Financial Data and Key Metrics Changes - For the full year 2025, gross billings increased by 8.6% to $9 billion, compared to $8.3 billion in the prior year, while diluted earnings per share rose by 5% to $2.08 from $1.98 [15] - In Q4 2025, gross billings increased by 6.4% to $2.4 billion, compared to $2.25 billion in Q4 2024, and diluted earnings per share increased by 2% to $0.64 from $0.60 [15][16] - Average billing per worksite employee (WSE) per day increased by 1.5% in the quarter, driven by sustained wage growth [16] Business Line Data and Key Metrics Changes - The staffing business declined by 13% year-over-year in Q4 and 11% for the full year, reflecting client reluctance to place staffing orders amid macroeconomic uncertainty [8] - PEO gross billings increased by 6.6% in Q4 to $2.38 billion, while staffing revenues declined to $18 million [15][16] - PEO worksite employees grew by 5.1% in Q4, driven by record WSEs added from new clients, despite client workforce reductions [16] Market Data and Key Metrics Changes - Southern and Northern California both grew by 5%, while the Mountain and East Coast regions grew by 10%. The Pacific Northwest declined by 4%, and asset-light markets grew by 95% [16] - Client net hiring has been below historical norms throughout 2025, with reductions across all geographies and nearly all industries, particularly in California and construction [7][16] Company Strategy and Development Direction - The company is focusing on expanding its asset-light model and has successfully converted two emerging markets to traditional branches [4] - Continued investment in technology and product development, including enhancements to the myBBSI platform and new IT products, is a key part of the strategy [10][12] - The company aims to maintain controllable growth despite macroeconomic headwinds, with expectations for gross billings to increase between 3% and 5% in 2026 [23][24] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about future growth despite macroeconomic uncertainties, with a focus on client needs and retention [3][14] - The company anticipates that negative hiring trends will continue into 2026, but expects improvements as the year progresses [27] - Wage growth is expected to moderate, with clients facing challenges in finding skilled labor [29][30] Other Important Information - The company repurchased $17 million of shares in Q4 2025, with a total of $42 million repurchased throughout the year [23] - The company paid $8.2 million in dividends for the year, returning a total of $50 million to shareholders [23] - The balance sheet remains strong with $157 million of unrestricted cash and investments and no debt [20] Q&A Session Summary Question: What are you hearing from your clients in terms of being able to improve growth throughout 2026? - Management anticipates that negative hiring trends will continue into 2026, with a potential for improvement later in the year [26][27] Question: What are you hearing from clients regarding the ability to pay higher wages in 2026? - Wage growth is real and has moderated, with clients still facing challenges in finding skilled labor [29][30] Question: Is there any improvement in sight for 2026 on the payroll tax side? - Payroll tax rates are expected to see a modest increase, but mechanisms are in place to manage these costs [33] Question: Are you expecting margins to improve as the year progresses relative to the workers' compensation pricing environment? - Management is cautiously optimistic about margin improvements, particularly in California, where rates are expected to increase [34][35] Question: How does the new client pipeline of qualified leads look currently? - The pipeline remains strong, with good volume and consistency in client acquisition [43] Question: Is the hiring trend improving this year, and is it broad-based? - The deterioration in hiring trends has been broad across industries, with construction remaining particularly weak [45]

Barrett Business Services (NasdaqGS:BBSI) Q4 2025 Earnings call February 25, 2026 05:00 PM ET Company ParticipantsAnthony Harris - CFOGary Kramer - President and CEOConference Call ParticipantsChristopher Moore - Senior Research AnalystJeff Martin - Co-Director of Research and Senior Research AnalystMarc Riddick - Senior Research AnalystVincent Colicchio - Senior Investment AnalystOperatorGood afternoon, everyone, and thank you for participating in today's conference call to discuss BBSI's financial results ...

