Insperity, Inc. (NYSE: NSP), a leading provider of human
resources and business performance solutions for America’s best
businesses, today reported results for the fourth quarter and year
ended Dec. 31, 2021. Insperity will be hosting a conference call
today at 5 p.m. ET to discuss these results and our 2022 outlook,
and has posted an accompanying presentation to its investor website
at http://ir.insperity.com.
- 2021 average number of paid WSEEs and revenues up 7% and 16%,
respectively
- 2021 net income and diluted EPS of $124.1 million and $3.18,
respectively
- 2021 adjusted EBITDA and adjusted EPS of $254.9 million and
$3.95, respectively
- Continued strong sales and client retention drives 2022
worksite employee forecast to range of 14.5% to 16.5%
Fourth Quarter Results
Worksite employee (“WSEE”) growth continued to accelerate with a
Q4 2021 increase of 12.4% over Q4 2020, above the high end of our
expected range. Revenues in Q4 2021 increased 22% to $1.3 billion
on the 12% increase in paid WSEEs and a 9% increase in revenue per
WSEE, which reflects a 5% increase in pricing and the
non-recurrence of the 2020 FICA deferral credits instituted as part
of the CARES Act.
“Our growth acceleration driven by the improved sales efficiency
of our Business Performance Advisors, a high level of client
retention and strong hiring by our clients sets us up for
impressive growth in 2022,” said Paul J. Sarvadi, Insperity
chairman and chief executive officer. “Insperity is poised to
capitalize on increased awareness and demand for our premium HR
services, when combined with outstanding sales and service
execution, positions us for an excellent start to our new five year
plan.”
In addition to the WSEE growth, our payroll tax and workers’
compensation areas contributed favorably to Q4 2021 gross profit,
and operating costs were managed to forecasted levels. However,
approximately $27 million in higher benefits costs driven by
utilization related to the ongoing pandemic, including treatment,
vaccination and testing costs associated with the recent COVID-19
variants, more than offset these favorable results and led to a Q4
2021 earnings shortfall from our expectations. Accordingly, Q4 2021
net income and diluted EPS were $9.7 million and $0.25,
respectively. Adjusted EBITDA and adjusted EPS were $30.4 million
and $0.34, respectively.
“We continued to produce strong cash flow through a difficult
period allowing us to invest in our business while returning $214
million to our shareholders through our regular dividend program, a
special $2 per share dividend at year-end and ongoing share
repurchases,” said Douglas S. Sharp, senior vice president of
finance, chief financial officer and treasurer. “We ended 2021 with
a solid balance sheet and are projecting continued strong cash flow
in 2022 as we execute on our long-term strategy.”
Full Year Results
Reported net income and diluted earnings per share (“EPS”) were
$124.1 million and $3.18, respectively. Adjusted EBITDA and
adjusted EPS were $254.9 million and $3.95, respectively.
The average number of WSEEs paid per month increased 7% over
2020 to 250,745 WSEEs. Revenues in 2021 increased by 16% to $5.0
billion on the 7% increase in paid WSEEs and an 8% increase in
revenue per WSEE, which reflects a 5% increase in pricing and the
non-recurrence of the 2020 FICA deferral credits instituted as part
of the CARES Act.
Gross profit per WSEE per month of $273 came in slightly higher
than budget for 2021, declining from $287 in 2020, a period with
unusually low healthcare utilization.
Operating expenses increased 6% over 2020 to $646.8 million and
included increased compensation costs associated with the
acceleration of our growth, increased investment in marketing, and
increased travel and event costs from the unusual low levels at the
outset of the pandemic in 2020.
Cash outlays in 2021 included dividends totaling $144.2 million,
including both our regular quarterly dividend and the $2.00 per
share special dividend declared in December. We also repurchased
approximately 716,000 shares of our common stock at a cost of $69.7
million and had capital expenditures of $32.9 million. Adjusted
cash, cash equivalents and marketable securities at Dec. 31, 2021
was $162.7 million and $369.4 million was outstanding under our
$500 million credit facility.
2022 Guidance
The company also announced its guidance for 2022, including the
first quarter of 2022. 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.
