- Full Year 2006 Earnings Per Share Increase 46% to $1.64
- 2006 Annual EBITDA Increases 36% to $89 Million
- Share Repurchase Authorization Increased by One Million Shares
HOUSTON, Feb. 12 /PRNewswire-FirstCall/ -- Administaff, Inc. (NYSE: ASF),
a leading provider of human resources services for small and medium-sized
businesses, today announced a 22.2% increase in fourth quarter net income to
$13.4 million in the 2006 period from $10.9 million in the 2005 period.
Diluted earnings per share increased to $0.47 from $0.39 in 2005. For the
year ended December 31, 2006, the company reported net income and diluted net
earnings per share of $46.5 million and $1.64, compared to $30.0 million and
$1.12 for 2005. Diluted earnings per share increased 46.4% over 2005.
"Our outstanding 2006 results demonstrate the strength and profitability
of our core business model and the commitment of Administaff employees to the
small business clients we serve," said Paul J. Sarvadi, Administaff chairman
and chief executive officer. "For 2007, we expect to refine our growth plan
by accelerating our new office openings, re-engineering our mid-market
initiative and improving client retention."
Fourth Quarter Results
Revenues for the fourth quarter of 2006 increased 15.4% over the 2005
period to $352.6 million. This increase was due to a 10.9% increase in the
average number of worksite employees paid per month, while revenues per
worksite employee per month increased 4.1% to $1,127 compared to $1,083 in the
2005 period.
Gross profit for the fourth quarter increased 11.1% to $74.7 million. The
average gross profit per worksite employee per month increased to $239 in the
fourth quarter of 2006 from $238 in the 2005 period.
Operating expenses for the quarter increased 11.5% to $57.8 million.
Operating expenses on a per worksite employee per month basis increased 0.5%
from $184 in the 2005 period to $185 in the 2006 period.
Operating income for the fourth quarter of 2006 increased 9.5% to $16.9
million, with an average operating income per worksite employee per month of
$54 compared to $55 in the 2005 period.
Full Year Results
Revenues in 2006 increased 18.8% to $1.4 billion, due to a 13.4% increase
in the average number of worksite employees paid and a 4.7% increase in
revenues per worksite employee per month.
Gross profit increased 19.9% to $282.7 million. The average gross profit
per worksite employee per month was $234 compared to $221 in the 2005 period,
as a result of increased service fee markup and a higher surplus from the
company's direct cost programs. This higher surplus was primarily the result
of continued favorable workers' compensation claim trends and an annual
healthcare cost increase within our expected 5 - 6% range.
Operating expenses increased 15.2% over the 2005 period to $221.2 million.
On a per worksite employee per month basis, operating expenses increased 1.7%
to $183 compared to $180 in the 2005 period.
The resulting operating income for the year ended December 31, 2006,
increased 40.7% to $61.6 million compared to $43.8 million in the 2005 period,
with an average monthly operating income per worksite employee of $51 in 2006
compared to $41 in 2005.
During 2006, the company generated $89 million of EBITDA, an increase of
$23.4 million over 2005. This contributed to a $35.2 million increase in
working capital to a balance of $128.4 million at December 31, 2006.
"With our continued strong cash flow, we have reaffirmed our capital
strategy with a focus on funding growth, strategic acquisitions and returning
value to shareholders," said Douglas S. Sharp, vice-president of finance,
chief financial officer and treasurer. "As a result, we recently raised our
quarterly dividend by 22% and are announcing today a one million share
increase in our stock repurchase program."
Share Repurchase Authorization
Administaff's board of directors has authorized the repurchase of up to
one million additional shares of the company's outstanding common stock,
bringing the total authorization to 9.5 million shares. The purchases are to
be made from time to time in the open market during the company's open trading
period, or directly from shareholders at prevailing market prices based upon
market conditions and other factors. Since the plan's inception in January
1999, the company has repurchased 8 million shares, leaving 1.5 million shares
available for repurchase.
Forward-Looking Guidance
In an effort to better inform our investors, Administaff has adopted new
procedures for providing forward-looking guidance. Each quarter, the company
will provide a discussion of expectations on key metrics during its earnings
conference call. Following each call, guidance will be posted on the
company's Web site at http://www.administaff.com . To access the guidance,
click on the Investor Relations section of the Web site and select "Company
Guidance for First Quarter and Full Year 2007."
Conference Call
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 2007
and answer questions from investment analysts. To listen in, call
888-396-2369 and use passcode 45862796. 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 will be available at the same Web site later today. A replay of
the conference call will be available at 888-286-8010, passcode 24647414, 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 42 sales offices in 22 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 premiums
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)
December 31,
2006 2005
Assets
Cash and cash equivalents $148,416 $137,407
Restricted cash 37,405 27,580
Marketable securities 85,617 57,973
Accounts receivable 122,723 98,411
Prepaid expenses and other current assets 15,233 13,882
Income taxes receivable 3,193 ---
Deferred income taxes 2,492 3,308
Total current assets 415,079 338,561
Property and equipment, net 81,120 83,620
Deposits 59,890 67,375
Other assets 5,426 5,883
Total assets $561,515 $495,439
Liabilities and Stockholders' Equity
Accounts payable $3,802 $4,979
Payroll taxes and other payroll deductions
payable 116,926 101,293
Accrued worksite employee payroll expense 94,818 78,393
Accrued health insurance costs 2,824 3,495
Accrued workers' compensation costs 39,035 30,212
Other accrued liabilities 28,690 25,254
Current portion of long-term debt 583 1,700
Total current liabilities 286,678 245,326
Long-term debt 1,166 33,190
Accrued workers' compensation costs 40,019 32,692
Deferred income taxes 5,207 1,802
Total noncurrent liabilities 46,392 67,684
Stockholders' equity:
Common stock 309 309
Additional paid-in capital 135,942 119,573
Treasury stock, cost (55,405) (45,614)
Deferred compensation expense --- (2,931)
Accumulated other comprehensive income,
net of tax (131) (153)
Retained earnings 147,730 111,245
Total stockholders' equity 228,445 182,429
Total liabilities and stockholders'
equity $561,515 $495,439
Administaff, Inc.
