BBSI Reports Strong Fourth Quarter and Full Year 2023 Financial Results
- Revenues and gross billings increased in Q4 2023 compared to the prior year quarter.
- Net income for Q4 2023 was $14.6 million, or $2.16 per diluted share, showing growth from the year-ago quarter.
- Full-year 2023 net income was $50.6 million, or $7.39 per diluted share, higher than in 2022.
- BBSI experienced growth in average WSEs and higher average billings per WSE in 2023.
- The company remained debt-free with unrestricted cash and investments of $152.2 million as of December 31, 2023.
- BBSI repurchased shares and paid dividends, returning over $42 million to shareholders in 2023.
- The outlook for 2024 includes projections for gross billings growth, WSEs expansion, and gross margin.
- BBSI conducted a conference call on February 28, 2024, to discuss its financial results for the year ended December 31, 2023.
- None.
Insights
The reported net income increase for Barrett Business Services, Inc. (BBSI) in Q4 and the full year of 2023 indicates a robust financial performance, with a notable rise in diluted earnings per share (EPS). This performance metric is crucial as it directly impacts investor perception and the company's valuation. The EPS growth from $1.64 to $2.16 in Q4 and from $6.54 to $7.39 for the full year, reflects a strong profitability trend, which may positively influence the stock price.
In assessing the company's financial health, the increase in unrestricted cash and investments from $129.2 million to $152.2 million, coupled with the company's debt-free status, presents a solid liquidity position. This financial stability is often reassuring for investors and can contribute to a favorable investment climate. Additionally, the consistent dividend payments and active stock repurchase program reflect a shareholder-friendly capital allocation strategy, which can be attractive to both current and potential investors.
The reported growth in average worksite employees (WSEs) and gross billings indicates an expanding operational scale for BBSI. The increase in WSEs suggests successful client acquisition and retention strategies. This growth metric is essential for evaluating the company's market position and competitive edge, potentially leading to increased market share.
However, it's important to note the partial offset by reductions in WSEs at existing clients, which could signal underlying challenges in client satisfaction or market dynamics. The anticipated gross billings growth of 6% to 8% and WSE growth of 4% to 5% for 2024 are positive signs, yet they require ongoing monitoring to ensure they translate into sustainable revenue growth and margin improvements.
The subtle increase in revenues, despite higher gross billings, suggests a discrepancy between top-line growth and the conversion of gross billings into net revenue. This could be attributed to the company's pricing strategies, cost structure, or competitive pressures. The reported gross margin as a percent of gross billings for 2024 ranging between 2.95% and 3.15% will be an important indicator to watch, as it reflects the company's operational efficiency and pricing power in the market.
The workers' compensation expense as a percent of gross billings shows a favorable trend, decreasing from 3.0% to 2.6% in Q4 and from 2.9% to 2.7% for the full year, benefiting from favorable prior year adjustments. This reduction in costs contributes to the overall profitability but should be analyzed in the context of industry benchmarks and potential volatility in insurance costs.
- Q4 2023 Net Income of
- Full Year 2023 Net Income of
VANCOUVER, Wash. , Feb. 28, 2024 (GLOBE NEWSWIRE) -- Barrett Business Services, Inc. (“BBSI” or the “Company”) (NASDAQ: BBSI), a leading provider of business management solutions, reported financial results for the fourth quarter and full year ended December 31, 2023.
Fourth Quarter 2023 Financial Summary vs. Prior Year Quarter
- Revenues up
2% to$276.7 million . - Gross billings up
5% to$2.05 billion . - Average worksite employees (“WSEs”) up
2% . - Increase in net income to
$14.6 million , or$2.16 per diluted share, compared to$11.5 million , or$1.64 per diluted share.
Full Year 2023 Financial Summary vs. 2022
- Revenues up
1% to$1.07 billion . - Gross billings up
4% to$7.72 billion . - Average WSEs up
2% . - Net income of
$50.6 million , or$7.39 per diluted share, compared to$47.3 million , or$6.54 per diluted share.
