- Q1 adjusted EPS up 105% over 2014 to
$0.86
- Q1 adjusted EBITDA increases 74% over
2014 to $42.3 million
- Q1 gross profit increases 22% on 10%
revenue growth
Insperity, Inc. (NYSE: NSP), a leading provider of human
resources and business performance solutions for America’s best
businesses, today reported first quarter adjusted EBITDA of $42.3
million, a 73.8% increase over the first quarter of 2014. Adjusted
net income was $21.6 million and adjusted diluted earnings per
share were $0.86, a 104.8% increase over the first quarter of 2014.
Reported first quarter GAAP net income and earnings per share were
$13.8 million and $0.54, respectively.
The number of worksite employees paid at the end of the quarter
increased 10% over the first quarter of 2014. This increase was the
result of improved new client sales and client retention. Net
hiring in the client base declined slightly when compared to the
2014 period.
“These record results demonstrate the earnings power of our
business model as unit growth accelerated to double digits with
effective client selection,” said Paul J. Sarvadi, Insperity
chairman and chief executive officer. “The combination of targeted
growth, proactive management of risk and operating leverage drove
this third consecutive quarter of outperformance.”
Adjusted EBITDA increased 73.8% over the first quarter of 2014
on a 22.3% increase in gross profit.
“Our successful year-end transition included a 23% reduction in
client attrition from the 2014 period, positively impacting
worksite employee growth and average pricing during the quarter,”
said Douglas S. Sharp, senior vice president of finance, chief
financial officer and treasurer. “This higher average pricing,
combined with low health care costs from the effective management
of health plan design and lower COBRA participation, drove the
better-than-expected gross profit results.”
Cash outlays in the first three months of 2015 included the
repurchase of 113,050 shares of stock at a cost of $5.7 million,
dividends totaling $4.8 million and capital expenditures of $2.4
million. Adjusted working capital increased by $18.3 million during
the quarter to $91.4 million at March 31, 2015.
2015 Guidance
The company also announced its updated guidance for 2015,
including guidance for the second quarter of 2015.
Q2 2015
Full Year 2015
Average WSEEs 141,000
-
142,400 144,000
-
146,400 Year-over-year increase 10%
-
11% 10%
-
12% Adjusted EPS $0.36
-
$0.40 $2.15
-
$2.24 Year-over-year increase 71%
-
90% 48%
-
54% Adjusted EBITDA (in millions) $20.0
-
$22.0 $112.0
-
$116.0 Year-over-year increase 38%
-
52% 33%
-
38%
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.
Insperity will be hosting a conference call today at 10 a.m. ET
to discuss these results, provide guidance for the second 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 24866062. 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.
24866062. 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 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) 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)
March 31,2015
December 31,2014
(Unaudited) Assets: Cash and cash equivalents $ 228,588 $
276,456 Restricted cash 45,152 44,040 Marketable securities 28,840
28,631 Accounts receivable, net 259,778 175,116 Prepaid insurance
36,660 21,301 Assets held for sale 13,495
-
Other current assets 21,080 17,649 Deferred income taxes
-
6,316 Total current assets 633,593 569,509 Property
and equipment, net 59,115 84,345 Prepaid health insurance 9,000
9,000 Deposits 119,340 117,634 Goodwill and other intangible
assets, net 14,232 14,457 Deferred income taxes 3,588
-
Other assets 1,753 1,725 Total assets $ 840,621
$ 796,670 Liabilities and Stockholders’ Equity:
Accounts payable $ 3,061 $ 4,674 Payroll taxes and other payroll
deductions payable 176,667 176,341 Accrued worksite employee
payroll cost 223,564 192,396 Accrued health insurance costs 25,589
18,329 Accrued workers’ compensation costs 47,225 45,592 Accrued
corporate payroll and commissions 23,068 32,644 Other accrued
liabilities 25,347 22,444 Deferred income taxes 6,944
-
Income taxes payable 280 4,031 Total current
liabilities 531,745 496,451 Accrued workers’ compensation costs
95,775 92,048 Deferred income taxes
-
4,075 Total noncurrent liabilities 95,775 96,123
Stockholders’ equity: Common stock 308 308 Additional paid-in
capital 140,963 137,769 Treasury stock, at cost (151,599 ) (148,465
) Accumulated other comprehensive income, net of tax 5 3 Retained
earnings 223,424 214,481 Total stockholders’ equity
213,101 204,096 Total liabilities and stockholders’
equity $ 840,621 $ 796,670
Insperity, Inc.
Summary Financial Information
(continued)
(in thousands, except per share amounts
and statistical data)
(Unaudited)
Three Months Ended March
31,
2015 2014 Change Operating
results:
Revenues (gross billings of $3.940 billion
and $3.588 billion, less worksite employee
payroll cost of $3.241 billion and $2.951
billion, respectively)
$ 699,479 $ 636,999 9.8 % Direct costs: Payroll taxes, benefits and
workers’ compensation costs 569,619 530,823 7.3 %
Gross profit 129,860 106,176 22.3 % Operating expenses: Salaries,
wages and payroll taxes 56,748 51,032 11.2 % Stock-based
compensation 2,423 2,400 1.0 % Commissions 4,304 3,246 32.6 %
Advertising 3,718 4,941 (24.8 )% General and administrative
expenses 24,055 22,732 5.8 % Depreciation and amortization 5,285
5,234 1.0 % Impairment charges and other 9,807
-
-
Total operating expenses 106,340 89,585 18.7 %
Operating income 23,520 16,591 41.8 % Other income (expense):
Interest, net 7 47 (85.1 )% Other, net
-
(26 ) (100.0 )% Income before income tax expense 23,527
16,612 41.6 % Income tax expense 9,740 7,048 38.2 %
Net income $ 13,787 $ 9,564 44.2 % Less distributed
and undistributed earnings allocated to participating securities
(355 )
(282
) 25.9 % Net income allocated to common shares $ 13,432 $
9,282 44.7 % Basic net income per share of common stock $
0.54 $ 0.37 45.9 % Diluted net income per share of
common stock $ 0.54 $ 0.37 45.9 %
Insperity, Inc.
