# EDGAR Filing Document

**Accession Number:** 0000902791
**File Stem:** 0000950170-23-005526
**Filing Date:** 2023-3
**Character Count:** 22363
**Document Hash:** 555be9a2675e8034b23f85cc9542cfec
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0000950170-23-005526.hdr.sgml**: 20230301

**ACCESSION NUMBER**: 0000950170-23-005526

**CONFORMED SUBMISSION TYPE**: 8-K

**PUBLIC DOCUMENT COUNT**: 14

**CONFORMED PERIOD OF REPORT**: 20230301

**ITEM INFORMATION**: Results of Operations and Financial Condition

**ITEM INFORMATION**: Regulation FD Disclosure

**ITEM INFORMATION**: Financial Statements and Exhibits

**FILED AS OF DATE**: 20230301

**DATE AS OF CHANGE**: 20230301

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** BARRETT BUSINESS SERVICES INC
- **CENTRAL INDEX KEY:** 0000902791
- **STANDARD INDUSTRIAL CLASSIFICATION:** SERVICES-HELP SUPPLY SERVICES [7363]
- **IRS NUMBER:** 520812977
- **STATE OF INCORPORATION:** MD
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 8-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 000-21886
- **FILM NUMBER:** 23693575

**BUSINESS ADDRESS:**
- **STREET 1:** 8100 NE PARKWAY DRIVE
- **STREET 2:** SUITE 200
- **CITY:** VANCOUVER
- **STATE:** WA
- **ZIP:** 98662
- **BUSINESS PHONE:** (800) 494-5669

**MAIL ADDRESS:**
- **STREET 1:** 8100 NE PARKWAY DRIVE
- **STREET 2:** SUITE 200
- **CITY:** VANCOUVER
- **STATE:** WA
- **ZIP:** 98662

?xml version="1.0" encoding="ASCII"? 8-K

**UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549**

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**FORM** 8-K

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**CURRENT REPORT**

**Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934**

**Date of Report (Date of earliest event reported):** March 01, 2023<br>

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BARRETT BUSINESS SERVICES, INC.

**(Exact name of Registrant as Specified in Its Charter)**

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| | | |
|:---|:---|:---|
| Maryland | 0-21886 | 52-0812977 |
| **(State or Other Jurisdiction<br>of Incorporation)** | **(Commission File Number)** | **(IRS Employer<br>Identification No.)** |
| 8100 NE Parkway Drive<br>Suite 200 |  |  |
| Vancouver**,** Washington |  | 98662 |
| **(Address of Principal Executive Offices)** |  | **(Zip Code)** |

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**Registrant's Telephone Number, Including Area Code:** (360) 828-0700<br>

**(Former Name or Former Address, if Changed Since Last Report)**

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Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

**Securities registered pursuant to Section 12(b) of the Act:**

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| | | |
|:---|:---|:---|
| **<br>Title of each class** | **Trading<br>Symbol(s)** | **<br>Name of each exchange on which registered** |
| Common Stock, par value $0.01 per share | BBSI | The Nasdaq Stock Market LLC |

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Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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**Item 2.02. Results of Operations and Financial Condition.**

On March 1, 2023, Barrett Business Services, Inc. (the "Company"), issued a news release announcing its financial results for the fourth quarter and year ended December 31, 2022. The release also provides management's expectations for certain key performance metrics for 2023. A copy of the news release is furnished as Exhibit 99.1 to this report and incorporated by reference.

**Item 7.01. Regulation FD Disclosure.**

On March 1, 2023 the Company announced that its Board of Directors has declared a regular quarterly cash dividend of $0.30 per share. The dividend is payable on March 31, 2023 to all stockholders of record as of March 17, 2023.

**Item 9.01. Financial Statements and Exhibits.**

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(d) Exhibits.

