Insperity, Inc. (NYSE: NSP), a leading provider of human
resources and business performance solutions for America’s best
businesses, today reported results for the first quarter ended
March 31, 2023. Insperity will be hosting a conference call today
at 8:30 a.m. ET to discuss these results and our updated 2023
outlook, and has posted an accompanying presentation to its
investor website at http://ir.insperity.com.
- Q1 average number of WSEEs paid and revenues up 10% and 12%,
respectively
- Q1 net income and diluted EPS of $94.6 million and $2.45,
respectively
- Q1 adjusted EPS up 34% to $2.67; Q1 adjusted EBITDA up 29% to
$152.4 million
- Return to shareholders of $55 million in Q1 through the
repurchase of 289,000 shares at a cost of $35 million and $20
million in cash dividends
First Quarter Results
Reported net income and diluted earnings per share (“EPS”) were
$94.6 million and $2.45, respectively. Adjusted EPS increased 34.2%
over the first quarter of 2022 to $2.67. Adjusted EBITDA increased
28.5% to $152.4 million.
“We are pleased with our strong Q1 results reported today and
our solid execution in the face of a softening economic
environment,” said Paul J. Sarvadi, Insperity chairman and chief
executive officer. “We expect to continue to capitalize on our
market opportunity as we help our best-in-class small-to-medium
size clients succeed through today’s challenges with the support of
our comprehensive and sophisticated HR solutions.”
The average number of worksite employees (“WSEE”) paid per month
increased 10.1% over Q1 2022 to 306,691 WSEEs. Client attrition,
which was near our historical lows, and WSEEs paid from new sales
came in near budgeted levels. Net hiring by our clients were in
line with our expectations and were about 50% less than that
experienced during the first quarter of 2022 due primarily to the
softer economic environment. Revenues in Q1 2023 increased 12.2% to
$1.8 billion on the 10.1% increase in paid WSEEs and a 1.9%
increase in revenue per WSEE.
Gross profit increased 16.2% over Q1 2022 to $332.1 million on
the 10.1% increase in paid WSEEs and a 5.6% increase in gross
profit per WSEE per month. Pricing was strong through our year-end
transition, accomplishing a key objective given the current
inflationary environment. Additionally, our benefits and workers’
compensation programs were in line with our budget.
Operating expenses increased 12.7% over Q1 2022 on the 16.2%
increase in gross profit. Operating costs included continued
investment in our growth with an 11.2% increase in the average
number of hired Business Performance Advisors, and an increase in
the number of service and support personnel given the recent high
growth in the number of clients and WSEEs. We also continue to
invest in our technology, including our ongoing implementation of
SalesForce.
Cash outlays in Q1 2023 included the repurchase of approximately
289,000 shares of our common stock at a cost of $34.6 million,
dividends totaling $19.9 million, and capital expenditures of $6.8
million. Adjusted cash at March 31, 2023 totaled $231.4 million and
$280 million remains available under our $650 million credit
facility.
“Our strong growth and earnings performance in Q1, reflects the
strength of our business model, even in a period of inflationary
pressures and economic uncertainty,” said Douglas S. Sharp,
executive vice president of finance, chief financial officer and
treasurer. “This has allowed us to continue to invest in the key
initiatives of our Five-Year Plan while providing strong returns to
our shareholders through our dividend and share repurchase
programs.”
2023 Guidance
The company also announced its updated guidance for 2023,
including the second quarter of 2023. 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 2023
Full Year 2023
Average WSEEs paid
310,800
—
313,700
315,600
—
321,600
Year-over-year increase
7.0%
—
8.0%
7.0%
—
9.0%
Adjusted EPS
$1.16
—
$1.32
$5.62
—
$6.39
Year-over-year increase
0%
—
14%
1%
—
14%
Adjusted EBITDA (in millions)
$81
—
$90
$370
—
$410
Year-over-year increase
8%
—
20%
5%
—
16%
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 332970.
