Administaff, Inc. (NYSE:ASF), a leading provider of human resources services for small and medium-sized businesses, today reported first quarter 2010 net income of $2.3 million, or $0.09 per diluted share, on revenues of $457.7 million. In the 2009 first quarter, the company had net income of $8.2 million, or $0.33 per diluted share.
First quarter diluted earnings per share was $0.15 higher than expected due to positive results in all components of gross profit, including better than expected pricing and lower health care, workers' compensation and payroll tax costs.
"In the first quarter we made substantial progress in both our short-term growth and profitability plans and our long-term PEO and adjacent business development strategies," said Paul J. Sarvadi, Administaff chairman and chief executive officer. "We expect rising demand for our services as a direct result of recovering business sentiment combined with elevated concerns over health care reform and the growing burden of government regulation."
Revenues for the first quarter of 2010 decreased 0.9% compared to the 2009 period, due to a 7.8% decrease in the average number of worksite employees paid per month largely offset by a 7.5% increase in revenues per worksite employee per month.
Gross profit decreased 13.0% to $72.7 million compared to the first quarter of 2009. The average gross profit per worksite employee per month decreased 5.6% to $235 in the 2010 period from $249 in the 2009 period. The average gross profit per worksite employee per month was $24 higher than expected due primarily to a smaller than expected deficit from benefits of $9, and contributions of $7 from workers' compensation, $4 from payroll taxes and $2 from additional service fees.
"In the first quarter, utilization of our health plans declined more than expected from the elevated levels experienced during the fourth quarter of 2009," said Richard G. Rawson, president. "A continuation of this trend, combined with recent COBRA pricing adjustments, should help produce gross profit levels in the last half of 2010 more in line with historical results."
Operating expenses decreased 2.5% to $68.9 million compared to the first quarter of 2009 and included approximately $1.2 million in costs associated with a reduction in force.
EBITDA plus stock-based compensation for the first quarter was $9.5 million. Cash outlays included capital expenditures of $800,000 and dividends of $3.4 million.
"We continued to produce considerable cash flow and increased working capital in the first quarter to $130 million," said Douglas S. Sharp, senior vice-president of finance, chief financial officer and treasurer. "This will allow us to continue investing in the growth of our core business, pursue adjacent business opportunities and execute our share repurchase and dividend programs."