Barrett Business Services, Inc.

Good afternoon, everyone, and thank you for participating in today's conference call to discuss BBSI's financial results for the first quarter ended March 31st, 2024. Joining us today are BBSI's president and CEO, Mr. Gary Kramer, and the company's CFO, Mr. Anthony Harris. Following the remarks, we will open the call for questions. Before we go further, please take note of the company's safe harbor statement within the meeting of the Private Securities Litigation Reform Act of 1995. The statement provides important questions regarding forward-looking statements. The company's remarks during today's conference call will include forward-looking statements. These statements, along with other information presented that does not reflect historical fact, are subject to a number of risks and uncertainties. Actual results may differ materially from those implied by these forward-looking statements. Please refer to the company's recent earnings release and to the company's quarterly and annual reports filed with the Securities and Exchange Commission for more information about risks and uncertainties that could cause actual results to differ from those expressed or implied by the forward-looking statements. I would like to remind everybody that this call will be available for replay through June 1st, 2024, starting at 8 p.m. Eastern time tonight. A webcast replay will also be available via the link provided in today's press release, as well as available on the company's website at www.bbsi.com. Now I would like to turn the call over to the President and Chief Executive Officer of BBSI, Mr. Gary Kramer. Please go ahead, sir.

Thank you, and good afternoon, everyone, and thank you for joining the call. I am pleased to report that we had a strong start of the year, and our financial results are in line with our full year projections. We continued to execute our short and long-term objectives, and we added a record amount of worksite employees for our first quarter. Moving to our financial results and worksite employee status, during the quarter, our gross billings increased 7% over the prior year quarter and was in line with our expectations. We continue to execute on our various strategies to increase the top of the sales funnel, and we are seeing positive results. We added 11% more WSEs from new client ads than the prior year quarter. Our client retention continues to trend better than pre-pandemic levels. I'd like to attribute that to the work we do with our clients and the value our teams provide. The result of all these efforts, or what I refer to as controllable growth, is that we added approximately 3,100 worksite employees year over year from NetNew clients. We mentioned previously that we began to see our clients' workforce stabilize in Q3 and Q4. We are pleased to report that our clients began to hire modestly in the first quarter as we were forecasting. To summarize, for the quarter, we grew our worksite employees by 3.1% as we sold and retained more business and experienced the benefit from our clients' moderate net hiring. Moving to our staffing operations, our staffing business declined by 12% over the prior year quarter and was within our expected range. We continue to execute on our strategy to recruit for our PEO clients and place 79 applicants in the quarter. We are also experiencing macroeconomic factors, including supply and demand imbalances, which vary by geography. As we look to the remainder of the year, we will be going against softer comparables starting in Q2, and we are forecasting our staffing business to stabilize. Moving to the field operational updates, we are very pleased with our entrance into new markets with our asset light model. We have 15 total new market development managers in various stages of their development. They are doing well. and largely achieving their goals of adding and servicing new clients and new referral partners. In two of the markets, we have hired additional folks to support our clients and are in the process of moving into a traditional brick-and-mortar BVSI branch. We continue to see positive results from our investments in new markets and are actively recruiting additional new market development managers. Regarding our product updates, We continue to execute on the sale and service of BBSI benefits, our new health insurance offering. We had a successful year-end selling season, and I am pleased to report that through March, we have approximately 280 clients on our various plans with more than 7,000 total participants. We continue to invest and evolve our business product offering. Earlier in the month, we announced that we entered into a strategic multi-year partnership with Kaiser Permanente for programs effective 7-124 and greater. Kaiser is renowned for its excellence in healthcare services and offers one of the most complete and competitive HMO products in the marketplace. This offering folds into our workers' comp and health insurance framework where we take no underwriting risk. The addition of Kaiser will further round out our product offering for blue and gray collar clients We will be offering a national PPO side-by-side with the Kaiser HMO, and we are receiving positive feedback from our clients and referral partners. We believe that this is going to give us a lift for 7-1, but more importantly, be an accelerant to growth as we look out to 2025 and beyond. We are pleased with the results of BVSI benefits, and this product will be accretive to earnings in 2024. We are bullish on this product, and will now reap the benefit of leverage through scale. Next, I would like to shift to our view of the remainder of the year. We have consecutive quarters of great momentum. We met our worksite employee expectations. We continue to be optimistic about the road ahead. We have consistently achieved strong, controllable growth by focusing on the needs of our clients and by adding new clients. We have more product to sell, more folks selling it, and more referral partners recommending BBSI.

Overall, our view of the economy has material dislocation in the economy growth in 20 Your phone is cutting out on us. Thank you, Gary. Can you hear me now? Yes. Okay. Shall I continue? Yes, go ahead. Okay. Thank you. We're ready for transition.