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. 48104. 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 2022 revenues of $5.9 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; 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, including if our clients fail to pay us;
- bank failures or other events affecting financial
institutions;
- 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; and
- our ability to integrate or realize expected returns on future
product offerings, including through acquisition and
investment.
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)
March 31,
Dec. 31,
(in thousands)
2023
2022
Assets
Cash and cash equivalents
$
696,588
$
732,828
Restricted cash
48,113
49,779
Marketable securities
35,535
33,068
Accounts receivable, net
607,313
622,764
Prepaid insurance
50,665
11,706
Other current assets
79,860
61,728
Total current assets
1,518,074
1,511,873
Property and equipment, net
196,382
199,992
Right-of-use leased assets
53,303
56,532
Deposits and prepaid health insurance
228,126
213,270
Goodwill and other intangible assets,
net
12,707
12,707
Deferred income taxes, net
—
15,533
Other assets
31,381
29,354
Total assets
$
2,039,973
$
2,039,261
Liabilities and stockholders'
equity
Accounts payable
$
9,491
$
7,732
Payroll taxes and other payroll deductions
payable
495,585
556,085
Accrued worksite employee payroll cost
525,312
513,397
Accrued health insurance costs
78,722
53,402
Accrued workers’ compensation costs
51,878
53,485
Accrued corporate payroll and
commissions
48,365
89,147
Other accrued liabilities
93,606
80,122
Total current liabilities
1,302,959
1,353,370
Accrued workers’ compensation costs, net
of current
181,364
179,629
Long-term debt
369,400
369,400
Operating lease liabilities, net of
current
51,622
55,587
Deferred income taxes, net
1,196
—
Total noncurrent liabilities
603,582
604,616
Stockholders’ equity:
Common stock
555
555
Additional paid-in capital
142,002
151,144
Treasury stock, at cost
(735,219
)
(725,532
)
Accumulated other comprehensive loss, net
of tax
(23
)
(82
)
Retained earnings
726,117
655,190
Total stockholders' equity
133,432
81,275
Total liabilities and stockholders’
equity
$
2,039,973
$
2,039,261
Insperity, Inc.
CONSOLIDATED STATEMENTS OF
OPERATIONS
(Unaudited)
Three Months Ended March
31,
(in thousands, except per share
amounts)
2023
2022
Change
Operating results:
Revenues(1)
$
1,769,652
$
1,577,837
12.2
%
Payroll taxes, benefits and workers’
compensation costs
1,437,506
1,292,063
11.3
%
Gross profit
332,146
285,774
16.2
%
Salaries, wages and payroll taxes
124,541
107,439
15.9
%
Stock-based compensation
11,110
9,846
12.8
%
Commissions
11,017
10,310
6.9
%
Advertising
5,940
8,595
(30.9
%)
General and administrative expenses
48,034
41,005
17.1
%
Depreciation and amortization
10,497
10,184
3.1
%
Total operating expenses
211,139
187,379
12.7
%
Operating income
121,007
98,395
23.0
%
Other income (expense):
Interest income
8,777
148
—
Interest expense
(6,205
)
(1,925
)
222.3
%
Income before income tax
expense
123,579
96,618
27.9
%
Income tax expense
28,984
26,734
8.4
%
Net income
$
94,595
$
69,884
35.4
%
Net income per share of common
stock
Basic
$
2.49
$
1.82
36.8
%
Diluted
$
2.45
$
1.80
36.1
%
____________________________________
(1)
Revenues are comprised of gross billings
less WSEE payroll costs as follows:
Three Months Ended March
31,
(in thousands)
2023
2022
Gross billings
$
11,451,262
$
10,357,905
Less: WSEE payroll cost
9,681,610
8,780,068
Revenues
$
1,769,652
$
1,577,837
Insperity, Inc.
