Exhibit
Exhibit 99.2
Insperity Announces Record Third Quarter and Year-to-Date Results
| |
• | Q3 EPS up 38% to $0.66; adjusted EPS up 37% to a record $0.78 |
| |
• | Q3 net income increased 18% to $14.1 million |
| |
• | Q3 adjusted EBITDA totaled $31.3 million |
| |
• | YTD EPS increased 100% to $2.64; adjusted EPS up 62% to $3.01 |
| |
• | YTD net income increased 71% to $56.5 million |
| |
• | YTD adjusted EBITDA up 27% over 2015 to a record level of $118 million |
| |
• | Full year 2016 adjusted EPS guidance remains at a 62% increase over 2015 |
HOUSTON – Nov. 1, 2016 – Insperity, Inc. (NYSE: NSP), a leading provider of human resources and business performance solutions for America’s best businesses, today reported third quarter net income and diluted earnings per share of $14.1 million and $0.66, which represent increases of 18% and 38%, respectively, compared to the third quarter of 2015. Adjusted diluted earnings per share were $0.78, a 37% increase over the third quarter of 2015. Adjusted EBITDA increased 11% over the third quarter of 2015 to $31.3 million.
“We are pleased with our third quarter and year-to-date growth and profitability as we continue to see strong demand for our best of class service offerings,” said Paul J. Sarvadi, Insperity chairman and chief executive officer. “We are off to an excellent start on our fall campaign selling and retention season which sets the stage for a strong 2017.”
Third Quarter Results
Revenues for the third quarter of 2016 increased 12% over the third quarter of 2015 on a 13% increase in the average number of worksite employees paid per month. The worksite employee growth was the result of new client sales driven by an increase in the number of trained Business Performance Advisors and improved sales efficiency, combined with a continuing high level of client retention. Net hiring of worksite employees by our clients during the quarter was lower than recent trends, resulting in a 1% shortfall from our expected worksite employee growth rate.
Gross profit increased 10% over the third quarter of 2015 to $117.8 million and included positive results from our workers’ compensation program, which offset a higher than expected level of large healthcare claims. Operating expenses increased 9% over the third quarter of 2015, but declined on a per worksite employee per month basis, from $194 to $187. As a result, adjusted EBITDA totaled $31.3 million, above the midpoint of our expected range.
Year-to-Date Results
For the nine months ended September 30, 2016, reported net income increased 71% to $56.5 million, and diluted net income per share increased 100% to $2.64. Adjusted diluted earnings per share increased 62% to $3.01. Adjusted EBITDA increased 27% to a record $118.1 million.
Revenues for the first nine months of 2016 totaled $2.2 billion, an increase of 13% over the 2015 period. Gross profit for the nine months ended September 30, 2016 increased 12% to $381.1 million. Operating expenses increased 1% to $289.2 million in 2016, while adjusted operating expenses increased 6% to $288.9 million.
Cash outlays in the first nine months of 2016 included the repurchase of 3.2 million shares of stock at a cost of $158.2 million, dividends totaling $15.3 million and capital expenditures of $21.3 million.
“Year-to-date adjusted EBITDA increased from $72 to $80 per worksite employee per month, as we continue to effectively manage pricing, direct costs, operating expense and risk while growing worksite employees at double-digit rates,” said Douglas S. Sharp, senior vice president of finance, chief financial officer and treasurer. “This record level of unit profitability combined with our double-digit worksite employee growth has resulted in a 27% increase in adjusted EBITDA over the first nine months of 2015.”
2016 Guidance
The company also announced its updated guidance for 2016, including the fourth quarter of 2016. Please refer to the accompanying financial tables at the end of this press release for the reconciliation of non-GAAP financial measures to the comparable GAAP financial measures.
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| | | | | | | |
| Q4 2016 | | Full Year 2016 |
| | | | | | | |
Average WSEEs | 173,000 | — | 173,750 | | 166,000 | — | 166,100 |
Year-over-year increase | 13% | — | 13.5% | | 14% | — | 14% |
| | | | | | | |
Adjusted EPS | $0.52 | — | $0.57 | | $3.53 | — | $3.58 |
Year-over-year increase | 58% | — | 73% | | 61% | — | 63% |
| | | | | | | |
Adjusted EBITDA (in millions) | $22.5 | — | $24.5 | | $141 | — | $143 |
Year-over-year increase | 34% | — | 46% | | 28% | — | 30% |
Definition of Key Metrics
Average WSEEs - Determined by calculating the company’s cumulative worksite employees paid during the period divided by the number of months in the period.
