-- Gross Profit Increases 15% on 9% Unit Growth
-- Operating Income Increases 31%
-- EPS Increases 35%
HOUSTON--(BUSINESS WIRE)--Aug. 1, 2007--Administaff, Inc.
(NYSE:ASF), a leading provider of human resources services for small
and medium-sized businesses, today announced results for the second
quarter and six months ended June 30, 2007. The company reported a
30.0% increase in second quarter net income to $13.6 million in the
2007 period from $10.5 million in the 2006 period. Diluted earnings
per share increased 35.1% to $0.50.
Second Quarter Results
Revenues for the second quarter of 2007 increased 11.5% over the
2006 period to $376.8 million, due to an 8.5% increase in the average
number of worksite employees paid per month and a 2.7% increase in
revenues per worksite employee per month.
"We are very pleased with the solid unit growth and substantial
gross profit improvement experienced in the second quarter," said Paul
J. Sarvadi, Administaff chairman and chief executive officer. "Our
strong operating results have positioned us well to take advantage of
new market and product opportunities over the second half of 2007 and
into next year."
Gross profit increased 15.0% over the second quarter 2006 to $78.5
million due to the growth in the average number of worksite employees
paid and better-than-expected results from direct cost programs. The
average gross profit per worksite employee per month increased to $241
in the 2007 period from $228 in the 2006 period.
Operating expenses for the quarter increased 10.9% to $60.2
million, and included the planned addition of sales and service
personnel and an accrual for incentive compensation due to
better-than-expected operating results.
Operating income for the second quarter of 2007 increased 31.0% to
$18.3 million, with an average operating income per worksite employee
per month of $56 compared to $47 in the 2006 period.
Year-to-Date Results
For the six months ended June 30, 2007, the company reported a
4.8% increase in net income to $22.0 million compared to $21.0 million
in the same period in 2006. Diluted earnings per share increased to
$0.79 from $0.74 in the 2006 period.
Year-to-date revenues were $784.5 million, a 12.3% increase over
the 2006 period, which resulted from an 8.9% increase in the average
number of worksite employees paid per month and a 3.1% increase in
revenues per worksite employee per month. Gross profit for the six
months ended June 30, 2007 increased 7.6% to $146.5 million. The
average gross profit per worksite employee per month was $229, a 1.3%
decrease compared to the 2006 period.
Year-to-date operating expenses increased 9.6% to $118.2 million.
On a per worksite employee per month basis, operating expenses
increased 0.5% over the 2006 period to $185. The resulting operating
income for the six months ended June 30, 2007, was $28.3 million
compared to $28.4 million in the 2006 period.
EBITDA for the first half of the year was $41.8 million. In
addition, the company received a scheduled return of $24.3 million in
excess funding from its workers' compensation program. Cash outlays
included capital expenditures of $5.5 million, dividends of $6.1
million and share repurchases.
"During the quarter we repurchased over one million shares at a
cost of approximately $35 million while maintaining working capital of
approximately $119 million," said Douglas S. Sharp, vice-president of
finance, chief financial officer and treasurer. "For the full year, we
have repurchased 1.4 million shares at a cost of approximately $48
million, and have 1.1 million shares remaining under the
authorization."
Administaff will be hosting a conference call today at 10 a.m. EDT
to discuss these results, give guidance for the third quarter and full
year 2007 and answer questions from investment analysts. To listen in,
call 800-322-5044 and use passcode 45731304. The call will also be
webcast at http://www.administaff.com. To access the webcast, click on
the Investor Relations section of the Web site and select "Live
Webcast." The conference call script and company guidance for the
third quarter and full year 2007 will be available at the same Web
site later today. A replay of the conference call will be available at
888-286-8010, passcode 76022692, for two weeks after the call. The
webcast will be archived for one year.
Administaff is the nation's leading professional employer
organization (PEO), serving as a full-service human resources
department that provides small and medium-sized businesses with
administrative relief, big-company benefits, reduced liabilities and a
systematic way to improve productivity. The company operates 46 sales
offices in 23 major markets. For additional information, visit
Administaff's Web site at http://www.administaff.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," "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, Administaff, 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 current expectations, estimates and projections. 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) changes in general economic conditions;
(ii) regulatory and tax developments and possible adverse application
of various federal, state and local regulations, including but not
limited to the California State Unemployment Tax matter; (iii) changes
in our direct costs and operating expenses including, but not limited
to, increases in health insurance costs and workers' compensation
rates and underlying claims trends, financial solvency of workers'
compensation carriers and other insurers, state unemployment tax
rates, liabilities for employee and client actions or payroll-related
claims, changes in the costs of expanding into new markets, and
failure to manage growth of our operations; (iv) the effectiveness of
our sales and marketing efforts; (v) changes in the competitive
environment in the PEO industry, including the entrance of new
competitors and our ability to renew or replace client companies; (vi)
our liability for worksite employee payroll and benefits costs; and
(vii) an adverse final judgment or settlement of claims against
Administaff. These factors are discussed in further detail in
Administaff'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.
