• BBSI Reports Strong Fourth Quarter and Full Year 2022 Financial Results

    المصدر: Nasdaq GlobeNewswire / 01 مارس 2023 16:05:00   America/New_York

    - Q4 2022 Net Income of $11.5 Million, or $1.64 per Diluted Share -
    - Full Year 2022 Net Income of $47.3 Million, or $6.54 per Diluted Share -

    VANCOUVER, Wash., March 01, 2023 (GLOBE NEWSWIRE) -- Barrett Business Services, Inc. (“BBSI” or the “Company”) (NASDAQ: BBSI), a leading provider of business management solutions, reported financial results for the fourth quarter and full year ended December 31, 2022.

    Fourth Quarter 2022 Financial Summary vs. Prior Year Quarter

    • Revenues up 6% to $272.0 million.
    • Gross billings up 8% to $1.95 billion.
    • Average worksite employees (“WSEs”) up 6%.
    • Net income up to $11.5 million, or $1.64 per diluted share, compared to $10.6 million, or $1.40 per diluted share.

    Full Year 2022 Financial Summary vs. 2021

    • Revenues up 10% to $1.05 billion.
    • Gross billings up 13% to $7.39 billion.
    • Average WSEs up 8%.
    • Net income up to $47.3 million, or $6.54 per diluted share, compared to $38.1 million, or $5.00 per diluted share.

    “We had a strong finish to a year that consistently exceeded expectations,” said BBSI President and CEO, Gary Kramer. “We continued to see positive results from our sales efforts through Q4 with a larger portion of our WSE growth resulting from new clients in the quarter. Looking ahead to 2023, we are now launching our health benefits offering nationwide after our successful roll-out in select markets in the fourth quarter. This new product offering, paired with continued innovation in our sales and service delivery, brings exciting growth potential in the years ahead.”

    Fourth Quarter 2022 Financial Results

    Revenues in the fourth quarter of 2022 increased 6% to $272.0 million compared to $256.6 million in the fourth quarter of 2021.

    Total gross billings in the fourth quarter increased 8% to $1.95 billion compared to $1.81 billion in the same year-ago quarter (see “Key Performance Metrics and Non-GAAP Financial Measures” below). The increase was driven by higher WSEs from net client additions and net client hiring, as well as from higher average billings per WSE.

    Non-GAAP gross workers’ compensation expense as a percent of gross billings was 3.0% in the fourth quarter of 2022 and benefited from a favorable adjustment of prior accident year liability of $0.6 million. This compares to 3.1% in the fourth quarter of 2021, which included a favorable adjustment of prior accident year liability of $1.7 million.

    Net income for the fourth quarter of 2022 was $11.5 million, or $1.64 per diluted share, compared to $10.6 million, or $1.40 per diluted share, in the year-ago quarter. The increase is primarily attributable to growth in revenue.

    Full Year 2022 Financial Results

    Revenues in 2022 increased 10% to $1.05 billion compared to $955.2 million in 2021.

    Total gross billings in 2022 increased 13% to $7.39 billion compared to $6.57 billion in 2021 (see “Key Performance Metrics and Non-GAAP Financial Measures” below). The increase was primarily due to an increase in average WSEs and higher average billings per WSE.

    Non-GAAP gross workers’ compensation expense as a percent of gross billings was 2.9% in 2022 and benefited from favorable adjustments of prior accident year liability of $11.3 million. This compares to 3.0% in 2021, which included favorable adjustments of prior accident year liability of $9.2 million.

    Net income in 2022 increased to $47.3 million, or $6.54 per diluted share, compared to $38.1 million, or $5.00 per diluted share, in 2021. The increase is primarily attributable to higher revenue in 2022.

    Liquidity

    As of December 31, 2022, unrestricted cash and investments increased to $159.7 million compared to $132.1 million in the prior quarter. BBSI was debt free at year 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 March 31, 2023, to all stockholders of record as of March 17, 2023.

    On February 28, 2022, BBSI’s board of directors approved a stock repurchase program authorizing the Company to purchase up to $75 million of its stock over a two-year period. In the fourth quarter, BBSI repurchased 92,308 shares at an average price of $87.92 per share. At December 31, 2022, approximately $28 million remains available under the repurchase program.

    Outlook

    In 2023, BBSI expects the following:

    • Gross billings growth of 5% to 8%
    • Growth in the average number of WSEs of 2% to 4%
    • Gross margin as a percent of gross billings of 3.0% to 3.15%
    • Effective annual tax rate to remain at 27% to 28%

    Conference Call

    BBSI will conduct a conference call on Wednesday, March 1, 2023, at 5:00 p.m. Eastern time (2:00 p.m. Pacific time) to discuss its financial results for the year ended December 31, 2022.

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

    Date: Wednesday, March 1, 2023
    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: 13736188

    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 April 1, 2023.

    Toll-free replay number: 1-844-512-2921
    International replay number: 1-412-317-6671
    Replay ID: 13736188

    Key Performance Metrics and Non-GAAP Financial Measures        

    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 an important performance metric 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 and twelve months ended December 31, 2022 and 2021.