“2023 was another year of significant accomplishments and solid execution for BBSI,” said BBSI President and CEO, Gary Kramer. “During the year, we experienced consistent momentum in our sales pipeline, bringing in a record number of new WSEs from new customer additions, and we continued the trend of strong client retention. These results underscore our compelling product, now enhanced with a health benefits offering, and increased effectiveness in our sales and marketing efforts. We expect the momentum of strong controllable growth to continue into 2024 as our value proposition continues to improve.”
Fourth Quarter 2023 Financial Results
Revenues in the fourth quarter of 2023 increased
Total gross billings in the fourth quarter increased
Workers’ compensation expense as a percent of gross billings was
Net income for the fourth quarter of 2023 increased to
Full Year 2023 Financial Results
Revenues in 2023 increased
Total gross billings in 2023 increased
Workers’ compensation expense as a percent of gross billings was
Net income in 2023 increased to
Liquidity
As of December 31, 2023, unrestricted cash and investments were
Capital Allocation
BBSI’s board of directors has confirmed its regular quarterly cash dividend of
Continuing under the Company’s stock repurchase program established in July 2023, BBSI repurchased 45,800 shares in the fourth quarter at an average price of
In total in 2023, BBSI repurchased more than
Outlook
In 2024, BBSI expects the following:
- Gross billings growth of
6% to8% - Growth in the average number of WSEs of
4% to5% - Gross margin as a percent of gross billings of
2.95% to3.15% - Effective annual tax rate to remain at
26% to27%
Conference Call
BBSI will conduct a conference call on Wednesday, February 28, 2024, at 5:00 p.m. Eastern time (2:00 p.m. Pacific time) to discuss its financial results for the year ended December 31, 2023.
BBSI’s CEO Gary Kramer and CFO Anthony Harris will host the conference call, followed by a question and answer period.
Date: Wednesday, February 28, 2024
Time: 5:00 p.m. Eastern time (2:00 p.m. Pacific time)
Toll-free dial-in number: 1-877-407-4018
International dial-in number: 1-201-689-8471
Conference ID: 13744439
Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Investor Relations at 1-949-574-3860.
The conference call will be broadcast live and available for replay here and via the Investors section of the BBSI website at ir.bbsi.com.
A replay of the conference call will be available after 8:00 p.m. Eastern time on the same day through March 28, 2024.
Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 13744439
Key Performance Metrics
We report PEO revenues net of direct payroll costs because we are not the primary obligor for wage payments to our clients’ employees. However, management believes that gross billings and wages are useful in understanding the volume of our business activity and serve as important performance metrics in managing our operations, including the preparation of internal operating forecasts and establishing executive compensation performance goals. We therefore present for purposes of analysis gross billings and wage information for the three and twelve months ended December 31, 2023 and 2022.
| (Unaudited) | (Unaudited) | |||||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||
| (in thousands) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
| Gross billings | $ | 2,051,922 | $ | 1,948,591 | $ | 7,716,152 | $ | 7,393,808 | ||||||||
| PEO and staffing wages | $ | 1,791,792 | $ | 1,697,514 | $ | 6,711,115 | $ | 6,425,286 | ||||||||
In monitoring and evaluating the performance of our operations, management also reviews the following ratios, which represent selected amounts as a percentage of gross billings. Management believes these ratios are useful in understanding the efficiency and profitability of our service offerings.
| (Unaudited) | (Unaudited) | |||||||
| Percentage of Gross Billings | Percentage of Gross Billings | |||||||
| Three Months Ended December 31, | Year Ended December 31, | |||||||
| 2023 | 2022 | 2023 | 2022 | |||||
| PEO and staffing wages | ||||||||
| Payroll taxes and benefits | ||||||||
| Workers' compensation | ||||||||
| Gross margin | ||||||||
We refer to employees of our PEO clients as WSEs. Management reviews average and ending WSE growth to monitor and evaluate the performance of our operations. Average WSEs are calculated by dividing the number of unique individuals paid in each month by the number of months in the period. Ending WSEs represents the number of unique individuals paid in the last month of the period.
