Insperity Announces Fourth Quarter and Full Year Results

Insperity Announces Fourth Quarter and Full Year Results

• 2012 adjusted EPS increases 26% on 9% revenue growth

• 2012 adjusted EBITDA increases 23% to over $100 million

• $43 million returned to stockholders in 2012 through dividends

• Working capital of $116 million and no debt at Dec. 31, 2012

HOUSTON--(BUSINESS WIRE)-- Insperity, Inc. (NYS: NSP) , a leading provider of human resources and business performance solutions for America's best businesses, today reported results for the fourth quarter and year ended Dec. 31, 2012. For the fourth quarter, the company's adjusted net income was $11.9 million. Adjusted diluted earnings per share was $0.47, an 11.9% increase over 2011. Adjusted net income excludes an after-tax non-cash impairment charge of $2.5 million, or $0.10 per share, associated with a write-down of goodwill related to a 2006 acquisition. Additionally, there was a $0.03 effect to earnings per share, related to the accounting treatment associated with the $1.00 per share special dividend paid in December 2012. Reported fourth quarter net income and earnings per share were $9.4 million and $0.34, respectively.

For the year ended Dec. 31, 2012, the company had adjusted diluted earnings per share of $1.67, a 25.6% increase over 2011. Adjusted results exclude $0.10 per share related to the impairment charge and $0.01 per share related to the accounting treatment associated with the special dividend in 2012, and $0.17 per share for two non-operational items in 2011. Reported 2012 net income was $40.4 million, or $1.56 per share, a 34.5% increase compared to 2011.

"We are pleased with these strong results for both the quarter and the year, achieved in spite of the effects of the election and fiscal cliff on our customer base comprised of highly successful U.S. small businesses," said Paul J. Sarvadi, Insperity chairman and chief executive officer. "Our plan for growth in 2013 is to invest in expanding our number of business performance advisors, leverage opportunities related to health care reform, and accelerate the growth of our adjacent businesses."

Fourth Quarter Results

Revenues for the fourth quarter of 2012 increased 7.5% over the fourth quarter of 2011 due to a 6.0% increase in the average number of worksite employees paid per month and a 1.5% increase in revenues per worksite employee per month. Gross profit increased 4.0% over the fourth quarter of 2011 to $93.5 million, as expected.

Operating expenses increased 5.9% to $77.6 million compared to the fourth quarter of 2011. Excluding the $4.2 million impairment charge, operating expenses increased less than 1.0% to $73.4 million.

Year-to-Date Results

Revenues in 2012 were $2.2 billion, an increase of 9.2% over 2011. Gross profit for the year ended Dec. 31, 2012, increased 8.7% to $382.2 million. The average gross profit per worksite employee per month increased $2, or 0.8%, to $253 in 2012 from $251 in 2011.

Reported 2012 operating expenses were $314.7 million. Excluding the $4.2 million impairment charge, operating expenses increased 5.5% over 2011 to $310.5 million.

Reported operating income for the year ended Dec. 31, 2012, was $67.5 million. Excluding the impairment charge, operating income was $71.7 million, a 25.1% increase over 2011.

Adjusted EBITDA increased 22.8% to $100.9 million compared to 2011. These results exclude the impairment charge in 2012 and $7.5 million in costs associated with two non-operational items in 2011. Cash outlays in 2012 included the repurchase of 595,676 shares at a cost of $16.9 million, including 80,983 shares repurchased in a modified "Dutch auction" tender offer in the fourth quarter; dividends of $42.7 million, including a special cash dividend of $25.7 million paid in the fourth quarter; and capital expenditures of $17.6 million. Working capital at Dec. 31, 2012, was $115.7 million.

"Our strong balance sheet and cash flow have allowed us to continue to invest in the business while returning significant value to stockholders, including a $1.00 per share special dividend paid in December," said Douglas S. Sharp, senior vice-president of finance, chief financial officer and treasurer. "Going forward, we intend to continue to invest in our growth initiatives, continue our dividend program, and apply the $47 million balance authorized in our $50 million Dutch tender offer to future share repurchases."

Insperity will be hosting a conference call today at 10 a.m. ET to discuss these results, give guidance for the first quarter and full year 2013 and answer questions from investment analysts. To listen in, call 877-651-0053 and use conference i.d. number 87449063. The call will also be webcast at http://ir.insperity.com. The conference call script and company guidance 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. 87449063, for one week. The webcast will be archived for one year.

Insperity, a trusted advisor to America's best businesses for more than 26 years, provides an array of human resources and business solutions designed to help improve business performance. Insperity^TM 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^TM solution. Additional company offerings include Human Capital Management, Payroll Services, Time and Attendance, Performance Management, Organizational Planning, Recruiting Services, Employment Screening, Financial Services, Expense Management, Retirement Services and Insurance Services. Insperity business performance solutions support more than 100,000 businesses with over 2 million employees. With 2012 revenues of $2.2 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) continued effects of the economic recession and general 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 contracts 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) changes in the competitive environment in the PEO industry, including the entrance of new competitors and our ability to renew or replace client companies; (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; and (x) an adverse final judgment or settlement of claims against Insperity.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.