(State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) | |||||||||
(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)) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Exhibit Number | Description | ||||
99.1 | Press Release, dated October 25, 2021, entitled “TriNet Announces Third Quarter 2021 Results" | ||||
104 | Cover Page Interactive Data File (embedded with the Inline XBRL document) |
Exhibit Number | Description | ||||
99.1 | |||||
104 | Cover Page Interactive Data File (embedded with the Inline XBRL document) |
TriNet Group, Inc. | |||||||||||
Date: | October 25, 2021 | By: | /s/ Samantha Wellington | ||||||||
Samantha Wellington | |||||||||||
Senior Vice President, Chief Legal Officer and Secretary |
Q4 2021 | Full Year 2021 | |||||||||||||||||||||||||
Low | High | Low | High | |||||||||||||||||||||||
Total Revenues | 12 | % | 14 | % | 11 | % | 12 | % | ||||||||||||||||||
Professional Service Revenues | 16 | % | 20 | % | 15 | % | 16 | % | ||||||||||||||||||
Insurance Cost Ratio | 94 | % | 92 | % | 87.0 | % | 86.5 | % | ||||||||||||||||||
Diluted net income per share of common stock | $ | 0.17 | $ | 0.40 | $ | 4.20 | $ | 4.43 | ||||||||||||||||||
Adjusted Net Income per share - diluted | $ | 0.36 | $ | 0.60 | $ | 4.88 | $ | 5.12 |
Contacts: | |||||
Investors: | Media: | ||||
Alex Bauer | Renee Brotherton | ||||
TriNet | TriNet | ||||
Investorrelations@TriNet.com | Renee.Brotherton@TriNet.com | ||||
(510) 875-7201 | (925) 965-8441 |
FINANCIAL HIGHLIGHTS |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||||||||||||||||
(in millions, except per share and Operating Metrics data) | 2021 | 2020 | % Change | 2021 | 2020 | % Change | |||||||||||||||||||||||||||||||||||
Income Statement Data: | |||||||||||||||||||||||||||||||||||||||||
Total revenues | $ | 1,148 | $ | 975 | 18 | % | $ | 3,308 | $ | 2,971 | 11 | % | |||||||||||||||||||||||||||||
Operating income | 105 | 45 | 133 | 364 | 338 | 8 | |||||||||||||||||||||||||||||||||||
Net income | 77 | 33 | 133 | 269 | 250 | 8 | |||||||||||||||||||||||||||||||||||
Diluted net income per share of common stock | 1.16 | 0.48 | 142 | 4.03 | 3.66 | 10 | |||||||||||||||||||||||||||||||||||
Non-GAAP measures (1): | |||||||||||||||||||||||||||||||||||||||||
Adjusted EBITDA | 132 | 69 | 91 | 449 | 413 | 9 | |||||||||||||||||||||||||||||||||||
Adjusted Net income | 87 | 39 | 123 | 302 | 274 | 10 | |||||||||||||||||||||||||||||||||||
Operating Metrics: | |||||||||||||||||||||||||||||||||||||||||
Insurance Cost Ratio | 86 | % | 89 | % | 84 | % | 83 | % | |||||||||||||||||||||||||||||||||
Average WSEs | 347,502 | 317,737 | 9 | % | 333,839 | 322,595 | 3 | % | |||||||||||||||||||||||||||||||||
Total WSEs at period end | 351,267 | 320,604 | 10 | 351,267 | 320,604 | 10 | |||||||||||||||||||||||||||||||||||
(in millions) | September 30, 2021 | December 31, 2020 | % Change | |||||||||||||||||
Balance Sheet Data: | ||||||||||||||||||||
Working capital | $ | 645 | 290 | 122 | % | |||||||||||||||
Total assets | 3,069 | 3,043 | 1 | |||||||||||||||||
Debt | 495 | 370 | 34 | |||||||||||||||||
Total stockholders’ equity | 809 | 607 | 33 |
Nine Months Ended September 30, | ||||||||||||||||||||
(in millions) | 2021 | 2020 | % Change | |||||||||||||||||
Cash Flow Data: | ||||||||||||||||||||
Net cash used in operating activities | $ | (16) | $ | (40) | (60) | % | ||||||||||||||
Net cash used in investing activities | (145) | (151) | (4) | |||||||||||||||||
Net cash provided by financing activities | 20 | 77 | (74) | |||||||||||||||||
Non-GAAP measure (1): | ||||||||||||||||||||
Corporate Operating Cash Flows | 334 | 308 | 8 |
FINANCIAL STATEMENTS |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||
(in millions except per share data) | 2021 | 2020 | 2021 | 2020 | ||||||||||
