BBSI - Earnings call transcript Q3 2019 | 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 third quarter ended September 30, 2019.

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 the call up for 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 company forward-looking today's conference The company's remarks call include forward-looking will statements. during presented other facts, to of These number not uncertainties. and subject does information along reflect that statements, a risks with historical are Actual statements. results those by forward-looking may differ implied materially from those and the Exchange the results company's could for that with recent company's to quarterly differ. to to and filed uncertainties and actual refer cause about Please the - information release Securities Commission more and that the reports annual earnings results excuse risks me, cause could

I'd will in today's for Time via p.m. available like will provided Eastern call December also the company's everyone afternoon. link as release at be on this at A webcast X the be replay website this to available replay available X, as well remind that press through XXXX, starting www.mybbsi.com.

turn to please I'd go the Sir, Now call ahead. Kramer. Financial to the Officer BBSI, Gary over like Mr. of Chief

Gary Kramer

$X.XX $X.XX quarter income to Thank 'XX. share billion upon over $X.XX billion resulted compared the you're to from, where in the dialing in quarter We or earnings. grew QX $X.XX X% Gross very to afternoon, compared quarter X% billings morning everyone. gross same to of record billings Diluted year. last increased of good Depending good had the period. that you, for a third PEO in increased Michelle. XX% strong per

gross grew versus Same X% XXXX. X.X% one customer Gross geographies. when X.X% quarter more to prior X% 'XX. had of to compared all of combined the day billings when XX% by in XXXX billings over approximately for of other period. quarter the adjusting third were California QX day increased sales year the compared in in X difference, our The third work

QX lower X.X%, lower of been However, customer same sales have internal would plan. was adjusting for which than the our one than approximately 'XX day difference, and

XXX in clients the XXX in any base to increase number client continue in net We gross XXX our a The or gross of additions record are third quarter of addition history. our runoff with a quarter.

Net of is a which $XXX.X growth. anticipate in compared million of XX% a 'XX compared to result and slight million staffing of QX staffing slight tight a weaker and to reflects increase headwind reflected we direct $XXX in decreased revenue 'XX. decrease of market, labor will to revenue revenue staffing million near-term revenue, remain the continued $XX.X The that to QX

increased payroll in X.X% compared QX and outpaced profit a X.X% at XX% and QX million as percentage billings 'XX. Gross of million to was to 'XX. gross $XX.X growth 'XX of in taxes Gross $XX.X of of QX benefits payroll versus

which X.X% quarter, is billings the compensation billings percentage our expense X.X%. X.X% gross to range third of a was XXXX. this of of Workers' below of to gross in quarter compares expected This as X.X%

the million. Also, quarter Chubb where arrangement The actuarial $X.X first discussed, is effective third restructured frictional of reduction year and as in are when independent costs, year we to more on previously in experience. the The of bring is estimated liability our prior a our triangles reduce evaluation and with all reset another this pure efficient resulted quarter structure. policies of we

our the of to compared frequency the compensation trend pleased percentage trailing quarter, payroll claims XX.X% decrease in, with All is performing. the portfolio we XXXX. In favorably. compensation very relative continues way a of claims we to are quarter of third as workers' workers' Our saw frequency XX-month

We yielding have many results. taken are and steps positive actions which

quarters the our why resulted come our in continues focus a strict redundancy a lower and conservative seven than portfolio to expense in are and and We this in has in deliberate. row And range. attention

other states margin and as lower Payroll where of business many decrease. to as California, expansion increase is compensation continued a related This mix of gross components percentage have an PEO outside billings tax increasing payroll of is in ratios. workers' gross and

the XX% portion timing for year sharing. in includes quarter. than prior is million, higher SG&A business increase in This plus increase quarter which the $XX.X profit the third day, slight was a extra a

about to against continue for mindful balancing future. We be growth investing business and the in diligent while spend the

our full For the to XXXX, be on expected year of SG&A is plan.

