Delaware | 001-36373 | 95-3359658 |
(State or Other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
1100 San Leandro Blvd., Suite 400 San Leandro, CA | 94577 | |
(Address of Principal Executive Offices) | (Zip Code) |
¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Exhibit Number | Description |
99.1 | Press release, dated May 2, 2017, entitled “TriNet Announces First Quarter 2017 Results." |
TriNet Group, Inc. | |||
Date: | May 2, 2017 | By: | /s/ Brady Mickelsen |
Brady Mickelsen | |||
Senior Vice President, Chief Legal Officer and Secretary |
Exhibit Number | Description |
99.1 | Press release, dated May 2, 2017, entitled “TriNet Announces First Quarter 2017 Results." |
• | Total revenues increased 10% to $807.6 million, while Net Service Revenues increased 22% to $199.0 million, each as compared to the same period last year. |
• | Total WSEs at March 31, 2017 increased 2% from March 31, 2016, to approximately 331,000. |
• | Average WSEs increased 3% to approximately 328,000 as compared to the same period last year. |
• | Net income was $28.7 million, or $0.41 per diluted share, compared to net income of $11.6 million, or $0.16 per diluted share, in the same period last year. |
• | Adjusted Net Income was $31.6 million, or $0.45 per diluted share, compared to Adjusted Net Income of $19.5 million, or $0.27 per diluted share, in the same period last year. |
• | Adjusted EBITDA was $63.3 million, a 50% increase from the same period last year. |
Contacts: | |
Investors: | Media: |
Alex Bauer | Fatima Afzal |
TriNet | TriNet |
Investorrelations@TriNet.com | Fatima.Afzal@TriNet.com |
(510) 875-7201 | (510) 875-7265 |
FINANCIAL HIGHLIGHTS |
Three Months Ended March 31, | Percent | |||||||||
(in thousands, except per share and operating metrics data) | 2017 | 2016 | Change | |||||||
Income Statement Data: | ||||||||||
Total revenues | $ | 807,610 | $ | 732,939 | 10 | % | ||||
Operating income | 49,487 | 25,902 | 91 | |||||||
Net income | 28,737 | 11,577 | 148 | |||||||
Diluted net income per share of common stock | 0.41 | 0.16 | 156 | |||||||
Non-GAAP measures (1): | ||||||||||
Net Service Revenues (1) | 198,968 | 163,250 | 22 | |||||||
Net Insurance Service Revenues (1) | 78,847 | 50,847 | 55 | |||||||
Adjusted EBITDA (1) | 63,343 | 42,153 | 50 | |||||||
Adjusted Net income (1) | 31,577 | 19,533 | 62 | |||||||
Operating Metrics: | ||||||||||
Total WSEs payroll and payroll taxes processed (in millions) | $ | 9,816 | $ | 9,402 | 4 | % | ||||
Total WSEs at period end | 330,731 | 324,103 | 2 | |||||||
Average WSEs | 327,803 | 319,424 | 3 | |||||||
Cash Flow Data: | ||||||||||
Net cash provided by operating activities | $ | 75,904 | $ | 40,431 | 88 | % | ||||
Net cash used in investing activities | (6,848 | ) | (5,607 | ) | 22 | |||||
Net cash used in financing activities | (37,052 | ) | (5,224 | ) | 609 |
(1) | Refer to Non-GAAP Financial Measures section below for definitions and reconciliations from GAAP measures. |
(in thousands) | March 31, 2017 | December 31, 2016 | Percent Change | ||||||||
Balance Sheet Data: | |||||||||||
Cash and cash equivalents | $ | 216,054 | $ | 184,004 | 17 | % | |||||
Working capital | 159,869 | 156,771 | 2 | ||||||||
Total assets | 1,872,672 | 2,095,143 | (11 | ) | |||||||
Notes and capital leases payable | 449,934 | 459,054 | (2 | ) | |||||||
Total liabilities | 1,830,125 | 2,060,553 | (11 | ) | |||||||
Total stockholders’ equity | 42,547 | 34,590 | 23 |
FINANCIAL STATEMENTS |
Three Months Ended March 31, | ||||||
(in thousands, except share and per share data) | 2017 | 2016 | ||||
