BBSI - Earnings call 4 2023 | Barrett Business Services, Inc.

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Operator

Good afternoon, everyone and thank you for participating in today's conference call to discuss BBSI's financial results for the fourth quarter and full year ended December 31, 2023.

Joining us today are BBSI's President and CEO, Mr. Gary Kramer; and the company's CFO, Mr. Anthony Harris.

Following their remarks, we will open 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

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

this through X:XX be Time would everyone will available like at starting call XXXX, replay that for p.m. XX, remind to tonight. I Eastern March

A the press link website webcast www.bbsi.com. available as provided available the at on via be as well today's release in will also replay company's

please Officer I to the Executive call would the Mr. of ahead. over BBSI, like Kramer. Chief and Now President to Sir, go turn

Gary Kramer

pleased everyone, our you, quarter, We am had year, results. for capping strong and another off good Thank with and joining afternoon, I and strong you thank the call. an equally

of recap year. I key performance, Before to would and some the financial strategic speak about for our operational like accomplishments the I

new every clients buying markets. existing successfully selling are one benefits and are of so are servicing our in We BBSI and our clients.

a time that seeing success penetrating. we clients, we previously white in the are collar new verticals difficult had On

in predictable have clients and are of consistent partners. referral strategic sales new been operationalized Our and initiatives and new acquisition resulting

and model into We geographies gaining successfully asset-light expanded to invest in new and our are have momentum. continue

other perfect BBSIU new to products and continue recruit. our invest with and We BBSI

Work made also row. enhancements the stack to and we myBBSI. Employer of Choice year designation our the We Initiative to our in And further third bolster invest Place advancements tech for and earned of with on continue Great a

a retention needs. good, XX continues we Every survey willing so great and to client BBSI. Promoter our we XX. put services clients recommend be a and of conduct evaluate is satisfaction This than how calculate on say prepandemic that error. Our above we I the of the our the in an a pleased our provide. of year, Score is value we this Promoter and trend would solutions and This many scored anything that exceptional. clients gives am the place customer considered sum Net modified Score, our could year, to to is refer X to perspective, clients in Net survey us evaluation we To better above which confidence

we what what are was love for willing about they year of word team clients do, proud and BBSI, BBSI. XXXX ready a I am Our and and the to accomplished. our spread great

our controllable WSEs the various the client Moving for quarter we We finished year. on In that than the clients. sales to year versus once funnel. more continuing gross new to us quarter estimate well am strategies up We we billings adds start again in more XXXX. of sets our I our the which financial results pleased we prior the net forecasted, for new say to the from exceeded expectations for the the for to our growth with X% increase by WSEs of quarter. top execute added surpassed XXXX,

size stack are continues national clients with PEO the we of that off. average discussed clients adding and the size that BBSI we upgraded have favorably, As been larger This progress along of to average benefits. able are are with our sell the previously, clients and the to support licenses, running larger technology than

Regarding to teams attribute value work levels. to to remain continues I'd the we than the prepandemic runoff, provide. our quarter like the in clients that our and stronger client do retention our with our

of to worksite The as I new all what growth is approximately added from that efforts year-over-year we controllable refer employees these clients. our or X,XXX net result

trend summarize X.X%. existing we which grew see the clients. client in QX. our to partially retained started offset We continued To by more at was for workforces we in worksite and year, stabilize and our reductions QX, sold by employees Year-over-year, business, that in WSEs

staffing Moving to operations. our

staffing by and and achieving return. that year we repriced was portfolio XX% previously forecast. jenison not in mentioned with the clients prior where adequate declined business quarter over we were We Our line the our an

We quarter. also XX the recruit our in for strategy to PEO placed our applicants and shifted clients

experiencing also are geography. imbalances, and which by supply macroeconomic varies demand factors, We including

expect stabilize We in XXXX. to revenue our staffing

Moving field the updates. to operational

are with pleased asset-light our We with very into new entrance markets model. our

goals market managers total They largely We referral their new their in various are new of development and clients servicing and partners. have adding in XX new achieving stages doing well of development.

recruiting Some to of a real as support branch searching XXXX we BBSI estate these in to for the and locally and actively business. traditional are graduate will

