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 $9.6 million
and diluted earnings per share of $0.37.
“We exceeded our first quarter earnings expectations during a
weak economy, soft labor market and repeated delays and changes to
health care reform,” said Paul J. Sarvadi, Insperity chairman and
chief executive officer. “Our momentum for both core and mid-market
sales, coupled with our plan to align operating expenses,
establishes a solid foundation for growth for the balance of the
year and operating leverage into 2015.”
Revenues for the first quarter of 2014 increased 4.1% over the
first quarter of 2013 to $637.0 million, due to a 2.3% increase in
the average number of worksite employees paid per month and a 1.7%
increase in revenues per worksite employee per month. Gross profit
decreased 1.8% compared to the first quarter of 2013 to $106.2
million, due primarily to an expected higher deficit in the
benefits cost center.
Operating expenses increased 4.0% over the first quarter of 2013
to $89.6 million and included the impact of Business Performance
Advisors hired throughout 2013, implementation of our health care
reform strategy and recent technology investments. Operating
expenses per worksite employee per month increased $3, or 1.3%, to
$236 in the first quarter of 2014 from $233 in the 2013 period.
“During the quarter we generated adjusted EBITDA of $24.3
million, repurchased 469,456 shares at a cost of $13.9 million and
paid quarterly dividends of $4.4 million,” said Douglas S. Sharp,
senior vice-president of finance, chief financial officer and
treasurer. “We ended the quarter with working capital of $123.1
million and no debt, allowing us to continue to invest in the
business and return capital to stockholders through share
repurchases and dividends.”
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 2014 and answer questions from investment analysts. To
listen in, call 877-651-0053 and use conference i.d. number
23289133. 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. 23289133. The
webcast will be archived for one year.
Insperity, a trusted advisor to America’s best businesses for
more than 28 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
Insurances Services. Insperity business performance solutions
support more than 100,000 businesses with over 2 million employees.
With 2013 revenues of $2.3 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 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 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 and federal 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 acquisitions; (x)
failure of our information technology systems; and (xi) 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, 2014
December 31,2013
(Unaudited) Assets: Cash and cash equivalents $ 213,518 $
225,755 Restricted cash 52,162 51,928 Marketable securities 46,897
46,340 Accounts receivable, net 222,399 210,009 Prepaid insurance
34,793 10,638 Other current assets 19,228 12,053 Income taxes
receivable 9,040 409 Deferred income taxes
-
8,185 Total current assets 598,037 565,317
Property and equipment, net 83,933 86,415 Prepaid health insurance
9,000 9,000 Deposits 88,571 85,578 Goodwill and other intangible
assets, net 18,036 18,434 Other assets 1,812 1,816
Total assets $ 799,389 $ 766,560 Liabilities
and Stockholders' Equity: Accounts payable $ 2,591 $ 2,678 Payroll
taxes and other payroll deductions payable 163,985 165,604 Accrued
worksite employee payroll cost 187,311 173,801 Accrued health
insurance costs 25,708 5,103 Accrued workers’ compensation costs
53,387 52,930 Accrued corporate payroll and commissions 16,225
21,611 Other accrued liabilities 25,685 14,960 Total
current liabilities 474,892 436,687 Accrued workers’
compensation costs 71,285 68,905 Deferred income taxes 5,896
7,696 Total noncurrent liabilities 77,181 76,601
Stockholders’ equity: Common stock 308 308 Additional paid-in
capital 135,838 135,653 Treasury stock, at cost (150,039 ) (138,688
) Accumulated other comprehensive income, net of tax 26 29 Retained
earnings 261,183 255,970 Total stockholders’ equity
247,316 253,272 Total liabilities and stockholders’
equity $ 799,389 $ 766,560
Insperity, Inc.
