BBSI Reports Strong Fourth Quarter and Full Year 2024 Financial Results

- 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, 2025Time: 5:00 p.m. Eastern time (2:00 p.m. Pacific time)Toll-free dial-in number: 1-877-407-4018International dial-in number: 1-201-689-8471Conference 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: 1-844-512-2921International replay number: 1-412-317-6671Replay 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 2023Gross 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 2023PEO 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 2022Average 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 2022Average 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 RelationsGateway Group, Inc.Cody Slach Tel 1-949-574-3860 BBSI@gateway-grp.com

BBSI Reports Strong Fourth Quarter and Full Year 2024 Financial Results

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