Barrett Business Services Inc. (NASDAQ:BBSI) Q4 2019 Earnings Conference Call - Final Transcript

Feb 26, 2020 • 12:00 pm ET

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Barrett Business Services Inc. (NASDAQ:BBSI) Q4 2019 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good day, everyone and thank you for participating in today's conference call to discuss BBSIs Financial Results for the Fourth Quarter and Full Year ended December 31, 2019. Joining us today are BBSIs President and CEO, Mr. Michael Elich and the company's CFO, Mr. Gary Kramer. Following their remarks, we'll open the call for your questions.

Before we go further, please take note of the company's Safe Harbor statement within the meaning of the Private Securities Litigation Reform Act of 1995. The statement provides important cautions regarding forward-looking statements. The company's remarks during today's conference call will include forward-looking statements. These statements, along with other information presented that does not reflect historical facts, are subject to a number of risks and uncertainties. Actual results may differ materially from those implied by these forward-looking statements.

Please refer to the company's recent earnings release to the company's quarterly and annual report filed with the Securities and Exchange Commission for more information about the risks and uncertainties that could cause actual results to differ. I would like to remind everyone that this call will be available for replay through March 26, 2020 starting at 3:00 PM Eastern this afternoon. A webcast replay will also be available via the link provided in today's press release as well as available on the company's website at www.mybbsi.com. Now I'd like to turn the call over to the Chief Financial Officer of BBSI, Mr. Gary Kramer. Sir, please go ahead.

Executive
Gary E. Kramer

Thank you, Robert. Depending upon where you're dialing in from, good morning or good afternoon, everyone. We had a very strong year that resulted in record earnings. In the fourth quarter, we reported diluted income per share of $1.51 compared to $2.21 in Q4 of '18. Gross billings of $1.59 billion grew 5% over the same period. PEO gross billings increased 6% to $1.56 billion compared to the fourth quarter last year. Gross billings for the year were about 3% less than we expected and was primarily related to same customer sales. In our plan, we estimated that same customer sales would be about 6% for the year versus an actual of about 4%. This decrease is primarily related to our clients slower growth in adding additional employees due to a tight labor market.

Gross billings grew by 3% in California versus 14% in all other combined geographies. Same customer sales were 5.4% compared to 6.3% in Q4 of '18. In comparing December of 2019 versus December of 2018, we saw that our clients hours work decreased, which we attribute to how the holiday season sell.

We continue to increase our client base with the gross addition of 373 clients or 134 net of runoff in the quarter. The 373 gross additions are a record number in any fourth quarter in our history.

Net revenue of $245.2 million increased 3% compared to $237.8 million in Q4 of '18 and reflected the continued build of our PEO clients, which was slightly offset by weaker staffing revenue, which decreased 10%