Barrett posts 35% surge in net revenue

After $111.6M in 1Q, Vancouver-based firm plans to get bigger

By Aaron Corvin, Columbian port & economy reporter

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Barrett Business Services Inc., the Vancouver-based supplier of staffing and outsourced human resources services, reported surging net revenue Wednesday, hauling in $111.6 million in the January-to-March period. The company's revenue is up 35 percent from $82.4 million in the first quarter of 2012.

The company showed a net loss of $2.5 million, or 36 cents per share, in the first quarter of this year, but that was to be expected. Barrett historically experiences first-quarter losses because of higher payroll taxes that ensue at the beginning of every year. The company posted a net loss of $2.2 million, or 22 cents per share, in the first quarter of 2012.

During their quarterly earnings conference call Wednesday, company officials said that, based partly on Barrett's strong revenue growth and high retention of clients, the company — which has 57 offices in 10 states and conducts business in 23 states — will invest this year in getting bigger.

Company officials also addressed questions about the broader economy, with president and CEO Michael Elich saying, at one point, that he thinks the U.S. economy will remain stable and will not see a double-dip recession.

For now, Barrett will take its gains and plow them back into "talent and operational infrastructure throughout 2013 to ultimately support a much larger organization," said James Miller, the company's chief financial officer.

Miller's statement about plans to grow in the months ahead echoed remarks the company has made previously. Barrett is a pioneer of "professional employer organization" services. Under that system, Barrett becomes a co-employer of a client's work force, handling human resources responsibilities, including workers' compensation claims.

And the company reported new numbers Wednesday to support its sunny outlook, including ballooning gross revenues.

Company managers pointed to $591.2 million in first-quarter gross revenues — money that's generated by all of a company's operations before expenses are deducted — as one reason they feel confident about the future. That's up 37 percent from gross revenues of $432.1 million in the first quarter of 2012.

Elich said the 37 percent increase in the company's gross revenues marked the fifth consecutive quarter of gross-revenue growth higher than 30 percent.

And that expansion, company officials said, is primarily because Barrett continues to increase its client base and to beef up same-store sales. In fact, Elich said, Barrett added a net 198 clients in the first quarter of this year — the "largest of any quarter in our history."

At one point during the earnings call, an analyst asked Elich about whether he thinks the broader economy will continue to improve or slide. Because Barrett acts as a co-employer of a client's workforce, it has close connections to companies' hiring plans and to broader economic trends.

So, Elich put his economist's hat on.

"I really didn't see a double-dip" recession when talk of that was rampant two years ago, Elich said. "I still don't."

While well-run companies aren't acting aggressively, Elich said, they "are continuing to grow and add incrementally. We see stability there." In another nod to the company's plan to enlarge its operations, Elich said he currently has "two acquisition prospects" on his desk.

For all of 2012, Barrett posted net revenues of $402.7 million, an increase of 28 percent from 2011. And it showed a profit of $13.1 million, or $1.67 per share, for the year. That compared with a profit of $14.3 million, or $1.41 per share, for all of 2011.

The company has its challenges.

According to its 2011 annual financial report, Barrett listed several risk factors. They included negative publicity surrounding outsourcing issues; potential increases in workers' compensation and unemployment insurance costs; unforeseen liabilities taken on in the acquisition of companies; and competition from other companies that provide similar services, including Kelly Services Inc. and Manpower Inc.

The company's stock, which trades as BBSI, closed down $4.46 Wednesday, at $52.57 per share. The company's shares have traded between $18.88 and $59.32 in the past 52 weeks.

Aaron Corvin: http://twitter.com/col_econ;http://on.fb.me/AaronCorvin; 360-735-4518; aaron.corvin@columbian.com.