-- Q3 revenues increase 10.1% on 6.1% unit growth
-- Year-to-date earnings per share increase 12.9%
-- Year-to-date EBITDA increases 5.7% to $68 million
-- Working capital totals $109 million at September 30
HOUSTON--(BUSINESS WIRE)--Nov. 3, 2008--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, 2008. The company reported
2008 third quarter net income of $11.9 million, or $0.46 diluted
earnings per share compared to $12.2 million and $0.45 diluted
earnings per share in the 2007 period. Lower interest rates negatively
impacted investment income, discounting of workers' compensation
reserves and the effective income tax rate by $0.05 per share in the
2008 period when compared to the third quarter of 2007. For the nine
months ended September 30, 2008, the company reported net income of
$36.1 million, or $1.40 diluted earnings per share.
Third Quarter Results
Revenues for the third quarter of 2008 increased 10.1% over the
2007 period to $421.9 million, due to a 6.1% increase in the average
number of worksite employees paid per month and a 3.7% increase in
revenues per worksite employee per month.
"Administaff continues to produce solid results in spite of
turmoil in the marketplace and the disruption of Hurricane Ike," said
Paul J. Sarvadi, Administaff chairman and chief executive officer. "We
believe our target market strategy to aggregate the most successful
small to medium-sized businesses builds considerable resiliency into
our business model in a difficult economic environment."
Gross profit increased 13.9% to $85.5 million from $75.0 million
in the third quarter of 2007. The average gross profit per worksite
employee per month was $239, compared to $222 in the 2007 period. This
increase was a result of a higher surplus on direct cost programs,
with improvements in both payroll taxes and benefits.
Operating expenses for the quarter increased 15.8% to $68.6
million, largely attributable to salaries and wages associated with
sales and service staffing levels, including those related to the
company's mid-market initiative.
Operating income for the third quarter of 2008 increased 7.1% to
$16.9 million, with an average operating income per worksite employee
per month of $47, consistent with the 2007 period.
Interest income for the quarter declined 41.6% to $1.7 million
from $3.0 million in the 2007 period. This decline was a result of
lower yields on the company's investments.
Year-to-Date Results
Year-to-date revenues were $1.3 billion, an 11.2% increase over
the 2007 period, due to a 7.2% 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 nine months ended
September 30, 2008 increased 15.6% to $256.2 million. The average
gross profit per worksite employee per month increased 7.9% over the
2007 period to $245.
Year-to-date operating expenses increased 15.9% to $205.7 million.
On a per worksite employee per month basis, operating expenses
increased 7.7% over the 2007 period. The resulting operating income
for the nine months ended September 30, 2008, was $50.5 million
compared to $44.1 million in the 2007 period.
EBITDA for the first nine months of the year increased 5.7% over
2007 to $68.0 million. During the period, the company returned $28.7
million to shareholders, including share repurchases of $19.6 million
and dividends of $9.1 million.
"Our strong cash position allows us to take advantage of current
market conditions, as we repurchase shares at very attractive prices,"
said Douglas S. Sharp, senior vice president of finance, chief
financial officer and treasurer. "We have repurchased 432,894 shares
since our preliminary third quarter release and have now bought back
over 1.5 million shares year to date."
Administaff will be hosting a conference call today at 10 a.m. ET
to discuss these results, give guidance for the fourth quarter 2008,
and answer questions from investment analysts. To listen in, call
800-573-4842 and use passcode 27570929. 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 52091327, 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)
September 30, December 31,
2008 2007
------------- ------------
(Unaudited)
Assets
Cash and cash equivalents $ 189,470 $ 135,793
Restricted cash 35,689 35,318
Marketable securities 226 74,880
Accounts receivable 175,814 134,834
Prepaid expenses and other current assets 32,691 28,668
Income taxes receivable -- 3,918
------------- ------------
Total current assets 433,890 413,411
Property and equipment, net 89,265 77,941
Deposits 62,016 63,720
Other assets 9,514 5,579
------------- ------------
Total assets $ 594,685 $ 560,651
============= ============
Liabilities and Stockholders' Equity
Accounts payable $ 4,476 $ 5,236
Payroll taxes and other payroll
deductions payable 80,270 113,929
Accrued worksite employee payroll expense 156,350 110,406
Accrued health insurance costs 13,486 19,297
Accrued workers' compensation costs 37,530 37,150
Deferred income taxes 3,237 1,066
Income tax payable 217 --
Other accrued liabilities 28,776 28,518
Current portion of capital leases 640 629
------------- ------------
Total current liabilities 324,982 316,231
Long-term capital leases 59 537
Accrued workers' compensation costs 43,794 39,116
Deferred income taxes 7,883 6,092
------------- ------------
Total noncurrent liabilities 51,736 45,745
Stockholders' equity:
Common stock 309 309
Additional paid-in capital 138,847 138,640
Treasury stock, cost (131,454) (123,600)
Accumulated other comprehensive income,
net of tax -- 5
Retained earnings 210,265 183,321
------------- ------------
Total stockholders' equity 217,967 198,675
------------- ------------
Total liabilities and stockholders'
equity $ 594,685 $ 560,651
============= ============
Administaff, Inc.
