Good day everyone and thank you for participating in today's conference call to discuss BBSI's Financial Results for the First Quarter Ended March 31, 2017. Joining us today are BBSI's Vice-President and CEO, Mr. Michael Elich; and Company's CFO, Mr. Gary Kramer. Following their remarks, we'll open up the call for your questions. Before we go further, please take note of the company's Safe Harbor statement within the meaning of the Private Securities Litigation Reform Act of 1995. The statement provides important cautions regarding forward-looking statements. The company remarks during today's conference call will include forward-looking statements. These statements along with other information presented that does not reflect 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 June 05, 2017, starting at 6 P.M. Eastern Time 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. Gary Kramer. Sir please go ahead.

Thank you, Vicki. Depending upon where you dialing in from good morning and afternoon everyone. The operations in the company were strong in the first quarter and we believe our results represent a solid foundation on which to build. Net revenue $210 million increased 10% from Q4 '16. Gross revenue of $1.2 billion grew 13% over the same period. Diluted loss per share was $1.55 compared to $1.11 in Q1 '16 and Q1 '17 results included nonrecurring expenses of $400,000 or $0.03 per share for outside investigation and legal proceedings. Please recall that we historically incur a loss in the first quarter due to higher effective payroll taxes at the beginning of each year. Also in the quarter, PEO gross revenue increased 13% to $1.2 billion compared to the first quarter last year. Contributing to this growth were 225 net new PEO client additions and growth in same customer sales comprised 3.7% of total PEO revenue growth. As mentioned last quarter we encounter some less than predictable event that resulted in the slow down and same customer sales in the fourth quarter of 2016, and as anticipated extended into the first quarter of 2017. The real weather in many of our markets had a direct effect on hours worked in certain industries, also the labor market is tightened to levels where our employers cannot easily hire to fulfill their need. So a combination of the decrease in days worked and a slowdown in hiring resulted in the lower same customer sales growth. Staffing revenue in the first quarter increased 4.1% to $37.8 million. We have experienced three quarter of consecutive year-over-year growth and anticipate sequential growth for the foreseeable future. Our strategy to pursue only those client relationships that align with our core value is bearing fruit. Workers' Compensation expense…

Hello. And thank you for being on the call. As Gary mentioned, despite headwinds we had a good start to 2017. As I look at the business, we've build a strong foundation and the fundamentals of the model are sound, the organization is well aligned, our pipelines are consistent and we’re seeing our value proposition mature in all markets. Looking at the quarter, we added 334 new PEO clients, we experienced attrition in the 109 clients, 10 were due to account receivable, four were due to lack of tier progression, 12 were accountable due to risk profile, 25 sold or were closed and 58 left due to pricing to competition or companies that left to move away from the outsourced model. This represents an approximate net build in the quarter of 225 net new clients. Looking forward our focus remains and drive to support scale in the model while bringing consistency and ongoing relevant to our offering. Related to the pipeline, we continue to evolve our ability to scale from a model base on individual market contribution to a systemic approach for developing channel and pipeline. As a result we're seeing development of new referral channels in all markets, which support strong pipeline growth. This approach also supports consistency of message and product, which allows us to move more easily into new market and support growth against the large number. We continue to see a consistent in contribution of a new business from all markets, most notably from developing emerging market that has historically under performed. Related to organizational structure, we've operationalized our approach to developing leadership and have roughly 18 months of run way with our existing bench. We continue to build the field organization to support future growth, scale into new markets and investment support of our product…

[Operator Instructions] And we will go first to Jeff Martin with ROTH Capital Partners.

Nice job of going through in detail with your prepared remarks, I appreciate that. Mike, could you talk about the client attrition in the quarter. If I recall correctly a year ago or going back overtime, the rate of client attrition first quarter is it a bit lower than it was this quarter. Can you compare and contrast perhaps the business today versus the last couple of years in terms of the first quarter net app. Is there anything -- do you see the difference today versus the last couple of years?

