– Q4 2023 Net Income of $14.6 Million, or $2.16 per Diluted Share –
– Full Year 2023 Net Income of $50.6 Million, or $7.39 per Diluted Share –
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 2% to $276.7 million compared to $272.0 million in the fourth quarter of 2022.
Total gross billings in the fourth quarter increased 5% to $2.05 billion compared to $1.95 billion in the same year-ago quarter (see “Key Performance Metrics” below). The increase was driven by growth in PEO services, specifically increased WSEs from net new clients and higher average billings per WSE, offset in part by reductions in WSEs at existing clients.
Workers’ compensation expense as a percent of gross billings was 2.6% in the fourth quarter of 2023 and benefited from favorable prior year liability and premium adjustments of $5.4 million. This compares to 3.0% in the fourth quarter of 2022, which included favorable prior year liability and premium adjustments of $0.6 million.
Net income for the fourth quarter of 2023 increased to $14.6 million, or $2.16 per diluted share, compared to $11.5 million, or $1.64 per diluted share, in the year-ago quarter.
Full Year 2023 Financial Results
Revenues in 2023 increased 1% to $1.07 billion compared to $1.05 billion in 2022.
Total gross billings in 2023 increased 4% to $7.72 billion compared to $7.39 billion in 2022 (see “Key Performance Metrics” below). The increase was primarily due to an increase in average WSEs and higher average billings per WSE, offset in part by reductions in WSEs at existing clients.
Workers’ compensation expense as a percent of gross billings was 2.7% in 2023 and benefited from favorable prior year liability and premium adjustments of $14.9 million. This compares to 2.9% in 2022, which included favorable prior year liability and premium adjustments of $13.4 million.
Net income in 2023 increased to $50.6 million, or $7.39 per diluted share, compared to $47.3 million, or $6.54 per diluted share, in 2022.
Liquidity
As of December 31, 2023, unrestricted cash and investments were $152.2 million compared to $129.2 million at September 30, 2023. BBSI remained debt free at year end.
Capital Allocation
BBSI’s board of directors has confirmed its regular quarterly cash dividend of $0.30 per share. The cash dividend will be paid on March 28, 2024, to all stockholders of record as of March 15, 2024.
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 $111.38. At December 31, 2023, approximately $59.0 million remained available under the repurchase program.
In total in 2023, BBSI repurchased more than $34 million of stock at an average price of $91.15 per share. The Company also paid over $8 million in dividends for the year, bringing total capital returned to shareholders in 2023 to more than $42 million.
Outlook
In 2024, BBSI expects the following:
Gross billings growth of 6% to 8%
Growth in the average number of WSEs of 4% to 5%
Gross margin as a percent of gross billings of 2.95% to 3.15%
Effective annual tax rate to remain at 26% to 27%
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
87.3%
87.1%
87.0%
86.9%
Payroll taxes and benefits
6.9%
6.8%
7.2%
7.0%
Workers’ compensation
2.6%
3.0%
2.7%
2.9%
Gross margin
3.2%
3.1%
3.1%
3.2%
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
2.2%
123,761
6.0%
116,791
Ending WSEs
126,446
3.4%
122,306
5.3%
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