BBSI reports Q1 2014 results
First Quarter 2014 Financial Summary vs. Year-Ago Quarter
• Net revenues up 21% to $135.1 million
• Gross revenues up 23% to $727.4 million
• Net loss was $3.6 million, or $(0.50) per diluted share, compared to a net loss of $2.5 million, or $(0.36) per diluted share
First Quarter 2014 Financial Results
Net revenues in the first quarter of 2014 increased 21% to $135.1 million compared to $111.6 million in the first quarter of 2013.
Total non-GAAP gross revenues in the first quarter of 2014 increased 23% to $727.4 million compared to $591.2 million in the first quarter of 2013 (see "Reconciliation of Non-GAAP Financial Measures" below). The increase was due primarily to the continued build in the Company's co-employed client count and same-store sales growth, partially offset by the vetting of specific clients who no longer met certain performance criteria.
Net loss for the first quarter of 2014 was $3.6 million, or $(0.50) per diluted share, compared to a net loss of $2.5 million, or$(0.36) per diluted share, in the year-ago quarter. The Company historically incurs losses in the first quarter due to the higher effective payroll taxes at the beginning of each year.
At March 31, 2014, the Company's cash, cash equivalents, marketable securities, and restricted securities totaled $147.9 millioncompared to $143.2 million at December 31, 2013. At March 31, 2014, the Company had no outstanding borrowings on its revolving credit facility.
"BBSI's 23% increase in gross revenues during the first quarter reflects our continued focus on delivering a management platform that is both predictable and adaptable in how it supports well-run companies over the long term," said Michael Elich, president and CEO of BBSI. "Vital to this long-term model is a client vetting process which has driven our 90%-plus retention rate. Over the past several months, however, the size of clients that we ultimately determined did not fit our platform has been larger than in the past. By identifying and canceling clients who were utilizing a disproportionate level of BBSI resources, we expect to achieve a long-term increase in efficiencies and quality of operations, which will benefit remaining and future clients.
"This recent trend does not change our long-term view about our untapped market opportunity, the health of our client base and the strength of our referral network. In fact, we see it as more episodic and expect we will return to a higher pace of growth as we work to backfill lost revenues created by the vetting process. Given this view, we remain well-positioned to continue gaining market share and deliver another record year for our shareholders."
Second Quarter 2014 Outlook
For the second quarter of 2014, the Company expects gross revenues to increase at least 15% to between $780 million and $800 million compared to $675.0 million in the second quarter of 2013. Diluted income per common share in the second quarter of 2014 is expected to be between $0.93 and $0.98 compared to $0.80 in the second quarter of 2013.