News Releases

• Year-over-year worksite employee growth accelerates from 9% to 12% sequentially
• Q2 adjusted EPS up 110% to $0.42 on 11% revenue growth
• Q2 adjusted EBITDA increases 56% to $22.6 million
• Q2 adjusted operating expenses up less than 1% over 2014 on 12% unit growth
• YTD adjusted EBITDA and adjusted EPS up 67% and 100%, respectively

HOUSTON--(BUSINESS WIRE)--Aug. 3, 2015-- Insperity, Inc. (NYSE: NSP), a leading provider of human resources and business performance solutions for America’s best businesses, today reported second quarter adjusted EBITDA of $22.6 million, a 55.5% increase over the second quarter of 2014. Adjusted net income was $10.8 million and adjusted diluted earnings per share were $0.42, a 110.0% increase over the second quarter of 2014. Reported second quarter GAAP net income and earnings per share were $7.3 million and $0.29, respectively.

Second Quarter Results

Revenues for the second quarter of 2015 increased 11.2% over the second quarter of 2014. The average number of worksite employees paid per month increased 11.6% during the quarter, an acceleration from the 9.2% year-over-year growth in the first quarter of 2015. All three drivers to worksite employee growth including sales, client retention and net hiring in our client base, improved over the second quarter of 2014.

“Our second quarter results reflect successful execution of our 2015 plan to accelerate growth while carefully managing operating costs,” said Paul J. Sarvadi, Insperity chairman and chief executive officer. “We expect to continue positive trends in growth and profitability over the balance of this year.”

Adjusted EBITDA increased 55.5% on a 9.2% increase in gross profit and a less than 1% increase in operating expenses over the 2014 period, reflecting planned operating leverage.

Year-to-Date Results

For the six months ended June 30, 2015, adjusted EBITDA increased 66.9% to $64.9 million and adjusted diluted earnings per share increased 100.0% to $1.28. Reported 2015 GAAP net income was $21.1 million, or $0.83 per share.

Revenues in the first six months of 2015 were $1.3 billion, an increase of 10.5% over the 2014 period on a 10.4% increase in the average number of worksite employees paid per month. Gross profit for the six months ended June 30, 2015 increased 16.1% to $234.1 million, while adjusted operating expenses increased only 3.6% to $185.7 million.

Cash outlays in the first six months of 2015 included the repurchase of 645,292 shares of stock at a cost of $33.5 million, dividends totaling $10.4 million and capital expenditures of $5.9 million.

“In spite of recently increasing our dividend rate by 16% and being more aggressive in our share buybacks, our strong cash flow has resulted in a $6.2 million increase in adjusted working capital over Dec. 31, 2014 to $79.3 million at June 30, 2015,” said Douglas S. Sharp, senior vice president of finance, chief financial officer and treasurer. “Our outlook for continued strong cash flow positions us well to execute on our strategic plan and continue our track record of significant returns to stockholders.”

2015 Guidance

The company also announced its updated guidance for 2015, including guidance for the third quarter of 2015.

		Q3 2015							Full Year 2015
Average WSEEs		148,500		-		150,000			145,750		-		147,000
Year-over-year increase		13.0%		-		14.0%			11.5%		-		12.5%
Adjusted EPS		$0.52		-		$0.56			$2.20		-		$2.29
Year-over-year increase		33.0%		-		43.0%			52.0%		-		58.0%
Adjusted EBITDA (in millions)		$27.0		-		$29.0			$114.0		-		$117.0
Year-over-year increase		20.0%		-		28.0%			36.0%		-		39.0%

Definition of Key Metrics

Average WSEEs - Determined by calculating the company’s cumulative worksite employees paid during the period divided by the number of months in the period.

Adjusted EPS - Represents diluted net income per share computed in accordance with GAAP, excluding the impact of non-cash impairment and other charges, stockholder advisory expenses and stock-based compensation. Note that beginning in 2015, the company began excluding stock-based compensation when reporting Adjusted EPS.

Adjusted EBITDA - Represents net income computed in accordance with GAAP, plus interest expense, income taxes, depreciation, amortization, stock-based compensation, non-cash impairment and other charges and stockholder advisory expenses.

