- Year-over-year worksite employee growth
accelerates from 9% to 12% sequentially
- Q2 adjusted EPS up 110% to $0.42 on 11%
revenue growth
- Q2 adjusted EBITDA increases 56% to
$22.6 million
- Q2 adjusted operating expenses up less
than 1% over 2014 on 12% unit growth
- YTD adjusted EBITDA and adjusted EPS up
67% and 100%, respectively
Insperity, Inc. (NYSE: NSP), a leading provider of human
resources and business performance solutions for America’s best
businesses, today reported second quarter adjusted EBITDA of $22.6
million, a 55.5% increase over the second quarter of 2014. Adjusted
net income was $10.8 million and adjusted diluted earnings per
share were $0.42, a 110.0% increase over the second quarter of
2014. Reported second quarter GAAP net income and earnings per
share were $7.3 million and $0.29, respectively.
Second Quarter Results
Revenues for the second quarter of 2015 increased 11.2% over the
second quarter of 2014. The average number of worksite employees
paid per month increased 11.6% during the quarter, an acceleration
from the 9.2% year-over-year growth in the first quarter of 2015.
All three drivers to worksite employee growth including sales,
client retention and net hiring in our client base, improved over
the second quarter of 2014.
“Our second quarter results reflect successful execution of our
2015 plan to accelerate growth while carefully managing operating
costs,” said Paul J. Sarvadi, Insperity chairman and chief
executive officer. “We expect to continue positive trends in growth
and profitability over the balance of this year.”
Adjusted EBITDA increased 55.5% on a 9.2% increase in gross
profit and a less than 1% increase in operating expenses over the
2014 period, reflecting planned operating leverage.
Year-to-Date Results
For the six months ended June 30, 2015, adjusted EBITDA
increased 66.9% to $64.9 million and adjusted diluted earnings per
share increased 100.0% to $1.28. Reported 2015 GAAP net income was
$21.1 million, or $0.83 per share.
Revenues in the first six months of 2015 were $1.3 billion, an
increase of 10.5% over the 2014 period on a 10.4% increase in the
average number of worksite employees paid per month. Gross profit
for the six months ended June 30, 2015 increased 16.1% to $234.1
million, while adjusted operating expenses increased only 3.6% to
$185.7 million.
Cash outlays in the first six months of 2015 included the
repurchase of 645,292 shares of stock at a cost of $33.5 million,
dividends totaling $10.4 million and capital expenditures of $5.9
million.
“In spite of recently increasing our dividend rate by 16% and
being more aggressive in our share buybacks, our strong cash flow
has resulted in a $6.2 million increase in adjusted working capital
over Dec. 31, 2014 to $79.3 million at June 30, 2015,” said Douglas
S. Sharp, senior vice president of finance, chief financial officer
and treasurer. “Our outlook for continued strong cash flow
positions us well to execute on our strategic plan and continue our
track record of significant returns to stockholders.”
2015 Guidance
The company also announced its updated guidance for 2015,
including guidance for the third quarter of 2015.
Q3 2015 Full Year 2015
Average WSEEs 148,500
-
150,000 145,750
-
147,000 Year-over-year increase 13.0%
-
14.0% 11.5%
-
12.5% Adjusted EPS $0.52
-
$0.56 $2.20
-
$2.29 Year-over-year increase 33.0%
-
43.0% 52.0%
-
58.0% Adjusted EBITDA (in millions) $27.0
-
$29.0 $114.0
-
$117.0 Year-over-year increase 20.0%
-
28.0% 36.0%
-
39.0%
Definition of Key Metrics
Average WSEEs - Determined by calculating the company’s
cumulative worksite employees paid during the period divided by the
number of months in the period.
Adjusted EPS - Represents diluted net income per share computed
in accordance with GAAP, excluding the impact of non-cash
impairment and other charges, stockholder advisory expenses and
stock-based compensation. Note that beginning in 2015, the company
began excluding stock-based compensation when reporting Adjusted
EPS.
Adjusted EBITDA - Represents net income computed in accordance
with GAAP, plus interest expense, income taxes, depreciation,
amortization, stock-based compensation, non-cash impairment and
other charges and stockholder advisory expenses.
