-- Fourth quarter revenues increase 14% on 11% unit growth
-- 2007 EBITDA increases to $90 million
-- 2.3 million shares repurchased in 2007
HOUSTON--(BUSINESS WIRE)--Feb. 7, 2008--Administaff, Inc.
(NYSE:ASF), a leading provider of human resources services for small
and medium-sized businesses, today announced results for the fourth
quarter and year ended December 31, 2007. The company reported fourth
quarter net income of $13.3 million and diluted earnings per share of
$0.50, up from $0.47 in the 2006 quarter. For the full year, the
company reported net income and diluted net earnings per share of
$47.5 million and $1.74, compared to $46.5 million and $1.64 in 2006.
"We are pleased with our solid fourth quarter and full year 2007
results in spite of uncertainty in the marketplace regarding a
weakening economy," said Paul J. Sarvadi, Administaff chairman and
chief executive officer. "While we expect some effect from slower
economic growth in 2008, we are well-positioned to take advantage of
opportunities to grow the business, expand our profitability and
extend our competitive advantage."
Fourth Quarter Results
Revenues for the fourth quarter of 2007 increased 14.0% over the
2006 period to $402.1 million, due to a 10.7% increase in the average
number of worksite employees paid per month and a 3.0% increase in
revenues per worksite employee per month.
Gross profit increased 13.0% over the fourth quarter of 2006 to
$84.3 million, due primarily to the growth in the average number of
worksite employees paid. The average gross profit per worksite
employee per month increased to $244 from $239 in the 2006 period, and
exceeded the high end of our forecasted range for the quarter due to
lower-than-expected benefits and workers' compensation costs.
Operating expenses for the quarter increased 14.7% to $66.3
million, and included an increased accrual for incentive compensation
due to better than initially expected operating results and a $1.2
million write off of capitalized software costs associated with our
decision to upgrade our HRTools.com offering into a
Software-as-a-Service (SaaS) model. Operating expenses per worksite
employee per month increased 3.2% from $185 in the 2006 period to $191
in the 2007 period.
Operating income for the fourth quarter of 2007 increased 7.0% to
$18.1 million, with an average operating income per worksite employee
per month of $52 compared to $54 in the 2006 period.
EBITDA for the fourth quarter was $25.4 million. Cash outlays
included share repurchases of $19.2 million, capital expenditures of
$3.3 million and dividends of $2.9 million.
Full Year Results
Revenues in 2007 increased 13.0% to $1.6 billion, due to a 9.6%
increase in the average number of worksite employees paid and a 3.1%
increase in revenues per worksite employee per month.
Gross profit increased 8.2% to $305.9 million. The average gross
profit per worksite employee decreased 1.3% to $231 per month compared
to $234 in the 2006 period. This decline was associated with a
slightly lower surplus from our direct cost programs.
Operating expenses increased 10.2% over the 2006 period to $243.7
million. On a per worksite employee per month basis, operating
expenses were relatively flat at $184 compared to $183 in the 2006
period.
The resulting operating income for the year ended December 31,
2007, increased 1.1% to $62.2 million compared to $61.6 million in the
2006 period, with an average monthly operating income per worksite
employee of $47 in 2007 compared to $51 in 2006.
During 2007, the company generated $89.7 million of EBITDA. Cash
outlays included share repurchases of $80.5 million, and capital
expenditures of $12.9 million and dividends of $11.9 million. Working
capital at December 31, 2007 was $97.2 million.
"Our strong cash flow and working capital position have allowed us
to take advantage of the recent softening in the economic climate
through the continued execution of our share repurchase program," said
Douglas S. Sharp, vice-president of finance, chief financial officer
and treasurer. "We plan to continue to be opportunistic with our share
repurchase program while investing in our sales expansion and new
products and services."