Summary Financial Information
(continued)
(in thousands, except per share amounts
and statistical data)
(Unaudited)
Three Months Ended March 31, 2015
2014 Change Statistical Data:
Average number of worksite employees paid per month 137,959 126,289
9.2 % Revenues per worksite employee per month(1) $ 1,690 $ 1,681
0.5 % Gross profit per worksite employee per month 314 280 12.1 %
Operating expenses per worksite employee per month 257 236 8.9 %
Operating income per worksite employee per month 57 44 29.5 % Net
income per worksite employee per month 33 25 32.0 %
(1) Gross billings of $9,521 and $9,469
per worksite employee per month, less payroll cost of $7,831 and
$7,788 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, 2015
2014 Change Payroll cost (GAAP) $ 3,240,982 $
2,950,568 9.8 % Less: Bonus payroll cost 518,503
521,341 (0.5 )% Non-bonus payroll cost $ 2,722,479 $ 2,429,227 12.1
% Payroll cost per worksite employee per month (GAAP) $
7,831 $ 7,788 0.6 % Less: Bonus payroll cost per worksite employee
per month 1,253 1,376 (8.9 )% Non-bonus payroll cost
per worksite employee per month $ 6,578 $ 6,412 2.6 %
Non-bonus payroll cost represents payroll
cost excluding the impact of bonus payrolls paid to thecompany’s
worksite employees. Bonus payroll cost varies from period to
period, but has nodirect 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
andforecasting the company’s workers’ compensation costs.
March 31, 2015 December
31, 2014 Cash, cash equivalents and marketable
securities (GAAP) $ 257,428 $ 305,087
Less: Amounts payable for withheld federal
and state income taxes,
employment taxes and other payroll
deductions
158,596 152,132 Customer prepayments 22,743 87,887 Adjusted
cash, cash equivalents and marketable securities $ 76,089 $
65,068
Adjusted cash, cash equivalents and
marketable securities excludes funds associated with federaland
state income tax withholdings, employment taxes and other payroll
deductions, as well asclient prepayments. Insperity management
believes adjusted cash, cash equivalents andmarketable securities
is a useful measure of the company’s available funds.
March 31, 2015 December 31, 2014
Working capital (GAAP) $ 101,848 $ 73,058 Less: Assets held
for sale, net of current deferred tax liabilities 10,491
-
Adjusted working capital $ 91,357 $ 73,058
Adjusted working capital represents
working capital excluding assets held for sale that areclassified
as current assets and their associated current deferred tax
liabilities. Insperitymanagement believes adjusted working capital
is a useful measure of the company’s liquidity,as it allows for
additional analysis of the company’s liquidity separate from the
impactof this item.
Three Months Ended March 31,
2015 2014 Change
Operating expenses (GAAP) $ 106,340 $ 89,585 18.7 % Less:
Impairment charges and other 9,807
-
-
Stockholder advisory expenses 1,148
-
-
Adjusted operating expenses $ 95,385 $ 89,585 6.5 %
Adjusted operating expenses represent
operating expenses excluding the impact of impairmentand other
charges related to the valuation of aircraft held for sale and
stockholder advisoryexpenses. Insperity management
believes adjusted operating expenses is a useful measure of
thecompany’s operating costs, as it allows for additional analysis
of the company’s operatingexpenses separate from the impact of
these items.
Three Months Ended March
31,
2015 2014 Change Net
income (GAAP) $ 13,787 $ 9,564 44.2 % Income tax expense 9,740
7,048 38.2 % Interest expense 100 89 12.4 % Depreciation and
amortization 5,285 5,234 1.0 % EBITDA
28,912 21,935 31.8 % Impairment charges and other 9,807
-
-
Stock-based compensation 2,423 2,400 1.0 % Stockholder advisory
expenses 1,148
-
-
Adjusted EBITDA $ 42,290 $ 24,335 73.8 %
EBITDA represents net income computed in
accordance with generally accepted accountingprinciples (“GAAP”),
plus interest expense, income tax expense, depreciation and
amortizationexpense. Adjusted EBITDA represents EBITDA
plus non-cash impairment and other charges,costs associated with
stockholder advisory expenses and stock-based
compensation. Insperitymanagement believes EBITDA and
Adjusted EBITDA are often useful measures of thecompany’s operating
performance, as they allow for additional analysis of the
company’soperating results separate from the impact of these
items.
Three Months Ended March
31,
2015 2014 Change Net income (GAAP) $
13,787 $ 9,564 44.2 % Impairment charges and other, net of tax
5,747
-
-
Stock-based compensation, net of tax 1,420 1,382 2.7 % Stockholder
advisory expenses, net of tax 673
-
-
Adjusted net income $ 21,627 $ 10,946 97.6 %
Three Months Ended March 31, 2015 2014
Change Diluted net income per share of common stock
(GAAP) $ 0.54 $ 0.37 45.9 % Impairment charges and other, net of
tax 0.23
-
-
Stock-based compensation, net of tax 0.06 0.05 20.0 % Stockholder
advisory expenses, net of tax 0.03
-
-
Adjusted diluted net income per share of common stock $ 0.86
$ 0.42 104.8 %
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 valuation of aircraft
held for sale, 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 working capital, 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
working capital, 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.
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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