Insperity (NSP) Q4 Earnings & Revenues Surpass Estimate
Zacks Investment Research | Feb 12, 2019 09:55PM ET
Insperity, Inc. (NYSE:NSP) reported strong fourth-quarter 2018 results wherein both earnings and revenues surpassed the Zacks Consensus Estimate. Both the metrics also improved on a year-over-year basis.
Adjusted earnings per share of 69 cents beat the consensus mark by 4 cents and increased 25.5% year over year on worksite employee growth and effective management of pricing, direct cost programs and operating costs. The reported figure surpassed the guided range of 63-67 centsper share.
Total revenues of $966.8 million beat the consensus estimate by $3 million and increased 16.9% year over year. The top line benefited from 17% increase in average number of worksite employees paid per month. Average number of worksite employees paid per month was 221,809 at the end of the reported quarter.
In the reported quarter, worksite employee growth was driven by strong sales (36% growth in worksite employees paid from new sales on 13% increase in the average number of Business Performance Advisors in both core and mid-market clients segments), higher client retention (totaled over 99%) and rise in net hiring of worksite employees by the company’s client base.
Over the past year, shares of Insperity have gained more than 93.8% against 1.3% decline of the industry it belongs to.
Operating Results
Gross profit of $161.59 million increased 13.1% from the year-ago quarter on the back of improved pricing, effective management of direct cost programs and continuous investment in growth, technology and product and service offerings. These were, however, partially offset by slightly higher-than-expected fourth-quarter 2018 medical claims. Gross margin declined to 16.7% from 17.3% in the prior-year quarter. Gross profit per worksite employee per month decreased 3.2% year over year to $243.
Adjusted EBITDA was up 23.5% year over year to $47.59 million. Adjusted EBITDA per worksite employee per month increased 5.9% to $72.
Adjusted operating expenses increased 9% year over year to $128.97 million due to continuous investment in technology and product and service offerings. The company’s growth-related investments resulted in the opening of seven new sales offices in 2018, along with a 13% increase in average number of Business Performance Advisors and additional sales commissions associated with higher sales volume in fourth-quarter 2018. Adjusted operating expenses per worksite employee per month declined 6.7% to $194.
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Operating income increased 37.6% year over year to $32.6 million. Operating income per worksite employee per month increased 16.7% to $49.
Insperity, Inc. Price, Consensus and EPS Surprise
Insperity exited fourth-quarter 2018 with adjusted cash, cash equivalents and marketable securities of $128.89 million compared with $166.50 million at the end of the prior quarter. Long- term debt was $144.40 million compared with $104.40 million at the end of prior quarter.
Capital expenditures were $13.8 million.
In 2018, Insperity repurchased almost 1,198,000 shares for $113.3 million and paid dividends totaling $33.4 million.
Guidance
Insperity unveiled its guidance for first-quarter and full-year 2019.
Q1 Guidance
For first-quarter 2019, Insperity projects adjusted earnings in the range of $1.85-$1.91 per share, indicating a year-over-year increase of 31-35%. The Zacks Consensus Estimate of $1.58 is well below the guided range.
Adjusted EBITDA is anticipated to increase 15-18% to a range of $96-$99 million. Average worksite employees (WSEs) is expected in the range of 224,000 to 226,000, indicating 14.5-15.5% growth.
2019 Guidance
For the full year, the company projects adjusted earnings between $4.37 per share and $4.69 per share, indicating growth of 17-25%. The Zacks Consensus Estimate is pegged lower at $4.31.
Adjusted EBITDA is projected to grow 12-19% to a range of $268-$285 million. Average WSEs are expected to be in the range of 238,400 to 242,600, indicating 14-16% growth.
Zacks Rank & Upcoming Releases
Insperity currently carries a Zacks Rank #3 (Hold). You can see Zacks Investment Research
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