News

BBSI Announces First Quarter 2005 Operating Results and Financial Guidance for 2Q05

4/27/2005 Print Version

PORTLAND, Ore., April 27 /PRNewswire-FirstCall/ -- Barrett Business

Services, Inc. (Nasdaq: BBSI) reported today net income of $931,000 for the

first quarter ended March 31, 2005, an improvement of $325,000 or 53.6% over

net income of $606,000 for the first quarter of 2004. Diluted earnings per

share for the 2005 first quarter were $.15, as compared to diluted earnings

per share of $.10 for the same quarter a year ago.

Net revenues for the first quarter ended March 31, 2005 totaled $49.2

million, an increase of approximately $8.6 million or 21.2% over the $40.6

million for the same quarter in 2004.

(Unaudited)

($ in thousands) First Quarter Ended

March 31,

Results of Operations 2005 2004

Revenues:

Staffing services $28,542 $25,054

Professional employer service fees 20,702 15,556

Total revenues 49,244 40,610

Cost of revenues:

Direct payroll costs 21,017 18,320

Payroll taxes and benefits 15,697 11,531

Workers' compensation 4,930 4,036

Total cost of revenues 41,644 33,887

Gross margin 7,600 6,723

Selling, general and administrative

expenses 5,946 5,532

Depreciation and amortization 236 242

Income from operations 1,418 949

Other income, net 108 21

Income before taxes 1,526 970

Provision for income taxes 595 364

Net income $931 $606

Basic earnings per share $.16 $.11

Weighted average basic shares

outstanding 5,764 5,704

Diluted earnings per share $.15 $.10

Weighted average diluted shares

outstanding 6,234 6,196

As previously reported on April 18, 2005, the Company has declared a 3-

for-2 stock split. The additional shares to be issued in the stock split will

be distributed on May 19, 2005 to stockholders of record at the close of

business on April 29, 2005. On a split adjusted basis, diluted earnings per

share for the 2005 first quarter would have been $.10, as compared to $.07 for

the same quarter a year ago.

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.

Unaudited

First Quarter

(in thousands) March 31,

2005 2004

Revenues:

Staffing services $28,542 $25,054

Professional employer services 128,551 91,720

Total revenues 157,093 116,774

Cost of revenues:

Direct payroll costs 127,397 93,367

Payroll taxes and benefits 15,697 11,531

Workers' compensation 6,399 5,153

Total cost of revenues 149,493 110,051

Gross margin $7,600 $6,723

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

For the first quarters ended March 31, 2005 and 2004 (in thousands):

Unaudited

Three Months Ended March 31,

Gross Revenue

(in thousands) Reporting Method

2005 2004

Revenues:

Staffing services $28,542 $25,054

Professional

employer

services 128,551 91,720

Total revenues $157,093 $116,774

Cost of revenues: $149,493 $110,051

Unaudited

Three Months Ended March 31,

(in thousands) Reclassification

2005 2004

Revenues:

Staffing services $-- $--

Professional

employer

services (107,849) (76,164)

Total revenues $(107,849) $(76,164)

Cost of revenues: $(107,849) $(76,164)

Unaudited

Three Months Ended March 31,

Net Revenue

(in thousands) Reporting Method

2005 2004

Revenues:

Staffing services $28,542 $25,054

Professional

employer

services 20,702 15,556

Total revenues $49,244 $40,610

Cost of revenues: $41,644 $33,887

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

that: "Our results for the quarter reflect strong growth from all of our

operating regions, which bodes well for 2005."

The following summarizes the unaudited consolidated balance sheets at

March 31, 2005 and December 31, 2004.

March 31, December 31,

($ in thousands) 2005 2004

Assets

Current assets:

Cash and cash equivalents $20,667 $12,153

Marketable securities 4,584 4,630

Trade accounts receivable, net 31,264 23,840

Prepaid expenses and other 3,249 1,364

Deferred income taxes 4,910 4,100

Workers' compensation receivables

for insured claims 213 213

Total current assets 64,887 46,300

Goodwill, net 22,516 22,516

Intangibles, net 20 25

Property, equipment and software,

net 4,221 4,301

Restricted marketable securities

and workers'

compensation deposits 1,734 1,702

Deferred income taxes 459 582

Other assets 395 401

Workers' compensation receivables

for insured claims 4,090 4,158

$98,322 $79,985

Liabilities and Stockholders' Equity

Current liabilities:

Current portion of long-term debt $348 $348

Income taxes payable 213 --

Accounts payable 774 994

Accrued payroll, payroll taxes

and related benefits 31,246 17,427

Workers' compensation claims

liabilities 5,530 4,946

Workers' compensation claims

liabilities for insured claims 213 213

Safety incentives liabilities 5,618 4,807

Other accrued liabilities 2,013 414

Total current liabilities 45,955 29,149

Long-term debt, net of current

portion 1,204 1,441

Customer deposits 635 608

Long-term workers' compensation

claims liabilities 4,956 4,840

Long-term workers' compensation

liabilities for insured claims 4,090 4,158

Deferred gain on sale and

leaseback 1,006 1,036

Stockholders' equity 40,476 38,753

$98,322 $79,985

Outlook for Second Quarter 2005

The Company also disclosed today limited financial guidance with respect

to its operating results for the second quarter ending June 30, 2005. The

Company expects gross revenues for the second quarter of 2005 to range from

$172 million to $174 million, an increase of approximately 35% over the second

quarter of 2004, and anticipates diluted earnings per share for the second

quarter of 2005, on a split-adjusted basis, to range from $.27 to $.28 per

share, an increase of approximately 37% over $.20 per share for the same

period a year ago, on a split-adjusted basis. Management expectations for

diluted earnings per share for the second quarter of 2005 on a non-split

adjusted basis equate to a range of $.40 to $.42.

A reconciliation of estimated gross revenues to estimated GAAP net

revenues for the second quarter of 2005 is not included because PEO revenues

and cost of PEO revenues for the period are not reasonably estimable.

On April 28, 2005 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 2005 operating results. To participate in the call,

dial 877-356-3717. The call identification number is 5396598. 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 April 28, 2005 at

11:00 a.m. and ending May 5, 2005. To listen to the recording, dial 800-642-

1687 and enter conference identification code 5396598.

BBSI provides human resource management solutions to large and small

companies throughout many regions of the United States.

Statements in this release about future events or performance, including

earnings expectations for the second quarter of 2005, 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, 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 2004 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.


04/27/2005


CONTACT: William W. Sherertz, President and

Chief Executive Officer of Barrett Business Services, Inc., +1-503-220-0988


Web site: http://www.barrettbusiness.com

(BBSI)

04/27/2005 16:28 EDT http://www.prnewswire.com