Core Viewpoint - Growth investors seek stocks with above-average financial growth, but identifying such stocks can be challenging due to associated risks and volatility [1] Group 1: Company Overview - Barrett Business Services (BBSI) is currently recommended as a cutting-edge growth stock by the Zacks Growth Style Score system, which evaluates a company's real growth prospects beyond traditional metrics [2] - Barrett has a favorable Growth Score and a top Zacks Rank, indicating strong potential for growth investors [10] Group 2: Earnings Growth - The historical EPS growth rate for Barrett is 13.1%, with projected EPS growth of 8.1% this year, significantly outperforming the industry average of 5.5% [5] Group 3: Asset Utilization - Barrett's asset utilization ratio (sales-to-total-assets ratio) is 1.6, indicating that the company generates $1.6 in sales for every dollar in assets, surpassing the industry average of 1.32 [6] Group 4: Sales Growth - The company's sales are expected to grow by 9.5% this year, compared to the industry average of 1.3%, highlighting Barrett's strong sales growth potential [7] Group 5: Earnings Estimate Revisions - The current-year earnings estimates for Barrett have been revised upward, with the Zacks Consensus Estimate increasing by 1.7% over the past month, indicating positive momentum [8]

Core Insights - The staffing industry is evolving rapidly due to digital innovation, demographic changes, and the demand for flexible work arrangements, making effective staffing solutions critical for companies [3][4] - Staffing firms are increasingly viewed as growth enablers, helping organizations navigate economic uncertainties and scale for growth [4][5] Industry Overview - The staffing ecosystem has transformed, with organizations seeking strategic partners who understand talent needs and market trends [3] - Technology, including AI-enabled recruitment tools and talent analytics, is becoming standard in staffing strategies, allowing for faster and smarter hiring decisions [3] Investment Opportunities - The staffing sector presents compelling opportunities for investors, with firms like ADP, Korn Ferry, and Barrett Business Services positioned as key players in workforce transformation [5][6] - As hiring accelerates, staffing companies are at the forefront of providing scalable solutions that contribute to economic growth and long-term value creation [5] Company Highlights - **ADP**: A leader in human capital management solutions, ADP reported revenues of $5.1 billion for Q3 fiscal 2025, a 5.7% year-over-year increase, and is focused on expanding its cloud-based HCM and HR outsourcing solutions [8][9] - **Korn Ferry**: Specializes in executive search and workforce transformation, leveraging data-driven insights and AI tools to enhance hiring processes and leadership development [10][11][12] - **Barrett Business Services (BBSI)**: Provides HR outsourcing and management consulting, focusing on personalized client interactions and local market expertise, which supports its sustained growth [13]

Core Insights - Barrett Business Services (BBSI) reported revenue of $2.23 billion for the quarter ended June 2025, reflecting a year-over-year increase of 10.1% and surpassing the Zacks Consensus Estimate by 2.28% [1] - The earnings per share (EPS) for the same period was $0.70, compared to $0.62 a year ago, resulting in an EPS surprise of 7.69% over the consensus estimate of $0.65 [1] Financial Performance Metrics - Gross billings reached $2.23 billion, exceeding the average estimate of $2.18 billion from two analysts [4] - Revenue from professional employer services was $290.17 million, surpassing the average estimate of $280.04 million, with a year-over-year change of 11.7% [4] - Revenue from staffing services was $17.49 million, which fell short of the estimated $18.56 million, representing a year-over-year decline of 11.5% [4] Stock Performance - Barrett's shares have returned +4.1% over the past month, outperforming the Zacks S&P 500 composite's +0.5% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating potential performance in line with the broader market in the near term [3]

