- Q3 adjusted EPS up 46% to $0.57 on 12%
revenue growth
- Q3 adjusted EBITDA increases 25% to
$28.3 million
- Q3 operating expenses up less than 1%
over 2014 on 13% unit growth
- YTD adjusted EBITDA and adjusted EPS up
52% and 81%, respectively
- YTD return to stockholders through
share repurchases and dividends of $75 million
Insperity, Inc. (NYSE: NSP), a leading provider of human
resources and business performance solutions for America’s best
businesses, today reported third quarter adjusted EBITDA of $28.3
million, a 25.1% increase over the third quarter of 2014. Adjusted
net income was $14.2 million and adjusted diluted earnings per
share were $0.57, a 46.2% increase over the third quarter of 2014.
Reported third quarter GAAP net income and diluted earnings per
share were $12.0 million and $0.48, respectively.
“We are pleased with our third quarter and year-to-date results,
which demonstrate solid execution of our plan to accelerate unit
growth while controlling operating costs,” said Paul J. Sarvadi,
Insperity chairman and chief executive officer. “We have
significant momentum to continue strong sales and retention through
year end, which would set the stage for another year of
double-digit worksite employee growth and operating leverage in
2016.”
Third Quarter Results
Revenues for the third quarter of 2015 increased 11.8% over the
third quarter of 2014. The average number of worksite employees
paid per month increased 13.3% during the quarter, a continued
acceleration from the 11.6% year-over-year growth in the second
quarter and 9.2% in 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 third quarter of
2014.
“Our direct cost programs, including benefits, payroll taxes and
workers’ compensation costs, continue to remain stable and trend
favorably, as demonstrated by a benefits cost increase of only 1.9%
in the third quarter,” said Richard G. Rawson, Insperity president.
“In addition, gross profit increased 13%, in line with worksite
employee growth when excluding the $6.4 million benefits credit
related to lower than expected claims run-off in the third quarter
of 2014.”
While reported gross profit increased 5.9% over the third
quarter of 2014, operating expenses increased less than 1% and
included costs associated with continued growth in the number of
Business Performance Advisors and targeted reductions in
advertising and general and administrative costs.
Year-to-Date Results
For the nine months ended Sept. 30, 2015, adjusted EBITDA
increased 51.6% to $93.2 million and adjusted diluted earnings per
share increased 80.6% to $1.86. Reported 2015 GAAP net income was
$33.1 million, or diluted earnings per share of $1.32.
Revenues in the first nine months of 2015 were $2.0 billion, an
increase of 10.9% over the 2014 period on an 11.4% increase in the
average number of worksite employees paid per month. Gross profit
for the nine months ended Sept. 30, 2015 increased 12.7% to $340.8
million, while adjusted operating expenses increased only 2.6% to
$272.5 million.
“We have repurchased 1.2 million shares of stock at a cost of
$59 million and paid dividends totaling $16 million through the
third quarter,” said Douglas S. Sharp, Insperity senior vice
president of finance, chief financial officer and treasurer. “Our
strong cash flow has led to a $3 million increase in working
capital after returning $75 million to stockholders so far this
year.”
2015 Guidance
The company also announced its updated guidance for 2015,
including the fourth quarter of 2015.
Q4 2015 Full Year 2015
Average WSEEs 153,000
-
154,000 145,800
-
146,000 Adjusted EPS $0.40
-
$0.42 $2.26
-
$2.28 Adjusted EBITDA (in millions) $21.0
-
$22.0 $114.0
-
$115.0
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.
