-- Q2 revenues increase 12% on 7% unit growth
-- Year-to-date earnings per share increases 19%
-- Trained sales staff increases 15%
HOUSTON, Aug 01, 2008 (BUSINESS WIRE) -- 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,
2008. The company reported 2008 second quarter net income of $11.0
million, or $0.43 diluted earnings per share. For the six months ended
June 30, 2008, the company reported net income of $24.1 million, or
$0.94 diluted earnings per share.
Second Quarter Results
Revenues for the second quarter of 2008 increased 11.6% over the
2007 period to $420.5 million, due to a 7.2% increase in the average
number of worksite employees paid per month and a 4.1% increase in
revenues per worksite employee per month.
"Solid execution over the first half of the year has allowed us to
make investments in our sales expansion and product and service
enhancements while achieving strong profitability," said Paul J.
Sarvadi, Administaff chairman and chief executive officer. "These
investments, which include a 15% increase in trained sales staff,
should allow us to continue to grow in the current economic
environment and to accelerate our growth rate as the economy
improves."
Gross profit increased 7.1% to $84.1 million from $78.5 million in
the second quarter of 2007. The 2007 period included a $3.3 million
administrative fee credit negotiated under the current three-year
contract with UnitedHealthcare. The gross profit increase, excluding
this credit, was 11.8%.
Operating expenses for the quarter increased 13.9% to $68.5
million, and included expenses associated with the company's sales
expansion, development of its middle-market sales and service
initiative, development of HRTools software products, and integration
of its second quarter acquisition of USDatalink, an employment
screening services company.
As a result of these investments and last year's administrative
fee credit, operating income for the second quarter of 2008 decreased
15.0% to $15.6 million, with an average operating income per worksite
employee per month of $45 compared to $56 in the 2007 period. The
administrative fee credit added $10 in the 2007 period.
Year-to-Date Results
Year-to-date revenues were $876.5 million, an 11.7% increase over
the 2007 period, due to a 7.7% increase in the average number of
worksite employees paid per month and a 3.8% increase in revenues per
worksite employee per month. Gross profit for the six months ended
June 30, 2008 increased 16.5% to $170.7 million. The average gross
profit per worksite employee per month increased 8.3% over the 2007
period.
Year-to-date operating expenses increased 16.0% to $137.1 million.
On a per worksite employee per month basis, operating expenses
increased 7.6% over the 2007 period. The resulting operating income
for the six months ended June 30, 2008, was $33.6 million compared to
$28.3 million in the 2007 period.
EBITDA for the first half of the year increased 8.7% over 2007 to
$45.4 million. During the period, the company returned $22.2 million
to shareholders, including share repurchases of $16.5 million and
dividends of $5.7 million.
"A 19% increase in earnings per share on 12% revenue growth
through the first half of this year further confirms the strength of
our business model, even in a tough economic climate," said Douglas S.
Sharp, senior vice president of finance, chief financial officer and
treasurer. "These results demonstrate our ability to invest for the
long term while continuing to increase profitability."
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 2008, and answer questions from investment analysts. To listen
in, call 866-770-7146 and use passcode 63181769. The call will also be
webcast at http://www.administaff.com/investor_relations. 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 24261941, 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) 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,
2008 2007
------------- ------------
(Unaudited)
Assets
Cash and cash equivalents $ 158,637 $ 135,793
Restricted cash 34,320 35,318
Marketable securities 3,831 74,880
Accounts receivable 159,658 134,834
Prepaid expenses and other current assets 30,213 28,668
Income taxes receivable -- 3,918
------------ -----------
Total current assets 386,659 413,411
Property and equipment, net 78,446 77,941
Deposits 77,235 63,720
Other assets 17,537 5,579
------------ -----------
Total assets $ 559,877 $ 560,651
============ ===========
Liabilities and Stockholders' Equity
Accounts payable $ 3,663 $ 5,236
Payroll taxes and other payroll
deductions payable 76,116 113,929
Accrued worksite employee payroll expense 140,201 110,406
Accrued health insurance costs 15,328 19,297
Accrued workers' compensation costs 36,731 37,150
Deferred income taxes 2,790 1,066
Income tax payable 993 --
Other accrued liabilities 25,163 28,518
Current portion of capital leases 652 629
------------ -----------
Total current liabilities 301,637 316,231
Long-term capital leases 205 537
Accrued workers' compensation costs 43,299 39,116
Deferred income taxes 7,299 6,092
------------ -----------
Total noncurrent liabilities 50,803 45,745
Stockholders' equity:
Common stock 309 309
Additional paid-in capital 138,977 138,640
Treasury stock, cost (133,572) (123,600)
Accumulated other comprehensive income,
net of tax 3 5
Retained earnings 201,720 183,321
------------ -----------
Total stockholders' equity 207,437 198,675
------------ -----------
Total liabilities and stockholders'
equity $ 559,877 $ 560,651
============ ===========
Administaff, Inc.