Q1 2022
Full Year 2022
Average WSEEs paid
275,100
—
277,500
287,100
—
292,200
Year-over-year increase
18.0%
—
19.0%
14.5%
—
16.5%
Adjusted EPS
$1.56
—
$2.12
$3.74
—
$4.86
Year-over-year increase (decrease)
(14)%
—
16%
(5)%
—
23%
Adjusted EBITDA (in millions)
$95
—
$125
$251
—
$311
Year-over-year increase (decrease)
(9)%
—
20%
(2)%
—
22%
Definition of Key Metrics
Average WSEEs paid - Determined by calculating the company’s
cumulative WSEEs 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
stock-based compensation.
Adjusted EBITDA - Represents net income computed in accordance
with GAAP, plus interest expense, income taxes, depreciation and
amortization expense and non-cash stock-based compensation.
Insperity will be hosting a conference call today at 5 p.m. ET
to discuss these results, provide guidance for the first quarter
and full year 2022 and answer questions from investment analysts.
To listen in, call 833-797-3715 and use conference i.d. number
4079734. 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. 4079734. The webcast will be archived
for one year.
About Insperity
Since 1986, Insperity’s mission has been to help businesses
succeed so communities prosper. Offering the most comprehensive
suite of scalable HR solutions available in the marketplace,
Insperity is defined by an unrivaled breadth and depth of services
and level of care. Through an optimal blend of premium HR service
and technology, Insperity delivers the administrative relief,
reduced liabilities and better benefit solutions that businesses
need for sustained growth. With 2021 revenues of $5.0 billion and
more than 80 offices throughout the U.S., Insperity is currently
making a difference in thousands of businesses and communities
nationwide. For more information, visit
http://www.insperity.com.
Forward-Looking Statements
The statements contained herein that are not historical facts
are forward-looking statements within the meaning of the 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 “anticipates,” “expects,” “intends,”
“plans,” “projects,” “believes,” “estimates,” “likely,” “possibly,”
“probably,” “could,” “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, in an effort to help keep our stockholders and the public
informed about our operations, from time to time, we may 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, average number of worksite employees, benefits and
workers’ compensation costs, or other operating results. We base
the forward-looking statements on our current expectations,
estimates and projections. We caution you that these statements are
not guarantees of future performance and involve risks,
uncertainties and assumptions 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:
- adverse economic conditions;
- impact of the COVID-19 pandemic, or other future pandemics,
including the scope, severity and duration of the pandemic;
government responses; regulatory developments; and the related
disruptions and economic impact to our business and the small and
medium-sized businesses that we serve;
- labor shortages and increasing competition for highly skilled
workers;
- vulnerability to regional economic factors because of our
geographic market concentration;
- failure to comply with covenants under our credit
facility;
- our liability for WSEE payroll, payroll taxes and benefits
costs, or other liabilities associated with actions of our client
companies or WSEEs;
- 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;
- an adverse determination regarding our status as the employer
of our WSEEs for tax and benefit purposes and an inability to offer
alternative benefit plans following such a determination;
- cancellation of client contracts on short notice, or the
inability to renew client contracts or attract new clients;
- the ability to secure competitive replacement contracts for
health insurance and workers’ compensation insurance at expiration
of current contracts;
- regulatory and tax developments and possible adverse
application of various federal, state and local regulations;
- failure to manage growth of our operations and the
effectiveness of our sales and marketing efforts;
- the impact of the competitive environment and other
developments in the human resources services industry, including
the PEO industry, on our growth and/or profitability;
- an adverse final judgment or settlement of claims against
Insperity;
- disruptions of our information technology systems or failure to
enhance our service and technology offerings to address new
regulations or client expectations;
- our liability or damage to our reputation relating to
disclosure of sensitive or private information as a result of data
theft, cyberattacks or security vulnerabilities;
- failure of third-party providers, data centers or cloud service
providers; and
- our ability to integrate or realize expected returns on our
acquisitions.
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.
Any forward-looking statements are made only as of the date
hereof and, unless otherwise required by applicable securities
laws, we undertake no obligation to update or revise any
forward-looking statements, whether as a result of new information,
future events or otherwise.
Insperity, Inc.