Our marketplace. begin is year selling that upon in talent classes March. next anticipate three class the will we in markets depending in We this the in training their have will and

am clients successful of health the total and updates, year-end XXX service Regarding insurance a various with on we approximately season, to continue more we that offering. our on product X,XXX We benefits, had our than sales and participants. BBSI through plans have pleased January, I selling report new to our execute

collar every resonates are diverse distribution having proposition a channel. operate and we in and we with value and well, small clients large with success state and blue white Our in industries

will with results XXXX. pleased accretive product these to be and this earnings are We in

of a leverage position will and in benefit through now We the reap great are scale.

growth. XXXX our accelerate carriers We BBSI attractive we For carriers additional benefits, certain operational additional the and to our compelling tech, be in processes may add offering. refine our in plans have think to and will and enhance markets our further

will that participation 'XX. we estimating are of double January by our We

of view shift Next, to like I'd to XXXX. my

growth clients' XXXX. in our achieved needs These of focusing than by clients. the on controllable and reduction We have strong adding workforce by clients outweighed new actions more consistently our

folks more have sell, partners and product BBSI. more selling more We recommending referral to it

will is advancements compelling. additional have in client-focused to and XXXX. going XXXX dislocation make proposition in are more no there expect that gross to will If offer IT that greater to insurers have in health value billings We we growth than in our see economy additional the

over Anthony to I'm his turn prepared Now remarks. call going to the for

Anthony Harris

X% pleased the per XXXX finished to Gary. versus increased Thanks, earnings $X.X in share diluted $X.X in billion strong and everyone. with sales increased to period, to I'm strong while and our XX% prior compared we the year billings results report pipeline. to in Gross in prior $X.XX, the million $X.XX momentum Hello, year.

$X.XX billion $X.XX at our billings of billion X% and increased Looking XXXX. QX gross versus to in QX,

quarter While increased share PEO per the X% sequential quarter. increase in decline quarter, to while gross were a year a $X basis diluted increased the staffing $X.XX XX% and XX%. but year-over-year representing earnings prior in a revenues $XX billings on to billion, the compared in to modest $X.XX million of

in clients. base. controllable net slower existing PEO result within Our by the employees in X% PEO Offset customer worksite of grew strong quarter, our hiring which part new growth from the was by

over XXXX. quarter. prior the see in concentrated hiring at quarter. stabilize than Average the broadly worked largest and see to the hours overtime The time closely, in of Looking historical year-over-year employee a continue overtime trends trends. for the continue hiring slower client worked first remained remains WSE were our most quarter. and pace stable than to of with we year early But in hours Northern more reductions hiring the construction the have region. we the in occurring total hours in sector And and higher California also per in year, impact

by average resilient in and of going client wage increased the will quarter, growth WSE per rates, to which remain higher be forward. billing billings a driven Average X% continue source which

quarter, by growth grew region East PEO Coast at grew Looking States the fourth gross the year prior Mountain XX%. XX%, versus billings

Southern California and X% Northwest the by X%, California grew flat. Pacific was Northern grew

and margin profitability. to Turning

trends again of well favorable premium adjustments performance prior of quarter resulted claim benefit favorable $X.X prior In compensation claim $XXX,XXX claims. year million favorable favorable for the Our recognized in from to compared adjustments liability of in development. adjustments XXXX. and XXXX, continues program perform strong fourth we favorable once workers' QX to has This frequency year and and

client retained liability our no exposure program is BBSI. reminder, by workers' a compensation primarily As now with insured fully covered our by

Our gross expense the compensation margin due to quarter our and pricing improved discipline. in rate on lower from the cost workers' focus ongoing savings

Our cost benefit from overall management. continued profitability has to operating

full XXXX, approximately the by expense year SG&A QX both increased and X%. For

As a result, to ongoing for and rate, providing grew we in billings and expect our growth slower XXXX operating the trend year this leverage. continue than SG&A

Moving to investment income.

average average an quarter. And continues of earned AA, average conservatively investment portfolios yield portfolio investment with years, duration managed million $X.X Our to of our book of X.X%. the at an fourth quality be investment X.X in

cash remains December at no sheet strong million balance Our with and of debt. investments unrestricted $XXX XX