<u>Exhibit No</u>. <u>Description</u>

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;99.1 [<u>News Release dated March 1, 2023</u>](bbsi-ex99_1.htm)\*

104 Cover Page Interactive Data File (embedded within the Inline XBRL document).

\* Furnished herewith

**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

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| | | |
|:---|:---|:---|
|  | BARRETT BUSINESS SERVICES, INC.Registrant | BARRETT BUSINESS SERVICES, INC.Registrant |
| <br>Dated: March 1, 2023 | By:  | /s/ Anthony J. Harris |
|  |  | Anthony J. Harris<br>Executive Vice President and Chief Financial Officer and Treasurer |

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## Ex-99

**EXHIBIT 99.1**

![img69943567_0.jpg](img69943567_0.jpg)

**BBSI Reports Strong Fourth Quarter and Full Year 2022 Financial Results**

- Q4 2022 Net Income of $11.5 Million, or $1.64 per Diluted Share -

- Full Year 2022 Net Income of $47.3 Million, or $6.54 per Diluted Share -

**VANCOUVER, Washington, March 1, 2023 –** Barrett Business Services, Inc. ("BBSI" or the "Company") (NASDAQ: BBSI), a leading provider of business management solutions, reported financial results for the fourth quarter and full year ended December 31, 2022.

**Fourth Quarter 2022 Financial Summary vs. Prior Year Quarter**

&nbsp;&nbsp;&nbsp;&nbsp;•Revenues up 6% to $272.0 million.

&nbsp;&nbsp;&nbsp;&nbsp;•Gross billings up 8% to $1.95 billion.

&nbsp;&nbsp;&nbsp;&nbsp;•Average worksite employees ("WSEs") up 6%.

&nbsp;&nbsp;&nbsp;&nbsp;•Net income up to $11.5 million, or $1.64 per diluted share, compared to $10.6 million, or $1.40 per diluted share.

**Full Year 2022 Financial Summary vs. 2021**

&nbsp;&nbsp;&nbsp;&nbsp;•Revenues up 10% to $1.05 billion.

&nbsp;&nbsp;&nbsp;&nbsp;•Gross billings up 13% to $7.39 billion.

&nbsp;&nbsp;&nbsp;&nbsp;•Average WSEs up 8%.

&nbsp;&nbsp;&nbsp;&nbsp;•Net income up to $47.3 million, or $6.54 per diluted share, compared to $38.1 million, or $5.00 per diluted share.

"We had a strong finish to a year that consistently exceeded expectations," said BBSI President and CEO, Gary Kramer. "We continued to see positive results from our sales efforts through Q4 with a larger portion of our WSE growth resulting from new clients in the quarter. Looking ahead to 2023, we are now launching our health benefits offering nationwide after our successful roll-out in select markets in the fourth quarter. This new product offering, paired with continued innovation in our sales and service delivery, brings exciting growth potential in the years ahead."

**Fourth Quarter 2022 Financial Results**

Revenues in the fourth quarter of 2022 increased 6% to $272.0 million compared to $256.6 million in the fourth quarter of 2021.

Total gross billings in the fourth quarter increased 8% to $1.95 billion compared to $1.81 billion in the same year-ago quarter (see "Key Performance Metrics and Non-GAAP Financial Measures" below). The increase was driven by higher WSEs from net client additions and net client hiring, as well as from higher average billings per WSE.

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Non-GAAP gross workers' compensation expense as a percent of gross billings was 3.0% in the fourth quarter of 2022 and benefited from a favorable adjustment of prior accident year liability of $0.6 million. This compares to 3.1% in the fourth quarter of 2021, which included a favorable adjustment of prior accident year liability of $1.7 million.

Net income for the fourth quarter of 2022 was $11.5 million, or $1.64 per diluted share, compared to $10.6 million, or $1.40 per diluted share, in the year-ago quarter. The increase is primarily attributable to growth in revenue.

**Full Year 2022 Financial Results**

Revenues in 2022 increased 10% to $1.05 billion compared to $955.2 million in 2021.

Total gross billings in 2022 increased 13% to $7.39 billion compared to $6.57 billion in 2021 (see "Key Performance Metrics and Non-GAAP Financial Measures" below). The increase was primarily due to an increase in average WSEs and higher average billings per WSE.

