- Q1 adjusted EPS up 90% to $1.63
- Q1 adjusted EBITDA increases 45% to
$61.2 million
- Q1 worksite employee growth accelerates
to 15% while adjusted operating expenses increased less than
2%
Insperity, Inc. (NYSE: NSP), a leading provider of human
resources and business performance solutions for America’s best
businesses, today reported first quarter adjusted EBITDA of $61.2
million, a 44.7% increase over the first quarter of 2015. Adjusted
net income was $34.9 million and adjusted diluted earnings per
share were $1.63, an 89.5% increase over the first quarter of 2015.
Reported first quarter GAAP net income and diluted earnings per
share were $32.7 million and $1.53, respectively.
“Our excellent first quarter results demonstrate the strength of
our business model from accelerating worksite employee growth
combined with substantial operating leverage,” said Paul J.
Sarvadi, Insperity chairman and chief executive officer. “The
continuation of strong execution in sales and client retention
provides a high-level of confidence in the sustainability of our
plan for high growth and profitability throughout 2016 and
beyond.”
First Quarter Results
Revenues for the first quarter of 2016 increased 14.7% over the
first quarter of 2015 on a 14.8% increase in the average number of
worksite employees paid per month. The continued acceleration of
worksite employee growth was primarily the result of improved new
client sales and a record level of client retention during our
heavy first quarter client renewal period. Client attrition totaled
only 7.6% for the quarter. This was a significant improvement over
an already favorable trend in which attrition during the first
quarter of 2014 and 2015 was 12.8% and 9.9%, respectively.
Gross profit increased 15.5% over the first quarter of 2015 on
14.8% worksite employee growth and effective management of pricing
and direct cost trends. Adjusted operating expenses increased less
than 2% and included the impact of recent cost savings initiatives
and the inherent leverage of our cost structure.
“Our strong cash flow and debt capacity allowed us to
successfully execute a dutch auction tender offer, which resulted
in the repurchase of approximately 3.0 million shares during the
quarter,” said Douglas S. Sharp, senior vice president of finance,
chief financial officer and treasurer. “We ended the quarter with
$40.4 million of adjusted cash and $95.0 million available under
our recently increased line of credit.”
2016 Guidance
The company also announced its updated guidance for 2016,
including the second quarter of 2016.
Q2 2016 Full Year 2016 Average
WSEEs 163,000
-
164,000 166,000
-
168,000 Year-over-year increase 14%
-
15% 14%
-
15% Adjusted EPS $0.54
-
$0.62 $3.46
-
$3.58 Year-over-year increase 29%
-
48% 58%
-
63% Adjusted EBITDA (in millions) $24
-
$27 $141
-
$145 Year-over-year increase 6%
-
19% 28%
-
32%
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.
Adjusted EBITDA - Represents net income computed in accordance
with GAAP, plus interest expense, income taxes, depreciation and
amortization expense, non-cash impairment and other charges, costs
associated with stockholder advisory expenses and stock-based
compensation.
Please refer to the accompanying financial tables at the end of
this press release for the reconciliation of non-GAAP financial
measures to the comparable GAAP financial measures.
Insperity will be hosting a conference call today at 10 a.m. ET
to discuss these results, provide guidance for the second 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 88375056. 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.
88375056. The webcast will be archived for one year.
Insperity, a trusted advisor to America’s best businesses for
more than 30 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
Insurance Services. Insperity business performance solutions
support more than 100,000 businesses with over 2 million employees.
