Barrett Business Services Inc (BBSI, Financial), a leading provider of business management solutions, released its financial results for the third quarter ended September 30, 2023, on November 1, 2023. Despite a slight decrease in revenues, the company reported an increase in net income and gross billings.
Financial Performance
Revenues for the third quarter of 2023 slightly decreased by 0.2% to $273.3 million compared to $273.8 million in the same quarter of 2022. This decrease was primarily due to lower demand for staffing services and continued tight labor market conditions.
However, BBSI reported a 3% increase in gross billings to $1.96 billion, up from $1.91 billion in the year-ago quarter. This increase was driven by growth in PEO services resulting from increased worksite employees (WSEs) from net new clients and higher average billings per WSE.
Net income for the third quarter of 2023 was $18.2 million, or $2.68 per diluted share, compared to $17.4 million, or $2.45 per diluted share, in the year-ago quarter. The increase is primarily attributable to higher gross margin in the third quarter of 2023.
Liquidity and Capital Allocation
As of September 30, 2023, BBSI reported unrestricted cash and investments of $129.2 million, compared to $159.7 million at the end of 2022. The company remains debt-free at the end of the quarter.
BBSI's board of directors has confirmed its regular quarterly cash dividend of $0.30 per share, payable on December 1, 2023, to all stockholders of record as of November 17, 2023. Under the company's stock repurchase program established in July 2023, BBSI repurchased 115,400 shares in the third quarter at an average price of $94.60. As of September 30, 2023, approximately $64.1 million remained available under the repurchase program.
Outlook
For 2023, BBSI expects gross billings growth of 4% to 5%, growth in the average number of WSEs of 2% to 3%, and a gross margin as a percent of gross billings of 3.1% to 3.15%. The company also anticipates an effective annual tax rate of 27% to 28%.
Explore the complete 8-K earnings release (here) from Barrett Business Services Inc for further details.
