• November 20, 2018

Insperity Announces Record Third Quarter Results - Odessa American: Business

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Insperity Announces Record Third Quarter Results

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Posted: Thursday, November 1, 2018 6:01 am

HOUSTON--(BUSINESS WIRE)--Nov 1, 2018--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 ended Sep. 30, 2018:

Q3 WSEE growth accelerates to 15%, driving 19% gross profit increaseQ3 net income and EPS up 89% and 87%, to $36 million and $0.86, respectivelyQ3 adjusted EPS up 68% to $0.96Q3 adjusted EBITDA up 43% to $62 millionYTD EPS and adjusted EPS up 60% and 61%, respectively

Third Quarter Results

Third quarter 2018 net income and diluted earnings per share of $36.2 million and $0.86 represented increases of 89% and 87%, respectively, compared to the third quarter of 2017. Adjusted EPS was $0.96, a 68% increase over the third quarter of 2017. Adjusted EBITDA increased 43% over the third quarter of 2017 to $61.6 million.

“Our refined business model is continuing to generate outstanding growth and profitability as demonstrated by the recent quarter and year-to-date results,” said Paul J. Sarvadi, Insperity chairman and chief executive officer. “We are in an excellent position to continue double-digit growth and profitability as we look forward to 2019.”

Revenues increased 16% over the third quarter of 2017 to $925.1 million on a 15% increase in the average number of worksite employees (“WSEEs”) paid per month. An acceleration of WSEE growth throughout 2018 has been the result of increased new client sales in both our core and midmarket client segments, a continued high level of client retention and an improvement in net hiring of WSEEs by our client base.

Gross profit increased 19% over the third quarter of 2017 to $166.1 million. This increase was driven by the 15% WSEE growth and the effective pricing and management of our direct cost programs. Operating expenses increased 7% over the third quarter of 2017 to $117.9 million, as we leveraged various areas of the business while continuing to invest in our growth, technology and product and service offerings. Our growth investment has included the opening of six new sales offices in 2018, along with a 16% increase in the average number of Business Performance Advisors over the third quarter of 2017.

“Our year-to-date results, combined with our outlook for the fourth quarter, results in 33% adjusted EBITDA growth for 2018,” said Douglas S. Sharp, senior vice president of finance, chief financial officer and treasurer. “This would be our fourth year in a row with adjusted EBITDA growth in excess of 25% demonstrating strong execution of our long-term business plan.”

Year-to-Date Results

For the nine months ended Sep. 30, 2018, reported net income increased 61% over the first nine months of 2017 to $110.8 million, and diluted net income per share increased 60% to $2.63. Adjusted EPS increased 61% over the first nine months of 2017 to $3.06. Adjusted EBITDA increased 38% to $192.0 million.

Revenues for the first nine months of 2018 increased 16% to $2.9 billion, on a 14% increase in the average number of WSEEs paid per month over the 2017 period. Gross profit for the first nine months of 2018 increased 21% to $520.3 million. Operating expenses increased 16% to $373.9 million over the 2017 period and adjusted operating expenses increased 13% to $364.6 million.

Net income per WSEE per month increased 43% from $42 in the 2017 period to $60 in the 2018 period. Adjusted EBITDA per WSEE per month increased 21% from $86 in the 2017 period to $104 in the 2018 period.

Cash outlays in the first nine months of 2018 included the repurchase of approximately 212,000 shares of stock at a cost of $16.2 million, dividends totaling $25.2 million and capital expenditures of $21.5 million. Adjusted cash, cash equivalents and marketable securities at Sep. 30, 2018 were $166.5 million.

2018 Guidance

The company also announced its updated guidance for 2018, including the fourth quarter of 2018. 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.

Definition of Key Metrics

Average WSEEs - 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 fourth 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 2768708. 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. 2768708. The webcast will be archived for one year.

About Insperity

Insperity, a trusted advisor to America’s best businesses for more than 32 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 Human Capital Management, Payroll Services, 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 2017 revenues of $3.3 billion, Insperity operates in 71 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:

adverse economic conditions;regulatory and tax developments and possible adverse application of various federal, state and local regulations;the ability to secure competitive replacement contracts for health insurance and workers’ compensation insurance at expiration of current contracts;cancellation of client contracts on short notice, or the inability to renew client contracts or attract new clients;vulnerability to regional economic factors because of our geographic market concentration;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;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;our liability for worksite employee payroll, payroll taxes and benefits costs;our liability for disclosure of sensitive or private information;our ability to integrate or realize expected returns on our acquisitions;failure of our information technology systems;an adverse final judgment or settlement of claims against Insperity; anddisruptions to our business resulting from the actions of certain stockholders.

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.

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.

Following is a reconciliation of payroll cost (GAAP) to non-bonus payroll costs (non-GAAP):

Following is a reconciliation of cash, cash equivalents and marketable securities (GAAP) to adjusted cash, cash equivalents and marketable securities (non-GAAP):

Following is a reconciliation of operating expenses (GAAP) to adjusted operating expenses (non-GAAP):

Following is a reconciliation of net income (GAAP) to EBITDA (non-GAAP) and adjusted EBITDA (non-GAAP):

Following reconciliation of net income (GAAP) to adjusted net income (non-GAAP):

Following is a reconciliation of diluted EPS (GAAP) to adjusted EPS (non-GAAP) (1):

The following is a reconciliation of GAAP to non-GAAP financial measures for fourth quarter and full year 2018 guidance:

View source version on businesswire.com:https://www.businesswire.com/news/home/20181101005188/en/

CONTACT: Insperity, Inc.

Investor Relations Contact:

Douglas S. Sharp, (281) 348-3232

Senior Vice President of Finance,

Chief Financial Officer and Treasurer



News Media Contact:

Suzanne Haugen, (281) 312-3543

Public Relations Manager




SOURCE: Insperity, Inc.

Copyright Business Wire 2018.

PUB: 11/01/2018 07:00 AM/DISC: 11/01/2018 07:01 AM


© 2018 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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