Non-GAAP gross workers' compensation expense as a percent of gross billings was 2.9% in 2022 and benefited from favorable adjustments of prior accident year liability of $11.3 million. This compares to 3.0% in 2021, which included favorable adjustments of prior accident year liability of $9.2 million.

Net income in 2022 increased to $47.3 million, or $6.54 per diluted share, compared to $38.1 million, or $5.00 per diluted share, in 2021. The increase is primarily attributable to higher revenue in 2022.

**Liquidity**

As of December 31, 2022, unrestricted cash and investments increased to $159.7 million compared to $132.1 million in the prior quarter. BBSI was debt free at year end.

**Capital Allocation**

BBSI's board of directors has confirmed its regular quarterly cash dividend of $0.30 per share. The cash dividend will be paid on March 31, 2023, to all stockholders of record as of March 17, 2023.

On February 28, 2022, BBSI's board of directors approved a stock repurchase program authorizing the Company to purchase up to $75 million of its stock over a two-year period. In the fourth quarter, BBSI repurchased 92,308 shares at an average price of $87.92 per share. At December 31, 2022, approximately $28 million remains available under the repurchase program.

**Outlook**

In 2023, BBSI expects the following:

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Gross billings growth of 5% to 8%

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Growth in the average number of WSEs of 2% to 4%

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Gross margin as a percent of gross billings of 3.0% to 3.15%

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;•Effective annual tax rate to remain at 27% to 28%

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**Conference Call**

BBSI will conduct a conference call on Wednesday, March 1, 2023, at 5:00 p.m. Eastern time (2:00 p.m. Pacific time) to discuss its financial results for the year ended December 31, 2022.

BBSI's CEO Gary Kramer and CFO Anthony Harris will host the conference call, followed by a question and answer period.

Date: Wednesday, March 1, 2023<br>Time: 5:00 p.m. Eastern time (2:00 p.m. Pacific time)<br>Toll-free dial-in number: 1-877-407-4018<br>International dial-in number: 1-201-689-8471<br>Conference ID: 13736188

Please call the conference telephone number 5-10 minutes prior to the start time. An operator will register your name and organization. If you have any difficulty connecting with the conference call, please contact Gateway Investor Relations at 1-949-574-3860.

The conference call will be broadcast live and available for replay <u>here</u> and via the Investors section of the BBSI website at <u>ir.bbsi.com</u>.

A replay of the conference call will be available after 8:00 p.m. Eastern time on the same day through April 1, 2023.

Toll-free replay number: 1-844-512-2921<br>International replay number: 1-412-317-6671<br>Replay ID: 13736188

**Key Performance Metrics and Non-GAAP Financial Measures** 

We report PEO revenues net of direct payroll costs because we are not the primary obligor for wage payments to our clients' employees. However, management believes that gross billings and wages are useful in understanding the volume of our business activity and serve as an important performance metric in managing our operations, including the preparation of internal operating forecasts and establishing executive compensation performance goals. We therefore present for purposes of analysis gross billings and wage information for the three and twelve months ended December 31, 2022 and 2021.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) |
|  | Three Months Ended December 31, | Three Months Ended December 31, | Year Ended December 31, | Year Ended December 31, |
| (in thousands) | 2022 | 2021 | 2022 | 2021 |
| Gross billings | $1948591 | $1807793 | $7393808 | $6569986 |
| PEO and staffing wages | $1697514 | $1574668 | $6425286 | $5693903 |

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Because safety incentives represent consideration payable to PEO customers, safety incentive costs are netted against PEO revenue in our consolidated statements of operations. We therefore present below for purposes of analysis non-GAAP gross workers' compensation expense, which represents workers' compensation costs including safety incentive costs. We believe this non-GAAP measure is useful in evaluating the total costs of our workers' compensation program. In July 2020, the Company began limiting its safety incentive offering in certain markets, resulting in a substantial reduction in safety incentive costs.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) |
|  | Three Months Ended December 31, | Three Months Ended December 31, | Year Ended December 31, | Year Ended December 31, |
| (in thousands) | 2022 | 2021 | 2022 | 2021 |
| Workers' compensation | $58076 | $55256 | $209145 | $196949 |
| Safety incentive costs | 298 | 822 | 1852 | 2985 |
| Non-GAAP gross workers' compensation | $58374 | $56078 | $210997 | $199934 |

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In monitoring and evaluating the performance of our operations, management also reviews the following ratios, which represent selected amounts as a percentage of gross billings. Management believes these ratios are useful in understanding the efficiency and profitability of our service offerings.

