[PART I – FINANCIAL INFORMATION (Unaudited)](index=3&type=section&id=Part%20I%20%E2%80%93%20Financial%20Information%20(Unaudited)) This section presents BBSI's unaudited interim condensed consolidated financial statements and notes for the periods ended June 30, 2023 [Item 1. Unaudited Interim Condensed Consolidated Financial Statements](index=3&type=section&id=Item%201.%20Unaudited%20Interim%20Condensed%20Consolidated%20Financial%20Statements) This section presents BBSI's unaudited interim condensed consolidated financial statements and notes for periods ending June 30, 2023 [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) The condensed consolidated balance sheets show a slight decrease in total assets and liabilities from December 31, 2022, to June 30, 2023, with stable stockholders' equity Condensed Consolidated Balance Sheets (in thousands) | Metric (in thousands) | June 30, 2023 | December 31, 2022 | | :-------------------- | :------------ | :---------------- | | Total assets | $671,904 | $686,938 | | Total liabilities | $493,935 | $509,096 | | Total stockholders' equity | $177,969 | $177,842 | [Condensed Consolidated Statements of Operations](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Total revenues slightly increased for Q2 and six months ended June 30, 2023, driven by PEO services, while staffing declined, leading to a minor net income decrease Condensed Consolidated Statements of Operations (in thousands) **Three Months Ended June 30:** | Metric (in thousands) | 2023 | 2022 | Change ($) | Change (%) | | :-------------------- | :-------- | :-------- | :--------- | :--------- | | Total revenues | $264,630 | $262,179 | $2,451 | 0.9% | | PEO services revenue | $244,256 | $232,174 | $12,082 | 5.2% | | Staffing services revenue | $20,374 | $30,005 | $(9,631) | -32.1% | | Gross margin | $67,046 | $66,885 | $161 | 0.2% | | Net income | $17,016 | $18,014 | $(998) | -5.5% | | Basic EPS | $2.52 | $2.52 | $0.00 | 0.0% | | Diluted EPS | $2.47 | $2.48 | $(0.01) | -0.4% | **Six Months Ended June 30:** | Metric (in thousands) | 2023 | 2022 | Change ($) | Change (%) | | :-------------------- | :-------- | :-------- | :--------- | :--------- | | Total revenues | $519,297 | $508,554 | $10,743 | 2.1% | | PEO services revenue | $476,563 | $449,607 | $26,956 | 6.0% | | Staffing services revenue | $42,734 | $58,947 | $(16,213) | -27.5% | | Gross margin | $108,590 | $107,238 | $1,352 | 1.3% | | Net income | $17,835 | $18,302 | $(467) | -2.6% | | Basic EPS | $2.62 | $2.51 | $0.11 | 4.4% | | Diluted EPS | $2.57 | $2.48 | $0.09 | 3.6% | [Condensed Consolidated Statements of Comprehensive Income (Loss)](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) Comprehensive income for the three and six months ended June 30, 2023, significantly improved compared to the prior year, primarily due to a reduction in unrealized losses on investments Condensed Consolidated Statements of Comprehensive Income (Loss) (in thousands) **Three Months Ended June 30:** | Metric (in thousands) | 2023 | 2022 | | :-------------------- | :-------- | :-------- | | Net income | $17,016 | $18,014 | | Unrealized losses on investments, net of tax | $(2,028) | $(8,624) | | Comprehensive income | $14,988 | $9,390 | **Six Months Ended June 30:** | Metric (in thousands) | 2023 | 2022 | | :-------------------- | :-------- | :-------- | | Net income | $17,835 | $18,302 | | Unrealized gains (losses) on investments, net of tax | $1,624 | $(22,982) | | Comprehensive income (loss) | $19,459 | $(4,680) | [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders'%20Equity) Stockholders' equity at June 30, 2023, increased slightly from December 31, 2022, influenced by net income and share-based compensation, offset by repurchases and dividends Changes in Stockholders' Equity (Six Months Ended June 30, 2023, in thousands) | Item | Impact on Equity (in thousands) | | :---------------------------------------- | :--------------- | | Balance, December 31, 2022 | $177,842 | | Common stock issued | $2 | | Common stock repurchased | $(10,145) | | Share-based compensation expense | $1,963 | | Cash dividends on common stock | $(2,013) | | Unrealized loss on investments, net of tax | $(2,028) | | Net income | $17,016 | | Balance, June 30, 2023 | $177,969 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) For the six months ended June 30, 2023, the company experienced a net decrease in cash, cash equivalents, and restricted cash, primarily due to operating and financing activities Cash Flows (Six Months Ended June 30, in thousands) | Activity | 2023 (in thousands) | 2022 (in thousands) | | :------------------------ | :---------- | :---------- | | Net cash used in operating activities | $(23,197) | $(37,416) | | Net cash (used in) provided by investing