Good day, everyone, and thank you participating in today's Conference Call to discuss BBSI's Financial Results for the First Quarter ended March 31, 2014. Joining us today are BBSI's President and CEO, Mr. Michael Elich, and the company's CFO, Mr. Jim Miller. Following their remarks, we'll open the call for your questions. Before we go any further, I would like to take a moment to read the company's Safe Harbor statement within the meaning of the Private Securities Litigation Reform Act of 1995 that provides important cautions regarding forward-looking statements. The company's remarks during today's conference call may include forward-looking statements. These statements, along with other information presented that are not historical facts, are subject to a number of risks and uncertainties. Actual results may differ materially from those implied by these forward-looking statements. Please refer to the company's recent earnings release and to the company's quarterly and annual reports filed with the Securities and Exchange Commission for more information about the risks and uncertainties that could cause actual results to differ. I would like to remind everyone that this call will be available for replay through May 30, 2014, starting at 3:00 p.m. Eastern this afternoon. A webcast replay will also be available via the link provided in today's press release, as well as available on the company's website at www.barrettbusiness.com. Now, I would like to turn the call over to the Chief Financial Officer of BBSI, Mr. Jim Miller. Sir, please go ahead.

Thank you, Luke. And depending upon where you're dialing in from, good morning or afternoon, everyone. As you saw at the close of the market yesterday, we issued a press release announcing our financial results for the first quarter ended March 31, 2014. The 23% increase in gross revenue during the first quarter reflects our continued focus on delivering a management platform that is both predictable and adaptable in how it supports well-run clients over the long-term. Vital to this long-term model is the client vetting plus which has driven our 90% retention rate. During the past several months, however, the size of clients that we ultimately determine we're not a fit where our platform has been larger than in the past. This recent trend does not impact our long-term view about our untapped market opportunity with the help our client base and the strength of our referral network. Given this view, we remain well-positioned to continued gaining market share and deliver another record year for our shareholders. Before taking you through our financial results, I would like to mention that yesterday's earnings release summarizes our revenues and cost of revenues on a net revenue basis as required by Generally Accepted Accounting Principles or GAAP. Most of our comments today, however, will be based upon gross revenues and various relationships to gross revenue because we believe such information is, one, more informative as to the level of our business activity; two, more useful in managing and analyzing our operations; and three, add more transparency to the trends within our business. College related gross revenue as compared to a net revenue basis reporting have no effect on gross margin dollars, SG&A expenses or net income. Now turning to the first quarter results, total gross revenue has increased 23% to $727.4 million…

Good morning, and thank you for being on the call. The mid first quarter of 2014, we recognized more clearly that we have been experiencing growing pains within operations resulting from growth fatigue related to doubling the company over the past two years, maturing of the organizational foundation through a build in senior management, as well as retooling of branch operations to accommodate business units and how we focus on client development in teams, and the implementation and adoption of HRP, our payroll and data platform along with the implementation and transition of our insurance model as resulted of SB 863. It is as easy to see in hindsight, looking forward but we believe we have turn the corner in the most recent quarter adapting to effects resulting from third and fourth quarter of 2013 with this experience brings new perspective as to how we should look at the organization on a go forward basis. Related to canceled clients, we did see an impact created by canceling of larger than normal clients in the fourth quarter of 2013 and January of 2014. As a result, we saw a loss of revenue is impacting our revenue base through the vetting process that once replaced will return us to our more recent trend. By identifying canceling clients who were utilizing a disproportionate level of BSSI resources, we expect to recognize a long-term increase to efficiencies in quality of operation which will benefit remaining and future clients. Also in the quarter, we saw an 8% billed in same-store sale. Looking at the current quarter compared to fourth quarter 2013, we saw 38% of clients add new headcount, 35% of our clients reduced headcounts, 27% of our clients remained unchanged. We saw 42% of our clients increase hours worked, while 57% of our clients…

(Operator Instructions) And our first question today comes from the line of Jeff Martin, of ROTH Capital Partners. Please go ahead.

Mike, could you go into little more detail on the client vetting process, what all is behind it? Is it just larger clients, is it clients in general that are taking a disproportionate amount of resources? Do you expect margin gains to result from this and how long the transition will take?

