-- Revenues increase 13% on 10% unit growth
-- Operating expense per worksite employee declines 3%
-- Share repurchases continue on strong cash flow
HOUSTON--(BUSINESS WIRE)--Nov. 1, 2007--Administaff, Inc.
(NYSE:ASF), a leading provider of human resources services for small
and medium-sized businesses, today announced results for the third
quarter and nine months ended September 30, 2007. The company reported
third quarter net income of $12.2 million in the 2007 period, up from
$12.1 million in the 2006 period. Diluted earnings per share increased
to $0.45 from $0.43 in the 2006 period.
Third Quarter Results
Revenues for the third quarter of 2007 increased 13.3% over the
2006 period to $383.4 million, due to a 9.7% increase in the average
number of worksite employees paid per month and a 3.3% increase in
revenues per worksite employee per month.
"We are pleased with the unit growth acceleration we experienced
during the quarter," said Paul J. Sarvadi, Administaff chairman and
chief executive officer. "Our fall selling and retention campaign is
off to a good start as we lay the foundation for a successful 2008."
Gross profit increased 4.4% over the third quarter of 2006 to
$75.0 million, due primarily to the growth in the average number of
worksite employees paid. As expected, the average gross profit per
worksite employee per month of $222 declined on higher benefits costs
compared to the 2006 period; however, exceeded the high end of our
forecasted range for the quarter.
Operating expenses for the quarter increased 6.6% to $59.2
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 expenses per
worksite employee per month declined 2.8% from $181 in the 2006 period
to $176 in the 2007 period.
Operating income for the third quarter of 2007 decreased 3.1% to
$15.8 million, with an average operating income per worksite employee
per month of $47 compared to $53 in the 2006 period.
EBITDA for the third quarter was $22.6 million. Cash outlays
included capital expenditures of $4.0 million, dividends of $2.9
million and share repurchases of $13.4 million.
Year-to-Date Results
For the nine months ended September 30, 2007, the company reported
a 3.1% increase in net income to $34.2 million compared to $33.2
million in the same period in 2006. Diluted earnings per share
increased to $1.24 from $1.17 in the 2006 period.
Year-to-date revenues were $1.2 billion, a 12.6% increase over the
2006 period, which resulted from a 9.2% increase in the average number
of worksite employees paid per month and a 3.2% increase in revenues
per worksite employee per month. Gross profit for the nine months
ended September 30, 2007 increased 6.5% to $221.6 million. The average
gross profit per worksite employee per month was $227, a 2.2% decrease
compared to the 2006 period.
Year-to-date operating expenses increased 8.6% to $177.4 million.
On a per worksite employee per month basis, operating expenses were
$182 compared to $183 in the 2006 period. The resulting operating
income for the nine months ended September 30, 2007, was $44.1 million
compared to $44.7 million in 2006.
EBITDA for the first nine months of the year was $64.3 million.
Cash outlays included capital expenditures of $9.5 million, dividends
of $9.0 million and share repurchases of $61.3 million.
"Our strong cash flow has given us the opportunity to repurchase
over 6% of our shares since the beginning of the year," said Douglas
S. Sharp, vice-president of finance, chief financial officer and
treasurer. "The accretive impact of these share repurchases, coupled
with $9 million in dividends, demonstrates significant return to
shareholders while we continue to invest in the growth of the
company."
