Barrett Business Services(US:BBSI)2022-08-06 09:17Financial 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]