Insperity will be hosting a conference call today at 10 a.m. ET to discuss these results, provide guidance for the third quarter and an update to full year guidance, and answer questions from investment analysts. To listen in, call 877-651-0053 and use conference i.d. number 91929268. The call will also be webcast at http://ir.insperity.com. The conference call script will be available at the same website later today. A replay of the conference call will be available at 855-859-2056, conference i.d. 91929268. The webcast will be archived for one year.

Insperity, a trusted advisor to America’s best 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 offer the most comprehensive suite 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 Software, Time and Attendance, Performance Management, Organizational Planning, Recruiting Services, Employment Screening, Financial Services, Expense Management, Retirement Services and Insurances Services. Insperity business performance solutions support more than 100,000 businesses with over 2 million employees. With 2014 revenues of $2.4 billion, Insperity operates in 57 offices throughout the United States. For more information, visit http://www.insperity.com.

The statements contained herein that are not historical facts are forward-looking statements within the meaning of the federal securities laws (Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934). You can identify such forward-looking statements by the words “expects,” “intends,” “plans,” “projects,” “believes,” “estimates,” “likely,” “possibly,” “probably,” “goal,” “opportunity,” “objective,” “target,” “assume,” “outlook,” “guidance,” “predicts,” “appears,” “indicator” and similar expressions. Forward-looking statements involve a number of risks and uncertainties. In the normal course of business, Insperity, Inc., in an effort to help keep our stockholders and the public informed about our operations, may from time to time issue such forward-looking statements, either orally or in writing. Generally, these statements relate to business plans or strategies, projected or anticipated benefits or other consequences of such plans or strategies, or projections involving anticipated revenues, earnings, unit growth, profit per worksite employee, pricing, operating expenses or other aspects of operating results. We base the forward-looking statements on our expectations, estimates and projections at the time such statements are made. These statements are not guarantees of future performance and involve risks and uncertainties that we cannot predict. In addition, we have based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate. Therefore, the actual results of the future events described in such forward-looking statements could differ materially from those stated in such forward-looking statements. Among the factors that could cause actual results to differ materially are: (i) adverse economic conditions; (ii) regulatory and tax developments and possible adverse application of various federal, state and local regulations; (iii) the ability to secure competitive replacement contracts for health insurance and workers’ compensation insurance at expiration of current contracts; (iv) increases in health insurance costs and workers’ compensation rates and underlying claims trends, health care reform, financial solvency of workers’ compensation carriers, other insurers or financial institutions, state unemployment tax rates, liabilities for employee and client actions or payroll-related claims; (v) failure to manage growth of our operations and the effectiveness of our sales and marketing efforts; (vi) the impact of the competitive environment in the PEO industry on our growth and/or profitability; (vii) our liability for worksite employee payroll, payroll taxes and benefits costs; (viii) our liability for disclosure of sensitive or private information; (ix) our ability to integrate or realize expected returns on our acquisitions; (x) failure of our information technology systems; (xi) an adverse final judgment or settlement of claims against Insperity; and (xii) disruptions to our business resulting from the actions of certain stockholders. These factors are discussed in further detail in Insperity’s filings with the U.S. Securities and Exchange Commission. Any of these factors, or a combination of such factors, could materially affect the results of our operations and whether forward-looking statements we make ultimately prove to be accurate.

Except to the extent otherwise required by federal securities law, we do not undertake any obligation to update our forward-looking statements to reflect events or circumstances after the date they are made or to reflect the occurrence of unanticipated events.

