Insperity (NSP) Beats on Q1 Earnings, Raises 2019 EPS View

Insperity, Inc. NSP reported mixed first-quarter 2019 results wherein earnings surpassed the Zacks Consensus Estimate but revenues lagged the same.

Adjusted earnings per share (EPS) of $1.98 cents beat the consensus mark by 10 cents and increased 40.4% year over year on worksite employee growth and effective management of pricing, direct cost programs and operating costs. The reported figure surpassed the guided range of $1.85-$1.91 cents per share.

Total revenues of $1.15 billion however lagged the consensus estimate by $11.7 million but increased 13.7% year over year on the back of 15% increase in average number of worksite employees (WSEEs) paid per month. Average number of worksite employees paid per month was 225,525 at the end of the reported quarter.

In the reported quarter, worksite employee growth was driven by new client enrollment on the back of strong sales, higher client retention and net hiring in the company’s client base.

So far this year, shares of Insperity have gained 24.4% compared with 20.1% rise of the industry it belongs to.

Operating Results       

Gross profit of $226.72 million increased 13.5% from the year-ago quarter on the back of favorable workers’ compensation and benefit cost trends and stronger pricing. Gross margin of 19.7% was flat year over year. Gross profit per worksite employee per month decreased 1.5% year over year to $335.

Adjusted EBITDA was up 21% year over year to $101.44 million. Adjusted EBITDA per worksite employee per month increased 4.9% to $150.

Adjusted operating expenses increased 12.4% year over year to $141.26 million due to continuous investment in growth, technology and product and service offerings. Adjusted operating expenses per worksite employee per month declined 2.3% to $209.

Operating income increased 32.1% year over year to $85.5 million. Operating income per worksite employee per month increased 14.5% to $126.

Insperity, Inc. Price, Consensus and EPS Surprise

Insperity, Inc. Price, Consensus and EPS Surprise | Insperity, Inc. Quote

Balance Sheet & Cash Flow

Insperity exited first-quarter 2019 with adjusted cash, cash equivalents and marketable securities of $140.51 million compared with $128.89 million at the end of the prior quarter. Long- term debt of $144.40 million was flat with the prior quarter.

In first-quarter 2019, Insperity repurchased 230,000 shares for $29 million and paid dividends totaling $12 million.

Guidance

Second-Quarter 2019

For second-quarter 2019, Insperity projects adjusted earnings in the range of 81-86 cents per share, indicating a year-over-year increase of 19-26%. The current Zacks Consensus Estimate of 82 cents lies within the guided range.

Adjusted EBITDA is anticipated to increase 18-24% to a range of $55-$58 million. Average WSEEs is expected in the range of 232,500 to 234,500, indicating 14-15% growth.

Full-Year 2019

For the full year, Insperity raised its guidance for adjusted EPS and adjusted EBITDA while reaffirming the same for average WSEs. The company now projects adjusted earnings in the band of $4.55-$4.80 per share (indicating growth of 21-28%) compared with the previously guided range of $4.37-$4.69 per share (which indicated growth of 17-25%). The current Zacks Consensus Estimate of $4.59 lies within the guided range.