provision third quarter was million. income in $X taxes The the for

from last our XX% quarter, tax mentioned to As increased effective annual XX%. estimate we rate

the results mentioned because together actuarial in program renewal the balance X/X/XX view last We This of closer and and insurance accelerated a we renewed with sheet flow. the balance balance our quarter moved our our unrestricted sheet. cash that collective rates. we tipping our point growth was have free was Chubb. Moving significant of to with a successfully This cash loss for

which X/XX/XX. with unrestricted previous our X/XX/XX, $XXX X/XX/XX restricted cash million will XX/XX/XX. at are than unrestricted comprised greater million $XXX million investments Chubb The a and than trust, Accordingly, our is investments $XX cash were investments, be consistent the million and manner to combined and The restricted in of $XXX was and invested disclosures. primarily at cash which continue greater and $XXX million

X/XX/XX, We to stay in cash XXX of an a we returned annual had yield to in continue the rate flattening invested term curve. conservatively near securities that $XXX shorter-duration in points. due basis crediting At million

with no X% for yield points the AA, the and the $X.X income. of investment basis portfolios XX, of quarter, X.XX X/XX/XX, portfolios was we September investment quality invested the the portfolio. than XXX the greater book duration of a At In invested earned average of was was At million years.

million of no we we our had continue of debt-free, the credit We $X as side our have X/XX/XX, on be no in Washington. On to for mortgage except the headquarters the line under and borrowing material updates. sheet, corporate balance liability Vancouver,

allocation. Turning to capital

the balancing capital diligent We be company regarding in we and mindful company, have built to around the continue while will a note and financial investment to returning shareholders.

quarter. drive dividend the tool by last to million shareholder this far is $X value, stock back but have did repurchase another in authorized increased to plan, quarter stock have we buy returned XX% year. not We so an We the and shareholders which any

expectations branches gross and continuing meet to regarding adds. our or for exceed are In summary, controllables the for net client the quarter,

experience product our We margin continue model. expansion costs through reducing in relevance to while

gross customer billings increase sales. even the the to uncontrollable with continue softness of same Our

in continue the future in business to and We efficiencies savings while of growth we invest being mindful for looking and do. and expenses everything

and new Our we strong, pipeline remains net to base of our continue build clients.

channels to distribution and relationships continued referral Our widen.

we financial our company. core balance have predictable. a has turn, sheet strong more are the to and importantly, a But and note Our support built made earnings

the outlook of our for remainder the year. Regarding

XX-month continuing far deceleration in expect approximately revenue X%. to contemplates billings period growth We for we continue and growth This be gross to next to to XXXX. customer have PEO sales thus in staffing similar same what experienced be the rolling for

the For for reflects results our estimate plus XX% our core planned, year an our as effective increase offset tax to increase than rate we operating per raising XXXX, diluted earnings by share compensation are This partially better $X.XX. in by portfolio is full performing $X.XX which performing workers' from approximately our to expected, XX%.

range when of also gross percentage For quarter of the a be X.X%. be the looking range fourth to to we an applied as can workers' compensation expense approximation billings as for to This X.X% forward XXXX, XXXX. expect

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

Michael Elich

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

and As continue the do our September spent we the progress we fundamentals. organization the of my we strong, to our and each reviewing XXXX to in From of much looks XXXX. business, field, of in forward year, of looking to plan execute view support

to the introduced we and new market. partners make - several Also, and first with time referral new in September, - we our excuse the continue understand coming be to spend coming we a and may value moving continue the first in this - value These is visibility me, to Additionally, seeing to market. we in the that will will as owners, our make the move step represent months accurately the the efforts working mybbsi.com. to This at a business in more what we business is confidence to our URL, website in the look forward support proposition they in us proposition market. and field

we XXX the XXX sold, XXX away moved added net XX due to attrition to closed of and risk profile, to businesses XX in businesses clients. receivable, clients, for accounts from new the new pricing represents PEO quarter, an have of XX due lack clients. This left XX companies XX progression, in three competition We quarter the that model. experienced approximate build due outsourced forward Looking tier of and

and profitable and runway some why seeing. continues Also are to be there find believe growth, to are quarter, majority business talent lack the they what In continues existing spoke a our opportunity, optimism to macro to sales. able poll to with we they of offering. these we a variety are customer clients, Despite to the the need of we of which their took uncertainty clients expressed not owners seeing relevance general, to issues. understand the see same better to but to labor be limitation time grow, XX% is related skilled softness we in speaking In may in in be and to continue

partners recommending to of continued and BBSI. to quarter, and result adds we a the believe strong client in Related see is pipeline, we referral this our understanding

model a approach on seeing to adds. by national We market Today, based channels systemic continued a are developing we contributors our of strong supports scale as which basis. individual channels from all new referral for in to new evidenced evolve markets client to growth pipelines referral on a continued ability development

