Barrett Business Services(US:BBSI)2022-05-05 16:31Financial Data and Key Metrics Changes - The company reported a gross billings increase of 16% year-over-year, reaching $1.68 billion for the PEO business, while staffing revenues increased by 18% to $28.9 million [13][7] - Average worksite employees (WSEs) rose by 9% compared to the prior year, with average billing per WSE increasing by 6% due to higher wages [13][14] - The company generated positive net income in Q1 for the first time in over 10 years, typically showing a loss in Q1 due to payroll tax timing [16] Business Line Data and Key Metrics Changes - The PEO business saw a 16% increase in gross billings, driven by stronger client growth and hiring [13][14] - The staffing business experienced an 18% year-over-year growth, with improvements in applicant placement and fill ratios despite a tight labor market [7][8] - The company added approximately 3,500 worksite employees year-over-year from net new clients, marking the best quarter in over five years [6][29] Market Data and Key Metrics Changes - PEO gross billings growth varied by region, with the Mountain States growing by 38%, East Coast by 25%, and Southern California by 13% [14] - The company operates in 13 states and 68 markets, maintaining consistent market presence compared to the previous quarter [9] Company Strategy and Development Direction - The company is focused on a three-pronged strategy to enhance sales leads, including deepening relationships with existing partners and utilizing technology for new client acquisition [4][5] - An asset-light model is being employed to enter new markets, allowing for efficient client servicing and sales through digital initiatives [9][39] - The company plans to continue investing in technology and growth initiatives while maintaining a disciplined approach to acquisitions [12][25] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's trajectory, citing strong client retention and growth in prospects [11][50] - Despite macroeconomic challenges such as inflation and labor market tightness, the company does not see immediate signs of a slowdown in its data [10][50] - The company raised its full-year guidance for gross billings growth to 10%-12%, up from 7%-9%, reflecting confidence in continued performance [19] Other Important Information - The company has a new $75 million stock repurchase plan and has already purchased 241,000 shares at an average price of $74.80 [18] - The unrestricted cash investments decreased to $127 million from $166 million at year-end, primarily due to payroll tax payments and stock repurchases [17] Q&A Session Summary Question: Can you talk about the distribution of revenue and earnings in the final three quarters of 2022? - Management expects sequential growth each quarter, with Q4 potentially impacted by one less business day [22][23] Question: Will the company be more cautious on acquisitions given economic risks? - Management indicated that pricing has improved for sellers, and they remain active in the acquisition market while being prudent [24][25] Question: What was the year-over-year same customer WSE growth in the quarter? - The company added approximately 3,400 worksite employees from net new customers and about 6,500 from customer hiring year-over-year [29] Question: Can you comment on the asset-light model and its progress? - Management reported positive outcomes from the asset-light model, with markets performing at or better than expectations [39] Question: Is the average WSE growth guidance of 4% to 6% conservative? - Management acknowledged some conservatism in the guidance, considering the tight labor market and hiring trends [42][44]