Barrett Business Services posts robust 3Q revenue, profit

Vancouver-based supplier of staffing, HR services saw 55% spike in profit over 2012

By Aaron Corvin, Columbian Port & Economy Reporter



Barrett Business Services Inc., the Vancouver-based supplier of staffing and outsourced human resources services, reported robust third-quarter net revenue Wednesday, hauling in $148 million in the July-to-September period. That’s up 33 percent from $111.1 million during the same period a year ago, underscoring the company’s continued brisk pace of growth.

The company posted a profit of about $9 million in the third-quarter, or $1.21 per share — that’s up 55 percent from a profit of $5.8 million, or 81 cents per share, during the same three-month period last year.

Suffice it to say, investors liked what they saw: Barrett’s stock, which trades as BBSI, surged 24 percent, reaching $85.95 per share by the market’s close. The company’s shares have traded between $28.74 and $86 in the past 52 weeks.

During the company’s quarterly earnings conference call Wednesday, James Miller, chief financial officer for Barrett, focused on the company’s gross revenue, which is money that’s generated by all of a company’s operations before expenses are deducted. He said gross revenue in the third quarter rose 37 percent to $764.1 million — the “second-highest (posting of gross revenue) in the company’s history,” which dates to the mid-1960s.

The company’s president and CEO, Michael Elich, said Barrett added a net 120 clients in the third quarter, maintains a 95 percent client retention rate and faces “no measurable headwinds” from competitors, which include companies such as Kelly Services Inc. and Manpower Inc.

Both executives indicated the company, on the basis of its financial performance, is girding for expansion.

Said Miller: “We continue to reinvest in our company to ultimately support a much larger and more mature organization.”

Barrett, which has some 57 offices in 10 states and conducts business in 23 states, is a pioneer of “professional employer organization” services. Under that system, the company becomes a co-employer of a client’s workforce, handling human resources responsibilities, including workers’ compensation claims.

Continued growth

The company’s selling, general and administrative expenses — which include costs associated with such things as running an office, advertising, research and development, and depreciation — increased by roughly 32 percent to $16.80 million in the third quarter, according to Miller. That increase reflected higher incentive pay for company employees at branch offices and an increase in “management payroll to support continued business growth,” he said.

In any case, company executives said Wednesday, Barrett carries a booming balance sheet.

The company’s cash and cash equivalents totaled about $48 million at the end of September, the company said. That compares to $72.4 million at the end of December 2012. And Barrett has no “outstanding borrowing” on its credit line, Miller said. That’s expected to continue for the rest of this year “as cash will continue to build from operations.”

Barrett’s clients include electronics manufacturers, light-industrial companies, forest products and agriculture-based businesses, transportation and shipping enterprises, and food processing and telecommunications companies.

In an interview with The Columbian in June, Elich said that Barrett has evolved with the larger economy. About seven years ago, roughly 50 percent of the company’s business was tied to the construction industry, he said. Now, that industry makes up less than 2 percent of Barrett’s business.

During Wednesday’s earnings call, Elich said the company “continues to see larger client” prospects filling its pipeline. Currently, no client makes up more than 1 percent “of our total business,” he said.