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March 18, 2024

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Barrett posts $8.7 million profit in Q2

Vancouver-based staffing firm still focus of SEC probe

By , Columbian Port & Economy Reporter
Published:

Barrett Business Services Inc., the Vancouver-based supplier of staffing and outsourced human resources services, said Wednesday it recorded a second-quarter profit of $8.7 million. That compares with a profit of $7.3 million in the April-to-June period of 2014.

Meanwhile, the company posted second-quarter net revenues of $182.39 million, up 20 percent from the year-ago period. During an earnings conference call, company leaders said the positive results reflected strong sales growth from existing clients and a net gain of 201 clients, among other factors.

Michael Elich, president and CEO of Barrett, said the company’s “general market outlook is strong” and that its retention of clients is “north of 90 percent.”

At the same time, the company’s accounting practices remain under investigation by the U.S. Securities and Exchange Commission in a case concerning Barrett’s workers’ compensation reserves. James Miller, the company’s chief financial officer, said Tuesday that Barrett has provided the SEC “with thousands of documents and emails, and maintained an open dialogue” with the federal agency.

While there’s no timetable for the SEC to release the results of its investigation, Miller said, the company “strongly believes” its financial statements and accounting practices “are and have been in full compliance” with commonly accepted procedures.

Barrett also is embroiled in litigation stemming from its announcement in the third quarter of last year of an $80 million increase in reserves for payments of drawn-out workers’ compensation claims. The company’s stock price plummeted after the announcement. A class-action shareholder lawsuit followed. The complaint alleges the company violated federal securities laws.

Miller said a court is expected to take up Barrett’s motion to dismiss the shareholder complaint in early September. Meanwhile, another lawsuit has been filed by a shareholder. That complaint is partly based on the allegations outlined in the class-action suit, according to Miller. It accuses company directors and officers of violating their fiduciary duties. As with the class-action complaint, Miller said, “we believe (the) claims in this suit also are without merit.”

The company is experiencing improving trends with respect to the number and severity of workers’ compensation claims, Elich said. And Barrett continues to watch those trends. “We expect this to result in greater predictability within the model,” he said.

Barrett has clients with employees in 22 states and the District of Columbia through a network of 54 branch locations in California, Oregon, Washington, Idaho, Arizona, Nevada, Utah, Colorado, Maryland, Delaware and North Carolina. The company offers “professional employer organization” services. Under that system, Barrett becomes a co-employer of a client’s workforce, handling payroll, payroll taxes, workers’ compensation coverage and other administrative functions. Its staffing services include on-demand or short-term staffing assignments, contract staffing, long-term on-site management, and direct placement.

The company has service agreements with a variety of customers, including electronics manufacturers, light-manufacturing industries, agriculture-based companies, transportation and shipping enterprises, food processing, telecommunications and public utilities.

None of its clients individually represented more than 1 percent of the company’s total revenues in 2014, according to an annual filing with the SEC.

However, the company’s California operations “accounted for approximately 77 percent of our total net revenues in 2014,” the company said in its annual filing. “As a result of the current importance of our California operations and anticipated continued growth from these operations, our profitability over the next several years is expected to be largely dependent on economic and regulatory conditions in California.”

The company’s stock, which trades as BBSI on the Nasdaq exchange, closed up 15 cents Wednesday, at $42.07 per share. The company’s shares have traded between $18.25 and $63.45 in the past 52 weeks.

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Columbian Port & Economy Reporter