- 2015 Adjusted EPS increases 53% to
$2.19 on 12% worksite employee growth
- 2015 Adjusted EBITDA increases 31% over
2014 to a record $110 million
- 2016 Worksite employee growth projected
to increase 13% to 15% over 2015
- 2016 Adjusted EPS guidance of $3.19 to
$3.36, a 46% to 53% increase over 2015
- 2016 Adjusted EBITDA guidance of $134
to $141 million, a 22% to 28% increase over 2015
- Over $230 million returned to
stockholders through dividends and share repurchases since January
2015
Insperity, Inc. (NYSE: NSP), a leading provider of human
resources and business performance solutions for America’s best
businesses, today reported results for the fourth quarter and year
ended Dec. 31, 2015. For the year ended Dec. 31, 2015, adjusted
diluted earnings per share increased 53.1% over 2014 to $2.19.
Adjusted EBITDA increased 30.8% over 2014 to $110.0 million.
Reported 2015 GAAP net income was $39.4 million, or $1.58 per
share. For the fourth quarter, the company reported adjusted EBITDA
of $16.8 million. Adjusted net income was $8.0 million and adjusted
diluted earnings per share were $0.33. Reported fourth quarter GAAP
net income and earnings per share were $6.3 million and $0.26,
respectively.
“We are pleased with our 2015 results and especially our
successful year-end sales and renewal campaign, which sets us up
for a strong 2016,” said Paul J. Sarvadi, Insperity chairman and
chief executive officer. “This recent strong performance across the
company is expected to result in continued acceleration in worksite
employee growth and substantial operating leverage, which positions
Insperity for another record year in 2016.”
Fourth Quarter Results
Revenues for the fourth quarter of 2015 increased 9.1% over the
fourth quarter of 2014 on a 12.0% increase in the average number of
worksite employees paid per month. Worksite employees paid from new
client sales increased 25% over the fourth quarter of 2014, and
worksite employee retention remained above 99%. Net hiring in our
client base declined slightly compared to the fourth quarter of
2014.
Gross profit decreased by 4.3% from the fourth quarter of 2014,
due primarily to large medical claim activity during the quarter.
Costs associated with these fourth quarter claims exceeded the
average of the previous three quarters of 2015 by approximately $5
million.
“Adjusted EBITDA for the quarter was below expected levels
primarily as a result of the large medical claims,” said Richard G.
Rawson, Insperity president. “Large medical claim activity in a
health plan of our size can negatively impact a stand-alone
quarter. However, on an annual basis, large medical claim costs
increased less than 6% on a 10% increase in participants compared
to 2014. Additionally, when combined with favorable underlying
trends in benefit plan migration and the general utilization of our
plans, benefits costs per covered employee increased only 1.4% in
2015 over 2014.”
Adjusted operating expenses increased less than 1% compared to
the fourth quarter of 2014 as a result of continued operating
efficiencies and targeted cost savings. We continued to invest in
the growth of the company, including an 11.8% increase in the
number of Business Performance Advisors.
Full Year Results
Revenues in 2015 were $2.6 billion. The average number of
worksite employees paid per month increased 11.6% over 2014 on a
31% increase in worksite employees paid from new sales and an
improvement in worksite employee retention from 80% in 2014 to a
historical high of 84% in 2015. Gross profit for the year ended
Dec. 31, 2015 increased 8.4%, while adjusted operating expenses
increased only 2.1%.
Cash outlays in 2015 included the repurchase of approximately
1.4 million shares at a cost of $67.1 million, regular cash
dividends totaling $21.2 million, and capital expenditures totaling
$17.8 million. Adjusted cash, cash equivalents and marketable
securities at Dec. 31, 2015 was $76.7 million.
Other Matters
In December 2015, the company launched a modified Dutch auction
tender offer. The offer concluded on Jan. 7, 2016 with the
repurchase of over 3 million shares of common stock at a purchase
price of $47.50 per share. Aggregate transaction costs of the
tender offer totaled $144.2 million, which was funded with
approximately $40 million in cash and $104 million of debt.
