News

BBSI Announces Fourth Quarter 2008 Operating Results, Financial Guidance for 1Q09, Declaration of Quarterly Cash Dividend and Conference Call

2/10/2009 Print Version

VANCOUVER, Wash., Feb. 10, 2009 (GLOBE NEWSWIRE) -- Barrett Business Services, Inc. (Nasdaq:BBSI) reported today net income of $2.3 million for the fourth quarter ended December 31, 2008, a decline of $1.6 million or 42.0% from net income of $3.9 million for the fourth quarter of 2007. Diluted earnings per share for the 2008 fourth quarter were $.21, as compared to diluted earnings per share of $.34 for the same quarter a year ago.

Net revenues for the fourth quarter ended December 31, 2008 totaled $64.6 million, a decrease of approximately $17.2 million or 21.0% from the $81.8 million for the same quarter in 2007.

(Unaudited) (Unaudited)

($ in thousands, except per Fourth Quarter Ended Year Ended

share amounts) December 31, December 31,

------------------ ------------------

Results of Operations 2008 2007 2008 2007

----------------------------- -------- -------- -------- --------

Revenues:

Staffing services $ 33,674 $ 45,548 $154,565 $147,221

Professional employer service

fees 30,956 36,283 125,903 141,992

-------- -------- -------- --------

Total revenues 64,630 81,831 280,468 289,213

-------- -------- -------- --------

Cost of revenues:

Direct payroll costs 25,173 34,250 114,440 113,450

Payroll taxes and benefits 19,164 21,534 85,531 87,822

Workers' compensation 8,208 10,590 30,887 29,031

-------- -------- -------- --------

Total cost of revenues 52,545 66,374 230,858 230,303

-------- -------- -------- --------

Gross margin 12,085 15,457 49,610 58,910

Selling, general and

administrative expenses 8,813 10,043 36,654 34,688

Depreciation and amortization 393 372 1,536 1,387

-------- -------- -------- --------

Income from operations 2,879 5,042 11,420 22,835

Loss on impairment of

investments -- -- (3,483) --

Other income, net 376 732 2,054 3,083

-------- -------- -------- --------

Income before taxes 3,255 5,774 9,991 25,918

Provision for income taxes 983 1,859 3,728 9,112

-------- -------- -------- --------

Net income $ 2,272 $ 3,915 $ 6,263 $ 16,806

======== ======== ======== ========

Basic earnings per share $ .21 $ .35 $ .58 $ 1.49

======== ======== ======== ========

Weighted average basic shares

outstanding 10,638 11,193 10,861 11,247

======== ======== ======== ========

Diluted earnings per share $ .21 $ .34 $ .56 $ 1.44

======== ======== ======== ========

Weighted average diluted shares

outstanding 10,837 11,555 11,120 11,654

======== ======== ======== ========

The Company reports its Professional Employer Organization services ("PEO") revenues on a net basis because it is not the primary obligor for the services provided by the Company's PEO clients to their customers. The gross revenues and cost of revenues information below, although not in accordance with generally accepted accounting principles ("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)

Fourth Quarter Ended Year Ended

(in thousands) December 31, December 31,

---------------------- ----------------------

2008 2007 2008 2007

---------- ---------- ---------- ----------

Revenues:

Staffing services $ 33,674 $ 45,548 $ 154,565 $ 147,221

Professional employer

services 229,449 248,251 926,028 968,576

---------- ---------- ---------- ----------

Total revenues 263,123 293,799 1,080,593 1,115,797

---------- ---------- ---------- ----------

Cost of revenues:

Direct payroll costs 222,274 246,530 908,410 935,697

Payroll taxes and

benefits 19,164 21,534 85,531 87,822

Workers' compensation 9,600 10,278 37,042 33,368

---------- ---------- ---------- ----------

Total cost of

revenues 251,038 278,342 1,030,983 1,056,887

========== ========== ========== ==========

Gross margin $ 12,085 $ 15,457 $ 49,610 $ 58,910

========== ========== ========== ==========

Gross revenues of $263.1 million for the fourth quarter ended December 31, 2008 declined 10.4% from the similar period in 2007. For the year ended December 31, 2008, gross revenues of $1.08 billion decreased 3.2% from the comparable 2007 period.

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

For the fourth quarters ended December 31, 2008 and 2007:

(Unaudited)

Three Months Ended December 31,

-------------------------------------------------------

(in Gross Revenue Net Revenue

thousands) Reporting Method Reclassification Reporting Method

----------------- -------------------- ----------------

2008 2007 2008 2007 2008 2007

-------- -------- --------- --------- ------- -------

Revenues:

Staffing

services $ 33,674 $ 45,548 $ -- $ -- $33,674 $45,548

Professional

employer

services 229,449 248,251 (198,493) (211,968) 30,956 36,283

-------- -------- --------- --------- ------- -------

Total

revenues $263,123 $293,799 $(198,493) $(211,968) $64,630 $81,831

======== ======== ========= ========= ======= =======

Cost of

revenues $251,038 $278,342 $(198,493) $(211,968) $52,545 $66,374

======== ======== ========= ========= ======= =======

For the years ended December 31, 2008 and 2007:

(Unaudited)

Year Ended December 31,

-------------------------------------------------------------

(in thousands)

Gross Revenue Net Revenue

Reporting Method Reclassification Reporting Method

--------------------- -------------------- -----------------

2008 2007 2008 2007 2008 2007

---------- ---------- --------- --------- -------- --------

Revenues:

Staffing

servi-

ces $ 154,565 $ 147,221 $ -- $ -- $154,565 $147,221

Profess-

ional

employer

services 926,028 968,576 (800,125) (826,584) 125,903 141,992

---------- ---------- --------- --------- -------- --------

Total

reve-

nues $1,080,593 $1,115,797 $(800,125) $(826,584) $280,468 $289,213

========== ========== ========= ========= ======== ========

Cost of

reve-

nues $1,030,983 $1,056,887 $(800,125) $(826,584) $230,858 $230,303

========== ========== ========= ========= ======== ========

The following summarizes the unaudited consolidated balance sheets at December 31, 2008 and December 31, 2007.

December 31, December 31,

(in thousands) 2008 2007

------------ ------------

Assets

------

Current assets:

Cash and cash equivalents $ 42,214 $ 9,777

Marketable securities 17,968 50,364

Trade accounts receivable, net 34,389 36,673

Prepaid expenses and other 1,440 2,336

Deferred income taxes 2,373 3,138

Workers' compensation receivables for

insured claims 225 225

------------ ------------

Total current assets 98,609 102,513

Marketable securities 427 4,772

Goodwill, net 47,338 41,508

Property, equipment and software, net 15,503 16,136

Restricted marketable securities and

workers' compensation deposits 2,701 2,750

Other assets 1,645 1,649

Workers' compensation receivables for

insured claims 3,837 3,896

------------ ------------

$ 170,060 $ 173,224

============ ============

Liabilities and Stockholders' Equity

------------------------------------

Current liabilities:

Accounts payable $ 881 $ 1,516

Accrued payroll, payroll taxes and related

benefits 32,296 33,553

Other accrued liabilities 902 1,064

Workers' compensation claims liabilities 7,186 6,031

Workers' compensation claims liabilities

for insured claims 225 225

Safety incentives liabilities 4,626 5,911

------------ ------------

Total current liabilities 46,116 48,300

Customer deposits 706 752

Long-term workers' compensation claims

liabilities 5,235 4,021

Long-term workers' compensation liabilities

for insured claims 2,438 2,464

Deferred income taxes 4,394 3,268

Deferred gain on sale and leaseback 549 671

Stockholders' equity 110,622 113,748

------------ ------------

$ 170,060 $ 173,224

============ ============

The financial results presented in this release are unaudited. Moss Adams LLP is currently completing its audit of the Company's 2008 financial statements and internal controls over financial reporting at December 31, 2008. The Company expects that Moss Adams will complete its work in early March and that it will then file its 2008 Annual Report on Form 10-K with the U.S. Securities and Exchange Commission. The Form 10-K will include additional information, including the Company's audited financial statements, management's report on internal controls over financial reporting at December 31, 2008, and the reports of Moss Adams.

Outlook for First Quarter 2009

The Company also disclosed today limited financial guidance with respect to its operating results for the first quarter ending March 31, 2009. The Company expects gross revenues for the first quarter of 2009 to range from $240 million to $245 million, as compared to $259.6 million for the first quarter of 2008, and anticipates diluted loss per share for the first quarter of 2009 to range from $.19 to $.22 per share, as compared to diluted earnings per share of $.01 for the same period a year ago. The Company currently expects to return to profitability beginning with the 2009 second quarter. A reconciliation of estimated gross revenues to estimated GAAP net revenues for the first quarter of 2009 is not included because PEO revenues and cost of PEO revenues for the period are not reasonably estimable.

Declaration of Quarterly Cash Dividend

The Company's board also declared a regular quarterly cash dividend of $0.08 per share. The cash dividend will be paid on March 13, 2009 to all stockholders of record as of February 27, 2009.

Conference Call

On February 11 at 9:00 a.m. Pacific Time, William W. Sherertz, Michael L. Elich and James D. Miller will host an investor telephone conference call to discuss fourth quarter 2008 operating results. To participate in the call, dial (877) 356-3717. The call identification number is 85089378. The conference call will also be webcast live at www.barrettbusiness.com. To access the webcast, click on the Investor Relations section of the Web site and select Webcast. A replay of the call will be available beginning Wednesday, February 11, 2009 at 12:00 p.m. PT and ending on Wednesday, February 18, 2009. To listen to the recording, dial (800) 642-1687 and enter conference identification code 85089378.

Statements in this release about future events or performance, including gross revenues and earnings expectations for the first quarter of 2009, 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 successfully integrate acquired businesses with its existing operations, future workers' compensation claims experience, the effect of changes in the workers' compensation regulatory environment in one or more of its primary markets, the collectibility of accounts receivable 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 2007 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 may be 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.

BBSI provides a comprehensive range of human resource management solutions to large and small companies throughout many regions of the United States.

CONTACT:
Barrett Business Services, Inc.

William W. Sherertz
President and Chief Executive Officer

(360) 828-0700