Administaff, Inc.
Summary Financial Information
(in thousands, except per share amounts and statistical data)
June 30, December 31,
2007 2006
-------------- --------------
(Unaudited)
Assets
Cash and cash equivalents $118,933 $148,416
Restricted cash 35,792 37,405
Marketable securities 86,348 85,617
Accounts receivable 122,008 122,723
Prepaid expenses and other current
assets 18,987 15,233
Income taxes receivable 48 3,193
Deferred income taxes 196 2,492
-------------- --------------
Total current assets 382,312 415,079
Property and equipment, net 79,268 81,120
Deposits 47,456 59,890
Other assets 5,823 5,426
-------------- --------------
Total assets $514,859 $561,515
============== ==============
Liabilities and Stockholders' Equity
Accounts payable $ 3,307 $ 3,802
Payroll taxes and other payroll
deductions payable 89,641 116,926
Accrued worksite employee payroll
expense 102,896 94,818
Accrued health insurance costs 9,045 2,824
Accrued workers' compensation costs 37,384 39,035
Other accrued liabilities 20,416 28,690
Current portion of long-term debt 606 583
-------------- --------------
Total current liabilities 263,295 286,678
Long-term debt 857 1,166
Accrued workers' compensation costs 40,491 40,019
Deferred income taxes 5,979 5,207
-------------- --------------
Total noncurrent liabilities 47,327 46,392
Stockholders' equity:
Common stock 309 309
Additional paid-in capital 138,457 135,942
Treasury stock, cost (98,091) (55,405)
Accumulated other comprehensive
income, net of tax (141) (131)
Retained earnings 163,703 147,730
-------------- --------------
Total stockholders' equity 204,237 228,445
-------------- --------------
Total liabilities and stockholders'
equity $514,859 $561,515
============== ==============
Administaff, Inc.
Summary Financial Information (continued)
(in thousands, except per share amounts and statistical data)
(Unaudited)
Three months ended
June 30,
2007 2006 Change
---------- ---------- -------
Operating results:
Revenues (gross billings of $2.191
billion, $1.910 billion, $4.465
billion and $3.822 billion, less
worksite employee payroll cost of
$1.814 billion, $1.573 billion, $3.681
billion and $3.124 billion,
respectively) $ 376,758 $ 337,778 11.5%
Direct costs:
Payroll taxes, benefits and workers'
compensation costs 298,291 269,562 10.7%
---------- ----------
Gross profit 78,467 68,216 15.0%
Operating expenses:
Salaries, wages and payroll taxes 33,076 29,440 12.4%
Stock-based compensation 2,435 1,068 128.0%
General and administrative expenses 14,276 13,876 2.9%
Commissions 2,704 2,709 (0.2)%
Advertising 3,958 3,319 19.3%
Depreciation and amortization 3,704 3,829 (3.3)%
---------- ----------
Total operating expenses 60,153 54,241 10.9%
---------- ----------
Operating income 18,314 13,975 31.0%
Other income (expense):
Interest income 2,987 3,008 (0.7)%
Interest expense (29) (392) (92.6)%
Other, net -- (7) --
---------- ----------
Income before income tax expense 21,272 16,584 28.3%
Income tax expense 7,627 6,087 25.3%
---------- ----------
Net income $13,645 $10,497 30.0%
========== ==========
Diluted net income per share of common
stock $0.50 $0.37 35.1%
========== ==========
Diluted weighted average common shares
outstanding 27,517 28,561
Six months ended
June 30,
2007 2006 Change
---------- ---------- -------
Operating results:
Revenues (gross billings of $2.191
billion, $1.910 billion, $4.465
billion and $3.822 billion, less
worksite employee payroll cost of
$1.814 billion, $1.573 billion, $3.681
billion and $3.124 billion,
respectively) $ 784,516 $ 698,414 12.3%
Direct costs:
Payroll taxes, benefits and workers'
compensation costs 637,982 562,205 13.5%
---------- ----------
Gross profit 146,534 136,209 7.6%
Operating expenses:
Salaries, wages and payroll taxes 65,121 57,664 12.9%
Stock-based compensation 3,743 1,357 175.8%
General and administrative expenses 30,222 29,851 1.2%
Commissions 5,623 5,542 1.5%
Advertising 6,060 5,702 6.3%
Depreciation and amortization 7,424 7,724 (3.9)%
---------- ----------
Total operating expenses 118,193 107,840 9.6%
---------- ----------
Operating income 28,341 28,369 (0.1)%
Other income (expense):
Interest income 5,984 5,817 2.9%
Interest expense (61) (1,062) (94.3)%
Other, net 9 112 (92.0)%
---------- ----------
Income before income tax expense 34,273 33,236 3.1%
Income tax expense 12,235 12,198 0.3%
---------- ----------
Net income $22,038 $21,038 4.8%
========== ==========
Diluted net income per share of common
stock $0.79 $0.74 6.8%
========== ==========
Diluted weighted average common shares
outstanding 27,845 28,473
Administaff, Inc.