One thing Jeff it happened in this quarter and it kind of was a transition between fourth quarter and this quarter is that we have typically measured whether the client was [indiscernible] when a client was added, against when we did payroll for that client. In the last two quarters we’ve actually move that and actually throughout last year we moved it to a measure where we don’t count that client is being active until -- we count that client being an active once we have a contract with them. So, when we have a client, that had a contract, it normally would have come into January, if probably was counted back in December. So that would be on the ad front. The other thing that we’ve done historically we’ve move from a model where we typically would count customer numbers, because you can get duplications of -- a customer can have multiple numbers. Today, we’ve matured a process where we're accounting FBIN which is the federal and employee tax number, which is a cleaner number as to who’s -- how many clients we have. And that both -- those were actually better measures that have given more consistency through how we measure things throughout the organization. Relative to the attrition rate, we’ve seen a little more competition and we're just not going to change business for price. But on a relative basis to our size, the shift over the last couple of years is in line with our growth. We still are seeing a retention level of north of 90%, probably even closer to about 92%. So, that part, that’s fast and then the other thing on our ad, you're just going to -- you're going to go up to period where well if we haven't paid shift, we probably would have had a softer fourth quarter, but we would have been strong in the third quarter. So, there is roughly a balancing out of making 50 clients that are added quarter-to-quarter if you look at it. And we did see some headwinds probably just call it, look on the hind sight, maybe a little bit of distraction in third quarter and fourth quarter which gauzed up our pipelines a little bit. And we’re back to -- we’re back and we’re focus well now and I think we're -- I'm not too concern that we won’t make that up in the year.

Okay. And with labor being so tight among you client base. How does this -- new platform help the clients to meet their need for additional labor?

One of the things that we’re working on and this is still on build stage. But we have all the staff and resources already in place to support our staffing business. We’re working more and more with our clients from a recruiting base. One of the things that we have; we’re supporting a 100,000 people on a week-to-week basis. And our employees on week-to-week basis we do see that as that labor pool moved that we've that we'll have the ability to capture that labor course and we’re more effectively deploy that in local markets to support a hiring model for our PEO clients.

Okay. And then could you characterize the current pricing environment. because you did renew a lot of business in the first couple of months of the year, may be how that pricing environment was during that [avenue] process?

Its always competitive, if you're getting as much as you can. But we haven’t seen where -- even though we would say that we ran off 53 client's due to competition, it spend higher, but I wouldn’t say that were running into -- we're not losing deals on new ads to that and where we're really -- I don’t think we're losing that much--we’re not losing business that really would choose to keep relative to price on our customer retention. The thing we have is that we renew as we moved and evolved our model even to be less workers comp dependent. We 're adding business very consistently even week to week now. So we don’t really have a spike in renewal as some of our competitors do.

[Operator Instructions] And we will go next to Bill [indiscernible] with Trium Capital Management.

Thank you Tylorson [ph] Capital and I have a group of questions. First of all, would you quantify how much weather impacted the quarter in terms of same location revenue and EPS wise?

So I will start and Gary can follow up. It's hard to quantify in dollars by location, but we saw the greatest impact in the North West and then Northern California, but also in Southern California. So if you look at historically, what we would expect same store sales to be closer to 7% to 8% in the quarter coming in right about 4%, you're looking at the base of probably close to 50 million that was not same because of weakness in same store sale. Gary?

Bill, let's say it’s a good question we get to answer that but it’s hard one for us to try to quantify. Because we can tell you kind by geography or by regions where we're seeing the softness and the hours worked. But to actually pinpoint specific industries or specific locations within this geography it is difficult because we have a large, a large client base of 5,000 clients and really it comes, they are feeding us their payroll and what we can tell from the payroll they feed us is that the hour's worked are down or that there employee base is not growing as much as it historically have.

That’s helpful I appreciate both those comments. And recognizing what you have just said, this next question may be even more difficult or less relevant, but what are you seeing in qualitative terms, in terms of weight growth, headcounts changes from your customers and hours worked, excluding the weather impact. So I'm just trying to just get a feeling of general trends that you're seeing on a more normalized non-weather and important stuff basis.