Related to organizational structure.

build invest branch of one new business support In into to and to quarter, XXX and team, future the locations. us bringing field added across the continue offering. we scale our to support We teams business XX product growth, organization markets

Directors, October, our to We our To to Diane addition structure the we continue Dewbrey levels. all count end, to Board members. announced eight of in organizational build total bringing that of at

a we stratification, increase branch use in This have branch's indicate excess to we to run mature million. $XXX rates ability branches measure to is Related XX of leverage. with

regularly emerging million to We million. running branches these capacity support $XX $XXX We they have into XX as back teams between reinvest grow. and

Finally, XX consistency run pipeline consider In while with integrity branches, product rates scale. to as we support branches million. of invest to we developing up have these we of of they maintaining $XX

we to dictated pay infrastructure as add support our attention business support capacity, pipelines, our ability we add As particular growth. of by our teams to in to

stay the remain on relevance bringing the and received to look forward, strong. fundamentals of to of execute are supports and and to comes in the focused ability at over field from this I've year, our structure partners a we our Looking the strength of that allows value clients our the the years. product time as us business our confidence in We the deal spent the nimble. referral Feedback business Having long run. teams five great next predictability of my from

We continue predictable evolution that need that to foundation to new energy, our product our are to we have where invest into both outcomes. we plan. Today, to and with supports a in we and our strong. infrastructure know is focus We scale executing markets ability

it that, over With I'll turn for questions.

Operator

Instructions]. [Operator

first question Moore CJS Our of Securities. with Chris line the from comes

Christopher Moore

focus near kind of of just Maybe on a specifically that, California, the growth, kind outside has, bit and impact midterm. little that

with maybe on channels. start the Just referral

referral that a look established. kind you they talk California? about are little Can have in the So well outside of channels of you how California bit

Gary Kramer

Kramer. it's Chris,

we question. good how consistency go in is product focused consistency that's really we deliver the we've product in and a market. to So how our and on And what

think on strategy for about state. work basis, forge we got partners our you with a we've if referral we try So every national how relationships how these a in to

get So and you Utah, platform California. referral in to you're a service treated same if of the sort as partner

going to by So vary it's market.

a idea the and treated But everywhere. respect the our Some that any service in are is our it get state are matter that to that those developed. are like versus, the in little branches in, more gets same you what states with opening basic to same that mature, take going BBSI East referral say, the channels Coast you're partner looks no of markets time if Mountain go storefront, up, and

Michael Elich

I'd and to Chris, Yes, add that.

difference leadership probably One the call Mountain that being very markets in the in really and to the the that reviews see a all Coast. in don't out I consistent, in of field saw third you much of and quarter, was, very states the did the bench it, California East is one, things just between, we our

more California. may effort. an have other in retool brand have say The we I taken evolved and that's would we Coast partners thing the grew reeducate on as that if West that our referral And lot the to shifted it, is and insurance with in past, and California - more of we've had offering we've as a up of had

As and we we're at referral through channels our markets our where proposition a current of probably through a California. existing acceleration value came an markets those at of pipelines value where we in the see out lot get other of probably a we markets of an adoption look proposition, growth seeing in states, different effective yield outside higher our that those actually coming we in

Christopher Moore

a That's smaller size, client customer California. interesting. on you're are that it's up of the kind you're of signing or that From - outside - average, clients

frame You impact about the to a talked on starting you much that reach million successful - had that kind five kind branch of $XXX historically side, level. progression potential see? the for that does of that year time a Does smaller

