HOUSTON--(BUSINESS WIRE)--
Insperity, Inc. (NSP), a leading provider of human resources and business performance solutions for America’s best businesses, today reported results for the first quarter ended Mar. 31, 2019:
First Quarter Results
First quarter 2019 net income and diluted earnings per share of $76.3 million and $1.85 represented increases of 53% and 57%, respectively, compared to the first quarter of 2018. Adjusted EPS was $1.98, a 40% increase over the first quarter of 2018. Adjusted EBITDA increased 21% over the first quarter of 2018 to $101.4 million.
“Our record first quarter results reflect the strength of our business model and continued excellent execution of our strategic plan,†said Paul J. Sarvadi, Insperity chairman and chief executive officer. “These results further demonstrate the sustainability of our rapid growth and profitability experienced over the last several years into 2019.â€
Revenues increased 14% over the first quarter of 2018 to $1,153.0 million on a 15% increase in the average number of worksite employees (“WSEEsâ€) paid per month. The continued double-digit worksite employee growth was the result of the enrollment of new clients coming off a successful 2018 fall sales campaign and a high level of client retention during our heavy first quarter client renewal period. Additionally, we experienced net hiring in our client base during the first quarter of 2019, although at lower levels than experienced during the first quarter of 2018.
Gross profit increased 14% over the first quarter of 2018 to $226.7 million, and included favorable workers’ compensation and benefit cost trends and stronger pricing. Operating expenses increased 5% over the first quarter of 2018, while adjusted operating expenses increased 12% to $141.3 million, and included continued investments in our growth, technology and product and service offerings.
“Worksite employee growth in the mid-teens, combined with effective management of pricing, direct cost programs and operating costs, produced adjusted EBITDA and cash flow at record levels,†said Douglas S. Sharp, senior vice president of finance, chief financial officer and treasurer. “We ended the first quarter with $141 million of adjusted cash, up from $129 million at December 31, 2018, after the repurchase of 230,000 shares at a cost of $29 million and the payment of our regular cash dividend totaling $12 million.â€
2019 Guidance
The company also announced its updated guidance for 2019, including the second quarter of 2019. 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.
| Q2 2019 | Full Year 2019 | ||||||||||||||
| Average WSEEs paid | 232,500 | — | 234,500 | 238,400 | — | 242,600 | |||||||||
| Year-over-year increase | 14.0% | — | 15.0% | 14.0% | — | 16.0% | |||||||||
| Adjusted EPS | $0.81 | — | $0.86 | $4.55 | — | $4.80 | |||||||||
| Year-over-year increase | 19% | — | 26% | 21% | — | 28% | |||||||||
| Adjusted EBITDA (in millions) | $55 | — | $58 | $276 | — | $289 | |||||||||
| Year-over-year increase | 18% | — | 24% | 15% | — | 21% | |||||||||
Definition of Key Metrics
Average WSEEs paid - 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 stock-based compensation and costs associated with a one-time tax reform bonus paid to corporate employees.
Adjusted EBITDA - Represents net income computed in accordance with GAAP, plus interest expense, income taxes, depreciation and amortization expense, non-cash stock-based compensation and costs associated with a one-time tax reform bonus paid to corporate employees.
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 the full year guidance, and answer questions from investment analysts. To listen in, call 877-651-0053 and use conference i.d. number 2122429. 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. 2122429. The webcast will be archived for one year.
About Insperity
Insperity, a trusted advisor to America’s best businesses for more than 33 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 Traditional Payroll and Human Capital Management, Time and Attendance, Performance Management, Organizational Planning, Recruiting Services, Employment Screening, Expense Management, Retirement Services and Insurance Services. Insperity business performance solutions support more than 100,000 businesses with over 2 million employees. With 2018 revenues of $3.8 billion, Insperity operates in 74 offices throughout the United States. 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 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:
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.
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Insperity, Inc. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) |
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| (in thousands) | March 31, 2019 | December 31, 2018 | ||||||||
| Assets | ||||||||||
| Cash and cash equivalents | $ | 398,936 | $ | 326,773 | ||||||
| Restricted cash | 44,705 | 42,227 | ||||||||
| Marketable securities | 53,599 | 60,781 | ||||||||
| Accounts receivable, net | 421,297 | 400,623 | ||||||||
| Prepaid insurance | 24,928 | 8,411 | ||||||||
| Other current assets | 36,616 | 27,721 | ||||||||
| Total current assets | 980,081 | 866,536 | ||||||||
| Property and equipment, net | 116,131 | 117,213 | ||||||||
| Right of use leased assets | 50,259 | — | ||||||||
| Prepaid health insurance | 9,000 | 9,000 | ||||||||
| Deposits | 177,105 | 172,674 | ||||||||
| Goodwill and other intangible assets, net | 12,723 | 12,726 | ||||||||
| Deferred income taxes, net | 145 | 8,816 | ||||||||
| Other assets | 5,534 | 4,851 | ||||||||
| Total assets | $ | 1,350,978 | $ | 1,191,816 | ||||||
| Liabilities and stockholders’ equity | ||||||||||
| Accounts payable | $ | 7,854 | $ | 10,622 | ||||||
| Payroll taxes and other payroll deductions payable | 308,062 | 261,166 | ||||||||
| Accrued worksite employee payroll cost | 363,862 | 329,979 | ||||||||
| Accrued health insurance costs | 45,832 | 35,153 | ||||||||
| Accrued workers’ compensation costs | 47,973 | 45,818 | ||||||||
| Accrued corporate payroll and commissions | 27,562 | 60,704 | ||||||||
| Other accrued liabilities | 49,244 | 28,890 | ||||||||
| Total current liabilities | 850,389 | 772,332 | ||||||||
| Accrued workers’ compensation cost, net of current | 186,624 | 187,412 | ||||||||
| Long-term debt | 144,400 | 144,400 | ||||||||
| Operating lease liabilities, net of current | 50,371 | — | ||||||||
| Other accrued liabilities, net of current | — | 9,996 | ||||||||
| Total noncurrent liabilities | 381,395 | 341,808 | ||||||||
| Stockholders’ equity: | ||||||||||
| Common stock | 555 | 555 | ||||||||
| Additional paid-in capital | 33,833 | 36,752 | ||||||||
| Treasury stock, at cost | (376,097 | ) | (357,569 | ) | ||||||
| Retained earnings | 460,903 | 397,938 | ||||||||
| Total stockholders’ equity | 119,194 | 77,676 | ||||||||
| Total liabilities and stockholders’ equity | $ | 1,350,978 | $ | 1,191,816 | ||||||
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Insperity, Inc. | ||||||||||||