Insperity, Inc. (NYSE: NSP), a leading provider of human
resources and business performance solutions for America’s best
businesses, today reported first quarter net income of $13.9
million, a 58.0% increase over the $8.8 million earned in the 2011
period. Diluted earnings per share increased 63.6% to $0.54 from
$0.33 in the 2011 period.
“These are outstanding results, particularly in light of a
weakening labor market and the amount of change involved in
implementing our new growth strategy,” said Paul J. Sarvadi,
Insperity chairman and chief executive officer. “We are on track
with our implementation of fundamental changes that are directed
toward accelerating growth in the years ahead.”
Revenues for the first quarter of 2012 increased 11.0% over the
2011 period primarily due to an 8.5% increase in the average number
of worksite employees paid per month. Gross profit increased 13.2%
to $103.0 million compared to the first quarter of 2011. The
average gross profit per worksite employee per month increased $12,
or 4.4%, to $282 in the first quarter of 2012 from $270 in the 2011
period. This increase was attributable to effective management
within each of the company’s direct cost centers of the Insperity
Workforce OptimizationTM solution.
Operating expenses increased 5.4% to $80.0 million compared to
$75.8 million in the first quarter of 2011. Operating expenses per
worksite employee per month decreased $6, or 2.7%, to $219 in the
first quarter of 2012 from $225 in the 2011 period. The
year-over-year comparison includes rebranding costs incurred in the
first quarter of 2011.
“Our strong first quarter results produced a record level of
$29.8 million in EBITDA plus stock-based compensation,” said
Douglas S. Sharp, senior vice-president of finance, chief financial
officer and treasurer. “Working capital increased to $135.9 million
and included cash outlays of $3.9 million in dividends, $3.4
million in capital expenditures and $3.3 million in stock
repurchases.”
Insperity will be hosting a conference call today at 10 a.m. ET
to discuss these results, give guidance for the second quarter and
full year 2012 and answer questions from investment analysts. To
listen in, call 877-650-3776 and use conference i.d. number
69276192. 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. 69276192, for
one week. The webcast will be archived for one year.
Insperity, a trusted advisor to America’s best businesses for
more than 25 years, provides an array of human resources and
business solutions designed to help improve business performance.
InsperityTM Business Performance Advisors offer the most
comprehensive Workforce OptimizationTM solution in the marketplace
that delivers administrative relief, better benefits, reduced
liabilities and a systematic way to improve productivity.
Additional offerings include MidMarket SolutionsTM, Performance
Management, Expense Management, Time and Attendance, Organizational
Planning, Recruiting Services, Employment Screening, Retirement
Services and Insurance Services. Insperity business performance
solutions support more than 100,000 businesses with over 2 million
employees. With 2011 revenues of $2 billion, Insperity operates in
56 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) continued
effects of the economic recession and general 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 contracts 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) changes in the competitive environment in the PEO
industry, including the entrance of new competitors and our ability
to renew or replace client companies; (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
Adjacent Business strategy, including acquisitions; and (x) an
adverse final judgment or settlement of claims against Insperity.
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, December 31,
2012 2011
(Unaudited) Assets Cash and cash equivalents $ 234,548 $
211,208 Restricted cash 45,068 44,737 Marketable securities 56,981
56,987 Accounts receivable 175,961 170,933 Prepaid insurance 24,662
21,300 Other current assets 11,529 11,488 Income taxes receivable
617 2,902 Deferred income taxes
-
3,233 Total current assets
549,366 522,788 Property and equipment, net 92,597 92,944
Prepaid health insurance 9,000 9,000 Deposits 58,505 54,960
Goodwill and other intangible assets, net 27,999 28,433 Other
assets
4,163 4,134
Total assets
$ 741,630
$ 712,259 Liabilities and
Stockholders’ Equity Accounts payable $ 3,437 $ 5,085 Payroll taxes
and other payroll deductions payable 177,991 168,652 Accrued
worksite employee payroll expense 144,840 130,317 Accrued health
insurance costs 9,200 9,427 Accrued workers’ compensation costs
47,094 46,548 Accrued corporate payroll and commissions 13,703
22,383 Other accrued liabilities 14,092 13,814 Deferred income
taxes
3,089
-
Total current liabilities 413,446 396,226 Accrued
workers’ compensation costs 61,895 60,054 Deferred income taxes
9,814 10,772
Total noncurrent liabilities 71,709 70,826 Stockholders’
equity: Common stock 309 309 Additional paid-in capital 136,670
135,871 Treasury stock, cost (134,198 ) (134,647 ) Accumulated
other comprehensive income, net of tax 59 24 Retained earnings
253,635 243,650
Total stockholders’ equity
256,475
245,207 Total liabilities and
stockholders’ equity
$ 741,630
$ 712,259
Insperity, Inc.