Michael Elich

branch a tendency a to you'll that two to more headwind. be what as a a of adding lot new smaller And bit little times the you get markets. client, when in is smaller there's sides comfortable more average customer see size smaller - There online. increase of all a traction, you Yes. is There's company. see you more And The maybe customers. a coming employee

versus So just have nature Idaho, and if that then population tend California tends But just consideration that's to into by companies be of kind to you companies to in market look Boise, take a - smaller. they or standard. demographics, at there in be you size Utah of Southern

in more been and the our But longer I you and we adding too, ago. will if how to because get we're say, we're think back maybe today, bit today in went have it I we we're us one pipeline model, take So is, efficient of faster business get little overall a than would XX for there. years there how things building adding

Operator

comes the Roth Jeff Capital line Martin Partners. question next from of with Our

Jeffrey Martin

know updated of going payroll from that. you are with I format if for guidance to an think implied of $X.XX taxes, but helpful on guide year in insight get down I on some relative there wondering QX your would some Was imply things the comment the could here open to year-over-year. be it'd on kind you

Michael Elich

Yes.

'XX, think it, QX nonrecurring. So have, two call if back you for we of

$X.X in for million. estimate comp, we change So a had like workers' which was

So when estimates. giving forecast forecast in forward-look, any we're the for we any don't for change

was that that were have a ended So being that in that's of of one 'XX, other due going we be the we QX the puts. up to were then one going to due. estimating not tax was And payroll

So 'XX. we QX took down on that accrual in of

'XX. So you've got, call it, two credits from 'XX that don't repeat in

So growth 'XX. if getting earnings those, we normalize for are you of QX to for still

Jeffrey Martin

have I Okay. an the progress some up on could units And then and that new update new wondering the year. branches of of if you opened business this was give us

Michael Elich

style added we've branches finding as new of branches. there's and markets, two new So we're that

that might a gets the ground with off existing sense client. already branches. in that's that existing of there's that moves branches you're a that those to example. talent market. with somewhat faster a that we be add there maybe taking be market of you're a talent started new business but where already those that channels a already combining that branch, branch call tuck-in. got we'll gets local makes if happens, to experience the and With that, that's built also say a referral pull branch, that, momentum and partner been branches it are around customers that the for a opens in for book typically, a one, working Let's the current from a - the in that tenure, adjacency, that peeled already started of you've And because new business with more branch off and When Typically, be

$XX that branches, to $XX move So pretty million in to that fast we'll find they those million. through million $XX

that tend we all this They anything that any in tend to markets and all referral $XX we're be new I have rebuild end used to at able we is that we more the helping having that lot also quicker. channels or we ever branches have a our well. broader. on they business we time six last around be and look going as a those really branches more years, go point But at than in front us running retool and that to new. pipeline months What's have right couple are by they're go it there get suspect find a once take new enter are proactively And needing When at that wings we to to through the a ramped manager before greenfield whoever's and when to into markets. out doing we of to. relative bit lot today a either a create greenfield, that's little or don't look the to We million, retooled the sit to up go for market, enter learn very a

So the than are a seeing greenfield pace but be little those a bit where slower than faster tuck-in, also historically. we're ramping of branches the might

Gary Kramer

I some on of it, our just when we had, set out - plan And call beginning would X branches. year, - new the for to numbers throw X it, we to

the the Colorado. for branches, California, one another a opened So we're year, of to process we've in this in Allentown the far in signing one area. location three in lease open two And

branches. be. So for were plan for we'd units we're, it, And think a about then units, call hitting when we our behind the number little our where for business business we thought

get people, change below just and find more else, of them for than operationalized. a we're timing when the really get it, anything to in you that's just and going think more It's have them be the the timing year, to than slightly strategy. I of of function

Michael Elich

XX%. utilization we stall make to gaining getting come done today, well. we about to good pipeline to it u feel closer more we build beginning our business we're And units. we looking Yes. our to was have we like capacity the and where cap the be need But or sure But up. of closer of as more efficiencies If at XX%, against of year, are don't runway where kind XX%, it, anything. seeing optimize where we're capacity call to at teams, running we're we're efficiency as we still to has necessary through

