- Q2 worksite employees grew 14% while
operating expenses increased 6%
- Q2 EPS up 55% to $0.45; Adjusted EPS up
43% to $0.60
- Q2 net income increases 33% to $9.7
million
- Q2 adjusted EBITDA increases 13% to
$25.6 million
- YTD net income increases 101% to $42.4
million
- YTD adjusted EBITDA up 34% over
2015
Insperity, Inc. (NYSE:NSP), a leading provider of human
resources and business performance solutions for America’s best
businesses, today reported second quarter net income and diluted
earnings per share of $9.7 million and $0.45, respectively, which
represent increases of 33% and 55% compared to the second quarter
of 2015. Adjusted EBITDA was $25.6 million, a 13% increase over the
second quarter of 2015. Adjusted net income was $12.9 million, an
increase of 19% over the second quarter of 2015, and adjusted
diluted earnings per share were $0.60, a 43% increase over the
second quarter of 2015.
“Our second quarter results and outlook for the last half of
2016 validate that the execution of our strategic plan is producing
exceptional growth and profitability,” said Paul J. Sarvadi,
Insperity chairman and chief executive officer. “This performance
combined with our competitive position and ability to grow our team
of Business Performance Advisors gives us confidence as we look
ahead to 2017.”
Second Quarter Results
Revenues for the second quarter of 2016 increased 13% over the
second quarter of 2015 on a 14% increase in the average number of
worksite employees paid per month. The worksite employee growth was
the result of strong new client sales driven by a 15% increase in
the number of trained Business Performance Advisors, and continuing
high level of client retention, which averaged over 99% during the
second quarter.
As expected, gross profit increased 9% over the second quarter
of 2015 reflecting client and product mix changes and the
seasonality associated with payroll taxes and benefit plan
selection. Operating expenses increased 6% and declined on a per
worksite employee per month basis from $215 in the second quarter
of 2015 to $198 due to recent cost savings initiatives and the
inherent leverage of our cost structure.
“Year-to-date adjusted EBITDA increased from $77 to $90 per
worksite employee per month, 17% over 2015, as we have effectively
managed worksite employee growth and gross profit in combination
with our operating costs,” said Douglas S. Sharp, senior vice
president of finance, chief financial officer and treasurer. “This
high level of unit profitability combined with our double digit
worksite employee growth has resulted in a 34% increase in adjusted
EBITDA over the first six months of 2015.”
Year-to-Date Results
For the six months ended June 30, 2016, reported 2016 net
income was $42.4 million, or $1.98 per diluted share, and adjusted
diluted earnings per share increased 74% to $2.23.
Revenues for the first six months of 2016 totaled $1.5 billion,
an increase of 14% over the 2015 period. Gross profit for the six
months ended June 30, 2016 increased 12% to $263.3 million.
Operating expenses decreased 2% to $194.2 million in 2016, while
adjusted operating expenses increased only 4% to $193.9 million.
Adjusted EBITDA increased 34% to $86.8 million.
Cash outlays in the first six months of 2016 included the
repurchase of 3.1 million shares of stock at a cost of $149.1
million, dividends totaling $10.0 million and capital expenditures
of $12.6 million.
2016 Guidance
The company also announced its updated guidance for 2016,
including the third quarter of 2016.
Q3 2016 Full Year
2016 Average WSEEs 170,000 —
170,700 166,000 — 168,000 Year-over-year increase 14.0% — 14.5% 14%
— 15% Adjusted EPS $0.72 — $0.78 $3.50 — $3.60
Year-over-year increase 26% — 37% 60% — 64% Adjusted EBITDA
(in millions) $30.0 — $32.0 $141.0 — $145.0 Year-over-year increase
6% — 13% 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 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 46738380. 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.