CONDENSED CONSOLIDATED BALANCE
SHEETS
Dec. 31,
Dec. 31,
(in thousands)
2021
2020
Assets
Cash and cash equivalents
$
575,812
$
554,846
Restricted cash
46,929
45,522
Marketable securities
31,791
34,529
Accounts receivable, net
513,306
392,746
Prepaid insurance
11,285
10,164
Other current assets
53,312
39,461
Income taxes receivable
12,413
—
Total current assets
1,244,848
1,077,268
Property and equipment, net
210,723
216,256
Right-of-use leased assets
62,830
60,663
Prepaid health insurance
9,000
9,000
Deposits
192,927
194,231
Goodwill and other intangible assets,
net
12,707
12,707
Deferred income taxes, net
4,892
9,603
Other assets
15,158
4,548
Total assets
$
1,753,085
$
1,584,276
Liabilities and stockholders'
equity
Accounts payable
$
6,412
$
6,203
Payroll taxes and other payroll deductions
payable
467,892
377,960
Accrued worksite employee payroll cost
409,653
334,836
Accrued health insurance costs
50,001
32,685
Accrued workers’ compensation costs
50,534
48,186
Accrued corporate payroll and
commissions
74,778
44,277
Other accrued liabilities
69,303
60,777
Total current liabilities
1,128,573
904,924
Accrued workers’ compensation costs, net
of current
192,694
195,239
Long-term debt
369,400
369,400
Operating lease liabilities, net of
current
64,192
64,289
Other accrued liabilities, net of
current
—
6,292
Total noncurrent liabilities
626,286
635,220
Stockholders’ equity (deficit):
Common stock
555
555
Additional paid-in capital
109,179
95,528
Treasury stock, at cost
(665,089
)
(626,984
)
Accumulated other comprehensive income
(loss), net of tax
(9
)
5
Retained earnings
553,590
575,028
Total stockholders' equity
(deficit)
(1,774
)
44,132
Total liabilities and stockholders’
equity
$
1,753,085
$
1,584,276
Insperity, Inc.
CONSOLIDATED STATEMENTS OF
OPERATIONS
Three Months Ended Dec.
31,
Year Ended Dec. 31,
(in thousands, except per share
amounts)
2021
2020
Change
2021
2020
Change
Operating results:
Revenues(1)
$
1,291,236
$
1,056,335
22.2
%
$
4,973,070
$
4,287,004
16.0
%
Payroll taxes, benefits and workers’
compensation costs
1,120,612
888,785
26.1
%
4,152,968
3,480,150
19.3
%
Gross profit
170,624
167,550
1.8
%
820,102
806,854
1.6
%
Salaries, wages and payroll taxes
92,502
86,633
6.8
%
379,171
353,273
7.3
%
Stock-based compensation
4,658
22,035
(78.9
) %
40,623
60,145
(32.5
) %
Commissions
10,228
9,178
11.4
%
34,922
32,835
6.4
%
Advertising
5,293
6,222
(14.9
) %
29,097
21,556
35.0
%
General and administrative expenses
32,432
27,913
16.2
%
124,413
113,167
9.9
%
Depreciation and amortization
10,832
7,860
37.8
%
38,547
31,189
23.6
%
Total operating expenses
155,945
159,841
(2.4
) %
646,773
612,165
5.7
%
Operating income
14,679
7,709
90.4
%
173,329
194,689
(11.0
) %
Other income (expense):
Interest income
217
246
(11.8
) %
2,447
2,597
(5.8
) %
Interest expense
(1,921
)
(1,704
)
12.7
%
(7,458
)
(8,016
)
(7.0
) %
Income before income tax
expense
12,975
6,251
107.6
%
168,318
189,270
(11.1
) %
Income tax expense
3,267
1,966
66.2
%
44,238
51,033
(13.3
) %
Net income
$
9,708
$
4,285
126.6
%
$
124,080
$
138,237
(10.2
) %
Less distributed and undistributed
earnings allocated to participating securities
(129
)
(78
)
65.4
%
(210
)
(782
)
(73.1
) %
Net income allocated to common
shares
$
9,579
$
4,207
127.7
%
$
123,870
$
137,455
(9.9
) %
Net income per share of common
stock
Basic
$
0.25
$
0.11
127.3
%
$
3.22
$
3.57
(9.8
) %
Diluted
$
0.25
$
0.11
127.3
%
$
3.18
$
3.54
(10.2
) %
____________________________________
(1)
Revenues are comprised of gross billings
less WSEE payroll costs as follows:
Three Months Ended Dec.
31,
Year Ended Dec. 31,
(in thousands)
2021
2020
2021
2020
Gross billings
$
9,636,414
$
7,812,447
$
33,318,693
$
28,168,611
Less: WSEE payroll cost
8,345,178
6,756,112
28,345,623
23,881,607
Revenues
$
1,291,236
$
1,056,335
$
4,973,070
$
4,287,004
Insperity, Inc.
