Title: Roth Capital Partners
1- Roth Capital Partners
- New York Conference
- September 2007
2Forward 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 2006
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.
3Key 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
4Projected 2006 HR Industry 170 billion
BBSI Revs 85 GM 50
BBSI Revs 15 GM 50
Source Staffing Industry Report
5Overview 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 Talented sales people,
client referrals, insurance brokers, financial
planners, CPAs, etc. - EPS 2006 1.40 (up 16 vs.
2005 net inc. up 31) -
- 1Q 07 0.15 (up 25 vs. 2006 net inc. up
27) - 2Q 07 0.42 (up 17 vs. 2006 net inc. up
17) - 2005 and 2006 include the effect of an additional
2.185 million shares outstanding in - August 2005.
(1)
6Geographic Footprint
45 Branch Offices in 10 states
MD 2 DE 1 NC 1
CA 16 OR 9 WA 4 ID 3 AZ 1 UT 6 CO 2
Effective 7/2/07 Strategic Staffing, Inc.
7Why Seek a Partner for HR Management?
Allows businesses to
- Reduce liabilities and complexities of being
employer - Focus on core competencies
- Restructure core work force
- - Flexibility and economics of just-in-time
employees - Improve operating efficiencies
8BBSI 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
Screening
Workplace Safety
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
9BBSI
Branch Blended Services Platform
HR Management Services
PEO
Staffing
Perm. Placement
ASO
- Temporary
- Long-term
- On-site mgmt
- HR consulting
- Full HR mgmt
- Risk mgmt
- HR consulting
- Search
- Recruit
- Place
- HR consulting
- Full HR mgmt
- Risk mgmt
- HR consulting
10- Why Outsource HR
- To a PEO?
11HR Responsibilities WITHOUT BBSI
12HR Responsibilities WITH BBSI
PEO Clients Are Able to Outsource Their HR
Functions
Report Incidents to BBSI
13HR Function is Becoming More Critical
- Laws and regulations regarding employment
policies and practices grew by 60 percent
(1980-2000 per U.S. SBA) - Proprietors of small or midsized businesses now
spend up to 25 of their time on
employment-related paperwork - New Homeland Security issues will further
increase HR burdens
BBSIs Pro HR approach enables clients to focus
on their core competencies
14Staffing Sector
- Supplemental Staffing
- - Secular change for businesses
- gt Now standard practice
- - Trend increasing
- gt Particularly in uncertain times
- - Best opportunities when unemployment rate is
- within 4 to 6.5
15Reasons to use staffing firms
16Growth Strategy
- Support, strengthen and expand branch office
operations - Increase client utilization of our services
- Cross selling between staffing and PEO
- Increased flexibility through ASO
- MIS
- Customer customization
- Seamless integration
- Penetrate new markets
- Expand our geographic presence following our
current customers expansion - Pursue strategic acquisitions
- Pro HR 1/1/06 (PEO)
- Strategic Staffing 7/02/07 (Staffing)
17Operating Strategy
- Broad scope of services
- Decentralized operations
- Customers are within 50 mile radius of branch
office - Hands-on with our customers with both risk
management and human resource professionals - gt Key competitive advantage
- Economic incentives for employees on financial
performance goals
18Experienced Management Team
Name and Title
Years of Industry Experience
19Financial Themes
- Strong Top-Line Growth
- Diversified revenue stream from PEO, staffing
services and permanent placement - Predictable, recurring revenue stream from PEO
- Continue to develop new markets
- Strong Cash Generating Capabilities
- Minimal capex
- Strong Balance Sheet
- No bank debt
- Current ratio 2.4 to 1
- 6.50 per share in cash and securities
20Highlights of 2006
- Continued strong growth in gross revenues
- - Record 1.04 billion
- gt Up 35.9 over 2005
- EPS of 1.40 vs. 1.21 (2005)
- Net income of 16.3 million up 30.8 over 2005
- Formed ASO division
- Formed captive insurance subsidiary
- Initiated quarterly cash dividends
- Over 90 customer retention
21Highlights of 1H07
- Record-level gross revenues
- - 1H07 525.2 million, up 6.6 over 1H06
- Record-level net income
- - 1H07 6.6 million, up 19.2 over 1H06
- Cash securities 75 million at 6/30/07
- 90 customer retention
- Continuation of expansion and diversification of
customer base -
22Other Highlights of 2007
- Acquisition of Strategic Staffing, Inc.,
effective 7/2/07 - - 5 offices Utah, 1 office Colorado
- - Revenues
- gt 2006 38 million
- gt 2007 48 million projected
- - After-tax ROI estimated at 12 - 13
- - After-tax cash-on-cash ROI projected at 15
-
23Annual Gross Revenues ( in millions)
24Quarterly Gross Revenues ( in millions)
Estimated increase of 9.2
273.8
267.7
296 to 302
257.5
235.3
213.1
212.1
183.6
Est.
2004
2005
2007
2006
25Quarterly EPS
0.56 to 0.59
0.48
0.45
0.42
2.185 mm additional shares o/s August 2005
0.40
0.36
0.26
0.12
Est.
26Key Balance Sheet Items
( in millions)
6/30/07
12/31/06
Cash and equivalents
71.0
69.9 3.6 162.2
Marketable securities
4.0
Workers compensation claims
9.1 7.5 -- 103.7 162.2
7.2 7.8 -- 108.7 168.7
Safety incentives
Long-term debt
Stockholders' equity
Â
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Total Liabilities and Equity
27Key Differentiators
- Proximity/closeness to our customers
- 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
28Key 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
29- Roth Capital Partners
- New York Conference
- September 2007