activities | $(6,363) | $39,383 | | Net cash used in financing activities | $(23,223) | $(36,458) | | Net decrease in cash, cash equivalents and restricted cash | $(52,783) | $(34,491) | | Cash, cash equivalents and restricted cash, end of period | $54,595 | $44,138 | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies, financial instrument valuations, workers' compensation liabilities, debt, income tax, and legal matters, providing crucial context [Note 1 - Basis of Presentation of Interim Period Statements](index=9&type=section&id=Note%201%20-%20Basis%20of%20Presentation%20of%20Interim%20Period%20Statements) This note outlines the basis for preparing interim financial statements, detailing key accounting policies for revenue, costs, cash, investments, workers' compensation, and EPS - PEO revenues are reported net of direct payroll costs, as the Company is not the primary obligor for wage payments to client employees. Staffing revenues are recognized as services are rendered[34](index=34&type=chunk) - Workers' compensation claims liabilities are management's best estimate, utilizing actuarial expertise and projection techniques, and are reviewed at least quarterly[42](index=42&type=chunk) Cash, Cash Equivalents and Restricted Cash (in thousands) | Category | June 30, 2023 (in thousands) | December 31, 2022 (in thousands) | | :------- | :------------ | :---------------- | | Cash and cash equivalents | $48,347 | $91,423 | | Restricted cash | $6,248 | $15,955 | | Total | $54,595 | $107,378 | Weighted Average Common Shares Outstanding (in thousands) | Period | Basic (2023, in thousands) | Basic (2022, in thousands) | Diluted (2023, in thousands) | Diluted (2022, in thousands) | | :----- | :----------- | :----------- | :------------- | :------------- | | Three Months Ended June 30 | 6,751 | 7,162 | 6,875 | 7,257 | | Six Months Ended June 30 | 6,809 | 7,284 | 6,931 | 7,365 | [Note 2 - Fair Value Measurement](index=13&type=section&id=Note%202%20-%20Fair%20Value%20Measurement) The company's available-for-sale investments are measured at fair value, with unrealized gains/losses in OCI, primarily consisting of corporate bonds, U.S. treasuries, and mortgage-backed securities Total Investments at Fair Value (in thousands) | Category | June 30, 2023 (in thousands) | December 31, 2022 (in thousands) | | :------- | :------------ | :---------------- | | Current Investments | $84,658 | $68,325 | | Restricted Cash and Investments | $185,966 | $199,326 | | Total Investments | $282,288 | $307,947 | Contractual Maturities of Available-for-Sale Securities (June 30, 2023, in thousands) | Maturity Period | Corporate Bonds (in thousands) | U.S. Treasuries (in thousands) | U.S. Gov. Agency Securities (in thousands) | Asset Backed Securities (in thousands) | Money Market Funds (in thousands) | Emerging Markets (in thousands) | Total (in thousands) | | :-------------- | :-------------- | :-------------- | :-------------------------- | :---------------------- | :----------------- | :--------------- | :---- | | Less than 1 Year | $3,049 | $3,775 | $1,539 | - | $11,692 | $1,981 | $22,036 | | Between 1 to 5 Years | $63,667 | $27,007 | $24,269 | $792 | - | - | $115,735 | | Between 5 to 10 Years | $38,847 | $29,665 | $3,535 | $11,921 | - | - | $83,968 | | After 10 Years | $175 | - | - | $1,269 | - | - | $1,444 | | Total | $105,738 | $60,447 | $29,343 | $13,982 | $11,692 | $1,981 | $223,183 | [Note 3 – Workers' Compensation Claims](index=15&type=section&id=Note%203%20%E2%80%93%20Workers'%20Compensation%20Claims) Workers' compensation claims liabilities decreased, with most exposure covered by an insured program, and the company retaining risk for claims incurred prior to July 1, 2021, and for self-insured programs Workers' Compensation Claims Liabilities (in thousands) | Metric | June 30, 2023 (in thousands) | December 31, 2022 (in thousands) | | :----- | :------------ | :---------------- | | Ending balance | $191,822 | $216,000 | | IBNR | $90,053 | $124,320 | | Ratio of IBNR to liabilities | 47% | 51% | - Approximately **84%** of the Company's workers' compensation exposure is covered through an insured program, with third-party insurers assuming all risk for claims incurred from July 1, 2021, onwards[64](index=64&type=chunk) - The Company retains risk for claims incurred under the insured program prior to July 1, 2021, up to **$3.0 million** or **$5.0 million** per occurrence, and for all claims under its self-insured programs up to **$1.0 million** to **$3.0 million** per occurrence depending on the state[64](index=64&type=chunk)[68](index=68&type=chunk) - The trust account balance for collateral under the insured program was **$163.4 million** at June 30, 2023, down from **$188.2 million** at December 31, 