BBSI - Earnings call transcript Q1 2018 | Barrett Business Services, Inc.

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Operator

Good day, everyone and thank you for participating in today's conference call to discuss BBSI's Financial Results for the First Quarter ended March 31, 2018.

Joining us today are BBSI's President and CEO, Mr. Michael Elich; and the Company's CFO, Mr. Gary Kramer.

Following their remarks, we'll open up the call for your questions.

please the of Securities meaning Act XXXX. further, Harbor Company's Litigation go of within statement of we take the note Safe Reform Before the Private cautions statements. The regarding provides important statement forward-looking today's conference The company’s remarks call include forward-looking will statements. during presented other facts subject number These a not and risks are does information along reflect that statements uncertainties. to of with historical and Actual these forward-looking results statements. may differ materially from those implied by for company's quarterly Securities differ. the to actual recent information Commission annual and filed refer and cause company's earnings and Please the risks the reports with Exchange could uncertainties more about results that to results I everyone X, be XXXX, like Time this June available X at call PM Eastern would will to remind starting this through for replay afternoon. that provided the press available webcast well as website as company's in today's A also the will replay on release, www.barrettbusiness.com. be at available link via I the to call would Chief Mr. turn Financial like now the BBSI, of over to Officer Gary Kramer. ahead. go please Sir,

Gary Kramer

compared PEO last that at QX beginning increased growth year the dialing billing of $X.XX 'XX. the in X.X% $X.XX in In upon recall over share Thank continue period. of to $XXX quarter of to morning billion X.X% taxes operations same The revenue QX gross payroll QX X% $X.X Net you’re you, million grew customer the 'XX. a billion a we $X.X per or billings quarter Depending Diluted and the everyone. compared loss incurred sales of the increased a in was due compared historically to Aaron. the loss first a 'XX. in be of loss from, strong. to effective Please XX% afternoon, was the good first compared Gross where to XX% company good higher year. same to to quarter

addition We increase with in of net client run-off continue gross XXX the a quarter. our were of clients XXX base to

revenues firm. This susceptible be calls, accounts believe as workers we some losing to discipline business. California's decreased competition pricing larger $XX and market on decrease in our difficult not we first compensation accounts is for expectations price we're where pressures our to results that labor pricing and in market. this we proposition we mentioned more in workers X% more is compensation employees the continued result continue chase can making discuss we is to Staffing are line hold this million. to was insurance but of much affect quarter tight bottom. the and to This a we prior in than our quarter direct Each staffing As this will hire the value seeing quarter trend the specifically with regarding our experiencing our these it

but have standards. our clients demand and is without challenging We orders a it orders hiring all compromising our fulfill to from

to staffing will anticipate headwind slight we As to that revenue such, be growth. continue near-term a

a low We this continue X.X% Workers to a at for $XXXX prior-year estimated favorable expected is be in X.X%. liabilities. as the expect which X.X% slightly was quarter includes our to change percentage year. the to compensation minor gross staffing billings flat of end of down This range to of expense of

reserves. and to As required quarterly a evaluation actuarial This that to chosen confidence have expert and are reminder, adequacy annually, we provides the performed of one although to process have be we an overall greater have independent completed booked results. our

XXXX. the compared expectations. trailing quarter, quarter as payroll, saw XXXX the a claims in line with we XX compensation of of XX% the X.X% to quarter continues to In month increased and first percentage to claims greater frequency workers decreased first Our of frequency trend of compared

the effectively. retention. now successfully cost risk manage for our and to structure client more actions We've DNA in and part enhance their mitigate program branches has initiated while and improving the over to reducing and of and operationalized processes claims manage been strategy controls year forms Our XXXX and past taken onboarding was many of frequency

our with year prior Over expenses million prior XXX,XXX year liabilities. accumulative All the the of $XX.X or compared favorable or quarters, X.X% to million Nonrecurring as estimated in total issues and X.X% we to focus open prior with have $XX.X period million $XX.X workers to quarter. of XXX,XXX Gross the continue security in from to in, billings gross predictability. or have SG&A first billings last increased XXX,XXX better same we it by have minor compensation the three the year and quarter. first expenses claims million $X.X and is in nonrecurring prior taxes X.X% legal change benefit to associated while total compared law quarter experienced apply $XX.X in The was or the program were X.X% accounting gross quarter. in income the was quarter performing laser in quarter of decreased year's expected million. XX% over margin the X%, billings the was compared in

