To say Barrett Business Services, the Vancouver-based human resources company, experienced a bumpy 2014 would be a bit of an understatement.
Yet the company said Wednesday it expects better years ahead.
Last year wasn’t easy, Michael Elich, Barrett’s CEO, said during the company’s earnings call, “but I believe time will show it as a turning point, with us emerging as a much better company due to challenges we had to face.”
Part of the bumpy news: Barrett, a publicly traded company, posted a net loss of $27.08 million for all of 2014. That compares with a profit of $17.89 million for all of 2013.
The $27.08 million loss for the year ended Dec. 31, 2014 was the result of a big hit the company took in the third quarter last year: an $80 million increase in reserves for payments of drawn-out workers’ compensation claims.
Barrett, a provider of temporary staffing, among other services, faces a class-action lawsuit over the matter. Part of the suit focuses on statements the company made when it disclosed a third-quarter loss of $37.8 million largely due to increased workers’ compensation expenses.
The suit alleges the company violated federal securities laws by misleading shareholders about its market value. During the company’s earnings call Wednesday, however, officials spelled out several positive financial results and discussed steps Barrett has taken to buttress its workers’ compensation reserves.
The company recorded a fourth-quarter profit of $7.03 million. That compares with a profit of $5.56 million in the same October-to-December period in 2013. Barrett hauled in net revenues of $175.01 million in the fourth-quarter, up 21 percent from the year-ago period.
And the company brought in 167 new clients in the fourth quarter of last year, Elich said.
For all of 2014, Barrett posted net revenues of $636.18 million, a 19 percent increase over the year.
Looking ahead, the company said it expects gross revenues to increase by roughly 18 percent for all of 2015. “Included in this expectation is a high single-digit contribution from same-store sales growth as well as growth from new business consistent with current trends,” according to the company.
As to Barrett’s workers’ compensation reserves, officials said Wednesday they’ve taken several steps to shore them up. One of those steps was to secure loans from Wells Fargo, the company’s principal bank, in December. The loans include a $40 million, two-year term loan, as well as a $14 million revolving line of credit.
Those steps, coupled with positive fourth-quarter results, position Barrett “for a strong 2015,” said Jim Miller, the company’s chief financial officer.
The new credit agreement between the company and Wells Fargo includes restrictions on Barrett, according to a company filing with the U.S. Securities and Exchange Commission. The restrictions include limits on how much additional debt Barrett may take on, a ban on repurchases of the company’s common stock and ceilings on Barrett’s capital spending this year and in 2016.
In addition to the class-action suit, Barrett remains embroiled in separate litigation in Clark County Superior Court. In January, attorneys for Todd Krug, a former employee of Barrett, revised his lawsuit against the company. The suit levels several allegations, including breach of contract, failure to pay all final wages, wrongful termination and violation of the state Consumer Protection Act.
The company denies the allegations, court documents show, arguing “there was just cause” for firing Krug. It also makes counterclaims, including that Krug’s “conduct constitutes trespass to personal property.”
Barrett provides temporary staffing and employee recruitment and placement services, and acts as a co-employer for clients, handling their human resources responsibilities. The company’s stock, which trades as BBSI on the Nasdaq Exchange, closed up $4.97 Wednesday, at $35.30 per share. The company’s shares have traded between $18.25 and $76.49 in the past 52 weeks.
