In This Article:
Release Date: May 07, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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Barrett Business Services Inc (NASDAQ:BBSI) reported a record start to the year with new client sales and upselling of new products exceeding expectations.
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Gross billings increased by 9.5% over the prior year's quarter, driven by strong client retention and a 55% increase in worksite employees from new client additions.
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The company successfully entered new markets with an asset-light model, adding over 600 new worksite employees in the first quarter.
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BBSI's new health insurance offering, BBSI benefits, gained traction with approximately 3,000 new participants added, and is expected to be accretive to earnings in 2025.
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The company launched a new applicant tracking system, receiving positive feedback from clients for its efficiency and integration capabilities.
Negative Points
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Staffing operations declined by 10% over the prior year quarter, falling below expectations due to a slowdown in March.
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Macroeconomic headwinds, including supply and demand imbalances, affected performance and varied by geography.
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Despite strong Q1 results, the company maintained a cautious outlook for the remainder of the year due to economic uncertainties and potential impacts on client hiring.
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Investment income decreased by approximately $600,000 from the prior year due to lower average interest rates.
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The company reported a net loss per diluted share of $0.04, compared to a net loss of $0.01 per diluted share in the year-ago quarter, attributed to seasonality and payroll tax expenses.
Q & A Highlights
Q: Can you provide an estimate of what percentage of your clients have direct tariff exposure, and how might this impact them? A: (CEO) We primarily deal with service businesses, such as contractors and trades, which have indirect exposure to tariffs. Some of their materials or supplies might cost more, but we don't have significant manufacturing clients. In Southern LA or Long Beach, we have some trucking and logistics businesses that have slowed down due to fewer ships coming in from China. Overall, the impact is not material.
Q: Is there an annual goal for the number of new physical office locations you plan to open? A: (CEO) We don't have a set number of physical locations to open annually. It depends on market development. Some markets develop faster than others. We plan to open new locations in Dallas, Chicago, and Nashville by early Q3, and possibly one more by the end of the year. The decision is based on business sense and justifying the expense.