The our renewed credit first was period in effective rate quarter is than which guidance one-time first to the due higher prior tax a tax previous quarter.

line the We $XX $XX resulting to million quarter. year approximately Wells effective continue rate tax from of the during and Fargo Tax Act. passage from increased our the XX% We the to full Jobs with Cut million credit of expect

and annual line Vancouver, us the decreased a cash $XX at December our continue with to $XX.X at except X/XX. grow partner was million from corporate unrestricted line XXXX a million first to increase that in this be XX, credit for under decrease for continue in for quarter The no and will We XXXX. payroll of line related and primarily X/XX/XX The had to Washington. quarter borrowings we of we million renewal the $X.X of in the As credit filings due credit XXXX. on the as the to the mortgage positions grow, we look us tax headquarters debt-free first

we Chubb, insurance with established of part and a the Trust. our called As account program funded compensation trust fronted Chubb workers

and reflect is cash in Chubb restricted trust was XX/XX/XXXX. does balance Chubb X/XX/XXXX an early $XX.X was was the the March and additional in paid sheet, in-transit at investments. in not million balance million included Trust Chubb XXX.X XX March $XXX.X The balance deposited April. at late The the until but On account that million trust Chubb not and to the into Trust

interest we On portfolio. book sheet, and $X of fully basis restrictions of flow the from greater and years. versus was and duration money resulted we new the summary, to of Bond portfolio XX, came temporary balance class income X.X In model. yield liability included in to increasing increase this of with Trust points hold we with X/XX/XX, the income fixed is is asset as invested the into with was asset loss we out targeting prices to base this be Rising in-transit net of assets. the accumulated the and Trust. higher guidelines and our In other quarter March leverage our bonds of as investment clients out an move diversification. The earnings rates a highly This trust X.XX average quality will XXX earned portfolio At and The the practice At of these no continues X% the the new yield than amount bps years. our security liquid eligible of maturity. until a rates investment the duration we matching asset strategy interest other XX continue comprehensive at continue end is Trust. AA have the on strong view to portfolio. to million in tick high as has for will build investment the that quality the quarter, was as in were

experienced compensation slightly market that not decision was it this and quarters, the be by workers robust we by lower prior an referral we than are While active chase will offset revenue growth channels. a to driven confident

the gross next XX%. we be continue period XX our rolling to expect Regarding approximately to month outlook, for billings

resulting lower For and year costs full the expected X.X% of expense a X.X%. rate to passage the This approximately XXXX, and in legal workers a of as billings continue per tax XX% per diluted share to as as will the to Jobs accounting in be Cuts share of effective This approximately compensation with estimated of confirm associated Act. well diluted gross $X.XX. issues, earnings from also law $X.XX that range assumes security be Tax assumes approximately percentage we

Mike? and quarter, Now President I’d to to comment year. CEO Michael like operational remainder BBSI, the Elich well the for as further call first who will of our completed outlook over the turn the of recently as on

Michael Elich

be thank you time for and to on the taking Hello, call.

and my built sound. we've of review a fundamentals the the the For strong are business, business foundation of

markets We to talent product with our scale outcomes. continue evolution, new predictable and infrastructure support invest to that and ability our in into

away add This business we quarter, due closed, saw quarter for product, efforts XXX or progression, from for had or model. for bring our new clear and continued experienced moved of outsourced XX represents methods we businesses owners canceled tier our to efficiencies pricing bringing companies to trajectory. XX were defined the of proposition of We're net clients. clients, for XXX the clients. have value we XX brand clients. results delivery support have lack accounts a receivable, added which focus due the X XX profile, to seeing in In approximate as our risk to build of X value small new attrition that an left we supports competitive We to PEO as of ongoing a sold, solid competition XXX for new We

gap plan a billings due confidence continues seeing in are close in the competition that be it our but quarters. pipeline pricing we to in we with uptick in Although and strong expectations. line off the coming client will our attrition have We're slightly to slight gross is