Financial Data and Key Metrics Changes - Gross billings increased by 10.1% year-over-year to $2.23 billion in Q2 2025, compared to $2.03 billion in Q2 2024 [15] - PEO gross billings rose by 10.3% to $2.22 billion, while staffing revenues declined by 12% to $17 million [15] - Net income per diluted share increased to $0.70 from $0.62 in the prior year quarter, reflecting strong revenue growth and operating leverage [20] Business Line Data and Key Metrics Changes - The staffing business experienced an 11.5% decline year-over-year, attributed to macroeconomic uncertainty and client reluctance to fill staffing orders [6][15] - PEO worksite employees (WSEs) grew by 8%, driven by a record number of new client additions [15] - Average billing per WSE increased by 1.7%, influenced by rising wages but offset by lower average hours worked [20] Market Data and Key Metrics Changes - Southern California, the largest region, saw a 12% growth, while the Pacific Northwest declined by 4% [16] - Asset light markets experienced a significant growth of 100% [16] - Client hiring remained modest and below historical levels, impacting overall workforce growth [6][15] Company Strategy and Development Direction - The company is focusing on expanding its product offerings, particularly in health insurance, to capture a broader market, including white-collar businesses [10][40] - Investments in technology and product enhancements are aimed at improving client service and expanding the total addressable market [10][41] - The company plans to open one or two additional branches by the end of the year, following successful entries into Chicago and Dallas [8][62] Management's Comments on Operating Environment and Future Outlook - Management noted macroeconomic uncertainty has caused clients to pause hiring, but they remain optimistic about future growth driven by new client acquisitions [6][13] - The company has increased its growth outlook for the remainder of the year, expecting gross billings to rise between 9% and 10% [22] - Management emphasized the importance of controllable growth and client retention as key drivers of future performance [45] Other Important Information - The company has a strong balance sheet with $90 million in unrestricted cash and no debt [20] - A new $100 million stock repurchase program was approved, reflecting the company's commitment to returning value to shareholders [22] - The workers' compensation program continues to perform well, with favorable adjustments recognized in the quarter [17][18] Q&A Session Summary Question: Status of workers' compensation rate increase - The California regulatory board recommended an over 11% rate increase, but the approved rate was around 9%, expected to push pricing up [27][28] Question: Impact of workers' compensation adjustments - The $8.8 million adjustment was consistent with prior year adjustments, indicating normal performance [32] Question: Profit potential from workers' compensation renewal - The renewal is expected to improve profit potential, especially if claims continue to perform better than expected [36][38] Question: Technology enhancements and market positioning - The company aims to aggressively target the white-collar market with new technology offerings, expanding its total addressable market [40][41] Question: Performance of healthcare policies - The healthcare market is expected to see higher renewal rates, with the company viewing this as an opportunity for growth [42][44] Question: Considerations for raising guidance - Strong year-to-date performance and consistent controllable growth led to the decision to raise guidance for the remainder of the year [45][46]

Financial Performance - For Q2 2025, net income was $18.5 million, up from $16.7 million in Q2 2024, with diluted net income per share increasing to $0.70 from $0.62[104] - Revenue for Q2 2025 reached $307.7 million, a 10.0% increase from $279.6 million in Q2 2024, driven by an 11.7% increase in PEO services revenue[105] - Net income for the first six months of 2025 was $17.4 million, an increase of 4.8% from $16.6 million in the same period of 2024[113] - Revenue for the first six months of 2025 totaled $600.2 million, reflecting a 10.0% increase from $545.4 million in the first six months of 2024[114] Employee Metrics - Average worksite employees (WSEs) grew by 8.0% year-over-year to 138,969 in Q2 2025, while ending WSEs increased by 8.2% to 140,671[103] Cost and Expenses - Gross margin for Q2 2025 was $73.3 million, representing 23.8% of