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BBSI Announces Third Quarter 2009 Operating Results, Financial Guidance for 4Q09 and Conference Call

10/26/2009 Print Version

VANCOUVER, Wash., Oct. 26, 2009 (GLOBE NEWSWIRE) -- Barrett Business Services, Inc. (Nasdaq:BBSI) reported today net income of $2.9 million compared to net income of $650,000 for the third quarter of 2008. Diluted earnings per share for the 2009 third quarter were $.28, as compared to diluted earnings per share of $.06 for the same quarter a year ago.

During the third quarter of 2009, the Company realized a pre-tax gain of $572,000, or approximately $395,000 after tax equating to $.04 per diluted share, from the sale of certain corporate bonds. The gain is included in other income, net in the Company's results of operations.

Net revenues for the third quarter ended September 30, 2009 totaled $65.5 million, a decrease of approximately $12.0 million or 15.5% from the $77.5 million for the same quarter in 2008.

($ in thousands, except per (Unaudited) (Unaudited)

share amounts) Third Quarter Ended Nine Months Ended

September 30, September 30,

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

Results of Operations 2009 2008 2009 2008

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

Revenues:

Staffing services $ 33,180 $ 44,468 $ 85,224 $120,891

Professional employer

service fees 32,314 32,993 88,607 94,947

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

Total revenues 65,494 77,461 173,831 215,838

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

Cost of revenues:

Direct payroll costs 25,095 32,941 64,291 89,267

Payroll taxes and benefits 20,399 21,201 62,460 66,367

Workers' compensation 7,859 8,410 33,473 22,679

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

Total cost of revenues 53,353 62,552 160,224 178,313

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

Gross margin 12,141 14,909 13,607 37,525

Selling, general and

administrative expenses 8,416 10,007 24,792 27,841

Depreciation and amortization 422 385 1,218 1,143

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

Income (loss) from operations 3,303 4,517 (12,403) 8,541

Loss on impairment

of investment -- (3,483) -- (3,483)

Other income, net 965 465 1,373 1,678

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

Income (loss) before taxes 4,268 1,499 (11,030) 6,736

Provision for (benefit from)

income taxes 1,323 849 (4,069) 2,745

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

Net income (loss) $ 2,945 $ 650 $ (6,961) $ 3,991

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

Basic earnings (loss)

per share $ .28 $ .06 $ (.67) $ .36

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

Weighted average basic shares

outstanding 10,475 10,781 10,442 10,935

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

Diluted earnings (loss)

per share $ .28 $ .06 $ (.67) $ .36

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

Weighted average diluted

shares outstanding 10,559 10,997 10,442 11,214

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

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)

Third Quarter Ended Nine Months Ended

(in thousands) September 30, September 30,

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

2009 2008 2009 2008

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

Revenues:

Staffing services $ 33,180 $ 44,468 $ 85,224 $120,891

Professional employer services 239,872 243,927 663,847 696,579

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

Total revenues 273,052 288,395 749,071 817,470

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

Cost of revenues:

Direct payroll costs 231,532 242,396 635,808 686,136

Payroll taxes and benefits 20,399 21,201 62,460 66,367

Workers' compensation 8,980 9,889 37,196 27,442

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

Total cost of revenues 260,911 273,486 735,464 779,945

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

Gross margin $ 12,141 $ 14,909 $ 13,607 $ 37,525

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

Gross revenues of $273.1 million for the third quarter ended September 30, 2009 declined 5.3% from the similar period in 2008.