Administaff will be hosting a conference call today at 10 a.m. EDT
to discuss these results, give guidance for the fourth quarter of
2007, provide some preliminary commentary on 2008, and answer
questions from investment analysts. To listen in, call 800-573-4752
and use passcode 64345408. 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 fourth quarter
of 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
97180098, 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 47 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)
September 30, December 31,
2007 2006
------------- -------------
(Unaudited)
Assets
Cash and cash equivalents $ 114,926 $ 148,416
Restricted cash 36,195 37,405
Marketable securities 89,034 85,617
Accounts receivable 142,907 122,723
Prepaid expenses and other current
assets 21,666 15,233
Income taxes receivable -- 3,193
Deferred income taxes 2,878 2,492
------------- -------------
Total current assets 407,606 415,079
Property and equipment, net 79,491 81,120
Deposits 53,548 59,890
Other assets 5,774 5,426
------------- -------------
Total assets $ 546,419 $ 561,515
============= =============
Liabilities and Stockholders' Equity
Accounts payable $ 4,600 $ 3,802
Payroll taxes and other payroll
deductions payable 85,533 116,926
Accrued worksite employee payroll
expense 130,669 94,818
Accrued health insurance costs 13,945 2,824
Accrued workers' compensation costs 38,093 39,035
Income tax payable 2,369 --
Other accrued liabilities 21,588 28,690
Current portion of long-term debt 617 583
------------- -------------
Total current liabilities 297,414 286,678
Long-term debt 618 1,166
Accrued workers' compensation costs 39,729 40,019
Deferred income taxes 5,915 5,207
------------- -------------
Total noncurrent liabilities 46,262 46,392
Stockholders' equity:
Common stock 309 309
Additional paid-in capital 138,681 135,942
Treasury stock, cost (108,949) (55,405)
Accumulated other comprehensive income,
net of tax (222) (131)
Retained earnings 172,924 147,730
------------- -------------
Total stockholders' equity 202,743 228,445
------------- -------------
Total liabilities and stockholders'
equity $ 546,419 $ 561,515
============= =============
Administaff, Inc.
Summary Financial Information (continued)
(in thousands, except per share amounts and statistical data)
(Unaudited)
Three months ended
September 30,
2007 2006 Change
------------ ------------ ------------
Operating results:
Revenues (gross billings of
$2.316 billion, $1.990
billion, $6.781 billion and
$5.813 billion, less
worksite employee payroll
cost of $1.932 billion,
$1.652 billion, $5.613
billion and $4.776 billion,
respectively) $ 383,380 $ 338,421 13.3%
Direct costs:
Payroll taxes, benefits
and workers' compensation
costs 308,338 266,557 15.7%
------------ ------------
Gross profit 75,042 71,864 4.4%
Operating expenses:
Salaries, wages and
payroll taxes 31,774 30,393 4.5%
Stock-based compensation 1,885 1,011 86.4%
General and administrative
expenses 15,576 14,722 5.8%
Commissions 3,104 2,722 14.0%
Advertising 3,074 2,819 9.0%
Depreciation and
amortization 3,827 3,896 (1.8)%
------------ ------------
Total operating expenses 59,240 55,563 6.6%
------------ ------------
Operating income 15,802 16,301 (3.1)%
Other income (expense):
Interest income 2,957 2,567 15.2%
Interest expense (26) (14) 85.7%
Other, net 4 13 (69.2)%
------------ ------------
Income before income tax
expense 18,737 18,867 (0.7)%
Income tax expense 6,583 6,754 (2.5)%
------------ ------------
Net income $ 12,154 $ 12,113 0.3%
============ ============
Diluted net income per share
of common stock $ 0.45 $ 0.43 4.7%
============ ============
Diluted weighted average
common shares outstanding 26,873 28,259
Nine months ended
September 30,
2007 2006 Change
------------ ------------ ------------
Operating results:
Revenues (gross billings of
$2.316 billion, $1.990
billion, $6.781 billion and
$5.813 billion, less
worksite employee payroll
cost of $1.932 billion,
$1.652 billion, $5.613
billion and $4.776 billion,
respectively) $1,167,896 $1,036,835 12.6%
Direct costs:
Payroll taxes, benefits
and workers' compensation
costs 946,320 828,762 14.2%
------------ ------------
Gross profit 221,576 208,073 6.5%
Operating expenses:
Salaries, wages and
payroll taxes 96,895 88,057 10.0%
Stock-based compensation 5,628 2,368 137.7%
General and administrative
expenses 45,798 44,573 2.7%
Commissions 8,727 8,264 5.6%
Advertising 9,134 8,521 7.2%
Depreciation and
amortization 11,251 11,620 (3.2)%
------------ ------------
Total operating expenses 177,433 163,403 8.6%
------------ ------------
Operating income 44,143 44,670 (1.2)%
Other income (expense):
Interest income 8,941 8,384 6.6%
Interest expense (87) (1,076) (91.9)%
Other, net 13 125 (89.6)%
------------ ------------
Income before income tax
expense 53,010 52,103 1.7%
Income tax expense 18,819 18,952 (0.7)%
------------ ------------
Net income $ 34,191 $ 33,151 3.1%
============ ============
Diluted net income per share
of common stock $ 1.24 $ 1.17 6.0%
============ ============
Diluted weighted average
common shares outstanding 27,518 28,402
Administaff, Inc.