Insperity will be hosting a conference call today at 10 a.m. ET
to discuss these results, provide guidance for the third quarter
and an update to full year guidance, and answer questions from
investment analysts. To listen in, call 877-651-0053 and use
conference i.d. number 91929268. The call will also be webcast at
http://ir.insperity.com. The conference call script will be
available at the same website later today. A replay of the
conference call will be available at 855-859-2056, conference i.d.
91929268. The webcast will be archived for one year.
Insperity, a trusted advisor to America’s best businesses for
more than 29 years, provides an array of human resources and
business solutions designed to help improve business performance.
Insperity® Business Performance Advisors offer the most
comprehensive suite of products and services available in the
marketplace. Insperity delivers administrative relief, better
benefits, reduced liabilities and a systematic way to improve
productivity through its premier Workforce Optimization® solution.
Additional company offerings include Human Capital Management,
Payroll Software, Time and Attendance, Performance Management,
Organizational Planning, Recruiting Services, Employment Screening,
Financial Services, Expense Management, Retirement Services and
Insurances Services. Insperity business performance solutions
support more than 100,000 businesses with over 2 million employees.
With 2014 revenues of $2.4 billion, Insperity operates in 57
offices throughout the United States. For more information, visit
http://www.insperity.com.
The statements contained herein that are not historical facts
are forward-looking statements within the meaning of the federal
securities laws (Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934). You can
identify such forward-looking statements by the words “expects,”
“intends,” “plans,” “projects,” “believes,” “estimates,” “likely,”
“possibly,” “probably,” “goal,” “opportunity,” “objective,”
“target,” “assume,” “outlook,” “guidance,” “predicts,” “appears,”
“indicator” and similar expressions. Forward-looking statements
involve a number of risks and uncertainties. In the normal course
of business, Insperity, Inc., in an effort to help keep our
stockholders and the public informed about our operations, may from
time to time issue such forward-looking statements, either orally
or in writing. Generally, these statements relate to business plans
or strategies, projected or anticipated benefits or other
consequences of such plans or strategies, or projections involving
anticipated revenues, earnings, unit growth, profit per worksite
employee, pricing, operating expenses or other aspects of operating
results. We base the forward-looking statements on our
expectations, estimates and projections at the time such statements
are made. These statements are not guarantees of future performance
and involve risks and uncertainties that we cannot predict. In
addition, we have based many of these forward-looking statements on
assumptions about future events that may prove to be inaccurate.
Therefore, the actual results of the future events described in
such forward-looking statements could differ materially from those
stated in such forward-looking statements. Among the factors that
could cause actual results to differ materially are: (i) adverse
economic conditions; (ii) regulatory and tax developments and
possible adverse application of various federal, state and local
regulations; (iii) the ability to secure competitive replacement
contracts for health insurance and workers’ compensation insurance
at expiration of current contracts; (iv) increases in health
insurance costs and workers’ compensation rates and underlying
claims trends, health care reform, financial solvency of workers’
compensation carriers, other insurers or financial institutions,
state unemployment tax rates, liabilities for employee and client
actions or payroll-related claims; (v) failure to manage growth of
our operations and the effectiveness of our sales and marketing
efforts; (vi) the impact of the competitive environment in the PEO
industry on our growth and/or profitability; (vii) our liability
for worksite employee payroll, payroll taxes and benefits costs;
(viii) our liability for disclosure of sensitive or private
information; (ix) our ability to integrate or realize expected
returns on our acquisitions; (x) failure of our information
technology systems; (xi) an adverse final judgment or settlement of
claims against Insperity; and (xii) disruptions to our business
resulting from the actions of certain stockholders. These factors
are discussed in further detail in Insperity’s filings with the
U.S. Securities and Exchange Commission. Any of these factors, or a
combination of such factors, could materially affect the results of
our operations and whether forward-looking statements we make
ultimately prove to be accurate.
Except to the extent otherwise required by federal securities
law, we do not undertake any obligation to update our
forward-looking statements to reflect events or circumstances after
the date they are made or to reflect the occurrence of
unanticipated events.
Insperity, Inc.