Insperity, Inc. Summary Financial Information (in thousands, except per share amounts and statistical data)
			June 30, 2015				December 31, 2014
			(Unaudited)
Assets:
Cash and cash equivalents			$	167,728			$	276,456
Restricted cash			48,887				44,040
Marketable securities			21,648				28,631
Accounts receivable, net			265,631				175,116
Prepaid insurance			16,459				21,301
Assets held for sale			12,182				-
Other current assets			15,522				17,649
Deferred income taxes			3,537				6,316
Total current assets			551,594				569,509
Property and equipment, net			58,142				84,345
Prepaid health insurance			9,000				9,000
Deposits			114,577				117,634
Goodwill and other intangible assets, net			14,006				14,457
Deferred income taxes			3,956				-
Other assets			1,773				1,725
Total assets			$	753,048			$	796,670
Liabilities and Stockholders’ Equity:
Accounts payable			$	2,383			$	4,674
Payroll taxes and other payroll deductions payable			122,875				176,341
Accrued worksite employee payroll cost			228,091				192,396
Accrued health insurance costs			6,284				18,329
Accrued workers’ compensation costs			50,841				45,592
Accrued corporate payroll and commissions			25,836				32,644
Other accrued liabilities			24,801				22,444
Income taxes payable			1,652				4,031
Total current liabilities			462,763				496,451
Accrued workers’ compensation costs			98,938				92,048
Deferred income taxes			-				4,075
Total noncurrent liabilities			98,938				96,123
Stockholders’ equity:
Common stock			308				308
Additional paid-in capital			142,681				137,769
Treasury stock, at cost			(176,817		)		(148,465		)
Accumulated other comprehensive income, net of tax			-				3
Retained earnings			225,175				214,481
Total stockholders’ equity			191,347				204,096
Total liabilities and stockholders’ equity			$	753,048			$	796,670

Insperity, Inc. Summary Financial Information (continued) (in thousands, except per share amounts and statistical data) (Unaudited)
			Three Months Ended June 30,											Six Months Ended June 30,
			2015				2014				Change			2015				2014				Change
Operating results:
Revenues (gross billings of $3.703 billion, $3.281
billion, $7.643 billion and $6.869 billion less
worksite employee payroll cost of $3.075 billion,
$2.716 billion, $6.316 billion and $5.667 billion,
respectively)			$	627,838			$	564,621			11.2	%		$	1,327,317			$	1,201,620			10.5	%
Direct costs:
Payroll taxes, benefits and workers’ compensation
costs			523,619				469,168				11.6	%		1,093,238				999,991				9.3	%
Gross profit			104,219				95,453				9.2	%		234,079				201,629				16.1	%
Operating expenses:
Salaries, wages and payroll taxes			50,234				47,829				5.0	%		106,982				98,861				8.2	%
Stock-based compensation			4,041				3,245				24.5	%		6,464				5,645				14.5	%
Commissions			4,103				3,717				10.4	%		8,407				6,963				20.7	%
Advertising			7,389				8,356				(11.6	)%		11,107				13,297				(16.5	)%
General and administrative expenses			20,332				21,116				(3.7	)%		44,387				43,848				1.2	%
Depreciation and amortization			4,590				5,291				(13.2	)%		9,875				10,525				(6.2	)%
Impairment charges and other			1,313				2,485				(47.2	)%		11,120				2,485				347.5	%
Total operating expenses			92,002				92,039				-			198,342				181,624				9.2	%
Operating income			12,217				3,414				257.9	%		35,737				20,005				78.6	%
Other income (expense):
Interest, net			(8		)		24				(133.3	)%		(1		)		71				(101.4	)%
Other, net			(32		)		12				(366.7	)%		(32		)		(14		)		128.6	%
Income before income tax expense			12,177				3,450				253.0	%		35,704				20,062				78.0	%
Income tax expense			4,863				1,559				211.9	%		14,603				8,607				69.7	%
Net income			$	7,314			$	1,891			286.8	%		$	21,101			$	11,455			84.2	%
Less distributed and undistributed earnings allocated
to participating securities			(179		)		(139		)		28.8	%		(521		)		(333		)		56.5	%
Net income allocated to common shares			$	7,135			$	1,752			307.2	%		$	20,580			$	11,122			85.0	%
Basic net income per share of common stock			$	0.29			$	0.07			314.3	%		$	0.83			$	0.45			84.4	%
Diluted net income per share of common stock			$	0.29			$	0.07			314.3	%		$	0.83			$	0.45			84.4	%

Insperity, Inc. Summary Financial Information (continued) (in thousands, except per share amounts and statistical data) (Unaudited)
			Three Months Ended June 30,											Six Months Ended June 30,
			2015				2014				Change			2015				2014				Change
Statistical Data:
Average number of worksite employees paid per
month			143,131				128,274				11.6	%		140,545				127,281				10.4	%
Revenues per worksite employee per month(1)			$	1,462			$	1,467			(0.3	)%		$	1,574			$	1,573			0.1	%
Gross profit per worksite employee per month			243				248				(2.0	)%		278				264				5.3	%
Operating expenses per worksite employee per
month			215				239				(10.0	)%		236				238				(0.8	)%
Operating income per worksite employee per
month			28				9				211.1	%		42				26				61.5	%
Net income per worksite employee per month			17				5				240.0	%		25				15				66.7	%

(1)		Gross billings of $8,623, $8,526, $9,064 and $8,994 per worksite employee per month, less payroll cost of $7,161, $7,059,
		$7,490 and $7,421 per worksite employee per month, respectively.