KEY FINANCIAL AND STATISTICAL
DATA
Three Months Ended Dec.
31,
Year Ended Dec. 31,
2021
2020
Change
2021
2020
Change
Average WSEEs paid
268,978
239,232
12.4
%
250,745
234,223
7.1
%
Statistical data (per WSEE per
month):
Revenues(1)
$
1,600
$
1,472
8.7
%
$
1,653
$
1,525
8.4
%
Gross profit
211
233
(9.4
) %
273
287
(4.9
) %
Operating expenses
193
222
(13.1
) %
215
218
(1.4
) %
Operating income
18
11
63.6
%
58
69
(15.9
) %
Net income
12
6
100.0
%
41
49
(16.3
) %
____________________________________
(1)
Revenues per WSEE per month are comprised
of gross billings per WSEE per month less WSEE payroll costs per
WSEE per month follows:
Three Months Ended Dec.
31,
Year Ended Dec. 31,
(per WSEE per month)
2021
2020
2021
2020
Gross billings
$
11,942
$
10,885
$
11,073
$
10,022
Less: WSEE payroll cost
10,342
9,413
9,420
8,497
Revenues
$
1,600
$
1,472
$
1,653
$
1,525
Insperity, Inc. Non-GAAP Financial Measures
(Unaudited)
Non-GAAP financial measures are not prepared in accordance with
GAAP and may be different from non-GAAP financial measures used by
other companies. Non-GAAP financial measures 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 to their most directly comparable GAAP
financial measures as provided in the tables below.
Non-GAAP Measure
Definition
Benefit of Non-GAAP Measure
Non-bonus payroll cost
Non-bonus payroll cost is a non-GAAP
financial measure that excludes the impact of bonus payrolls paid
to our WSEEs.
Bonus payroll cost varies from period to
period, but has no direct impact to our ultimate workers’
compensation costs under the current program.
Our management refers to non-bonus payroll
cost in analyzing, reporting and forecasting our workers’
compensation costs.
We include these non-GAAP financial
measures because we believe they are useful to investors in
allowing for greater transparency related to the costs incurred
under our current workers’ compensation program.
Adjusted cash, cash equivalents and
marketable securities
Excludes funds associated with:
• federal and state income tax
withholdings,
• employment taxes,
• other payroll deductions, and
• client prepayments.
We believe that the exclusion of the
identified items helps us reflect the fundamentals of our
underlying business model and analyze results against our
expectations, against prior periods, and to plan for future periods
by focusing on our underlying operations. We believe that the
adjusted results provide relevant and useful information for
investors because they allow investors to view performance in a
manner similar to the method used by management and improves their
ability to understand and assess our operating performance.
Adjusted EBITDA is used by our lenders to assess our leverage and
ability to make interest payments.
EBITDA
Represents net income computed in
accordance with GAAP, plus:
• interest expense,
• income tax expense, and
• depreciation and amortization
expense.
Adjusted EBITDA
Represents EBITDA plus:
• non-cash stock based compensation.
Adjusted net income
Represents net income computed in
accordance with GAAP, excluding:
• non-cash stock based compensation.
Adjusted EPS
Represents diluted net income per share
computed in accordance with GAAP, excluding:
• non-cash stock based compensation,
• impact of dividends exceeding earnings
under the two-class earnings per share method.
Following is a reconciliation of payroll cost (GAAP) to
non-bonus payroll costs (non-GAAP):
Three Months Ended Dec.
31,
Year Ended Dec. 31,
(in thousands, except per WSEE per
month)
2021
2020
2021
2020
Per
WSEE
Per
WSEE
Per
WSEE
Per
WSEE
Payroll cost
$
8,345,178
$
10,342
$
6,756,112
$
9,414
$
28,345,623
$
9,420
$
23,881,607
$
8,497
Less: Bonus payroll cost
1,776,400
2,202
1,302,334
1,815
4,719,217
1,568
3,238,284
1,152
Non-bonus payroll cost
$
6,568,778
$
8,140
$
5,453,778
$
7,599
$
23,626,406
$
7,852
$
20,643,323
$
7,345
% Change period over period
20.4
%
7.1
%
2.8
%
4.8
%
14.5
%
6.9
%
3.1
%
3.7
%
Following is a reconciliation of cash, cash equivalents and
marketable securities (GAAP) to adjusted cash, cash equivalents and
marketable securities (non-GAAP):
(in thousands)
December 31,
2021
December 31,
2020
Cash, cash equivalents and marketable
securities
$
607,603
$
589,375
Less:
Amounts payable for withheld federal and
state income taxes, employment taxes and other payroll
deductions
424,800
341,988
Client prepayments
20,054
35,328
Adjusted cash, cash equivalents and
marketable securities
$
162,749
$
212,059
Following is a reconciliation of net income (GAAP) to EBITDA
(non-GAAP) and adjusted EBITDA (non-GAAP):
Three Months Ended Dec.