Professional service revenues | $ | 120,121 | $ | 112,403 | ||
Insurance service revenues | 687,489 | 620,536 | ||||
Total revenues | 807,610 | 732,939 | ||||
Insurance costs | 608,642 | 569,689 | ||||
Cost of providing services (exclusive of depreciation and amortization of intangible assets) | 56,450 | 45,705 | ||||
Sales and marketing | 49,191 | 48,708 | ||||
General and administrative | 25,302 | 27,650 | ||||
Systems development and programming | 11,040 | 6,389 | ||||
Amortization of intangible assets | 1,350 | 4,980 | ||||
Depreciation | 6,148 | 3,916 | ||||
Total costs and operating expenses | 758,123 | 707,037 | ||||
Operating income | 49,487 | 25,902 | ||||
Other income (expense): | ||||||
Interest expense and bank fees | (4,748 | ) | (5,042 | ) | ||
Other, net | 151 | (42 | ) | |||
Income before provision for income taxes | 44,890 | 20,818 | ||||
Income tax expense | 16,153 | 9,241 | ||||
Net income | $ | 28,737 | $ | 11,577 | ||
Other comprehensive income, net of tax | 12 | 351 | ||||
Comprehensive income | $ | 28,749 | $ | 11,928 | ||
Net income per share: | ||||||
Basic | $ | 0.42 | $ | 0.16 | ||
Diluted | $ | 0.41 | $ | 0.16 | ||
Weighted average shares: | ||||||
Basic | 68,509,328 | 70,521,066 | ||||
Diluted | 70,913,970 | 71,745,753 |
FINANCIAL STATEMENTS |
(in thousands) | March 31, 2017 | December 31, 2016 | ||||
Assets | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 216,054 | $ | 184,004 | ||
Restricted cash and cash equivalents | 14,578 | 14,569 | ||||
Prepaid income taxes | 27,583 | 42,381 | ||||
Prepaid expenses | 9,051 | 10,784 | ||||
Other current assets | 2,005 | 2,145 | ||||
Worksite employee related assets | 1,039,349 | 1,281,471 | ||||
Total current assets | 1,308,620 | 1,535,354 | ||||
Workers' compensation collateral receivable | 34,755 | 31,883 | ||||
Restricted cash, cash equivalents and investments | 127,715 | 130,501 | ||||
Property and equipment, net | 63,417 | 58,622 | ||||
Goodwill | 289,207 | 289,207 | ||||
Other intangible assets, net | 29,724 | 31,074 | ||||
Other assets | 19,234 | 18,502 | ||||
Total assets | $ | 1,872,672 | $ | 2,095,143 | ||
Liabilities and stockholders’ equity | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 22,598 | $ | 22,541 | ||
Accrued corporate wages | 40,908 | 30,937 | ||||
Notes and capital leases payable, net | 36,606 | 36,559 | ||||
Other current liabilities | 14,546 | 12,551 | ||||
Worksite employee related liabilities | 1,034,093 | 1,275,995 | ||||
Total current liabilities | 1,148,751 | 1,378,583 | ||||
Notes and capital leases payable, net, noncurrent | 413,328 | 422,495 | ||||
Workers' compensation loss reserves | 164,671 | 159,301 | ||||
Deferred income taxes | 91,847 | 92,373 | ||||
Other liabilities | 11,528 | 7,801 | ||||
Total liabilities | 1,830,125 | 2,060,553 | ||||
Commitments and contingencies | ||||||
Stockholders’ equity: | ||||||
Preferred stock | — | — | ||||
Common stock and additional paid-in capital | 543,600 | 535,132 | ||||
Accumulated deficit | (500,461 | ) | (499,938 | ) | ||
Accumulated other comprehensive loss | (592 | ) | (604 | ) | ||
Total stockholders’ equity | 42,547 | 34,590 | ||||
Total liabilities and stockholders’ equity | $ | 1,872,672 | $ | 2,095,143 |
FINANCIAL STATEMENTS |
Three Months Ended March 31, | ||||||
(in thousands) | 2017 | 2016 | ||||
Operating activities | ||||||
Net income | $ | 28,737 | $ | 11,577 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Depreciation and amortization | 8,123 | 8,746 | ||||
Stock-based compensation | 6,207 | 7,397 | ||||