With 2015 revenues of $2.6 billion, Insperity operates in 60
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) cancellation of client
contracts on short notice, or the inability to renew client
contracts or attract new clients; (v) vulnerability to regional
economic factors because of our geographic market concentration;
(vi) 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; (vii)
failure to manage growth of our operations and the effectiveness of
our sales and marketing efforts; (viii) the impact of the
competitive environment in the PEO industry on our growth and/or
profitability; (ix) our liability for worksite employee payroll,
payroll taxes and benefits costs; (x) our liability for disclosure
of sensitive or private information; (xi) our ability to integrate
or realize expected returns on our acquisitions; (xii) failure of
our information technology systems; (xiii) an adverse final
judgment or settlement of claims against Insperity; and (xiv)
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)
March 31, 2016 December
31, 2015 (Unaudited) Assets: Cash and cash
equivalents $ 318,848 $ 269,538 Restricted cash 40,281 37,418
Marketable securities 1,894 9,875 Accounts receivable, net 235,368
200,665 Prepaid insurance 11,554 7,417 Other current assets 28,448
17,135 Total current assets 636,393 542,048 Property
and equipment, net 64,315 61,759 Prepaid health insurance 9,000
9,000 Deposits 143,573 140,162 Goodwill and other intangible
assets, net 13,463 13,588 Deferred income taxes, net 11,998 16,976
Other assets 1,768 1,379 Total assets $ 880,510
$ 784,912 Liabilities and stockholders’ equity:
Accounts payable $ 5,213 $ 5,381 Payroll taxes and other payroll
deductions payable 202,355 205,393 Accrued worksite employee
payroll cost 267,656 161,917 Accrued health insurance costs 7,737
13,643 Accrued workers’ compensation costs 42,229 39,053 Accrued
corporate payroll and commissions 21,017 39,103 Other accrued
liabilities 30,693 20,250 Income taxes payable 13,527 2,971
Total current liabilities 590,427 487,711 Accrued workers’
compensation costs 130,331 124,746 Long-term debt 104,400
-
Total noncurrent liabilities 234,731 124,746 Stockholders’
equity: Common stock 277 308 Additional paid-in capital 2,061
144,701 Treasury stock, at cost (207,798 ) (205,325 ) Retained
earnings 260,812 232,771 Total stockholders’ equity
55,352 172,455 Total liabilities and stockholders’
equity $ 880,510 $ 784,912
Insperity, Inc.
Summary Financial Information
(continued)
(in thousands, except per share amounts
and statistical data)
(Unaudited)
Three Months Ended March 31,
2016 2015 Change Operating
results:
Revenues (gross billings of $4.564 billion
and $3.940 billion less worksite employee payrollcost of $3.762
billion and $3.241 billion, respectively)
$ 802,408 $ 699,479 14.7 % Direct costs: Payroll taxes, benefits
and workers’ compensation costs 652,392 569,619 14.5
% Gross profit 150,016 129,860 15.5 % Operating expenses: Salaries,
wages and payroll taxes 58,015 56,748 2.2 % Stock-based
compensation 3,575 2,423 47.5 % Commissions 4,281 4,304 (0.5 )%
Advertising 3,047 3,180 (4.2 )% General and administrative expenses
23,784 24,593 (3.3 )% Depreciation and amortization 4,271 5,285
(19.2 )% Impairment charges and other
-
9,807
-
Total operating expenses 96,973 106,340 (8.8 )%
Operating income 53,043 23,520 125.5 % Other income (expense):
Interest income 299 107 179.4 % Interest expense (637 ) (100 )
-
Income before income tax expense 52,705 23,527 124.0 % Income tax
expense 20,012 9,740 105.5 % Net income $ 32,693
$ 13,787 137.1 % Less distributed and undistributed
earnings allocated to participating securities (664 ) (355 ) 87.0 %
Net income allocated to common shares $ 32,029 $ 13,432
138.5 % Basic net income per share of common stock $ 1.53
$ 0.54 183.3 % Diluted net income per share of common
stock $ 1.53 $ 0.54 183.3 %
Insperity, Inc.