Adjusted EPS - Represents diluted net income per share computed in accordance with GAAP, excluding the impact of non-cash impairment and other charges, stockholder advisory expenses and stock-based compensation.
Adjusted EBITDA - Represents net income computed in accordance with GAAP, plus interest expense, income taxes, depreciation and amortization expense, non-cash impairment and other charges, costs associated with stockholder advisory expenses and stock-based compensation.
Insperity will be hosting a conference call today at 10 a.m. ET to discuss these results, provide guidance for the fourth quarter and an update to full year guidance, and answer questions from investment analysts. To listen in, call 877-651-0053 and use conference i.d. number 96647508. The call will also be webcast at http://ir.insperity.com. The conference call script will be available at the same website later today. A replay of the conference call will be available at 855-859-2056, conference i.d. 96647508. The webcast will be archived for one year.
Insperity, a trusted advisor to America’s best businesses for more than 30 years, provides an array of human resources and business solutions designed to help improve business performance. Insperity® Business Performance Advisors offer the most comprehensive suite of products and services available in the marketplace. Insperity delivers administrative relief, better benefits, reduced liabilities and a systematic way to improve productivity through its premier Workforce Optimization® solution. Additional company offerings include Human Capital Management, Payroll Software, Time and Attendance, Performance Management, Organizational Planning, Recruiting Services, Employment Screening, Financial Services, Expense Management, Retirement Services
and Insurance Services. Insperity business performance solutions support more than 100,000 businesses with over 2 million employees. With 2015 revenues of $2.6 billion, Insperity operates in 60 offices throughout the United States. For more information, visit http://www.insperity.com.
The statements contained herein that are not historical facts are forward-looking statements within the meaning of the federal securities laws (Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934). You can identify such forward-looking statements by the words “expects,” “intends,” “plans,” “projects,” “believes,” “estimates,” “likely,” “possibly,” “probably,” “goal,” “opportunity,” “objective,” “target,” “assume,” “outlook,” “guidance,” “predicts,” “appears,” “indicator” and similar expressions. Forward-looking statements involve a number of risks and uncertainties. In the normal course of business, Insperity, Inc., in an effort to help keep our stockholders and the public informed about our operations, may from time to time issue such forward-looking statements, either orally or in writing. Generally, these statements relate to business plans or strategies, projected or anticipated benefits or other consequences of such plans or strategies, or projections involving anticipated revenues, earnings, unit growth, profit per worksite employee, pricing, operating expenses or other aspects of operating results. We base the forward-looking statements on our expectations, estimates and projections at the time such statements are made. These statements are not guarantees of future performance and involve risks and uncertainties that we cannot predict. In addition, we have based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate. Therefore, the actual results of the future events described in such forward-looking statements could differ materially from those stated in such forward-looking statements. Among the factors that could cause actual results to differ materially are: (i) adverse economic conditions; (ii) regulatory and tax developments and possible adverse application of various federal, state and local regulations; (iii) the ability to secure competitive replacement contracts for health insurance and workers’ compensation insurance at expiration of current contracts; (iv) cancellation of client contracts on short notice, or the inability to renew client contracts or attract new clients; (v) vulnerability to regional economic factors because of our geographic market concentration; (vi) increases in health insurance costs and workers’ compensation rates and underlying claims trends, health care reform, financial solvency of workers’ compensation carriers, other insurers or financial institutions, state unemployment tax rates, liabilities for employee and client actions or payroll-related claims; (vii) failure to manage growth of our operations and the effectiveness of our sales and marketing efforts; (viii) the impact of the competitive environment in the PEO industry on our growth and/or profitability; (ix) our liability for worksite employee payroll, payroll taxes and benefits costs; (x) our liability for disclosure of sensitive or private information; (xi) our ability to integrate or realize expected returns on our acquisitions; (xii) failure of our information technology systems; (xiii) an adverse final judgment or settlement of claims against Insperity; and (xiv) disruptions to our business resulting from the actions of certain stockholders. These factors are discussed in further detail in Insperity’s filings with the U.S. Securities and Exchange Commission. Any of these factors, or a combination of such factors, could materially affect the results of our operations and whether forward-looking statements we make ultimately prove to be accurate.