Changes in operating assets and liabilities: | ||||||
Restricted cash and cash equivalents | (877 | ) | (3,202 | ) | ||
Prepaid income taxes | 14,798 | 6,735 | ||||
Prepaid expenses and other current assets | 1,701 | (1,157 | ) | |||
Workers' compensation collateral receivable | (2,872 | ) | (7,688 | ) | ||
Other assets | 148 | (312 | ) | |||
Accounts payable | (413 | ) | 6,111 | |||
Accrued corporate wages and other current liabilities | 11,903 | (2,505 | ) | |||
Workers' compensation loss reserves and other non-current liabilities | 8,229 | 15,205 | ||||
Worksite employee related assets | 242,122 | 346,563 | ||||
Worksite employee related liabilities | (241,902 | ) | (347,039 | ) | ||
Net cash provided by operating activities | 75,904 | 40,431 | ||||
Investing activities | ||||||
Acquisitions of businesses | — | (300 | ) | |||
Proceeds from maturity of marketable securities | 3,625 | 1,500 | ||||
Acquisitions of property and equipment | (10,473 | ) | (6,807 | ) | ||
Net cash used in investing activities | (6,848 | ) | (5,607 | ) | ||
Financing activities | ||||||
Repurchase of common stock | (27,595 | ) | — | |||
Proceeds from issuance of common stock on exercised options | 2,099 | 504 | ||||
Awards effectively repurchased for required employee withholding taxes | (1,987 | ) | (656 | ) | ||
Repayment of notes and capital leases payable | (9,569 | ) | (5,072 | ) | ||
Net cash used in financing activities | (37,052 | ) | (5,224 | ) | ||
Effect of exchange rate changes on cash and cash equivalents | 46 | 160 | ||||
Net increase in cash and cash equivalents | 32,050 | 29,760 | ||||
Cash and cash equivalents at beginning of period | 184,004 | 166,178 | ||||
Cash and cash equivalents at end of period | $ | 216,054 | $ | 195,938 | ||
Supplemental disclosures of cash flow information | ||||||
Interest paid | $ | 4,162 | $ | 4,083 | ||
Income taxes paid (refunded), net | (564 | ) | 2,572 | |||
Supplemental schedule of noncash investing and financing activities | ||||||
Payable for purchase of property and equipment | $ | 1,971 | $ | 1,435 |
NON-GAAP FINANCIAL MEASURES |
NON-GAAP FINANCIAL MEASURES |
Non-GAAP Measure | Definition | How We Use The Measure |
Net Service Revenues | • Sum of professional service revenues and Net Insurance Service Revenues, or total revenues less insurance costs. | • Provides a comparable basis of revenues on a net basis. Professional service revenues are represented net of client payroll costs whereas insurance service revenues are presented gross of insurance costs for financial reporting purposes. • Acts as the basis to allocate resources to different functions and evaluates the effectiveness of our business strategies by each business function, and • Provides a measure, among others, used in the determination of incentive compensation for management. |
Net Insurance Service Revenues | • Insurance revenues less insurance costs. | • Is a component of Net Service Revenues, and • Provides a comparable basis of revenues on a net basis. Professional service revenues are represented net of client payroll costs whereas insurance service revenues are presented gross of insurance costs for financial reporting purposes. Promotes an understanding of our insurance services business by evaluating insurance service revenues net of our WSE related costs which are substantially pass-through for the benefit of our WSEs. Under GAAP, insurance service revenues and costs are recorded gross as we have latitude in establishing the price, service and supplier specifications. |