Summary Financial Information
(continued)
(in thousands, except per share amounts
and statistical data)
(Unaudited)
Three Months Ended March 31,
2016 2015 Change
Statistical Data: Average number of worksite employees paid per
month 158,391 137,959 14.8 % Revenues per worksite employee per
month(1) $ 1,689 $ 1,690 (0.1 )% Gross profit per worksite employee
per month 316 314 0.6 % Operating expenses per worksite employee
per month 204 257 (20.6 )% Operating income per worksite employee
per month 112 57 96.5 % Net income per worksite employee per month
69 33 109.1 %
(1) Gross billings of $9,606 and $9,521
per worksite employee per month, less payroll cost of $7,917 and
$7,831 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 March
31,
2016 2015 Change Payroll
cost (GAAP) $ 3,762,064 $ 3,240,982 16.1 % Less: Bonus payroll cost
582,312 518,503 12.3 % Non-bonus payroll cost $
3,179,752 $ 2,722,479 16.8 % Payroll cost per
worksite employee per month (GAAP) $ 7,917 $ 7,831 1.1 % Less:
Bonus payroll cost per worksite employee per month 1,225
1,253 (2.2 )% Non-bonus payroll cost per worksite employee
per month $ 6,692 $ 6,578 1.7 %
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.
March 31, 2016 December 31, 2015
Cash, cash equivalents and marketable securities (GAAP) $
320,742 $ 279,413 Less: Amounts payable for withheld federal and
state income taxes, employment taxes and other payroll deductions
181,132 185,719 Customer prepayments 99,178 17,037 Adjusted
cash, cash equivalents and marketable securities $ 40,432 $
76,657
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.
Three Months Ended March 31,
2016 2015 Change
Operating expenses (GAAP) $ 96,973 $ 106,340 (8.8 )% Less:
Impairment charges and other
-
9,807
-
Stockholder advisory expenses
-
1,148
-
Adjusted operating expenses $ 96,973 $ 95,385 1.7 %
Operating expenses per worksite employee per month (GAAP) $
204 $ 257 (20.6 )% Less: Impairment charges and other per worksite
employee per month
-
24
-
Stockholder advisory expenses per worksite employee per month
-
3
-
Adjusted operating expenses per worksite employee per month $ 204
$ 230 (11.3 )%
Adjusted operating expenses represent operating expenses
excluding the impact of impairment and other charges related to the
sale of two aircraft and stockholder advisory expenses in 2015.
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 March 31,
2016 2015 Change Net
income (GAAP) $ 32,693 $ 13,787 137.1 % Income tax expense 20,012
9,740 105.5 % Interest expense 637 100
-
Depreciation and amortization 4,271 5,285 (19.2 )%
EBITDA 57,613 28,912 99.3 % Impairment charges and other
-
9,807
-
Stock-based compensation 3,575 2,423 47.5 % Stockholder advisory
expenses
-
1,148
-
Adjusted EBITDA $ 61,188 $ 42,290 44.7 %
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 March 31,
2016 2015 Change Net
income (GAAP) $ 32,693 $ 13,787 137.1 % Impairment charges and
other, net of tax
-
5,747
-
Stock-based compensation, net of tax 2,218 1,420 56.2 % Stockholder
advisory expenses, net of tax
-
673
-
Adjusted net income $ 34,911 $ 21,627 61.4 %
Three Months Ended March 31, 2016
2015 Change Diluted net income
per share of common stock (GAAP) $ 1.53 $ 0.54 183.3 % Impairment
charges and other, net of tax
-
0.23
-
Stock-based compensation, net of tax 0.10 0.06 66.7 % Stockholder
advisory expenses, net of tax
-
0.03
-
Adjusted diluted net income per share of common stock $ 1.63
$ 0.86 89.5 %
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 sale of two aircraft in
2015, 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 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 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/20160502005250/en/
Insperity, Inc.Investor Relations Contact:Douglas S.
Sharp, (281) 348-3232Senior Vice President of Finance,Chief
Financial Officer and
TreasurerInvestor.Relations@Insperity.comorNews Media
Contact:Suzanne Haugen, (281) 312-3543Public Relations
ManagerMedia@Insperity.com
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