Except to the extent otherwise required by federal securities law, we do not undertake any obligation to update our forward-looking statements to reflect events or circumstances after the date they are made or to reflect the occurrence of unanticipated events.
Insperity, Inc.
Summary Financial Information
(in thousands, except per share amounts and statistical data)
|
| | | | | | | | |
| | September 30,
2016 | | December 31,
2015 |
| | (Unaudited) | | |
Assets: | | | | |
Cash and cash equivalents | | $ | 223,550 |
| | $ | 269,538 |
|
Restricted cash | | 41,779 |
| | 37,418 |
|
Marketable securities | | 1,820 |
| | 9,875 |
|
Accounts receivable, net | | 241,409 |
| | 200,665 |
|
Prepaid insurance | | 17,596 |
| | 7,417 |
|
Other current assets | | 18,426 |
| | 17,135 |
|
Income taxes receivable | | 4,084 |
| | — |
|
Total current assets | | 548,664 |
| | 542,048 |
|
Property and equipment, net | | 72,737 |
| | 61,759 |
|
Prepaid health insurance | | 9,000 |
| | 9,000 |
|
Deposits | | 139,288 |
| | 140,162 |
|
Goodwill and other intangible assets, net | | 13,213 |
| | 13,588 |
|
Deferred income taxes, net | | 9,771 |
| | 16,976 |
|
Other assets | | 2,213 |
| | 1,379 |
|
Total assets | | $ | 794,886 |
| | $ | 784,912 |
|
Liabilities and stockholders’ equity: | | | | |
Accounts payable | | $ | 4,034 |
| | $ | 5,381 |
|
Payroll taxes and other payroll deductions payable | | 162,076 |
| | 205,393 |
|
Accrued worksite employee payroll cost | | 202,502 |
| | 161,917 |
|
Accrued health insurance costs | | 20,707 |
| | 13,643 |
|
Accrued workers’ compensation costs | | 43,930 |
| | 39,053 |
|
Accrued corporate payroll and commissions | | 28,446 |
| | 39,103 |
|
Other accrued liabilities | | 23,170 |
| | 20,250 |
|
Income taxes payable | | — |
| | 2,971 |
|
Total current liabilities | | 484,865 |
| | 487,711 |
|
Accrued workers’ compensation costs | | 136,041 |
| | 124,746 |
|
Long-term debt | | 104,400 |
| | — |
|
Total noncurrent liabilities | | 240,441 |
| | 124,746 |
|
Stockholders’ equity: | | | | |
Common stock | | 277 |
| | 308 |
|
Additional paid-in capital | | 7,047 |
| | 144,701 |
|
Treasury stock, at cost | | (211,662 | ) | | (205,325 | ) |
Retained earnings | | 273,918 |
| | 232,771 |
|
Total stockholders’ equity | | 69,580 |
| | 172,455 |
|
Total liabilities and stockholders’ equity | | $ | 794,886 |
| | $ | 784,912 |
|
Insperity, Inc.
Summary Financial Information (continued)
(in thousands, except per share amounts and statistical data)
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| 2016 | | 2015 | | Change | | 2016 | | 2015 | | Change |
Operating results: | | | | | | | | | | | |
Revenues (gross billings of $4.314 billion, $3.826 billion, $13.040 billion and $11.469 billion less worksite employee payroll cost of $3.611 billion, $3.200 billion, $10.828 billion and $9.515 billion, respectively) | $ | 702,538 |
| | $ | 626,286 |
| | 12.2 | % | | $ | 2,212,278 |
| | $ | 1,953,603 |
| | 13.2 | % |
Direct costs: | | | | | | | | | | | |
Payroll taxes, benefits and workers’ compensation costs | 584,742 |
| | 519,543 |
| | 12.5 | % | | 1,831,207 |
| | 1,612,781 |
| | 13.5 | % |
Gross profit | 117,796 |
| | 106,743 |
| | 10.4 | % | | 381,071 |
| | 340,822 |
| | 11.8 | % |