Summary Financial Information
(in thousands, except per share amounts
and statistical data)
June 30, 2015
December 31, 2014
(Unaudited) Assets: Cash and cash equivalents $ 167,728 $
276,456 Restricted cash 48,887 44,040 Marketable securities 21,648
28,631 Accounts receivable, net 265,631 175,116 Prepaid insurance
16,459 21,301 Assets held for sale 12,182
-
Other current assets 15,522 17,649 Deferred income taxes 3,537
6,316 Total current assets 551,594 569,509 Property
and equipment, net 58,142 84,345 Prepaid health insurance 9,000
9,000 Deposits 114,577 117,634 Goodwill and other intangible
assets, net 14,006 14,457 Deferred income taxes 3,956
-
Other assets 1,773 1,725 Total assets $ 753,048
$ 796,670 Liabilities and Stockholders’ Equity:
Accounts payable $ 2,383 $ 4,674 Payroll taxes and other payroll
deductions payable 122,875 176,341 Accrued worksite employee
payroll cost 228,091 192,396 Accrued health insurance costs 6,284
18,329 Accrued workers’ compensation costs 50,841 45,592 Accrued
corporate payroll and commissions 25,836 32,644 Other accrued
liabilities 24,801 22,444 Income taxes payable 1,652 4,031
Total current liabilities 462,763 496,451 Accrued workers’
compensation costs 98,938 92,048 Deferred income taxes
-
4,075 Total noncurrent liabilities 98,938 96,123
Stockholders’ equity: Common stock 308 308 Additional paid-in
capital 142,681 137,769 Treasury stock, at cost (176,817 ) (148,465
) Accumulated other comprehensive income, net of tax
-
3 Retained earnings 225,175 214,481 Total
stockholders’ equity 191,347 204,096 Total
liabilities and stockholders’ equity $ 753,048 $ 796,670
Insperity, Inc.
Summary Financial Information
(continued)
(in thousands, except per share amounts
and statistical data)
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
2015 2014 Change 2015
2014 Change Operating results:
Revenues (gross billings of $3.703
billion, $3.281
billion, $7.643 billion and $6.869 billion
less
worksite employee payroll cost of $3.075
billion,
$2.716 billion, $6.316 billion and $5.667
billion,
respectively) $ 627,838 $ 564,621 11.2 % $ 1,327,317 $ 1,201,620
10.5 % Direct costs:
Payroll taxes, benefits and workers’
compensation
costs
523,619 469,168 11.6 % 1,093,238 999,991
9.3 % Gross profit 104,219 95,453 9.2 % 234,079 201,629 16.1
% Operating expenses: Salaries, wages and payroll taxes 50,234
47,829 5.0 % 106,982 98,861 8.2 % Stock-based compensation 4,041
3,245 24.5 % 6,464 5,645 14.5 % Commissions 4,103 3,717 10.4 %
8,407 6,963 20.7 % Advertising 7,389 8,356 (11.6 )% 11,107 13,297
(16.5 )% General and administrative expenses 20,332 21,116 (3.7 )%
44,387 43,848 1.2 % Depreciation and amortization 4,590 5,291 (13.2
)% 9,875 10,525 (6.2 )% Impairment charges and other 1,313
2,485 (47.2 )% 11,120 2,485 347.5 % Total
operating expenses 92,002 92,039
-
198,342 181,624 9.2 % Operating income 12,217 3,414
257.9 % 35,737 20,005 78.6 % Other income (expense): Interest, net
(8 ) 24 (133.3 )% (1 ) 71 (101.4 )% Other, net (32 ) 12
(366.7 )% (32 ) (14 ) 128.6 % Income before income tax expense
12,177 3,450 253.0 % 35,704 20,062 78.0 % Income tax expense 4,863
1,559 211.9 % 14,603 8,607 69.7 % Net
income $ 7,314 $ 1,891 286.8 % $ 21,101 $
11,455 84.2 %
Less distributed and undistributed
earnings allocated
to participating securities
(179 ) (139 ) 28.8 % (521 ) (333 ) 56.5 % Net income allocated to
common shares $ 7,135 $ 1,752 307.2 % $ 20,580
$ 11,122 85.0 % Basic net income per share of common stock $
0.29 $ 0.07 314.3 % $ 0.83 $ 0.45 84.4
% Diluted net income per share of common stock $ 0.29 $ 0.07
314.3 % $ 0.83 $ 0.45 84.4 %
Insperity, Inc.