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 fourth quarter
and answer questions from investment analysts. To listen in, call
877-651-0053 and use conference i.d. number 56772990. 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. 56772990. 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)
September 30,2015
December 31,2014
(Unaudited) Assets: Cash and cash equivalents $ 201,085 $
276,456 Restricted cash 43,056 44,040 Marketable securities 9,754
28,631 Accounts receivable, net 273,421 175,116 Prepaid insurance
20,177 21,301 Other current assets 15,279 17,649 Deferred income
taxes 5,692 6,316 Total current assets 568,464
569,509 Property and equipment, net 58,023 84,345 Prepaid health
insurance 9,000 9,000 Deposits 124,872 117,634 Goodwill and other
intangible assets, net 13,780 14,457 Deferred income taxes 4,466
-
Other assets 1,488 1,725 Total assets $ 780,093
$ 796,670 Liabilities and Stockholders’ Equity:
Accounts payable $ 2,613 $ 4,674 Payroll taxes and other payroll
deductions payable 116,257 176,341 Accrued worksite employee
payroll cost 251,966 192,396 Accrued health insurance costs 12,661
18,329 Accrued workers’ compensation costs 45,798 45,592 Accrued
corporate payroll and commissions 34,654 32,644 Other accrued
liabilities 23,139 22,444 Income taxes payable 4,976 4,031
Total current liabilities 492,064 496,451 Accrued workers’
compensation costs 112,088 92,048 Deferred income taxes
-
4,075 Total noncurrent liabilities 112,088 96,123
Stockholders’ equity: Common stock 308 308 Additional paid-in
capital 143,951 137,769 Treasury stock, at cost (200,043 ) (148,465
) Accumulated other comprehensive income, net of tax 5 3 Retained
earnings 231,720 214,481 Total stockholders’ equity
175,941 204,096 Total liabilities and stockholders’
equity $ 780,093 $ 796,670
Insperity, Inc.
Summary Financial Information
(continued)
(in thousands, except per share amounts
and statistical data)
(Unaudited)
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2015 2014 Change 2015
2014 Change Operating results:
Revenues (gross billings of $3.826
billion, $3.362
billion, $11.469 billion and $10.231
billion less
worksite employee payroll cost of $3.200
billion,
$2.802 billion, $9.515 billion and $8.469
billion,
respectively)
$ 626,286 $ 560,303 11.8 % $ 1,953,603 $ 1,761,923 10.9 % Direct
costs:
Payroll taxes, benefits and workers’
compensation
costs
519,543 459,486 13.1 % 1,612,781 1,459,477
10.5 % Gross profit 106,743 100,817 5.9 % 340,822 302,446
12.7 % Operating expenses: Salaries, wages and payroll taxes 51,329
49,384 3.9 % 158,311 148,245 6.8 % Stock-based compensation 3,710
2,701 37.4 % 10,174 8,346 21.9 % Commissions 4,516 3,790 19.2 %
12,923 10,753 20.2 % Advertising 3,574 4,885 (26.8 )% 14,681 18,182
(19.3 )% General and administrative expenses 19,191 20,295 (5.4 )%
63,578 64,143 (0.9 )% Depreciation and amortization 4,487 5,302
(15.4 )% 14,362 15,827 (9.3 )% Impairment charges and other
-
-
-
11,120 2,485 347.5 % Total operating expenses 86,807
86,357 0.5 % 285,149 267,981 6.4 %
Operating income 19,936 14,460 37.9 % 55,673 34,465 61.5 % Other
income (expense): Interest, net 3 9 (66.7 )% 2 80 (97.5 )% Other,
net 16 34 (52.9 )% (16 ) 20 (180.0 )% Income
before income tax expense 19,955 14,503 37.6 % 55,659 34,565 61.0 %
Income tax expense 8,005 6,118 30.8 % 22,608
14,725 53.5 % Net income $ 11,950 $ 8,385 42.5
% $ 33,051 $ 19,840 66.6 %
Less distributed and undistributed
earnings allocated
to participating securities
(303 ) (243 ) 24.7 % (822 ) (576 ) 42.7 % Net income allocated to
common shares $ 11,647 $ 8,142 43.0 % $ 32,229
$ 19,264 67.3 % Basic net income per share of common stock $
0.48 $ 0.33 45.5 % $ 1.32 $ 0.78 69.2 %
Diluted net income per share of common stock $ 0.48 $ 0.33
45.5 % $ 1.32 $ 0.78 69.2 %
Insperity, Inc.
