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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Insperity Inc | NYSE:NSP | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
3.97 | 4.13% | 100.05 | 100.345 | 96.10 | 96.92 | 262,740 | 22:34:08 |
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 September 30, 2022. Insperity will be hosting a conference call today at 10:00 a.m. ET to discuss these results and our updated 2022 outlook, and has posted an accompanying presentation to its investor website at http://ir.insperity.com.
Third Quarter Results
For the third quarter of 2022, reported net income and diluted earnings per share (“EPS”) were $37.7 million and $0.98, respectively. Adjusted EPS increased 38.2% over the third quarter of 2021 to $1.23. Adjusted EBITDA increased 32.7% to $79.8 million.
The average number of worksite employees (“WSEEs”) paid per month increased 17.8% over Q3 2021 to 303,347 WSEEs. WSEEs paid from new client sales improved over Q3 2021 and client retention remained strong, averaging 99% per month for the quarter. The net gain in our client base continued, although at expected lower levels than Q3 2021, a period when many clients were rehiring employees as the pandemic conditions improved. Revenues in Q3 2022 increased 19.0% to $1.4 billion on the 17.8% increase in paid WSEEs. Revenue per WSEE was up 1.0% as overall pricing was managed to targeted levels given the current inflationary environment, partially offset by a client and worksite employee mix change.
“We are pleased to report continuing strong growth and profitability this quarter and year to date driven by a combination of strong demand for our services and excellent execution by our Insperity employees,” said Paul J. Sarvadi, Insperity chief executive officer and chairman. “We have successfully launched our fall selling and retention campaign, and are focused on finishing an excellent first year of our five year plan and achieving a strong start to 2023.”
Gross profit increased 23.2% over Q3 2021 to $244.6 million on the 17.8% increase in paid WSEEs and a 4.7% increase in gross profit per WSEE per month. Benefits costs were better than expected, driven by lower utilization, including COVID related costs. Gross profit contribution from our workers’ compensation program improved over Q3 2021, further driving the increase in gross profit per WSEE per month.
Operating expenses increased 20.8% over Q3 2021 on the 23.2% increase in gross profit. Operating spend included continued investment in our service personnel given our high growth and a focus on hiring and retention in the current tight labor market. Other Q3 2022 personnel costs included a higher incentive compensation accrual tied to our outperformance. Travel and event costs also increased over Q3 2021, which was more restrictive under the pandemic conditions.
Year-to-Date Results
Revenues for the first nine months of 2022 increased 20.8% to $4.4 billion on an 18.9% increase in paid WSEEs and a 1.7% increase in revenue per WSEE. Gross profit for the first nine months of 2022 increased 18.6% to $770.2 million. Operating expenses increased 16.3% to $570.8 million compared to the 2021 period.
For the nine months ended September 30, 2022, reported net income and diluted EPS were $141.2 million and $3.66, respectively. Adjusted EPS increased 21.0% compared to the first nine months of 2021 to $4.38. Adjusted EBITDA increased 21.8% compared to the first nine months of 2021 to $273.4 million.
Net income per WSEE per month increased 3.8% to $54 in the 2022 period from $52 in the 2021 period. Adjusted EBITDA per WSEE per month was $104 in the 2022 period compared to $102 in the 2021 period.
Gross profit and earnings comparisons are impacted by the non-recurrence of $16.8 million in federal payroll tax refunds received in 2021 related to prior years.
Cash outlays in the first nine months of 2022 included the repurchase of approximately 679,000 shares of stock at a cost of $63.4 million, dividends totaling $56.9 million and capital expenditures of $16.4 million. Adjusted cash totaled $239 million at September 30, 2022 and $280 million is available under our recently expanded $650 million credit facility.
“In spite of the lingering pandemic conditions and the recent economic uncertainty, we have been able to achieve over a 20% increase in Adjusted EBITDA and Adjusted EPS over the first three quarters of this year,” said Douglas S. Sharp, Insperity executive vice president of finance, chief financial officer and treasurer. “While some uncertainty surrounding these factors continues to exist, we remain focused on taking advantage of the ongoing market opportunity and executing our long-term plan as we head into 2023.”
