Barrett Business Services' CEO Discusses At The Noble 8th Annual Equity Conference Call Transcript

Barrett Business Services, Inc. ( BBSI)

Noble Financial Capital Markets’ 8th Annual Equity Conference Call

January 17, 2012, 03:30 pm ET


Michael Elich - President and CEO



Michael Elich

Good afternoon. I appreciate your hanging with me through this afternoon. I am glad I am not the only one here. So that's a good sign. I will try to keep it light and have a little bit of fun with it. But I wanted to introduce you first of all to BBSI. I am not sure how much everybody knows about the company but it’s been around for many years over the last 10 years. We’ve reformatted it a little bit of who we are in that timeframe. We’ve have grown, find ourselves in a position today, where a year ago our founder passed away and I was the operating COO for the company. I stepped in to the role and over the last 12 months we’ve had very successful transition and continue to move things forward. I will leave you to read our disclaimer. I am sure most of you have done that already.

Just looking at some operating statistics for our company as you just see, over the last 12 months we’ve had quite an appreciation in our stock value, still holds pretty strong balance sheet with earnings being up, cash begin up, revenue growth as well. So who are we? I like to look at us as a little bit of a hybrid. If you were to take the best of what to staffing industry, the payroll industry and the PEO industry has offered and combine that into a company that utilizes the resources of those companies, we take those resources apply them to our clients to help build the management platform that helps them in those operations. And those business owners leverage their internal resources more effectively to grow their companies.

We focus our attention towards the HR side in the human capital management side of our clients and over the last few years see ourselves with a client base in excess of 2000 different companies with a 90% plus retention rate, which is historical. If you think of a business owner, a business owner starts lot of times in their garage. They build a product; they have a product that works. They step out and sell the product; they find themselves reaching their own capacity level, so they add an employee and another employee, another employee.

They get to about 10 employees and now they have hired all other friends and so now they have to hire people they don’t know. They hire 11, 12, 13, 14, 15 person on day-to-day basis. They can go around the room and they can touch and they can help to control the success of organization by impacting each person’s outcome by direct interface. Some of them find themselves with 16, 17, 20-25 employees and all of a sudden the dynamic changes. And we will like to think that a business owner can manage the business tactically up to about 15-20 employees. But beyond that standpoint, they now have to start hiring layers of management back into their organization and the organization shifts from being able to run tactically to having a more dynamic complexion about it.

What we do is, we come in and help the business owner get their arms around all the pieces, help them to frame a management platform or a method for interfacing with that organization on a regular basis and help them to ultimately leverage the internal human capital that they had invested already.

The industry as a whole is pretty-vast. If you check just the HR industry, HR outsourcing look to be 162 billion by 2015 and then the consulting industry related to all facets of consulting is around 366 billion.

What I consider important here is, we lot of times are, even though we have been around the long term, today in any one of our given markets at max we would have may be a 5% concentration and we tend to be one of a larger players in the markets that we serve.

So why do companies outsource? I already explained a few things. The traditional first impression for people is that they’re going to save money, to control risk, to reduce just complexities.

As I see it, if a business owner has the ability to refine their focus and put their attention, where they have the most leverage in their time, they have a higher probability to be unsuccessful. And that’s where we get in and work as a management team with our clients, on a localized basis to help them get out of their own way.

Our model is we develop and as we continue to work with our clients, it starts with the business development cycle. And a business development foundation, we get our clients from one of three areas. From direct sales, we still pick up 10% of our business through direct sales. Referral networks that could be anything from brokers to financial planners to accountant CPAs. Those resources and partners out there that we work with, that have a trusted advisor relationship with the business owner and on a growing basis.

We see more and more business coming from customer referrals and we see a multiplier effect in that and that if we continue to take care of business, we find that our customers are referring to us to more customers and that carries on and as our base gets larger, there is a multiplier effect that we’re seeing.

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