market and relates We it in in competitive California. to specifically pressures attention paying close the are as to insurance pricing

we our very compensation over we pricing own the years our as have the related worker's in three to well to California work has the done have softened. differentiate past value years in several held past Given proposition,

hold California to recognize through We historically rates methods to we it our all of on pricing ability evolver pipeline, referral individual Outside approach excess developing are XX% market cyclical. a model national experiencing with Related to hold growth for to are a contributors channels will continue base from regions year-over-year. continue systemic other scale as basis. a rates of in our to on we

growth. channels supports today pipeline which result, we're of in markets referral a strong seeing all new As development

efforts have from bring runway of existing broader to brand from consistency leadership bench. operationalized to all in roughly our consistent approach contribution Because referral organizational to through months of new awareness markets this have XX we're and educational ongoing seeing to our developing channels. continue Related we with with We partners. structure, and our business

teams currently We support the a In measure our a of This a we to XXX mature support field continue in team in use to invest housed in we in Related and XXX Portland, branch scale future build Oregon. physical have is business added stratification, excess product markets, organization locations. to branch's we run quarter, to of a new indicate rate now XX have with growth, We offering. million. into the XX to ability total increase leverage. business branches a business

branches and billing. in We have between to XX these emerging into regularly as back branches that running XXX We million grow. million support gross capacity reinvest are XX they

branches May. we XXXX. integrity In our locations to consider XXXX, At operational XX XX open Las expect while they in Pasadena, is rate of of business California of have invest having growth and with long-term XX that scale. we maintaining the to these branches and more anticipate locations. In we to we goal billing. in end XX end add than up with To in run new business in its as physical support strategy million developing in of teams to consistency our in became we product Vegas housed April gross conjunction XXX Finally, physical doors teams pipeline four

consolidated Tillamook and Oregon locations. Roseburg, existing also We physical in into teams

teams continue as will they no business longer forward as branches. Moving but to reflect

I to and clear Looking to consistency the forward my predictability business. field spend our strength from our seeing bringing and in the methods as execute leadership. product the confidence I for of am ability comes time the in organization's

from see the in a resulting on to believe and We're As within With we markets I'll small the brand our the could have future acceleration understanding possible communities up creating of that, to questions. for model. we and open impact envision is beginning clear we’re it of business. what

Operator

Chris Please CJS question first from go Our from Instructions] ahead. Moore [Operator Securities. comes

Chris Moore

profile or of increase extra companies cost The seeing clients. the is, new the pricing the are match the at is companies profitability that coming than I to the from their of turnovers leaving? it are kind while is pressures standpoint question associated that that take that much the in declines or kind – with the of for different in guys leaving, a are guess these you're is - that size that

Gary Kramer

XX%. XXXX rating is in agency new. in California has comp. in worker's rates seeing WCIRB general lower seeing called the Since California the trends we're favorable not What And about by California is

worker’s So people to bureau market. laws favorable the more in worker's such come the comp comp past into some working the you’re are actually has five reforms the and are prices over and California California trending as development lower enacted getting in years which

So, look prices. we’re when seeing like come and and start to we book our a carriers some at market, insurance decrease that’s in

of to the they accounts, our And higher when they’re to pricing to try end So, really is smaller - of where book. going typically our stay book. pressure that in at end come they’re price the not we're seeing that's higher going the

in goal is had XXX continue the off runoff. clients quarter that's and in net gross XXX to bring where adds So some we’re the and of we when we backfill at. leave, clients We additional those the have

Michael Elich

one add things I have revenue. are X clients would And our also of less over Chris you at the our when in clients we total X% look of that million than larger

is and a by finding the get we client can in pressure where that might see to somewhere we with small concentration that else $XXX,XXX save it’s even pricing part we’re Comp. a that, So particular other if Worker’s going where see

without we’re do a stay I a price that economies little Maybe to appeal too, clients a we to there worker’s we've question number coming the for with on basis smaller, of are your operation gain answer actually don't offering we we is year-over-year XX% might to traction in go that which seeing look We’re of bit clients our scale. comp that you working lot the and do really about into book. run and better have other what yes, and of us when with be at hope just seen the seeing

at profitable, as so portfolio and because them be will typically a is profitable more do out the of it are and through, of and So the and in efficiency gate But there more I normalize more with have will they they kind a of things collective we itself rolls smaller probably that think it we way as larger is paying call working ultimately at environment as to you look and nimble more a a some rate. client higher typically that clients client effectively would it wage risk is where or recessionary you’re date, might in more the more future whether at one probably recession will

more So us in bit we change it’s don’t see as problem, we little see build a opportunity for just to it of the and continue C with.