2022 Guidance
The company also announced its updated guidance for 2022, including the fourth quarter of 2022. 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.
Q4 2022
Full Year 2022
Average WSEEs paid
308,000
—
310,700
295,100
—
295,800
Year-over-year increase
14.5%
—
15.5%
17.7%
—
18.0%
Adjusted EPS
$0.87
—
$0.98
$5.23
—
$5.37
Year-over-year increase
156%
—
188%
32%
—
36%
Adjusted EBITDA (in millions)
$62
—
$68
$335
—
$342
Year-over-year increase
104%
—
124%
31%
—
34%
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 10:00 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 274789. 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, with pass code 46882, for one week after the call. 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 2021 revenues of $5.0 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 the 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:
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)
(in thousands)
September 30, 2022
December 31, 2021
Assets
Cash and cash equivalents
$
562,143
$
575,812
Restricted cash
51,829
46,929
Marketable securities
34,493
31,791
Accounts receivable, net
558,700
513,306
Prepaid insurance
30,368
11,285
Other current assets
51,473
53,312
Income taxes receivable
—
12,413
Total current assets
1,289,006
1,244,848
Property and equipment, net
196,601
210,723
Right of use leased assets
56,626
62,830
Prepaid health insurance
9,000
9,000
Deposits
186,914
192,927
Goodwill and other intangible assets, net
12,707
12,707
Deferred income taxes, net
748
4,892
Other assets
29,904
15,158
Total assets
$
1,781,506
$
1,753,085
Liabilities and stockholders' equity
Accounts payable
$
5,466
$
6,412
Payroll taxes and other payroll deductions payable
352,129
467,892
Accrued worksite employee payroll cost
494,986
409,653
Accrued health insurance costs
64,858
50,001
Accrued workers’ compensation costs
57,023
50,534
Accrued corporate payroll and commissions
81,278
74,778
Other accrued liabilities
65,053
69,303
Income taxes payable
455
—
Total current liabilities
1,121,248
1,128,573
Accrued workers’ compensation costs, net of current
174,664
192,694
Long-term debt
369,400
369,400
Operating lease liabilities, net of current
55,691
64,192
Total noncurrent liabilities
599,755
626,286
Stockholders’ equity:
Common stock
555
555
Additional paid-in capital
139,370
109,179
Treasury stock, at cost
(716,046
)
(665,089
)
Retained earnings
636,624
553,581
Total stockholders’ equity (deficit)
60,503
(1,774
)
Total liabilities and stockholders’ equity
$
1,781,506
$
1,753,085
Insperity, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share amounts)
Three Months Ended September 30,
Nine Months Ended September 30,
2022
2021
Change
2022
2021
Change
Operating results:
Revenues(1)
$
1,439,160
$
1,209,628
19.0
%
$
4,449,104
$
3,681,834
20.8
%
Payroll taxes, benefits and workers’ compensation costs
1,194,607
1,011,149
18.1
%
3,678,909
3,032,356
21.3
%
Gross profit
244,553
198,479
23.2
%
770,195
649,478
18.6
%
Salaries, wages and payroll taxes
109,525
89,232
22.7
%
323,486
286,669
12.8
%
Stock-based compensation
13,341
10,362
28.7
%
38,818
35,965
7.9
%
Commissions
11,068
8,724
26.9
%
32,121
24,694
30.1
%
Advertising
9,790
9,507
3.0
%
30,812
23,804