KEY FINANCIAL AND STATISTICAL
DATA
Three Months Ended March
31,
2023
2022
Change
Average WSEEs paid
306,691
278,660
10.1
%
Statistical data (per WSEE per
month):
Revenues(1)
$
1,923
$
1,887
1.9
%
Gross profit
361
342
5.6
%
Operating expenses
229
224
2.2
%
Operating income
132
118
11.9
%
Net income
103
84
22.6
%
____________________________________
(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 March
31,
(per WSEE per month)
2023
2022
Gross billings
$
12,446
$
12,390
Less: WSEE payroll cost
10,523
10,503
Revenues
$
1,923
$
1,887
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 March
31,
(in thousands, except per WSEE per
month)
2023
2022
Per WSEE
Per WSEE
Payroll cost
$
9,681,610
$
10,523
$
8,780,068
$
10,503
Less: Bonus payroll cost
2,002,043
2,176
1,983,853
2,373
Non-bonus payroll cost
$
7,679,567
$
8,347
$
6,796,215
$
8,130
% Change period over period
13.0
%
2.7
%
27.2
%
6.4
%
Following is a reconciliation of cash,
cash equivalents and marketable securities (GAAP) to adjusted cash,
cash equivalents and marketable securities (non-GAAP):
(in thousands)
March 31, 2023
December 31,
2022
Cash, cash equivalents and marketable
securities
$
732,123
$
765,896
Less:
Amounts payable for withheld federal and
state income taxes, employment taxes and other payroll
deductions
457,778
504,817
Client prepayments
42,907
36,800
Adjusted cash, cash equivalents and
marketable securities
$
231,438
$
224,279
Following is a reconciliation of net
income (GAAP) to EBITDA (non-GAAP) and adjusted EBITDA
(non-GAAP):
Three Months Ended March
31,
(in thousands, except per WSEE per
month)
2023
2022
Per WSEE
Per WSEE
Net income
$
94,595
$
103
$
69,884
$
84
Income tax expense
28,984
32
26,734
32
Interest expense
6,205
7
1,925
2
Amortization of SaaS implementation
costs
1,022
1
—
—
Depreciation and amortization
10,497
11
10,184
12
EBITDA
141,303
154
108,727
130
Stock-based compensation
11,110
12
9,846
12
Adjusted EBITDA
$
152,413
$
166
$
118,573
$
142
% Change period over period
28.5
%
16.9
%
13.8
%
(4.7
%)
Following is a reconciliation of net
income (GAAP) to adjusted net income (non-GAAP):
Three Months Ended March
31,
(in thousands)
2023
2022
Net income
$
94,595
$
69,884
Non-GAAP adjustments:
Stock-based compensation
11,110
9,846
Tax effect
(2,606
)
(2,724
)
Total non-GAAP adjustments, net
8,504
7,122
Adjusted net income
$
103,099
$
77,006
% Change period over period
33.9
%
8.8
%
Following is a reconciliation of diluted
EPS (GAAP) to adjusted EPS (non-GAAP):
Three Months Ended March
31,
2023
2022
Diluted EPS
$
2.45
$
1.80
Non-GAAP adjustments:
Stock-based compensation
0.29
0.25
Tax effect
(0.07
)
(0.06
)
Total non-GAAP adjustments, net
0.22
0.19
Adjusted EPS
$
2.67
$
1.99
% Change period over period
34.2
%
9.3
%
The following is a reconciliation of GAAP
to non-GAAP financial measures for second quarter and full year
2023 guidance:
Q2 2023
Full Year 2023
(in millions, except per share
amounts)
Guidance
Guidance
Net income
$32 - $38
$175 - $205
Income tax expense
12 - 15
61 - 71
Interest expense
6
26
SaaS implementation amortization
1
7
Depreciation and amortization
11
43
EBITDA
62 - 71
312 - 352
Stock-based compensation
19
58
Adjusted EBITDA
$81 - $90
$370 - $410
Diluted EPS
$0.81 - $0.97
$4.51 - $5.28
Non-GAAP adjustments:
Stock-based compensation
0.49
1.49
Tax effect
(0.14)
(0.38)
Total non-GAAP adjustments, net
0.35
1.11
Adjusted EPS
$1.16 - $1.32
$5.62 - $6.39
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230426005172/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 Jul 2024 to Aug 2024
Insperity (NYSE:NSP)
Historical Stock Chart
From Aug 2023 to Aug 2024