Barrett Business Services, Inc. Announces First Quarter 2004 Operating Results and Financial Guidance for 2Q04

4/28/2004 Print Version

PORTLAND, Ore., April 28 /PRNewswire-FirstCall/ -- Barrett Business

Services, Inc. (Nasdaq: BBSI) reported today net income of $606,000 for the

first quarter ended March 31, 2004, an improvement of $949,000 from a net loss

of $343,000 for the first quarter of 2003. Diluted income per share for the

2004 first quarter was $.10, as compared to a diluted loss per share of $(.06)

for the same quarter a year ago.

Net revenues for the first quarter ended March 31, 2004 totaled $40.6

million, an increase of approximately $17.2 million or 73.5% over the $23.4

million for the same quarter in 2003.


First Quarter Ended

March 31,

Results of Operations 2004 2003

(in thousands, except per share amounts)


Staffing services $25,054 $20,110

Professional employer service fees 15,556 3,287

Total revenues 40,610 23,397

Cost of revenues:

Direct payroll costs 18,320 14,798

Payroll taxes and benefits 11,531 3,805

Workers' compensation 4,036 1,425

Total cost of revenues 33,887 20,028

Gross margin 6,723 3,369

Selling, general and administrative expenses 5,532 3,596

Depreciation and amortization 242 280

Income (loss) from operations 949 (507)

Other income (expense), net 21 (6)

Income (loss) before taxes 970 (513)

Provision for (benefit from) income taxes 364 (170)

Net income (loss) $606 $(343)

Basic income (loss) per share $.11 $(.06)

Weighted average basic shares outstanding 5,704 5,748

Diluted income (loss) per share $.10 $(.06)

Weighted average diluted shares outstanding 6,143 5,748

The Company changed its reporting of PEO revenues from a gross basis to a

net basis in 2002. 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.


First Quarter Ended

($ in thousands) March 31,

2004 2003


Staffing services $25,054 $20,110

Professional employer services 91,720 20,539

Total gross revenues $116,774 $40,649

Cost of revenues:

Direct payroll costs 93,367 32,050

Payroll taxes and benefits 11,531 3,805

Workers' compensation 5,153 1,425

Total cost of revenues 110,051 37,280

Gross margin $6,723 $3,369

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

For the first quarters ended March 31, 2004 and 2003 (in thousands):

Gross Revenue Net Revenue

Reporting Method Reclassification Reporting Method

2004 2003 2004 2003 2004 2003



services $25,054 $20,110 $-- $-- $25,054 $20,110



services 91,720 20,539 (76,164) (17,252) 15,556 3,287


revenues $116,774 $40,649 $(76,164) $(17,252) $40,610 $23,397

Cost of

revenues: $110,051 $37,280 $(76,164) $(17,252) $33,887 $20,028

William W. Sherertz, President and Chief Executive Officer, commented

that: "We are very pleased with our continuing sequential growth in gross

revenues. We believe this will equate to increased momentum for improved

earnings trends for the balance of 2004. In addition, our balance sheet has

never been stronger, now with a record $10.0 million in cash and securities,

which further strengthens our overall liquidity and working capital position."

The following summarizes the unaudited balance sheets at March 31, 2004

and December 31, 2003.

    ($ in thousands)                                March 31,  December 31,

2004 2003


Current assets:

Cash and cash equivalents $6,062 $7,785

Marketable securities 3,907 --

Trade accounts receivable, net 24,816 18,481

Prepaid expenses and other 2,576 958

Deferred income taxes 2,115 2,196

Total current assets 39,476 29,420

Goodwill, net 21,738 18,749

Intangibles, net 44 13

Property, equipment and software, net 3,247 3,367

Restricted marketable securities and workers'

compensation deposits 1,726 1,647

Deferred income taxes 990 1,041

Other assets 474 436

$67,695 $54,673

Liabilities and Stockholders' Equity

Current liabilities:

Current portion of long-term debt $200 $88

Income taxes payable 227 --

Accounts payable 639 727

Accrued payroll, payroll taxes and related

benefits 22,734 13,881

Workers' compensation claims liabilities 5,116 3,886

Safety incentives liabilities 2,961 2,007

Other accrued liabilities 1,722 361

Total current liabilities 33,599 20,950

Long-term debt, net of current portion 200 400

Customer deposits 481 455

Long-term workers' compensation claims

liabilities 1,025 1,031

Other long-term liabilities -- 45

Deferred gain on sale and leaseback 1,128 1,158

Stockholders' equity 31,262 30,634

$67,695 $54,673

Outlook for Second Quarter 2004

The Company also disclosed today limited financial guidance with respect

to its operating results for the second quarter ending June 30, 2004. The

Company expects gross revenues for the second quarter to range from $120

million to $123 million and anticipates diluted income per share to range from

$.25 to $.30 per share for the same period. A reconciliation of estimated

gross revenues to estimated GAAP net revenues for the second quarter of 2004

is not included because estimated PEO revenues and cost of PEO revenues for

the period cannot be determined without unreasonable effort and expense.

On April 29, 2004 at 9:00 a.m. Pacific Time, William W. Sherertz and

Michael D. Mulholland will host an investor telephone conference call to

discuss first quarter 2004 operating results. To participate in the call,

dial 877-0356-3717 shortly before 9:00 a.m. Pacific Time on April 29, 2004.

The call identification number is 6842413. The conference call will also be

webcast live at 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 April 29, 2004 at 11:00 a.m. and ending

May 6, 2004. To listen to the recording, dial 800-642-1687 and enter

conference identification code 6842413.

Barrett Business Services, Inc. is a human resource management company

with offices in eight states, which serve customers in approximately 18


Statements in this release about future events or performance, including

earnings expectations for the second quarter of 2004, 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 successful integration of the

operations of Skills Resource Training Center acquired by the Company on

January 1, 2004, the effect of changes in the Company's mix of services on

gross margin, future workers' compensation claims experience, the effect of

changes in the workers' compensation regulatory environment in one or more of

our primary markets, collectibility of accounts receivable, and availability

of funding for working capital purposes, among others. Other important

factors that may affect the Company's future prospects are described in the

Company's 2003 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.

SOURCE Barrett Business Services, Inc.