Summary Financial Information (continued)
(in thousands, except per share amounts and statistical data)
(Unaudited)
Three months Nine months
ended ended
September 30, September 30,
2007 2006 Change 2007 2006 Change
------- ------- ------- ------- ------- -------
Statistical data:
Average number of
worksite employees
paid per month 112,496 102,530 9.7% 108,571 99,459 9.2%
Revenues per
worksite employee
per month (1) $1,136 $1,100 3.3% $1,195 $1,158 3.2%
Gross profit per
worksite employee
per month 222 234 (5.1)% 227 232 (2.2)%
Operating expenses
per worksite
employee per month 176 181 (2.8)% 182 183 (0.5)%
Operating income
per worksite
employee per month 47 53 (11.3)% 45 50 (10.0)%
Net income per
worksite employee
per month 36 39 (7.7)% 35 37 (5.4)%
(1) Gross billings of $6,862, $6,470, $6,940 and $6,494 per worksite
employee per month, less payroll cost of $5,726, $5,370, $5,745 and
$5,335 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
September 30,
2007 2006 Change
------------ ------------ ------------
Payroll cost (GAAP) $ 1,932,491 $ 1,651,694 17.0%
Less: Bonus payroll cost 142,231 120,620 17.9%
------------ ------------
Non-bonus payroll cost $ 1,790,260 $ 1,531,074 16.9%
============ ============
Payroll cost per worksite
employee (GAAP) $ 5,726 $ 5,370 6.6%
Less: Bonus payroll cost per
worksite employee 421 392 7.4%
------------ ------------
Non-bonus payroll cost per
worksite employee $ 5,305 $ 4,978 6.6%
============ ============
Nine months ended
September 30,
2007 2006 Change
------------ ------------ ------------
Payroll cost (GAAP) $ 5,613,354 $ 4,775,737 17.5%
Less: Bonus payroll cost 499,006 382,728 30.4%
------------ ------------
Non-bonus payroll cost $ 5,114,348 $ 4,393,009 16.4%
============ ============
Payroll cost per worksite
employee (GAAP) $ 5,745 $ 5,335 7.7%
Less: Bonus payroll cost per
worksite employee 511 427 19.7%
------------ ------------
Non-bonus payroll cost per
worksite employee $ 5,234 $ 4,908 6.6%
============ ============
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.
Three months ended Nine months ended
September 30, September 30,
2007 2006 2007 2006
--------- ---------- ---------- ----------
Net income (GAAP) $ 12,154 $ 12,113 $ 34,191 $ 33,151
Interest expense 26 14 87 1,076
Income tax expense 6,583 6,754 18,819 18,952
Depreciation and
amortization 3,827 3,896 11,251 11,620
--------- ---------- ---------- ----------
EBITDA $ 22,590 $ 22,777 $ 64,348 $ 64,799
========= ========== ========== ==========
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., Houston
Investor Relations Contact:
Vice President, Finance
Chief Financial Officer and Treasurer
Douglas S. Sharp, 281-348-3232
Douglas_Sharp@Administaff.com
or
News Media Contact:
Managing Director, Marketing
and Corporate Communications
Jason Cutbirth, 281-312-3085
Jason_Cutbirth@Administaff.com
SOURCE:
Administaff, Inc.
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