46738380. 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) June 30,
December 31, 2016 2015 (Unaudited)
Assets: Cash and cash equivalents $ 271,573 $ 269,538 Restricted
cash 41,226 37,418 Marketable securities 1,881 9,875 Accounts
receivable, net 245,012 200,665 Prepaid insurance 26,545 7,417
Other current assets 18,554 17,135 Income taxes receivable 6,690
— Total current assets 611,481 542,048 Property and
equipment, net 67,671 61,759 Prepaid health insurance 9,000 9,000
Deposits 135,431 140,162 Goodwill and other intangible assets, net
13,338 13,588 Deferred income taxes, net 7,562 16,976 Other assets
2,012 1,379 Total assets $ 846,495 $ 784,912
Liabilities and stockholders’ equity: Accounts payable $
3,546 $ 5,381 Payroll taxes and other payroll deductions payable
141,213 205,393 Accrued worksite employee payroll cost 277,376
161,917 Accrued health insurance costs 26,920 13,643 Accrued
workers’ compensation costs 43,294 39,053 Accrued corporate payroll
and commissions 24,375 39,103 Other accrued liabilities 24,823
20,250 Income taxes payable — 2,971 Total current
liabilities 541,547 487,711 Accrued workers’ compensation costs
135,681 124,746 Long-term debt 104,400 — Total
noncurrent liabilities 240,081 124,746 Stockholders’ equity: Common
stock 277 308 Additional paid-in capital 4,428 144,701 Treasury
stock, at cost (205,018 ) (205,325 ) Retained earnings 265,180
232,771 Total stockholders’ equity 64,867
172,455 Total liabilities and stockholders’ equity $ 846,495
$ 784,912
Insperity, Inc. Summary Financial Information
(continued) (in thousands, except per share amounts and
statistical data) (Unaudited) Three Months
Ended Six Months Ended June 30, June 30,
2016 2015 Change
2016 2015 Change
Operating results: Revenues (gross billings of $4.163 billion,
$3.703 billion, $8.727 billion and $7.643 billion less worksite
employee payroll cost of $3.456 billion, $3.075 billion, $7.217
billion and $6.316 billion, respectively) $ 707,332 $ 627,838 12.7
% $ 1,509,740 $ 1,327,317 13.7 % Direct costs: Payroll taxes,
benefits and workers’ compensation costs 594,073 523,619
13.5 % 1,246,465 1,093,238 14.0 % Gross profit
113,259 104,219 8.7 % 263,275 234,079 12.5 % Operating expenses:
Salaries, wages and payroll taxes 55,998 50,234 11.5 % 114,013
106,982 6.6 % Stock-based compensation 4,761 4,041 17.8 % 8,336
6,464 29.0 % Commissions 4,335 4,103 5.7 % 8,616 8,407 2.5 %
Advertising 6,712 6,883 (2.5 )% 9,759 10,064 (3.0 )% General and
administrative expenses 21,254 20,838 2.0 % 45,038 45,430 (0.9 )%
Depreciation and amortization 4,176 4,590 (9.0 )% 8,447 9,875 (14.5
)% Impairment charges and other — 1,313 — —
11,120 — Total operating expenses 97,236 92,002
5.7 % 194,209 198,342 (2.1 )% Operating income
16,023 12,217 31.2 % 69,066 35,737 93.3 % Other income (expense):
Interest income 293 84 248.8 % 592 191 209.9 % Interest expense
(650 ) (124 ) 424.2 % (1,287 ) (224 ) 474.6 % Income before income
tax expense 15,666 12,177 28.7 % 68,371 35,704 91.5 % Income tax
expense 5,953 4,863 22.4 % 25,965 14,603
77.8 % Net income $ 9,713 $ 7,314 32.8 % $
42,406 $ 21,101 101.0 % Less distributed and
undistributed earnings allocated to participating securities (229 )
(179 ) 27.9 % (962 ) (521 ) 84.6 % Net income allocated to common
shares $ 9,484 $ 7,135 32.9 % $ 41,444 $
20,580 101.4 % Basic net income per share of common stock $
0.45 $ 0.29 55.2 % $ 1.98 $ 0.83 138.6
% Diluted net income per share of common stock $ 0.45 $ 0.29
55.2 % $ 1.98 $ 0.83 138.6 %
Insperity, Inc. Summary Financial Information
(continued) (in thousands, except per share amounts and
statistical data) (Unaudited)
Three Months Ended Six Months Ended
June 30, June 30, 2016
2015 Change 2016
2015 Change Statistical Data:
Average number of worksite employees paid per month 163,521 143,131
14.2 % 160,956 140,545 14.5 % Revenues per worksite employee per
month(1) $ 1,442 $ 1,462 (1.4 )% $ 1,563 $ 1,574 (0.7 )% Gross
profit per worksite employee per month 231 243 (4.9 )% 273 278 (1.8
)% Operating expenses per worksite employee per month 198 215 (7.9
)% 201 236 (14.8 )% Operating income per worksite employee per
month 33 28 17.9 % 72 42 71.4 % Net income per worksite employee
