Insperity, Inc. (NYSE: NSP), a leading provider of human
resources and business performance solutions for America’s best
businesses, today reported results for the second quarter ended
June 30, 2024. Insperity will be hosting a conference call today at
8:30 a.m. ET to discuss these results and our updated 2024 outlook
and will be posting an accompanying presentation to its investor
website at http://ir.insperity.com.
- Q2 average number of WSEEs paid within our expected range, down
1% year-over-year
- Q2 gross profit up 16% to $260 million on continued strong
pricing and lower benefits costs
- Q2 net income of $18 million; diluted EPS of $0.48
- Q2 adjusted EPS increased 34% to $0.86; adjusted EBITDA
increased 29% to $66 million
- Return to shareholders of $81 million during the first six
months of 2024 through the repurchase of 384,000 shares at a cost
of $37 million and $44 million in cash dividends
Second Quarter Results
The average number of worksite employees (“WSEE”) paid per month
decreased 1% from Q2 2023 to 306,958 WSEEs. We continued to
experience a significantly lower level of net hiring in the client
base in Q2 2024 when compared to Q2 2023. Worksite employees paid
from new clients was at a similar level compared to Q2 2023 and
client retention remained at 99%. Revenues in Q2 2024 increased 1%
to $1.6 billion on a 3% increase in revenue per WSEE, partially
offset by the 1% decrease in paid WSEEs.
“We are pleased with our strong financial performance in Q2 and
the first half of the year in a challenging economic environment in
our target small and medium size business marketplace,” said Paul
J. Sarvadi, Insperity chairman and chief executive officer. “We are
focused on capitalizing on our market opportunity in the second
half of 2024 as we look to reestablish solid growth next year and
beyond.”
Gross profit increased 16% over Q2 2023 to $260 million on a 17%
increase in gross profit per WSEE per month, partially offset by
the 1% decrease in paid WSEEs. This increase resulted primarily
from higher average pricing and lower benefits costs, when compared
to Q2 2023, a period which included a spike in healthcare
costs.
Operating expenses increased 13% over Q2 2023 and included costs
associated with the implementation of our Workday strategic
partnership, along with continued investment in our long-term
growth, and service and technology offerings.
Second quarter’s effective tax rate came in at 28%, above Q2
2023’s rate of 25%.
Reported net income and diluted earnings per share (“EPS”) were
$18 million and $0.48, respectively. Adjusted EPS and adjusted
EBITDA were $0.86 and $66 million, respectively.
Year-to-Date Results
The average number of WSEEs paid per month decreased 1% from
2023 to 305,431 WSEEs. Revenues increased by 2% to $3.4 billion on
the 1% decrease in paid WSEEs and a 3% increase in revenue per
WSEE.
Gross profit increased 9% on a 10% increase in gross profit per
WSEE per month, primarily due to increased pricing and more
favorable results from our benefits costs program.
Operating expenses increased 13% over the 2023 period. This
increase included $19 million associated with the implementation of
our Workday strategic partnership and ongoing investments in our
sales, service and technology areas. Operating expenses have also
been impacted by the current inflationary environment, particularly
in areas such as corporate salaries and wages, technology costs and
travel and training costs.
Reported net income and diluted EPS were $97 million and $2.56,
respectively. Adjusted EPS and Adjusted EBITDA were $3.13 and $208
million, respectively.
Cash outlays in the first six months of 2024 included the
repurchase of approximately 384,000 shares of our common stock at a
cost of $37 million, dividends totaling $44 million, and capital
expenditures of $11 million. Adjusted cash at June 30, 2024 totaled
$211 million and $280 million remains available under our $650
million credit facility.
“While worksite employee growth has been a challenge in the
current small business environment, year-to-date earnings have
exceeded our initial budget through effective management of
pricing, direct cost and operating expenses,” said Douglas S.
Sharp, executive vice president of finance, chief financial officer
and treasurer. “Our plan for the remainder of the year addresses
the current business environment, and we remain focused on our
long-term growth objectives, including our Workday strategic
partnership.”
2024 Guidance
The company also announced its updated guidance for 2024,
including the third quarter of 2024. 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.
Q3 2024
Full Year 2024
Average WSEEs paid
307,500
—
310,600
307,400
—
310,600
Year-over-year decrease
(2.5)%
—
(1.5)%
(1.5)%
—
(0.5)%
Adjusted EPS
$0.21
—
$0.45
$3.33
—
$3.88
Year-over-year decrease
(86)%
—
(69)%
(40)%
—
(30)%
Adjusted EBITDA (in millions)
$32
—
$45
$261
—
$290
Year-over-year decrease
(66)%
—
(52)%
(26)%
—
(18)%
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, amortization of SaaS implementation costs and
non-cash stock-based compensation.
Conference Call and Webcast
Insperity will be hosting a conference call today at 8:30 a.m.