2022[66](index=66&type=chunk) [Note 4 - Revolving Credit Facility and Long-Term Debt](index=18&type=section&id=Note%204%20-%20Revolving%20Credit%20Facility%20and%20Long-Term%20Debt) The company's $50.0 million revolving credit facility was amended on July 31, 2023, extending its term to July 1, 2026, and modifying sublimits and covenants - Revolving credit line of **$50.0 million**, extended to July 1, 2026, with a sublimit for standby letters of credit increased from **$8.0 million** to **$25.0 million**[71](index=71&type=chunk) - Financial covenants were modified, including a decrease in the minimum tangible net worth requirement from **$100 million** to **$50 million**[71](index=71&type=chunk) - The Company had no outstanding borrowings on its revolving credit line at June 30, 2023, and was in compliance with all covenants[71](index=71&type=chunk) [Note 5 – Income Taxes](index=19&type=section&id=Note%205%20%E2%80%93%20Income%20Taxes) The company evaluates deferred tax assets quarterly and was in a cumulative income position; the IRS is examining federal tax returns for 2017-2021, proposing disallowance of certain wage-based tax credits - The Company was in a cumulative income position for the 12 quarters ended June 30, 2023, supporting the realizability of deferred tax assets[74](index=74&type=chunk) - IRS examination for 2017-2021 proposes disallowing wage-based tax credits, potentially resulting in **$7.4 million** in additional taxes and **$1.7 million** in penalties for 2017-2020, plus **$0.6 million** for 2021. The Company disputes this[74](index=74&type=chunk) - Total gross unrecognized tax benefits of **$0.6 million** (excluding interest and penalties) as of June 30, 2023, are not expected to materially change in the next 12 months[74](index=74&type=chunk) [Note 6 – Litigation](index=19&type=section&id=Note%206%20%E2%80%93%20Litigation) The company faces ongoing class action wage and hour lawsuits in California, with one case settled and another reversed on appeal regarding joint-employer status, which BBSI will defend - The 'Kaanaana v. Barrett Business Services, Inc.' class action lawsuit regarding prevailing wage and meal break violations has been settled and is final[75](index=75&type=chunk)[77](index=77&type=chunk) - In the 'Merry Maids franchisee' class action, the Ninth Circuit Court of Appeals reversed summary judgment for BBSI, finding a triable issue of fact on joint-employer status. BBSI intends to vigorously defend this claim[77](index=77&type=chunk) - Management has recorded estimated liabilities totaling **$2.0 million** in other accrued liabilities for ongoing legal proceedings and claims[77](index=77&type=chunk) [Note 7 – Subsequent Events](index=20&type=section&id=Note%207%20%E2%80%93%20Subsequent%20Events) The only significant subsequent event is the July 31, 2023, amendment of the revolving credit facility with Wells Fargo Bank, N.A., extending its term and modifying covenants - On July 31, 2023, the Company amended its credit agreement with Wells Fargo Bank, N.A., extending the revolving credit line to July 1, 2026, and increasing the sublimit for standby letters of credit to **$25.0 million**[78](index=78&type=chunk)[117](index=117&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial performance, condition, business model, and operational results for the periods ended June 30, 2023 and 2022 [General](index=21&type=section&id=General) BBSI provides business management solutions for small and mid-sized companies, integrating management consulting with human resource outsourcing, including workers' compensation and employee benefits - BBSI provides business management solutions for small and mid-sized companies, leveraging a management platform that integrates management consulting and human resource outsourcing[81](index=81&type=chunk) - The company operates a decentralized delivery model with local business teams in **68 markets**, offering strategic leadership and expert consultation[81](index=81&type=chunk) - BBSI offers workers' compensation coverage and began offering employee benefits (medical, dental, vision, etc.) to PEO clients in 2023[85](index=85&type=chunk) [Results of Operations](index=22&type=section&id=Results%20of%20Operations) For Q2 and the first six months of 2023, net income slightly decreased despite modest revenue growth from PEO services, offsetting a significant decline in staffing services Revenue Mix and Growth **Three Months Ended June 30:** | Metric | 2023 (%) | 2022 (%) | Change (2023 vs 2022) | | :----- | :------- | :------- | :-------------------- | | PEO services revenue | 92.3% | 88.6% | +5.2% | | Staffing services revenue | 7.7% | 11.4% | -32.1% | | Total revenues | 100.0% | 100.0% | +0.9% | **Six Months Ended June 30:** | Metric | 2023 (%) | 2022 (%) | Change (2023 vs 2022) | | :----- | :------- | :------- | :-------------------- | | PEO services revenue | 91.8% | 88.4% | +6.0% | | Staffing services revenue | 8.2% | 11.6% | -27.5% | | Total revenues | 100.0% | 100.0% | +2.1% | Key Financial Ratios as Percentage of Gross Billings **Three Months Ended June 30:** | Metric | 2023 | 2022 | | :----- | :---- | :---- | | PEO and staffing wages | 86.9% | 86.9% | | Payroll taxes and benefits | 7.0% | 6.9% | | Workers' compensation | 2.6% | 2.5% | | Gross margin | 3.5% | 3.7% | **Six Months Ended June 30:** | Metric | 2023 | 2022 | | :----- | :---- | :---- | | PEO and staffing wages | 86.9% | 86.9% | | Payroll taxes and benefits | 7.5% | 7.4% | | Workers' compensation | 2.7% | 2.7% | | Gross margin | 2.9% | 3.0% | Worksite Employees (WSEs) Growth **Three Months Ended June 30:** | Metric | 2023 | % Change | 2022 | % Change | | :----- | :-------- | :------- | :-------- | :------- | | Average WSEs | 124,186 | 1.6% | 122,234 | 8.8% | | Ending WSEs | 127,336 | 2.8% | 123,853 | 8.4% | **Six Months Ended June 30:** | Metric | 2023 | % Change | 2022 | % Change | | :----- | :-------- | :------- | :-------- | :------- | | Average WSEs | 121,749 | 2.1% | 119,216 | 9.1% | | Ending WSEs | 127,336 | 2.8% | 123,853 | 8.4% | [Fluctuations in Quarterly Operating Results](index=25&type=section&id=Fluctuations%20in%20Quarterly%20Operating%20Results) The company anticipates significant quarterly fluctuations in operating results due to seasonality, payroll tax wage limits, workers' compensation claims, service demand, and competition - Quarterly operating results are expected to fluctuate due to seasonality, wage limits on statutory payroll taxes, workers' compensation claims experience, demand for services, and competition[98](index=98&type=chunk) - Payroll taxes generally decline throughout the calendar year as statutory wage bases are exceeded. Revenue may be higher in Q3 due to agriculture, food processing, and forest products industries, and lower in Q4 due to holiday schedules[98](index=98&type=chunk) [Liquidity and Capital Resources](index=26&type=section&id=Liquidity%20and%20Capital%20Resources) The company's cash balance decreased by **$52.8 million** for the six months ended June 30, 2023, primarily due to increased receivables, decreased workers' compensation liabilities, and stock repurchases Cash Balance and Changes (in thousands) | Metric | June 30, 2023 (in thousands) | December 31, 2022 (in thousands) | | :----- | :------------ | :---------------- | | Cash, cash equivalents, and restricted cash | $54,595 | $107,378 | | Net decrease (six months) | $(52,783) | $(34,491) | - Net cash used in operating activities was **$23.2 million** for the six months ended June 30, 2023, primarily due to increased trade accounts receivable (**$34.2 million**) and decreased workers' compensation claims liabilities (**$24.9 million**)[100](index=100&type=chunk) - Net cash used in financing activities was **$23.2 million**, mainly from **$18.2 million** in common stock repurchases and **$4.1 million** in dividend payments[100](index=100&type=chunk) [Forward-Looking Information](index=27&type=section&id=Forward-Looking%20Information) This section highlights forward-looking statements covering economic conditions, service competitiveness, client retention, gross margin, labor market, workers' compensation reserves, tax assets, and litigation - Forward-looking statements include discussions on economic conditions, competitiveness, client retention, revenue growth, gross margin, labor market, workers' compensation reserves, deferred tax assets, insurance subsidiaries, and litigation costs[102](index=102&type=chunk) - Key risk factors include the ability to retain and attract clients, effects of governmental orders, integration difficulties, economic trends, workers' compensation claims experience, regulatory changes, security breaches, collectability of receivables, tax rate changes, inflation, healthcare reforms, capital market conditions, and availability of financing[102](index=102&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=28&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risk exposure is to interest rate changes, affecting its investment portfolio, with a hypothetical 50 basis point increase resulting in a **$5.5 million** downward effect on fair value - The Company's market risk primarily relates to interest rate changes affecting its investment portfolio[104](index=104&type=chunk) - A **50 basis point** increase in market interest rates would result in a **$5.5 million** downward effect on the fair value of the investment portfolio at June 30, 2023[104](index=104&type=chunk) - The investment portfolio at June 30, 2023, included **$105.7 million** in corporate