So it kind of gets back to that same piece, what we're seeing in an hour's work on a aggregated basis, it's hard to separate the two, the evidence we have, the companies are having some difficultly hiring is more of a survey based, where you companies just to say I would probably grow my business by 20%, but I can't find the labor to scale. One of the things that we have seen relative to delay, probably more related to the probably more related to the weather effect, if we were running close to a 39 hour a week per FTE and historically during this period we were probably about to about closer to about 36 hours in the quarter, so that’s we have hours that were hit. Wage inflation, as we look back over the last couple of years has crept, if we went back even three years or so we were probably, three or four years ago, we were at roughly $22, $23 an hour base, today we’re close to $25. Typically, when you're moving into a market where you have call zero employment if you really look seriously and say how much of your labor force below 4% is employable, you're going to have to see a little bit inflation to break that log count and we haven't seen that yet, not at least in the most recent quarters.

Okay. And is that something that given what you've seeing in past cycles that you would anticipate would happen that ultimately someone's going to break price and start to push wages up a bit?

I think if you're going to have on an economy it's going to be continue to expand, businesses are going to find out opportunity where it is and you're either going to find it through -- you're going to first find it and if they've got more business than they can handle, you're going to see pricing inflation in the overall economy first and then it will follow because there is opportunity at a new price point, so they can pass on the cost of that additional labor. So, there is -- the pieces have to work together a little bit and there is a more of a cycle. I do sense and we’ve had a lot of conversations with owners and principle in our book over the last three or four months and there is a lot of optimism and willing us to grow. I still feel that there is a little bit of a risk off scenario, where the business owner may have gotten back to where they were even to a level where they were in 2007, 2008. They’re feeling good, they're making money and there is been lots of work met to take the risk to really grow in. That’s probably the bigger headwind right now is why grow, if I can’t find good people, I don’t want to grow. And that’s only encouraged them not to get out over their tips of they can't find good people as they can find good people. And then with those two factors, that will be what will break that log down and get things moving.

Okay. Thank you. And I do have one additional question, I'm going to have to apologize in advance for my ignorance. The 2.9 million adverse claim change that you had referenced. Does that impact the P&L or does that pour through the balance sheet? What piece of accounting if you would please?

Yeah, Bill. So that is -- so every quarter we do an outside actuarial evaluation where we look at the historical claims and the historical loss experience. And then we also look at the more greener years in the current trends which we have used for our, called it our loss ratio, our loss expectation for the current year. In that scenario, for the 2.9 million what we had was a handful of claims that has a change in fact. So the claims are constantly being worked by the claim adjustor and when you have claims you can have a claim in a change in fact and the fact could be the way the medical evaluation came in or somebody else needs a supplemental surgery or things of that nature that won’t original in there. So what had happened once we had a handful of claims that has changes of fact, when they had a change in facts, we had increased the reserve on those claims. And what happens there as those claims being going to be actuarial evolution. And then based upon that actuarial we moved the estimated liability for the year 2016 and prior by 2.9 million and that change of 2.9 million is that’s an expanse to the P&L and then a liability that goes up on the balance sheet, but the importance there is that's a change that does not affect revenues, that’s just a P&L within offset for the liability, where it doesn’t have a revenue offset.

So to make sure that I'm clear, if I've done the tax effecting correctly, you had a $0.27 may be it is impacted that flow through the P&L that do not have these change in facts, that you would not have had and as a results you would have reported a loss of closer to a $28 and then the $55.

Your logic sound, I don’t have the tax effective numbers in front me, but your logic is sound.

And at this time, this concludes our question-and-answer session. I would now like to turn the call back over to Mr. Elich for closing remarks.

Again, I would like to thank you for being on the call. We feel that 2017 is off to a good start, got a little bit of make to do in the year, but we're confidence that our teams are all growing in the same direction and feel very good about where the company is today. Looking forward to catching up with you in a couple of months. Thank you.

That does conclude today's conference. Thank you for your participation.