News

BBSI Announces First Quarter 2007 Operating Results, Financial Guidance for 2Q07 and Conference Call

4/25/2007 Print Version

VANCOUVER, Wash.--(BUSINESS WIRE)--April 25, 2007--Barrett

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

$1.7 million for the first quarter ended March 31, 2007, an

improvement of $371,000 or 27.3% over net income of $1.4 million for

the first quarter of 2006. Diluted earnings per share for the 2007

first quarter were $.15, as compared to diluted earnings per share of

$.12 for the same quarter a year ago.

Net revenues for the first quarter ended March 31, 2007 totaled

$60.6 million, an increase of approximately $2.3 million or 4.0% over

the $58.3 million for the same quarter in 2006.

(Unaudited)

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

March 31,

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

Results of Operations 2007 2006

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

Revenues:

Staffing services $28,015 $26,661

Professional employer service fees 32,573 31,624

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

Total revenues 60,588 58,285

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

Cost of revenues:

Direct payroll costs 21,142 19,851

Payroll taxes and benefits 23,911 22,837

Workers' compensation 5,844 6,554

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

Total cost of revenues 50,897 49,242

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

Gross margin 9,691 9,043

Selling, general and administrative expenses 7,388 7,220

Depreciation and amortization 349 301

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

Income from operations 1,954 1,522

Other income, net 785 632

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

Income before taxes 2,739 2,154

Provision for income taxes 1,011 797

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

Net income $ 1,728 $ 1,357

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

Basic earnings per share $ .15 $ .12

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

Weighted average basic shares outstanding 11,255 11,076

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

Diluted earnings per share $ .15 $ .12

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

Weighted average diluted shares outstanding 11,681 11,661

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

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)

First Quarter

(in thousands) March 31,

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

2007 2006

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

Revenues:

Staffing services $ 28,015 $ 26,661

Professional employer services 229,513 208,674

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

Total revenues 257,528 235,335

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

Cost of revenues:

Direct payroll costs 216,628 195,965

Payroll taxes and benefits 23,911 22,837

Workers' compensation 7,298 7,490

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

Total cost of revenues 247,837 226,292

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

Gross margin $ 9,691 $ 9,043

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

Gross revenues of $257.5 million for the first quarter ended

March 31, 2007 rose 9.4% over the similar period in 2006.

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

follows:

For the first quarters ended March 31, 2007 and 2006 (in

thousands):

(Unaudited)

Three Months Ended March 31,

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

Gross Net

Revenue Revenue

(in Reporting Reclassification Reporting

thousands) Method Method

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

2007 2006 2007 2006 2007 2006

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

Revenues:

Staffing

services $ 28,015 $ 26,661 $ - $ - $28,015 $26,661

Professional

employer

services 229,513 208,674 (196,940) (177,050) 32,573 31,624

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

Total

revenues $257,528 $235,335 $(196,940) $(177,050) $60,588 $58,285

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

Cost of

revenues: $247,837 $226,292 $(196,940) $(177,050) $50,897 $49,242

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

William W. Sherertz, President and Chief Executive Officer,

commented: "We are pleased with our record-level results for the first

quarter both in terms of earnings and revenues."

The following summarizes the unaudited consolidated balance sheets

at March 31, 2007 and December 31, 2006.

March 31, December 31,

(in thousands) 2007 2006

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

Assets

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

Current assets:

Cash and cash equivalents $ 69,707 $ 69,874

Marketable securities 3,845 3,159

Trade accounts receivable, net 35,420 31,328

Prepaid expenses and other 2,551 1,940

Deferred income taxes 4,719 4,699

Workers' compensation receivables for insured

claims 225 225

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

Total current assets 116,467 111,225

Marketable securities 409 406

Goodwill, net 28,036 27,536

Intangibles, net 69 75

Property, equipment and software, net 13,383 13,502

Restricted marketable securities and workers'

compensation deposits 2,703 2,616

Other assets 1,718 2,143

Workers' compensation receivables for insured

claims 4,629 4,678

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

$167,414 $162,181

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

Liabilities and Stockholders' Equity

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

Current liabilities:

Accounts payable $ 1,842 $ 1,545

Accrued payroll, payroll taxes and related

benefits 38,133 33,372

Income taxes payable 216 -

Other accrued liabilities 752 516

Workers' compensation claims liabilities 3,441 3,843

Workers' compensation claims liabilities for

insured claims 225 225

Safety incentives liabilities 7,447 7,519

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

Total current liabilities 52,056 47,020

Customer deposits 685 817

Long-term workers' compensation claims

liabilities 4,751 5,295

Long-term workers' compensation liabilities for

insured claims 2,962 3,011

Deferred income taxes 1,545 1,545

Deferred gain on sale and leaseback 762 793

Stockholders' equity 104,653 103,700

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

$167,414 $162,181

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

Outlook for Second Quarter 2007

The Company also disclosed today limited financial guidance with

respect to its operating results for the second quarter ending June

30, 2007. The Company expects gross revenues for the second quarter of

2007 to range from $268 million to $273 million, an increase of

approximately 5.1% over the second quarter of 2006, and anticipates

diluted earnings per share for the second quarter of 2007 to range

from $.40 to $.43 per share, an increase of approximately 15.3% over

the $.36 per share for the same period a year ago. A reconciliation of

estimated gross revenues to estimated GAAP net revenues for the second

quarter of 2007 is not included because PEO revenues and cost of PEO

revenues for the period are not reasonably estimable.

Conference Call

On April 26, 2007 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 2007 operating results. To participate

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

5714299. 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 Thursday, April 26, 2007 at 12:00

p.m. PT and ending on May 4, 2007. To listen to the recording, dial

(800) 642-1687 and enter conference identification code 5714299.

Statements in this release about future events or performance,

including earnings expectations for the second quarter of 2007, 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, collectibility of accounts receivable, and the use of

$74 million in cash and marketable securities, among others. Other

important factors that may affect the Company's future prospects are

described in the Company's 2006 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.

President and Chief Executive Officer

William W. Sherertz, 360-828-0700

SOURCE: Barrett Business Services, Inc.