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 company reported a net loss per diluted share of $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 - The number of PEO 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 14% growth in PEO gross billings, while Southern California grew by 11% [19] - The Pacific Northwest region, however, experienced a decline of 1% in gross billings [19] - Total hours and overtime hours increased modestly year-over-year, indicating stability in client operations [18] 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 technology and product enhancements are ongoing, including the launch of a new applicant tracking system [11][63] - The company aims to enhance the employee life cycle experience through additional product launches throughout the year [11] 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][24] - Despite a strong start to the year, the company is maintaining its outlook for gross billings growth between 7% to 9% for the year [24] - The company believes that small businesses benefit from PEO relationships during challenging economic 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 balance sheet remains strong with $99 million in unrestricted cash and investments and no debt [23] Q&A Session Summary Question: What percentage of clients have direct tariff exposure? - Management indicated that most clients are service businesses with indirect exposure to tariffs, primarily affecting materials and supplies [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 is the benefits side driving new client growth? - The benefits offering has shifted to a more balanced contribution between existing and new clients, with significant success in attracting new clients [41][42] Question: Are there any areas that have not performed as expected? - Management acknowledged that while there are ongoing investments in technology, some products may take longer to gain traction [65]