Our capital remains philosophy allocation unchanged. for

We our strategic back continue on company to into value-add prioritize initiatives. the investments

these the benefits of system management health myBBSI, been geographic and learning of approach including offering, improved the by among last launch products, integrations included accelerated and enhancement our in expansion, which client continued others, new expanding years, launch capabilities several has Over IT the with system asset-light our initiatives new our our markets. and

and going level to of expand our we expect similar products as to remain our in reach. forward areas these continue We investment enhance our

to is our distribute capital investments, to our these Beyond priority shareholders. next

In program repurchase last year, of with $XX shares X% in XXXX the repurchased $XXX at of Continuing than price the share, available remaining per more under Board's BBSI at repurchased of under year-end. million shares announced quarter XXXX, of million. million through the over average the company's an we July $X outstanding fourth program purchases in total, $XX

in dividends million. return over XXXX $XX paid $X in to also shareholders bringing million total year, the capital to for We

Looking continue ahead excess strategies. generate capital cash into to allocation these to expect to available and continue 'XX, we

our for Now turning to outlook XXXX.

between average XXXX, WSEs gross from to strengthen average WSEs to XXXX X% and and and X% X% expect expected increase increase We X%. billings billings to between gross and with

As net client return XXXX. a expect inflation a also baseline, to for client positive hiring. a we at now expect continue to XXXX, wage But similar we to

client year, XXXX the trends with in improving progressed. While had the most of hiring, reductions early as occurred year negative the net

outlook, modestly XXXX. to clients, While factored into which a we benefiting driver spending our decline of our residential construction sector improving, only in construction also starting signs see are primary were of

see our we has to optimistic total to XXXX Beyond momentum more in are that with year in consistently. service our grow new the we about were our will fluctuations hiring, the by stability bring client shown and customers hiring, And pipeline. This stack client even long-term negative more our sales WC our in able we growth. improvement ability to even sell adding economic through

ongoing to billings a XXXX gross matched we rates X.XX%, be XXXX, cost between with pricing line percent For X.XX% savings. our to expect margin and of adjustments with gross as in being

annual I we effective and will Finally, turn between operator for the now call XX%. XX% to expect the our be tax questions. to rate back

Operator

session. be you. Thank Ladies question-and-answer we gentlemen, now conducting and [Operator Instructions]. will a

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

Unknown Analyst

[indiscernible] actually Chris It's for evening. this

I health all, but care, care the health care And Gary, what are first. about take you there's underwriting giving starting bit but a up result? you puts you competitors your clearly, obviously a guess as less talk on and risk little So health just Can the some takes? you risk with of don't. for

Gary Kramer

workers' so off Yes. market. of we -- over take all insurance evolved comp it all lay it on years, the longer side reinsurance risk, Good we to question. and we've the no the that mean we've I our the primarily workers' model comp

care, side. So when health have on want we the perceived health the on didn't we care the risk brought underwriting to

and sure as make it were strategic partnered we able going partners we get product. long-term we're our with to that of fee charge that arguably be we a We more plays. our for So seller's when think to

type have as just we're far really We reward consistent health give they're to a making flow So that's on earnings to the cash our first pattern. fee economics fixed as losing business that up right? years, the a the is underwriting Some give money, money. The side getting. that risk want it we they're that and do, competitors years, as some

Unknown Analyst

to bias, geographic moving that sense obviously, the smaller out, once be we comp geographies And split? is a there? is in how fully Is California. then rolled think today in there about in parts geographic other any of your this Or the of going terms should it is workers' most like,

Gary Kramer

market. state, every in California. based pretty are would the XX way come branches operations it's I'd Rhode is be than We've well distributed -- It's workers just California the have rather payroll largest upon our got not Island, We big California right? in say I bigger there.

bring this sell at able able to So white -- on and the to but we're when map, we product collar we're everywhere, look business.

to right? which I was think in the we space, XX% was was business for us, of an outside care the of and the for more new about exciting is in in of that map penetrate challenging white-collar filling we grow fun health on heavy it being with us because the a development was But brought comp. industry market for our the little California, as That California. with blue we're grow we gray managers. workers' But

So everywhere. be a big player our national and plan is to be ultimately

Unknown Analyst

And then for hop back one I'll more and in me, queue.

that? So have this year it's the and point? would XXXX. a in just you're sort double-digit and of of X% X% law too Or gross there billings it at to some X%, to large take preventing guiding gross around large what approach scenario gotten billings Is or you numbers to