Summary Financial Information (continued)
(in thousands, except per share amounts and statistical data)
Three months ended Year ended
December 31, December 31,
2006 2005 Change 2006 2005 Change
Operating results:
Revenues (gross
billings of
$2.242 billion,
$1.877 billion,
$8.055 billion
and $6.633
billion, less
worksite employee
payroll cost of
$1.889 billion,
$1.572 billion,
$6.666 billion
and $5.463
billion,
respectively) $352,629 $305,550 15.4% $1,389,464 $1,169,612 18.8%
Direct costs:
Payroll taxes,
benefits and
workers'
compensation
costs 277,973 238,328 16.6% 1,106,735 933,856 18.5%
Gross profit 74,656 67,222 11.1% 282,729 235,756 19.9%
Operating expenses:
Salaries, wages
and payroll
taxes 31,906 26,126 22.1% 119,963 99,562 20.5%
Stock-based
compensation 1,043 314 231.2% 3,411 2,079 64.1%
General and
administrative
expenses 12,836 13,882 (7.5)% 57,409 52,960 8.4%
Commissions 2,704 2,659 1.7% 10,968 10,121 8.4%
Advertising 5,454 4,746 14.9% 13,975 12,100 15.5%
Depreciation and
amortization 3,818 4,068 (6.1)% 15,438 15,167 1.8%
57,761 51,795 11.5% 221,164 191,989 15.2%
Operating income 16,895 15,427 9.5% 61,565 43,767 40.7%
Other income
(expense):
Interest income 2,999 2,452 22.3% 11,383 6,549 73.8%
Interest expense (35) (650) (94.6)% (1,111) (2,359) (52.9)%
Other, net 120 (113) (206.2)% 245 (210) (216.7)%
3,084 1,689 82.6% 10,517 3,980 164.2%
Income before
income taxes 19,979 17,116 16.7% 72,082 47,747 51.0%
Income tax
expense 6,624 6,190 7.0% 25,576 17,764 44.0%
Net income $13,355 $10,926 22.2% $46,506 $29,983 55.1%
Diluted net
income per share
of common stock $0.47 $0.39 20.5% $1.64 $1.12 46.4%
Diluted weighted
average common
shares
outstanding 28,239 28,033 28,361 26,854
Administaff, Inc.
Summary Financial Information (continued)
(in thousands, except per share amounts and statistical data)
Three months ended Year ended
December 31, December 31,
2006 2005 Change 2006 2005 Change
Statistical data:
Average number of
worksite employees
paid per month 104,325 94,031 10.9% 100,675 88,780 13.4%
Revenues per
worksite employee
per month(1) $1,127 $1,083 4.1% $1,150 $1,098 4.7%
Gross profit per
worksite employee
per month 239 238 0.4% 234 221 5.9%
Operating expenses
per worksite
employee per month 185 184 0.5% 183 180 1.7%
Operating income per
worksite employee
per month 54 55 (1.8)% 51 41 24.4%
Net income from
continuing operations
per worksite employee
per month 43 39 10.3% 38 28 35.7%
(1) Gross billings of $7,165, $6,655, $6,667 and $6,226 per worksite
employee per month less payroll cost of $6,038, $5,572, $5,517 and
$5,128 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,
2006 2005 Change 2006 2005 Change
Payroll cost
(GAAP) $1,889,795 $1,571,718 20.2% $6,665,532 $5,463,474 22.0%
Less: Bonus
payroll cost 257,824 205,293 25.6% 640,552 508,170 26.1%
Non-bonus
payroll
cost $1,631,971 $1,366,425 19.4% $6,024,980 $4,955,304 21.6%
Payroll cost
per worksite
employee (GAAP) $6,038 $5,572 8.4% $5,517 $5,128 7.6%
Less: Bonus
payroll cost per
worksite employee 824 728 13.2% 530 477 11.1%
Non-bonus
payroll cost
per worksite
employee $5,214 $4,844 7.6% $4,987 $4,651 7.2%
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.
Year ended December 31,
2006 2005
Net income (GAAP) $46,506 $29,983
Interest expense 1,111 2,359
Income tax expense 25,576 17,764
Depreciation and amortization 15,438 15,167
EBITDA $88,631 $65,273
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, adjusted net income 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, adjusted net income 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, adjusted net income 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: investor relations, Douglas S. Sharp, Vice President, Finance,
Chief Financial Officer and Treasurer, +1-281-348-3232, or
Douglas_Sharp@Administaff.com , or media, Susan Emfinger, Director, Corporate
Communications, +1-281-348-3105, or Susan_Emfinger@Administaff.com , both of
Administaff, Inc.
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