29.4
%
General and administrative expenses
38,115
31,134
22.4
%
115,215
91,981
25.3
%
Depreciation and amortization
10,083
9,917
1.7
%
30,367
27,715
9.6
%
Total operating expenses
191,922
158,876
20.8
%
570,819
490,828
16.3
%
Operating income
52,631
39,603
32.9
%
199,376
158,650
25.7
%
Other income (expense):
Interest income
2,808
251
1,018.7
%
3,901
2,230
74.9
%
Interest expense
(4,082
)
(1,963
)
107.9
%
(8,698
)
(5,537
)
57.1
%
Income before income tax expense
51,357
37,891
35.5
%
194,579
155,343
25.3
%
Income tax expense
13,688
10,595
29.2
%
53,427
40,971
30.4
%
Net income
$
37,669
$
27,296
38.0
%
$
141,152
$
114,372
23.4
%
Less distributed and undistributed earnings allocated to participating securities
—
(39
)
(100.0
)%
(27
)
(219
)
(87.7
)%
Net income allocated to common shares
$
37,669
$
27,257
38.2
%
$
141,125
$
114,153
23.6
%
Net income per share of common stock
Basic
$
0.99
$
0.71
39.4
%
$
3.70
$
2.97
24.6
%
Diluted
$
0.98
$
0.70
40.0
%
$
3.66
$
2.94
24.5
%
____________________________________
(1) Revenues are comprised of gross billings less WSEE payroll costs as follows:
Three Months Ended September 30,
Nine Months Ended September 30,
(in thousands)
2022
2021
2022
2021
Gross billings
$
9,528,695
$
7,994,006
$
29,111,243
$
23,682,279
Less: WSEE payroll cost
8,089,535
6,784,378
24,662,139
20,000,445
Revenues
$
1,439,160
$
1,209,628
$
4,449,104
$
3,681,834
Insperity, Inc.
KEY FINANCIAL AND STATISTICAL DATA
(Unaudited)
Three Months Ended September 30,
Nine Months Ended September 30,
2022
2021
Change
2022
2021
Change
Average WSEEs paid
303,347
257,560
17.8
%
290,838
244,667
18.9
%
Statistical data (per WSEE per month):
Revenues(1)
$
1,581
$
1,565
1.0
%
$
1,700
$
1,672
1.7
%
Gross profit
269
257
4.7
%
294
295
(0.3
)%
Operating expenses
211
206
2.4
%
218
223
(2.2
)%
Operating income
58
51
13.7
%
76
72
5.6
%
Net income
41
35
17.1
%
54
52
3.8
%
____________________________________
(1) Revenues per WSEE per month are comprised of gross billings per WSEE per month less WSEE payroll costs per WSEE per month as follows:
Three Months Ended September 30,
Nine Months Ended September 30,
(per WSEE per month)
2022
2021
2022
2021
Gross billings
$
10,470
$
10,346
$
11,122
$
10,755
Less: WSEE payroll cost
8,889
8,781
9,422
9,083
Revenues
$
1,581
$
1,565
$
1,700
$
1,672
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 September 30,
Nine Months Ended September 30,
(in thousands, except per WSEE per month)
2022
2021
2022
2021
Per WSEE
Per WSEE
Per WSEE
Per WSEE
Payroll cost
$
8,089,535
$
8,889
$
6,784,378
$
8,781
$
24,662,139
$
9,422
$
20,000,445
$
9,083
Less: Bonus payroll cost
583,703
641
726,187
940
3,236,059
1,236
2,942,817
1,337
Non-bonus payroll cost
$
7,505,832
$
8,248
$
6,058,191
$
7,841
$
21,426,080
$
8,186
$
17,057,628
$
7,746
% Change period over period
23.9
%
5.2
%
18.2
%
6.4
%
25.6
%
5.7
%
12.3
%
6.7
%
Following is a reconciliation of cash, cash equivalents and marketable securities (GAAP) to adjusted cash, cash equivalents and marketable securities (non-GAAP):
(in thousands)
September 30, 2022
December 31, 2021
Cash, cash equivalents and marketable securities
$
596,636
$
607,603
Less:
Amounts payable for withheld federal and state income taxes, employment taxes and other payroll deductions