per month 20 17 17.6 % 44 25 76.0 % (1) Gross billings of
$8,485, $8,623, $9,036 and $9,064 per worksite employee per month,
less payroll cost of $7,043, $7,161, $7,473 and $7,490 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 Six Months Ended June 30, June 30,
2016 2015 Change
2016 2015 Change
Payroll cost (GAAP) $ 3,455,077 $ 3,074,892 12.4 % $
7,217,142 $ 6,315,874 14.3 % Less: Bonus payroll cost 213,224
257,367 (17.2 )% 795,537 775,870 2.5 %
Non-bonus payroll cost $ 3,241,853 $ 2,817,525 15.1 %
$ 6,421,605 $ 5,540,004 15.9 % Payroll cost
per worksite employee per month (GAAP) $ 7,043 $ 7,161 (1.6 )% $
7,473 $ 7,490 (0.2 )% Less: Bonus payroll cost per worksite
employee per month 436 599 (27.2 )% 824 920
(10.4 )% Non-bonus payroll cost per worksite employee per
month $ 6,607 $ 6,562 0.7 % $ 6,649 $ 6,570
1.2 %
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, December
31, 2016 2015 Cash, cash
equivalents and marketable securities (GAAP) $ 273,454 $ 279,413
Less: Amounts payable for withheld federal
and state income taxes, employment taxes and other payroll
deductions
121,437 185,719
Customer prepayments
100,728 17,037 Adjusted cash, cash equivalents and
marketable securities $ 51,289 $ 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 Six
Months Ended June 30, June 30, 2016
2015 Change 2016
2015 Change Operating
expenses (GAAP) $ 97,236 $ 92,002 5.7 % $ 194,209 $ 198,342 (2.1 )%
Less: Impairment charges and other — 1,313 — — 11,120 — Stockholder
advisory expenses 323 398 (18.8 )% 323 1,546
(79.1 )% Adjusted operating expenses $ 96,913 $
90,291 7.3 % $ 193,886 $ 185,676 4.4 %
Operating expenses per worksite employee per month (GAAP) $ 198 $
215 (7.9 )% $ 201 $ 236 (14.8 )% Less: Impairment charges and other
per worksite employee per month — 3 — — 13 — Stockholder advisory
expenses per worksite employee per month 1 1 — —
2 — Adjusted operating expenses per worksite employee
per month $ 197 $ 211 (6.6 )% $ 201 $ 221
(9.0 )%
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. 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 Six Months Ended June 30,
June 30, 2016 2015
Change 2016 2015
Change Net income (GAAP) $ 9,713 $ 7,314 32.8 % $
42,406 $ 21,101 101.0 % Income tax expense 5,953 4,863 22.4 %
25,965 14,603 77.8 % Interest expense 650 124 424.2 % 1,287 224
474.6 % Depreciation and amortization 4,176 4,590
(9.0 )% 8,447 9,875 (14.5 )% EBITDA 20,492 16,891
21.3 % 78,105 45,803 70.5 % Impairment charges and other — 1,313 —
— 11,120 — Stock-based compensation 4,761 4,041 17.8 % 8,336 6,464
29.0 % Stockholder advisory expenses 323 398 (18.8 )%
323 1,546 (79.1 )% Adjusted EBITDA $ 25,576 $
22,643 13.0 % $ 86,764 $ 64,933 33.6 %
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 Six Months Ended June 30,
June 30, 2016 2015
Change 2016 2015
Change Net income (GAAP) $ 9,713 $ 7,314 32.8 % $
42,406 $ 21,101 101.0 % Impairment charges and other — 1,313
— — 11,120 — Stock-based compensation 4,761 4,041 17.8 % 8,336
6,464 29.0 % Stockholder advisory expenses 323 398
(18.8 )% 323 1,546 (79.1 )% Total non-GAAP
adjustments 5,084 5,752 (11.6 )% 8,659 19,130 (54.7 )% Tax effect
on non-GAAP adjustments (1,933 ) (2,295 ) (15.8 )% (3,290 ) (7,824
) (57.9 )% Adjusted net income (non-GAAP) $ 12,864 $ 10,771
19.4 % $ 47,775 $ 32,407 47.4 %
Three Months Ended Six Months Ended June 30,
June 30, 2016 2015
Change 2016 2015
Change Diluted net income per share of common stock
(GAAP) $ 0.45 $ 0.29 55.2 % $ 1.98 $ 0.83 138.6 % Impairment
charges and other — 0.05 — — 0.44 — Stock-based compensation 0.22
0.16 37.5 % 0.39 0.25 56.0 % Stockholder advisory expenses 0.02
0.02 — 0.02 0.06 (66.7 )% Total
non-GAAP adjustments 0.24 0.23 4.3 % 0.41 0.75 (45.3 )% Tax effect
on non-GAAP adjustments (0.09 ) (0.10 ) (10.0 )% (0.16 ) (0.30 )
(46.7 )% Adjusted diluted net income per share of common stock $
0.60 $ 0.42 42.9 % $ 2.23 $ 1.28 74.2 %
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/20160801005355/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
Insperity (NYSE:NSP)
Historical Stock Chart
From Aug 2024 to Sep 2024
Insperity (NYSE:NSP)
Historical Stock Chart
From Sep 2023 to Sep 2024