RECENT INVESTMENT COMMUNITY PRESENTATION
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Transcript of RECENT INVESTMENT COMMUNITY PRESENTATION
Partners in Profitability…
Roth Capital Partners 21st Annual OC Growth Stock Conference
February 18, 2009
Partners in Profitability…
2
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 2007 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.
Partners in Profitability…
3
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– ASO (Administrative Services Organization)
• Highly predictable and recurring revenue stream– PEO contracts are annual with automatic renewals (30-day cancellation)– Industry-leading client retention rate – Staffing clients are large and reoccurring
• Strong value proposition for companies seeking efficiencies in operations
• Experienced management team
Partners in Profitability…
4
Outplacement
Search & Place13%
PEO (Professional Employer
Organization)
35%Temporary /
Supplemental52%
Source: Staffing Industry Report, updated and issued every 3 years
Projected 2006 HR Industry: $170 billion
BBSIRevs 85%
BBSIRevs 15%
Partners in Profitability…
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Overview of BBSI
Target Client: PEO: 20 to 200 employees per business
Staffing: Large employers with seasonal and human capital fluctuations
Service Delivery: 45 branch offices (10 states)
Sales Model: Consultative sales model networked through sales people, client referrals, brokers, financial planners,
CPAs, etc.
Financial: 2008 EPS: $.56Gross Revenues: $1.08 billionNet Income: $6.3 million
Partners in Profitability…
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Branch Offices in 10
states
CA 16OR 7WA 4ID 3AZ 2UT 5
CO 3
MD 2DE 1NC 1
Geographic Footprint
Partners in Profitability…
7
Why Seek a Partner for HR Management?
• 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
Allows businesses to:
Partners in Profitability…
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Work CompPremiums
Save 25-30%
Future Cost
Protection
Employee Turnover
RecruitingDrug
Testing
ScreeningWorkplace Safety
Risk Mgmt
ClaimsMgmt
DrugTesting
Regulatory Filings
Full Compliance
Proper Hiring
Procedures
Discrimination Wrongful Term.
HarassmentSuits
ProactiveTraining
Policies&
ProceduresCoachingCounseling
TimelyTax
Payments
BBSI Solves HR Problems
Benefit Programs
CompetitiveEmployeeRetention
Cost Effective
Qualified Employees
Search
CompensationAdvice
InterviewHomeland Security Issues
Data BaseScreening
Partners in Profitability…
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HR Management Services
PEO Staffing Perm. Placement
• Full HR mgmt
• Risk mgmt
• HR consulting
• Temporary
• Long-term
• On-site mgmt
• HR consulting
• Search
• Recruit
• Place
• HR consulting
BBSI
Branch Blended Services Platform
ASO
• Full HR mgmt
• Risk mgmt
• HR consulting
Partners in Profitability…
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Why Outsource HR?
Partners in Profitability…
11
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
401(k)
Cafeteria Plan
Credit Unions
Health Insurance
COBRA
Claims Management
RateNegotiation Regulatory Compliance
Supplemental Life
Disability
Dental
Vision
EAP
ERISAHIPAA
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 PremiumDeposits
Costly Premiums
Claims Management
Loss Runs
Human Resources
Payroll Admin
Employee Benefits
Safety Services
Workers’ Comp
HR Responsibilities WITHOUT BBSI
Partners in Profitability…
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PEO Clients Are Able to Outsource Their HR Functions
Report Hours New Employee Reporting
Reviews
Written Warnings
Disciplinary Notices
Safety Meetings
OSHA
Human Resources
Payroll Admin
Employee Benefits
Safety Services
Workers’ Comp
Report Incidents to
BBSI
HR Responsibilities WITH BBSI
Partners in Profitability…
13
Growth Strategy
• Support, strengthen and expand branch office operations
• Increase client utilization of our deliverables– Focus on impacting client operational efficiency– Increased flexibility through ASO
• Penetrate new markets– Expand our geographic presence following our current
customers’ expansion
• Continue to explore acquisition opportunities
Partners in Profitability…
14
Operating Strategy
• High touch deliverables
• Decentralized operations
– Customers are within 50 mile radius of branch office
– 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
Partners in Profitability…
15
Name and Title Years of Industry Experience
Experienced Management Team
Bill SherertzPresident, CEO & Chairman
38
Gregory VaughnVice President - IT
13
James MillerVice President & CFO
15
Michael Elich Vice President & COO
14
Partners in Profitability…
16
Financial Themes
• Strong Business Capabilities– Diversified revenue stream from PEO, staffing services and
permanent placement – Serve multiple industries– Recurring revenue stream from PEO– Continue to develop new markets
• Strong Cash Generating Capabilities– Minimal capex
• Strong Balance Sheet– No bank debt– Current ratio 2.1 to 1– $5.69 per share in cash and securities
Partners in Profitability…
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Highlights of 2008
• Gross revenues
- $1.08 billion, down 3.2% from 2007
• Net income
- $6.3 million, vs. $16.8 million for 2007
- EPS: $.56 vs. 1.44 for 2007
• Cash & securities $60.2 million at 12/31/08
• 90% customer retention
• Matured management
• Continuation of expansion and diversification of client base
Partners in Profitability…
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• Acquisition of First Employment Services, effective 2/4/08
- 2 offices in Phoenix area
• Self-insured workers’ compensation coverage
- Added self-insurance in Colorado
- Pursuing self-insurance in Arizona
Highlights of 2008
Partners in Profitability…
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Annual Gross Revenues ($ in millions)
$543
$766
$1,040$1,116 $1,081
$0
$100
$200
$300
$400
$500
$600
$700
$800
$900
$1,000
$1,100
$1,200
2004 2005 2006 2007 2008
Partners in Profitability…
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Quarterly Gross Revenues ($ in millions)
$116.8
$128.5
$145.1
$152.2
$157.1
$0
$25
$50
$75
$100
$125
$150
$175
$200
$225
$250
$275
$300
2004 2005 2006 2008
$296.8
$213.1
$183.6
$235.3
$273.8
$212.1
$257.5
$267.7$273.8
$257.4
2007
$293.8
$259.6
$269.5
$288.4
$263.1
Partners in Profitability…
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Quarterly EPS
$0.07
$0.27
$0.10
$0.37
$0.00
$0.05
$0.10
$0.15
$0.20
$0.25
$0.30
$0.35
$0.40
$0.45
$0.50
$0.55
$0.60
2004 2005 2006 2007 2008
$0.54
$0.26
$0.40
2.185 mmadditional
shares o/s August 2005
$0.12
$0.36
$0.48$0.45
$0.42
$0.34
$0.20
$0.31
$0.15
$0.01
$0.29
$0.06
$0.21
Note: 2008 3rd quarter included a $.32 per share impairment charge on investments
Partners in Profitability…
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Key Balance Sheet Items
Assets
Liabilities
Cash and equivalents $42.2
12/31/08 12/31/07
Marketable securities 18.0
Total Assets $170.1
Workers’ compensation claims
Long-term debt
Stockholders' equity
Total Liabilities and Equity
($ in millions)
$9.8
50.4
$173.2
$ 18.7
--
113.8
$173.2
$ 19.7
--
110.6
$170.1
& safety incentives
Partners in Profitability…
23
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– ASO
• Decision makers at Branch Offices– Management talent
Partners in Profitability…
24
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– ASO (Administrative Services Organization)– Nearly $6 per share in cash and securities, no bank debt
• Recurring revenue stream– PEO contracts are annual with automatic renewals (30-day cancellation)– 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
Partners in Profitability…
Roth Capital Partners 21st Annual OC Growth Stock Conference
February 18, 2009