We continue to look at our base of clients on an ongoing basis to understand and figure out where we are out with them, are we making progress with them, are we stalled in the process, are they communicating with us, are we able to longer term to have an impact on them. So as we look at branches and/or business units and we reach a point where we look to, one, some of the analytics that come back and tell us that we are not making the progress with a certain client, we look to the client figure our okay is there short-term, long-term or does that make sense to continue to invest there. The one piece that usually stresses that as we grow and add business, we have two choices, we can add additional resources to build more business units and add capacity to the overall branch, but the first thing we typically do is we will look back to the client base and look to kind of identifying 80/20 rule to understand which 20% or 10% of client within that business unit or branch might be taking up 80% of the capacity within that branch. So the first step is that we will look at one quality of risk, are we seeing things that we shouldn't see. It just so what happens as we keep combing through the branch and we kept keep combing through, I think it surfaced probably mid last year but we had some larger clients that were causing us little more problem than we are may have understood earlier and just made sense to move them out. We still do business with a number of large clients and we do a great job with them. It's just that with some larger clients you…

Okay. And is this a process that for the end of its cycle or I mean, it's somewhat of an ongoing process but the bigger so to speak is worth its wait for this thing?

Yeah, we have spent a lot of time in the field over the last couple of months trying to understand that ourselves and if all indications are that is where was the kind of the spike and that we are on the back end of it, I mean we will continue to have ongoing vetting as we always should but there was a definitely a spike in that activity that now that has cleared out we will see it reach a more normalized level and ultimately help us return to a base of supporting a stronger product. The other thing too I would add is with that we begin to get more efficiency out of business units so we don't have to add as much to infrastructure and once you clear that out a little bit, it allows us to focus on the remaining clients and add new and better clients, because we get at underwriting over time. I think that this is a -- it's a pent up build that you got to get out of way sometimes to be able to move to the next level and that's kind of where we ended up.

Okay, and it sounds like your transition over 200 customers to ACE. Wondering if you could give any detail how that has gone and how the pricing tops have done (inaudible) workers comp?

On the front end of it, we did ultimately get to an arrangement finalized until closer to March 1. We started bringing clients into the process in March, but we didn't really have that many. And April actually it has been accelerating and with no effects, I mean, we're having good conversations; it seems to be pretty much a neutral change for our clients. Where we were pricing our products with new business coming in, I mean, it's like anything, your price is always going to be a product of how good are you, but we are not seeing competitive pressures there that are keeping us from getting business at least on the front end. I think the arrangement overall will be additive to the quality of the product that were bringing and our clients are getting a certificate of insurance now rather than a certificate of self insurance or a letter of self insurance. It allows them to go their clients and have more valid rate of paper behind them. It’s just going to be cleaner and we already are seeing results of that.

So you previously talked about it 25 to 30 basis points uptake in workers compensation as a percentage of gross payroll once this is fully transitioned, are you seeing your ability to recoup a good percentage of that? I mean, it's early, but just curious if you are feeling that this is still likely to be an earnings from neutral transition.

I think throughout this first year, throughout 2014 we will be ramping into it and we will be capturing additional margin where it make sense and then over time will normalize where we need to get to which will be a process for 2015 more so. But for most of the part we should be somewhat neutral even though the expense will increase, we're not seeing where we believe that it will be -- it shouldn't slow our growth curve to be able to capture that additional margin on a go forward basis to make sure that we are remaining neutral to maybe somewhat accretive to the new program.

Okay. And then one more, Mike, if I could, you talked about a couple of more quarters to kind of get through these growing pains. What sort of things should investors look for in terms of ways to gauge your progress towards getting back to where you feel you are back on track?

Well, you come out of first quarter and you go through and you are looking at what was the real effect of the business that left versus what you're backfilling with. So if you look at the quarter we added 149 net new clients to the process, but how big they are, how much the new business coming in contributes to the existing month, the existing quarter, when we look to first to second quarter we are seeing pretty strong pipelines, we have already add what looks to be a pretty strong April, May looks pretty strong and then getting into July and it gets a little cloudier as you get out there, but what you are really doing is you are kind of backfilling, you might be at a neutral basis. If we were to add back in what came out, we are still on trends that we had been on previously. The challenges with that is is that as you are coming through and backfilling the vetting you are still going up with higher and higher comps based on a 35% to 37% growth rate last year and that's probably working against you more than what's really going on in the operation. So if you were to normalize or add back in say close to $200 million under the base and then look at how we are building on top of it, it might give you more of a normalized idea of what our growth rate would be based on recent (inaudible) based on trends over the last couple of years.

Okay. And then just to clarify that of the clients that were vetted that's included in the subtractions number for the quarter.

Yes.

Yes.

