News

BBSI Announces First Quarter 2006 Operating Results and Financial Guidance for 2Q06

4/26/2006 Print Version

VANCOUVER, Wash.--(BUSINESS WIRE)--April 26, 2006--Barrett

Business Services, Inc. (Nasdaq:BBSI) reported today net income of

$1,357,000 for the first quarter ended March 31, 2006, an improvement

of $426,000 or 45.8% over net income of $931,000 for the first quarter

of 2005. Diluted earnings per share for the 2006 first quarter were

$.12, 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, 2006 totaled

$58.3 million, an increase of approximately $9.1 million or 18.5% over

the $49.2 million for the same quarter in 2005.

(Unaudited)

($ in thousands, except per share amounts) First Quarter Ended

March 31,

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

Results of Operations 2006 2005

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

Revenues:

Staffing services $ 26,661 $ 28,542

Professional employer service fees 31,624 20,702

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

Total revenues 58,285 49,244

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

Cost of revenues:

Direct payroll costs 19,851 21,017

Payroll taxes and benefits 22,837 15,697

Workers' compensation 6,554 5,406

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

Total cost of revenues 49,242 42,120

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

Gross margin 9,043 7,124

Selling, general and administrative expenses 7,220 5,470

Depreciation and amortization 301 236

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

Income from operations 1,522 1,418

Other income, net 632 108

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

Income before taxes 2,154 1,526

Provision for income taxes 797 595

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

Net income $ 1,357 $ 931

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

Basic earnings per share $ .12 $ .11

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

Weighted average basic shares outstanding 11,076 8,645

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

Diluted earnings per share $ .12 $ .10

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

Weighted average diluted shares outstanding 11,661 9,352

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

We report our PEO revenues on a net basis because we are not the

primary obligor for the services provided by our 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)

First Quarter

(in thousands) March 31,

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

2006 2005

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

Revenues:

Staffing services $ 26,661 $ 28,542

Professional employer services 208,674 128,551

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

Total revenues 235,335 157,093

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

Cost of revenues:

Direct payroll costs 195,965 127,397

Payroll taxes and benefits 22,837 15,697

Workers' compensation 7,490 6,875

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

Total cost of revenues 226,292 149,969

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

Gross margin $9,043 $7,124

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

Gross revenues of $235.3 million for the 2006 first quarter rose

49.8% over the comparable 2005 period.

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

follows:

For the first quarters ended March 31, 2006 and 2005 (in thousands):

(Unaudited)

Three Months Ended March 31,

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

Gross Revenue Net Revenue

(in thous- Reporting Method Reclassification Reporting Method

ands) ------------------- --------------------- -----------------

2006 2005 2006 2005 2006 2005

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

Revenues:

Staffing

services $ 26,661 $ 28,542 $ - $ - $26,661 $28,542

Profes-

sional

employer

services 208,674 128,551 (177,050) (107,849) 31,624 20,702

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

Total

rev-

enues $235,335 $157,093 $(177,050) $(107,849) $58,285 $49,244

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

Cost of

revenues: $226,292 $149,969 $(177,050) $(107,849) $49,242 $42,120

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

The following summarizes the unaudited consolidated balance sheets at

March 31, 2006 and December 31, 2005.

(Unaudited)

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

March 31, December 31,

(in thousands) 2006 2005

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

Assets

------

Current assets:

Cash and cash equivalents $ 59,357 $ 61,361

Marketable securities 3,664 3,548

Trade accounts receivable, net 29,353 26,328

Prepaid expenses and other 4,755 2,514

Deferred income taxes 6,175 5,864

Workers' compensation receivables for

insured claims 242 242

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

Total current assets 103,546 99,857

Marketable securities 399 396

Goodwill, net 26,536 22,516

Intangibles, net 96 5

Property, equipment and software, net 13,538 13,071

Restricted marketable securities and workers'

compensation deposits 2,133 2,041

Deferred income taxes 141 341

Other assets 3,034 1,528

Workers' compensation receivables for insured

claims 4,496 4,546

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

$ 153,919 $ 144,301

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

Liabilities and Stockholders' Equity

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

Current liabilities:

Accounts payable $ 1,809 $ 1,366

Accrued payroll, payroll taxes and related

benefits 33,733 28,650

Other accrued liabilities 3,559 360

Workers' compensation claims liabilities 5,399 5,729

Workers' compensation claims liabilities for

insured claims 242 242

Safety incentives liability 7,516 7,687

Current portion of long-term debt 148 348

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

Total current liabilities 52,406 44,382

Long-term debt, net of current portion 1,057 1,094

Customer deposits 782 663

Long-term workers' compensation claims

liabilities 8,114 8,532

Long-term workers' compensation liabilities

for insured claims 2,816 2,866

Deferred gain on sale and leaseback 884 914

Stockholders' equity 87,860 85,850

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

$ 153,919 $ 144,301

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

Outlook for Second Quarter 2006

The Company also disclosed today limited financial guidance with

respect to its operating results for the second quarter ending June

30, 2006. The Company expects gross revenues for the second quarter of

2006 to range from $250 million to $255 million, an increase of

approximately 37.5% over the second quarter of 2005, and anticipates

diluted earnings per share for the second quarter of 2006 to range

from $.33 to $.35 per share. Management expectations for diluted

earnings per share for the second quarter of 2006 equate to increases

over the second quarter of 2005 of approximately 36.9% in net income

and approximately 9.7% in diluted earnings per share. The percentage

increase in expected net income for the 2006 second quarter exceeds

the percentage increase in expected diluted earnings per share due to

the dilutive effect of the July 2005 follow-on equity offering. A

reconciliation of estimated gross revenues to estimated GAAP net

revenues for the second quarter of 2006 is not included because PEO

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

estimable.

On April 27, 2006 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 2006 operating results. To participate

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

8171396. 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 27, 2006 at 12:00 p.m. and

ending May 3, 2006. To listen to the recording, dial 800-642-1687 and

enter conference identification code 8171396.

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 2006, 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 our

primary markets, collectibility of accounts receivable, and the use of

net proceeds of approximately $33 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 2005 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, 360-828-0700

SOURCE: Barrett Business Services, Inc.