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| | | | | |
|:---|:---|:---|:---|:---|
|  | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) |
|  | Percentage of Gross Billings | Percentage of Gross Billings | Percentage of Gross Billings | Percentage of Gross Billings |
|  | Three Months Ended December 31, | Three Months Ended December 31, | Year Ended December 31, | Year Ended December 31, |
|  | 2022 | 2021 | 2022 | 2021 |
| PEO and staffing wages | 87.1% | 87.1% | 86.9% | 86.7% |
| Payroll taxes and benefits | 6.8% | 6.7% | 7.0% | 7.2% |
| Non-GAAP gross workers' compensation | 3.0% | 3.1% | 2.9% | 3.0% |
| Gross margin | 3.1% | 3.1% | 3.2% | 3.1% |

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We refer to employees of our PEO clients as WSEs. Management reviews average and ending WSE growth to monitor and evaluate the performance of our operations. Average WSEs are calculated by dividing the number of unique individuals paid in each month by the number of months in the period. Ending WSEs represents the number of unique individuals paid in the last month of the period.

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| | | | | | |
|:---|:---|:---|:---|:---|:---|
|  | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) | (Unaudited) |
|  | Year Ended December 31, | Year Ended December 31, | Year Ended December 31, | Year Ended December 31, | Year Ended December 31, |
|  | 2022 | % Change | 2021 | % Change | 2020 |
| Average WSEs | 122001 | 8.0% | 112928 | 4.3% | 108249 |
| Ending WSEs | 122306 | 5.3% | 116154 | 6.3% | 109292 |

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**About BBSI**

BBSI (NASDAQ: BBSI) is a leading provider of business management solutions, combining human resource outsourcing and professional management consulting to create a unique operational platform that differentiates it from competitors. The Company's integrated platform is built upon expertise in payroll processing, employee benefits, workers' compensation coverage, risk management and workplace safety programs, and human resource administration. BBSI's partnerships help businesses of all sizes improve the efficiency of their operations. For more information, please visit <u>www.bbsi.com</u>.

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**Forward-Looking Statements**

Statements in this release about future events and financial outlook are forward-looking statements. Such statements 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 effects of the COVID-19 pandemic, inflation, and potential recessionary pressures on our clients; our plans to make certain fully insured medical and other health and welfare benefits available to qualifying worksite employees beginning in 2023; 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 and to achieve revenue growth; the availability of financing or other sources of capital; the Company's relationship with its primary bank lender; the potential for material deviations from expected future workers' compensation claims experience; changes in the workers' compensation regulatory environment in the Company's primary markets; litigation costs; security breaches or failures in the Company's information technology systems; the collectability of accounts receivable; changes in executive management; the carrying value of deferred income tax assets and goodwill; the effects of the pandemic and conditions in the global capital markets on the Company's investment portfolio; and the potential for and effect of acquisitions, among others. Other important factors that may affect the Company's prospects are described in the Company's 2021 Annual Report on Form 10-K and in subsequent reports filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934. 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 release to reflect events or changes in circumstances that occur after the date of this release.