But the problem with that is that when you let a client go you were 100% of those dollars that are contributing in a month or in a quarter ago where when you are building throughout the quarter unless that you added 200 clients you are getting maybe 60% to 70% credit in that quarter for what's coming in. So you got your curves, your lines and then you got a growth curve that's going out, you got a vetting curve that maybe going out but as that vetting curve gets over you now will cross lines then you will start to find another build coming on after that.

Okay. Thanks, Mike, appreciate it.

You bet.

(Operator Instructions) Your next question will come from the line of Josh Vogel of Sidoti & Company. Please go ahead. Josh Vogel - Sidoti & Company: I just want to focus a little more on this vetting. You did $2.8 billion in revenue last year. Can you kind of quantify how much of this revenue you are going to be pulling out?

This is a little bit of a moving target but I would say that if you took out about $200 million, which represents around $50 million a quarter, and then you kind of start off a new base of say 2.6 and then you would grow similar to what you have seen in the past. It would get you back to where we should be. And that's a little bit how we are looking at internally. It is a little more complex when you look at timings throughout a quarter of how business might leave versus how it's coming in. We were looking to this coming quarter and we don't see, I mean it's gotten back to much more of a normal process. So it's not spiking anymore. So if you looked at that against additional clients that are coming in that's being offset and then if you look at maybe some strength returning to same-store sales which you sought on a year-over-year basis we typically see third and fourth quarter start to support our strength in same-store sales. If we were looking at 30% on the 2.8 growth line taking us to almost 3.6 level, at 2.6 you are probably going to be somewhere between 3.3 and 3.4 in the year. Josh Vogel - Sidoti & Company: Okay. And you got some commentary about decline in hours work. So when we are looking at your guidance for Q2, you are taking into account vetted clients but are you also baking in the decline in hours worked? Are you taking conservative assumption there?

I think we are pricing pretty conservative assumptions right now. We are kind of working through this process. We missed two quarters, one by $700,000 the bottom end and the other one $8 million which is a literally a matter of hours within our guide. We're trying to get to a point where we come with deeper into what's going on in that (inaudible) pot and understand where it really should be landing with the better predictability rather than using the old methods that we have had that don't seem to be robust enough to kind of get us to a real level. So we are looking at, when we are diving back into it we are looking at the effective new clients added, we are looking at the effect of same-store sales and then we are looking at the effect of the vetting process all built on a base of which a run was on the previous quarter. And so as you do that you have got new clients coming in, so it's a product of how big they are, how much they are going to contribute in the quarter and then at what rates they are coming in. Then you look at same-store sales and you look at three factors that are going to affect same-store sales. It's going to be new hires coming on its going to be the number of hours worked which was almost going backwards last quarter and then you look at wage inflation. So headcount, hours worked, wage inflation and those are -- that's what's going to affect same-store sales and really those are out of our control, but historically we have seen where those trends are but we are continuing to see similarities to previous quarters, so we are not seeing really where that change is. And then the last one is ultimately how many dollars or how many clients are you moving out relative to what you are bringing in which either gives you a build or a net build in your client as it adds to your daily run rate. Josh Vogel - Sidoti & Company: Okay. Now the client side you have targeted to vet out, are these more recent clients that you signed in the last two years or these are more of your client that you have had for dating back to previous (inaudible)?

I would say probably more recent, because we continue to go through a pretty strong vetting process, I would say that they are probably a product of some of the more rapid growth that we have seen over the last couple of years, and it's not even that. We went through post recession and '09, '10, '11 and we have kind of looked at the smaller clients that were causing us issues, because it's how much you are making versus what you are putting back into them. And then you kind of can go through that process and that starts to get pretty clean. And then all of a sudden you started to seeing these bigger clients offer more margin dollars and more comp dollars short-term, but when you start to look back on it after the fact you start seeing what is the real net effect of them. And again I want to say that 80% of those larger clients are rock solid and they are great. We do a lot of good business with them, but there are others where we probably came into the relationship (inaudible) when we look at how we come to the end of the relationship, how we sell the product today to the business unit process, and even in the last year to year and a half compared to where were three years ago, it's not even the same, it's so much more strong. And so I would say it's not clients that came on six months ago and its not clients that probably -- we give clients a fair shot. We have everybody. I mean, we want to make everything work, but you got to be realist sometimes and say you got to trim your portfolio and make sure that you are not keeping stuff that you shouldn’t keep. And so it's probably a trend that I would say probably clients that's been on two to three years. Josh Vogel - Sidoti & Company: Okay. And I just want to get a sense of how revenue growth should trend throughout the balance of the year. You talked about a spike in activity over the near-term with regard to the vetting so. Is it safe to say that in terms of the revenue deceleration that we have seen over the last several quarters? Will Q2 basically mark a trough there before we expect to see revenue growth reaccelerate in the back half of the year?