31,
(in thousands, except per WSEE per
month)
2021
2020
Per WSEE
Per WSEE
Net income
$
9,708
$
12
$
4,285
$
6
Income tax expense
3,267
5
1,966
3
Interest expense
1,921
2
1,704
2
Depreciation and amortization
10,832
13
7,860
11
EBITDA
25,728
32
15,815
22
Stock-based compensation
4,658
6
22,035
31
Adjusted EBITDA
$
30,386
$
38
$
37,850
$
53
% Change period over period
(19.7
) %
(28.3
) %
(7.1
) %
(5.4
) %
(in thousands, except per WSEE per
month)
Year Ended December
31,
2021
2020
Per WSEE
Per WSEE
Net income
$
124,080
$
41
$
138,237
$
49
Income tax expense
44,238
15
51,033
19
Interest expense
7,458
2
8,016
3
Depreciation and amortization
38,547
13
31,189
11
EBITDA
214,323
71
228,475
82
Stock-based compensation
40,623
14
60,145
21
Adjusted EBITDA
$
254,946
$
85
$
288,620
$
103
% Change year over year
(11.7
) %
(17.5
) %
15.4
%
17.0
%
Following is a reconciliation of net income (GAAP) to adjusted
net income (non-GAAP):
Three Months Ended
Dec. 31,
Year Ended Dec. 31,
(in thousands)
2021
2020
2021
2020
Net income
$
9,708
$
4,285
$
124,080
$
138,237
Non-GAAP adjustments:
Stock-based compensation
4,658
22,035
40,623
60,145
Tax effect
(1,191
)
(6,934
)
(10,677
)
(17,068
)
Total non-GAAP adjustments, net
3,467
15,101
29,946
43,077
Adjusted net income
$
13,175
$
19,386
$
154,026
$
181,314
% Change period over period
(32.0
) %
(14.8
) %
(15.1
) %
7.0
%
Following is a reconciliation of diluted EPS (GAAP) to adjusted
EPS (non-GAAP):
Three Months Ended
Dec. 31,
Year Ended
Dec. 31,
2021
2020
2021
2020
Diluted EPS
$
0.25
$
0.11
$
3.18
$
3.54
Non-GAAP adjustments:
Stock-based compensation
0.12
0.56
1.04
1.54
Impact of dividends exceeding earnings
0.01
—
—
—
Tax effect
(0.04
)
(0.18
)
(0.27
)
(0.44
)
Total non-GAAP adjustments, net
0.09
0.38
0.77
1.10
Adjusted EPS
$
0.34
$
0.49
$
3.95
$
4.64
% Change period over period
(30.6
) %
(14.0
) %
(14.9
) %
11.8
%
The following is a reconciliation of GAAP to non-GAAP financial
measures for first quarter and full year 2022 guidance:
Q1 2022
Full Year 2022
(in millions, except per share
amounts)
Guidance
Guidance
Net income
$54 - $76
$112 - $156
Income tax expense
20 - 28
41- 57
Interest expense
2
8
SaaS implementation amortization
—
1
Depreciation and amortization
10
42
EBITDA
86 - 116
204 - 264
Stock-based compensation
9
47
Adjusted EBITDA
$95 - $125
$251 - $311
Diluted EPS
$1.39 - $1.95
$2.86 - $3.98
Non-GAAP adjustments:
Stock-based compensation
0.23
1.21
Tax effect
(0.06)
(0.33)
Total non-GAAP adjustments, net
0.17
0.88
Adjusted EPS
$1.56 - $2.12
$3.74 - $4.86
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220210005709/en/
Investor Relations Contact: Douglas S. Sharp Senior Vice President
of Finance, Chief Financial Officer and Treasurer (281) 348-3232
Investor.Relations@Insperity.com
News Media Contact: Larry Shaffer SVP of Marketing and
Business Development (281) 312-3020 Media@Insperity.com
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