BBSI report Q4 & full year 2013 financial results
Fourth Quarter 2013 Financial Highlights vs. Year-Ago Quarter
· Net revenues up 27% to $144.5 million
· Gross revenues up 31% to $779.3 million
· Net income was $5.6 million, or $0.74 per diluted share, compared to $5.8 million, or $0.80 per diluted share
· Excluding $5.1 million, or $3.1 million after tax, for an increase in workers' compensation reserve, net income was $8.7 million
· Excluding $0.42 per diluted share for the increase to workers' compensation reserve, diluted earnings per share was $1.16
Fourth Quarter 2013 Financial Results
Net revenues in the fourth quarter of 2013 increased 27% to $144.5 million compared to $113.7 million in the fourth quarter of 2012. The increase was due primarily to the continued build in the Company's co-employed client count and same-store sales growth.
Total non-GAAP gross revenues in the fourth quarter of 2013 increased 31% to $779.3 million compared to $596.7 million in the fourth quarter of 2012 (see "Reconciliation of Non-GAAP Financial Measures" below).
In the fourth quarter of 2013, the Company recorded an additional increase to its self-insured workers' compensation reserve of $5.1 million, or $3.1 million after tax, equating to $0.42 per diluted share. The increase represents approximately 5% of the Company's total workers' compensation reserve and is a result of increased estimated reserves for prior year injury claims, primarily in the state of California.
Taking into account the effect of this expense, net income in the fourth quarter of 2013 was $5.6 million compared to $5.8 million in the year-ago quarter. Diluted earnings per share in the fourth quarter of 2013 was $0.74 compared to $0.80 in the year-ago quarter. Excluding the effect of the increase in workers' compensation reserve, net income increased 50% to $8.7 million and diluted earnings per share increased 45% to $1.16 in the fourth quarter of 2013.
At December 31, 2013, the Company's cash, cash equivalents, marketable securities, as well as restricted securities totaled $143.2 million, compared to $82.1 million at December 31, 2012. At December 31, 2013, the Company had no outstanding borrowings on its revolving credit facility.
Full Year 2013 Financial Results
Net revenues in 2013 increased 32% to $532.8 million compared to $402.7 million in 2012. Total non-GAAP gross revenues in 2013 increased 35% to $2.8 billion compared to $2.1 billion in 2012. The increase was primarily attributable to the previously discussed increase in net PEO clients and same-store sales growth.
Net income in 2013 increased 36% to $17.9 million compared to $13.1 million in 2012. Diluted earnings per share increased 45% to $2.42 compared to $1.67 per diluted common share in 2012.
"In addition to record revenue and earnings growth in 2013, we accomplished several important strategic initiatives during the year," said Michael Elich, president and CEO of BBSI. "All clients have now transitioned to our new payroll and data technology platform, which we expect will improve the quality and consistency of BBSI's offering. We also continued to expand our infrastructure, as we started 12 business units during the year with another 11 in development for the first half of 2014. We also plan to open two new branches, one in San Luis Obispo and a second in Reno, during 2014.
"BBSI remains well positioned for 2014 and beyond. Along with the maturation of our infrastructure and internal talent, our referral network partners remain strong. Going forward, we are focused on becoming a much larger company with a product offering that remains adaptable and predictable long-term."
First Quarter 2014 Outlook
For the first quarter of 2014, the Company expects gross revenues to increase at least 24% to between $735 million and $755 million compared to $591.2 million in the first quarter of 2013. Diluted loss per common share in the first quarter of 2014 is expected to be between $(0.45) and $(0.50) compared to $(0.36) in the first quarter of 2013. The Company historically incurs losses in the first quarter due to the higher effective payroll taxes at the beginning of each year.