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» Barrett Business Services' CEO Discusses Q1 2011 Results - Earnings Call Transcript
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» Barrett Business Services, Inc. Q2 2010 Earnings Call Transcript
Page seven of yesterday’s earnings release reflecting our operating results summarizes the company’s revenues and cost of revenues on a net revenue basis as required by Generally Accepted Accounting Principles.Most of our comments today, however, will be based upon gross revenues and various relationships to gross revenues because management believes such information is one, more informative as to the level of our business activity, two, more useful in managing and analyzing our operations, and three, adds more transparency to the trends within our business. Comments related to gross revenues as compared to a net revenue basis of reporting have no effect on gross margin dollars, SG&A expenses or net income. Turning now to the second quarter results, total gross revenues of 366.9 million increased 69.8 million or 23.5% over the 2010 second quarter. California which comprised approximately 83% of our overall second-quarter gross revenues increased 28.1% from continued growth in new PEO business. PEO gross revenues increased 71.3 million or 26.9% on a quarter-over-quarter basis primarily due to the addition of new customers. Our PEO revenues from existing customers experienced an increase of 8.6 million or 3.6% on a quarter-over-quarter basis. The increase in PEO revenues from existing customers represents the fifth consecutive quarter of existing customer growth. Staffing revenues for the second quarter of 2011 decreased 1.5 million or 4.6% from the second quarter of 2010 primarily due to a loss of business from several customers in that nutraceutical our vitamin industry. Staffing revenues have also been affected by a delay in the agricultural industry in the Northwest as a result from cooler than normal weather in the region. Gross margin dollars for the 2011 second quarter of 13.3 million increased approximately 1.5 million over the 2010 quarter primarily due to the increase in revenues. Gross margin percent on a gross revenue basis was 3.6% for the second quarter of 2011 compared to 3.9% from the quarter a year ago primarily due to increases in each of the cost of revenue components as a percentage of revenues.
Direct payroll costs increased by eight basis points over the 2010 second quarter primarily attributable to an increase or mix of PEO services, which typically have a much higher payroll cost component and gapping services. Payroll taxes and benefits for the 2011 second quarter as a percentage of gross revenues was 7.9% versus 7.7% for the same quarter a year ago due to higher state unemployment taxes and the majority of states the company operates in.Workers compensation expense for the 2011 second quarter increased 2.6 million over the 2010 second quarter. Workers compensation expense as a percentage of gross revenues was 3.4%, which is up slightly from the 3.3% for the same quarter a year ago, primarily due to an increase in the estimated for claim costs. Selling, general and administrative expenses were 8.9 million, an increase of approximately 464,000 or 5.5% over the 2010 second quarter. This increase is primarily due to increases in management payroll, legal fees, and stock option compensation expenses. Other income net for the 2011 second quarter, totaled 266,000 primarily attributable to investments income earned on the company’s cash and marketable securities. This compares to other income for the 2010 second quarter of 380,000, which included approximately 200,000 in gains recognized on the sale of certain marketable securities. The income tax rate for the second quarter of 2011 was 20.6%, which included a favorable benefit from the effect of the 10 million life insurance proceeds on the annual effective tax rate for the company. As most of you are aware, the life insurance proceeds were realized during the first quarter of 2011 from the passing of Bill Sherertz, the company’s President and CEO. We expected that effective tax rate of approximately 20% to continue through the third and fourth quarters of 2011 and we anticipate our overall tax rate to return to the low to mid 30s percent range for the third quarter of 2012. Read the rest of this transcript for free on seekingalpha.com