Barrett Business Services(US:BBSI)2022-03-06 16:00Client Base and Employee Support - In 2021, the company supported over 7,600 PEO clients with an average of 112,928 worksite employees (WSEs), compared to 7,500 clients and 108,249 WSEs in 2020, reflecting a growth in client base and employee support [26]. - As of December 31, 2021, the company had a total of 121,660 employees, including 116,154 under PEO client service agreements [42]. - The small and mid-sized business segment remains a key focus for the company, as it is large, underserved, and generally more dependent on external resources [30]. Revenue and Financial Performance - Total revenues for 2021 were $955,166 thousand, an increase from $880,824 thousand in 2020, representing a growth of 8.5% [125]. - Revenues increased by 8.4% in 2021 but decreased by 6.5% in 2020, indicating volatility in revenue growth [64]. - Net income for 2021 was $38,079 thousand, compared to $33,765 thousand in 2020, reflecting an increase of 12.9% [125]. - Professional employer service fees accounted for 88.3% of total revenues in 2021, remaining consistent with 2020 [125]. - Gross billings for 2021 reached $6,569,986 thousand, up from $5,924,539 thousand in 2020, indicating a growth of 10.9% [128]. Operational Model and Technology - The company operates a decentralized delivery model with 50 branch locations across 47 states and the District of Columbia, enhancing local decision-making and client service [20]. - The company’s client-facing technology platform, myBBSI, provides tools for payroll processing, time and attendance management, and human resource information, enhancing operational efficiency for clients [33]. - The company’s operations are affected by the need to constantly improve technology to meet client expectations, with potential risks associated with technological upgrades [59]. Risk Management and Compliance - The company emphasizes risk mitigation and workplace safety, tying the employment of area managers and risk management consultants to their effectiveness in managing client safety compliance [36]. - The company is subject to various federal and state laws and regulations, which impose compliance costs but have not had a material adverse effect on its business to date [45]. - The company faces risks related to compliance with complex and evolving laws and regulations, which could adversely affect profitability and competitiveness [90]. Workers' Compensation and Claims Management - Approximately 82% of the company's workers' compensation exposure is covered through an insured program, which allows for premium adjustments based on overall portfolio performance, with potential savings of up to $20 million [38]. - The company’s self-insured programs cover approximately 18% of its workers' compensation exposure, with specific retention limits based on state regulations [40]. - The company has a comprehensive claims management program aimed at reducing workers' compensation costs through managed-care systems and early settlements [41]. Economic and Market Conditions - California operations accounted for approximately 73% of total revenues in 2021, making the company highly dependent on the economic and regulatory conditions in California [65]. - Economic downturns may lead to reduced revenues as small- and mid-sized clients could cut costs or cease operations, impacting the company's ability to attract new clients [67]. - The company is vulnerable to economic fluctuations, which can affect demand for staffing services and the availability of qualified employees [68]. Shareholder and Investment Activities - The company has repurchased a total of 91,104 shares during the quarter ended December 31, 2021, with an aggregate purchase price of $25.3 million as of that date [107]. - The company has authorized a new repurchase program of up to $75 million of its common stock over a two-year period starting February 28, 2022 [107]. - The investment portfolio is subject to market and credit risks, which could adversely impact the company's financial condition or results of operations [85]. Financial Position and Assets - The company's total current assets decreased slightly to $406.719 million in 2021 from $407.875 million in 2020 [157]. - Total liabilities decreased to $538.422 million in 2021 from $576.715 million in 2020, indicating a reduction of approximately 6.6% [157]. - The company's retained earnings increased to $178.323 million in 2021, up from $165.710 million in 2020, marking a growth of 7.7% [157]. Employee Relations and Community Engagement - The company’s employee relations with management employees are reported to be good, emphasizing the importance of attracting and retaining talent [42]. - The company has implemented a program providing paid volunteer time to encourage management employees' participation in community service projects [42].