Jeffrey Martin

you build growth how point? for then looking the on of unrestricted this investments share sheet in additional with And are repurchases at the Okay. at terms balance cash, versus

Michael Elich

foremost, it capital, and right, about to Yes. and thing first is invest I look Then branches to we're technology. i.e., the think going we're And mean, in information synergies, going not invest businesses to the think having we excess going we're make that are - things when value our and you people going revenue when When acquisitive a do first we're invest product in we're in can why to and business a IT, our units. either our buy company it. company. you props, and very expense grow our of synergies, then

dollars. stock undervalued. with for smart down then the board the stock when see and took when the a purchase kind any any and we going three market our we which to repurchase, next to dividend, finger, utilize trigger raising last which and shareholders' we're of we've to is - methodical get authorized we and dislocation backstop will be have tranche, how say that don't So in million that a years. is think over can which just we if the spend That's done, stock then for we be we we $XX quarter the

Gary Kramer

when and not look up headwind it's typically, that, we've say, own it comes add stream, so we to too, that branch, just to we Yes. it I capitalized investments complement made, a earnings. would when through becomes at our earnings Jeff, that and a

to have a areas we'll bringing and So that of platform. to a than today XXXX into and as level putting that. we're energy going how new is where a and strategy infrastructure back IT look our be we as existing of the beyond, model. maturity been our building relative in a that we're get But we overall probably one broader complement lot we and into And just to the have past we've rolling with technology had

So...

Jeffrey Martin

right. Right,

question. Last Okay.

underwriting So many peers have health had with issues insurance. care

and Just want to the issues of to similar health were having. exposure underwriting no clarify that that care you some others have

Michael Elich

Yes.

we methodical a offer mitigate. can and comp, to clients you're in how align about workers' feel not peers that's underwrite, can don't do better, difficult call health work we work the it When how that do the our more need we that underwriting the we for we that for to a we challenging a health bring really we risk to difficult our which very mitigate we as risk is we as opposed seeing a to for and risk, think for clients, that them of our with value it's with care have for like take, a So we risk some prop. - on, client can be risks, feel to process care more with side, how of better decision to make the

Gary Kramer

on running as we've do with our that I also come over care a model help although bit really the have clients one-stop-fits-all. as and taking And have than the resources. that we as service than we're that care trying non-captive where outside living, And professionals to find our still have time underwriting and they're with get clients health our and we I our for has that can side stayed rather where I Jeff, rather best level, little in really risk-neutral the can we is, risk. would of we business opportunity, have But that, support an mechanisms stayed help think our a Yes. model, rather benefits conflict to high-touch what been always owners. it of say grown we're and down health would matured be

Operator

Sidoti Josh & Our of next question Company. Vogel comes from the line with

Joshua Vogel

overtime around Mike, your client and the you commentary some across base. average pay usually give trends

share can you if wondering with Just us. that

Michael Elich

So in the quarter, I'll absolutes Kramer. probably the defer with to

Kramer probably I'll is - in to coming inflation. that. same of And more we that probably it relates have sales things the talk still the from let details to but of customer growth seen of One wage as

Gary Kramer

of more same it's Josh, quarter. that about trends we the talked last

I give adjust extra I'm going day. numbers So the to here, when one you it for

seeing X.X% be the Xs. in a still to customer the mid- that is of is wage in So of then we're which after same going lion's inflation, to then our adds. wage - up And high sales, share headcount you in after a and in of bit inflation, you get that, get get bump a up little a you worked. little bump hours bit of

when this sales how we're months, wage a how So it's come looking it's this sub-X.X%, our don't same primarily going over customer performing, - the at going from how inflation. going probably - XX don't is next at to say, get uptick see to just be I next this unemployment in in I'll the - WSEs. to cycle, we're with I

