Barrett Business Services Inc (BBSI) Q2 2024 Earnings Call Highlights: Strong Growth in Gross ...

GuruFocus News
5 min read

In This Article:

  • Gross Billings: Increased 6% to $2 billion in Q2 2024 from $1.9 billion in the prior-year quarter.

  • PEO Gross Billings: Increased 6% to $2.01 billion in the quarter.

  • Staffing Revenues: Declined 3% to $20 million in the quarter.

  • Worksite Employees (WSEs): Grew by 4% year-over-year.

  • Net Income per Diluted Share: $0.62, unchanged from the year-ago quarter.

  • SG&A Expense: Increased by approximately 4%.

  • Investment Income: $3 million in the second quarter, up $0.9 million from the prior year.

  • Unrestricted Cash Investments: $110 million at June 30.

  • Share Repurchase: $7 million of shares repurchased in the second quarter at an average price of $31.63 per share.

  • Dividend Increase: Quarterly dividend rate increased from $0.075 to $0.08 per share, a 7% increase.

  • Gross Margin Rate: Expected to be between 3.0% and 3.1% for the year.

  • Effective Annual Tax Rate: Expected to remain between 26% and 27%.

Release Date: July 31, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Barrett Business Services Inc (NASDAQ:BBSI) reported a strong second quarter with financial results in line with their full-year outlook.

  • Gross billings increased by 6% over the prior year's quarter, reaching $2 billion, driven by strong controllable growth from net new PEO clients.

  • The company added a record number of worksite employees, growing by 4% year-over-year, attributed to successful client retention and new client additions.

  • BBSI's new health insurance offering, BBSI Benefits, is showing positive results with a strategic partnership with Kaiser Permanente, leading to increased new subscribers.

  • The company has a strong balance sheet with $110 million of unrestricted cash investments and no debt, allowing for continued investments and shareholder returns through dividends and stock buybacks.

Negative Points

  • The staffing business declined by 3% over the prior-year quarter, impacted by macroeconomic headwinds and supply-demand imbalances.

  • The Pacific Northwest region experienced a decline of 3% in PEO gross billings, affected by slower client growth and negative client hiring trends.

  • Payroll taxes remained higher than the prior year, impacting gross margin rates, although these are being addressed in pricing strategies.

  • The benefits broker channel for BBSI Benefits is growing slower than expected, with less traction than anticipated.

  • The construction industry in the Pacific Northwest has been slower to rebound, affecting client growth in that region.

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