Adjusted EBITDA | • Net income, excluding the effects of: - income tax provision, - interest expense, - depreciation, - amortization of intangible assets, and - stock-based compensation expense. | • Provides period-to-period comparisons on a consistent basis and an understanding as to how our management evaluates the effectiveness of our business strategies by excluding certain non-cash charges such as depreciation and amortization, and stock-based compensation recognized based on the estimated fair values. We believe these charges are not directly resulting from our core operations or indicative of our ongoing operations. • Enhances comparisons to prior periods and, accordingly, facilitates the development of future projections and earnings growth prospects, and • Provides a measure, among others, used in the determination of incentive compensation for management. |
Adjusted Net Income | • Net income, excluding the effects of: - effective income tax rate(1), - stock-based compensation, - amortization of intangible assets, - non-cash interest expense(2), and - the income tax effect (at our effective tax rate(1)) of these pre-tax adjustments. | • Provides information to our stockholders and board of directors to understand how our management evaluates our business, to monitor and evaluate our operating results, and analyze profitability of our ongoing operations and trends on a consistent basis by excluding certain non-cash charges. |
(1) | We have adjusted the non-GAAP effective tax rate to 40.5% for 2017, from 42.5% for 2016, due to a decrease in state income taxes from an increase in excludable income for state income tax purposes. These non-GAAP effective tax rates exclude the income tax impact from stock-based compensation and changes in uncertain tax positions. |
(2) | Non-cash interest expense represents amortization and write-off of our debt issuance costs. |
NON-GAAP FINANCIAL MEASURES |
Three Months Ended March 31, | Change 2017 vs. 2016 | ||||||||||||
(in thousands) | 2017 | 2016 | $ | % | |||||||||
Total revenues | $ | 807,610 | $ | 732,939 | $ | 74,671 | 10 | % | |||||
Less: Insurance costs | 608,642 | 569,689 | 38,953 | 7 | |||||||||
Net Service Revenues | $ | 198,968 | $ | 163,250 | $ | 35,718 | 22 | % |
Three Months Ended March 31, | Change 2017 vs. 2016 | ||||||||||||
(in thousands) | 2017 | 2016 | $ | % | |||||||||
Insurance service revenues | $ | 687,489 | $ | 620,536 | $ | 66,953 | 11 | % | |||||
Less: Insurance costs | 608,642 | 569,689 | 38,953 | 7 | |||||||||
Net Insurance Service Revenues | $ | 78,847 | $ | 50,847 | $ | 28,000 | 55 | % |
Three Months Ended March 31, | |||||||
(in thousands) | 2017 | 2016 | |||||
Net income | $ | 28,737 | $ | 11,577 | |||
Provision for income taxes | 16,153 | 9,241 | |||||
Stock-based compensation | 6,207 | 7,397 | |||||
Interest expense and bank fees | 4,748 | 5,042 | |||||
Depreciation | 6,148 | 3,916 | |||||
Amortization of intangible assets | 1,350 | 4,980 | |||||
Adjusted EBITDA | $ | 63,343 | $ | 42,153 |
Three Months Ended March 31, | |||||||
(in thousands) | 2017 | 2016 | |||||
Net income | $ | 28,737 | $ | 11,577 | |||
Effective income tax rate adjustment | (2,027 | ) | 394 | ||||
Stock-based compensation | 6,207 | 7,397 | |||||
Amortization of intangible assets | 1,350 | 4,980 | |||||
Non-cash interest expense | 622 | 775 | |||||
Income tax impact of pre-tax adjustments | (3,312 | ) | (5,590 | ) | |||
Adjusted Net Income | $ | 31,577 | $ | 19,533 | |||
GAAP Weighted average shares of common stock - diluted | 70,914 | 71,746 | |||||
Adjusted Net Income per share - diluted | $ | 0.45 | $ | 0.27 |