Chris Moore

QX, In the pickup XXXX are you versus little in of a XX year difference XXXX for are assumption a assuming of a was months, QX, fiscal it making makes for the you XX% Is only guidance kind a obviously bit XXXX guidance terms growth big next of kind XXXX. versus much QX, if XXXX over soft QX, difference of rates. XX% there

Michael Elich

probably bit I it and feel about we bit we’ve very little fourth talked after softness were strong of kind And wise quarter. a a we’re a turn pricing seeing we our now. What are would that, little like say right and we the pipelines making on is

improve that on recognize And bit so going other also how where we’re off things to as on not are the dropped opportunities. we that we some to but yields the opportunities one is pipeline, areas market there we're can little that a our good we’re that ensure doing capitalizing

we what we’ll to the with close continuing we the ourselves we’re our are just as So, to build, feel execute and the pipeline see seeing and not have hook just think we’re that off gap. I that in and letting - what

net ended If only were XX gap the between at was anticipating where and first our in being we being builds where look the you build nets as about we up spread. client our a that quarter

same you client move known can customer So in than likewise process our will in And that we lighter It biggest anticipated always us come the quarter quarter. be the bit. and play on which a quarter that to thing seeing we’ll we’re we can - close was to base. can a the strength percent little is that sales little into

erosion any of seeing not there. We’re kind

kind of So position quarter that a ourselves And in there. turn would stronger make of gives then us see confidence ultimately XXXX. that the will we first

Operator

Martin Partners. Our next Capital question Please comes from ROTH go from Jeff ahead.

Jeff Martin

three Gary could worker's you end sustainability quarters. comment of on the the of the which been the comp your lower last range at but part most is,

So curious what your there? thought is

Gary Kramer

how we operations pretty on comes them, with that have pricing with work we our in, who aspect, it to, up, restructured how much with the set them. how how plane could work Yes, it we comes

I’ll So feel much trying to administrative at shareholders we as effort that's that. to of out try of take we a return say going at something continuing we’re can friction - something models. it good we’re to continue are to We that And to on look we to a had costs is and model. focus look really the out the to remove

the comp little at as for flows look why to we looking a think X.X but what far give and to and of you when we’ve that's as you’re - to in this the downs. we but always we model up have more can the it’s to range at and quarter, have some going X.X be So the X.X in going X.X ebb bit done,

sustainable we we’re that So future. for feel where the at is

Jeff Martin

back segways for for then margin prior estimates claims. And year-over-year into the comp the you is in kind up change out nicely of gross that workers when year's even year previous

see a you’re trend quarterly you could year-over-year basis? where improvements gross the you a margins on in If that think on

Michael Elich

mean I goal. Yes, that’s our

try margin the of SG&A. to to to get leverage get to gross is get try to goal of much to leverage as out Our try out

a quarter, that us back way, the about seriously XXXX was lot number take prior X.XX this field if that, and to and good do Our we’re the and this earnings doing QX pricing you is in are we’re the feel good with of change that, work proud and we in get for out the mean a that all it doing corporate. increase the I you branches had a to good a like what we in margins over percentage handle of we

be think we’re proud that to we of going it’s So and sustainable.