Gary Kramer

No.

model starting But of right? be our 'XX And clients we going we we in 'XX have we clients if more to So our workforce, half think right, easily double-digit the hire. QX. in So we could higher, into as back are in our their the clients range. modestly it's going were of the reducing think to that that grew realistically, year, when get

Operator

question is with ROTH Capital from Partners. Our next Martin Jeff

Jeff Martin

first December, season, wanted even assume. lot renew I year, in clients into November, the would assume. the of of I the December, would portfolio a the to months I renewal some of in get X

is the how clients. period that curious existing gone Just new pricing renewal and and has how environment within

Gary Kramer

Yes.

So this good question.

in that California. the was say first this I California. us, what couple we on And pleased season I'm there first for with loan can a selling right? So did in our was first was So

other was this -- our renewal. The first was first

this ecstatic is why brought They're So can well loss on are year. to we ecstatic are more we're ecstatic, about X, and is. I that California our about was 'XX, tell able on carriers our how this good that our clients outside -- for we've ratio renewal. how and this They're our of bring carriers our done. X, you honestly underwriting happy first carriers

this But of it was -- we to renewed the was and say first our season, renewal want I benefits. XX%

So for the an we fell sell underwriting out we they reasons only for done But under were for both out renewal. what -- primarily, fell couple for new with a that got either they there had that operations really and and out. pleased

Jeff Martin

new And and renewals? in terms environment pricing of on the

Gary Kramer

drugs cost of some the on side, Inflation up the the out right? that and So is coming seeing are everywhere, Rx you're prices. driving benefit medical and trend the other

rate and that was folks years around. and at push new to some submissions right? I have a still increases game, there higher the, this, be us of saw coming about more an of it. transactions them. experience is to that What talk up So shopping a lot alternative was We've were able the have do we markets of clients. But didn't to tell try -- XX%. because we being But can the rate XX% And you we're to market new don't charging for say, because had we entrant a our through to more I'll we those we're were into

Jeff Martin

sense. Makes

you're kind to platform for like technology clients. bolster up to Sounds looking of continue the

if there driver that enhancement? are of Just in specific us can curious strategically client enlighten the you're driven? this is doing further underlying things with there? What you And behind what is terms

Gary Kramer

that number sources. we one? via we data And two, it's things the with that BBSI, And then APIs as like that I and we to employee push how really and that client-driven think enhancements their our life they we other say have of predominantly Yes. would client think number cycle employee it's do do first feel with and data, about cycle of do think employees. how life how then pull

of so to products, going of specifics first the client later launch want we're So until as that give as I far think that's the kind focus we specifics and the have in products to don't actually launching year. we're we

Jeff Martin

I Okay. And could. me, last if for one then

about XXXX should for year But last how you modeling How workers' prior roughly assume of potential terms this going maybe and hard just $XX million adjustments in to $XX to liability off the premiums, standpoint. know -- terms we tail how point. XXXX and about that's it think of range? at think it's for predict. I On people a that to should year. compensation some from year, to I in think a million

Gary Kramer

this Kramer We're set I'm Jeff. And conservative on by answer. to nature wander this we when year rates. our -- you give loss going sorry, a current -- then to going one, is I'm

So we call managers, structural have I operation, what folks, actuarial. claims partners. We've underwriting, risk best-in-class best-in-class got

a very We mature are organization.

all to on favorable, a and have BBSI either are our as of or be with have them. then aligned this. and is adopt XXX help money And the structured we indirectly about multiple shareholders that with we get that that at directly back. We folks interest We derisked this workers' to we model. the it's then because work programs would things attractive us we tech, so If more these investors we get AI market. that because money organization. with the And thought thought we that new have market expansion would did makes we, we as comp

Our our results. conservatism in

for check on of quarters think estimate in XX-plus favorable Anthony. fact was history. You year our largest but had quarters, our changes have this, premium prior for XX in adjustments. we've liabilities I and XXXX to me

So at you is largest that look we've if if trend in like up continue. So is had number the trend, history. trend feel And 'XX. right? for ourselves at just the that set we aspect look the you this our was friend, we've That our to going

Operator

[Operator you. Thank Instructions].

line of the Colicchio Vincent Research. from is next Our Banton question with

Vincent Colicchio

you're how people hire will assume it's bit a will expand the that existing curious since if clients correctly, I roles has of quarter? view changed economy their I better, in 'XX. heard Yes. assuming Gary, your last

Gary Kramer

Yes.

