Labor Ready, Inc. reported that revenue for the 13-week fourth quarter ended Dec. 31, 2004, increased 9.4 percent to $272.1 million from $248.7 million for the 14-week fourth quarter of 2003. On a comparable 13-week basis, revenue for the fourth quarter of 2004 increased 19.2 percent compared to the fourth quarter of 2003. Net income for the quarter improved 100 percent to $10.4 million, or $0.21 per share, from $5.2 million, or $0.12 per share, a year earlier.
Revenue for 2004 increased 17.2 percent to $1,044 million from $891 million in 2003. Net income improved 110 percent to $36.8 million, or $0.76 per share, from $17.5 million, or $0.41 per share, for fiscal 2003.
“The strength of our operations team has continued to build throughout our 15-year history,” said Labor Ready President and CEO Joe Sambataro. “Our results in 2004 reflected solid top line growth, higher gross margins, and strong cost controls. We continue to focus on our strategies of increasing revenue and profitability of our existing branches, penetrating new markets in the U.S., Canada and the United Kingdom, and diversifying our service offerings for our customers.”
Gross margin for the fourth quarter of 2004 was 31.4 percent, compared to 29.7 percent in the fourth quarter 2003, a 1.7 percent improvement. Operating expenses for the fourth quarter 2004 decreased by 0.9 percent of revenue.
According to Sambataro, approximately 1.1 percent of the improvement in gross margin was attributable to increased pricing and improved safety trends. An additional 0.6 percent of the margin improvement resulted from certain adjustments in connection with the company’s workers’ compensation costs.
“We have been working diligently to expand our safety procedures in regard to our temporary workers and reduce risk exposure through better client selection,” said Sambataro. “I am pleased to report that we are making significant progress in reducing our overall workers’ compensation expense through these programs. With the improvements in safety and reduced risk exposure, claim frequency has dropped approximately 10 percent from 2003 levels. We expect these trends to continue and estimate gross margin will average 30.5 percent in 2005.”
The Spartan and Workforce branches the company acquired at the beginning of the second quarter of 2004 provided 6 percent of Labor Ready’s year-over-year revenue growth during the fourth quarter and continued to make a positive contribution to the company’s quarterly and year-to-date net income results. Labor Ready anticipates opening 35 new branch locations in 2005, including 15 Spartan branches, 15 branches in smaller markets in the U.S. and Canada, and five branches in the United Kingdom.
For the first quarter of 2005, the company estimates revenue in the range of $240 million to $245 million, with net income per share for the quarter between $0.09 and $0.11. Based on current trends, revenue for the year 2005 is estimated to be in the range of $1,140 million to $1,160 million, with net income per share for the year in the range of $0.90 to $0.95. These estimates have been calculated taking into consideration the impact of expensing stock options in accordance with FAS 123R, Share Based Payment, for the last half of 2005.