Gary Kramer

might restructure, Jeff of geared made And reinvest we’ve it and though and little that the reaching over coming where we we turn last we just usually branches we’re the because really on build an six, would stratification own actually and little are branches and out, the at pretty seems ones where we’ve the stratification what our I where into ones holding you see like had in last are bit one quarter shift those place to feeding emerging but into still piece, movement we’re want years the feel developing the feeding, and a leverage up of I the a if can this that emerging play from a be our well. a been in you doing seven model developing look bit important all we’re they’re find we are the own was now their becomes

we’re $XXX SG&A longer within plus to get branches the you that’s time, you’re period of leverage over million number watching that we that will infrastructure. where that really If be because the of mark moving lot see into of

Jeff Martin

into but it than if like of what could much, to that? kind grow scenario perspective you we’re you know maybe confidence. on than was a so Otherwise your are it XX% underneath earnings faster better, wondering curious that sitting lot some on less of pipeline, grow margins the I of kind surface, you that much think you’re I a and optimistic shed the but where gives level your And sounds

Gary Kramer

we’re helps work the say to I’d doing educate market pipeline. receiving a us Yes, the that stronger

probably look at over good going pretty visibility you and that can three in today week kind months and have a to got look what’s and look lag yield go that’s we force usually at through out know to we’re on were sales on much our we pipelines to So in result where to wise that. build. October, moving we and it a week November, of average months almost have stronger December going three than was almost if to versus but pipeline We

the So first that's look thing we at. that by

pricing in other proposition, is part really pushing the the running locked we’re that The few were as branches your in could really versus against are we areas second might yield you see pressure, still have bringing pipeline really that. to and value where yield true that the bringing where up confidence company markets a we’re some were value

me that confidence. So that’s part another gives

it’s other have kind that to we I say flow bit thing of be going The somewhat and at time, cyclical. looked build little and a is throughout would that ebb to it’s going

they’ve going out they’re have that branches grown, of seen you’re to grown little and fast So and they’ve our branches. pretty to going peak you may bit and have maybe then a a reset some to where got larger bit we little

there. we micro and should going resetting have that received example So a behind our of XX%, referrals. looking at things XX two there pipeline, there of are more they lot is about good from through branches a and seeing right we’re process about now some One customer going their one in would what historically through where pipeline XX% so a of back or confidence able yields, has on our pulling increase that business be be branch be and to at gives we consistency kind the we’re will that larger just us that of of

and the This quarter nth degree better XX%, numbers. that's in it to get sustains against growth jumped what model more and customer can large overtime through we the almost from referrals our

Jeff Martin

the California using then based in and the they history market think my today? how in California last various perspective can provide analogy in comp And are take where do you and some on we then cycle long question, over cycles we

Michael Elich

a question, good a it’s that's to difficult because Yes, market now. answer that’s unique

where capital the we capital more how in rates market seeing is broad favorable based companies still Job have really becomes Cut of and caps XXXX still have losses. the the to difficulty the are was capitals in the are income of they and reform rise you're it's but favorable with up in so in that insurance listen If in interest follow going really the market. in you we're more the offset in of it you just by question a market, the you is general, worst look its from market is Act. rates capital in really in upon base tax there's The has lot unique higher how you tax rates start are going loss as low the because low for in Tax time what the market but up, and and shown at when really charging we seeing market have of make rates the and It's the to pricing with history so order low California and to interest insurance and the much catastrophic been because

first has last two the California the has which years. time combined under been that years and XXX% ten done So ratio is over

that I’d point So are to getting to inning long difficult for start the to say a to answer we're question to down going up. a typically push when going rates I'm have the but say seventh of to rates,

Operator

comes next go Tieton Bill Please from Capital [Operator Instructions] Our question ahead. from Management. Dezellem

Bill Dezellem

do process and when that's workers your so rates on or if see last happen the a pricing start like customer actually up win they to rise than follow start what to you will to begin do do with, your with I'd comment California? in arise comp new Gary,

Gary Kramer

our we client’s to do We look We the is don't that partnerships. ultimately term will we partnerships is vary term way consistency but way long the just and long where don't to contracts. these we're in be consistent much. is which want with going term we're at we We theory right, we be long to key. we have and spot at so fixed Our our the not to The stay we're - best, as flow expensive. to that to think be the going want try most for ebb our We're going want to is now. sweet pricing, our this to do market