“With our strong balance sheet and a 31% increase in adjusted
EBITDA during 2015, we were in a position to provide significant
stockholder return through our dividend program and share
repurchases,” said Douglas S. Sharp, senior vice president of
finance, chief financial officer and treasurer. “A total of $231
million has been returned to stockholders since January 2015
through our dividend program, which included a 16% increase in the
dividend rate in May 2015, and the repurchase of approximately 4.4
million shares including the recent tender offer.”
2016
Guidance
Q1 2016 Full Year 2016
Average WSEEs 155,900
-
157,300 164,800
-
167,700 Year-over-year increase 13%
-
14% 13%
-
15% Adjusted EPS $1.44
-
$1.52 $3.19
-
$3.36 Year-over-year increase 67%
-
77% 46%
-
53% Adjusted EBITDA (in millions) $57
-
$60 $134
-
$141 Year-over-year increase 35%
-
42% 22%
-
28%
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 charges and stock-based compensation.
Adjusted EBITDA - Represents net income computed in accordance
with GAAP, plus interest expense, income taxes, depreciation,
amortization, stock-based compensation and non-cash impairment
charges.
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 first quarter
and full year 2016 and answer questions from investment analysts.
To listen in, call 877-651-0053 and use conference i.d. number
32432381. The call will also be webcast at http://ir.insperity.com.
The conference call script and company guidance 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. 32432381, for
one week. 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 Services, 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)
Dec. 31,
Dec. 31, 2015 2014 Assets: Cash and cash
equivalents $ 269,538 $ 276,456 Restricted cash 37,418 44,040
Marketable securities 9,875 28,631 Accounts receivable, net 200,665
175,116 Prepaid insurance 7,417 21,301 Other current assets 17,135
17,649 Total current assets 542,048 563,193
Property and equipment, net 61,759 84,345 Prepaid health insurance
9,000 9,000 Deposits 140,162 117,634 Goodwill and other intangible
assets, net 13,588 14,457 Deferred income taxes, net 16,976 2,241
Other assets 1,379 1,725 Total assets $ 784,912
$ 792,595 Liabilities and Stockholders'
Equity: Accounts payable $ 5,381 $ 4,674 Payroll taxes and other
payroll deductions payable 205,393 176,341 Accrued worksite
employee payroll cost 161,917 192,396 Accrued health insurance
costs 13,643 18,329 Accrued workers’ compensation costs 39,053
45,592 Accrued corporate payroll and commissions 39,103 32,644
Other accrued liabilities 20,250 22,444 Income taxes payable 2,971
4,031 Total current liabilities 487,711 496,451
Accrued workers’ compensation costs 124,746 92,048
Total noncurrent liabilities 124,746 92,048
Stockholders’ equity: Common stock 308 308 Additional paid-in
capital 144,701 137,769 Treasury stock, at cost (205,325 ) (148,465
) Accumulated other comprehensive income, net of tax
-
3 Retained earnings 232,771 214,481 Total
stockholders’ equity 172,455 204,096 Total
liabilities and stockholders’ equity $ 784,912 $ 792,595
Insperity, Inc.
Summary Financial Information
(continued)
(in thousands, except per share amounts
and statistical data)
Three months ended Dec. 31, Year ended Dec.
