News

BBSI Announces Third Quarter 2005 Operating Results and Financial Guidance For 4Q05

10/26/2005 Print Version

PORTLAND, Ore.--(BUSINESS WIRE)--Oct. 26, 2005--Barrett Business

Services, Inc. (Nasdaq:BBSI) reported today net income of $4,340,000

for the third quarter ended September 30, 2005, an improvement of

$1,892,000 or 77.3% over net income of $2,448,000 for the third

quarter of 2004. Diluted earnings per share for the 2005 third quarter

were $.40, as compared to diluted earnings per share of $.26 for the

same quarter a year ago. Per share amounts for 2004 have been adjusted

for a 3-for-2 stock split effected on May 19, 2005.

Net revenues for the third quarter ended September 30, 2005

totaled $64.6 million, an increase of approximately $9.9 million or

18.1% over the $54.7 million for the same quarter in 2004.

(Unaudited) (Unaudited)

(in thousands, except per Third Quarter Ended Nine Months Ended

share amounts) September 30, September 30,

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

Results of Operations 2005 2004 2005 2004

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

Revenues:

Staffing services $36,668 $35,673 $100,847 $91,197

Professional employer

service fees 27,883 19,006 72,579 51,796

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

Total revenues 64,551 54,679 173,426 142,993

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

Cost of revenues:

Direct payroll costs 27,527 26,436 75,142 67,307

Payroll taxes and

benefits 16,651 11,376 47,651 33,556

Workers' compensation 6,664 6,505 18,365 16,837

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

Total cost of

revenues 50,842 44,317 141,158 117,700

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

Gross margin 13,709 10,362 32,268 25,293

Selling, general and

administrative

expenses 6,906 5,993 18,627 16,574

Depreciation and

amortization 239 257 692 752

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

Income from operations 6,564 4,112 12,949 7,967

Other income, net 325 73 228 132

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

Income before taxes 6,889 4,185 13,177 8,099

Provision for income taxes 2,549 1,737 5,001 3,205

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

Net income $4,340 $2,448 $8,176 $4,894

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

Basic earnings per share $.43 $.28 $.89 $.57

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

Weighted average basic

shares outstanding 10,209 8,608 9,190 8,580

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

Diluted earnings per share $.40 $.26 $.83 $.53

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

Weighted average diluted

shares outstanding 10,884 9,295 9,878 9,289

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

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"), are 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,

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

2005 2004 2005 2004

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

Revenues:

Staffing services $36,668 $35,673 $100,847 $91,197

Professional employer

services 175,404 109,435 451,900 299,139

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

Total revenues 212,072 145,108 552,747 390,336

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

Cost of revenues:

Direct payroll costs 172,994 115,580 449,318 311,337

Payroll taxes and

benefits 16,651 11,376 47,651 33,555

Workers' compensation 8,718 7,790 23,510 20,151

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

Total cost of

revenues 198,363 134,746 520,479 365,043

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

Gross margin $13,709 $10,362 $32,268 $25,293

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

Gross revenues of $212.1 million for the third quarter ended

September 30, 2005 rose 46.2% over the similar period in 2004. For the

nine months ended September 30, 2005, gross revenues of $552.7 million

increased 41.6% over the comparable period in 2004.

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

follows:

For the third quarters ended September 30, 2005 and 2004 (in

thousands):

(Unaudited)

Third Quarters Ended September 30,

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

Net

Gross Revenue Revenue

(in Reporting Method Reclassification Reporting Method

thousands) 2005 2004 2005 2004 2005 2004

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

Revenues:

Staffing

services $36,668 $35,673 $- $- $36,668 $35,673

Professional

employer

services 175,404 109,435 (147,521) (90,429) 27,883 19,006

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

Total

revenues $212,072 $145,108 $(147,521) $(90,429) $64,551 $54,679

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

Cost of

revenues: $198,363 $134,746 $(147,521) $(90,429) $50,842 $44,317

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

For the nine months ended September 30, 2005 and 2004 (in

thousands):

(Unaudited)

