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Insperity Announces Strong Second Quarter Results

Insperity Announces Strong Second Quarter Results

Insperity, Inc a leading provider of human resources and business performance solutions for America’s best businesses, today reported results for the second quarter and six months ended June 30, 2013. For the second quarter, the company reported adjusted diluted earnings per share of $0.24, a 9.1% increase over the 2012 period. These earnings exclude costs of $0.10 per share arising from the previously reported non-cash impairment charge related to the company's minority interest in The Receivables Exchange. Adjusted net income of $6.2 million excludes $2.7 million of costs related to the impairment. In accordance with generally accepted accounting principles ("GAAP"), net income for the second quarter of 2013 was $3.5 million, or $0.14 per diluted share.

“We are pleased with these strong second quarter financial results achieved while growing the number of Business Performance Advisors by 20% over the first quarter,” said Paul J. Sarvadi, Insperity chairman and chief executive officer. “Corresponding sales activity is ramping up commensurately, including leads, opportunities to bid and sales of business performance solutions in our adjacent businesses. These activities lay the groundwork for a strong fall selling season and accelerating growth into 2014.”

Second Quarter Results

Revenues for the second quarter of 2013 increased 5.4% over the second quarter of 2012 due to a 2.0% increase in the average number of worksite employees paid per month and a 3.4% increase in revenues per worksite employee per month.

Gross profit increased 12.0% over the second quarter of 2012 to $97.7 million. The average gross profit per worksite employee per month increased $23, or 9.8% to $257, compared to the second quarter of 2012. The primary driver of this increase was a lower deficit in the benefits costs center.

Operating expenses increased 12.4% to $87.5 million compared to the second quarter of 2012. This increase included costs associated with the hiring of additional Business Performance Advisors, the implementation of the company's health care reform strategy, and the run rate from technology and personnel investments made in our Workforce OptimizationTM solution and adjacent businesses over the past year. Operating expenses per worksite employee per month increased 10.0% to $230 in the 2013 quarter compared to $209 in the 2012 quarter.

Other non-operational expenses totaling $2.7 million included a non-cash impairment charge related to the company's minority investment in The Receivables Exchange.

Year-to-Date Results

For the six months ended June 30, 2013, the company reported adjusted net income of $19.3 million and adjusted diluted earnings per share of $0.75. These earnings exclude costs of $2.7 million, or $0.10 per share associated with the impairment charge. On a GAAP basis, net income for the six months ended June 30, 2013 was $16.7 million, or $0.65 per diluted share.

Year-to-date revenues were $1.2 billion, an increase of 4.0% over the 2012 period. Gross profit for the six months ended June 30, 2013, increased 8.2% to $205.9 million. The average gross profit per worksite employee per month increased $16, or 6.2%, to $274 in the 2013 period from $258 in the 2012 period.

Year-to-date operating expenses increased 10.0% over the first six months of 2012 to $173.6 million. On a per worksite employee per month basis, operating expenses increased 7.9% to $231 in the 2013 period from $214 in the 2012 period.

Adjusted EBITDA increased 3.9% to $48.5 million compared to the first six months of 2012. Cash outlays included dividends of $8.7 million, capital expenditures of $6.6 million and the repurchase of 532,374 shares at a cost of $15.1 million. Working capital at June 30, 2013, was $118.5 million, an increase of $2.8 million over December 31, 2012.

“With an increase in adjusted EBITDA, strong working capital and no debt, we are positioned to continue to invest in growth and provide ongoing returns to stockholders in the form of dividends and stock repurchases,” said Douglas S. Sharp, senior vice-president of finance, chief financial officer and treasurer.

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