revenue, compared to 24.2% in Q2 2024[106] - Direct payroll costs decreased to $13.2 million or 4.3% of revenue in Q2 2025, down from 5.3% in Q2 2024[107] - Payroll taxes and benefits increased to $173.3 million or 56.3% of revenue in Q2 2025, up from 53.2% in Q2 2024, due to expanded client benefit programs[108] - Workers' compensation expense was $48.0 million or 15.6% of revenue in Q2 2025, a decrease from 17.3% in Q2 2024[109] - SG&A expenses rose to $48.2 million or 15.7% of revenue in Q2 2025, compared to $45.6 million or 16.3% in Q2 2024[110] - Gross margin for the first six months of 2025 was $115.9 million, representing 19.3% of revenue, down from 19.7% in the same period of 2024[115] - Payroll taxes and benefits for the first six months of 2025 amounted to $360.3 million, or 60.0% of revenue, compared to 57.0% in the first six months of 2024[117] - Workers' compensation expense for the first six months of 2025 was $97.6 million, or 16.3% of revenue, a decrease from 17.9% in the same period of 2024[118] - SG&A expense for the first six months of 2025 totaled $93.0 million, or 15.5% of revenue, compared to 16.1% in the first six months of 2024[119] Cash Flow and Balance Sheet - The company's cash balance decreased by $45.4 million for the six months ended June 30, 2025, compared to a decrease of $4.8 million for the same period in 2024[123] - Net cash used in operating activities for the first six months of 2025 was $48.6 million, compared to $42.4 million in the same period of 2024[124] - The trust account balance decreased to $153.9 million at June 30, 2025, from $197.1 million at December 31, 2024[127] Business Operations - The company began offering additional employee benefit programs in 2023, including medical, dental, and vision plans[99] - The company operates a decentralized delivery model with teams located within 50 miles of client companies, enhancing local engagement and decision-making[92]

Part I [Executive Summary](index=1&type=section&id=Executive%20Summary) [Q2 2025 Performance Highlights](index=1&type=section&id=Q2%202025%20Performance%20Highlights) BBSI reported strong Q2 2025 financial results, with 10% increases in revenues and gross billings, alongside healthy net income and EPS growth Q2 2025 Key Financial Highlights | Metric | Q2 2025 | Q2 2024 | YoY Change | | :---------------- | :---------- | :---------- | :--------- | | Revenues | $307.7 million | $279.7 million | +10% | | Gross Billings | $2.23 billion | $2.03 billion | +10% | | Net Income | $18.5 million | $16.7 million | +10.8% | | Diluted EPS | $0.70 | $0.62 | +12.9% | | Average WSEs Growth | 8% | 3.7% | +4.3 pp | - BBSI sustained positive momentum with strong net new client growth and continued client retention, demonstrating the strength of its business model and value proposition[2](index=2&type=chunk) [Strategic Initiatives & Outlook](index=1&type=section&id=Strategic%20Initiatives%20%26%20Outlook) BBSI authorized a new $100 million stock repurchase program, continued dividends, and raised 2025 guidance for key growth metrics - A new **$100 million** stock repurchase program was authorized over a two-year period, replacing the program approved in July 2023[9](index=9&type=chunk) - The Company paid **$2.0 million** of dividends in the quarter and confirmed its next regular quarterly cash dividend at **$0.08 per share**[10](index=10&type=chunk) Updated 2025 Outlook | Metric | New Guidance | Previous Guidance | | :------------------------------------ | :---------------- | :---------------- | | Gross billings growth | 9% to 10% | 7% to 9% | | Average WSEs growth | 6% to 8% | 4% to 6% | | Gross margin as a percent of gross billings | 2.9% to 3.05% | 2.85% to 3.10% | | Effective annual tax rate | 26% to 27% | 26% to 27% | Detailed Financial Results [Revenues and Gross Billings](index=1&type=section&id=Revenues%20and%20Gross%20Billings) Total revenues and gross billings for Q2 2025 both increased by **10%**, driven primarily by growth in PEO services and increased WSEs Q2 2025 Revenues and Gross Billings | Metric | Q2 2025 | Q2 2024 | YoY Change | | :---------------- | :---------- | :---------- | :--------- | | Revenues | $307.7 million | $279.7 million | +10% | | Gross Billings | $2.23 billion | $2.03 billion | +10% | - The increase in gross billings was driven by growth in professional