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

For the third quarters ended September 30, 2009 and 2008:

(Unaudited)

Three Months Ended September 30,

(in -------------------------------------------------------------

thous- Gross Revenue Net Revenue

ands) Reporting Method Reclassification Reporting Method

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

2009 2008 2009 2008 2009 2008

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

Revenues:

Staff-

ing

serv-

ices $ 33,180 $ 44,468 $ -- $ -- $ 33,180 $ 44,468

Profes-

sional

empl-

oyer

serv-

ices 239,872 243,927 (207,558) (210,934) 32,314 32,993

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

Total

reve-

nues $ 273,052 $ 288,395 $(207,558) $(210,934) $ 65,494 $ 77,461

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

Cost of

reve-

nues $ 260,911 $ 273,486 $(207,558) $(210,934) $ 53,353 $ 62,552

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

For the nine months ended September 30, 2009 and 2008:

(Unaudited)

Nine Months Ended September 30,

(in -------------------------------------------------------------

thous- Gross Revenue Net Revenue

ands) Reporting Method Reclassification Reporting Method

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

2009 2008 2009 2008 2009 2008

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

Reve-

nues:

Staff-

ing

serv-

ices $ 85,224 $ 120,891 $ -- $ -- $ 85,224 $ 120,891

Profes-

sional

empl-

oyer

serv-

ices 663,847 696,579 (575,240) (601,632) 88,607 94,947

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

Total

reve-

nues $ 749,071 $ 817,470 $(575,240) $(601,632) $ 173,831 $ 215,838

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

Cost of

reve-

nues $ 735,464 $ 779,945 $(575,240) $(601,632) $ 160,224 $ 178,313

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

The following summarizes the unaudited consolidated balance sheets at September 30, 2009 and December 31, 2008.

Sept. 30, Dec. 31,

(in thousands) 2009 2008

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

Assets

------

Current assets:

Cash and cash equivalents $ 38,505 $ 42,214

Marketable securities 8,919 17,968

Trade accounts receivable, net 46,194 34,389

Income taxes receivable 4,455 --

Prepaid expenses and other 1,365 1,440

Deferred income taxes 2,963 2,373

Workers' compensation receivables for

insured claims 225 225

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

Total current assets 102,626 98,609

Marketable securities 6,389 427

Goodwill, net 47,338 47,338

Property, equipment and software, net 15,014 15,503

Restricted marketable securities and workers'

compensation deposits 3,454 2,701

Other assets 1,650 1,645

Workers' compensation receivables for

insured claims 3,552 3,837

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

$180,023 $170,060

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

Liabilities and Stockholders' Equity

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

Current liabilities:

Accounts payable $ 648 $ 881

Accrued payroll, payroll taxes and

related benefits 42,134 32,296

Other accrued liabilities 557 902

Workers' compensation claims liabilities 9,872 7,186

Workers' compensation claims liabilities for

insured claims 225 225

Safety incentives liabilities 4,588 4,626

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

Total current liabilities 58,024 46,116

Customer deposits 614 706

Long-term workers' compensation claims liabilities 15,377 5,235

Long-term workers' compensation liabilities for

insured claims 2,350 2,438

Deferred income taxes 3,911 4,394

Deferred gain on sale and leaseback 457 549

Stockholders' equity 99,290 110,622

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

$180,023 $170,060

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

Outlook for Fourth Quarter 2009

The Company also disclosed today limited financial guidance with respect to its operating results for the fourth quarter ending December 31, 2009. The Company expects gross revenues for the fourth quarter of 2009 to range from $265 million to $270 million, as compared to $263.1 million for the fourth quarter of 2008, and anticipates diluted earnings per share for the fourth quarter of 2009 to range from $.19 to $.22 per share, as compared to diluted earnings per share of $.21 for the same period a year ago. A reconciliation of estimated gross revenues to estimated GAAP net revenues for the fourth quarter of 2009 is not included because PEO revenues and cost of PEO revenues for the period are not reasonably estimable.

Conference Call

On October 27 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 third quarter 2009 operating results. To participate in the call, dial (877) 356-3717. The call identification number is 36223270. 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 October 27, 2009 at 12:00 p.m. PT and ending on Tuesday, November 3, 2009. To listen to the recording, dial (800) 642-1687 and enter conference identification code 36223270.

Statements in this release about future events or performance, including gross revenues and earnings expectations for the fourth 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 2008 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