321,930
424,800
Client prepayments
35,794
20,054
Adjusted cash, cash equivalents and marketable securities
$
238,912
$
162,749
Following is a reconciliation of net income (GAAP) to EBITDA (non-GAAP) and adjusted EBITDA (non-GAAP):
(in thousands, except per WSEE per month)
Three Months Ended September 30,
Nine Months Ended September 30,
2022
2021
2022
2021
Per WSEE
Per WSEE
Per WSEE
Per WSEE
Net income
$
37,669
$
41
$
27,296
$
35
$
141,152
$
54
$
114,372
$
52
Income tax expense
13,688
15
10,595
14
53,427
20
40,971
19
Interest expense
4,082
4
1,963
3
8,698
3
5,537
3
Amortization of SaaS implementation costs
948
1
—
—
948
—
—
—
Depreciation and amortization
10,083
12
9,917
12
30,367
13
27,715
12
EBITDA
66,470
73
49,771
64
234,592
90
188,595
86
Stock-based compensation
13,341
15
10,362
14
38,818
14
35,965
16
Adjusted EBITDA
$
79,811
$
88
$
60,133
$
78
$
273,410
$
104
$
224,560
$
102
% Change period over period
32.7
%
12.8
%
4.5
%
(6.0
)%
21.8
%
2.0
%
(10.5
)%
(15.0
)%
Following is a reconciliation of net income (GAAP) to adjusted net income (non-GAAP):
Three Months Ended September 30,
Nine Months Ended September 30,
(in thousands)
2022
2021
2022
2021
Net income
$
37,669
$
27,296
$
141,152
$
114,372
Non-GAAP adjustments:
Stock-based compensation
13,341
10,362
38,818
35,965
Total non-GAAP adjustments
13,341
10,362
38,818
35,965
Tax effect
(3,590
)
(2,865
)
(10,659
)
(9,486
)
Total non-GAAP adjustments, net
9,751
7,497
28,159
26,479
Adjusted net income
$
47,420
$
34,793
$
169,311
$
140,851
% Change period over period
36.3
%
(1.7
)%
20.2
%
(13.0
)%
Following is a reconciliation of diluted EPS (GAAP) to adjusted EPS (non-GAAP):
Three Months Ended September 30,
Nine Months Ended September 30,
2022
2021
2022
2021
Diluted EPS
$
0.98
$
0.70
$
3.66
$
2.94
Non-GAAP adjustments:
Stock-based compensation
0.35
0.27
1.01
0.92
Total non-GAAP adjustments
0.35
0.27
1.01
0.92
Tax effect
(0.10
)
(0.08
)
(0.29
)
(0.24
)
Total non-GAAP adjustments, net
$
0.25
$
0.19
$
0.72
$
0.68
Adjusted EPS
$
1.23
$
0.89
$
4.38
$
3.62
% Change period over period
38.2
%
(2.2
)%
21.0
%
(12.8
)%
Following is a reconciliation of GAAP to non-GAAP financial measures for fourth quarter and full year 2022 guidance:
(in millions, except per share amounts)
Q4 2022 Guidance
Full Year 2022 Guidance
Net income
$26 - $30
$166 - $171
Income tax expense
9 - 11
63 - 65
Interest expense
5
13
Amortization of SaaS implementation costs
1
2
Depreciation and amortization
11
41
EBITDA
52 - 58
285 - 292
Stock-based compensation
10
50
Adjusted EBITDA
$62 - $68
$335 - $342
Diluted net income per share of common stock
$0.68 - $0.79
$4.28 - $4.42
Non-GAAP adjustments:
Stock-based compensation
0.26
1.30
Tax effect
(0.07)
(0.35)
Total non-GAAP adjustments, net
0.19
0.95
Adjusted EPS
$0.87 - $0.98
$5.23 - $5.37
View source version on businesswire.com: https://www.businesswire.com/news/home/20221031005153/en/
Investor Relations Contact: Douglas S. Sharp Senior Vice President of Finance, Chief Financial Officer and Treasurer (281) 348-3232 Investor.Relations@Insperity.com
News Media Contact: Cynthia Murga Director of Public Relations (713) 324-1414 Media@Insperity.com
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