Financial Data and Key Metrics Changes - For the full year 2025, gross billings increased by 8.6% to $9 billion, compared to $8.3 billion in the prior year, while diluted earnings per share rose by 5% to $2.08 from $1.98 [13][14] - In Q4 2025, gross billings increased by 6.4% to $2.4 billion, compared to $2.25 billion in Q4 2024, with diluted earnings per share increasing by 2% to $0.64 from $0.60 [14][15] - Average billing per worksite employee (WSE) per day increased by 1.5% in the quarter, driven by sustained wage growth [15] Business Line Data and Key Metrics Changes - PEO gross billings increased by 6.6% in Q4 to $2.38 billion, while staffing revenues declined by 13% to $18 million [14][15] - The staffing business declined by 13% year-over-year, reflecting client reluctance to place staffing orders amid macroeconomic uncertainty [7] - The company added approximately 8,300 WSEs year-over-year from net new clients, achieving a 5.1% increase in worksite employees for the quarter [6][15] Market Data and Key Metrics Changes - Southern and Northern California both grew by 5%, while the Mountain and East Coast regions grew by 10%. The Pacific Northwest declined by 4%, and asset-light markets grew by 95% [15][16] - Client workforce reductions were noted across all geographies and nearly all industries, with the construction industry and California clients being most affected [6][15] Company Strategy and Development Direction - The company is focusing on expanding its asset-light model and has successfully converted two emerging markets to traditional branches [4] - Continued investment in technology and product development is a priority, with multiple product releases planned for 2026 [10][20] - The company aims to maintain controllable growth despite macroeconomic headwinds, with expectations for gross billings to increase between 3% and 5% in 2026 [21][22] Management's Comments on Operating Environment and Future Outlook - Management anticipates that client hiring will continue to grow at a rate below historical norms due to macroeconomic uncertainties [11][21] - The workers' compensation market is expected to experience a positive shift with recent premium rate increases, which may help improve margins [17][22] - The company remains cautious in its planning for margins in 2026, balancing top-line growth with margin protection [22] Other Important Information - The company repurchased $17 million of shares in Q4 2025, with a total of $42 million repurchased throughout the year [21] - The company paid $8.2 million in dividends for the year, returning a total of $50 million to shareholders [21] Q&A Session Summary Question: What are you hearing from your clients in terms of being able to improve growth throughout 2026? - Management noted that they anticipate a continuation of negative hiring trends into 2026, with a potential for improvement later in the year as macroeconomic conditions stabilize [24][25] Question: What are you hearing from clients regarding the ability to pay higher wages in 2026? - Wage growth is real and has moderated to a range of 2%-4%. Clients are still facing challenges in finding skilled labor [26] Question: Is there any improvement in sight for 2026 on the payroll tax side? - Management indicated that payroll tax rates are modestly higher but manageable through pricing mechanisms [31] Question: Are you expecting margins to improve as the workers' compensation pricing environment evolves? - Management expressed cautious optimism about margin improvement, particularly in California, where rates are expected to rise [32][33] Question: How does the new client pipeline of qualified leads look currently? - The pipeline remains strong, with good volume and consistency in client acquisition, particularly in the benefits sector [42][43] Question: What impact do you anticipate from artificial intelligence on the business? - Management believes AI will enhance internal efficiency but does not foresee it replacing the human element in complex business operations [51][55]

Financial Data and Key Metrics Changes - For Q4 2024, gross billings increased by 10% to $2.25 billion compared to $2.05 billion in Q4 2023, while diluted earnings per share rose by 17% to $0.63 from $0.54 in the prior year quarter [30] - For the full year 2024, gross billings grew by 7.9% to $8.3 billion from $7.7 billion in the previous year, and diluted earnings per share increased by 7% to $1.98 from $1.85 [30] - Average billing per worksite employee (WSE) increased by 3.3% in Q4 [32] Business Line Data and Key Metrics Changes - PEO growth billings increased by 10% in Q4, while staffing revenues declined by 9% to $20 million [31] - PEO worksite employees grew by 5.2% in Q4, driven by a record number of WSEs added from new clients [31] - Staffing business declined by 9% year-over-year, but the rate of decline has slowed significantly compared to the previous year [15] Market Data and Key Metrics Changes - Year-over-year PEO gross billings growth by region for Q4: East Coast grew by 21%, Southern California by 11%, Mountain by 10%, Northern California by 5%, and Pacific Northwest declined by 4% [33] - The East Coast region has achieved 15 consecutive quarters of double-digit growth, while the Pacific Northwest is expected to return to growth in 2025 [34] Company Strategy and Development Direction - The company is focusing on expanding its asset-light model and has successfully entered new markets, with 21 new market development managers added [16] - Continued investment in technology and product development is a priority, with multiple product releases planned for 2025 [9][21] - The company aims to enhance its employee life cycle experience through new product launches and technology investments [22][26] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2025, anticipating gross billings to increase between 7% and 9% and average WSEs to rise between 4% and 6% [43] - The company expects continued growth in net client adds and modest improvements in client hiring [44] - Management noted that wage inflation remains stable and is a baseline driver of growth [49] Other Important Information - The company achieved a Net Promoter Score increase of 5 points to 69, indicating strong client satisfaction [10] - The balance sheet remains strong with $122 million in unrestricted cash investments and no debt [40] - The company repurchased over 3% of its outstanding shares in 2024, totaling more than $29 million [42] Q&A Session Summary Question: Insights on client hiring and wage inflation - Management noted stability and recovery in hiring metrics, with consistent wage inflation being a driver of growth [49] Question: Average WSE growth and client contributions - The majority of WSE growth is expected to come from new clients and client retention [52] Question: Healthcare revenue mechanics - The company earns through reseller fees and administrative fees, with plans to disclose more detailed metrics in the future [60] Question: Technology investments and client attraction - Technology initiatives have been enhanced to support non-traditional clients and larger clients, with a focus on software to support business operations [67] Question: Workers' compensation pricing trends - Management indicated a deceleration in rate decreases for workers' compensation, with hopes for a market turnaround soon [80] Question: Impact of California wildfires - Minimal impact on employees and clients was reported, with potential future business opportunities arising from rebuilding efforts [84][87] Question: Competitive positioning in benefits - The company emphasizes its strong local teams and expanding product offerings as key differentiators in the market [96]