Operating expenses: | | | | | | | | | | | |
Salaries, wages and payroll taxes | 56,897 |
| | 51,329 |
| | 10.8 | % | | 170,910 |
| | 158,311 |
| | 8.0 | % |
Stock-based compensation | 4,191 |
| | 3,710 |
| | 13.0 | % | | 12,527 |
| | 10,174 |
| | 23.1 | % |
Commissions | 5,030 |
| | 4,516 |
| | 11.4 | % | | 13,646 |
| | 12,923 |
| | 5.6 | % |
Advertising | 3,540 |
| | 3,193 |
| | 10.9 | % | | 13,299 |
| | 13,257 |
| | 0.3 | % |
General and administrative expenses | 21,318 |
| | 19,572 |
| | 8.9 | % | | 66,356 |
| | 65,002 |
| | 2.1 | % |
Depreciation and amortization | 4,047 |
| | 4,487 |
| | (9.8 | )% | | 12,494 |
| | 14,362 |
| | (13.0 | )% |
Impairment charges and other | — |
| | — |
| | — |
| | — |
| | 11,120 |
| | — |
|
Total operating expenses | 95,023 |
| | 86,807 |
| | 9.4 | % | | 289,232 |
| | 285,149 |
| | 1.4 | % |
Operating income | 22,773 |
| | 19,936 |
| | 14.2 | % | | 91,839 |
| | 55,673 |
| | 65.0 | % |
Other income (expense): | | | | | | | | | | | |
Interest income | 335 |
| | 145 |
| | 131.0 | % | | 927 |
| | 336 |
| | 175.9 | % |
Interest expense | (628 | ) | | (126 | ) | | 398.4 | % | | (1,915 | ) | | (350 | ) | | 447.1 | % |
Income before income tax expense | 22,480 |
| | 19,955 |
| | 12.7 | % | | 90,851 |
| | 55,659 |
| | 63.2 | % |
Income tax expense | 8,415 |
| | 8,005 |
| | 5.1 | % | | 34,380 |
| | 22,608 |
| | 52.1 | % |
Net income | $ | 14,065 |
| | $ | 11,950 |
| | 17.7 | % | | $ | 56,471 |
| | $ | 33,051 |
| | 70.9 | % |
Less distributed and undistributed earnings allocated to participating securities | (330 | ) | | (303 | ) | | 8.9 | % | | (1,283 | ) | | (822 | ) | | 56.1 | % |
Net income allocated to common shares | $ | 13,735 |
| | $ | 11,647 |
| | 17.9 | % | | $ | 55,188 |
| | $ | 32,229 |
| | 71.2 | % |
Basic net income per share of common stock | $ | 0.66 |
| | $ | 0.48 |
| | 37.5 | % | | $ | 2.64 |
| | $ | 1.32 |
| | 100.0 | % |
Diluted net income per share of common stock | $ | 0.66 |
| | $ | 0.48 |
| | 37.5 | % | | $ | 2.64 |
| | $ | 1.32 |
| | 100.0 | % |
Insperity, Inc.
Summary Financial Information (continued)
(in thousands, except per share amounts and statistical data)
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| 2016 | | 2015 | | Change | | 2016 | | 2015 | | Change |
| | | | | | | | | | | |
Statistical Data: | | | | | | | | | | | |
Average number of worksite employees paid per month | 168,909 |
| | 149,086 |
| | 13.3 | % | | 163,607 |
| | 143,392 |
| | 14.1 | % |
Revenues per worksite employee per month(1) | $ | 1,386 |
| | $ | 1,400 |
| | (1.0 | )% | | $ | 1,502 |
| | $ | 1,514 |
| | (0.8 | )% |
Gross profit per worksite employee per month | 232 |
| | 239 |
| | (2.9 | )% | | 259 |
| | 264 |
| | (1.9 | )% |
Operating expenses per worksite employee per month | 187 |
| | 194 |
| | (3.6 | )% | | 197 |
| | 221 |
| | (10.9 | )% |
Operating income per worksite employee per month | 45 |
| | 45 |
| | — |
| | 62 |
| | 43 |
| | 44.2 | % |
Net income per worksite employee per month | 28 |
| | 27 |
| | 3.7 | % | | 38 |
| | 26 |
| | 46.2 | % |
(1) Gross billings of $8,513, $8,555, $8,856 and $8,887 per worksite employee per month, less payroll cost of $7,127, $7,155, $7,354 and $7,373 per worksite employee per month, respectively.
Insperity, Inc.
