BBSI Reports Strong Fourth Quarter and Full Year 2024 Financial Results

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BBSI's Q4 and full-year 2024 results reveal a company executing efficiently across multiple fronts. The 10% year-over-year revenue growth to $304.8 million in Q4, coupled with a 15% increase in net income to $16.8 million, demonstrates BBSI's ability to scale profitably in the competitive PEO market.

The company's operational metrics tell a compelling story about its growth drivers. The 5% increase in average worksite employees (WSEs) indicates strong client acquisition and retention, while the larger 10% increase in gross billings suggests BBSI is successfully extracting more revenue per employee—a key efficiency metric in the PEO industry. Management's reference to "record WSE additions from new clients" and "continued high client retention" confirms the company is winning on both acquisition and retention fronts.

BBSI's workers' compensation expense ratio improved significantly to 2.3% of gross billings (down from 2.6%), despite smaller favorable prior-year adjustments ($2.4 million vs. $5.4 million in Q4 2023). This suggests underlying structural improvements in risk management rather than just accounting adjustments, which bodes well for sustainable margin expansion.

The company's capital allocation strategy reflects management's confidence in future cash flows. With $121.9 million in unrestricted cash and zero debt, BBSI maintains financial flexibility while still returning substantial capital to shareholders through both share repurchases ($7 million in Q4 alone) and dividends.

Management's 2025 guidance of 7-9% gross billings growth suggests continued momentum, with the projected 4-6% WSE growth indicating expectations for both new client wins and existing client expansion. The strong January performance mentioned by CEO Gary Kramer provides near-term validation of this outlook.

The specific mention of the "BBSI Benefits healthcare offering" as a growth driver is particularly noteworthy, as value-added services beyond core PEO functions typically command higher margins and increase client stickiness, potentially supporting both retention rates and revenue per WSE going forward.

BBSI's Q4 and full-year 2024 results reveal a company executing a sophisticated multi-pronged strategy in the competitive PEO market. The company's ability to achieve 10% growth in gross billings while WSEs only increased by 5% demonstrates exceptional revenue optimization per client relationship—a critical differentiator in an industry where commoditization is a constant threat.

This revenue efficiency stems from BBSI's strategic evolution beyond basic HR outsourcing into higher-value services. The highlighted success of their BBSI Benefits healthcare offering represents a strategic masterstroke in the PEO playbook. Healthcare benefits create significant switching costs for clients while addressing a critical pain point for small and mid-sized businesses struggling with healthcare complexity and costs. Each client that adopts this offering becomes substantially more embedded in BBSI's ecosystem.

The company's risk management capabilities deserve special attention. The reduction in workers' compensation expense to 2.3% of gross billings (from 2.6%) is particularly impressive given that favorable prior year adjustments were actually $3 million lower than in Q4 2023. This suggests BBSI has developed sophisticated underwriting and risk mitigation practices that create structural margin advantages over competitors with less refined risk models.

BBSI's capital allocation strategy balances prudent cash reserves with shareholder returns in a way that signals management confidence. The $7 million in share repurchases at an average price of $43.23 (versus the current $40.35) demonstrates management's belief in the company's intrinsic value, while the maintained dividend provides income stability for investors.

Looking ahead, the company's 2025 guidance suggests confidence in both market conditions and BBSI's competitive position. The projected 7-9% gross billings growth exceeding 4-6% WSE growth indicates continued expansion of revenue per client—a key metric that typically correlates with improved retention rates and higher lifetime client value.

CEO Gary Kramer's specific mention of "strong January" performance provides a real-time indicator that the momentum isn't just a Q4 phenomenon but is carrying into 2025, suggesting the company's growth drivers have sustainable legs rather than being cyclical or one-time benefits.

02/26/2025 - 04:05 PM

- Fourth Quarter Revenues up 10% to $304.8 Million With Net Income up 15% to $16.8 Million, or $0.63 per Diluted Share -

VANCOUVER, Wash., Feb. 26, 2025 (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, 2024.

All share and per share amounts presented herein have been retroactively adjusted to reflect the impact of the four-for-one stock split that was distributed in the form of a stock dividend in June 2024 (the “Stock Split”).

Fourth Quarter 2024 Financial Summary vs. Year-ago Quarter

Revenues up 10% to $304.8 million.
Gross billings up 10% to $2.25 billion.
Average worksite employees (“WSEs”) up 5%.
Net income up 15% to $16.8 million, or $0.63 per diluted share, compared to net income of $14.6 million, or $0.54 per diluted share.

Full Year 2024 Financial Summary vs. 2023

Revenues up 7% to $1.14 billion.
Gross billings up 8% to $8.33 billion.
Average WSEs up 4%.
Net income up 5% to $53.0 million, or $1.98 per diluted share, compared to net income of $50.6 million, or $1.85 per diluted share.