| (Unaudited) | ||||||||||||||||
| Three Months Ended December 31, | ||||||||||||||||
| 2023 | % Change | 2022 | % Change | 2021 | ||||||||||||
| Average WSEs | 126,492 | 123,761 | 116,791 | |||||||||||||
| Ending WSEs | 126,446 | 122,306 | 116,154 | |||||||||||||
| (Unaudited) | ||||||||||||||||
| Year Ended December 31, | ||||||||||||||||
| 2023 | % Change | 2022 | % Change | 2021 | ||||||||||||
| Average WSEs | 124,306 | 122,001 | 112,928 | |||||||||||||
| Ending WSEs | 126,446 | 122,306 | 116,154 | |||||||||||||
About BBSI
BBSI (NASDAQ: BBSI) is a leading provider of business management solutions, combining human resource outsourcing and professional management consulting to create a unique operational platform that differentiates it from competitors. The Company’s integrated platform is built upon expertise in payroll processing, employee benefits, workers’ compensation coverage, risk management and workplace safety programs, and human resource administration. BBSI’s partnerships help businesses of all sizes improve the efficiency of their operations. For more information, please visit www.bbsi.com.
Forward-Looking Statements
Statements in this release about future events and financial outlook are forward-looking statements. Such statements 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 lingering effects of the COVID-19 pandemic; the effects of inflation on our operating expenses and those of our clients; the availability of certain fully insured medical and other health and welfare benefits to qualifying worksite employees; the effect of changes in the Company’s mix of services on gross margin; the Company’s ability to attract and retain clients and to achieve revenue growth; the availability of financing or other sources of capital; the Company’s relationship with its primary bank lender; the potential for material deviations from expected future workers’ compensation claims experience; changes in the workers’ compensation regulatory environment in the Company’s primary markets; litigation costs; security breaches or failures in the Company’s information technology systems; the collectability of accounts receivable; changes in executive management; changes in effective payroll tax rates and federal and state income tax rates; the carrying value of deferred income tax assets and goodwill; the effects of conditions in the global capital markets on the Company’s investment portfolio; and the potential for and effect of acquisitions, among others. Other important factors that may affect the Company’s prospects are described in the Company’s 2022 Annual Report on Form 10-K and in subsequent reports filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934. Although forward-looking statements help to provide complete information about the Company, readers should keep in mind that forward-looking statements are 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.
| Barrett Business Services, Inc. Condensed Consolidated Balance Sheets (Unaudited) | ||||||||
| December 31, | December 31, | |||||||
| (in thousands) | 2023 | 2022 | ||||||
| ASSETS | ||||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 71,168 | $ | 91,423 | ||||
| Investments | 81,027 | 68,325 | ||||||
| Trade accounts receivable, net | 171,407 | 163,838 | ||||||
| Income taxes receivable | 7,987 | — | ||||||
| Prepaid expenses and other | 18,443 | 19,787 | ||||||
| Restricted cash and investments | 97,470 | 110,989 | ||||||
| Total current assets | 447,502 | 454,362 | ||||||
| Property, equipment and software, net | 50,295 | 45,954 | ||||||
| Operating lease right-of-use assets | 19,898 | 19,804 | ||||||
| Restricted cash and investments | 145,583 | 104,277 | ||||||