Summary Financial Information (continued)
(in thousands, except per share amounts and statistical data)
(Unaudited)
GAAP to Non-GAAP Reconciliation Tables
|
| | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| | 2016 | | 2015 | | Change | | 2016 | | 2015 | | Change |
| | | | | | | | | | | | |
Payroll cost (GAAP) | | $ | 3,611,159 |
| | $ | 3,199,788 |
| | 12.9 | % | | $ | 10,828,301 |
| | $ | 9,515,662 |
| | 13.8 | % |
Less: Bonus payroll cost | | 255,112 |
| | 262,445 |
| | (2.8 | )% | | 1,050,649 |
| | 1,038,315 |
| | 1.2 | % |
Non-bonus payroll cost | | $ | 3,356,047 |
| | $ | 2,937,343 |
| | 14.3 | % | | $ | 9,777,652 |
| | $ | 8,477,347 |
| | 15.3 | % |
| | | | | | | | | | | | |
Payroll cost per worksite employee per month (GAAP) | | $ | 7,127 |
| | $ | 7,155 |
| | (0.4 | )% | | $ | 7,354 |
| | $ | 7,373 |
| | (0.3 | )% |
Less: Bonus payroll cost per worksite employee per month | | 504 |
| | 588 |
| | (14.3 | )% | | 714 |
| | 805 |
| | (11.3 | )% |
Non-bonus payroll cost per worksite employee per month | | $ | 6,623 |
| | $ | 6,567 |
| | 0.9 | % | | $ | 6,640 |
| | $ | 6,568 |
| | 1.1 | % |
Non-bonus payroll cost represents payroll cost excluding the impact of bonus payrolls paid to the company’s worksite employees. Bonus payroll cost varies from period to period, but has no direct impact to the company’s ultimate workers’ compensation costs under the current program. As a result, Insperity management refers to non-bonus payroll cost in analyzing, reporting and forecasting the company’s workers’ compensation costs.
|
| | | | | | | | |
| | September 30,
2016 | | December 31,
2015 |
| | |
Cash, cash equivalents and marketable securities (GAAP) | | $ | 225,370 |
| | $ | 279,413 |
|
Less: Amounts payable for withheld federal and state income taxes, employment taxes and other payroll deductions | | 148,789 |
| | 185,719 |
|
Customer prepayments | | 8,661 |
| | 17,037 |
|
Adjusted cash, cash equivalents and marketable securities | | $ | 67,920 |
| | $ | 76,657 |
|
Adjusted cash, cash equivalents and marketable securities excludes funds associated with federal and state income tax withholdings, employment taxes and other payroll deductions, as well as client prepayments. Insperity management believes adjusted cash, cash equivalents and marketable securities is a useful measure of the company’s available funds.
|
| | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| | 2016 | | 2015 | | Change | | 2016 | | 2015 | | Change |
| | | | | | | | | | | | |
Operating expenses (GAAP) | | $ | 95,023 |
| | $ | 86,807 |
| | 9.4 | % | | $ | 289,232 |
| | $ | 285,149 |
| | 1.4 | % |
Less: Impairment charges and other | | — |
| | — |
| | — |
| | — |
| | 11,120 |
| | (100.0 | )% |
Stockholder advisory expenses | | — |
| | — |
| | — |
| | 323 |
| | 1,546 |
| | (79.1 | )% |
Adjusted operating expenses | | $ | 95,023 |
| | $ | 86,807 |
| | 9.4 | % | | $ | 288,909 |
| | $ | 272,483 |
| | 6.0 | % |
| | | | | | | | | | | | |
Operating expenses per worksite employee per month (GAAP) | | $ | 187 |
| | $ | 194 |
| | (3.6 | )% | | $ | 197 |
| | $ | 221 |
| | (10.9 | )% |
Less: Impairment charges and other per worksite employee per month | | — |
| | — |
| | — |
| | — |
| | 9 |
| | (100.0 | )% |
Stockholder advisory expenses per worksite employee per month | | — |
| | — |
| | — |
| | — |
| | 1 |
| | (100.0 | )% |
Adjusted operating expenses per worksite employee per month | | $ | 187 |
| | $ | 194 |
| | (3.6 | )% | | $ | 197 |
| | $ | 211 |
| | (6.6 | )% |
Adjusted operating expenses represent operating expenses excluding the impact of impairment and other charges related to the sale of two aircraft and stockholder advisory expenses. Insperity management believes adjusted operating expenses is a useful measure of the company’s operating costs, as it allows for additional analysis of the company’s operating expenses separate from the impact of these items.
