C O R P O R AT E P R E S E N TAT I O N. NASDAQ: BBSI November 2014

Transcription

1 C O R P O R AT E P R E S E N TAT I O N NASDAQ: BBSI November 2014

2 FORWARD-LOOKING STATEMENTS Statements in this presentation about future events or performance, including gross revenues expectations for the next 12 months, are forward-looking statements which involve known and unknown risks, uncertainties and other factors that may cause the actual results of the Company to be materially different from any future results expressed or implied by such forward-looking statements. Factors that could affect future results include economic conditions in the Company's service areas, the effect of changes in the Company's mix of services on gross margin, the Company's ability to retain current clients and attract new clients, the availability of financing or other sources of capital, future workers' compensation claims experience, the effect of changes in the workers compensation regulatory environment in one or more of the Company s primary markets, the collectability of accounts receivable, and the effect of conditions in the global capital markets on the Company s investment portfolio, among others. Other important factors that may affect the Company s future prospects are described in the Company s 2013 Annual Report on Form 10-K. Although forward-looking statements help to provide complete information about the Company, readers should keep in mind that forward-looking statements are less reliable than historical information. The Company undertakes no obligation to update or revise forward-looking statements in this presentation to reflect events or changes in circumstances that occur after the date of this presentation. 2

3 EVOLUTION OF A BUSINESS BUSINESS FORMATION GRASSROOTS GROWTH INFLECTION POINT MANAGEMENT PLATFORM STABILITY The owner has an idea & puts everything into it Early success requires employees Organization moves beyond its original structure, becoming more complex & less efficient Insight, guidance & tools that bring predictability to the business A professionally managed organization that maintains the spirit & culture of the entrepreneur 3

4 POSITION IN THE INDUSTRY We integrate the best management tools with expertise in human capital related to the structure and succession of organizations. TYPICAL OUTCOME: TOOLS, SYSTEMS, PROCESSES Engage as a tactical subordinate Minimal integration with the business TYPICAL OUTCOME: ROAD MAP TO MORE EFFICIENTLY RUN BUSINESS TYPICAL OUTCOME: WHITE PAPERS Engage as an expert guide Highly integrated with the business 4

5 ENTER BBSI We partner with the business owner to frame a management platform that brings predictability to their organization We leverage the business investment in human capital through a unique, high-touch, resultsoriented approach We enable business owners to focus on their core business, eliminating organizational complexity and maximizing profitability 5

6 COMPANY FOOTPRINT 52 branches in 11 states One more business unit to open by end of 2014 for a total of 36 6

7 MANAGEMENT STRUCTURE Decentralized, autonomous, entrepreneurial focus Most clients within 50-mile radius of BBSI branch Branch structure may represent one team or many Model supports scalability: 85 business teams across the organization 7

8 DIFFERENTIATOR High-touch, team-based interface fosters client loyalty Drives client results & performance through tier system 8

9 BUSINESS DEVELOPMENT: PROCESS OF ALIGNMENT 90%+ client retention rate 9

10 MANAGEMENT PLATFORM ONGOING Facilitating the owner s vision. Forward-looking with a focus on cultivating a culture in which the supervisors & employees, instead of the business owner, drive the success of the organization. 3-6 MONTHS Addresses administrative/tactical components of managing employees MONTHS AND BEYOND Focused on goals, continuing process improvement, organizational development, HR, risk & safety, administrative best practices. 10

11 OUTCOME FOR THE BUSINESS OWNER Reduced complexity Predictability Stability MANAGEMENT PLATFORM Insight, guidance & tools that bring predictability to the business STABILITY A professionally managed organization that maintains the spirit & culture of the entrepreneur 11

12 MARKET OPPORTUNITY BBSI works with approximately 2,785 businesses roughly 2% BBSI works with less than 1% of target market in U.S. 12

13 ANNUAL GROSS REVENUES & PEO CLIENT GROWTH Gross Revenues ($Millions) PEO Customers¹ 2,191 2,576 ~3,000 $3,205 1,070 1,124 1,293 1,509 1,767 $2,081 $2,810 $1,528 $1,116 $1,081 $1,020 $1, Sep-14 1) PEO customers defined as the active number of customer Federal Employee Identification Numbers (FEINs). Please take into consideration that this non-gaap figure is a broad estimate of the Company s actual client count. However, the Company does believe the number represents an effective proxy for the health of its business. 13