31, 2015 2014 Change 2015
2014 Change Operating results: Revenues (gross
billings of $4.337 billion, $3.956 billion, $15.806 billion and
$14.187 billion, less worksite employee payroll cost of $3.687
billion, $3.360 billion, $13.202 billion and $11.829 billion,
respectively) $ 650,011 $ 595,865 9.1 % $ 2,603,614 $ 2,357,788
10.4 % Direct costs: Payroll taxes, benefits and workers’
compensation costs 552,966 494,506 11.8
% 2,165,747 1,953,983 10.8 % Gross
profit 97,045 101,359 (4.3 )% 437,867 403,805 8.4 %
Operating expenses: Salaries, wages and payroll taxes 52,749 51,873
1.7 % 211,060 200,118 5.5 % Stock-based compensation 3,171 2,707
17.1 % 13,345 11,053 20.7 % Commissions 5,556 4,532 22.6 % 18,479
15,285 20.9 % Advertising 2,724 3,457 (21.2 )% 15,980 20,084 (20.4
)% General and administrative expenses 19,256 19,019 1.2 % 84,259
84,717 (0.5 )% Impairment charges and other (640 ) 1,202 (153.2 )%
10,480 3,687 184.2 % Depreciation and amortization 4,203
5,560 (24.4 )% 18,565
21,387 (13.2 )% Total operating expenses 87,019
88,350 (1.5 )% 372,168
356,331 4.4 % Operating income 10,026 13,009 (22.9 )% 65,699
47,474 38.4 % Other income (expense): Interest, net 31 26 19.2 % 33
106 (68.9 )% Other, net (97 ) 27 (459.3 )%
(113 ) 47 (340.4 )% Income before income tax
expense 9,960 13,062 (23.7 )% 65,619 47,627 37.8 % Income tax
expense 3,621 4,898 (26.1 )%
26,229 19,623 33.7 % Net income $ 6,339
$ 8,164 (22.4 )% $ 39,390 $ 28,004 40.7 % Less
distributed and undistributed earnings allocated to participating
securities (160 ) (1,572 ) (89.8 )% (981 )
(2,002 ) (51.0 )% Net income allocated to common shares $
6,179 $ 6,592 (6.3 )% $ 38,409 $ 26,002
47.7 % Basic net income per share of common stock $ 0.26 $
0.27 (3.7 )% $ 1.58 $ 1.05 50.5 % Diluted net
income per share of common stock $ 0.26 $ 0.27 (3.7
)% $ 1.58 $ 1.05 50.5 %
Insperity, Inc.
Summary Financial Information
(continued)
(in thousands, except per share amounts
and statistical data)
Three months ended Dec. 31, Year ended Dec. 31,
2015 2014 Change 2015 2014
Change Statistical Data: Average number of
worksite employees paid per month 153,144 136,764 12.0 % 145,830
130,718 11.6 % Revenues per worksite employee per
month (1)
$ 1,415 $ 1,452 (2.5 )% $ 1,488 $ 1,503 (1.0 )% Gross profit per
worksite employee per month 211 247 (14.6 )% 250 257 (2.7 )%
Operating expenses per worksite employee per month 189 215 (12.1 )%
212 227 (6.6 )% Operating income per worksite employee per month 22
32 (31.3 )% 38 30 26.7 % Net income per worksite employee per month
14 20 (30.0 )% 23 18 27.8 %
(1)
Gross billings of $9,440, $9,642, $9,032
and $9,044 per worksite employee per month, less payroll cost of
$8,025, $8,190, $7,544 and $7,541 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 Year ended Dec. 31,
Dec. 31, 2015 2014 Change
2015 2014 Change Payroll
cost (GAAP) $ 3,686,902 $ 3,360,329 9.7 % $ 13,202,564 $ 11,829,133
11.6 % Less: Bonus payroll cost 573,542 561,259 2.2 %
1,611,857 1,509,010 6.8 % Non-bonus payroll cost $
3,113,360 $ 2,799,070 11.2 % $ 11,590,707 $
10,320,123 12.3 %
Payroll cost per worksite employee per
month (GAAP)
$ 8,025 $ 8,190 (2.0 )% $ 7,544 $ 7,541
-
Less: Bonus payroll cost per worksite
employee per month
1,248 1,368 (8.8 )% 921 962 (4.3 )%
Non-bonus payroll cost per worksite
employee per month
$ 6,777 $ 6,822 (0.7 )% $ 6,623 $ 6,579
0.7 %
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.
December 31, 2015 December
31, 2014 Cash, cash equivalents and marketable
securities (GAAP) $ 279,413 $ 305,087
Less: Amounts payable for withheld federal
and state income taxes,
employment taxes and other payroll
deductions
185,719 152,132 Customer prepayments 17,037 87,887 Adjusted
cash, cash equivalents and marketable securities $ 76,657 $
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.