Summary Financial Information
(continued)
(in thousands, except per share amounts
and statistical data)
(Unaudited)
Three months ended
March 31,
2012 2011
Change Operating results:
Revenues (gross billings of $3.231 billion
and $2.888
billion, less worksite employee payroll
cost of $2.636
billion and $2.352 billion, respectively) $ 595,177 $ 536,381 11.0
% Direct costs: Payroll taxes, benefits and workers’ compensation
costs
492,173
445,422 10.5 % Gross profit 103,004 90,959 13.2
% Operating expenses: Salaries, wages and payroll taxes 43,323
39,597 9.4 % Stock-based compensation 2,155 1,790 20.4 % General
and administrative expenses 22,078 21,893 0.8 % Commissions 3,435
3,096 10.9 % Advertising 4,755 5,506 (13.6 )% Depreciation and
amortization
4,212
3,948 6.7 % Total operating expenses
79,958 75,830 5.4 %
Operating income 23,046 15,129 52.3 % Other income: Interest
income, net
288 284
1.4 % Income before income tax expense 23,334 15,413 51.4 %
Income tax expense
9,450
6,627 42.6 % Net income
$
13,884 $ 8,786
58.0 % Less net income allocated to participating securities
(402 )
(264 ) 52.3 % Net income
allocated to common shares
$ 13,482
$ 8,522 58.2 % Diluted net
income per share of common stock
$ 0.54
$ 0.33 63.6 %
Insperity, Inc.
Summary Financial Information
(continued)
(in thousands, except per share amounts
and statistical data)
(Unaudited)
Three months ended March 31,
2012 2011
Change Statistical data: Average number of
worksite employees paid per month 121,938 112,409 8.5 %
Revenues per worksite employee per month
(1)
$ 1,627 $ 1,591 2.3 % Gross profit per worksite employee per month
282 270 4.4 % Operating expenses per worksite employee per month
219 225 (2.7 )% Operating income per worksite employee per month 63
45 40.0 % Net income per worksite employee per month 38 26 46.2 %
(1)
Gross billings of $8,833 and $8,566 per
worksite employee per month, less payroll cost of $7,206 and $6,975
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,
2012 2011
Change Payroll cost (GAAP) $ 2,636,129 $
2,352,263 12.1 % Less: Bonus payroll cost
(367,823 )
(304,849 ) 20.7 %
Non-bonus payroll cost
$ 2,268,306
$ 2,047,414 10.8 % Payroll
cost per worksite employee (GAAP) $ 7,206 $ 6,975 3.3 % Less: Bonus
payroll cost per worksite employee
(1,005 )
(904 ) 11.2 % Non-bonus payroll cost per
worksite employee
$ 6,201
$ 6,071 2.1 %
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.
Three months ended March 31, 2012
2011 Change Net income
(GAAP) $ 13,884 $ 8,786 58.0 % Income tax expense 9,450 6,627 42.6
% Depreciation and amortization 4,212 3,948 6.7 % Interest expense
88
-
-
EBITDA 27,634 19,361 42.7 % Stock-based compensation
2,155 1,790 20.4 %
$
29,789 $ 21,151 40.8 %
EBITDA represents net income computed in accordance with GAAP,
plus interest expense, income tax expense, and depreciation and
amortization expense. Insperity management believes EBITDA plus
stock-based compensation is often a useful measure of the company’s
operating performance, as it allows for additional analysis of the
company’s operating results separate from the impact of taxes,
stock-based compensation and capital and financing transactions on
earnings.
Non-bonus payroll and EBITDA plus stock-based compensation are
not financial measures prepared in accordance with GAAP and may be
different from similar measures used by other companies. Non-bonus
payroll and EBITDA plus stock-based compensation 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 and EBITDA plus stock-based compensation
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.
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