Administaff will be hosting a conference call today at 10 a.m. EST
to discuss these results, give guidance for the first quarter and full
year 2008, and answer questions from investment analysts. To listen
in, call 800-798-2864 and use passcode 63515699. 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 will be
available at the same Web site later today. A replay of the conference
call will be available at 888-286-8010, passcode 37617516, 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 49 sales
offices in 24 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; (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; and
(vi) our liability for worksite employee payroll and benefits costs.
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)
December 31, December 31,
2007 2006
------------ ------------
Assets
Cash and cash equivalents $ 135,793 $148,416
Restricted cash 35,318 37,405
Marketable securities 74,880 85,617
Accounts receivable 134,834 122,723
Prepaid expenses and other current
assets 28,668 15,233
Income taxes receivable 3,918 3,193
Deferred income taxes -- 2,492
------------ ------------
Total current assets 413,411 415,079
Property and equipment, net 77,941 81,120
Deposits 63,720 59,890
Other assets 5,579 5,426
------------ ------------
Total assets $ 560,651 $561,515
============ ============
Liabilities and Stockholders' Equity
Accounts payable $ 5,236 $ 3,802
Payroll taxes and other payroll
deductions payable 113,929 116,926
Accrued worksite employee payroll
expense 110,406 94,818
Accrued health insurance costs 19,297 2,824
Accrued workers' compensation costs 37,150 39,035
Deferred income taxes 1,066 --
Other accrued liabilities 28,518 28,690
Current portion of long-term debt 629 583
------------ ------------
Total current liabilities 316,231 286,678
Long-term debt 537 1,166
Accrued workers' compensation costs 39,116 40,019
Deferred income taxes 6,092 5,207
------------ ------------
Total noncurrent liabilities 45,745 46,392
Stockholders' equity:
Common stock 309 309
Additional paid-in capital 138,640 135,942
Treasury stock, cost (123,600) (55,405)
Accumulated other comprehensive
income, net of tax 5 (131)
Retained earnings 183,321 147,730
------------ ------------
Total stockholders' equity 198,675 228,445
------------ ------------
Total liabilities and
stockholders' equity $ 560,651 $561,515
============ ============
Administaff, Inc.
Summary Financial Information (continued)
(in thousands, except per share amounts and statistical data)
Three months ended
December 31,
2007 2006 Change
--------- --------- ---------
Operating results:
Revenues (gross billings of
$2.655 billion, $2.242 billion,
$9.437 billion and $8.055
billion, less worksite employee
payroll cost of $2.253 billion,
$1.889 billion, $7.867 billion
and $6.666 billion,
respectively) $402,081 $352,629 14.0%
Direct costs:
Payroll taxes, benefits and
workers' compensation costs 317,735 277,973 14.3%
--------- ---------
Gross profit 84,346 74,656 13.0%
Operating expenses:
Salaries, wages and payroll
taxes 34,753 31,906 8.9%
Stock-based compensation 1,885 1,043 80.7%
General and administrative
expenses 16,655 12,836 29.8%
Commissions 3,068 2,704 13.5%
Advertising 5,009 5,454 (8.2)%
Depreciation and amortization 4,905 3,818 28.5%
--------- ---------
Total operating expenses 66,275 57,761 14.7%
--------- ---------
Operating income 18,071 16,895 7.0%
Other income (expense):
Interest income 2,777 2,999 (7.4)%
Interest expense (24) (35) (31.4)%
Other, net (395) 120 (429.2)%
--------- ---------
2,358 3,084 (23.5)%
Income before income tax expense 20,429 19,979 2.3%
Income tax expense 7,129 6,624 7.6%
--------- ---------
Net income $ 13,300 $ 13,355 (0.4)%
========= =========
Diluted net income per share of
common stock $ 0.50 $ 0.47 6.4%
========= =========
Diluted weighted average common