ET to discuss these results and the guidance discussed in this
press release, and answer questions from investment analysts. To
listen in, call 888-506-0062 and use conference i.d. number 470125.
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
877-481-4010, conference i.d. number 50892. 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 2023 revenues of $6.5 billion and
more than 90 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 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, including
our strategic partnership with Workday, Inc.; 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
these 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;
- failure to comply with or meet client expectations regarding
certain COVID-19 relief programs;
- bank failures or other events affecting financial institutions;
labor shortages, increasing competition for highly skilled workers,
and evolving employee expectations regarding the workplace;
- vulnerability to regional economic factors because of our
geographic market concentration;
- failure to comply with covenants under our credit
facility;
- impact of a future outbreak of highly infectious or contagious
disease;
- our liability for WSEE payroll, payroll taxes and benefits
costs, or other liabilities associated with actions of our client
companies or WSEEs, including if our clients fail to pay us;
- 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, such as financial
institutions, data centers or cloud service providers;
- our ability to fully realize the anticipated benefits of our
strategic partnership and plans to develop a joint solution with
Workday, Inc.; and
- our ability to integrate or realize expected returns on future
product offerings, including through acquisitions, strategic
partnerships, and investments.
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
(Unaudited)
June 30, 2024
December 31, 2023
(in millions)
Assets
Cash and cash equivalents
$
676
$
693
Marketable securities
16
16
Accounts receivable, net
740
694
Other current assets
189
192
Total current assets
1,621
1,595
Long-term assets
474
525
Total assets
$
2,095
$
2,120
Liabilities and stockholders'
equity
Payroll taxes and other payroll deductions
payable
$
504
$
566
Accrued worksite employee payroll cost
627
559
Other current liabilities
252
311
Total current liabilities
1,383
1,436
Long-term debt
369
369
Other long-term liabilities
201
221
Total noncurrent liabilities
570
590
Stockholders’ equity
142
94
Total liabilities and stockholders’
equity
$
2,095
$
2,120
Insperity, Inc.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
Three Months Ended
June 30,
Six Months Ended
June 30,
(in millions, except per share
amounts)
2024
2023
Change
2024
2023
Change
Operating results:
Revenues(1)
$
1,605
$
1,585
1
%
$
3,407
$
3,355
2
%
Payroll taxes, benefits and workers’
compensation costs
1,345
1,360
(1
)%
2,802
2,798
—
Gross profit
260
225
16
%
605
557
9
%
Salaries, wages and payroll taxes
126
110
15
%
266
235
13
%
Stock-based compensation
20
15
33
%
30
26
15
%
Commissions
11
12
(8
)%
23
23
—
Advertising
12
17
(29
)%
19
23
(17
)%
General and administrative expenses
57
44
30
%
114
92
24
%
Depreciation and amortization
11
11
—
22
21
5
%
Total operating expenses
237
209
13
%
474
420
13
%
Operating income
23
16
44
%
131
137
(4
)%
Other income (expense):
Interest income
9
7
29
%
19
16
19
%
Interest expense
(7
)
(7
)
—
(14
)
(13
)
8
%
Income before income tax
expense
25
16
56
%
136
140
(3
)%
Income tax expense
7
4
75
%
39
33
18
%
Net income
$
18
$
12
50
%
$
97
$
107
(9
)%
Net income per share of common
stock
Basic
$
0.48
$
0.34
41
%
$
2.58
$
2.82
(9
)%
Diluted
$
0.48
$
0.33
45
%
$
2.56
$
2.78
(8
)%
____________________________________
(1) Revenues are comprised of gross billings less WSEE payroll
costs as follows:
Three Months Ended
June 30,
Six Months Ended
June 30,
(in millions)
2024
2023
2024
2023
Gross billings
$
10,361
$
10,245
$
21,844
$
21,696
Less: WSEE payroll cost
8,756
8,660
18,437
18,341
Revenues
$
1,605
$
1,585
$
3,407
$
3,355
Insperity, Inc.
KEY FINANCIAL AND STATISTICAL
DATA
Three Months Ended
June 30,
Six Months Ended
June 30,
2024
2023
Change
2024
2023
Change
Average WSEEs paid
306,958
311,304
(1
)%
305,431
308,998
(1
)%
Statistical data (per WSEE per
month):
Revenues(1)
$
1,743
$
1,697
3
%
$
1,859
$
1,809
3
%
Gross profit
282
241
17
%
330
300
10
%
Operating expenses
257
224
15
%
259
226
15
%
Operating income
25
17
47
%
71
74
(4
)%
Net income
20
14
43
%
53
58
(9
)%
____________________________________
(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
June 30,
Six Months Ended
June 30,
(per WSEE per month)
2024
2023
2024
2023
Gross billings
$
11,251
$
10,969
$
11,920
$
11,702
Less: WSEE payroll cost
9,508
9,272
10,061
9,893
Revenues
$
1,743
$
1,697
$
1,859
$
1,809
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,
• depreciation and amortization expense,
and
• amortization of SaaS implementation
costs.
