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Insperity announces Q2 increased revenue & half year results

For the second quarter, the company reported adjusted net income of $3.5 million and adjusted diluted earnings per share of $0.13. Adjusted net income excludes an after-tax non-cash impairment charge of $1.6 million, or $0.06 per share, associated with the reorganization of our Employment Screening business. Reported second quarter net income and earnings per share were $1.9 million and $0.07, respectively.

“We are pleased with our second quarter results and the traction we are gaining in sales of several of our new service offerings,” said Paul J. Sarvadi, Insperity chairman and chief executive officer. “We are well positioned for accelerating unit growth over the balance of the year and into 2015.”

Second Quarter Results

Revenues for the second quarter of 2014 increased 3.2% over the second quarter of 2013 to $564.6 million, due to a 1.2% increase in the average number of worksite employees paid per month and a 1.9% increase in revenues per worksite employee per month. Gross profit decreased 2.3% as expected compared to the second quarter of 2013 to $95.5 million. Benefits costs per covered employee per month increased by 5.0% over the second quarter of 2013 and included increased taxes associated with the Affordable Care Act.

Adjusted operating expenses excluding the impact of the $2.5 million impairment charge increased 2.3% over the second quarter of 2013 to $89.6 million.

Year-to-Date Results

For the six months ended June 30, 2014, the company reported adjusted net income of $13.0 million and adjusted diluted earnings per share of $0.51. These earnings exclude after-tax costs of$1.6 million or $0.06 per share associated with the non-cash impairment charge. Reported net income for the six months ended June 30, 2014 was $11.5 million, or $0.45 per diluted share.

Year-to-date revenues were $1.2 billion, an increase of 3.7% compared to the 2013 period. Gross profit for the six months ended June 30, 2014 decreased 2.1% to $201.6 million. The average gross profit per worksite employee per month decreased $10, or 3.6%, to $264 in the 2014 period from $274 in the 2013 period.

Adjusted year-to-date operating expenses excluding the impact of the impairment charge, increased 3.2% over the first six months of 2013 to $179.1 million, approximately $6 million below initial 2014 guidance provided by the company. These expenses include investments made over the course of 2013, including a 15.6% year-over-year increase in the average number of trainedBusiness Performance Advisors, and a $2.0 million investment in human capital management technology.

“We continue to invest in areas important to our long-term strategy, including sales, technology and product development, while managing other areas of the business to better align operating costs with projected unit growth,” said Douglas S. Sharp, senior vice-president of finance, chief financial officer and treasurer.

Adjusted EBITDA was $38.9 million in the first six months of 2014. Cash outlays included the repurchase of 496,226 shares at a cost of $14.7 million, dividends of $9.2 million and capital expenditures of $6.6 million. Working capital at June 30, 2014 was $121.6 million.

 

David Head

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