Michael Elich

to and that's so, did I me, in our that is lot They're wage that the business themselves profitable - to we notice a last sure running stress in of And couple They're the and worked, businesses. a to capture not a spending of capacity meeting have good that clients, their is or time say, just Yes. normalized, what of probably profitable. them money. over somewhat with Josh, They're hours would are making modulated opportunity where, with doing And their they're doing quarters have - in are spot. well. it's opportunity market to finding to I to owners think, overtime aligned more but push more where make organization and they lot have aren't

they a off little that market of bit that flip, we were a that in, think is conversation guard and a where almost noticed for you're where group more of is business, of The transition having an maybe a seems for this bit They're they they the going, one a where unnecessary buying their and they're have They're building young is the owners, part has seeing couple a look guard and break group They coming young about group as now you've they're 'XX,'X about guard. mid-XXs long acquisitions. this think weeks is the businesses to with actually in owned X, risks. interesting The split can through got be growth. not it we maybe older but to future. And where is a time, the they're a to aggressive, you guard lived doing that take at a a old little The that 'XX. room, going are companies. their in can

bit a of shift so there's of It's a as that And point, at that going on this little but I going anecdotal there. more on think a little bit there's well.

Joshua Vogel

it get in your for I helpful. that being is just I want seen mention California I too elsewhere? you closed attrition clients. And businesses but That's then And into find in but weeds the that here, mostly PEO did XX number don't my And to in evaluate given do? status in partner, a was as can't notes, curious, wall trended they you do I'm how their little the just see business - And base? it how on often are the typically that this before year. you client how do writing And your just seems a high. I wondering you was immersed or

Michael Elich

selling So we mean visibility different And business work there, versus then an could probably wouldn't the wasn't be to is that there. we as was as closing to that dissect FEIN moved we - able structure. much number a client. of we've idea probably closing see and ownership that recognize with changed or The it and got as that a they good very

at closed. other But and sold, the that I basis, business. kind the on trend or - the structure look though, a that of either I'd businesses it's there. The the of sold, And of on relative capture bit, might that less that is have X% of one than last ownership base quarter has side. a we we businesses couple you shifted business businesses recognize that in total typically, same XX that in they little thing clients our too, they've said sold upticked The moved closed if quarters between

So real from as just them a those look get bit at a grows, you numbers our when skewed a standpoint. on base little - overall may

Gary Kramer

to at look $X expense through that pretty you attention got that even to our it. go of pipe. pay that go if dark, Yes. And And for perspective. have because to our rounding we've got issue And a Josh, we credit we it's not side allowance push companies I and how companies from the on we dark a billion do tight would the potential say,

So behind than if it we're going it usually are they ahead dark. of

Joshua Vogel

around rolled just that out. Great. And website you

and curious your that's investment received client outlays if Just or base? are of planned across rollout involves notable end? other on discuss And some being can the for that efforts how the you this any

Michael Elich

internally, I'm reluctant related market, to that's perceived. and realign - say inside when in. in as What And up decided look would start So - can the are be rebuild we the could before ever a different anything we from really on to and discussed who is show out we how we from that, to it looking to we I it started rebrand. call different the restructure it it you outside

different XXXX, retool And we will we them many, organization last point a we've whole rebrand, can that We been started so the the when together people the many when years has do And all actually been that really we finally to a poll XXXX. where as received. back story. place that place a ourselves, pieces we story and tell they well to for have where reached pulling a reached asked think have

I've that new maybe aligns represents we but the you'll the it mybbsi.com, and we're market. really back what about out think really we're and lot we've is business - that's a to bringing me And years, of to people about see we if story about it, finally that. it under been couple last one - that different do, for of us it's talks a website, what I where go believe that talking the as owners had that comment what excited they with see you

As we core possible forward, very here, think from look we look that a at I as business. we've got strong what's

day every core we around and through ultimately, and framework have, out have we life we through then and how talent I how blueprinting, the think technology. how with our we with of client support our front we in that that tie our discipline process cycle we've clients clients then that how manage through the with that we manage good interface basically got full

are those things enhance. So we'll that to continue all

be actually have together, around and place relates think we super go a business might success. showing show be to see locally towards community. partner look own there implies real you in ways. that owners idea up, you venues, to it with different it both when and to up probability about can building and you that have for might And that that regionally the find that they pull their don't a I But communities help where it in they we're direction will going alone them be we As they us emphasis different - different versus BBSI, the an when we're at places us increase is mybbsi think to

group clients, it's to a So business in we other, When with. our that's we're going get that the - for bring changing. communities accelerating. years been them three we we on now. direction field actually building with of talk - we've and these we're owners about And working to the this start it's through better as get and And in each working game to but

