) reported first-quarter 2013 earnings per share of 51 cents, in
line with the Zacks Consensus Estimate. The quarter's earnings
were 5.6% lower than 54 cents reported in the year-earlier
quarter. The year-over-year decline was mainly due to higher
investments for expanding the Business Performance Advisors group
and implementing health care reform strategy. However, this was
partially offset by higher gross profit per worksite employees.
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Insperity's first quarter revenues of $611.8 million increased
2.8% from $595.2 million in the year-ago quarter and were
slightly below the Zacks Consensus Estimate of $615.0 million.
The year-over-year improvement was attributed to a 1.2% increase
in average paid worksite employees.
Gross profit increased 5.0% from the year-ago quarter to $108.1
million. Gross margin was 17.7%, up from 17.3% in the year-ago
quarter. The improvement was led by higher gross profit per
worksite employee per month.
Total operating expenses surged 7.7% year over year. Operating
margin was 3.6% compared with 3.9% in the year-ago period.
Earnings before interest, tax and depreciation (EBITDA) was $27.3
million, down from $27.6 million in the year-ago quarter.
Insperity reported net income of $12.8 million or 51 cents per
share compared with $13.5 million or 54 cents in the year-ago
Balance Sheet & Share Repurchase
Insperity exited the first quarter with cash, marketable
securities and restricted cash of $326.2 million, down from
$328.6 million in the previous quarter. Accounts receivable
increased 5.7% sequentially to $201.2 million.
During the quarter, the company repurchased 472,211 shares worth
$13.5 million and paid dividend of $4.3 million.
Insperity expects gross profit per worksite employee in the range
of $253.0-$255.0 for the second quarter of 2013 and in the range
of $260.0-$263.0 for fiscal 2013. The sequential decrease is
mainly due to seasonality.
The company expects operating expenses in the range of
$87.75-$88.5 million for the second quarter and in the range of
$340.5-$342.5 million for fiscal 2013.
For fiscal 2013, the company expects earnings per share in the
range of $1.51-$1.61, given a tax rate of 40.0% and diluted
shares outstanding of 25.6 million.
Insperity provides human resources (HR) as well as business
solutions to small and medium business (SMBs) to help them
perform better. Insperity's first quarter results were
disappointing with the top line missing the Zacks Consensus
Estimate and the bottom line matching the same. Though second
quarter guidance seems weak on seasonality, we are encouraged by
a better visibility into fiscal 2013.
We believe that management's initiatives to expand the number of
Business Performance Advisors and implement health care reform
strategy will help it achieve its fiscal 2013 guidance.
In an internal survey, Insperity found that most of the SMBs are
willing to add employees in order to expand business activities.
This will have a positive impact on Insperity's fundamentals.
A debt-free balance sheet, share repurchases and dividend payouts
are positive, but increasing expenses, stiff competition from
Automatic Data Processing Inc.
Manpower Group Inc.
) are concerns.
Currently, Insperity has a Zacks Rank #3 (Hold).