Michael Elich

the consistency to many your the add predictability been cost doing business in one over that's things of of watched years that, would is in always structure. I've I the And a and that California challenge

the as we been to about structure. stability at business same time cost a you value-add running model, So built our to a risk really it's your run help bringing better while mitigation,

we that and markets ourselves down, ultimately and for we're same hurting want win our follow if So because we place the will the never clients ago to partner them reason the we there time think upside successful. the on in going brand become it client bankruptcy which or too in prices at your the that long to I capitalizing to all end. so the trusted much crazy straight opportunity that's don't time chase actually and to we not same on can be you being gets a that Bill that we're our up customers I where want find long term, build our

Bill Dezellem

your to but pricing become ability Does say is more would greater because than win that also imply be competitive? that business your easier careful this to - - new will

Michael Elich

going sure Good make that scarce to hunting are we're be time always we've got a clients to that force. all commodity the

business then because that So, I and are have do remain interest the will with not in work people just pools choice we our where that battle be they’ll The probably to would probably those We’ll may the we easier us. got really run to chasing we companies those of do good who well is ones and win that hirer with. we have an never will want won't say you've have in we’re well to impact and that be be that are will will and price the that good cultures easier. making it's going ourselves put is get that it spot - let and difference

Bill Dezellem

are really doing ever Couple worker's having more is better in X.X%. function you a all your the questions just or comp function to pool before? a actuaries reevaluation quarterly this better first of of that with this that have experience simply was that relative now you more please, dialed claims you Is it than of that since down at have

Michael Elich

was or So flat year prior prior years say for was the in much $X,XXX estimate pretty accident the I’ll good change right guy. it

reflection much depending year. other pretty in to regarding evaluate frequency, going estimate much book I’ll pretty you're loss is a fixed the comp comp upon out where have the friction that. what that in the to year. to on of to the in administration our amount quarter. ratio the that I we it’s you is depending if also And on a for change need know quarter focus as for of we’re then A In really operations fair We’ll So severity expense is large the estimated upon have our quarterly we this and expense is estimate worker's in at as operations mean seeing true for obviously it much of tried fixed the of part we a on administration. say the models what but basis, well is possible. try the remove look estimate our expenses to that, the

Gary Kramer

comp how look the more done predictability taken of model quarter that's longer measures three-year a is the We’ve at and work at as a measures the last lot a to us landing quarter consistency - would better of see those you’re and to few that we’ve where are it’s and given now really trend. years. we begin to are product quarter running. number think a when to term we it over lot, It’s a more look where you a I of not expense as quarter worker’s to I and really stability of add got kind probably rolling is with the in number

Bill Dezellem

this think your to then some I you with reference channels in quantify channels? with to multiple your And relative robustness ways you referral times each have success of you can referral channels, referral on strength Were the call or made quantify or the some

Michael Elich

channel. from - come partners. adding quarter of seeing follow it we’re that back source here closer went things the in one to individual channel I’ll call today from I and a be data it Today one we this year on that but we The receiving resources if business we’re as of XXX. seen guess ones point though larger be individual we of out ago to like Kramer may let were business up that XXX business might XXX single Where or the a

So strength. a we’re partners referrals base referral of which wider a of coming from a getting see I wider in given base period

a there got within building that of better we even just I it raw tap be we’ve to and D&A with able work belief lot we have customers. worker’s to overall I understanding and in is the that’s understanding we’re think well value it material to to partners comp beyond are really call it our extends that that been the what payroll, offering more bringing doing even of we’re evolving really So HR just of

Gary Kramer

you more got get that base. don’t into friends and we’ll go have a those you status give is more then if into get right. practice the got have When of I think things or but we’ll deeper friends a have that to their we position client you where you nature friends make

then and friends. friend we build have then new to business do a So with try once try we we our more to with

So referral there is continual trying partners. keep to more on bring effort of

Bill Dezellem

some be It may about makes wonder term? be longer thought of about a not I saw you where than things year growth. lastly breakeven grow point first you larger. historically at you and have quarter but the you next is that’s year then we that or first quarter business losing saw thinking as me that quarter of how money level But term actually this longer reverse some scale given more the prior and good are the consider reaching this And should because

