Barrett Business Services(US:BBSI)2025-05-07 21:45Financial Performance - Revenue for Q1 2025 totaled $292.6 million, an increase of $26.8 million or 10.1% compared to Q1 2024, driven by an 11.7% increase in PEO services revenue [102] - Gross margin for Q1 2025 was $42.6 million or 14.6% of revenue, compared to $39.6 million or 14.9% in Q1 2024 [103] - Net loss for Q1 2025 was $1.0 million, compared to a net loss of $0.1 million in Q1 2024, with diluted net loss per share of $0.04 [101] Employee Metrics - Average worksite employees (WSEs) grew by 7.6% year-over-year to 132,459 in Q1 2025, while ending WSEs increased by 7.1% to 133,699 [100] Expenses - Payroll taxes and benefits for Q1 2025 amounted to $187.0 million or 63.9% of revenue, up from 60.9% in Q1 2024, primarily due to higher average payroll tax rates [105] - Direct payroll costs decreased to $13.3 million or 4.5% of revenue in Q1 2025, down from 5.5% in Q1 2024 [104] - Workers' compensation expense for Q1 2025 was $49.6 million or 17.0% of revenue, a decrease from 18.7% in Q1 2024 [106] - Selling, general and administrative expenses for Q1 2025 totaled $44.8 million or 15.3% of revenue, compared to 16.0% in Q1 2024 [107] Cash Flow and Balance Sheet - Net cash provided by operating activities for Q1 2025 was $5.2 million, down from $9.0 million in Q1 2024 [112] - Cash balance decreased to $43.0 million as of March 31, 2025, a decrease of $39.6 million compared to the same period in 2024 [111] - Net cash used in financing activities for Q1 2025 was $12.8 million, up from $10.1 million in Q1 2024 [114] - The trust account balance increased to $211.6 million as of March 31, 2025, compared to $197.1 million at December 31, 2024 [115] Market and Economic Conditions - Future economic conditions, particularly in California, may impact revenue levels and client retention [117] - A 50 basis point increase in market interest rates would result in a $4.1 million decrease in the fair value of the investment portfolio [119] Risk Factors - The Company faces risks related to the integration of new clients and changes in governmental policies affecting its operations [118] - The adequacy of workers' compensation reserves is a key concern, influenced by future claims liabilities and regulatory changes [118] - The effectiveness of management information systems and relationships with primary bank lenders are critical for financing availability [118] Investment Strategy - The Company aims to mitigate market risk through low investment turnover and diversification strategies [119] - The Company is focused on maintaining minimum collateral levels for certain policies, which are held in a trust account [115] - The Company had no outstanding borrowings on its line of credit as of March 31, 2025 [119]