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Roth Capital Partners 22 nd Annual OC Growth Stock Conference March 16, 2010. Forward Looking Statements.
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Roth Capital Partners 22nd Annual OC Growth Stock Conference March 16, 2010
Forward Looking Statements The issues addressed in this presentation may involve forward-looking statements which, along with other information presented that are not historical facts, are subject to a number of risks and uncertainties. Actual results may differ materially. Please refer to our 2009 Annual Report on Form 10-K and to our other SEC filings for more information about the risks and uncertainties that could cause actual results to differ.
Key Investment Highlights • Leading provider of HR management services • Well-respected service provider in large, underserved market • Focused on small and medium-sized businesses • Scalable, substantial operating leverage • Positioned for growth opportunities • Pipeline of new business for organic growth • Financial capacity to seek strategic acquisition opportunities • Highly predictable and recurring revenue stream • Most contracts are annual with automatic renewals • Industry-leading client retention rate • Staffing clients are large and reoccurring • Strong value proposition for companies seeking efficiencies in operations • Experienced management team
Projected 2010 U.S. HR Industry: $165 billion BBSI Revs 89% BBSI Revs 11% Source: Staffing Industry Report, updated and issued every 3 years
Overview of BBSI Target Client: PEO: 20 to 200 employees per business Staffing: Large employers with seasonal and human capital fluctuations Service Delivery: 44 branch offices (10 states) Sales Model: Consultative sales model networked through sales people, client referrals, brokers, financial planners, CPAs, etc. Financial: 2009 EPS: $(.46) Gross Revenues: $1.02 billion Net Loss: $4.8 million
Geographic Footprint Branch Offices in 10 states MD 2 DE 1 NC 1 CA 16 OR 8 WA 4 ID 3 AZ 2 UT 4 CO 3
Why Seek a Partner for HR Management? Allows businesses to: • Reduce the complexities of being an employer • Focus on core business • Restructure core work force - Flexibility and economics of “just-in-time” employees • Improve operating efficiencies
BBSI Solves HR Problems Qualified Employees Work Comp Premiums Search Compensation Advice Employee Turnover Homeland Security Issues Data Base Screening Future Cost Protection Interview Save 25-30% Recruiting Drug Testing Workplace Safety Screening Discrimination Wrongful Term. Harassment Suits Risk Mgmt Claims Mgmt Policies & Procedures Drug Testing Proactive Training Coaching Counseling Benefit Programs Regulatory Filings Competitive Employee Retention Proper Hiring Procedures Full Compliance Cost Effective Timely Tax Payments
BBSI Branch Blended Services Platform HR Management Services PEO Staffing Permanent Placement Preferred Payroll • Temporary • Long-term • On-site mgmt • HR consulting • Search • Recruit • Place • HR consulting • Full HR mgmt • Risk mgmt • HR consulting • Payroll Processing
Human Resources Payroll Admin Employee Benefits Safety Services Workers’ Comp 401(k) Cafeteria Plan Credit Unions Health Insurance COBRA Claims Management Rate Negotiation Regulatory Compliance Supplemental Life Disability Dental Vision EAP ERISA HIPAA Report Hours Compute W/H Deductions Garnishments Issue Checks Direct Payroll Deposit Federal, multi-state P/R tax compliance Account Reconciliation Reports Vacation Pay Sick Pay Check Delivery Cost Accounting W-2s New Hire Reporting Advertising Recruiting Screening References Hiring Job Descriptions Reviews I-9 W-4 ADA FMLA DOL INS Employee Manuals Written Warnings Workplace Conduct Terminations Unemployment Claims Supplemental Staffing OSHA Federal & State Compliance Environmental Regs Safety Training Safety Manuals Safety Walk- Throughs Job-site Visits Supervisor Training Safety Meetings Hazard Training Accident Investigation Insurance Fraudulent Claims Large Premium Deposits Costly Premiums Claims Management Loss Runs HR Responsibilities WITHOUT BBSI
Human Resources Payroll Admin Employee Benefits Safety Services Workers’ Comp Report Hours New Employee Reporting Reviews Written Warnings Disciplinary Notices Safety Meetings OSHA HR Responsibilities WITH BBSI PEO Clients Are Able to Outsource Their HR Functions Report Incidents to BBSI
Growth Strategy • Support, strengthen and expand branch office operations • Increase client utilization of our deliverables • Focus on impacting client operational efficiency • Increased flexibility through Preferred Payroll • Penetrate new markets • Expand our geographic presence following our current customers’ expansion • Continue to explore acquisition opportunities
Operating Strategy • High touch deliverables • Decentralized operations • Customers are within 50 mile radius of branch office > We are local • Hands-on with our customers with both risk management and human resource professionals > Key competitive leverage point • Economic incentives for management employees on financial performance goals
Bill SherertzPresident,CEO & Chairman Gregory Vaughn Vice President - IT James Miller Vice President & CFO Michael Elich Vice President & COO 39 14 16 15 Experienced Management Team Name and Title Years of Industry Experience
Financial Themes • Strong Business Capabilities • Diversified revenue stream from PEO, staffing services, permanent placement and preferred payroll processing • Serve multiple industries • Recurring revenue stream • Continue to develop new markets • Strong Cash Generating Capabilities • Minimal capex • Strong Balance Sheet • No bank debt • Current ratio 2 to 1 • $5.53 per share in cash and securities
Highlightsof2009 and 2008 • Gross revenues - $1.02 billion, down 5.6% from 2008 • Net income - Net loss of $4.8 million, vs. net income of $6.3 million for 2008 - EPS: ($.46) vs. $.56 for 2008 • Cash & securities $57.9 million at 12/31/09 • 90% customer retention • Matured management • Continuation of expansion and diversification of client base
Highlightsof2009 and 2008 • Acquisition of First Employment Services, effective 2/4/08 - 2 offices in Phoenix area • Self-insured workers’ compensation coverage - Added self-insurance in Colorado - Formed insurance company in Arizona
Annual EPS 2.185 mm additional shares o/s August 2005 $1.40 $1.44 $0.56 $(0.46) Note: 2008 included a $.32 per share impairment charge on investments Note: 2009 included a $.72 per share charge for a change in estimate to the workers’ compensation reserves
Total Assets $172.1 Assets Liabilities Key Balance Sheet Items ($ in millions) 12/31/09 12/31/08 Cash and marketable securities $57.9 $60.2 $170.1 $ 32.2 100.1 $172.1 $ 19.7 110.6 $170.1 Workers’ compensation claims & safety incentives Stockholders' equity Total Liabilities and Equity
Key Differentiators • Proximity/closeness to our customers • Proactive HR management services • Industry-leading customer retention rate of 90% • Efficient provider of integrated services • PEO • Staffing • Permanent placement • HR administration • Risk management • Preferred payroll • Decision makers at Branch Offices • Management talent
Key Investment Highlights • Leading provider of HR management services • Well-respected service provider in large, underserved market • Focused on small and medium-sized businesses • Scalable, substantial operating leverage • Positioned for growth opportunities • Strong infrastructure • Financial capacity to seek strategic acquisition opportunities • $5 per share in cash and securities, no bank debt • Recurring revenue stream • Contracts are annual with automatic renewals • Industry-leading client retention rate • Staffing clients are large and reoccurring • Strong value proposition for companies seeking efficiencies in operations • Experienced management team, strong infrastructure
Roth Capital Partners 22nd Annual OC Growth Stock Conference March 16, 2010