- Q3 Revenues increase 5%
- Q3 Adjacent business gross profit
contribution up 40%
- YTD Trained Business Performance
Advisor count reaches 302, up 28%
Insperity, Inc. (NYSE: NSP), a leading provider of human
resources and business performance solutions for America’s best
businesses, today reported results for the third quarter and nine
months ended September 30, 2013.
Third Quarter Results
For the third quarter, the company reported net income of $10.1
million and diluted earnings per share of $0.39.
“In the third quarter we achieved our goal of ramping up the
number of trained Business Performance Advisors and the
corresponding sales activity is following,” said Paul J. Sarvadi,
Insperity chairman and chief executive officer. “We are well
positioned for strong year-end sales, which will contribute to
worksite employee growth in 2014.”
Revenues for the third quarter of 2013 increased 5.5% over the
third quarter of 2012 due to a 1.7% increase in the average number
of worksite employees paid per month and a 3.6% increase in
revenues per worksite employee per month.
Gross profit decreased 1.0% compared to the third quarter of
2012 to $97.4 million on a higher deficit in the benefits cost
center. A high level of large health care claim activity led to a
2.7% decrease in the average gross profit per worksite employee per
month compared to the third quarter of 2012.
Operating expenses increased 1.3% over the third quarter of 2012
to $80.3 million. This increase included costs associated with the
hiring of additional Business Performance Advisors and the
company's health care reform strategy, partially offset by lower
incentive compensation and general and administrative costs.
Operating expenses per worksite employee per month decreased 0.5%
to $207 in the 2013 quarter compared to $208 in the 2012
quarter.
Year-to-Date Results
For the nine months ended September 30, 2013, the company
reported adjusted net income of $29.4 million and adjusted diluted
earnings per share of $1.14. These earnings exclude costs of $2.7
million, or $0.10 per share associated with the impairment charge
incurred in the second quarter related to the company's investment
in The Receivables Exchange. On a GAAP basis, net income for the
nine months ended September 30, 2013 was $26.7 million, or $1.04
per diluted share.
Year-to-date revenues were $1.7 billion, an increase of 4.5%
over the 2012 period. Gross profit for the nine months ended
September 30, 2013, increased 5.0% to $303.3 million. The average
gross profit per worksite employee per month increased $8, or 3.1%,
to $266 in the 2013 period from $258 in the 2012 period.
Year-to-date operating expenses increased 7.1% over the first
nine months of 2012 to $253.9 million. On a per worksite employee
per month basis, operating expenses increased 5.2% to $223 in the
2013 period from $212 in the 2012 period.
"We have generated adjusted EBITDA of $74 million through the
first nine months of 2013. This is a slight increase over 2012 in
spite of investments in the growth in the number of Business
Performance Advisors and our health care reform initiative," said
Douglas S. Sharp, senior vice-president of finance, chief financial
officer and treasurer. "During the 2013 period, we have returned
$30 million to stockholders through cash dividends and the
repurchase of 593,834 shares of stock. Our balance sheet remains
strong with $123 million of working capital and no debt, providing
us with the opportunity to continue share buybacks."
Insperity will be hosting a conference call today at 10 a.m. ET
to discuss these results, give guidance for the fourth quarter, and
answer questions from investment analysts. To listen in, call
877-651-0053 and use conference i.d. number 76599792. 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. 76599792, for one week. The webcast
will be archived for one year.
Insperity, a trusted advisor to America’s best businesses for
more than 27 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 OptimizationTM 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
Insurance Services. Insperity business performance solutions
support more than 100,000 businesses with over 2 million employees.
