Good day everyone and thank you for participating in today's conference call to discuss BBSI's Financial Results for the Third Quarter Ended September 30, 2016. Joining us today are BBSI's President and CEO, Mr. Michael Elich; and Company's CFO, Mr. Gary Kramer. Following their remarks, we'll open up the call for questions. Before we go further, I would like to take a moment and 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 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 December 9, 2016, starting at 3 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. As a reminder, today's conference is being recorded. Now, I would like to turn the conference over to the Chief Financial Officer of BBSI, Mr. Gary Kramer. Please go ahead sir.

Thank you, Denise. The operations of the company were strong in the third quarter and we believe the results represent a solid foundation on which to build. Net revenues of $225.1 million increased 13% from Q3 2015, gross revenues of $1.2 billion grew 17% over the same period. Diluted earnings per share were $1.38 compared to a $1.49 in Q3 2015. The Q3 2016 results included non-recurring expenses of $0.16 per share for accounting and legal costs associated with financial restatements, outside investigation and legal proceedings and $0.30 per share for the shareholder litigation settlement. Also in the quarter, PEO gross revenue increased 17% to $1.2 billion compared to the third quarter last year. Contributing to this growth were 200 net new PEO client additions and same customer sales growth of 9.1%. These results are attributable to growth in the economy and ongoing efforts to develop our referral relationship, as well as the ability of our teams to remain focused on delivering value to our clients. Staffing revenues in the third quarter increased 3% to $47.9 million compared to Q3 2015. This is the first quarter in the last five where we have experienced a year-over-year increase in staffing sales. We tempered growth in this business due to a continued labor shortage and chose not to pursue client relationships that do not align with our own value. We believe this decision was down and we now believe that these levels would be our new base. Gross margin in the third quarter was $49.6 million or 22% of total net revenues compared to $42.9 million or $21.6 million in the prior year quarter. Gross margin as a percentage of gross revenue in Q3 2016 was 402 basis points compared to 406 basis points in the year ago quarter. An increase in…

Good morning and thank you for taking time to be on the call. Before moving on to a discussion about the quarter, I’d like to highlight a few areas of note. In recent months we spent time in the field getting perspective on business and guiding the organization and looking towards 2017. Specifically we conducted operational reviews with all area managers in the company assessing the performance of each branch and we conducted our annual all meeting as the means to setting tone for 2017 during which we spent a full day with each employee in the organization over the course of 14 days and five regions. As Gary mentioned in addition to a new seat on the Board and engaging Deloitte we continue to execute on our remediation plan while laying a solid foundation for the future. Moving forward in the third quarter of 2016 we saw through growth and maturing of our brand in all markets, the strength of our organizational bench and culture of BBSI as evidenced by progress we saw in our operational reviews and in our all meeting as well as consistency in tone and messaging across the organization and in the market. In the quarter we added 287 new PEO clients. We lost 87. Three were due to accounts receivable issues and were due to lack of tier progression, 3 were cancelled due to risk performance, 22 businesses sold or closed, and 49 business left due to pricing, competition or companies that have moved away from an outsourcing model. This represents approximately net build in the quarter of 200 net new clients that we also saw same-customer sales increase 9.1% in the quarter. Related to pipeline and regional growth, we continue to see consistent activity in pipeline and new client growth as a result…

[Operator Instructions] And we'll take our first question from Jeff Martin of ROTH Capital Partners. Please proceed sir.

Thank you, good morning. Mike, could you talk about - or Gary perhaps might have more granularity on the detail, but same-store sales growth 9.1%. How does that break down between headcount, hours worked, wages, and then just general pricing?

I would probably say on the general pricing front it's just pretty flat. I wouldn’t probably attribute it much to inflation there. Probably if you were to look at hours worked to - hours worked and headcount added, it's hard to really get to that granular detail but we would suspect looking at the data that headcount has been a little bit flat in the quarter but hours worked seem to have increased throughout the quarter. Could be an indication that small businesses aren't really taken the risk - weren’t taken the risk during the quarter to higher and against the tighter labor market is well chose to increase hours worked more than headcount. And then we didn’t really see a lot of moment year-over-year basis as far as increased or wage inflation maybe some so far a bit, I would say probably two-third is probably due to hours worked and headcount added and then maybe a third related to wage inflation throughout the year.

Okay. Bigger, broader question on Affordable Care Act, if that were repealed over the coming years how do you see that affecting the business?

My view of that is our business we have never attached ourselves to healthcare’s value stream. We do continue to build systems that help in the collection and remittance of information and data just to afford the rules of Affordable Care and I think that’s the value we bring to clients today but wouldn’t be missed if it wasn’t needed. I would say that for many small businesses if they've incorporated the class - the health benefits today that it would probably be pretty disruptive for them to discontinue providing health benefits, so that might already be in their DNA. What it could give for small businesses is the market that we’re changed too much it maybe adverse in pricing because you wouldn’t have the big of an aggregated pool. But for our model in particular, the effect would be more neutral. I think it would be any disruption that might come to small business, but if anything it would be taking pressure off where they are living.