Summary Financial Information (continued)
(in thousands, except per share amounts and statistical data)
(Unaudited)
Three months ended
September 30,
2008 2007 Change
--------- -------- -------
Operating results:
Revenues (gross billings of $2.560
billion, $2.316 billion, $7.570 billion
and $6.781 billion, less worksite
employee payroll cost of $2.138
billion, $1.932 billion, $6.271 billion
and $5.613 billion, respectively) $421,914 $383,380 10.1%
Direct costs:
Payroll taxes, benefits and workers'
compensation costs 336,415 308,338 9.1%
--------- --------
Gross profit 85,499 75,042 13.9%
Operating expenses:
Salaries, wages and payroll taxes 39,373 31,774 23.9%
Stock-based compensation 2,337 1,885 24.0%
General and administrative expenses 16,642 15,576 6.8%
Commissions 3,211 3,104 3.4%
Advertising 3,062 3,074 (0.4)%
Depreciation and amortization 3,951 3,827 3.2%
--------- --------
Total operating expenses 68,576 59,240 15.8%
--------- --------
Operating income 16,923 15,802 7.1%
Other income 1,733 2,935 (41.0)%
--------- --------
Income before income tax expense 18,656 18,737 (0.4)%
Income tax expense 6,727 6,583 2.2%
--------- --------
Net income $ 11,929 $ 12,154 (1.9)%
========= ========
Diluted net income per share of common
stock $ 0.46 $ 0.45 2.2%
========= ========
Diluted weighted average common shares
outstanding 25,837 26,873
Nine months ended
September 30,
2008 2007 Change
---------- ---------- -------
Operating results:
Revenues (gross billings of $2.560
billion, $2.316 billion, $7.570
billion and $6.781 billion, less
worksite employee payroll cost of
$2.138 billion, $1.932 billion, $6.271
billion and $5.613 billion,
respectively) $1,298,449 $1,167,896 11.2%
Direct costs:
Payroll taxes, benefits and workers'
compensation costs 1,042,282 946,320 10.1%
---------- ----------
Gross profit 256,167 221,576 15.6%
Operating expenses:
Salaries, wages and payroll taxes 113,779 96,895 17.4%
Stock-based compensation 7,630 5,628 35.6%
General and administrative expenses 52,304 45,798 14.2%
Commissions 9,579 8,727 9.8%
Advertising 10,998 9,134 20.4%
Depreciation and amortization 11,396 11,251 1.3%
---------- ----------
Total operating expenses 205,686 177,433 15.9%
---------- ----------
Operating income 50,481 44,143 14.4%
Other income 6,076 8,867 (31.5)%
---------- ----------
Income before income tax expense 56,557 53,010 6.7%
Income tax expense 20,485 18,819 8.9%
---------- ----------
Net income $ 36,072 $ 34,191 5.5%
========== ==========
Diluted net income per share of common
stock $ 1.40 $ 1.24 12.9%
========== ==========
Diluted weighted average common shares
outstanding 25,793 27,518
Administaff, Inc.
Summary Financial Information (continued)
(in thousands, except per share amounts and statistical data)
(Unaudited)
Three months ended Nine months ended
September 30, September 30,
2008 2007 Change 2008 2007 Change
--------- -------- ------ --------- -------- ------
Statistical data:
Average number
of worksite
employees paid
per month 119,389 112,496 6.1% 116,360 108,571 7.2%
Revenues per
worksite
employee per
month (1) $ 1,178 $ 1,136 3.7% $ 1,240 $ 1,195 3.8%
Gross profit per
worksite
employee per
month 239 222 7.7% 245 227 7.9%
Operating
expenses per
worksite
employee per
month 191 176 8.5% 196 182 7.7%
Operating income
per worksite
employee per
month 47 47 -- 48 45 6.7%
Net income per
worksite
employee per
month 33 36 (8.3)% 34 35 (2.9)%
(1) Gross billings of $7,147, $6,862, $7,228 and $6,940 per worksite
employee per month, less payroll cost of $5,969, $5,726, $5,988 and
$5,745 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,
2008 2007 Change
---------- ---------- -------
Payroll cost (GAAP) $2,137,954 $1,932,491 10.6%
Less: Bonus payroll cost 131,647 142,231 (7.4)%
---------- ----------
Non-bonus payroll cost $2,006,307 $1,790,260 12.1%
========== ==========
Payroll cost per worksite employee
(GAAP) $ 5,969 $ 5,726 4.2%
Less: Bonus payroll cost per worksite
employee 367 421 (12.8)%
---------- ----------
Non-bonus payroll cost per worksite
employee $ 5,602 $ 5,305 5.6%
========== ==========
Nine months ended
September 30,
2008 2007 Change
---------- ---------- -------
Payroll cost (GAAP) $6,271,168 $5,613,354 11.7%
Less: Bonus payroll cost 477,565 499,006 (4.3)%
---------- ----------
Non-bonus payroll cost $5,793,603 $5,114,348 13.3%
========== ==========
Payroll cost per worksite employee
(GAAP) $ 5,988 $ 5,745 4.2%
Less: Bonus payroll cost per worksite
employee 456 511 (10.8)%
---------- ----------
Non-bonus payroll cost per worksite
employee $ 5,532 $ 5,234 5.7%
========== ==========
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.
Nine months ended
September 30,
2008 2007
------------ -----------
Net income (GAAP) $ 36,072 $ 34,191
Interest expense 54 87
Income tax expense 20,485 18,819
Depreciation and amortization 11,396 11,251
------------ -----------
EBITDA $ 68,007 $ 64,348
============ ===========
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:
Senior 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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