"We finished 2024 on a strong note, achieving 10% growth in both revenue and gross billings during the fourth quarter, which helped drive a 15% increase in earnings," said BBSI President and CEO Gary Kramer. "These solid results were supported by record WSE additions from new clients, continued high client retention, and a strong year-end selling season for our BBSI Benefits healthcare offering. This strong quarter caps off an exceptional year for BBSI, and that momentum continued into a strong January, which positions us well for continued growth and success in 2025."

Fourth Quarter 2024 Financial Results

Revenues in the fourth quarter of 2024 increased 10% to $304.8 million compared to $276.7 million in the fourth quarter of 2023.

Total gross billings in the fourth quarter increased 10% to $2.25 billion compared to $2.05 billion in the same year-ago quarter (see “Key Performance Metrics” below). The increase was driven by growth in professional employer (“PEO”) services, specifically resulting from increased WSEs from net new clients and client hiring, as well as higher average billings per WSE.

Workers’ compensation expense as a percent of gross billings was 2.3% in the fourth quarter of 2024 and benefited from lower workers’ compensation costs as well as favorable prior year liability and premium adjustments of $2.4 million. This compares to 2.6% in the fourth quarter of 2023, which included favorable prior year liability and premium adjustments of $5.4 million.

Net income for the fourth quarter of 2024 increased 15% to $16.8 million, or $0.63 per diluted share, compared to net income of $14.6 million, or $0.54 per diluted share, in the year-ago quarter.

Full Year 2024 Financial Results

Revenues in 2024 increased 7% to $1.14 billion compared to $1.07 billion in 2023.

Total gross billings in 2024 increased 8% to $8.33 billion compared to $7.72 billion in 2023 (see “Key Performance Metrics” below). The increase was driven by growth in PEO services, specifically resulting from increased WSEs from net new clients and client hiring, as well as higher average billings per WSE.

Workers’ compensation expense as a percent of gross billings was 2.4% in 2024 and benefited from lower workers’ compensation costs as well as favorable prior year liability and premium adjustments of $18.5 million. This compares to 2.7% in 2023, which included favorable prior year liability and premium adjustments of $14.9 million.

Net income in 2024 increased 5% to $53.0 million, or $1.98 per diluted share, compared to net income of $50.6 million, or $1.85 per diluted share, in 2023.

Liquidity

As of December 31, 2024, unrestricted cash and investments were $121.9 million compared to $94.4 million at September 30, 2024. BBSI remained debt free at year end.

Capital Allocation

Continuing under the Company’s stock repurchase program established in July 2023, BBSI repurchased $7 million of stock in the fourth quarter comprising 162,100 shares at an average price of $43.23. At December 31, 2024, approximately $29.8 million remained available under the $75 million repurchase program.

The Company paid $2.1 million of dividends in the quarter, and BBSI’s board of directors confirmed its next regular quarterly cash dividend at $0.08 per share. The cash dividend will be paid on March 28, 2025, to all stockholders of record as of March 14, 2025.

Through a combination of stock repurchases and dividends, year-to-date capital returned to shareholders totaled more than $37 million.

Outlook

In 2025, BBSI expects the following:

Gross billings growth of 7% to 9%.
Growth in the average number of WSEs of 4% to 6%.
Gross margin as a percent of gross billings of 2.85% to 3.10%.
Effective annual tax rate to remain at 26% to 27%.

Conference Call

BBSI will conduct a conference call on Wednesday, February 26, 2025, at 5:00 p.m. Eastern time (2:00 p.m. Pacific time) to discuss its financial results for the fourth quarter and full year ended December 31, 2024.

BBSI’s CEO Gary Kramer and CFO Anthony Harris will host the conference call, followed by a question and answer period.

Date: Wednesday, February 26, 2025
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: 13751117

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 26, 2025.

Toll-free replay number: 1-844-512-2921
International replay number: 1-412-317-6671
Replay ID: 13751117

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, 2024 and 2023.


	(Unaudited)				(Unaudited)
	Three Months Ended December 31,				Year Ended December 31,
(in thousands)	2024		2023		2024		2023
Gross billings	$	2,251,997	$	2,051,922	$	8,327,091	$	7,716,152
PEO and staffing wages	$	1,964,001	$	1,791,792	$	7,245,093	$	6,711,115

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,
	2024	2023	2024	2023
PEO and staffing wages	87.2%	87.3%	87.0%	87.0%
Payroll taxes and benefits	7.3%	6.9%	7.6%	7.2%
Workers' compensation	2.3%	2.6%	2.4%	2.7%
Gross margin	3.2%	3.2%	3.0%	3.1%

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,
	2024		Year-over-year % Growth	2023		Year-over-year % Growth	2022
Average WSEs		133,124	5.2%		126,492	2.2%		123,761
Ending WSEs		132,069	4.4%		126,446	3.4%		122,306

	(Unaudited)
	Year Ended December 31,
	2024		Year-over-year % Growth	2023		Year-over-year % Growth	2022
Average WSEs		129,577	4.2%		124,306	1.9%		122,001
Ending WSEs		132,069	4.4%		126,446	3.4%		122,306