Right, okay. And then to shift over to worker's comp, in California what are the pricing trends you are seeing on a market basis, not necessarily specific to Barrett, but on a market basis?

We’re not really - we kind of got a good take in the ground. You know it is - the market is softening a little bit and we’re just making a trace not to chase business but we believe that are offset and our value set is bridging any gap or we might see softening market related to workers comp but the trend of races probably more neutral for down.

Okay. In terms of the reserve accruals, any shift in any contribution positively back into gross profit in the quarter from a worker's comp adjustment?

Hi, Jeff. For the quarter, from the second quarter last year we had a - I’ll call it a prior period credit of $2.7 million. In this quarter we had a $1 million credit. $1 million in the quarter for change in estimate for prior period.

Okay. And then as we look at worker's compensation expense as a percentage of gross revenue it's about 5.1% in the quarter, is that a level we should model going forward, or is that going to come down a little bit over time?

Around 5 is the good number. It's going to ebb and flow a little bit but 5 is a good number. This quarter compared to last quarter it was - we had a reduction in what I’ll say for prior period decreases which is affecting it. And we also had a minor uptick for the way that we’re handling the MCC versus prior. So we had a little bit of not as much of the change in ultimate a little bit of an uptick but around 5 is where, up or down a little bit is where we sit.

Okay. Great. Thanks for taking my question.

And we’ll take our next question from Kevin Casey of Casey Capital. Please proceed, sir.

Hi, couple questions. One next year if you add up your non-recurring plus your guidance, you get up 406. I was curious if some of those costs are actually recurring like their controller, assistant controller to be custom more of the finance or is that the base to use going forward?

We don’t know -- we don’t have control on some of the outside investigations as far as the SEC. That’s going to take what it takes and the costs are going to be what they are or just complying. The one increase that we know about that we'll have is the change in auditor in the first quarter. As far as the fourth quarter expenses that start with the K review, which will trickle into the first quarter. We know that that will be up a little bit on a year-over-year, but the expenses will not be up significantly. We’re going to – we try to keep that a region or a range that's in line lower than our gross rev growth.

Hi, Kevin I would also say that we're - from an SG&A, we’ve had a lot of build over the last several years and we’re continuing to build up front of rule, we made enough normalization there that might offset a few of those costs. So I think that for us wouldn't be a bad basis t that basis forward.

And then can you talk about ballpark percent of net income, the cash flow is? And you kind of mention that’s been ticked off, I was wondering, this is starting next year, we have to wait another year to talk about that?

Yes, so we’re going to see a growth in our unrestricted which is going to be attributable to A, higher net income, and then B, call it the stabilization of the funding with the Chubb program. So we’ll get an uptick for unrestricted for all of those plus also we don’t have the debt payment going forward. So cash flows are looking promising.

And then do you have the frequency trailing 12 month, as opposed to just for the quarter. So we can get more of a feel for the trend on Worker’s Comp?

I'll have to get that back to you. I have it for the quarter and for the quarter-over-quarter for not just for the year.

Yes, I think trailing 12 month and I’m not going up, what I have in front of me. But I take that trailing 12 is down – were down 7%, or 5% or 7%.

Yes, I think it’s down 14% over 15% and 17.5% over 14% on a year-over-year basis.

Okay. I think that’s everything, thanks congratulations on paying all your debt down.

[Operator Instructions] And we’ll take our next question from Bill Dezellem of Tieton Capital Management. Please proceed, sir.

Thank you. I wanted to follow up on that kind of that baseline point does roughly $4 a year if your revenue guidance is roughly 18% growth, if we add 18% to the $4 that takes this up around the $4.70 plus mark. Are we thinking about that correctly or is there some big piece of the puzzle that we’re missing?

No, I mean in a linear model that – without any other surprises that we – as we’ve add deal with the past year. We would expect that would be a fair way to look at it.

Mike, I think you’ve had a lifetime of surprises, so what’s the…

I would concur.

Next I think for your help there, next is relative to the staffing business. I think in the open remarks, if you had referenced that that business seems to stabilize, but it actually up about $10 million if I remember right sequentially which is better than the stabilization. Would you talk about kind of what you’re actually seeing there in a better more detail please and how we should be thinking about that business?

So if you look at the year-over-year base, probably use that as your better comp, so it was up 3%. So the problem sequentially is that you have a lot of seasonality in the third quarter and when that process a little bit, that might to store a little bit of where that trend might be. So I would probably use if you were comparing year-over-year basis you want to look forward, 3% growth over where we’ve been seem to be reasonable if you were to take that out next quarter or even a next year and it my might increase from there some. I think that’s a better way to look at it rather than sequentially.

That is helpful. Thank you very much.

At this time, we conclude our question-and-answer session. I would now like to turn the conference back over Mr. Michael Elich. Please proceed.

Thank you for taking time to be on the call. We will continue to be available and keep you informed as we keep moving the company forward. Look forward to the journey. Thank you.

Thank you for your participation. We look forward to talking to you again in our fourth quarter earnings call. Thank you.