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Insperity Q3 EBITDA up 25% YoY

Adjusted net income was $14.2 million and adjusted diluted earnings per share were$0.57, a 46.2% increase over the third quarter of 2014. Reported third quarter GAAP net income and diluted earnings per share were $12.0 million and $0.48, respectively.

“We are pleased with our third quarter and year-to-date results, which demonstrate solid execution of our plan to accelerate unit growth while controlling operating costs,” said Paul J. Sarvadi,Insperity chairman and chief executive officer. “We have significant momentum to continue strong sales and retention through year end, which would set the stage for another year of double-digit worksite employee growth and operating leverage in 2016.”

Revenues for the third quarter of 2015 increased 11.8% over the third quarter of 2014. The average number of worksite employees paid per month increased 13.3% during the quarter, a continued acceleration from the 11.6% year-over-year growth in the second quarter and 9.2% in first quarter of 2015. All three drivers to worksite employee growth, including sales, client retention and net hiring in our client base, improved over the third quarter of 2014.

“Our direct cost programs, including benefits, payroll taxes and workers’ compensation costs, continue to remain stable and trend favorably, as demonstrated by a benefits cost increase of only 1.9% in the third quarter,” said Richard G. Rawson, Insperity president. “In addition, gross profit increased 13%, in line with worksite employee growth when excluding the $6.4 million benefits credit related to lower than expected claims run-off in the third quarter of 2014.”

While reported gross profit increased 5.9% over the third quarter of 2014, operating expenses increased less than 1% and included costs associated with continued growth in the number ofBusiness Performance Advisors and targeted reductions in advertising and general and administrative costs.

Year-to-Date Results

For the nine months ended Sept. 30, 2015, adjusted EBITDA increased 51.6% to $93.2 million and adjusted diluted earnings per share increased 80.6% to $1.86. Reported 2015 GAAP net income was $33.1 million, or diluted earnings per share of $1.32.

Revenues in the first nine months of 2015 were $2.0 billion, an increase of 10.9% over the 2014 period on an 11.4% increase in the average number of worksite employees paid per month. Gross profit for the nine months ended Sept. 30, 2015 increased 12.7% to $340.8 million, while adjusted operating expenses increased only 2.6% to $272.5 million.

“We have repurchased 1.2 million shares of stock at a cost of $59 million and paid dividends totaling $16 million through the third quarter,” said Douglas S. Sharp, Insperity senior vice president of finance, chief financial officer and treasurer. “Our strong cash flow has led to a $3 million increase in working capital after returning $75 million to stockholders so far this year.”

 

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