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Insperity Announces Strong Third Quarter Results- Q3 Operating income up 36%

Insperity Announces Strong Third Quarter Results- Q3 Operating income up 36%

Insperity, Inc. has reported results for the third quarter and nine months ended Sept. 30, 2012. For the third quarter, the company reported net income of $11.5 million and diluted earnings per share of $0.45. For the nine months ended Sept. 30, 2012, the company reported net income of $31.0 million and diluted earnings per share of $1.20.

“We are pleased with our excellent third quarter and year-to-date financial results achieved while implementing a new growth strategy for Insperity,” said Paul J. Sarvadi, Insperity chairman and chief executive officer. “Now that all of the major elements of our business transformation are in place, we can focus our efforts and resources on the growth acceleration.”

Third Quarter Results

Revenues for the third quarter of 2012 increased 8.5% over the third quarter of 2011 due to a 7.5% increase in the average number of worksite employees paid per month and a 1.0% increase in revenues per worksite employee per month. Gross profit increased 13.1% over the third quarter of 2011 to $98.4 million. The average gross profit per worksite employee per month increased $13, or 5.3%, to $258 in the third quarter of 2012 from $245 in the 2011 period, primarily due to lower benefits costs.

Operating expenses increased 8.7% to $79.3 million compared to the third quarter of 2011. The 2012 quarter included higher salaries and wages due in part to higher incentive compensation accruals resulting from improved operating results. Operating expenses per worksite employee per month increased 1.0% to $208 in the 2012 quarter compared to $206 in the 2011 quarter.

Year-to-Date Results

Year-to-date revenues were $1.6 billion, an increase of 9.8% over the 2011 period. Gross profit for the nine months ended Sept. 30, 2012, increased 10.3% to $288.7 million. The average gross profit per worksite employee per month increased $5, or 2.0%, to $258 in the 2012 period from $253 in the 2011 period.

Year-to-date operating expenses increased 7.2% over the first nine months of 2011 to $237.1 million. This increase was primarily due to costs associated with the Insperity ChampionshipTM professional golf tournament, which was moved into the first nine months of the year, and higher salaries and wages, partially offset by the non-recurrence of expenses related to our 2011 rebranding initiative. On a per worksite employee per month basis, operating expenses decreased 0.9% to $212 in the 2012 period from $214 in the 2011 period.

Adjusted EBITDA plus stock-based compensation increased 23.5% to $73.2 million compared to the first nine months of 2011, excluding $7.5 million in costs associated with two non-operational items in 2011. Cash outlays included the repurchase of 514,628 shares at a cost of $13.8 million, dividends of $12.6 million and capital expenditures of $12.0 million. Working capital at Sept. 30, 2012, was $140.0 million, an increase of $13.4 million over Dec. 31, 2011.

“Effective execution of our 2012 operating plan has resulted in both year-to-date earnings and cash flow exceeding our initial expectations,” said Douglas S. Sharp, senior vice-president of finance, chief financial officer and treasurer. “These results, combined with a solid balance sheet, provide for further investment in our long-term growth and value creation for our shareholders.”

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