Barrett Business Services (BBSI) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenues increased 6% year-over-year to $279.7 million, with gross billings up 6% to $2.03 billion, driven by record worksite employee (WSE) additions and strong client retention.

• Net income was $16.7 million, or $0.62 per diluted share, nearly flat compared to $17.0 million and $0.62 per share in Q2 2023.

• PEO services revenue grew 6.4% year-over-year, while staffing services revenue declined 3% in Q2 2024.

• Expansion into new markets with an asset-light model is progressing, supported by 17 new market development managers.

• Quarterly dividend raised by 7% to $0.08 per share, following a four-for-one stock split in June 2024.

Financial highlights

• Gross margin for Q2 2024 was $67.9 million (24.2% of revenue), up from $67.0 million (25.3%) in Q2 2023.

• Workers' compensation expense as a percent of gross billings was 2.5%, benefiting from $8.9 million in favorable prior year adjustments.

• SG&A expense increased 4%, slower than billings growth, providing operating leverage.

• Investment income reached $3.1 million, up $0.9 million year-over-year.

• Unrestricted cash and investments totaled $110.4 million at quarter end; company remained debt free.

Outlook and guidance

• Full-year 2024 gross billings expected to increase 6–8%.

• Average WSEs projected to rise 4–5% for the year.

• Gross margin as a percent of gross billings expected between 3.0% and 3.1%.

• Effective annual tax rate anticipated to remain between 26% and 27%.

• Management expects continued quarterly fluctuations due to seasonality, wage limits, claims experience, and demand for services.