bonds, **$60.4 million** in U.S. treasuries, and **$51.1 million** in mortgage-backed securities[104](index=104&type=chunk) [Item 4. Controls and Procedures](index=28&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2023, with no material changes in internal control over financial reporting during the quarter - The CEO and CFO concluded that the Company's disclosure controls and procedures were effective as of June 30, 2023[105](index=105&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2023[106](index=106&type=chunk) - Management acknowledges that control systems provide only reasonable, not absolute, assurance due to inherent limitations like resource constraints, human error, collusion, or management override[107](index=107&type=chunk) [PART II – OTHER INFORMATION](index=29&type=section&id=Part%20II%20%E2%80%93%20Other%20Information) This section provides additional information including legal proceedings, updated risk factors, details on equity security sales and use of proceeds, other disclosures, and a list of exhibits [Item 1. Legal Proceedings](index=29&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 6 of the condensed consolidated financial statements for detailed information on the company's legal proceedings - Information regarding legal proceedings is detailed in Note 6 to the condensed consolidated financial statements[109](index=109&type=chunk) [Item 1A. Risk Factors](index=29&type=section&id=Item%201A.%20Risk%20Factors) This section updates risk factors, highlighting new risks related to the company's 'employer' status, healthcare reform compliance, and data security regulations from offering health benefits - New risk factors include potential liabilities if the company is determined not to be an 'employer' under certain laws, which could deter clients and affect its ability to offer health benefits[111](index=111&type=chunk) - Risks associated with healthcare reforms, specifically the Patient Protection and Affordable Care Act, include potential penalties for non-compliance with employer mandates and increased costs or limitations on offering health benefits[112](index=112&type=chunk) - Failure to comply with data security regulations (e.g., HIPAA, HITECH Act) related to protected health information (PHI) from offering health benefits could adversely affect the business and reputation[113](index=113&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=30&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company repurchased **123,361** shares of common stock during Q2 2023, and a new **$75.0 million** stock repurchase program was authorized on July 31, 2023, replacing the previous program Stock Repurchases (Quarter Ended June 30, 2023) | Month | Total Shares Repurchased | Average Price Paid Per Share | | :---- | :----------------------- | :--------------------------- | | April | 5,000 | $82.77 | | May | 90,461 | $81.41 | | June | 27,900 | $84.80 | | Total | 123,361 | | - As of June 30, 2023, the company had repurchased **819,851 shares** for **$65.3 million** under the February 2022 program[116](index=116&type=chunk) - On July 31, 2023, a new **$75.0 million** stock repurchase program was authorized for a two-year period, replacing the prior program[116](index=116&type=chunk) [Item 5. Other Information](index=30&type=section&id=Item%205.%20Other%20Information) This item reiterates the amendment to the revolving credit agreement with Wells Fargo Bank, N.A., on July 31, 2023, which extended the credit line and modified certain terms and covenants - The revolving credit agreement with Wells Fargo Bank, N.A., was amended on July 31, 2023, extending the **$50.0 million** credit line to July 1, 2026, and increasing the standby letter of credit sublimit to **$25.0 million**[117](index=117&type=chunk) [Item 6. Exhibits](index=31&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed with the Form 10-Q, including certifications from the CEO and CFO, the first amendment to the credit agreement, and XBRL-related documents - Exhibits include CEO and CFO certifications (31.1, 31.2), certification pursuant to 18 U.S.C. Section 1350 (32*), and the First Amendment to the Third Amended and Restated Credit Agreement (4.1)[119](index=119&type=chunk) [Signatures](index=31&type=section&id=Signatures) The report is duly signed on behalf of Barrett Business Services, Inc. by Anthony J. Harris, Executive Vice President and Chief Financial Officer, and Treasurer, on August 2, 2023 - The report was signed by Anthony J. Harris, Executive Vice President and Chief Financial Officer, and Treasurer, on August 2, 2023[121](index=121&type=chunk)

INVESTOR PRESENTATION NASDAQ: BBSI Forward Looking Statement Statements in this presentation 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 ...