Summary Financial Information
(continued)
(in thousands, except per share amounts
and statistical data)
(Unaudited)
Three Months Ended June
30,
Six Months Ended June 30, 2015
2014 Change 2015 2014
Change Statistical Data:
Average number of worksite employees paid
per
month
143,131 128,274 11.6 % 140,545 127,281 10.4 % Revenues per worksite
employee per month(1) $ 1,462 $ 1,467 (0.3 )% $ 1,574 $ 1,573 0.1 %
Gross profit per worksite employee per month 243 248 (2.0 )% 278
264 5.3 %
Operating expenses per worksite employee
per
month
215 239 (10.0 )% 236 238 (0.8 )%
Operating income per worksite employee
per
month
28 9 211.1 % 42 26 61.5 % Net income per worksite employee per
month 17 5 240.0 % 25 15 66.7 % (1)
Gross billings of $8,623, $8,526, $9,064
and $8,994 per worksite employee per month, less payroll cost of
$7,161, $7,059,
$7,490 and $7,421 per worksite employee
per month, respectively.
Insperity, Inc.
Summary Financial Information
(continued)
(in thousands, except per share amounts
and statistical data)
(Unaudited)
GAAP to Non-GAAP Reconciliation
Tables
Three Months Ended June 30, Six Months
Ended June 30, 2015 2014
Change 2015 2014 Change
Payroll cost (GAAP) $ 3,074,892 $ 2,716,514 13.2 % $
6,315,874 $ 5,667,082 11.4 % Less: Bonus payroll cost 257,367
222,005 15.9 % 775,870 743,346 4.4 %
Non-bonus payroll cost $ 2,817,525 $ 2,494,509 12.9 %
$ 5,540,004 $ 4,923,736 12.5 %
Payroll cost per worksite
employee per month
(GAAP)
$ 7,161 $ 7,059 1.4 % $ 7,490 $ 7,421 0.9 %
Less: Bonus payroll cost
per worksite employee
per month
599 577 3.8 % 920 973 (5.4 )% Non-bonus
payroll cost per worksite employee per month $ 6,562 $ 6,482
1.2 % $ 6,570 $ 6,448 1.9 %
Non-bonus payroll cost represents payroll
cost excluding the impact of bonus payrolls paid to the
company’s worksite employees. Bonus
payroll cost varies from period to period, but has no
direct impact to the company’s ultimate
workers’ compensation costs under the current program.
As a result, Insperity management refers
to non-bonus payroll cost in analyzing, reporting and
forecasting the company’s workers’
compensation costs.
June 30, 2015 December 31, 2014
Cash, cash equivalents and marketable securities (GAAP) $
189,376 $ 305,087
Less: Amounts payable for withheld federal
and state income taxes,
employment taxes and other payroll
deductions
106,169 152,132 Customer prepayments 19,376 87,887 Adjusted
cash, cash equivalents and marketable securities $ 63,831 $
65,068
Adjusted cash, cash equivalents and
marketable securities excludes funds associated with federal
and state income tax withholdings,
employment taxes and other payroll deductions, as well as
client prepayments. Insperity management
believes adjusted cash, cash equivalents and
marketable securities is a useful measure
of the company’s available funds.
June 30, 2015 December 31, 2014
Working capital (GAAP) $ 88,831 $ 73,058 Less: Assets held
for sale, net of current deferred tax liabilities 9,533
-
Adjusted working capital $ 79,298 $ 73,058
Adjusted working capital represents
working capital excluding assets held for sale that are
classified as current assets and their
associated current deferred tax liabilities. Insperity
management believes adjusted working
capital is a useful measure of the company’s liquidity, as
it allows for additional analysis of the
company’s liquidity separate from the impact of this item.
Three Months Ended June 30, Six Months
Ended June 30, 2015 2014
Change 2015 2014 Change
Operating expenses (GAAP) $ 92,002 $ 92,039
-
$ 198,342 $ 181,624 9.2 % Less: Impairment charges and other 1,313
2,485 (47.2 )% 11,120 2,485 347.5 % Stockholder advisory expenses
398
-
-
1,546
-
-
Adjusted operating expenses $ 90,291 $ 89,554 0.8 % $
185,676 $ 179,139 3.6 %
Adjusted operating expenses represent
operating expenses excluding the impact of impairment
and other charges related to the valuation
of aircraft held for sale and stockholder advisory
expenses in 2015 and an impairment charge
associated with the Employment Screening reporting
unit in 2014. Insperity management
believes adjusted operating expenses is a useful measure of
the company’s operating costs, as it
allows for additional analysis of the company’s operating
expenses separate from the impact of these
items.