If see back We just clients was last QX 'XX, experience, they to about, in pull of in from of back 'XX, our exposure. right, think QX. and thing our just 'XX pulled 'XX, call at in February of numbers as you far payroll months January was some seeing see QX pulled started it, nice back the then and we XX in started The stability slight slight the of more well, We we in QX. In stability. 'XX, So right? when stabilize, of saw it stability so to seeing for And we're we're hiring is QX QX. that hiring. through see QX

when primarily the that into construction construction now, business the And workforce, us resume just that to the look optimism things at are at clients and trades, our -- housing hiring we their we starts, workforce trades. you for gives reduced So of at the and that you are what kind that's back was going in if 'XX. our look coming look more

Vincent Colicchio

from And a clients amount company income that if what double by of would is of that, you meaningful to amount I'm your say you will be health is, goal? if year, next that let that hit income in me ask -- the to the you comes have what -- that care trying

Gary Kramer

to the dollars. We're product doing to but not We're just line, going for guide doing for we're pennies. it not this

Vincent Colicchio

converted have opening place how you Okay. locations you and some currently. those additional this have locations already Curious feel XX if you in And physical about to do said year? of then programs physical asset-light

Gary Kramer

Yes.

recruiting have estate, markets and local we for We also actively are of searching are support. to in real couple we're a the

we're pretty follow couple those that We have in doing of markets and in anticipate a to in we'll HR that then local in well probably brick-and-mortar 'XX markets, we're spots. 'XX. that at the because of three more So go looking

Operator

question & with the Marc line is of next from Riddick Sidoti Our Company.

Marc Riddick

evening, Good everybody.

for for if first -- was first wondering cell with being I this season BBSI. the key [indiscernible] So selling

of the slight any through gone have outside surprise, process was sorry, a been about slight could bit learnings that benefits, that thus there things have as or I'm of little you talk far that place process taken the expectations? If Anything negative. particular -- were for as you've this part that positive

Gary Kramer

build what of rollout. new on lot understand company, need that continuous team, to for hair better this I'd say straight while it's through We done. learned a we we're could is getting we We what way. of was to say probably the upon. things along proud of of good and Part the I'm team lot was glad service I I do I'm the it I'm I'm doing do underwriting right prior fresh, renewal. a go sales It a learned lessons organization lost -- still the and -- the lessons, of line. to my had . can now It we proud proud but for whole a of not improvement we

Marc Riddick

certain about was go Then One, any sorry you with was commentary other what scored bit. maybe do the your little two, you exercise NPS generally that of Okay. was the And to kind that? be sort to maybe I was talk board thing verticals client bit there was of those gears others? led Excellent. across scores? thought a back any was there could shifting or industry around of the little -- higher a messaging. than you I did. differentiation that Or may that it

Gary Kramer

Promoter products. said for. our that. Score we're really how some Score. of telling and to go Board. we sample, a mean get of are doing we IT And good I that get clients we part do year us clients We this don't from that's The our Promoter a good surprisingly you lot They question. what we shape was asking if to do our every the understand doing that It's we right? use that was get we well, the do to the a we this, And do with survey, better, of thought it. need what you're of utilize why we Net are directions a -- what listening some they're folks Net and Good

proud mean pleased was. honestly that So to it had to we're pretty the of it's really it with a high. read didn't but score survey. I'm the I results the have I'm pretty doing. I work I up, what know of remarkable

Marc Riddick

that. called was pretty glad to really hear, out you that appreciate interesting I actually so I'm that

Operator

would you. question-and-answer gentlemen, over closing Thank to the time, this for I this and Kramer concludes to Ladies turn Mr. at like session. now our remarks. back call

Gary Kramer

Yes. partnering of of year, thank with I to all I appreciate time. thank for employees BBSI. Thank I a you. to clients and our just want BBSI our all great want for your

Operator

conference concluded. of Thank has you. for BBSI now participation. The you your Thank

You may now disconnect your lines.

Barrett Business Services (BBSI) 28 Feb 242023 Q4 Earnings call transcript