Barrett Business Services(US:BBSI)2025-05-07 22:02Financial Data and Key Metrics Changes - Gross billings increased by 9.5% year-over-year to $2.09 billion in Q1 2025 compared to $1.91 billion in Q1 2024 [17] - PEO gross billings rose by 10% to $2.07 billion, while staffing revenues declined by 10% to $18 million [17] - Average billing per worksite employee (WSE) increased by 2.6% in the quarter [18] - The net loss per diluted share was $0.04 compared to a net loss of $0.01 per diluted share in the same quarter last year [23] Business Line Data and Key Metrics Changes - Worksite employees grew by 7.6% in the quarter, driven by a record number of new client additions [18] - Staffing operations experienced a decline of 10% year-over-year, attributed to macroeconomic headwinds [6][17] - The company added approximately 7,900 worksite employees year-over-year from net new clients [5] Market Data and Key Metrics Changes - The East Coast region saw a growth of 14%, Southern California grew by 11%, Mountain region by 9%, Northern California by 6%, while the Pacific Northwest declined by 1% [19] - Southern California represents the largest region for the company, achieving double-digit growth due to consistent client additions and hiring [19] Company Strategy and Development Direction - The company is focusing on geographic expansion with plans to open new physical locations in Chicago, Dallas, and Nashville by early Q3 [8][31] - Investments in new markets and product offerings, including a new health insurance product, are expected to drive future growth [9][10] - The company aims to enhance the employee life cycle experience through technology investments and product launches throughout the year [11][12] Management's Comments on Operating Environment and Future Outlook - Management expressed caution regarding the economic environment, noting potential impacts on client hiring and investment [14][15] - Despite a strong start to the year, the company is maintaining its outlook for billings growth and worksite employee growth due to economic uncertainties [24] - The company believes that small businesses benefit from PEO relationships during challenging times, positioning itself for sustainable growth [15] Other Important Information - The company repurchased $9 million of shares in Q1 under its $75 million repurchase program [24] - The company paid $2.1 million in dividends during the quarter and reaffirmed its dividend for the following quarter [24] Q&A Session Summary Question: What percentage of clients have direct tariff exposure? - Management indicated that most clients are in service industries with minimal direct exposure, primarily facing indirect impacts from increased material costs [28] Question: Is there an annual goal for new physical offices? - Management stated that the number of new physical locations depends on market development rather than a fixed annual target [30] Question: How much growth could come from geographic expansion over the next five years? - Management views geographic expansion as a long-term investment, expecting profitability to materialize in year three and beyond [34] Question: Are existing clients or new clients driving growth in benefits? - The company has seen a shift towards a more balanced contribution from both existing and new clients in the benefits segment [42] Question: Is the company displacing more legacy PEOs than before? - Management noted that while many new clients are first-time PEO users, there is an increase in PEO takeaways in certain markets [46] Question: How is pricing trending in the current economic backdrop? - Management reported that workers' compensation pricing has moderated, with minimal fluctuations expected [54]