Insperity Announces Third Quarter Results
Insperity Announces Third Quarter Results
Q3 Adjusted EPS increases 32% to $0.37
Q3 Revenues increase 14% on worksite employee growth of 9%
YTD Adjusted EPS increases 100% to $1.12
Repurchase of 670,000 shares in Q3 and 896,000 year to date
Insperity, Inc.(NYSE: NSP), a leading provider of human resources and business performance solutionsfor America's best businesses, today reported results for the third quarter and nine months ended Sept. 30, 2011. For the third quarter, the company reported adjusted diluted earnings per share of $0.37, a 32.1% increase over the 2010 period. These earnings exclude costs of $0.17 per share arising from two previously reported non-operational items and $0.04 per share related to the company's rebranding initiative. Adjusted net income of $9.6 million excludes $4.5 million of after-tax costs associated with the two non-operational items and $1.1 million of after-tax costs related to the rebranding initiative. In accordance with generally accepted accounting principles ("GAAP"), net income for the third quarter of 2011 was $4.1 million, or $0.16 per diluted share.
"Solid execution of our rebranding and associated growth strategy was reflected in our unit growth and overall excellent third quarter results," said Paul J. Sarvadi, Insperity chairman and chief executive officer. "We expect further development of our cross-selling initiatives within our fall selling campaign to position the company for an exciting 2012."
Revenues for the third quarter of 2011 increased 13.9% over the 2010 quarter due to a 9.0% increase in the average number of worksite employees paid per month and a 4.5% increase in revenues per worksite employee per month.
Gross profit increased 18.1% over the third quarter of 2010 to $87.0 million. The average gross profit per worksite employee per month increased $18, or 7.9%, to $245 in the third quarter of 2011 from $227 in the 2010 period. This increase was attributable to improved results in each of the company's Workforce Optimization(TM) (PEO) direct cost programs and a higher contribution from the company's adjacent businesses.
Operating expenses increased 18.4% to $72.9 million compared to the third quarter of 2010, including costs of $1.8 million associated with the company's rebranding initiative. Operating expenses per worksite employee per month increased 9.0% to $206 in the 2011 period from $189 in the 2010 period.
Other non-operational expenses totaling $7.5 million included a $4.4 million loss related to the exchange of a corporate aircraft and a $3.1 million loss related to the settlement of a dispute with the Employment Development Department of the State of California, as previously disclosed.
For the nine months ended Sept. 30, 2011, the company reported adjusted diluted earnings per share of $1.12, a 100.0% increase over the 2010 period. These earnings exclude costs of $0.17 per share arising from two previously reported non-operational items and $0.21 per share related to the company's rebranding initiative. Adjusted net income of $29.7 million excludes $4.5 million of after-tax costs associated with the two non-operational items and $5.6 million of after-tax costs associated with the company's rebranding initiative. On a GAAP basis, net income for the nine months ended Sept. 30, 2011 was $19.6 million, or $0.74 per diluted share.
Year-to-date revenues were $1.5 billion, an increase of 15.3% over the 2010 period. Gross profit for the nine months ended Sept. 30, 2011, increased 20.3% to $261.8 million. The average gross profit per worksite employee per month increased $24, or 10.5%, to $253 in the 2011 period from $229 in the 2010 period.
Year-to-date operating expenses increased 14.4% over the first nine months of 2010 to $221.2 million, primarily due to rebranding costs of approximately $9.7 million, and expenses of $6.8 million associated with acquisitions made in mid 2010 and early 2011. On a per worksite employee per month basis, operating expenses increased 5.4% to $214 in the 2011 period from $203 in the 2010 period.
Adjusted EBITDA plus stock-based compensation, excluding the $7.5 million in costs associated with the two non-operational items, increased 39.2% to $59.3 million compared to the first nine months of 2010. Cash outlays included an upfront payment of $10.8 million related to the acquisition of desktop and software-as-a-service products and other assets of OrgPlus, dividends of $11.9 million, capital expenditures of $23.4 million and share repurchases of $22.5 million. The company received a $10.0 million scheduled reimbursement from its workers' compensation program during the first nine months of 2011. Working capital at Sept. 30, 2011, was $129.1 million.
"Our strong balance sheet and cash flow have allowed us to execute our growth acceleration plan in a challenging economy while we also pursue strategic acquisitions," said Douglas S. Sharp, senior vice-president of finance, chief financial officer and treasurer. "Additionally, we continue to provide a strong return to shareholders in the form of increased dividends and recent share repurchase activity."
Insperity will be hosting a conference call today at 10 a.m. ET to discuss these results, give guidance for the fourth quarter and answer questions from investment analysts. To listen in, call 877-651-0053 and use conference i.d. number 18060517. The call will also be webcast at http://ir.insperity.com. The conference call script and company guidance 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. 18060517, for one week. The webcast will be archived for one year.
Insperity, a trusted advisor to America's best businesses for more than 25 years, provides an array of human resources and business solutions designed to help improve business performance. InsperityTM Business Performance Advisors offer the most comprehensive Workforce OptimizationTM solution in the marketplace that delivers administrative relief, better benefits, reduced liabilities and a systematic way to improve productivity. Additional offerings include MidMarket SolutionsTM, Performance Management, Expense Management, Time and Attendance, Organizational Planning, Recruiting Services, Employment Screening, Retirement Services, Insurance Services and Technology Services. Insperity business performance solutions support more than 100,000 businesses with over 2 million employees. With 2010 revenues in excess of $1.7 billion, Insperity operates in 56 offices throughout the United States. For more information, visit http://www.insperity.com.