Professional service revenues | $ | 156 | $ | 126 | $ | 465 | $ | 403 | ||||||
Insurance service revenues | 992 | 849 | 2,843 | 2,568 | ||||||||||
Total revenues | 1,148 | 975 | 3,308 | 2,971 | ||||||||||
Insurance costs | 851 | 759 | 2,400 | 2,137 | ||||||||||
Cost of providing services | 61 | 68 | 191 | 192 | ||||||||||
Sales and marketing | 56 | 45 | 147 | 136 | ||||||||||
General and administrative | 52 | 38 | 128 | 106 | ||||||||||
Systems development and programming | 12 | 9 | 36 | 27 | ||||||||||
Depreciation and amortization of intangible assets | 11 | 11 | 42 | 35 | ||||||||||
Total costs and operating expenses | 1,043 | 930 | 2,944 | 2,633 | ||||||||||
Operating income | 105 | 45 | 364 | 338 | ||||||||||
Other income (expense): | ||||||||||||||
Interest expense, bank fees and other | (5) | (8) | (15) | (16) | ||||||||||
Interest income | 3 | 2 | 6 | 9 | ||||||||||
Income before provision for income taxes | 103 | 39 | 355 | 331 | ||||||||||
Income taxes | 26 | 6 | 86 | 81 | ||||||||||
Net income | $ | 77 | $ | 33 | $ | 269 | $ | 250 | ||||||
Other comprehensive (loss) income, net of income taxes | (2) | — | (3) | 4 | ||||||||||
Comprehensive income | $ | 75 | $ | 33 | $ | 266 | $ | 254 | ||||||
Net income per share: | ||||||||||||||
Basic | $ | 1.17 | $ | 0.49 | $ | 4.08 | $ | 3.69 | ||||||
Diluted | $ | 1.16 | $ | 0.48 | $ | 4.03 | $ | 3.66 | ||||||
Weighted average shares: | ||||||||||||||
Basic | 66 | 67 | 66 | 68 | ||||||||||
Diluted | 67 | 68 | 67 | 69 |
FINANCIAL STATEMENTS |
(In millions) | September 30, 2021 | December 31, 2020 | |||||||||
Assets | |||||||||||
Current assets: | |||||||||||
Cash and cash equivalents | $ | 525 | $ | 301 | |||||||
Investments | 155 | 57 | |||||||||
Restricted cash, cash equivalents and investments | 1,040 | 1,388 | |||||||||
Accounts receivable, net | 8 | 18 | |||||||||
Unbilled revenue, net | 305 | 246 | |||||||||
Prepaid expenses, net | 73 | 63 | |||||||||
Other current assets | 95 | 87 | |||||||||
Total current assets | 2,201 | 2,160 | |||||||||
Restricted cash, cash equivalents and investments, noncurrent | 176 | 210 | |||||||||
Investments, noncurrent | 167 | 138 | |||||||||
Property, equipment and software, net | 78 | 79 | |||||||||
Operating lease right-of-use asset | 44 | 51 | |||||||||
Goodwill | 294 | 294 | |||||||||
Other intangible assets, net | 7 | 18 | |||||||||
Other assets | 102 | 93 | |||||||||
Total assets | $ | 3,069 | $ | 3,043 | |||||||
Liabilities and stockholders’ equity | |||||||||||
Current liabilities: | |||||||||||
Accounts payable and other current liabilities | $ | 70 | $ | 50 | |||||||
Long-term debt | — | 22 | |||||||||
Client deposits and other client liabilities | 120 | 134 | |||||||||
Accrued wages | 555 | 309 | |||||||||
Accrued health insurance costs, net | 162 | 172 | |||||||||
Accrued workers' compensation costs, net | 54 | 59 | |||||||||
Payroll tax liabilities and other payroll withholdings | 567 | 1,095 | |||||||||
Operating lease liabilities | 12 | 11 | |||||||||
Insurance premiums and other payables | 16 | 18 | |||||||||
Total current liabilities | 1,556 | 1,870 | |||||||||
Long-term debt, noncurrent | 495 | 348 | |||||||||
Accrued workers' compensation costs, noncurrent, net | 137 | 138 | |||||||||
Deferred taxes | 21 | 22 | |||||||||
Operating lease liabilities, noncurrent | 43 | 49 | |||||||||
Other non-current liabilities | 8 | 9 | |||||||||
Total liabilities | 2,260 | 2,436 | |||||||||
Stockholders’ equity: | |||||||||||
Preferred stock | — | — | |||||||||
Common stock and additional paid-in capital | 790 | 747 | |||||||||
Retained earnings (Accumulated deficit) | 18 | (144) | |||||||||
Accumulated other comprehensive income | 1 | 4 | |||||||||
Total stockholders’ equity | 809 | 607 | |||||||||