|
| | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| | |
| | 2016 | | 2015 | | Change | | 2016 | | 2015 | | Change |
| | | | | | | | | | | | |
Net income (GAAP) | | $ | 14,065 |
| | $ | 11,950 |
| | 17.7 | % | | $ | 56,471 |
| | $ | 33,051 |
| | 70.9 | % |
Income tax expense | | 8,415 |
| | 8,005 |
| | 5.1 | % | | 34,380 |
| | 22,608 |
| | 52.1 | % |
Interest expense | | 628 |
| | 126 |
| | 398.4 | % | | 1,915 |
| | 350 |
| | 447.1 | % |
Depreciation and amortization | | 4,047 |
| | 4,487 |
| | (9.8 | )% | | 12,494 |
| | 14,362 |
| | (13.0 | )% |
EBITDA | | 27,155 |
| | 24,568 |
| | 10.5 | % | | 105,260 |
| | 70,371 |
| | 49.6 | % |
Impairment charges and other | | — |
| | — |
| | — |
| | — |
| | 11,120 |
| | (100.0 | )% |
Stock-based compensation | | 4,191 |
| | 3,710 |
| | 13.0 | % | | 12,527 |
| | 10,174 |
| | 23.1 | % |
Stockholder advisory expenses | | — |
| | — |
| | — |
| | 323 |
| | 1,546 |
| | (79.1 | )% |
Adjusted EBITDA | | $ | 31,346 |
| | $ | 28,278 |
| | 10.8 | % | | $ | 118,110 |
| | $ | 93,211 |
| | 26.7 | % |
| | | | | | | | | | | | |
Net income per worksite employee per month (GAAP) | | $ | 28 |
| | $ | 27 |
| | 3.7 | % | | $ | 38 |
| | $ | 26 |
| | 46.2 | % |
Income tax expense per worksite employee per month | | 17 |
| | 18 |
| | (5.6 | )% | | 23 |
| | 18 |
| | 27.8 | % |
Interest expense per worksite employee per month | | 1 |
| | — |
| | — |
| | 1 |
| | — |
| | — |
|
Depreciation and amortization per worksite employee per month | | 8 |
| | 10 |
| | (20.0 | )% | | 9 |
| | 11 |
| | (18.2 | )% |
EBITDA per worksite employee per month | | 54 |
| | 55 |
| | (1.8 | )% | | 71 |
| | 55 |
| | 29.1 | % |
Impairment charges and other per worksite employee per month | | — |
| | — |
| | — |
| | — |
| | 9 |
| | (100.0 | )% |
Stock-based compensation per worksite employee per month | | 8 |
| | 8 |
| | — |
| | 9 |
| | 7 |
| | 28.6 | % |
Stockholder advisory expenses per worksite employee per month | | — |
| | — |
| | — |
| | — |
| | 1 |
| | (100.0 | )% |
Adjusted EBITDA per worksite employee per month | | $ | 62 |
| | $ | 63 |
| | (1.6 | )% | | $ | 80 |
| | $ | 72 |
| | 11.1 | % |
EBITDA represents net income computed in accordance with generally accepted accounting principles (“GAAP”), plus interest expense, income tax expense, depreciation and amortization expense. Adjusted EBITDA represents EBITDA plus non-cash impairment and other charges, costs associated with stockholder advisory expenses and stock-based compensation. Insperity management believes EBITDA and Adjusted EBITDA are often useful measures of the company’s operating performance, as they allow for additional analysis of the company’s operating results separate from the impact of these items.