employer organization (PEO) services, primarily from increased worksite employees (WSEs) from net new clients, modest client hiring, and higher average billings per WSE per day[4](index=4&type=chunk) [Profitability and Expenses](index=1&type=section&id=Profitability%20and%20Expenses) Q2 2025 net income increased to **$18.5 million** with diluted EPS of **$0.70**, while workers' compensation expense improved to **2.1%** of gross billings Q2 2025 Net Income and EPS | Metric | Q2 2025 | Q2 2024 | YoY Change | | :---------------- | :---------- | :---------- | :--------- | | Net Income | $18.5 million | $16.7 million | +10.8% | | Diluted EPS | $0.70 | $0.62 | +12.9% | Workers' Compensation Expense | Metric | Q2 2025 | Q2 2024 | | :------------------------------------ | :-------- | :-------- | | Workers' compensation expense as % of gross billings | 2.1% | 2.5% | | Favorable prior year liability and premium adjustments | $8.8 million | $8.9 million | [Liquidity and Capital Allocation](index=2&type=section&id=Liquidity%20and%20Capital%20Allocation) BBSI maintained a debt-free position with **$90.4 million** in cash, returning capital to shareholders, and authorizing a new **$100 million** repurchase program Liquidity Snapshot | Metric | June 30, 2025 | March 31, 2025 | | :-------------------------- | :-------------- | :--------------- | | Unrestricted cash and investments | $90.4 million | $99.1 million | - BBSI remained debt-free at quarter end[8](index=8&type=chunk) - Repurchased **$8.0 million** of stock (197,200 shares at an average price of **$40.80**) in the second quarter[9](index=9&type=chunk) - Year-to-date capital returned to shareholders through stock repurchases and dividends totaled more than **$21 million**[10](index=10&type=chunk) Key Performance Indicators (KPIs) [Gross Billings and Wages Analysis](index=3&type=section&id=Gross%20Billings%20and%20Wages%20Analysis) Gross billings for Q2 2025 reached **$2.23 billion** and **$4.32 billion** for the six months, demonstrating consistent growth in business activity Gross Billings and PEO/Staffing Wages (Unaudited, in billions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Gross billings | $2.23 billion | $2.03 billion | $4.32 billion | $3.94 billion | | PEO and staffing wages | $1.94 billion | $1.76 billion | $3.75 billion | $3.42 billion | - Management considers gross billings and wages useful for understanding the volume of business activity and as important performance metrics for operations and executive compensation[15](index=15&type=chunk) [Operational Efficiency Ratios](index=3&type=section&id=Operational%20Efficiency%20Ratios) Operational efficiency ratios remained stable or improved, with workers' compensation decreasing to **2.1%** and gross margin consistent at **3.3%** for Q2 2025 Percentage of Gross Billings (Unaudited) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | PEO and staffing wages | 86.8% | 86.9% | 86.7% | 86.9% | | Payroll taxes and benefits | 7.8% | 7.3% | 8.3% | 7.9% | | Workers' compensation | 2.1% | 2.5% | 2.3% | 2.5% | | Gross margin | 3.3% | 3.3% | 2.7% | 2.7% | [Worksite Employee (WSE) Growth](index=3&type=section&id=Worksite%20Employee%20(WSE)%20Growth) BBSI reported robust WSE growth, with average WSEs increasing by **8.0%** to **138,969** and ending WSEs growing by **8.2%** for Q2 2025 Worksite Employee (WSE) Growth (Unaudited) | Metric | Three Months Ended June 30, 2025 | % Growth YoY | Three Months Ended June 30, 2024 | % Growth YoY | | :---------- | :------------------------------- | :------------- | :------------------------------- | :------------- | | Average WSEs | 138,969 | 8.0% | 128,734 | 3.7% | | Ending WSEs | 140,671 | 8.2% | 130,046 | 2.1% | Worksite Employee (WSE) Growth (Unaudited) | Metric | Six Months Ended June 30, 2025 | % Growth YoY | Six Months Ended June 30, 2024 | % Growth YoY | | :---------- | :------------------------------- | :------------- | :------------------------------- | :------------- | | Average WSEs | 135,714 | 7.8% | 125,892 | 3.4% | | Ending WSEs | 140,671 | 8.2% | 130,046 | 2.1% | Financial Statements [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to **$713.6 million** as of June 30, 2025, primarily due to lower cash and investments, while stockholders' equity slightly increased Condensed Consolidated Balance Sheet Highlights (Unaudited, in