Summary Financial Information
(continued)
(in thousands, except per share amounts
and statistical data)
(Unaudited)
Three Months EndedSeptember
30,
Nine Months EndedSeptember
30,
2015 2014 Change 2015
2014 Change Statistical Data:
Average number of worksite employees paid
per
month
149,086 131,545 13.3 % 143,392 128,703 11.4 % Revenues per worksite
employee per month(1) $ 1,400 $ 1,420 (1.4 )% $ 1,514 $ 1,521 (0.5
)% Gross profit per worksite employee per month 239 255 (6.3 )% 264
261 1.1 % Operating expenses per worksite employee per month 194
218 (11.0 )% 221 231 (4.3 )% Operating income per worksite employee
per month 45 37 21.6 % 43 30 43.3 % Net income per worksite
employee per month 27 21 28.6 % 26 17 52.9 %
(1)
Gross billings of $8,555, $8,519, $8,887 and $8,832 per worksite
employee per month, less payroll cost of $7,155, $7,099, $7,373 and
$7,311 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 September 30, Nine
Months Ended September 30, 2015
2014 Change 2015 2014
Change Payroll cost (GAAP) $ 3,199,788 $
2,801,722 14.2 % $ 9,515,662 $ 8,468,804 12.4 % Less: Bonus payroll
cost 262,445 204,405 28.4 % 1,038,315 947,751
9.6 % Non-bonus payroll cost $ 2,937,343 $ 2,597,317
13.1 % $ 8,477,347 $ 7,521,053 12.7 %
Payroll cost per worksite employee per month (GAAP) $ 7,155 $ 7,099
0.8 % $ 7,373 $ 7,311 0.8 % Less: Bonus payroll cost per worksite
employee per month 588 518 13.5 % 805 818
(1.6 )% Non-bonus payroll cost per worksite employee per
month $ 6,567 $ 6,581 (0.2 )% $ 6,568 $ 6,493
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.
September 30, 2015 December
31, 2014 Cash, cash equivalents and marketable
securities (GAAP) $ 210,839 $ 305,087 Less: Amounts payable for
withheld federal and state income taxes, employment taxes and other
payroll deductions 99,382 152,132 Customer prepayments 40,533
87,887 Adjusted cash, cash equivalents and marketable
securities $ 70,924 $ 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 September 30,
Nine Months Ended September 30, 2015
2014 Change 2015
2014 Change Operating expenses (GAAP) $
86,807 $ 86,357 0.5 % $ 285,149 $ 267,981 6.4
%
Less: Impairment charges and other
-
-
-
11,120 2,485 347.5
%
Stockholder advisory expenses
-
-
-
1,546
-
-
Adjusted operating expenses $ 86,807 $ 86,357 0.5 % $
272,483 $ 265,496 2.6
%
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 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 September 30, Nine
Months Ended September 30, 2015 2014
Change 2015 2014 Change
Net income (GAAP) $ 11,950 $ 8,385 42.5 % $ 33,051 $ 19,840 66.6 %
Income tax expense 8,005 6,118 30.8 % 22,608 14,725 53.5 % Interest
expense 126 104 21.2 % 350 281 24.6 % Depreciation and amortization
4,487 5,302 (15.4 )% 14,362 15,827 (9.3 )% EBITDA 24,568
19,909 23.4 % 70,371 50,673 38.9 % Impairment charges and other
-
-
-
11,120 2,485 347.5 % Stock-based compensation 3,710 2,701 37.4 %
10,174 8,346 21.9 % Stockholder advisory expenses
-
-
-
1,546
-
-
Adjusted EBITDA $ 28,278 $ 22,610 25.1 % $ 93,211 $ 61,504
51.6 % 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
September 30, Nine Months Ended September 30,
2015 2014 Change 2015
2014 Change Net income (GAAP) $
11,950 $ 8,385 42.5 % $ 33,051 $ 19,840 66.6 % Impairment charges
and other, net of tax
-
-
-
6,572 1,566 319.7 % Stock-based compensation, net of tax 2,221
1,561 42.3 % 6,041 4,791 26.1 % Stockholder advisory expenses, net
of tax
-
-
-
914
-
-
Adjusted net income $ 14,171 $ 9,946 42.5 % $ 46,578
$ 26,197 77.8 %
Three Months
Ended September 30, Nine Months Ended
September 30, 2015 2014 Change
2015 2014 Change Diluted net
income per share of common stock (GAAP) $ 0.48 $ 0.33
45.5
%
$ 1.32 $ 0.78 69.2 % Impairment charges and other, net of
tax
-
-
-
0.26 0.06 333.3 % Stock-based compensation, net of tax 0.09 0.06
50.0
%
0.24 0.19 26.3 % Stockholder advisory expenses, net of tax
-
-
-
0.04
-
-
Adjusted diluted net income per share of common stock $ 0.57
$ 0.39
46.2
%
$ 1.86 $ 1.03 80.6 %
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 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 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/20151102005349/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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