|
| | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| | |
| | 2016 | | 2015 | | Change | | 2016 | | 2015 | | Change |
| | | | | | | | | | | | |
Net income (GAAP) | | $ | 14,065 |
| | $ | 11,950 |
| | 17.7 | % | | $ | 56,471 |
| | $ | 33,051 |
| | 70.9 | % |
| | | | | | | | | | | | |
Impairment charges and other | | — |
| | — |
| | — |
| | — |
| | 11,120 |
| | (100.0 | )% |
Stock-based compensation | | 4,191 |
| | 3,710 |
| | 13.0 | % | | 12,527 |
| | 10,174 |
| | 23.1 | % |
Stockholder advisory expenses | | — |
| | — |
| | — |
| | 323 |
| | 1,546 |
| | (79.1 | )% |
Total non-GAAP adjustments | | 4,191 |
| | 3,710 |
| | 13.0 | % | | 12,850 |
| | 22,840 |
| | (43.7 | )% |
Tax effect on non-GAAP adjustments | | (1,569 | ) | | (1,489 | ) | | 5.4 | % | | (4,858 | ) | | (9,313 | ) | | (47.8 | )% |
Adjusted net income (non-GAAP) | | $ | 16,687 |
| | $ | 14,171 |
| | 17.8 | % | | $ | 64,463 |
| | $ | 46,578 |
| | 38.4 | % |
|
| | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended
September 30, | | Nine Months Ended
September 30, |
| | |
| | 2016 | | 2015 | | Change | | 2016 | | 2015 | | Change |
| | | | | | | | | | | | |
Diluted net income per share of common stock (GAAP) | | $ | 0.66 |
| | $ | 0.48 |
| | 37.5 | % | | $ | 2.64 |
| | $ | 1.32 |
| | 100.0 | % |
| | | | | | | | | | | | |
Impairment charges and other | | — |
| | — |
| | — |
| | — |
| | 0.44 |
| | (100.0 | )% |
Stock-based compensation | | 0.20 |
| | 0.15 |
| | 33.3 | % | | 0.59 |
| | 0.40 |
| | 47.5 | % |
Stockholder advisory expenses | | — |
| | — |
| | — |
| | 0.02 |
| | 0.06 |
| | (66.7 | )% |
Total non-GAAP adjustments | | 0.20 |
| | 0.15 |
| | 33.3 | % | | 0.61 |
| | 0.90 |
| | (32.2 | )% |
Tax effect on non-GAAP adjustments | | (0.08 | ) | | (0.06 | ) | | 33.3 | % | | (0.24 | ) | | (0.36 | ) | | (33.3 | )% |
Adjusted diluted net income per share of common stock | | $ | 0.78 |
| | $ | 0.57 |
| | 36.8 | % | | $ | 3.01 |
| | $ | 1.86 |
| | 61.8 | % |
Adjusted net income and adjusted diluted net income per share of common stock represent net income and diluted net income per share computed in accordance with GAAP, excluding the impact of non-cash impairment and other charges related to the sale of two aircraft in 2015, stock-based compensation and costs associated with stockholder advisory expenses. Insperity management believes adjusted net income and adjusted diluted net income per share are useful measures of the company’s operating performance in this period, as they allow for additional analysis of the company’s operating results separate from the impact of these items.
Non-bonus payroll, adjusted cash, cash equivalents and marketable securities, adjusted operating expenses, EBITDA, adjusted EBITDA, adjusted net income and adjusted diluted net income per share of common stock are not financial measures prepared in accordance with GAAP and may be different from similar measures used by other companies. Non-bonus payroll, adjusted cash, cash equivalents and marketable securities, adjusted operating expenses, EBITDA, adjusted EBITDA, adjusted net income and adjusted diluted net income per share of common stock should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of the non-GAAP financial measures used in this press release to their most directly comparable GAAP financial measures as provided in the tables above.
The following is a reconciliation of GAAP to non-GAAP financial measures for fourth quarter and full year 2016 guidance (in millions, except per share amounts):
|
| | | | | | |
| | Q4 2016
Guidance | | Full Year 2016
Guidance |
| | | | |
Net income (GAAP) | | $7.5 - $9.5 |
| | $64 - $66 |
|
Income tax expense | | 6 |
| | 40 |
|
Interest expense | | 1 |
| | 3 |
|
Depreciation and amortization | | 4 |
| | 17 |
|
EBITDA | | 18.5 - 20.5 |
| | 124 - 126 |
|
Stock-based compensation | | 4 |
| | 17 |
|
Adjusted EBITDA | | $22.5 - $24.5 |
| | $141 - $143 |
|
| | | | |
Diluted net income per share of common stock (GAAP) | | $0.40 - $0.45 |
| | $3.04 - $3.09 |
|
Stock-based compensation | | 0.20 |
| | 0.78 |
|
Stockholder advisory expenses | | — |
| | 0.02 |
|
Total non-GAAP adjustments | | 0.20 |
| | 0.80 |
|
Tax effect on non-GAAP adjustments | | (0.08 | ) | | (0.31 | ) |
Adjusted EPS | | $0.52 - $0.57 |
| | $3.53 - $3.58 |
|
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