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Insperity (NSP) Meets Q2 Earnings Estimates, Tweaks 2019 View

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Insperity, Inc. (NSP - Free Report) reported decent second-quarter 2019 results, wherein earnings matched the Zacks Consensus Estimate and revenues surpassed the same.

Adjusted earnings of 83 cents per share came in line with the consensus mark and increased 22.1% year over year. The reported figure lies within the guided range of 81-86 cents per share.

Total revenues of $1.04 billion beat the consensus estimate by $3.8 million and increased 13.1% year over year on the back of 13.8% increase in average number of worksite employees (WSEEs) paid per month. Average number of worksite employees paid per month was 232,010 at the end of the reported quarter.

In the reported quarter, worksite employee growth stemmed from new client sales driven by an 11% increase in average number of Business Performance Advisors and higher client retention (whereinretention rate was more than 99%). Net gains in client base declined due to less hiring of full-time and seasonal employees.

So far this year, shares of Insperity have gained 12.9% compared with 11.9% rise of the industry it belongs to.

 

Operating Results        

Gross profit of $173.74 million increased 12.4% from the year-ago quarter on the back of favorable claims development in workers’ compensation program and higher pricing, which was partially offset by higher-than-expected benefits costs (driven by large claim activity). Gross margin of 19.7% remained flat year over year. Gross profit per worksite employee per month decreased 1.2% year over year to $250.

Adjusted EBITDA was up 21.6% year over year to $56.69 million. Adjusted EBITDA per worksite employee per month increased 6.6% to $81.

Adjusted operating expenses increased 11.6% year over year to $135.02 million.

Insperity, Inc. Price, Consensus and EPS Surprise

 

Insperity, Inc. Price, Consensus and EPS Surprise

Insperity, Inc. price-consensus-eps-surprise-chart | Insperity, Inc. Quote

Operating income increased 15.3% year over year to $38.72 million. Operating income per worksite employee per month increased 1.8% to $56.

Balance Sheet & Cash Flow

Insperity exited second-quarter 2019 with adjusted cash, cash equivalents and marketable securities of $130.66 million compared with $140.51 million at the end of the prior quarter. Long-term debt amounted to $169.40 million compared with $144.40 million at the end of the previous quarter.

In the reported quarter, the company repurchased 85,000 shares for $10 million and paid dividends totaling $12.7 million.

Q3 Guidance

For third-quarter 2019, Insperity projects adjusted earnings in the range of $1.00-$1.04 per share, indicating a year-over-year increase of 4-8%. The current Zacks Consensus Estimate of $1.05 lies within the guided range.

Adjusted EBITDA is anticipated to increase 8-12% to a range of $66.5-$69 million. Average WSEEs is expected in the range of 243,000-244,100, indicating 13-13.5% growth.

2019 Guidance

For the full year, Insperity updated its guidance for adjusted EPS, adjusted EBITDA and average WSEs.

The company now projects adjusted earnings in the band of $4.59-$4.74 per share (indicating growth of 22-26%) compared with the previously guided range of $4.55-$4.80 per share (which indicated growth of 21-28%). The current Zacks Consensus Estimate of $4.68 lies within the guided range.

Adjusted EBITDA is now anticipated to grow 16-19% to a range of $278-$286 million compared with the previously guided range of $276-$289 million (which indicated 15-21% growth).

Average WSEEs are expected to grow 13.5-14.5% to a range of 237,350–239,500 compared with the previously guided range of 238,400-242,600, indicating 14-16% growth.

Zacks Rank & Upcoming Releases

Currently, Insperity carries 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 Zacks Business Services sector are awaiting second-quarter 2019 results of key players like Genpact (G - Free Report) , Green Dot (GDOT - Free Report) and Navigant Consulting (NCI - Free Report) . While Genpact and Green Dot are slated to report on Aug 7, Navigant Consulting is scheduled to release results on Aug 8.

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