millions) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :------------------ | | Total assets | $713.6 million | $745.5 million | | Cash and cash equivalents | $26.3 million | $55.4 million | | Investments | $64.1 million | $66.5 million | | Trade accounts receivable, net | $264.2 million | $234.5 million | | Total current assets | $471.4 million | $475.4 million | | Total liabilities | $487.8 million | $523.3 million | | Stockholders' equity | $225.8 million | $221.4 million | [Consolidated Statements of Operations](index=6&type=section&id=Consolidated%20Statements%20of%20Operations) Total revenues for Q2 2025 increased to **$307.7 million**, driven by PEO services, with net income of **$18.5 million** and diluted EPS of **$0.70** Consolidated Statements of Operations Highlights (Unaudited, in millions, except per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenues | $307.7 million | $279.7 million | $600.2 million | $545.4 million | | Professional employer services revenue | $290.2 million | $259.9 million | $565.1 million | $506.1 million | | Staffing services revenue | $17.5 million | $19.8 million | $35.1 million | $39.4 million | | Gross margin | $73.3 million | $67.9 million | $115.9 million | $107.5 million | | Income from operations | $23.0 million | $20.4 million | $18.9 million | $15.7 million | | Net income | $18.5 million | $16.7 million | $17.4 million | $16.6 million | | Diluted income per common share | $0.70 | $0.62 | $0.66 | $0.62 | Company Overview & Forward-Looking Information [About BBSI](index=4&type=section&id=About%20BBSI) BBSI provides comprehensive business management solutions, including HR outsourcing and consulting, serving over **8,100 PEO clients** nationwide - BBSI provides business management solutions, combining human resource outsourcing and professional management consulting[20](index=20&type=chunk) - The Company's integrated platform is built upon expertise in payroll processing, employee benefits, workers' compensation coverage, risk management, and human resource administration[20](index=20&type=chunk) - BBSI works with more than **8,100 PEO clients** in all 50 states[20](index=20&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Forward-Looking%20Statements) This report contains forward-looking statements subject to known and unknown risks and uncertainties, which could cause actual results to differ materially from projections - Statements about future events and financial outlook are forward-looking and involve known and unknown risks, uncertainties, and other factors that may cause actual results to differ materially[21](index=21&type=chunk) - Factors that could affect future results include economic conditions, governmental policies, inflation, workers' compensation claims experience, PEO client benefits costs, litigation, security breaches, and tax rates[21](index=21&type=chunk) - The Company undertakes no obligation to update or revise forward-looking statements to reflect events or changes in circumstances that occur after the date of the release[21](index=21&type=chunk) Investor Information [Conference Call Details](index=2&type=section&id=Conference%20Call%20Details) BBSI will host a conference call on August 6, 2025, to discuss Q2 2025 financial results, with webcast and replay information available - A conference call to discuss Q2 2025 financial results will be held on Wednesday, August 6, 2025, at **5:00 p.m. Eastern time**[11](index=11&type=chunk)[12](index=12&type=chunk) - The conference call will be broadcast live and available for replay via the Investors section of the BBSI website at ir.bbsi.com[13](index=13&type=chunk) - A replay of the conference call will be available until **September 6, 2025**[15](index=15&type=chunk) [Investor Relations Contact](index=6&type=section&id=Investor%20Relations%20Contact) For investor relations inquiries, please contact Cody Slach at Gateway Group, Inc - Investor Relations contact: Cody Slach, Gateway Group, Inc., Tel **1-949-574-3860**, BBSI@gateway-grp.com[27](index=27&type=chunk)