14 ANNUAL FINANCIAL PERFORMANCE Annual Gross Revenues ($Millions) Diluted EPS $1,237 $1,528 $2,081 $1.71 $2,810 $3,205 $2.84 $ Month Outlook Gross revenue growth of ~18% High single-digit same-store sales New business growth consistent with current trends $0.71 $ ¹ 2012² 2013³ Sep-14³ 1) 2011 excludes a $0.86 per share charge for a change in the estimate of workers comp reserves as well as the benefit of $10M in life insurance proceeds and the related favorable income tax rate. 2) On March 28, 2012, the Company repurchased approximately 3.0 million common shares excludes $0.5M of incremental legal and professional fees associated with the response to requests for a special stockholders meeting. 3) Q4-13 excludes a $0.42 per share charge for a change in the estimate of workers comp reserves; Q3-14 excludes a $6.62 per share charge for a change in the estimate of workers comp reserves. 14

15 QUARTERLY GROSS REVENUE GROWTH $Millions $900.2 $727.4 $675.0 $798.4 $764.1 $779.3 $432.1 $591.2 $494.1 $558.0 $423.6 $596.7 Q1-12 Q1-13 Q1-14 Q2-12 Q2-13 Q2-14 Q3-12 Q3-13 Q3-14 Q4-11 Q4-12 Q

16 QUARTERLY DILUTED EARNINGS PER SHARE $0.80 $0.80 $1.21 $1.16 $0.98 $1.35 ($0.36) BBSI historically incurs losses in Q1 due to higher effective payroll taxes at the beginning of each year ($0.50) Q4-12 Q1-13 Q2-13 Q3-13 Q4-13¹ Q1-14 Q2-14 Q3-14² 1) Excludes a $0.42 per share charge for a change in the estimate of workers comp reserves. 2) Excludes a $6.62 per share charge for a change in the estimate of workers comp reserves. 16

17 OPERATING FREE CASH FLOW GENERATION, MINIMAL CAP EX $Millions $17.8 $20.9 $17.3 $12.5 $6.0 ($9.2) ¹ Sep-14 Note: Operating free cash flow is calculated as operating cash flow minus the change in workers compensation claims liabilities, safety incentives liability and capital expenditures. 1) Excludes $10M of proceeds from a key man life insurance policy paid in January

18 BBSI GROWTH DRIVERS Same store sales Net client add Penetrate new geographical markets as needed BBSI generates a majority of its business in the Western third of the U.S. 18

19 $1,237 $1,528 $2,081 $2,810 $3,205 BBSI KEY TAKEAWAYS BBSI offers a scalable business model Robust growth potential Industry-leading +90% retention Solid financial platform Gross Revenues ($Millions) PEO Customers¹ ~3,000 2,576 2,191 1,767 1,509 1) PEO customers defined as the active number of customer Federal Employee Identification Numbers (FEINs). Please take into consideration that this non-gaap figure is a broad estimate of the Company s actual client count. However, the Company does believe the number represents an effective proxy for the health of its business Sep-14 19

20 $1,528 $2,081 $2,810 $3,205 KEY STATS: BBSI ( NASDAQ) Trading Data (@ Nov 4, 2014) Stock Price $ Week High/Low $102.20/18.25 Avg. Daily Vol. (3 mo) 259,220 Shares Outstanding 7.2M Institutional Holdings 83% Insider Holdings 2% Valuation Measures Market Cap $170.5M Financial Highlights (@ Sep 30, 2014) Gross Revenues (ttm) $3,205M EBITDA² (ttm) $36.0M Diluted EPS² (ttm) $1.35 Cash & Equivalents³ (mrq) $167.5M Total Assets (mrq) $411.7M Total Debt (mrq) $5.1M Total Liabilities (mrq) $377.3M Total Equity (mrq) $34.4M Annual & TTM Gross Revenues ($Millions) Enterprise Value¹ $160.7M EV/Revenue (ttm) 0.1x EV/EBITDA (ttm) 4.5x P/E (ttm) 17.6x Sep-14 Source: CapitalIQ 1) Enterprise value assumes unencumbered cash of ~$15M as of Q3-14. The Company s cash & equivalents includes cash that is part of the Company s captive insurance subsidiary and the new ACE fronted program that were excluded from this calculation. 2) TTM at Sept 30, 2014 excludes a $0.42 per share charge and $6.62 per share charge for the change in the estimate of workers comp reserves. 3) Includes cash, cash equivalents, marketable securities and restricted securities. 20

21 BBSI CONTACTS Barrett Business Services, Inc NE Parkway Drive, Suite 200 Vancouver, WA Tel (360) Company Contact Mike Elich, CEO Jim Miller, CFO Investor Relations Liolios Group, Inc. Cody Slach Tel (949)