      (Unaudited)  (Unaudited) 
      Three Months Ended December 31,  Year Ended December 31, 
    (in thousands) 2022  2021  2022  2021 
    Gross billings $1,948,591  $1,807,793  $7,393,808  $6,569,986 
    PEO and staffing wages $1,697,514  $1,574,668  $6,425,286  $5,693,903 
                     

    Because safety incentives represent consideration payable to PEO customers, safety incentive costs are netted against PEO revenue in our consolidated statements of operations. We therefore present below for purposes of analysis non-GAAP gross workers’ compensation expense, which represents workers’ compensation costs including safety incentive costs. We believe this non-GAAP measure is useful in evaluating the total costs of our workers’ compensation program. In July 2020, the Company began limiting its safety incentive offering in certain markets, resulting in a substantial reduction in safety incentive costs.

      (Unaudited)  (Unaudited) 
      Three Months Ended December 31,  Year Ended December 31, 
    (in thousands) 2022  2021  2022  2021 
    Workers' compensation $58,076  $55,256  $209,145  $196,949 
    Safety incentive costs  298   822   1,852   2,985 
    Non-GAAP gross workers' compensation $58,374  $56,078  $210,997  $199,934 


    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) (Unaudited)
      Percentage of Gross Billings Percentage of Gross Billings
      Three Months Ended December 31, Year Ended December 31,
      2022 2021 2022 2021
    PEO and staffing wages 87.1% 87.1% 86.9% 86.7%
    Payroll taxes and benefits 6.8% 6.7% 7.0% 7.2%
    Non-GAAP gross workers' compensation 3.0% 3.1% 2.9% 3.0%
    Gross margin 3.1% 3.1% 3.2% 3.1% 
              

    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) 
      Year Ended December 31, 
      2022  % Change 2021  % Change 2020 
    Average WSEs  122,001  8.0%  112,928  4.3%  108,249 
    Ending WSEs  122,306  5.3%  116,154  6.3%  109,292 
                     

    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 effects of the COVID-19 pandemic, inflation, and potential recessionary pressures on our clients; our plans to make certain fully insured medical and other health and welfare benefits available to qualifying worksite employees beginning in 2023; 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 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; the carrying value of deferred income tax assets and goodwill; the effects of the pandemic and 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 2021 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)

      December 31,  December 31, 
    (in thousands) 2022  2021 
    ASSETS      
    Current assets:      
    Cash and cash equivalents $91,423  $69,405 
    Investments  68,325   96,763 
    Trade accounts receivable, net  163,838   155,707 
    Prepaid expenses and other  19,787   17,606 
    Restricted cash and investments  110,989   67,238 
    Total current assets  454,362   406,719 
    Property, equipment and software, net  45,954   36,277 
    Operating lease right-of-use assets  19,804   20,697 
    Restricted cash and investments  104,277   232,965 
    Goodwill  47,820   47,820 
    Other assets  3,281   2,474 
    Deferred income taxes  11,440   - 
    Total assets $686,938  $746,952 
    LIABILITIES AND STOCKHOLDERS' EQUITY      
    Current liabilities:      
    Current portion of long-term debt $-  $3,510 
    Accounts payable  8,264   4,485 
    Accrued payroll, payroll taxes and related benefits  222,331   199,067 
    Income taxes payable  610   1,673 
    Current operating lease liabilities  6,957   7,191 
    Other accrued liabilities  31,603   15,120 
    Workers' compensation claims liabilities  62,917   80,028 
    Safety incentives liability  2,049   4,322 
    Total current liabilities  334,731   315,396 
    Long-term workers' compensation claims liabilities  153,070   199,379 
    Deferred income taxes  -   1,687 
    Long-term operating lease liabilities  14,225   14,598 
    Customer deposits and other long-term liabilities  7,070   7,362 
    Stockholders' equity  177,842   208,530 
    Total liabilities and stockholders' equity $686,938  $746,952 


    Barrett Business Services, Inc.
    Condensed Consolidated Statements of Operations
    (Unaudited)

          
     Three Months Ended  Year Ended 
     December 31,  December 31, 
    (in thousands, except per share amounts)2022  2021  2022  2021 
    Revenues:           
    Professional employer services$243,189  $223,528  $937,363  $843,815 
    Staffing services 28,761   33,040   116,963   111,351 
    Total revenues 271,950   256,568   1,054,326   955,166 
    Cost of revenues:           
    Direct payroll costs 21,453   25,003   87,944   83,821 
    Payroll taxes and benefits 131,715   120,374   522,392   469,888 
    Workers' compensation 58,076   55,256   209,145   196,949 
    Total cost of revenues 211,244   200,633   819,481   750,658 
    Gross margin 60,706   55,935   234,845   204,508 
    Selling, general and administrative expenses 44,204   41,320   169,642   155,259 
    Depreciation and amortization 1,643   1,359   6,228   5,326 
    Income from operations 14,859   13,256   58,975   43,923 
    Other income, net 1,570   1,616   6,328   6,738 
    Income before income taxes 16,429   14,872   65,303   50,661 
    Provision for income taxes 4,901   4,258   18,035   12,582 
    Net income$11,528  $10,614  $47,268  $38,079 
    Basic income per common share$1.67  $1.42  $6.63  $5.05 
    Weighted average basic common shares outstanding 6,918   7,482   7,130   7,540 
    Diluted income per common share$1.64  $1.40  $6.54  $5.00 
    Weighted average diluted common shares outstanding 7,048   7,559   7,226   7,621 


    Investor Relations:

    Gateway Group, Inc.
    Cody Slach
    Tel 1-949-574-3860
    BBSI@gatewayir.com


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