I'm there's about posted those as we'll at. So and you things, all more keep look to excited

Operator

[Operator Instructions].

of Management. question comes Bill from next the with Tieton Our Dezellem line Capital

William Dezellem

up of of of remarks, please Would in you doing left forward value a be I'd shades to making and I point just what off. on going to you just to the on you're this steps value proposition. into said that highlight us give will window where from proposition? many your open the the look be you highlight have that kind Early like was you a start group mybbsi the picking and that questions, opening to first

Michael Elich

to And I'll - a much. going bit, blinds. to it we I'm make little and open blinds you that we'll the of little of let turn I'm sunlight give little going Well, about as bit them a kind thing How that? in. the

William Dezellem

fair. That's

Michael Elich

over they we partner. it's advocates. where theme many a over interface true the long creating that period of As again, been about And is look years, their been our there a as building have see us a at as time, we've see a us true through about with clients client we interface - if them what

their it. by to referral base, also clients support help and channels into to look the educate begins them and the we introducing we to can As value our bring they their that understand client of us DNA

the our work being the related we to of with. can lot of are So to can exclusive if owners look community, you do at business a around mybbsi collective we bring that where them give we a theme there there things access point, in access them and

as start I aligned at one technology that we and strategy. experience a event that information and outside in And well a a our that lot we as proprietary we And we to partners well what I When customers network way through bit do support channel strategy. where really channel access us, referral it that's where we a have of up a are I'll we bit broadening with of incubator an at an of becomes referral partners becomes an as we with have to that it, that through when little bring as strategy through we of little bill to that show developing - look call lot So learn understand a look the as to our just we that, more. us. channel in, we networking with events to think BBSI, bring and of work already, our, that do

barrier - create over that bring is brought through, over very can't We we've we get groups do entry. time. there's where They very, But that into we'll LPGA literally have firm today of three times, events periods environments relationships we've use, and those. built and to

that of XX% last on individuals we and being cost-effective be LPGA. looked bit, those front-running a that three but business is in two and as way actually and broader LPGA recognize are the start footprint CEOs there at markets golf of to this the a are the in new new using And efficient building market pro-am that way the pro-ams tour way or getting on owners. to business we we've we've owners creating idea to little year, - What on a able visibility we're year-round might With out participate - that, or time. bags to - a participate over in

TV of that a going also ultimately, environments market might those So then our us us channels, to, the brand or be two, creating and allows one, creating of create We're referral either we're without and today and begin and out to being getting we're our an our - tapping avenues curiosity But build media-wise. in are by more future, front expand brand experience. of BBSI the being in relationships and are to people - mybbsi visual that audience, where being seen a approach. create with

William Dezellem

that? your when And also really state were you and you that referral mentioned Would about had mean what widening. that you talk you relationships

Michael Elich

tends see When that I little that's when look a potentially and we we business business at owner, - a probably get transactional. individual to an we partner, them to kind meet tier first would but is aligned of be to person a who somebody a referral us. it a for X create and trusted them, them for can a maybe are. Tier They more that as opportunity It's adviser themselves, probably

point and bring them them lot of see we a in in as we their see value proposition, sense. business, starting to do opportunity we're have throughout individuals, regions and into that helping So help both own as them - get through different markets, our to eyes the get a education through And of more global the a on where work they're working product those understand basis, through environments we through makes branches. we'll then micro time to local lens, a to doing the business our to we spend that maybe the recognize if with of network

organization business might a a still help That internal areas a business. agency, help to X referral of becomes may partner it. their actually the insurance that it understands but do the environment see mature work From owners see firm from to a now partner X now they're time, product double an And tier us or they're we'll we with an can similar than law can. at we've sudden, that If nature that, and Tier a our handle understand we'll accounting to the that So trying into. to to on, we a really might one little there, a firm do. back, as our bit, what inside out of the - understand that product start articulate and Tier to that, Tier of to or they own Level and evolve lead help where running rather them those if bring we're got value and Tier we think X, when X well tend get probably X into of as start somebody catching them bring can referral the relationship you explained, we be as you to that there. And from they're or them proposition and them getting all we

