to securities law issues. The Company reported $3.47 diluted earnings per share in 2015.

 

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Conference Call

 

BBSI will conduct a conference call tomorrow, August 10, 2016 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, 2016. The Company’s President and CEO Michael Elich and Interim CFO Tom Carley will host the call, followed by a question and answer period.

 

Date: Wednesday, August 10, 2016

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

Toll-free dial-in number: 1-877-419-6603

International dial-in number: 1-719-325-4807

Conference ID: 6276674

 

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/player/index.php?id=120579 and via the 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 September 10, 2016.

 

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

International replay number: 1-858-384-5517

Replay ID: 6276674

 

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 Services 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.

 

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   (Unaudited)   (Unaudited) 
   Three Months Ended   Six Months Ended 
Non-GAAP (in thousands)  June 30,   June 30, 
   2016   2015   2016   2015 
       (As Restated)       (As Restated) 
Revenues:                    
Professional employer services  $1,102,884   $929,521   $2,130,482   $1,787,282 
Staffing services   37,641    42,347    73,932    81,513 
Total revenues   1,140,525    971,868    2,204,414    1,868,795 
Cost of revenues:                    
Direct payroll costs   958,458    815,773    1,852,508    1,570,209 
Payroll taxes and benefits   82,885    71,808    186,645    159,885 
Workers' compensation   56,929    47,809    112,621    93,292 
Total cost of revenues   1,098,272    935,390    2,151,774    1,823,386 
Gross margin  $42,253   $36,478   $52,640   $45,409 

 

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

 

   (Unaudited) 
   Three Months Ended June 30, 
   Gross Revenue       Net Revenue 
   Reporting Method       Reporting Method 
(in thousands)  (Non-GAAP)   Reclassification   (GAAP) 
   2016   2015   2016   2015   2016   2015 
      (As Restated)       (As Restated)       (As Restated) 
Revenues:                        
Professional employer services  $1,102,884   $929,521   $(937,108)  $(789,909)  $165,776   $139,612 
Staffing services   37,641    42,347    -    -    37,641    42,347 
Total revenues  $1,140,525   $971,868   $(937,108)  $(789,909)  $203,417   $181,959 
Cost of revenues  $1,098,272   $935,390   $(937,108)  $(789,909)  $161,164   $145,481 

 

   (Unaudited) 
   Six Months Ended June 30, 
   Gross Revenue       Net Revenue 
   Reporting Method       Reporting Method 
(in thousands)  (Non-GAAP)   Reclassification   (GAAP) 
   2016   2015   2016   2015   2016   2015 
      (As Restated)       (As Restated)       (As Restated) 
Revenues:                        
Professional employer services  $2,130,482   $1,787,282   $(1,810,030)  $(1,520,436)  $320,452   $266,846 
Staffing services   73,932    81,513    -    -    73,932    81,513 
Total revenues  $2,204,414   $1,868,795   $(1,810,030)  $(1,520,436)  $394,384   $348,359 
Cost of revenues  $2,151,774   $1,823,386   $(1,810,030)  $(1,520,436)  $341,744   $302,950 

 

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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 4,000 clients across all lines of business in 22 states. For more information, please visit www.barrettbusiness.com.

 

Forward-Looking Statements

 

Statements in this release about future events or performance, including expectations regarding revenue and earnings per share growth, 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 changes in executive management, the ineffectiveness of the Company’s internal control over financial reporting, the Company’s relationship with its primary bank lender, potential delisting of the Company’s common stock by Nasdaq, current and future shareholder litigation, the ongoing investigation of accounting issues by the Securities and Exchange Commission and the United States Department of Justice, 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 2015 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.

 

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Barrett Business Services, Inc.

Condensed Consolidated Balance Sheets

(Unaudited)

 

   June 30,   December 31, 
(in thousands)  2016   2015 
Assets          
Current assets:          
Cash and cash equivalents  $422   $25,218 
Trade accounts receivable, net   177,927    90,529 
Income taxes receivable   -    1,038 
Prepaid expenses and other   4,818    3,173 
Restricted certifcates of deposit   -    10,000 
Restricted marketable securities and workers' compensation deposits   48,371    76,110 
Deferred income taxes   20,908    20,941 
Total current assets   252,446    227,009 
Marketable securities   2,362    6,082 
Property, equipment and software, net   23,958    22,820 
Restricted certificates of deposit   10,000    - 
Restricted marketable securities and workers' compensation deposits   235,584    187,916 
Other assets   4,551    5,130 
Goodwill   47,820    47,820 
   $576,721   $496,777 
           
Liabilities and Stockholders' Equity          
Current liabilities:          
Current portion of long-term debt  $7,721   $19,833 
Accounts payable   4,458    3,217 
Accrued payroll, payroll taxes and related benefits   186,295    121,343 
Income taxes payable   71    - 
Other accrued liabilities   4,419    6,166 
Workers' compensation claims liabilities   71,785    65,581 
Safety incentives liabilities   24,262    21,253 
Total current liabilities   299,011    237,393 
Long-term workers' compensation claims liabilities   205,265    190,094 
Long-term debt   4,502    - 
Deferred income taxes   13,256    13,256 
Customer deposits and other long-term liabilities   1,399    1,483 
Stockholders' equity   53,288    54,551 
   $576,721   $496,777 

 

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Barrett Business Services, Inc.

Condensed Consolidated Statements of Operations

(Unaudited)

 

   (Unaudited)   (Unaudited) 
(in thousands, except per share amounts)  Three Months Ended   Six Months Ended 
   June 30,   June 30, 
   2016   2015   2016   2015 
       (As Restated)       (As Restated) 
Revenues:                    
Professional employer service fees  $165,776   $139,612   $320,452   $266,846 
Staffing services   37,641    42,347    73,932    81,513 
Total revenues   203,417    181,959    394,384    348,359 
Cost of revenues:                    
Direct payroll costs   28,223    32,188    55,649    61,952 
Payroll taxes and benefits   82,885    71,808    186,645    159,885 
Workers' compensation   50,056    41,485    99,450    81,113 
Total cost of revenues   161,164    145,481    341,744    302,950 
Gross margin   42,253    36,478    52,640    45,409 
Selling, general and administrative expenses   28,490    21,429    50,394    38,399 
Depreciation and amortization   769    709    1,518    1,392 
Income from operations   12,994    14,340    728    5,618 
Other income (expense), net   6    (398)   (2)   (845)
Income before income taxes   13,000    13,942    726    4,773 
Provision for income taxes   4,478    5,040    207    1,699 
Net income  $8,522   $8,902   $519   $3,074 
Basic earnings per common share  $1.18   $1.24   $0.07   $0.43 
Weighted average number of basic common shares outstanding   7,210    7,151    7,209    7,143 
Diluted earnings per common share  $1.16   $1.21   $0.07   $0.42 
Weighted average number of  diluted common shares outstanding   7,328    7,327    7,323    7,328 

 

Investor Relations:

Liolios

Cody Slach

Tel 1-949-574-3860

BBSI@liolios.com

 

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