Barrett Business Services, Inc. (NASDAQ:BBSI) Q1 2023 Earnings Conference Call May 3, 2023 5:00 PM ET Company Participants Gary Kramer - President, CEO & Director Anthony Harris - EVP, CFO, Principal Accounting Officer & Treasurer Conference Call Participants Jeffrey Martin - ROTH MKM Vincent Colicchio - Barrington Research Associates Christopher Moore - CJS Securities William Dezellem - Tieton Capital Management Operator Good afternoon, everyone, and thank you for participating in today's conference call t ...

Revenue and Income Performance - Total revenues for Q1 2023 increased to $254.667 million, up 3.4% from $246.375 million in Q1 2022[17] - Net income for Q1 2023 was $819 thousand, compared to $288 thousand in Q1 2022[17] - Professional employer services revenue grew to $232.307 million in Q1 2023, up 6.8% from $217.433 million in Q1 2022[17] - Staffing services revenue declined to $22.360 million in Q1 2023, down 22.7% from $28.942 million in Q1 2022[17] - Gross margin improved to $41.544 million in Q1 2023, up 3.0% from $40.353 million in Q1 2022[17] - Comprehensive income for Q1 2023 was $4.471 million, compared to a comprehensive loss of $14.070 million in Q1 2022[20] - Net income for 2023 increased to $819 million from $288 million in 2022[31] - Total revenues for the three months ended March 31, 2023, were $254.7 million, with professional employer services accounting for 91.2% of total revenues[87] - Gross billings for the three months ended March 31, 2023, were $1.79 billion, with PEO and staffing wages totaling $1.55 billion[90] - BBSI's gross margin for the three months ended March 31, 2023, was 16.3%, slightly down from 16.4% in the same period in 2022[87] - The company's net income for the three months ended March 31, 2023, was $0.2 million, representing 0.2% of total revenues[87] - Gross margin for Q1 2023 was 16.3% of revenue, totaling $41.5 million, compared to 16.4% of revenue in Q1 2022[94] - Revenue for Q1 2023 increased by 3.4% to $254.7 million, driven by a 6.8% increase in PEO service revenue, while staffing services revenue decreased by 22.8%[94] - Net income for Q1 2023 was $0.8 million, up from $0.3 million in Q1 2022, with diluted net income per share rising to $0.12 from $0.04[94] Cash and Investments - Cash and cash equivalents decreased to $52.635 million as of March 31, 2023, down from $91.423 million as of December 31, 2022[15] - Net cash used in operating activities decreased to $26.515 million in 2023 from $30.209 million in 2022[31] - Cash, cash equivalents, and restricted cash at the end of the period were $68.059 million in 2023 compared to $54.837 million in 2022[31] - Restricted cash included in restricted cash and investments was $15.424 million in 2023, down from $15.955 million in 2022[49] - Total cash equivalents decreased from $40.3 million in December 2022 to $26.8 million in March 2023[56] - Total current investments increased from $68.3 million in December 2022 to $80.1 million in March 2023[56] - Total restricted cash and investments decreased from $199.3 million in December 2022 to $194.5 million in March 2023[56] - Total investments decreased from $307.9 million in December 2022 to $301.4 million in March 2023[56] - Corporate bonds recorded basis decreased from $33.3 million in December 2022 to $33.8 million in March 2023[59] - U.S. treasuries recorded basis decreased from $57.3 million in December 2022 to $50.5 million in March 2023[59] - Mortgage backed securities recorded basis decreased from $40.1 million in December 2022 to $39.5 million in March 2023[59] - U.S. government agency securities recorded basis increased from $24.3 million in December 2022 to $24.8 million in March 2023[59] - Corporate bonds total $105,802 thousand, with $2,536 thousand maturing in less than 1 year, $53,788 thousand between 1 to 5 years, $49,300 thousand between 5 to 10 years, and $178 thousand after 10 years[62] - Total investments as of March 31, 2023, amount to $241,463 thousand, including $39,011 thousand in less than 1 year, $94,851 thousand between 1 to 5 years, $106,129 thousand between 5 to 10 years, and $1,472 thousand after 10 years[62] - The company's investment portfolio at March 31, 2023, included $105.8 million in corporate bonds and $61.6 million in U.S. treasuries[102] - The company's cash balance decreased by $39.3 million to $68.1 million in Q1 2023, primarily due to increased trade accounts receivable and repurchases of common stock[98] - Net cash used in operating activities for Q1 2023 was $26.5 million, compared to $30.2 million in Q1 2022[98] Workers' Compensation and Liabilities - Workers' compensation claims liabilities decreased to $14.412 million in 2023 from $16.894 million in 2022[31] - Safety incentives liability decreased to $1.8 million in 2023 from $2.0 million in 2022[44] - Workers' compensation claims