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Insperity, Inc. (NSP - Free Report) reported solid first-quarter 2020 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate.
Adjusted earnings of $1.70 per share beat the consensus mark by 5.6% but decreased 14.1% year over year. The reported figure matched the higher end of the guided range of $1.61-$1.70.
Revenues of $1.23 billion outpaced the consensus estimate by 1.8% and increased 6.6% year over year on the back of a 5.5% rise in average number of worksite employees (WSEEs) paid per month. Average number of WSEEs paid per month was 238,014 at the end of the reported quarter.
The company witnessed a higher-than-expected level of WSEEs paid from new sales origination in the quarter with the successful extension of the fall sales campaign. This was partially offset by lower growth in client base.
So far this year, shares of Insperity have lost 42.9% compared with 31.9% decline of the industry it belongs to.
Operating Results
Gross profit of $234.02 million increased 3.2% from the year-ago quarter on the back of favorable impact of benefits and workers’ compensation programs. Gross margin of 19% declined from 19.7% in the year-ago quarter. Gross profit per worksite employee per month decreased 2.1% year over year to $328.
Adjusted EBITDA was down 0.2% year over year to $101.25 million. Adjusted EBITDA margin of 8.2% declined from 8.8% in the year-ago quarter. Adjusted EBITDA per worksite employee per month decreased 5.3% to $142.
Operating expenses increased 5.3% year over year to $148.80 million due to continued growth-related investments. Operating expenses per worksite employee per month decreased 0.5% to $208.
Operating income decreased 0.3% year over year to $85.22 million. Operating income per worksite employee per month decreased 5.6% to $119.
Insperity exited first-quarter 2020 with adjusted cash, cash equivalents and marketable securities of $166.89 million compared with $107.91 million at the end of the prior quarter. Long-term debt amounted to $369.40 million compared with $269.40 million at the end of the previous quarter.
The company repurchased 878,000 of its shares for $61 million and paid $16 million in cash dividends during the reported quarter. Capital expenditures totaled $16 million.
Q2 Guidance
For second-quarter 2020, Insperity projects adjusted earnings in the range of $1.02-$1.29 per share, indicating an increase of 23-55%. The current Zacks Consensus Estimate of 72 cents lies below the guided range.
Adjusted EBITDA is anticipated between $65 million and $79 million, indicating an increase of 15-39%. Average WSEEs is expected in the range of 220,400-229,700.
2020 Guidance
For 2020, Insperity lowered its guidance for adjusted EPS, adjusted EBITDA and average WSEs.
The company projects adjusted earnings in the band of $3.19-$3.86 compared with the prior guidance of $3.73-$4.16 per share. The current Zacks Consensus Estimate of $3.65 lies within the updated guidance.
Adjusted EBITDA is anticipated at $215-$250 million compared with the prior-guided range of $250-$274 million.
Average WSEEs are expected in the range of 221,400-233,200 compared with the prior guidance of 249,700-254,400.
Currently, Insperity carries a Zacks Rank #4 (Sell).
The Interpublic Group of Companies, Inc. (IPG - Free Report) reported first-quarter 2020 adjusted earnings of 11 cents per share, which beat the consensus mark by 22.2% but remained flat on a year-over-year basis.
Equifax Inc. (EFX - Free Report) reported first-quarter 2020 adjusted earnings of $1.40 per share, which beat the consensus mark by 8.5% and improved 16% on a year-over-year basis.
ManpowerGroup Inc. (MAN - Free Report) reported first-quarter 2020 adjusted earnings of 71 cents per share, which missed the Zacks Consensus Estimate by 2.7% and slumped 48.9% year over year.
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Insperity (NSP) Q1 Earnings & Revenues Top, 2020 View Cut
Insperity, Inc. (NSP - Free Report) reported solid first-quarter 2020 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate.
Adjusted earnings of $1.70 per share beat the consensus mark by 5.6% but decreased 14.1% year over year. The reported figure matched the higher end of the guided range of $1.61-$1.70.
Revenues of $1.23 billion outpaced the consensus estimate by 1.8% and increased 6.6% year over year on the back of a 5.5% rise in average number of worksite employees (WSEEs) paid per month. Average number of WSEEs paid per month was 238,014 at the end of the reported quarter.
The company witnessed a higher-than-expected level of WSEEs paid from new sales origination in the quarter with the successful extension of the fall sales campaign. This was partially offset by lower growth in client base.
So far this year, shares of Insperity have lost 42.9% compared with 31.9% decline of the industry it belongs to.
Operating Results
Gross profit of $234.02 million increased 3.2% from the year-ago quarter on the back of favorable impact of benefits and workers’ compensation programs. Gross margin of 19% declined from 19.7% in the year-ago quarter. Gross profit per worksite employee per month decreased 2.1% year over year to $328.
Adjusted EBITDA was down 0.2% year over year to $101.25 million. Adjusted EBITDA margin of 8.2% declined from 8.8% in the year-ago quarter. Adjusted EBITDA per worksite employee per month decreased 5.3% to $142.
Operating expenses increased 5.3% year over year to $148.80 million due to continued growth-related investments. Operating expenses per worksite employee per month decreased 0.5% to $208.
Operating income decreased 0.3% year over year to $85.22 million. Operating income per worksite employee per month decreased 5.6% to $119.
Insperity, Inc. Price, Consensus and EPS Surprise
Insperity, Inc. price-consensus-eps-surprise-chart | Insperity, Inc. Quote
Balance Sheet & Cash Flow
Insperity exited first-quarter 2020 with adjusted cash, cash equivalents and marketable securities of $166.89 million compared with $107.91 million at the end of the prior quarter. Long-term debt amounted to $369.40 million compared with $269.40 million at the end of the previous quarter.
The company repurchased 878,000 of its shares for $61 million and paid $16 million in cash dividends during the reported quarter. Capital expenditures totaled $16 million.
Q2 Guidance
For second-quarter 2020, Insperity projects adjusted earnings in the range of $1.02-$1.29 per share, indicating an increase of 23-55%. The current Zacks Consensus Estimate of 72 cents lies below the guided range.
Adjusted EBITDA is anticipated between $65 million and $79 million, indicating an increase of 15-39%. Average WSEEs is expected in the range of 220,400-229,700.
2020 Guidance
For 2020, Insperity lowered its guidance for adjusted EPS, adjusted EBITDA and average WSEs.
The company projects adjusted earnings in the band of $3.19-$3.86 compared with the prior guidance of $3.73-$4.16 per share. The current Zacks Consensus Estimate of $3.65 lies within the updated guidance.
Adjusted EBITDA is anticipated at $215-$250 million compared with the prior-guided range of $250-$274 million.
Average WSEEs are expected in the range of 221,400-233,200 compared with the prior guidance of 249,700-254,400.
Currently, Insperity carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Business Services Companies
The Interpublic Group of Companies, Inc. (IPG - Free Report) reported first-quarter 2020 adjusted earnings of 11 cents per share, which beat the consensus mark by 22.2% but remained flat on a year-over-year basis.
Equifax Inc. (EFX - Free Report) reported first-quarter 2020 adjusted earnings of $1.40 per share, which beat the consensus mark by 8.5% and improved 16% on a year-over-year basis.
ManpowerGroup Inc. (MAN - Free Report) reported first-quarter 2020 adjusted earnings of 71 cents per share, which missed the Zacks Consensus Estimate by 2.7% and slumped 48.9% year over year.
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The biotech sector is projected to surge beyond $775 billion by 2024 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases.
Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Our recent biotech recommendations have produced gains of +50%, +83% and +164% in as little as 2 months. The stocks in this report could perform even better.
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