Nine Months Ended September 30,

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

Net

Gross Revenue Revenue

(in Reporting Method Reclassification Reporting Method

thousands) 2005 2004 2005 2004 2005 2004

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

Revenues:

Staffing

services $100,847 $91,197 $- $- $100,847 $91,197

Professional

employer

services 451,900 299,139 (379,321) (247,343) 72,579 51,796

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

Total

revenues $552,747 $390,336 $(379,321) $(247,343) $173,426 $142,993

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

Cost of

revenues:$520,479 $365,043 $(379,321) $(247,343) $141,158 $117,700

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

William W. Sherertz, President and Chief Executive Officer,

commented that: "We are pleased with another solid quarter of

operating results which were driven by continued strong growth in

revenues."

The following summarizes the unaudited consolidated balance sheets

at September 30, 2005 and December 31, 2004.

September December

30, 31,

(in thousands) 2005 2004

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

Assets

Current assets:

Cash and cash equivalents $50,408 $12,153

Marketable securities 3,680 4,630

Trade accounts receivable, net 35,558 23,840

Prepaid expenses and other 1,507 1,364

Deferred income taxes 6,484 4,100

Workers' compensation receivables for insured

claims 213 213

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

Total current assets 97,850 46,300

Marketable securities 394 -

Goodwill, net 22,516 22,516

Intangibles, net 10 25

Property, equipment and software, net 12,950 4,301

Restricted marketable securities and workers'

compensation deposits 2,052 1,702

Deferred income taxes 124 582

Other assets 400 401

Workers' compensation receivables for insured claims 3,949 4,158

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

$140,245 $79,985

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

Liabilities and Stockholders' Equity

Current liabilities:

Accounts payable $1,350 $994

Accrued payroll, payroll taxes and related

benefits 28,040 17,427

Income taxes payable 1,261 -

Other accrued liabilities 464 414

Workers' compensation claims liabilities 6,062 4,946

Workers' compensation claims liabilities for

insured claims 213 213

Safety incentives liabilities 7,834 4,807

Current portion of long-term debt 348 348

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

Total current liabilities 45,572 29,149

Long-term debt, net of current portion 1,131 1,441

Customer deposits 663 608

Long-term workers' compensation claims liabilities 6,913 4,840

Long-term workers' compensation liabilities for

insured claims 3,949 4,158

Deferred gain on sale and leaseback 945 1,036

Stockholders' equity 81,072 38,753

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

$140,245 $79,985

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

Outlook for Fourth Quarter 2005

The Company also disclosed today limited financial guidance with

respect to its operating results for the fourth quarter ending

December 31, 2005. The Company expects gross revenues for the fourth

quarter of 2005 to range from $204 million to $208 million, an

increase of approximately 35% over the fourth quarter of 2004, and

anticipates diluted earnings per share for the fourth quarter of 2005

to range from $.35 to $.37 per share, an increase of approximately 33%

over $.27 per share for the same period a year ago, on a

split-adjusted basis. Management's outlook for fourth quarter of 2005

gross revenues as compared to the third quarter of 2005 reflects

anticipated seasonality. A reconciliation of estimated gross revenues

to estimated GAAP net revenues for the fourth quarter of 2005 is not

included because the details of total gross revenues, such as PEO

revenues and cost of PEO revenues, for the period are not reasonably

estimable.

On October 27, 2005 at 9:00 a.m. Pacific Time, William W. Sherertz

and Michael D. Mulholland will host an investor telephone conference

call to discuss third quarter 2005 operating results. To participate

in the call, dial (877) 356-3717. The call identification number is

1259435. 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, 2005 at 11:00 a.m. and

ending on November 3, 2005. To listen to the recording, dial (800)

642-1687 and enter conference identification code 1259435.

BBSI provides a comprehensive range of 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 fourth 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 the use of net proceeds of

approximately $33.1 million and other effects of the Company's recent

follow-on equity offering, 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.

CONTACT: Barrett Business Services, Inc.

William W. Sherertz, Chief Executive Officer

503-220-0988

SOURCE: Barrett Business Services, Inc.