With 2012 revenues of $2.2 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) 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
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) September
30, December 31,
2013 2012 (Unaudited) Assets: Cash and cash
equivalents $ 161,842 $ 264,544 Restricted cash 50,317 47,149
Marketable securities 47,400 16,904 Accounts receivable, net
218,962 190,386 Prepaid insurance 17,349 15,620 Other current
assets 10,097 9,651 Deferred income taxes 3,451 7,211
Total current assets 509,418 551,465 Property and equipment,
net 89,044 93,942 Prepaid health insurance 9,000 9,000 Deposits
78,812 67,201 Goodwill and other intangible assets, net 22,275
23,775 Other assets 1,920 4,817 Total assets $
710,469 $ 750,200 Liabilities and
Stockholders' Equity: Accounts payable $ 3,311 $ 3,660 Payroll
taxes and other payroll deductions payable 102,288 178,534 Accrued
worksite employee payroll cost 184,142 150,070 Accrued health
insurance costs 6,824 13,942 Accrued workers’ compensation costs
52,312 49,484 Accrued corporate payroll and commissions 22,186
23,537 Other accrued liabilities 15,561 12,478 Income taxes payable
57 4,054 Total current liabilities 386,681 435,759
Accrued workers’ compensation costs 66,654 64,536 Deferred
income taxes 8,395 9,000 Total noncurrent liabilities
75,049 73,536 Stockholders’ equity: Common stock 308 308
Additional paid-in capital 134,781 133,207 Treasury stock, at cost
(141,401 ) (133,950 ) Accumulated other comprehensive income, net
of tax 23 16 Retained earnings 255,028 241,324 Total
stockholders’ equity 248,739 240,905 Total
liabilities and stockholders’ equity $ 710,469 $ 750,200
Insperity, Inc. Summary Financial
Information (continued) (in thousands, except per share
amounts and statistical data)
(Unaudited)
Three Months
Ended Nine Months
Ended September 30, September 30, 2013
2012
Change 2013 2012
Change Operating results:
Revenues (gross billings of $3.236 billion, $3.068 billion, $9.736
billion and $9.339 billion, less worksite employee payroll cost of
$2.696 billion, $2.556 billion, $8.037 billion and $7.712 billion,
respectively) $ 539,869 $ 511,953 5.5 % $ 1,698,979 $ 1,626,386 4.5
% Direct costs: Payroll taxes, benefits and workers’ compensation
costs 442,460 413,533 7.0 % 1,395,706
1,337,668 4.3 % Gross profit 97,409 98,420 (1.0 )% 303,273
288,718 5.0 % Operating expenses: Salaries, wages and payroll taxes
43,797 44,032 (0.5 )% 137,697 127,402 8.1 % Stock-based
compensation 2,749 2,429 13.2 % 8,351 7,385 13.1 % Commissions
3,609 3,358 7.5 % 10,349 10,299 0.5 % Advertising 4,273 3,680 16.1
% 19,243 17,001 13.2 % General and administrative expenses 20,567
21,122 (2.6 )% 62,592 61,694 1.5 % Depreciation and amortization
5,302 4,659 13.8 % 15,692 13,336 17.7 %
Total operating expenses 80,297 79,280 1.3 % 253,924
237,117 7.1 % Operating income 17,112 19,140 (10.6 )%
49,349 51,601 (4.4 )% Other income (expense): Interest, net 26 142
(81.7 )% 155 462 (66.5 )% Other, net (1 ) (3 ) (66.7 )% (2,668 )
141
-
Income before income tax expense 17,137 19,279 (11.1 )% 46,836
52,204 (10.3 )% Income tax expense 7,055 7,827 (9.9
)% 20,093 21,247 (5.4 )% Net income
$
10,082
$
11,452
(12.0 )%
$
26,743
$
30,957
(13.6 )% Less distributed and undistributed earnings
allocated to participating securities (289 ) (334 ) (13.5 )% (769 )
(898 ) (14.4 )% Net income allocated to common shares
$
9,793
$
11,118
(11.9 )%
$
25,974
$
30,059
(13.6 )% Basic net income per share of common stock
$
0.39
$
0.45
(13.3 )%
$
1.05
$
1.20
(12.5 )% Diluted net income per share of common stock $ 0.39
$ 0.45 (13.3 )% $ 1.04 $ 1.20 (13.3 )%