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.
Following is a reconciliation of payroll
cost (GAAP) to non-bonus payroll costs (non-GAAP):
Three Months Ended June
30,
Six Months Ended June
30,
(in millions, except per WSEE per
month)
2024
2023
2024
2023
Per WSEE
Per WSEE
Per WSEE
Per WSEE
Payroll cost
$
8,756
$
9,508
$
8,660
$
9,272
$
18,437
$
10,061
$
18,341
$
9,893
Less: Bonus payroll cost
845
917
814
871
2,707
1,478
2,815
1,519
Non-bonus payroll cost
$
7,911
$
8,591
$
7,846
$
8,401
$
15,730
$
8,583
$
15,526
$
8,374
% Change period over period
1
%
2
%
10
%
3
%
1
%
2
%
12
%
3
%
Following is a reconciliation of cash,
cash equivalents and marketable securities (GAAP) to adjusted cash,
cash equivalents and marketable securities (non-GAAP):
(in millions)
June 30, 2024
December 31,
2023
Cash, cash equivalents and marketable
securities
$
692
$
709
Less:
Amounts payable for withheld federal and
state income taxes, employment taxes and other payroll
deductions
459
510
Client prepayments
22
28
Adjusted cash, cash equivalents and
marketable securities
$
211
$
171
Following is a reconciliation of net
income (GAAP) to EBITDA (non-GAAP) and adjusted EBITDA
(non-GAAP):
(in millions, except per WSEE per
month)
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Per WSEE
Per WSEE
Per WSEE
Per WSEE
Net income
$
18
$
20
$
12
$
14
$
97
$
53
$
107
$
58
Income tax expense
7
7
4
4
39
22
33
19
Interest expense
7
8
7
7
14
8
13
7
Amortization of SaaS implementation
costs
3
3
2
1
6
3
3
1
Depreciation and amortization
11
12
11
12
22
12
21
11
EBITDA
46
50
36
38
178
98
177
96
Stock-based compensation
20
22
15
16
30
16
26
14
Adjusted EBITDA
$
66
$
72
$
51
$
54
$
208
$
114
$
203
$
110
% Change period over period
29
%
33
%
(32
)%
(37
)%
2
%
4
%
5
%
(3
)%
Following is a reconciliation of net
income (GAAP) to adjusted net income (non-GAAP):
Three Months Ended June
30,
Six Months Ended June
30,
(in millions)
2024
2023
2024
2023
Net income
$
18
$
12
$
97
$
107
Non-GAAP adjustments:
Stock-based compensation
20
15
30
26
Tax effect
(5
)
(2
)
(8
)
(5
)
Total non-GAAP adjustments, net
15
13
22
21
Adjusted net income
$
33
$
25
$
119
$
128
% Change period over period
32
%
(45
)%
(7
)%
5
%
Following is a reconciliation of diluted
EPS (GAAP) to adjusted EPS (non-GAAP):
Three Months Ended June
30,
Six Months Ended June
30,
2024
2023
2024
2023
Diluted EPS
$
0.48
$
0.33
$
2.56
$
2.78
Non-GAAP adjustments:
Stock-based compensation
0.53
0.40
0.80
0.69
Tax effect
(0.15
)
(0.09
)
(0.23
)
(0.17
)
Total non-GAAP adjustments, net
0.38
0.31
0.57
0.52
Adjusted EPS
$
0.86
$
0.64
$
3.13
$
3.30
% Change period over period
34
%
(45
)%
(5
)%
5
%
The following is a reconciliation of GAAP
to non-GAAP financial measures for third quarter and full year 2024
guidance:
Q3 2024
Full Year 2024
(in millions, except per share
amounts)
Guidance
Guidance
Net income
$(4) - $5
$83 - $104
Income tax expense
(2) - 2
33 - 41
Interest expense
7
28
SaaS implementation amortization
3
11
Depreciation and amortization
11
45
EBITDA
15 - 28
200 - 229
Stock-based compensation
17
61
Adjusted EBITDA
$32 - $45
$261 - $290
Diluted EPS
$(0.11) - $0.13
$2.18 - $2.73
Non-GAAP adjustments:
Stock-based compensation
0.45
1.61
Tax effect
(0.13)
(0.46)
Total non-GAAP adjustments, net
0.32
1.15
Adjusted EPS
$0.21 - $0.45
$3.33 - $3.88
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240801733436/en/
Investor Relations Contact: Douglas S. Sharp Executive
Vice President of Finance, Chief Financial Officer and Treasurer
281-348-3232 Investor.Relations@Insperity.com
News Media Contact: Cynthia Murga Director, Public
Relations 713-324-1414 Media@insperity.com
Insperity (NYSE:NSP)
Historical Stock Chart
From Oct 2024 to Nov 2024
Insperity (NYSE:NSP)
Historical Stock Chart
From Nov 2023 to Nov 2024