liabilities decreased from $215,987 thousand to $201,641 thousand in Q1 2023, with incurred but not reported (IBNR) at $103,804 thousand, representing 51% of total liabilities[64] - The insured program covers approximately 83% of the company's workers' compensation exposure, with third-party insurers assuming all risk of loss for claims incurred from July 1, 2021, to June 30, 2022[65] - The 2022-2023 Policy allows the company to participate in savings up to $22.5 million for the twelve-month policy period, with no additional premium charged if claims develop adversely[66] - Loss portfolio transfer agreements (LPT 1 and LPT 2) reduced the company's outstanding workers' compensation liabilities by $115.7 million and $53.1 million, respectively[66] - The trust account balance for the insured program was $178.8 million at March 31, 2023, down from $188.2 million at December 31, 2022[68] - Self-insured programs cover approximately 17% of the company's workers' compensation exposure, with retention limits ranging from $1.0 million to $5.0 million per occurrence depending on the state[70] - Workers' compensation expense for Q1 2023 was $51.7 million, or 20.3% of revenue, compared to $48.2 million, or 19.6% of revenue in Q1 2022[94] Share Repurchases and Stock - The company repurchased $8.030 million worth of common stock during Q1 2023[24] - The company repurchased $8.030 million worth of common stock in 2023, slightly down from $8.575 million in 2022[31] - The company repurchased 90,553 shares in March 2023 at an average price of $88.67 per share, reducing the remaining repurchase authorization to $19,803,564[114] - The company's stock repurchase plan had an approximate remaining dollar value of $27,832,833 as of January 2023[114] Tax and Legal Matters - The IRS intends to disallow certain wage-based tax credits claimed for the years 2017 through 2020, potentially resulting in additional taxes of $5.5 million and penalties of $1.7 million[75] - The company has total gross unrecognized tax benefits of $0.6 million as of March 31, 2023, which could affect the effective tax rate if recognized in future periods[75] - The company recorded estimated liabilities totaling $2.7 million in other accrued liabilities related to ongoing litigation[77] Employee Benefits and Compliance - In 2023, BBSI began offering employee benefits to clients, including medical, dental, vision plans, and other voluntary coverages[85] - The company began offering employee health and welfare benefits to PEO clients in 2023, which may be subject to future changes in healthcare legislation or increased costs[110] - Compliance with HIPAA and HITECH Act is required for handling protected health information (PHI) of client employees, with non-compliance potentially leading to penalties and fines[111] - The company faces risks related to healthcare reforms, including potential penalties if it fails to offer required health coverage to eligible employees under the Affordable Care Act[110] Workforce and Payroll - Average WSEs grew by 2.7% to 119,313 in Q1 2023, compared to 116,197 in Q1 2022[92] - Ending WSEs increased by 2.9% to 121,363 in Q1 2023, compared to 117,924 in Q1 2022[92] - Payroll taxes and benefits for Q1 2023 totaled $144.6 million, or 56.8% of revenue, compared to $135.9 million, or 55.1% of revenue in Q1 2022[94] Credit Facility and Financial Covenants - The company maintains a revolving credit facility of $50.0 million with Wells Fargo Bank, N.A., with no outstanding borrowings as of March 31, 2023[72] - The company was in compliance with all financial covenants under the revolving credit facility agreement as of March 31, 2023[74] - The company was in a cumulative income position for the 12 quarters ended March 31, 2023, indicating a strong financial performance over the past three years[75] Allowance for Doubtful Accounts - The allowance for doubtful accounts was $885,000 at March 31, 2023, compared to $893,000 at December 31, 2022[42] Income Taxes - Income taxes paid during the three months ended March 31, 2023, totaled $0.01 million, down from $0.04 million in 2022[48] Shares Outstanding - Weighted average number of basic shares outstanding decreased from 7,406 in 2022 to 6,866 in Q1 2023[52] - Weighted average number of diluted shares outstanding decreased from 7,474 in 2022 to 6,985 in Q1 2023[52] Market and Operations - BBSI operates in 68 markets throughout the United States, supporting over 7,770 companies daily with its decentralized delivery model[81]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 Commission File Number 0-21886 BARRETT BUSINESS SERVICES, INC. (Exact name of registrant as specified in its charter) Maryland 52-0812977 (State or other jurisdiction of (IRS Employer incorporation or organization) Identification No.) 8100 NE Parkway Drive, Suite 200 Vancouver, Washington 98662 (Ad ...