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. The company works with more than 8,100 PEO clients in all 50 states. 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 and the potential effects of changing governmental policies and natural disasters; 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; PEO client benefits costs, particularly with regard to health insurance benefits; 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 outcome of tax audits; the effect of changing interest rates and 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 2023 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)	2024		2023
ASSETS
Current assets:
Cash and cash equivalents	$	55,367	$	71,168
Investments		66,492		81,027
Trade accounts receivable, net		234,533		171,407
Income taxes receivable		2,662		7,987
Prepaid expenses and other		18,698		18,443
Restricted cash and investments		97,690		97,470
Total current assets		475,442		447,502
Property, equipment and software, net		56,781		50,295
Operating lease right-of-use assets		20,329		19,898
Restricted cash and investments		134,454		145,583
Goodwill		47,820		47,820
Other assets		6,205		6,222
Deferred income taxes		4,477		4,218
Total assets	$	745,508	$	721,538
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	6,787	$	6,593
Accrued payroll and related benefits		215,648		160,930
Payroll taxes payable		49,685		73,150
Current operating lease liabilities		6,231		6,623
Current premium payable		31,134		35,276
Other accrued liabilities		10,330		10,674
Workers' compensation claims liabilities		39,081		50,006
Total current liabilities		358,896		343,252
Long-term workers' compensation claims liabilities		89,365		117,757
Long-term premium payable		49,840		37,812
Long-term operating lease liabilities		15,215		14,590
Customer deposits and other long-term liabilities		10,788		8,987
Stockholders' equity		221,404		199,140
Total liabilities and stockholders' equity	$	745,508	$	721,538


Barrett Business Services, Inc. Consolidated Statements of Operations (Unaudited)

	Three Months Ended						Year Ended
	December 31,						December 31,
(in thousands, except per share amounts)	2024			2023			2024			2023
Revenues:
Professional employer services	$	284,517		$	254,282		$	1,063,386		$	982,268
Staffing services		20,303			22,400			81,145			87,039
Total revenues		304,820			276,682			1,144,531			1,069,307
Cost of revenues:
Direct payroll costs		15,392			16,743			61,010			65,042
Payroll taxes and benefits		163,720			141,363			628,534			555,758
Workers' compensation		54,333			52,963			201,736			205,975
Total cost of revenues		233,445			211,069			891,280			826,775
Gross margin		71,375			65,613			253,251			242,532
Selling, general and administrative expenses		48,818			45,578			185,869			174,772
Depreciation and amortization		1,938			1,837			7,601			7,110
Income from operations		20,619			18,198			59,781			60,650
Other income (expense):
Investment income, net		2,522			1,787			11,130			8,643
Interest expense		(45	)		(48	)		(178	)		(166	)
Other, net		(35	)		(232	)		89			(139	)
Other income, net		2,442			1,507			11,041			8,338
Income before income taxes		23,061			19,705			70,822			68,988
Provision for income taxes		6,261			5,147			17,829			18,376
Net income	$	16,800		$	14,558		$	52,993		$	50,612
Basic income per common share⁽¹⁾	$	0.65		$	0.55		$	2.03		$	1.88
Weighted average number of basic common shares outstanding⁽¹⁾		25,907			26,422			26,076			26,921
Diluted income per common share⁽¹⁾	$	0.63		$	0.54		$	1.98		$	1.85
Weighted average number of diluted common shares outstanding⁽¹⁾		26,626			26,956			26,708			27,394

⁽¹⁾ Prior period results have been adjusted to reflect the Stock Split.

Investor Relations
Gateway Group, Inc.
Cody Slach
Tel 1-949-574-3860
BBSI@gateway-grp.com

FAQ

What were BBSI's Q4 2024 earnings per share?

BBSI reported Q4 2024 earnings of $0.63 per diluted share, up from $0.54 in Q4 2023.

How much did BBSI's gross billings grow in 2024?

BBSI's gross billings increased 8% to $8.33 billion in 2024 compared to $7.72 billion in 2023.

What is BBSI's stock buyback program status as of Q4 2024?

BBSI repurchased $7M of stock in Q4 2024, with $29.8M remaining available under the $75M repurchase program.

What is BBSI's growth forecast for 2025?

BBSI expects gross billings growth of 7-9% and worksite employee growth of 4-6% in 2025.

How much cash does BBSI have on hand at the end of 2024?

BBSI reported $121.9M in unrestricted cash and investments as of December 31, 2024.

BBSI Reports Strong Fourth Quarter and Full Year 2024 Financial Results

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FAQ

What were BBSI's Q4 2024 earnings per share?

How much did BBSI's gross billings grow in 2024?

What is BBSI's stock buyback program status as of Q4 2024?

What is BBSI's growth forecast for 2025?

How much cash does BBSI have on hand at the end of 2024?

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BBSI Reports Strong Fourth Quarter and Full Year 2024 Financial Results

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What were BBSI's Q4 2024 earnings per share?

How much did BBSI's gross billings grow in 2024?

What is BBSI's stock buyback program status as of Q4 2024?

What is BBSI's growth forecast for 2025?

How much cash does BBSI have on hand at the end of 2024?

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