shares outstanding 26,509 28,239
Year ended
December 31,
2007 2006 Change
----------- ----------- --------
Operating results:
Revenues (gross billings of $2.655
billion, $2.242 billion, $9.437
billion and $8.055 billion, less
worksite employee payroll cost of
$2.253 billion, $1.889 billion,
$7.867 billion and $6.666
billion, respectively) $1,569,977 $1,389,464 13.0%
Direct costs:
Payroll taxes, benefits and
workers' compensation costs 1,264,055 1,106,735 14.2%
----------- -----------
Gross profit 305,922 282,729 8.2%
Operating expenses:
Salaries, wages and payroll
taxes 131,648 119,963 9.7%
Stock-based compensation 7,513 3,411 120.3%
General and administrative
expenses 62,453 57,409 8.8%
Commissions 11,795 10,968 7.5%
Advertising 14,143 13,975 1.2%
Depreciation and amortization 16,156 15,438 4.7%
----------- -----------
Total operating expenses 243,708 221,164 10.2%
----------- -----------
Operating income 62,214 61,565 1.1%
Other income (expense):
Interest income 11,718 11,383 2.9%
Interest expense (111) (1,111) (90.0)%
Other, net (382) 245 (255.9)%
----------- -----------
11,225 10,517 6.7%
Income before income tax expense 73,439 72,082 1.9%
Income tax expense 25,947 25,576 1.5%
----------- -----------
Net income $ 47,492 $ 46,506 2.1%
=========== ===========
Diluted net income per share of
common stock $ 1.74 $ 1.64 6.1%
=========== ===========
Diluted weighted average common
shares outstanding 27,264 28,361
Administaff, Inc.
Summary Financial Information (continued)
(in thousands, except per share amounts and statistical data)
Three months ended Year ended
December 31, December 31,
2007 2006 Change 2007 2006 Change
-------- -------- ------- -------- -------- ------
Statistical
data:
Average
number of
worksite
employees
paid per
month 115,451 104,325 10.7% 110,291 100,675 9.6%
Revenues
per
worksite
employee
per month
(1) $ 1,161 $ 1,127 3.0% $ 1,186 $ 1,150 3.1%
Gross
profit per
worksite
employee
per month 244 239 2.1% 231 234 (1.3)%
Operating
expenses
per
worksite
employee
per month 191 185 3.2% 184 183 0.5%
Operating
income per
worksite
employee
per month 52 54 (3.7)% 47 51 (7.8)%
Net income
per
worksite
employee
per month 38 43 (11.6)% 36 38 (5.3)%
(1) Gross billings of $7,667, $7,165, $7,130 and $6,667 per worksite
employee per month, less payroll cost of $6,506, $6,038, $5,944 and
$5,517 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 Year ended
December 31, December 31,
2007 2006 Change 2007 2006 Change
---------- ---------- ------ ---------- ---------- ------
Payroll cost
(GAAP) $2,253,438 $1,889,795 19.2% $7,866,792 $6,665,532 18.0%
Less: Bonus
payroll
cost 346,143 257,824 34.3% 845,149 640,552 31.9%
---------- ---------- ---------- ----------
Non-bonus
payroll
cost $1,907,295 $1,631,971 16.9% $7,021,643 $6,024,980 16.5%
========== ========== ========== ==========
Payroll cost
per
worksite
employee
(GAAP) $ 6,506 $ 6,038 7.8% $ 5,944 $ 5,517 7.7%
Less: Bonus
payroll
cost per
worksite
employee 999 824 21.2% 639 530 20.6%
---------- ---------- ---------- ----------
Non-bonus
payroll
cost per
worksite
employee $ 5,507 $ 5,214 5.6% $ 5,305 $ 4,987 6.4%
========== ========== ========== ==========
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 Year ended
December 31, December 31,
2007 2006 2007 2006
---------- ----------- ----------- -----------
Net income (GAAP) $ 13,300 $ 13,355 $ 47,492 $ 46,506
Interest expense 24 35 111 1,111
Income tax expense 7,129 6,624 25,947 25,576
Depreciation and
amortization 4,905 3,818 16,156 15,438
---------- ----------- ----------- -----------
EBITDA $ 25,358 $ 23,832 $ 89,706 $ 88,631
========== =========== =========== ===========
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:
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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