Three months ended Year ended
Dec. 31, Dec. 31, 2015 2014
Change 2015 2014
Change Operating expenses (GAAP) $ 87,019 $ 88,350
(1.5 )% $ 372,168 $ 356,331 4.4 % Less: Impairment charges and
other (640 ) 1,202 (153.2 )% 10,480 3,687 184.2 % Stockholder
advisory expenses
-
-
-
1,546
-
100.0 % Adjusted operating expenses $ 87,659 $ 87,148
0.6 % $ 360,142 $ 352,644 2.1 %
Adjusted operating expenses represent
operating expenses excluding the impact of impairment charges and
other related to the sale of aircraft and stockholder advisory
expenses in 2015 and an impairment charge associated with the
Employment Screening reporting unit and non-cash charge related to
a revision to our office consolidation plans 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 Year ended Dec.
31, Dec. 31, 2015 2014
Change 2015 2014 Change
Net income (GAAP) $ 6,339 $ 8,164 (22.4 )% $ 39,390 $ 28,004 40.7 %
Income tax expense 3,621 4,898 (26.1 )% 26,229 19,623 33.7 %
Interest expense 109 89 22.5 % 459 370 24.1 % Depreciation and
amortization 4,203 5,560 (24.4 )% 18,565
21,387 (13.2 )% EBITDA 14,272 18,711 (23.7 )% 84,643 69,384
22.0 % Impairment charges and other (640 ) 1,202 (153.2 )% 10,480
3,687 184.2 % Stock-based compensation 3,171 2,707 17.1 % 13,345
11,053 20.7 % Stockholder advisory expenses
-
-
-
1,546
-
-
Adjusted EBITDA $ 16,803 $ 22,620 (25.7 )% $ 110,014
$ 84,124 30.8 %
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 charges and other, 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
Dec. 31,
Year Ended
Dec. 31,
2015 2014 Change
2015 2014 Change
Net income (GAAP) $ 6,339 $ 8,164 (22.4 )% $ 39,390 $ 28,004
40.7 % Impairment charges and other, net of tax (407 ) 751 (154.2
)% 6,129 2,317 164.5 % Stock-based compensation, net of tax 2,018
1,692 19.3 % 8,088 6,413 26.1 % Stockholder advisory expenses, net
of tax
-
-
-
912
-
-
Adjusted net income $ 7,950 $ 10,607 (25.0 )% $
54,519 $ 36,734 48.4 %
Three Months
Ended
Dec. 31,
Year Ended
Dec. 31,
2015 2014 Change 2015 2014
Change Diluted net income per share of common stock
(GAAP) $ 0.26 $ 0.27 (3.7 )% $ 1.58 $ 1.05 50.5
%
Impairment charges and other, net of tax (0.01 ) 0.03 (133.3 )%
0.25 0.09 177.8 % Stock-based compensation, net of tax 0.08 0.06
33.3 % 0.32 0.24 33.3 % Stockholder advisory expenses, net of tax
-
-
-
0.04
-
-
Impact of dividends exceeding earnings
-
0.05 (100.0 )%
-
0.05 (100.0 )% Adjusted diluted net income per share
of common stock $ 0.33 $ 0.41 (19.5 )% $ 2.19
$ 1.43 53.1 %
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: i) $10.5
million non-cash impairment and other charges related to the sale
of two aircraft in 2015; ii) a $2.5 million impairment charge
associated with the Employment Screening reporting unit in 2014;
iii) a $1.2 million impairment charge related to a revision to our
office consolidation plans in 2014; iv) stock-based compensation;
and v) stockholder advisory expenses. Under the two-class earnings
per share method, the undistributed losses resulting from dividends
exceeding net income in 2014 are not allocated to participating
securities. Insperity management believes adjusted net income and
adjusted diluted net income per share of common stock 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. Insperity
includes 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 in this press release because the
company believes they are useful to investors in allowing for
greater transparency related to the costs incurred under the
company’s workers’ compensation program and the company’s operating
performance during the periods presented. 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/20160212005086/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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