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Insperity (NSP) Beats on Q1 Earnings, Raises 2018 Guidance

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Insperity, Inc. (NSP - Free Report) reported solid first-quarter 2018 results, beating the Zacks Consensus Estimate on both counts.

Adjusted earnings of $1.41 per share surpassed the consensus mark by 27 cents and increased a massive 53% year over year. The uptick can be attributed to worksite employee and gross profit growth. The bottom line also surpassed the guided range of $1.12-$1.16 per share.

Revenues came in at $1.04 billion exceeding the consensus mark by $26 million and improved 15% year over year. Strength across new sales, client retention and pricing led to top-line growth.

Insperity, Inc. Revenue (TTM)

There was no share price movement in the after-hours trading. In a year’s time, the stock has soared 85.3%, substantially outperforming the industry’s rally of 19.6%.

At the call, management stated that Insperity was confident about its five major initiatives, growth acceleration, technology leadership, operational excellence, risk optimization and talent development. These initiatives are expected to be key catalyst for the company going forward.

Other Quarterly Numbers

Average number of worksite employees paid per month increased 12% to 195.7 million.

Insperity’s gross margin expanded 160 basis points (bps) from the year-ago quarter to 19.7%. Gross profit per worksite employee per month increased 11.5% to $340. The improvement was backed by strong pricing and decrease in primary direct costs.

Adjusted EBITDA was up 34% year over year to $83.8 million. Adjusted EBITDA per worksite employee per month increased 19% to $143.

Adjusted operating expenses increased 19% year over year to $125.7 million. Adjusted operating expenses per worksite employee per month grew 6% to $214.

Balance Sheet & Share Repurchase

Insperity exited the first quarter with adjusted cash, cash equivalents and marketable securities of $87.5 million compared with $61.1 million at the end of the fourth quarter of 2017. Long term debt was $104.4 million, in line with fourth-quarter figure. The company repurchased roughly 131,000 shares at $8.6 million and paid dividends totaling $8.4 million.

Guidance

For second-quarter 2018, Insperity projects adjusted earnings in the range of 59-63 cents per share, representing a year-over-year increase of 44-54%. The guided range is well above the Zacks Consensus Estimate, which is currently pegged at 52 cents.

Adjusted EBITDA is anticipated to increase 23-29%, in a range of $41-$43 million. Average worksite employees (WSEs) are expected in a range of 202,000 to 203,700, representing 12-13% growth.

Insperity raised its guidance for 2018. The company now projects adjusted earnings between $3.36 per share and $3.44 per share, implying growth of 37-40%, above the previously guided range of $2.96-$3.08 per share. The consensus estimate is pegged lower at $3.04.

Adjusted EBITDA is projected to grow 23-25%, in a range of $218-$223 million. The prior guided range was $197 million to $204 million. Average WSEs are expected to be in the 206,400 to 208,400 bracket, representing 13-14% growth. The earlier expected range was between 203,700 and 207,400.

Zacks Rank & Peer Releases

Insperity currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Investors interested in the broader Business Services sector are keenly awaiting first-quarter earnings reports from key players like Automatic Data Processing (ADP - Free Report) , Republic Services (RSG - Free Report) and The Dun & Bradstreet Corporation (DNB - Free Report) . While Automatic Data Processing and Republic Services are slated to report quarterly numbers on May 2, Dun & Bradstreet will release its results on May 9.

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