Total liabilities and stockholders’ equity | $ | 3,069 | $ | 3,043 |
FINANCIAL STATEMENTS |
Nine Months Ended September 30, | ||||||||
(in millions) | 2021 | 2020 | ||||||
Operating activities | ||||||||
Net income | $ | 269 | $ | 250 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization | 63 | 49 | ||||||
Amortization of ROU asset | 8 | 12 | ||||||
Lease modification and impairment | 2 | — | ||||||
Accretion of discount rate on lease liabilities | 2 | 2 | ||||||
Amortization of premium of investments | 2 | — | ||||||
Stock based compensation | 37 | 31 | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable, net | 10 | 5 | ||||||
Unbilled revenue, net | (59) | (90) | ||||||
Prepaid expenses, net | (10) | (1) | ||||||
Accounts payable and other current liabilities | 19 | 10 | ||||||
Client deposits and other client liabilities | (14) | 163 | ||||||
Accrued wages | 246 | 63 | ||||||
Accrued health insurance costs, net | (10) | (7) | ||||||
Accrued workers' compensation costs, net | (6) | (2) | ||||||
Payroll taxes payable and other payroll withholdings | (528) | (467) | ||||||
Operating lease liabilities | (10) | (15) | ||||||
Other assets | (34) | (46) | ||||||
Other liabilities | (3) | 3 | ||||||
Net cash used in operating activities | (16) | (40) | ||||||
Investing activities | ||||||||
Purchases of marketable securities | (348) | (278) | ||||||
Proceeds from sale and maturity of marketable securities | 232 | 166 | ||||||
Acquisitions of property and equipment | (29) | (27) | ||||||
Other | — | (12) | ||||||
Net cash used in investing activities | (145) | (151) | ||||||
Financing activities | ||||||||
Repurchase of common stock | (94) | (135) | ||||||
Proceeds from issuance of common stock | 6 | 5 | ||||||
Awards effectively repurchased for required employee withholding taxes | (13) | (11) | ||||||
Proceeds from revolving credit agreement borrowings | — | 234 | ||||||
Payment of long-term financing fees | (2) | — | ||||||
Payment of debt issuance costs | (7) | — | ||||||
Proceeds from issuance of 2029 Notes | 500 | — | ||||||
Repayment of debt | (370) | (16) | ||||||
Net cash provided by financing activities | 20 | 77 | ||||||
Net decrease in cash and cash equivalents, unrestricted and restricted | (141) | (114) | ||||||
Cash and cash equivalents, unrestricted and restricted: | ||||||||
Beginning of period | 1,643 | 1,456 | ||||||
End of period | $ | 1,502 | $ | 1,342 | ||||
Supplemental disclosures of cash flow information | ||||||||
Interest paid | $ | 11 | $ | 11 | ||||
Income taxes paid, net | 83 | 83 | ||||||
Supplemental schedule of noncash investing and financing activities | ||||||||
Payable for purchase of property and equipment | $ | 3 | $ | 1 | ||||
FINANCIAL STATEMENTS |
Non-GAAP Measure | Definition | How We Use The Measure | ||||||
Adjusted EBITDA | • Net income, excluding the effects of: - income tax provision, - interest expense, bank fees and other, - 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 either not directly resulting from our core operations or not indicative of our ongoing operations. • Enhances comparisons to prior periods and, accordingly, facilitates the development of future projections and earnings growth prospects. • Provides a measure, among others, used in the determination of incentive compensation for management. • We also sometimes refer to Adjusted EBITDA margin, which is the ratio of Adjusted EBITDA to total revenues. | ||||||
Adjusted Net Income | • Net income, excluding the effects of: - effective income tax rate (1), - stock based compensation, - amortization of other intangible assets, net, - 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. | ||||||