Core Insights - Barrett Business Services, Inc. (BBSI) reported a 10% increase in revenues to $307.7 million and gross billings to $2.23 billion for the second quarter of 2025 compared to the same quarter in 2024 [3][4][10] - The company announced a new $100 million stock repurchase program, replacing the previous program established in July 2023 [8] Financial Performance - Revenues increased by 10% from $279.7 million in Q2 2024 to $307.7 million in Q2 2025 [3][10] - Gross billings rose by 10% from $2.03 billion in Q2 2024 to $2.23 billion in Q2 2025, driven by growth in professional employer services and increased worksite employees (WSEs) [4][10] - Net income for Q2 2025 was $18.5 million, or $0.70 per diluted share, compared to $16.7 million, or $0.62 per diluted share, in Q2 2024 [6][10] Operational Metrics - Average WSEs increased by 8% year-over-year, from 128,734 in Q2 2024 to 138,969 in Q2 2025 [18] - Workers' compensation expense as a percentage of gross billings decreased to 2.1% in Q2 2025 from 2.5% in Q2 2024, benefiting from lower costs [5][17] Capital Allocation - The company repurchased $8.0 million of stock in Q2 2025, comprising 197,200 shares at an average price of $40.80 [8] - BBSI paid $2.0 million in dividends during the quarter, with a confirmed quarterly cash dividend of $0.08 per share to be paid on September 5, 2025 [9] Liquidity Position - As of June 30, 2025, BBSI had unrestricted cash and investments totaling $90.4 million, down from $99.1 million as of March 31, 2025 [7]

Core Insights - Barrett Business Services, Inc. (BBSI) has opened a new physical branch in Chicago, transitioning to a full-service model in the area [1][2] - The Chicago branch aims to enhance BBSI's support for local businesses, particularly small and mid-sized enterprises, by providing a range of services including payroll, HR, and risk management [2][3] - The branch will be led by Dave Wills, who has extensive experience in Human Capital Management, indicating a strong leadership presence for the new location [4] Company Overview - BBSI is a leading provider of business management solutions, specializing in human resource outsourcing and professional management consulting [5] - The company serves over 8,100 PEO clients across all 50 states, highlighting its extensive reach and operational capabilities [5] - BBSI's integrated platform focuses on payroll processing, employee benefits, workers' compensation, risk management, and workplace safety programs [5]

Core Viewpoint - Barrett Business Services, Inc. (BBSI) will hold a conference call on August 6, 2025, to discuss its financial results for Q2 2025, which ended on June 30, 2025 [1][2]. Group 1 - The conference call will be hosted by CEO Gary Kramer and CFO Anthony Harris, followed by a Q&A session [2]. - The call is scheduled for 5:00 p.m. Eastern time (2:00 p.m. Pacific time) [2]. - Participants can join the call using a toll-free number or an international dial-in number, with a conference ID provided for access [2]. Group 2 - The conference call will be broadcast live and available for replay on the BBSI website, with a replay accessible until September 6, 2025 [3]. - BBSI is recognized as a leading provider of business management solutions, specializing in human resource outsourcing and professional management consulting [3]. - The company serves over 8,100 PEO clients across all 50 states, focusing on improving operational efficiency through its integrated platform [3].

Core Insights - Barrett Business Services, Inc. (BBSI) has opened a new branch in Dallas, Texas, enhancing its presence in the North Texas business community [1][2][3] Company Expansion - The Dallas branch is part of BBSI's asset-light branch model initiated in 2022, aimed at supporting local entrepreneurs [2] - The new location will provide a range of services including payroll administration, benefits, workers' compensation, risk consulting, recruiting, and human resources [3][4] Leadership and Community Engagement - Chase Mortenson, a Dallas native with a background in finance and marketing, will lead the new branch, emphasizing support for local entrepreneurs [5] - The establishment of the Dallas branch reflects BBSI's commitment to local, face-to-face support for business owners in the dynamic Dallas-Fort Worth area [4] Company Overview - BBSI is recognized as a leading provider of business management solutions, combining human resource outsourcing with professional management consulting [6] - The company serves over 8,100 PEO clients across all 50 states, focusing on improving operational efficiency for businesses of various sizes [6]