That's our belief, yes. And all the modeling we are doing, and we are looking at this pretty conservative. I mean, you know us. We are an operations based company, so we are all over this, trying to understand. It really comes down to what is going on, what is going out and then the effect of what is going out versus what is coming in. If you were to not be up against a growth rate of 38%, 37% I think in third -- second and third quarter last year, the decline would be a lot more muted, it would not -- we are still adding quite a bit of business if you look on a year-over-year basis from almost $200 million. So yeah, I would estimate that it is somewhat of a trough. It's hard still to understand what sort of impact it will have. In third quarters, you just kind of run it up against higher comps but then, by the time you get in and through fourth quarter, first quarter the problem is a little bit, next quarters you are -- or next year you are going to see it go the other direction again. And -- because you are going to get up against slower comps, so we get excited about that. But I would rather run at a basis for we have the predictable growth rate that is reasonable and on mid 20s to high 20 is probably good number that we can bake to and run long term at once we get through this low maturing process we're going through. Josh Vogel - Sidoti & Company: Okay. That is helpful. And just switching gears, we have seen a lot of investment by peers into the -- their tech infrastructure and platforms. I know you rolled out a new payroll and data platform, but it seems like there is a big push into cloud base products and I was wondering, what kind of exposure you have there or any planned investment in the future on that front?

Yeah. We both -- we basically have that a cloud system. I mean, we have an infrastructure and platform that's supported through our branches. We are going through phase 2 of HRP implementation today that is giving our clients a access point to that information which will bring a cleaner interface for us and bring us somewhat into the 21 century from where we have been previously. A lot of the investment that we are making is all about bringing more crisp analytics back to, one, the operating units that we have and then two, creating the bridge between our partners and who we are in the room. So realistically, we have an invested base into the same system. It is combination of cloud and on site. HRP is on site with our -- at our branch, individual branch unit. The major platform cloud is going to be through our CRM process and system, a foundation, which is Salesforce and all of our electronic doc that we have, that our clients need to access will be cloud. So without dressing it up into the latest and greatest, we are doing what the industry is doing. And I would like to stay with our operation with based platform ground up supported with our technology and our innovation around technology, especially which we will see going in the '15 in the next couple years. It has been a truly give us a leg up in the process of supporting our clients and competing in the market. Josh Vogel - Sidoti & Company: Okay. And just one last one, if I may. May be more for Jim. For the benefit of the investment community, can you may be quantify for us what the increment or frictional cost it went towards a swerve in Q1 and what is built into your modeling for Q2, just so we get a better idea of how this is really a net neutral event for you?

Yes. During the first quarter, there was probably -- only may be two to three basis points of frictional cost related to the ACE program. And looking at Q2, it's going to increase to probably 10 to -- depending on how customers transition, may be as high as 15 basis points, but I would say probably closer to 10 basis points for 2Q. And then, obviously, it will ramp more in third and fourth quarter. And again, going back to what we talked about here last quarter, that once fully loaded that the incremental fictional cost probably going to be 25 to 30 basis points. But again, we won't see that until that fully loaded cost until 1Q of '15.

And at this time, this does conclude our question and answer session. I would now turn the conference over to Mr. Elich for closing remarks. Please go ahead.

It's one of those things, as you grow and you have success hard to see sometimes what is not working. And like anything, we have to have -- unfortunately, we have to have some times the mirror put in front of you or something goes sideways for you to be able to look at things differently than you have always looked at. I still see -- and although, it is painful, I would not want to ever say I had to do this many more times but it's the same time. I said I will do it as many times as it needs to be done to make sure that we will become a better company overall, that I think this process has done a couple things. And when I look at your build in organization, the organization does not necessarily grow up until you have to figure out why you have to come together to get things done. And one of the things that this transition or this period of time has done is it has made us spread our ownership throughout the organization as to what has to get done. And we are -- before I always tell, like I had to find the next answer, I feel like that an organization that's backing that up and we are pretty rock solid and we are only going to get better. I think related to your data point, it's always easy to look at them and keep trusting them and believe them when they are working. But it is when they quit working on you is when you look deeper and go okay, this is broken, and I think from that we figured out by three or four more ways, new ways, better ways to look at the business…

And thank you, Mr. Elich. Ladies and gentlemen, that will conclude the conference call for today. Again, we thank you for your participation. And you may now disconnect your line.