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Insperity announces 33% YoY increase in net income in Q2 2016

Insperity today reported second quarter net income and diluted earnings per share of $9.7m and $0.45, respectively, which represent increases of 33% and 55% compared to the second quarter of 2015. Adjusted EBITDA was $25.6m, a 13% increase over the second quarter of 2015. Adjusted net income was $12.9m, an increase of 19% over the second quarter of 2015, and adjusted diluted earnings per share were $0.60, a 43% increase over the second quarter of 2015.

 

“Our second quarter results and outlook for the last half of 2016 validate that the execution of our strategic plan is producing exceptional growth and profitability,” said Paul J. Sarvadi, chairman and chief executive officer. “This performance combined with our competitive position and ability to grow our team of Business Performance Advisors gives us confidence as we look ahead to 2017.”

 

Revenues for the second quarter of 2016 increased 13% over the second quarter of 2015 on a 14% increase in the average number of worksite employees paid per month. Insperity said the worksite employee growth was the result of strong new client sales driven by a 15% increase in the number of trained business performance advisors, and continuing high level of client retention, which averaged over 99% during the second quarter.

 

Gross profit increased 9% over the second quarter of 2015. Insperity said this was expected and it reflected client and product mix changes and the seasonality associated with payroll taxes and benefit plan selection. Operating expenses increased 6% and declined on a per worksite employee per month basis, from $215 in the second quarter of 2015 to $198, due to recent cost savings initiatives and the inherent leverage of the company's cost structure.

 

“Year-to-date adjusted EBITDA increased from $77 to $90 per worksite employee per month, 17% over 2015, as we have effectively managed worksite employee growth and gross profit in combination with our operating costs,” said Douglas S. Sharp, senior vice president of finance, chief financial officer and treasurer. “This high level of unit profitability combined with our double digit worksite employee growth has resulted in a 34% increase in adjusted EBITDA over the first six months of 2015.”

 

For the six months ended 30th June 2016, reported 2016 net income was $42.4m, or $1.98 per diluted share, and adjusted diluted earnings per share increased 74% to $2.23.

 

Revenues for the first six months of 2016 totalled $1.5 billion, an increase of 14% over the 2015 period. Gross profit for the six months ended 30th June 2016 increased 12% to $263.3m. Operating expenses decreased 2% to $194.2m in 2016, while adjusted operating expenses increased only 4% to $193.9m. Adjusted EBITDA increased 34% to $86.8m.

 

Cash outlays in the first six months of 2016 included the repurchase of 3.1m shares of stock at a cost of $149.1 million, dividends totalling $10.0m and capital expenditures of $12.6m.

 

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