Barrett Business Services, Inc. (NASDAQ:BBSI) Q4 2022 Earnings Conference Call March 1, 2023 5:00 PM ET Company Participants Gary Kramer - President, CEO & Director Anthony Harris - EVP, CFO, Principal Accounting Officer & Treasurer Conference Call Participants Jeffrey Martin - ROTH MKM Partners Vincent Colicchio - Barrington Research Associates Marc Riddick - Sidoti & Company Operator Good afternoon, everyone, and thank you for participating in today's conference call to discuss BBSI's financial results fo ...

Barrett Business Services, Inc. (NASDAQ:BBSI) Q3 2022 Earnings Conference Call November 2, 2022 5:00 PM ET Company Participants Gary Kramer - President & CEO Anthony Harris - CFO Conference Call Participants Christopher Moore - CJS Jeff Martin - Roth Capital Partners Vincent Colicchio - Barrington Research Operator Good afternoon, everyone, and thank you for participating in today's conference call to discuss BBSI's Financial Results for the Third Quarter Ended September 30, 2022. Joining us today are BBSI' ...

Financial Data and Key Metrics Changes - The company reported a 14% increase in gross billings year-over-year, reaching $1.8 billion for the PEO business, while staffing revenues increased by 21% to $30 million [16][8] - Average worksite employees (WSEs) increased by 9% compared to the prior year, with average billing per WSE rising by 5% [16][8] - The company raised its full-year outlook, now expecting gross billings to increase between 11% and 13%, up from 10% to 12% previously [23] Business Line Data and Key Metrics Changes - The PEO business saw a 14% growth in gross billings, driven by stronger-than-expected growth from net new clients and higher average billing per WSE [16][8] - Staffing operations experienced a 21% increase year-over-year, with improvements in fill ratios despite challenges in the tight labor market [8][16] - The company added approximately 3,200 worksite employees year-over-year from net new clients, indicating strong client retention and growth [7][8] Market Data and Key Metrics Changes - PEO gross billings growth by region showed significant increases: Mountain States grew 34%, East Coast grew 22%, and Southern California grew 11% [17] - The company operates in 13 states and 68 markets, maintaining consistent operations across these regions [9] Company Strategy and Development Direction - The company is focusing on a three-pronged strategy to enhance client relationships and expand its referral partner network [5][6] - A new health benefits offering is being launched, which is expected to diversify the client profile and expand the total addressable market [12][10] - The company is actively looking for acquisition opportunities but remains cautious about deals that do not make sense [48] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's growth trajectory, citing strong performance in worksite employee growth and client retention [14][15] - Despite challenges such as tight labor markets and inflation, the company does not see signs of an economic slowdown affecting its operations [13][14] - The management is optimistic about the future, particularly with the new benefits offering expected to accelerate growth [15][24] Other Important Information - The company renewed its workers' compensation facility with better pricing and terms, reflecting improved underwriting and loss experience [10][19] - The company repurchased 270,000 shares at an average price of $73.88 per share, continuing its $75 million share repurchase program [22] Q&A Session Summary Question: Can you explain the mechanics of the health care benefits offering? - The company plans to start selling the health care benefits outside of California, with a seamless enrollment process leading to a master plan effective January 1, 2023 [27][28] Question: Is the health care offering exclusive to one insurance company? - The company has partnered with one health insurance company for the primary offering and another for ancillary benefits [30] Question: What is the pipeline for new sales prospects and referral partners? - The company is seeing increased lead activity and stronger business coming in compared to pre-pandemic levels [39] Question: What are the growth expectations for worksite employees in the second half of the year? - The company has tempered expectations for the second half, anticipating a more moderate pace of hiring due to the tight labor market [41] Question: What should Q3 revenue look like compared to Q2? - Q3 billings are expected to show strong year-over-year growth similar to Q2, with consistent trends observed [44] Question: Will the company be opportunistic in acquisitions if the market changes? - The company is actively looking for acquisition opportunities but will only pursue deals that make sense [48]