Summary Financial Information (continued)
(in thousands, except per share amounts and statistical data)
(Unaudited)
Three months Six months
ended ended
June 30, June 30,
2007 2006 Change 2007 2006 Change
-------- ------- ------ -------- ------- ------
Statistical data:
Average number of
worksite employees
paid per month 108,336 99,839 8.5% 106,609 97,923 8.9%
Revenues per
worksite employee
per month(1) $ 1,159 $ 1,128 2.7% $ 1,226 $ 1,189 3.1%
Gross profit per
worksite employee
per month 241 228 5.7% 229 232 (1.3)%
Operating expenses
per worksite
employee per month 185 181 2.2% 185 184 0.5%
Operating income per
worksite employee
per month 56 47 19.1% 44 48 (8.3)%
Net income per
worksite employee
per month 42 35 20.0% 34 36 (5.6)%
(1) Gross billings of $6,741, $6,378, $6,981 and $6,506 per worksite
employee per month, less payroll cost of $5,582, $5,250, $5,755 and
$5,317 per worksite employee per month, respectively.
Administaff, Inc.
Summary Financial Information (continued)
(in thousands, except per share amounts and statistical data)
(Unaudited)
GAAP to Non-GAAP Reconciliation Tables
Three months ended Six months ended
June 30, June 30,
2007 2006 Change 2007 2006 Change
---------- ---------- ------ ---------- ---------- ------
Payroll cost
(GAAP) $1,814,103 $1,572,541 15.4% $3,680,862 $3,124,043 17.8%
Less: Bonus
payroll
cost 120,779 108,381 11.4% 356,774 262,108 36.1%
---------- ---------- ---------- ----------
Non-bonus
payroll
cost $1,693,324 $1,464,160 15.7% $3,324,088 $2,861,935 16.1%
========== ========== ========== ==========
Payroll cost
per
worksite
employee
(GAAP) $5,582 $5,250 6.3% $5,755 $5,317 8.2%
Less: Bonus
payroll
cost per
worksite
employee 372 362 2.8% 558 446 25.1%
---------- ---------- ---------- ----------
Non-bonus
payroll
cost per
worksite
employee $5,210 $4,888 6.6% $5,197 $4,871 6.7%
========== ========== ========== ==========
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, Administaff management refers to
non-bonus payroll cost in analyzing, reporting and forecasting the
company's workers' compensation costs.
Six months ended
June 30,
2007 2006
-------------- --------------
Net income (GAAP) $22,038 $21,038
Interest expense 61 1,062
Income tax expense 12,235 12,198
Depreciation and amortization 7,424 7,724
-------------- --------------
EBITDA $41,758 $42,022
============== ==============
EBITDA represents net income computed in accordance with generally
accepted accounting principles ("GAAP"), plus interest expense, income
tax expense, depreciation and amortization expense. Administaff
management believes EBITDA is often a useful measure of the company's
operating performance, as it allows for additional analysis of the
company's operating results separate from the impact of taxes and
capital and financing transactions on earnings.
Non-bonus payroll and EBITDA are not financial measures prepared
in accordance with GAAP and may be different from similar measures
used by other companies. Non-bonus payroll and EBITDA should not be
considered as a substitute for, or superior to, measures of financial
performance prepared in accordance with GAAP. Administaff includes
non-bonus payroll and EBITDA in this press release because the company
believes they are useful to investors in allowing for greater
transparency related to the costs incurred under the company's
workers' compensation program and the company's operating performance
during the periods presented. 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.
CONTACT:
Administaff, Inc.
Investor Relations Contact:
Douglas S. Sharp, 281-348-3232
Vice President, Finance
Chief Financial Officer and Treasurer
Douglas_Sharp@Administaff.com
or
News Media Contact:
Jason Cutbirth, 281-312-3085
Managing Director, Marketing and Corporate Communications
Jason_Cutbirth@Administaff.com
SOURCE: Administaff, Inc.
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