Gary Kramer

is we’re we there is are that things seeing mean side to their limits. of a tax couple raising first payroll quarter. how are call we're go into not getting the seeing states I especially on Yes, the What

our the the more margin in - loss which So the you’re we’re continue quicker and but we have that's happens the first limits cap we’re we the so getting more hitting means is having or when going quarter year. quicker to that same, wage are what March hitting profitability staying inflation in is that’s caps but we’re that’s why throughout which coming

first will out have I quarter loss foreseeable for I to model our and and of part our you we be pricing, out have in years. tell model it’s can So a modeled the

Michael Elich

unknowns but bucks a an your state on a say XX wage that to state hour mentioned ago an by in basis. suit is equation to from average to bucks $X,XXX Kramer seven probably cap - that food see move and quicker as that's more are XX, years close hour, average little your as reaching say for and persons it’s your would you I six, XX

but don’t tax, so leverage of And because slightly to quicker I normalize think what base you fee to year-over-year. moving it’s obligation top get but see you’re is what zero your wage through - it that’s your I improve do could tax just that happening know your

Bill Dezellem

I’m heard correctly in if of we QX that be through some does comments the of if indication earnings strength year this and that your of And than so the could this seeing for rest interpreting beyond, comments I year give right.

Michael Elich

fair we our that we’re Yes, a think earnings achieve. that We higher guide. we’re reasonable degree comfortable have with a to XXX number confidence going of that’s

Operator

question Our Capital. ahead. Casey Casey Please next from from comes go Kevin

Kevin Casey

of workers the couple customer view risk, on the talk trying than workers price you margins can understand about comp, to same? or and and Yes, comp advantages, you comp versus how the one just of pressures non-workers the questions, like customer do better one then other

Gary Kramer

the don’t at which for mark that look off up look look for payroll, our work and for workers we percent X them tax, the XXXX at completely bucks as, back we based allocated take price in it we about at to margin we allocate for a - person. at modeling basis because or we and then we then our we that - start I’ll on as when same they’re of under we mark comp tied that’s is paid we look C-Code up customer bucket have we a per doing ahead

we with then remain and workers’ look we the workers' comp portion at So comp, peel without out just we a when client our margin.

one X% So yes have that the a - is workers’ standpoint, margin build see will them but might same things you comp risk. that, that called see you'll have the We risk customer to the place have that actually would of we you’ll out charge now but the of doesn’t going look is you won’t customer the working amount for but one any that the don't from amount but individual margin plant with carved and X%, because you're less we otherwise. different have

Kevin Casey

it was back you ups customers, or small then was and these had looked it you large broad workers’ comp coverage of when back have some a hick was And mix? gone it

Michael Elich

the can going. comp our make them It’s we a than try how a level or I when mean move will to client really branches get the you - them loss, to you portfolio of it's mix. trend in to it's the the profitable, broad that If really we our it that work client when not take out size, a it's be just unprofitable specific and a then not to but we it's with that have if make about the portfolio get portfolio size, when count not you get becomes to them and profitable. in

Gary Kramer

in that to go would that more when recession you typically the XXX tends have we the probably they flex the get risk might I as XXX they're force larger sometimes might for but be group have employees, XXX that of only to quickest bulk easiest also back from and carry both workforce let’s Yes, easiest you that as a to the and work clients then wage of see lower going well. and a employees more in let and to frequency base get last into bring would because of go the would a though that add potential standpoint in to that the the

for bring stability we big risk, client. client watch not in the you more the when have but it's you're versus smaller charging that cycles, So clients through more it larger the

Kevin Casey

asking bigger then same margin. chasing more business the you them was I actually might lower clients risk have with probably have

Michael Elich

specifically Yes, That's if larger right to competition chase. draw comp, in. business I more especially going accounts talking we're the mean to not that are going we're to workers'

Operator

At closing this the to like remarks. our concludes this I'd Elich time for call session. question-and-answer Mr. to back turn

Michael Elich

really morning. this us about at. joining playing staying the everybody touch. where I and we're feel good game forward to Again, We're feel looking Appreciate long quarter, in about a good

thank you few Speak a to So in you. months.

Operator

participation. again second your talking We quarter for on you our look earnings to you to call. forward Thank you. Thank

Barrett Business Services (BBSI) 2 May 182018 Q1 Earnings call transcript