| Goodwill | 47,820 | 47,820 | ||||||
| Other assets | 6,222 | 3,281 | ||||||
| Deferred income taxes | 4,218 | 11,440 | ||||||
| Total assets | $ | 721,538 | $ | 686,938 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
| Current liabilities: | ||||||||
| Accounts payable | $ | 6,593 | $ | 8,264 | ||||
| Accrued payroll, payroll taxes and related benefits | 234,080 | 222,331 | ||||||
| Income taxes payable | — | 610 | ||||||
| Current operating lease liabilities | 6,623 | 6,957 | ||||||
| Current premium payable | 35,276 | 18,920 | ||||||
| Other accrued liabilities | 9,412 | 12,683 | ||||||
| Workers' compensation claims liabilities | 50,006 | 62,917 | ||||||
| Safety incentives liability | 1,262 | 2,049 | ||||||
| Total current liabilities | 343,252 | 334,731 | ||||||
| Long-term workers' compensation claims liabilities | 117,757 | 153,070 | ||||||
| Long-term premium payable | 37,812 | — | ||||||
| Long-term operating lease liabilities | 14,590 | 14,225 | ||||||
| Customer deposits and other long-term liabilities | 8,987 | 7,070 | ||||||
| Stockholders' equity | 199,140 | 177,842 | ||||||
| Total liabilities and stockholders' equity | $ | 721,538 | $ | 686,938 | ||||
| Barrett Business Services, Inc. Consolidated Statements of Operations (Unaudited) | |||||||||||||||
| Three Months Ended | Year Ended | ||||||||||||||
| December 31, | December 31, | ||||||||||||||
| (in thousands, except per share amounts) | 2023 | 2022 | 2023 | 2022 | |||||||||||
| Revenues: | |||||||||||||||
| Professional employer services | $ | 254,282 | $ | 243,189 | $ | 982,268 | $ | 937,363 | |||||||
| Staffing services | 22,400 | 28,761 | 87,039 | 116,963 | |||||||||||
| Total revenues | 276,682 | 271,950 | 1,069,307 | 1,054,326 | |||||||||||
| Cost of revenues: | |||||||||||||||
| Direct payroll costs | 16,743 | 21,453 | 65,042 | 87,944 | |||||||||||
| Payroll taxes and benefits | 141,363 | 131,715 | 555,758 | 522,392 | |||||||||||
| Workers' compensation | 52,963 | 58,076 | 205,975 | 209,145 | |||||||||||
| Total cost of revenues | 211,069 | 211,244 | 826,775 | 819,481 | |||||||||||
| Gross margin | 65,613 | 60,706 | 242,532 | 234,845 | |||||||||||
| Selling, general and administrative expenses | 45,578 | 44,204 | 174,772 | 169,642 | |||||||||||
| Depreciation and amortization | 1,837 | 1,643 | 7,110 | 6,228 | |||||||||||
| Income from operations | 18,198 | 14,859 | 60,650 | 58,975 | |||||||||||
| Other income (expense): | |||||||||||||||
| Investment income, net | 1,787 | 1,686 | 8,643 | 6,476 | |||||||||||
| Interest expense | (48 | ) | (39 | ) | (166 | ) | (141 | ) | |||||||
| Other, net | (232 | ) | (77 | ) | (139 | ) | (7 | ) | |||||||
| Other income, net | 1,507 | 1,570 | 8,338 | 6,328 | |||||||||||
| Income before income taxes | 19,705 | 16,429 | 68,988 | 65,303 | |||||||||||
| Provision for income taxes | 5,147 | 4,901 | 18,376 | 18,035 | |||||||||||
| Net income | $ | 14,558 | $ | 11,528 | $ | 50,612 | $ | 47,268 | |||||||
| Basic income per common share | $ | 2.20 | $ | 1.67 | $ | 7.52 | $ | 6.63 | |||||||
| Weighted average basic common shares outstanding | 6,605 | 6,918 | 6,731 | 7,130 | |||||||||||
| Diluted income per common share | $ | 2.16 | $ | 1.64 | $ | 7.39 | $ | 6.54 | |||||||
| Weighted average diluted common shares outstanding | 6,739 | 7,048 | 6,849 | 7,226 | |||||||||||
Investor Relations:
Gateway Group, Inc.
Cody Slach
Tel 1-949-574-3860
BBSI@gateway-grp.com
FAQ
What was Barrett Business Services, Inc.'s (BBSI) net income for Q4 2023?
What was BBSI's full-year 2023 net income?
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Did BBSI experience growth in average worksite employees (WSEs) in 2023?
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