Summary Financial Information (continued)
(in thousands, except per share amounts and statistical data)
(Unaudited)
Three months ended
June 30,
2008 2007 Change
--------- --------- -------
Operating results:
Revenues (gross billings of $2.456
billion, $2.191 billion, $5.010 billion
and $4.465 billion, less worksite
employee payroll cost of $2.036
billion, $1.814 billion, $4.133 billion
and $3.681 billion, respectively) $420,469 $376,758 11.6%
Direct costs:
Payroll taxes, benefits and workers'
compensation costs 336,408 298,291 12.8%
-------- --------
Gross profit 84,061 78,467 7.1%
Operating expenses:
Salaries, wages and payroll taxes 37,427 33,076 13.2%
Stock-based compensation 2,908 2,435 19.4%
General and administrative expenses 16,923 14,276 18.5%
Commissions 3,274 2,704 21.1%
Advertising 4,158 3,958 5.1%
Depreciation and amortization 3,799 3,704 2.6%
-------- --------
Total operating expenses 68,489 60,153 13.9%
-------- --------
Operating income 15,572 18,314 (15.0)%
Other income (expense):
Interest income 1,876 2,987 (37.2)%
Other, net (7) (29) (75.9)%
-------- --------
Income before income tax expense 17,441 21,272 (18.0)%
Income tax expense 6,454 7,627 (15.4)%
-------- --------
Net income $ 10,987 $ 13,645 (19.5)%
======== ========
Diluted net income per share of common
stock $ 0.43 $ 0.50 (14.0)%
======== ========
Diluted weighted average common shares
outstanding 25,785 27,517
Six months ended
June 30,
2008 2007 Change
---------- --------- -------
Operating results:
Revenues (gross billings of $2.456
billion, $2.191 billion, $5.010 billion
and $4.465 billion, less worksite
employee payroll cost of $2.036
billion, $1.814 billion, $4.133 billion
and $3.681 billion, respectively) $ 876,535 $784,516 11.7%
Direct costs:
Payroll taxes, benefits and workers'
compensation costs 705,867 637,982 10.6%
--------- --------
Gross profit 170,668 146,534 16.5%
Operating expenses:
Salaries, wages and payroll taxes 74,406 65,121 14.3%
Stock-based compensation 5,293 3,743 41.4%
General and administrative expenses 35,662 30,222 18.0%
Commissions 6,368 5,623 13.2%
Advertising 7,936 6,060 31.0%
Depreciation and amortization 7,445 7,424 0.3%
--------- --------
Total operating expenses 137,110 118,193 16.0%
--------- --------
Operating income 33,558 28,341 18.4%
Other income (expense):
Interest income 4,383 5,984 (26.8)%
Other, net (40) (52) (23.1)%
--------- --------
Income before income tax expense 37,901 34,273 10.6%
Income tax expense 13,758 12,235 12.4%
--------- --------
Net income $ 24,143 $ 22,038 9.6%
========= ========
Diluted net income per share of common
stock $ 0.94 $ 0.79 19.0%
========= ========
Diluted weighted average common shares
outstanding 25,770 27,845
Administaff, Inc.
Summary Financial Information (continued)
(in thousands, except per share amounts and statistical data)
(Unaudited)
Three months ended Six months ended
June 30, June 30,
2008 2007 Change 2008 2007 Change
--------- -------- ------- -------- -------- ------
Statistical data:
Average number
of worksite
employees paid
per month 116,149 108,336 7.2% 114,845 106,609 7.7%
Revenues per
worksite
employee per
month (1) $ 1,207 $ 1,159 4.1% $ 1,272 $ 1,226 3.8%
Gross profit per
worksite
employee per
month 241 241 -- 248 229 8.3%
Operating
expenses per
worksite
employee per
month 197 185 6.5% 199 185 7.6%
Operating income
per worksite
employee per
month 45 56 (19.6)% 49 44 11.4%
Net income per
worksite
employee per
month 32 42 (23.8)% 35 34 2.9%
(1) Gross billings of $7,049, $6,741, $7,270 and $6,981 per worksite
employee per month, less payroll cost of $5,842, $5,582, $5,998
and $5,755 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,
2008 2007 Change 2008 2007 Change
---------- ---------- ------- ---------- ---------- -------
Payroll
cost
(GAAP) $2,035,626 $1,814,103 12.2% $4,133,215 $3,680,862 12.3%
Less:
Bonus
payroll
cost 111,393 120,779 (7.8)% 345,918 356,774 (3.0)%
---------- ---------- ---------- ----------
Non-bonus
payroll
cost $1,924,233 $1,693,324 13.6% $3,787,297 $3,324,088 13.9%
========== ========== ========== ==========
Payroll
cost per
worksite
employee
(GAAP) $ 5,842 $ 5,582 4.7% $ 5,998 $ 5,755 4.2%
Less:
Bonus
payroll
cost per
worksite
employee 320 372 (14.0)% 502 558 (10.0)%
---------- ---------- ---------- ----------
Non-bonus
payroll
cost per
worksite
employee $ 5,522 $ 5,210 6.0% $ 5,496 $ 5,197 5.8%
========== ========== ========== ==========
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,
2008 2007
---------- ----------
Net income (GAAP) $ 24,143 $ 22,038
Interest expense 39 61
Income tax expense 13,758 12,235
Depreciation and amortization 7,445 7,424
---------- ----------
EBITDA $ 45,385 $ 41,758
========== ==========
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.
SOURCE:
Administaff, Inc.
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
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