) adjusted second-quarter 2013 earnings per share of 24 cents
beat the Zacks Consensus Estimate of 21 cents. The quarter's
earnings were 9.1% higher than 22 cents reported in the
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Insperity's second quarter revenues of $547.3 million increased
5.4% from $519.3 million in the year-ago quarter and were above
the Zacks Consensus Estimate of $543.0 million. The
year-over-year improvement was attributed to higher worksite
employees and higher revenues per employee.
Gross profit increased 12.0% from the year-ago quarter to $97.7
million. Gross margin was 17.9%, up from 16.8% in the year-ago
quarter. The improvement was led by higher gross profit per
worksite employee per month.
Total operating expenses surged 12.4% year over year, mainly due
to increase in hirings and continuous investments (for expanding
the Business Performance Advisors group and implementing health
care reform strategy). Operating margin was 1.9%, slightly up
from 1.8% in the year-ago period. Earnings before interest, tax,
depreciation and amortization (EBITDA) were $12.9 million, down
from $14.1 million in the year-ago quarter.
Insperity reported net income of $3.5 million or 14 cents per
share compared with $5.6 million or 22 cents in the year-ago
quarter. Excluding the impairment charge, adjusted earnings per
share were 24 cents. There were no one-time items recorded in the
Balance Sheet & Share Repurchase
Insperity exited the second quarter with cash, marketable
securities and restricted cash of $278.6 million, down from
$326.2 million in the previous quarter. Accounts receivable were
roughly flat at $200.4 million.
During the quarter, the company repurchased 60,000 shares worth
$1.6 million and paid dividends worth $4.3 million.
Insperity expects gross profit per worksite employee per month in
the range of $260.0-$262.0 for the third quarter of 2013 and in
the range of $261.0-$263.0 (previously $260.0-$263.0) for fiscal
The company expects operating expenses in the range of
$84.0-$85.0 million for the third quarter and in the range of
$338.5-$339.5 million for fiscal 2013 (previously $340.5-$342.5
For fiscal 2013, the company expects earnings per share in the
range of $1.52-$1.61 (previously $1.51-$1.61), given a tax rate
of 40.0% and 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 second quarter results were
encouraging with both the top and bottom lines beating the Zacks
Consensus Estimate. Though third quarter guidance seems weak on
seasonality, we are encouraged by a better visibility into fiscal
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 #2 (Buy).