Insperity, Inc. Summary Financial Information (continued) (in thousands, except per share amounts and statistical data) (Unaudited)   GAAP to Non-GAAP Reconciliation Tables
			Three Months Ended June 30,											Six Months Ended June 30,
			2015				2014				Change			2015								2014								Change
Payroll cost (GAAP)			$	3,074,892			$	2,716,514			13.2	%		$	6,315,874							$	5,667,082							11.4	%
Less: Bonus payroll cost			257,367				222,005				15.9	%		775,870								743,346								4.4	%
Non-bonus payroll cost			$	2,817,525			$	2,494,509			12.9	%		$	5,540,004							$	4,923,736							12.5	%
Payroll cost per worksite
employee per month
(GAAP)			$	7,161			$	7,059			1.4	%		$	7,490							$	7,421							0.9	%
Less: Bonus payroll cost
per worksite employee
per month			599				577				3.8	%		920								973								(5.4	)%
Non-bonus payroll cost
per worksite employee
per month			$	6,562			$	6,482			1.2	%		$	6,570							$	6,448							1.9	%
Non-bonus payroll cost represents payroll cost excluding the impact of bonus payrolls paid to the
company’s worksite employees. Bonus payroll cost varies from period to period, but has no
direct impact to the company’s ultimate workers’ compensation costs under the current program.
As a result, Insperity management refers to non-bonus payroll cost in analyzing, reporting and
forecasting the company’s workers’ compensation costs.
																		June 30, 2015								December 31, 2014
Cash, cash equivalents and marketable securities (GAAP)																		$	189,376							$	305,087
Less: Amounts payable for withheld federal and state income taxes,
employment taxes and other payroll deductions																		106,169								152,132
Customer prepayments																		19,376								87,887
Adjusted cash, cash equivalents and marketable securities																		$	63,831							$	65,068

Adjusted cash, cash equivalents and marketable securities excludes funds associated with federal
and state income tax withholdings, employment taxes and other payroll deductions, as well as
client prepayments. Insperity management believes adjusted cash, cash equivalents and
marketable securities is a useful measure of the company’s available funds.
													June 30, 2015									December 31, 2014
Working capital (GAAP)													$	88,831								$	73,058
Less: Assets held for sale, net of current deferred tax liabilities													9,533									-
Adjusted working capital													$	79,298								$	73,058
Adjusted working capital represents working capital excluding assets held for sale that are
classified as current assets and their associated current deferred tax liabilities. Insperity
management believes adjusted working capital is a useful measure of the company’s liquidity, as
it allows for additional analysis of the company’s liquidity separate from the impact of this item.
		Three Months Ended June 30,												Six Months Ended June 30,
		2015				2014				Change				2015				2014								Change
Operating expenses (GAAP)		$	92,002			$	92,039			-				$	198,342			$	181,624							9.2	%
Less: Impairment charges and other		1,313				2,485				(47.2	)%			11,120				2,485								347.5	%
Stockholder advisory expenses		398				-				-				1,546				-								-
Adjusted operating expenses		$	90,291			$	89,554			0.8	%			$	185,676			$	179,139							3.6	%
Adjusted operating expenses represent operating expenses excluding the impact of impairment
and other charges related to the valuation of aircraft held for sale and stockholder advisory
expenses in 2015 and an impairment charge associated with the Employment Screening reporting
unit in 2014. Insperity management believes adjusted operating expenses is a useful measure of
the company’s operating costs, as it allows for additional analysis of the company’s operating
expenses separate from the impact of these items.