Three Months Ended June 30, Six
Months Ended June 30, 2015 2014
Change 2015 2014 Change Net
income (GAAP) $ 7,314 $ 1,891 286.8 % $ 21,101 $ 11,455 84.2 %
Income tax expense 4,863 1,559 211.9 % 14,603 8,607 69.7 % Interest
expense 124 88 40.9 % 224 177 26.6 % Depreciation and amortization
4,590 5,291 (13.2 )% 9,875 10,525 (6.2
)% EBITDA 16,891 8,829 91.3 % 45,803 30,764 48.9 % Impairment
charges and other 1,313 2,485 (47.2 )% 11,120 2,485 347.5 %
Stock-based compensation 4,041 3,245 24.5 % 6,464 5,645 14.5 %
Stockholder advisory expenses 398
-
-
1,546
-
-
Adjusted EBITDA $ 22,643 $ 14,559 55.5 % $ 64,933
$ 38,894 66.9 % EBITDA represents net income
computed in accordance with generally accepted accounting
principles (“GAAP”), plus interest expense, income tax expense,
depreciation and amortization expense. Adjusted EBITDA represents
EBITDA plus non-cash impairment and other charges, costs associated
with stockholder advisory expenses and stock-based compensation.
Insperity management believes EBITDA and Adjusted EBITDA are often
useful measures of the company’s operating performance, as they
allow for additional analysis of the company’s
operating results separate from the impact
of these items.
Three Months Ended June 30, Six Months
Ended June 30, 2015 2014
Change 2015 2014 Change
Net income (GAAP) $ 7,314 $ 1,891 286.8 % $ 21,101 $ 11,455 84.2 %
Impairment charges and other, net of tax 789 1,566 (49.6 )% 6,572
1,566 319.7 % Stock-based compensation, net of tax 2,429 1,778 36.6
% 3,820 3,223 18.5 % Stockholder advisory expenses, net of tax 239
-
-
914
-
-
Adjusted net income $ 10,771 $ 5,235 105.7 % $ 32,407
$ 16,244 99.5 %
Three Months Ended
June 30, Six Months Ended June 30,
2015
2014 Change 2015 2014
Change Diluted net income per share of common stock
(GAAP) $ 0.29 $ 0.07 314.3 % $ 0.83 $ 0.45 84.4 % Impairment
charges and other, net of tax 0.03 0.06 (50.0 )% 0.26 0.06 333.3 %
Stock-based compensation, net of tax 0.09 0.07 28.6 % 0.15 0.13
15.4 % Stockholder advisory expenses, net of tax 0.01
-
-
0.04
-
-
Adjusted diluted net income per share of common stock $ 0.42
$ 0.20 110.0 % $ 1.28 $ 0.64 100.0 %
Adjusted net income and adjusted diluted net income per share of
common stock represent net income and diluted net income per share
computed in accordance with GAAP, excluding the impact of non-cash
impairment and other charges related to the valuation of aircraft
held for sale in 2015 and an impairment charge associated with the
Employment Screening reporting unit in 2014, stock-based
compensation and costs associated with stockholder advisory
expenses. Insperity management believes adjusted net income and
adjusted diluted net income per share are useful measures of the
company’s operating performance in this period, as they allow for
additional analysis of the company’s operating results separate
from the impact of these items.
Non-bonus payroll, adjusted cash, cash equivalents and
marketable securities, adjusted working capital, adjusted operating
expenses, EBITDA, adjusted EBITDA, adjusted net income and adjusted
diluted net income per share of common stock are not financial
measures prepared in accordance with GAAP and may be different from
similar measures used by other companies. Non-bonus payroll,
adjusted cash, cash equivalents and marketable securities, adjusted
working capital, adjusted operating expenses, EBITDA, adjusted
EBITDA, adjusted net income and adjusted diluted net income per
share of common stock should not be considered as a substitute for,
or superior to, measures of financial performance prepared in
accordance with GAAP. Investors are encouraged to review the
reconciliation of the non-GAAP financial measures used in this
press release to their most directly comparable GAAP financial
measures as provided in the tables above.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20150803005270/en/
Insperity, Inc.Investor Relations Contact:Douglas S.
Sharp, (281) 348-3232Senior Vice President of Finance,Chief
Financial Officer and TreasurerorNews Media Contact:Jason
Cutbirth, (281) 312-3085Senior Vice President of
Marketingjason.cutbirth@insperity.com
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