Insperity, Inc. Summary Financial
Information (continued) (in thousands, except per share
amounts and statistical data) (Unaudited)
Three Months Ended
Nine Months Ended September 30,
September 30, 2013
2012 Change 2013
2012
Change Statistical Data: Average number of worksite
employees paid per month 129,248 127,096 1.7 % 126,445 124,418 1.6
% Revenues per worksite employee per month(1) $ 1,392 $ 1,343 3.6 %
$ 1,493 $ 1,452 2.8 % Gross profit per worksite employee per month
251 258 (2.7 )% 266 258 3.1 % Operating expenses per worksite
employee per month 207 208 (0.5 )% 223 212 5.2 % Operating income
per worksite employee per month 44 50 (12.0 )% 43 46 (6.5 )% Net
income per worksite employee per month 26 30 (13.3 )% 23 28 (17.9
)%
(1)
Gross billings of $8,346, $8,047, $8,555 and $8,340
per worksite employee per month, less payroll cost of
$6,954, $6,704, $7,062 and $6,888 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
Nine Months Ended September 30, September
30, 2013 2012
Change 2013
2012 Change
Payroll cost (GAAP) $ 2,696,330 $ 2,556,114 5.5 % $ 8,036,532 $
7,712,302 4.2 % Less: Bonus payroll cost 192,868
156,723 23.1 % 706,795 728,589 (3.0 )% Non-bonus
payroll cost $ 2,503,462 $ 2,399,391 4.3 % $ 7,329,737 $ 6,983,713
5.0 % Payroll cost per worksite employee per month (GAAP) $
6,954 $ 6,704 3.7 % $ 7,062 $ 6,888 2.5 % Less: Bonus payroll cost
per worksite employee per month 498 411 21.2 %
621 651 (4.6 )% Non-bonus payroll cost per worksite employee
per month $ 6,456 $ 6,293 2.6 % $ 6,441 $ 6,237 3.3 %
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
Nine Months Ended
September 30,
September 30,
2013 2012
Change 2013
2012 Change Net
income (GAAP) $ 10,082 $ 11,452 (12.0 )% $ 26,743 $ 30,957 (13.6 )%
Income tax expense 7,055 7,827 (9.9 )% 20,093 21,247 (5.4 )%
Interest expense 88 89 (1.1 )% 264 265 (0.4 )% Depreciation and
amortization 5,302 4,659 13.8 % 15,692
13,336 17.7 % EBITDA 22,527 24,027 (6.2 )% 62,792 65,805 (4.6 )%
Impairment charge
-
-
-
2,679
-
-
Stock-based compensation 2,749 2,429 13.2 %
8,351 7,385 13.1 % Adjusted EBITDA $ 25,276 $ 26,456 (4.5 )%
$ 73,822 $ 73,190 0.9 %
EBITDA represents net income computed in accordance with
generally accepted accounting principles (“GAAP”), plus interest
expense, income tax expense, depreciation and amortization expense.
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 taxes and capital and financing
transactions on earnings.
Three Months
Ended Nine Months Ended September 30,
September 30, 2013 2012 Change
2013 2012 Change Net income (GAAP) $
10,082 $ 11,452 (12.0 )% $ 26,743 $ 30,957 (13.6 )% Impairment
charge
-
-
-
2,679
-
-
Adjusted net income $ 10,082 $ 11,452 (12.0 )% $ 29,422 $ 30,957
(5.0 )%
Three Months Ended Nine Months Ended
September 30, September 30, 2013 2012
Change 2013 2012 Change Diluted
net income per share of common stock (GAAP) $ 0.39 $ 0.45 (13.3 )%
$ 1.04 $ 1.20 (13.3 )% Impairment charge
-
-
-
0.10
-
-
Adjusted diluted net income per share of common stock $ 0.39 $ 0.45
(13.3 )% $ 1.14 $ 1.20 (5.0 )%
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 the
impairment charge related to The Receivables Exchange. 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 the
impairment.
Non-bonus payroll, 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, 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. Insperity
includes non-bonus payroll, EBITDA, adjusted EBITDA, adjusted net
income and adjusted diluted net income per share of common stock 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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