Summary Financial Information
(in thousands, except per share amounts
and statistical data)
(Unaudited)
Three months
ended March 31, 2014 2013 Change Operating
results: Revenues (gross billings of $3.588 billion and $3.332
billion, less worksite employee payroll cost of $2.951 billion and
$2.270 billion, respectively) $ 636,999 $ 611,836 4.1 % Direct
costs: Payroll taxes, benefits and workers’ compensation costs
530,823 503,718 5.4 % Gross profit
106,176 108,118 (1.8 )% Operating expenses: Salaries, wages and
payroll taxes 51,032 48,211 5.9 % Stock-based compensation 2,400
2,310 3.9 % Commissions 3,246 3,207 1.2 % Advertising 4,941 5,250
(5.9 )% General and administrative expenses 22,732 21,986 3.4 %
Depreciation and amortization 5,234 5,145
1.7 % Total operating expenses 89,585
86,109 4.0 % Operating income 16,591 22,009 (24.6 )% Other
income (expense): Interest, net 47 69 (31.9 )% Other, net
(26 ) 9 (388.9 )% Income before income tax expense
16,612 22,087 (24.8 )% Income tax expense 7,048
8,914 (20.9 )% Net income $ 9,564 $ 13,173
(27.4 )% Less distributed and undistributed earnings
allocated to participating securities (282 ) (383 )
(26.4 )% Net income allocated to common shares $ 9,282 $
12,790 (27.4 )% Basic net income per share of common stock $
0.37 $ 0.51 (27.5 )% Diluted net income per share of
common stock $ 0.37 $ 0.51 (27.5 )%
Insperity, Inc.
Summary Financial Information
(in thousands, except per share amounts
and statistical data)
(Unaudited)
Three Months Ended March 31, 2014
2013 Change Statistical data: Average
number of worksite employees paid per month 126,289 123,391 2.3 %
Revenues per worksite employee per month(1) $ 1,681 $ 1,653 1.7 %
Gross profit per worksite employee per month 280 292 (4.1 )%
Operating expenses per worksite employee per month 236 233 1.3 %
Operating income per worksite employee per month 44 59 (25.4 )% Net
income per worksite employee per month 25 36 (30.6 )%
(1) Gross billings of $9,469 and $9,002
per worksite employee per month, less payroll cost of $7,788 and
$7,349 per worksite employee per month, respectively.
Insperity, Inc.
Summary Financial Information
(in thousands, except per share amounts
and statistical data)
(Unaudited)
Three Months Ended March 31,
2014 2013 Change Payroll cost (GAAP) $
2,950,568 $ 2,720,512 8.5 % Less: Bonus payroll cost 521,341
342,565 52.2 % Non-bonus payroll cost $ 2,429,227 $
2,377,947 2.2 % Payroll cost per worksite employee per month
(GAAP) $ 7,788 $ 7,349 6.0 % Less: Bonus payroll cost per worksite
employee per month 1,376 925 48.8 % Non-bonus payroll
cost per worksite employee per month $ 6,412 $ 6,424 (0.2 )%
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.
Three Months Ended March 31, 2014 2013
Change Net income (GAAP) $ 9,564 $ 13,173 (27.4 )%
Income tax expense 7,048 8,914 (20.9 )% Depreciation and
amortization 5,234 5,145 1.7 % Interest expense 89 88
1.1 % EBITDA 21,935 27,320 (19.7 )% Stock-based compensation
2,400 2,310 3.9 %
Adjusted EBITDA
$ 24,335 $ 29,630 (17.9 )%
Adjusted EBITDA represents net income
computed in accordance with generally accepted accounting
principles (“GAAP”), plus interest expense, income tax expense,
depreciation and amortization expense, and stock-based
compensation. Insperity management believes adjusted EBITDA 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 and capital and financing
transactions on earnings.
Non-bonus payroll and adjusted EBITDA are
not financial measures prepared in accordance with GAAP and may be
different from similar measures used by other companies. Non-bonus
payroll and adjusted EBITDA 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 adjusted EBITDA 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.
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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