Corporate Operating Cash Flows | • Net cash provided by (used in) operating activities, excluding the effects of: - Assets associated with WSEs (accounts receivable, unbilled revenue, prepaid expenses and other current assets) and - Liabilities associated with WSEs (client deposits and other client liabilities, accrued wages, payroll tax liabilities and other payroll withholdings, accrued health benefit costs, accrued workers' compensation costs, insurance premiums and other payables, and other current liabilities). | • Provides information that our stockholders and management can use to evaluate our cash flows from operations independent of the current assets and liabilities associated with our WSEs. • Enhances comparisons to prior periods and, accordingly, used as a liquidity measure to manage liquidity between corporate and WSE related activities, and to help determine and plan our cash flow and capital strategies. |
FINANCIAL STATEMENTS |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
(in millions) | 2021 | 2020 | 2021 | 2020 | |||||||||||||
Net income | $ | 77 | $ | 33 | $ | 269 | $ | 250 | |||||||||
Provision for income taxes | 26 | 6 | 86 | 81 | |||||||||||||
Stock based compensation | 13 | 11 | 37 | 31 | |||||||||||||
Interest expense, bank fees and other | 5 | 8 | 15 | 16 | |||||||||||||
Depreciation and amortization of intangible assets | 11 | 11 | 42 | 35 | |||||||||||||
Adjusted EBITDA | $ | 132 | $ | 69 | $ | 449 | $ | 413 | |||||||||
Adjusted EBITDA Margin | 11.5 | % | 7.1 | % | 13.6 | % | 13.9 | % |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
(in millions, except per share data) | 2021 | 2020 | 2021 | 2020 | |||||||||||||
Net income | $ | 77 | $ | 33 | $ | 269 | $ | 250 | |||||||||
Effective income tax rate adjustment | — | (4) | (4) | (3) | |||||||||||||
Stock based compensation | 13 | 11 | 37 | 31 | |||||||||||||
Amortization of intangible assets | 1 | 1 | 11 | 4 | |||||||||||||
Non-cash interest expense | — | 1 | 3 | 1 | |||||||||||||
Income tax impact of pre-tax adjustments | (4) | (3) | (14) | (9) | |||||||||||||
Adjusted Net Income | $ | 87 | $ | 39 | $ | 302 | $ | 274 | |||||||||
GAAP weighted average shares of common stock - diluted | 67 | 68 | 67 | 68 | |||||||||||||
Adjusted Net Income per share - diluted | $ | 1.31 | $ | 0.56 | $ | 4.51 | $ | 3.99 | |||||||||
Nine Months Ended September 30, | ||||||||
(in millions) | 2021 | 2020 | ||||||
Net cash used in operating activities | $ | (16) | $ | (40) | ||||
Less: Change in WSE related other current assets | (50) | (103) | ||||||
Less: Change in WSE related liabilities | (300) | (245) | ||||||
Net cash used in operating activities - WSE | $ | (350) | $ | (348) | ||||
Net cash provided by operating activities - Corporate | $ | 334 | $ | 308 |
FINANCIAL STATEMENTS |
Q4 2020 | Q4 2021 Guidance | FY 2020 | Year 2021 Guidance | ||||||||||||||||||||||||||
(in millions, except per share data) | Actual | Low | High | Actual | Low | High | |||||||||||||||||||||||
Net income | $ | 22 | (47) | % | 22 | % | $ | 272 | 3 | % | 9 | % | |||||||||||||||||
Effective income tax rate adjustment | (3) | (140) | (159) | (6) | (38) | (46) | |||||||||||||||||||||||
Stock based compensation | 12 | 19 | 19 | 43 | 19 | 19 | |||||||||||||||||||||||
Amortization of intangible assets | 1 | (3) | (3) | 5 | 132 | 132 | |||||||||||||||||||||||
Non-cash interest expense | 1 | 39 | 39 | 1 | 288 | 288 | |||||||||||||||||||||||
Income tax impact of pre-tax adjustments | (3) | 17 | 17 | (12) | 36 | 36 | |||||||||||||||||||||||
Adjusted Net Income | $ | 30 | (17) | % | 36 | % | $ | 303 | 8 | % | 13 | % | |||||||||||||||||
GAAP weighted average shares of common stock - diluted | 67 | 68 | |||||||||||||||||||||||||||
Adjusted Net Income per share - diluted | $ | 0.44 | $ | 0.36 | $ | 0.60 | $ | 4.44 | $ | 4.88 | $ | 5.12 |
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