Now they're in for work the really doing market. us

William Dezellem

helpful. That's

increasing the an you And then, relationships. the X, so of Tier number hence, the and seeing are presumably widening of would partners you consider

Michael Elich

Yes.

coming then from from start what's audiences. to also is and in referrals yield The effective is the we - look And a one our last from, seen yield. look presented couple this existing ways quarter one who where significant stratify, at we And of versus where areas the of number with of yield then of the on we a that have through or clients. uptick little we as in business to conversions probably is the we of and us have so that's thing quarters that that opportunities, one original that different bit at a the opportunities

William Dezellem

or that in you I than channel - Mike, was less somewhere opening than of call in the yield remarks mentioned your less California. California was yield this think outside referral

customers. having on from referrals more congratulations existing So

California? done to or what improve referral channel So to yield be needs in can that

Michael Elich

probably as was in meeting, consistent that the the meant would first of or what well, much yield how the - meeting, look see but happens ultimate at meeting, the if different. the second finally all the ultimate the end, pretty - in California and channel line to we what with - you states, it it's fourth I there's get way the across I we And third is the is of happens to it's see pipeline we pretty first falloff differently. When the meeting works

that. so bringing can I I So clarify that you up, - thank for

from time-based The more it's other opportunities to client even referral, would the the to that process uptick the it's do. that though, more execute the really say of allowing what as and maturing have clarity us bring It's I we more have. get we to a as part, that we we is more market of that seen the we

Gary Kramer

Yes. And that. around I would numbers some put just

right, California other geographies. how we clients it's all is efficiency Our ratios, whether or consistent, acquire pretty for

outside in of California, continues quicker when diluting we a adding California but because We are got just it California. like big get still the clients California. outside footprint And it's than - grow, California, we've more growing ocean is of and it's such to to

William Dezellem

And then then and talk I frequency, claims want about do I'll to done be here.

roughly said What to dropped that success? You XX%. frequency behind claims was

Gary Kramer

things, when a But to one little these and over thing the do pinpoint lot I wish doing of could repetitively. we it it's you're things.

very one and thing the It's we pinpoint very we've you can feel got year seeing redundancies with we it's we consistent favorable So We results we year prior But to. are claims. the for comfortable lot for have are the results prior that the so seeing, XX for that we're years, a what little workers' the comfortable and about we're things. comp, for feel the see on those can XX strategies those claims yielding pick. where different of in, strategies the coming and about in value loss different not of

start we the executing conservatism only are So we see And and strategy, strategy. then I have conservative, thing unwind is to over we say time. disciplined can that and are you a to the

Michael Elich

the base. that they retention business that have where the of with the when difference to - all one things of makes see a we a actually we probably add that the to bring And companies. client longer from And that level apt onboard I that more that's overall we client, better-run do are do it's the we think area big with approach systemic be more would I new a we Yes. a to

William Dezellem

So the claims were you serious when you said XX improve different to frequency? things

Gary Kramer

tools in have many the We box.

William Dezellem

business the the operational better is what those is an to ago as remarks just So that part was that of consistency is of opening going part perspective run from than this forward. being going this in referenced consistency lead much examples of is several to years and it you one where

Michael Elich

that I better. would we're BBSI say the is our that that better, say this clients value is would to bringing and I

So when a you take the two, it becomes effect. multiplicative

Operator

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

Michael Elich

to you. It's to years catching into you thank and dividends putting see over call. the with this organization many to and on Bye. journey up field starting rewarding work very on us. Again, next that the some all been both for the continuing we've look the with forward pay Thank been in you,

Barrett Business Services (BBSI) 6 Nov 192019 Q3 Earnings call transcript