Insperity Inc. (NSP, Financial), an adviser to American businesses for more than 29 years, provides an array of human resources and business solutions designed to help improve business performance.
Insperity Business Performance Advisors offers one of the most comprehensive suites 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 Services, 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 more than 2 million employees. With 2014 revenues of $2.4 billion, Insperity operates in 57 offices throughout the United States.
Inperity posted strong second quarter results. The company has increased its guidance for 2015. It is gaining momentum and has positioned itself in providing an array business performance solutions to its customers. It is adding up new offices and is poised to grow. The retention campaign has reestablished momentum in growth and profitability and set Insperity up for double digit unit growth in 2015.
Strong second-quarter results
For the second quarter, adjusted EBITDA increased by 56% and was $22.6 million.
Adjusted earnings per share were 42 cents (which marked an increase of increase of 110% from the prior year quarter).
Revenues increased by 11% and were $628 million.
YTD adjusted EBITDA and adjusted EPS up 67% and 100%, respectively.
Average paid worksite employees increased 12%, above forecasted levels and coming off the 9% year-over-year growth generated in the previous quarter.
Client retention was particularly strong, averaging 99.3% for the quarter.
Marketing costs declined by 12%.
A continued focus on other costs throughout the company resulted in a decrease of almost 6% in G&A costs, when excluding shareholder advisory costs.
Free cash flows during the quarter were $20 million.
The second quarter ended with total adjusted working capital of $79.3 million.
532,000 shares of stock were repurchased at a cost of $28 million.
Year-over-year unit growth rate in worksite employees over the last three quarters has increased from 5% in Q4 of last year to 9% in Q1 to 12% this quarter.
The core market sales of accounts with fewer than 150 employees increased 32% over last year and came in 113% of budget.
(Source: Company's Website)
Dividends
The company recently declared a quarterly cash dividend of 22 cents per share. The cash dividend will be paid on Sept. 18 to all stockholders of record as of Sept. 3.
2015 projections
A year-over-year increase of 13% to 14% in average paid worksite employees in the third quarter.
Adjusted EBITDA is expected to be in the range of $114 million to $117 million.
Adjusted EPS is projected to be in a range of $2.20 to $2.29, an increase of 52% to 58% over 2014.
For the third quarter, the company expects adjusted EBITDA of $27 million to $29 million.
Q3 adjusted EPS is projected in a range of 52 cents to 56 cents, or an increase of 33% to 43% over Q3 of the prior year.
Strong attributes of the second quarter
- High margins.
- Sales efficiency.
- Higher proficiency levels.
- Wide array of business performance solutions.
- The Business Performance Advisor sales force has become a successful channel for the strategic business units contributing to their growth at reduced customer acquisition costs.
- Client retention was also a highlight for the quarter.
Being in the news
NSP extended its arrangement for medical and dental coverage through 2019 with United Healthcare, a UnitedHealth Group (UNH, Financial) company. This arrangement reflects the dedication of both companies to offer the best health care and health care reform solutions in the marketplace.
“We are extremely pleased to deepen our strategic relationship with UnitedHealthcare,” said Insperity President Richard G. Rawson. “UnitedHealthcare will help Insperity continue to provide stability and compelling value in our health care plans for our client owners and worksite employees in a marketplace that has experienced significant volatility. The structure provides for administrative cost savings for years to come that will help to offset the rising costs of health care.”
Insperity has partnered with UnitedHealthcare as its leading health insurance carrier since January 2002.
Focus at the moment
- Operating cost containment focus
- Growth acceleration
- Cost savings initiatives
Critical company success factors
- SBU Product and Service Development
- Brand Introduction and Acceptance
- Insperity Selling System Adoption
- Core Sales Team Size and Efficiency
- Portfolio Management
- MidMarket Sales and Retention
On a concluding note
Our second quarter results reflect successful execution of our 2015 plan to accelerate growth while carefully managing operating costs,” said Insperity Chairman and Chief Executive Officer Paul J. Sarvadi. “We expect to continue positive trends in growth and profitability over the balance of this year.”
There is no doubt that the shares of NSP have soared higher, and, with its current performance, it is expected to do so in the near future. The company has been known mostly for beating earnings estimates.