		Three Months Ended June 30,																												Six Months Ended June 30,
		2015								2014									Change											2015								2014						Change
Net income (GAAP)		$	7,314							$	1,891								286.8						%					$	21,101							$	11,455					84.2		%
Income tax expense		4,863								1,559									211.9						%					14,603								8,607						69.7		%
Interest expense		124								88									40.9						%					224								177						26.6		%
Depreciation and amortization		4,590								5,291									(13.2						)%					9,875								10,525						(6.2		)%
EBITDA		16,891								8,829									91.3						%					45,803								30,764						48.9		%
Impairment charges and other		1,313								2,485									(47.2						)%					11,120								2,485						347.5		%
Stock-based compensation		4,041								3,245									24.5						%					6,464								5,645						14.5		%
Stockholder advisory expenses		398								-									-											1,546								-						-
Adjusted EBITDA		$	22,643							$	14,559								55.5						%					$	64,933							$	38,894					66.9		%
EBITDA represents net income computed in accordance with generally accepted accounting
principles (“GAAP”), plus interest expense, income tax expense, depreciation and amortization
expense. Adjusted EBITDA represents EBITDA plus non-cash impairment and other charges,
costs associated with stockholder advisory expenses and stock-based compensation. Insperity
management believes EBITDA and Adjusted EBITDA are often useful measures of the
company’s operating performance, as they allow for additional analysis of the company’s
operating results separate from the impact of these items.
					Three Months Ended June 30,																									Six Months Ended June 30,
					2015									2014							Change									2015									2014						Change
Net income (GAAP)					$	7,314								$	1,891						286.8						%			$	21,101								$	11,455					84.2		%
Impairment charges and other, net of tax					789									1,566							(49.6						)%			6,572									1,566						319.7		%
Stock-based compensation, net of tax					2,429									1,778							36.6						%			3,820									3,223						18.5		%
Stockholder advisory expenses, net of tax					239									-							-									914									-						-
Adjusted net income					$	10,771								$	5,235						105.7						%			$	32,407								$	16,244					99.5		%
						Three Months Ended June 30,																											Six Months Ended June 30,
						2015									2014									Change									2015							2014					Change
Diluted net income per share of common
stock (GAAP)						$	0.29								$	0.07								314.3				%					$	0.83						$	0.45				84.4		%
Impairment charges and other, net of tax						0.03									0.06									(50.0				)%					0.26							0.06					333.3		%
Stock-based compensation, net of tax						0.09									0.07									28.6				%					0.15							0.13					15.4		%
Stockholder advisory expenses, net of tax						0.01									-									-									0.04							-					-
Adjusted diluted net income per share of
common stock						$	0.42								$	0.20								110.0				%					$	1.28						$	0.64				100.0		%

Adjusted net income and adjusted diluted net income per share of common stock represent net income and diluted net income per share computed in accordance with GAAP, excluding the impact of non-cash impairment and other charges related to the valuation of aircraft held for sale in 2015 and an impairment charge associated with the Employment Screening reporting unit in 2014, stock-based compensation and costs associated with stockholder advisory expenses. Insperity management believes adjusted net income and adjusted diluted net income per share are useful measures of the company’s operating performance in this period, as they allow for additional analysis of the company’s operating results separate from the impact of these items.

Non-bonus payroll, adjusted cash, cash equivalents and marketable securities, adjusted working capital, adjusted operating expenses, EBITDA, adjusted EBITDA, adjusted net income and adjusted diluted net income per share of common stock are not financial measures prepared in accordance with GAAP and may be different from similar measures used by other companies. Non-bonus payroll, adjusted cash, cash equivalents and marketable securities, adjusted working capital, adjusted operating expenses, EBITDA, adjusted EBITDA, adjusted net income and adjusted diluted net income per share of common stock should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of the non-GAAP financial measures used in this press release to their most directly comparable GAAP financial measures as provided in the tables above.

View source version on businesswire.com: http://www.businesswire.com/news/home/20150803005270/en/

Source: Insperity, Inc.

Insperity, Inc.
Investor Relations Contact:
Douglas S. Sharp, (281) 348-3232
Senior Vice President of Finance,
Chief Financial Officer and Treasurer
or
News Media Contact:
Jason Cutbirth, (281) 312-3085
Senior Vice President of Marketing
jason.cutbirth@insperity.com