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**Barrett Business Services, Inc.**

**Condensed Consolidated Balance Sheets**

(Unaudited)

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| | | |
|:---|:---|:---|
|  | December 31, | December 31, |
| (in thousands) | 2022 | 2021 |
| **ASSETS** |  |  |
| Current assets: |  |  |
| &nbsp;&nbsp;&nbsp;Cash and cash equivalents | $91423 | $69405 |
| &nbsp;&nbsp;&nbsp;Investments | 68325 | 96763 |
| &nbsp;&nbsp;&nbsp;Trade accounts receivable, net | 163838 | 155707 |
| &nbsp;&nbsp;&nbsp;Prepaid expenses and other | 19787 | 17606 |
| &nbsp;&nbsp;&nbsp;Restricted cash and investments | 110989 | 67238 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current assets | 454362 | 406719 |
| Property, equipment and software, net | 45954 | 36277 |
| Operating lease right-of-use assets | 19804 | 20697 |
| Restricted cash and investments | 104277 | 232965 |
| Goodwill | 47820 | 47820 |
| Other assets | 3281 | 2474 |
| Deferred income taxes | 11440 | - |
| Total assets | $686938 | $746952 |
| **LIABILITIES AND STOCKHOLDERS' EQUITY** |  |  |
| Current liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;Current portion of long-term debt | $- | $3510 |
| &nbsp;&nbsp;&nbsp;Accounts payable | 8264 | 4485 |
| &nbsp;&nbsp;&nbsp;Accrued payroll, payroll taxes and related benefits | 222331 | 199067 |
| &nbsp;&nbsp;&nbsp;Income taxes payable | 610 | 1673 |
| &nbsp;&nbsp;&nbsp;Current operating lease liabilities | 6957 | 7191 |
| &nbsp;&nbsp;&nbsp;Other accrued liabilities | 31603 | 15120 |
| &nbsp;&nbsp;&nbsp;Workers' compensation claims liabilities | 62917 | 80028 |
| &nbsp;&nbsp;&nbsp;Safety incentives liability | 2049 | 4322 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities | 334731 | 315396 |
| Long-term workers' compensation claims liabilities | 153070 | 199379 |
| Deferred income taxes | - | 1687 |
| Long-term operating lease liabilities | 14225 | 14598 |
| Customer deposits and other long-term liabilities | 7070 | 7362 |
| Stockholders' equity | 177842 | 208530 |
| Total liabilities and stockholders' equity | $686938 | $746952 |

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**Barrett Business Services, Inc.**

**Condensed Consolidated Statements of Operations**

(Unaudited)

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| | | | | |
|:---|:---|:---|:---|:---|
|  | Three Months Ended | Three Months Ended | Year Ended | Year Ended |
|  | December 31, | December 31, | December 31, | December 31, |
| (in thousands, except per share amounts) | 2022 | 2021 | 2022 | 2021 |
| Revenues: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Professional employer services | $243189 | $223528 | $937363 | $843815 |
| &nbsp;&nbsp;&nbsp;Staffing services | 28761 | 33040 | 116963 | 111351 |
| Total revenues | 271950 | 256568 | 1054326 | 955166 |
| Cost of revenues: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Direct payroll costs | 21453 | 25003 | 87944 | 83821 |
| &nbsp;&nbsp;&nbsp;Payroll taxes and benefits | 131715 | 120374 | 522392 | 469888 |
| &nbsp;&nbsp;&nbsp;Workers' compensation | 58076 | 55256 | 209145 | 196949 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total cost of revenues | 211244 | 200633 | 819481 | 750658 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gross margin | 60706 | 55935 | 234845 | 204508 |
| Selling, general and administrative expenses | 44204 | 41320 | 169642 | 155259 |
| Depreciation and amortization | 1643 | 1359 | 6228 | 5326 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income from operations | 14859 | 13256 | 58975 | 43923 |
| Other income, net | 1570 | 1616 | 6328 | 6738 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income before income taxes | 16429 | 14872 | 65303 | 50661 |
| Provision for income taxes | 4901 | 4258 | 18035 | 12582 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net income | $11528 | $10614 | $47268 | $38079 |
| Basic income per common share | $1.67 | $1.42 | $6.63 | $5.05 |
| Weighted average basic common shares outstanding | 6918 | 7482 | 7130 | 7540 |
| Diluted income per common share | $1.64 | $1.40 | $6.54 | $5.00 |
| Weighted average diluted common shares outstanding | 7048 | 7559 | 7226 | 7621 |

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**Investor Relations:** 

Gateway Group, Inc.

Cody Slach

Tel 1-949-574-3860

BBSI@gatewayir.com

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