HOUSTON--(BUSINESS WIRE)--May 1, 2007--Administaff, Inc.
(NYSE:ASF), a leading provider of human resources services for small
and medium-sized businesses, today announced first quarter net income
of $8.4 million or $0.30 per diluted share. In the 2006 period the
company reported net income of $10.5 million or $0.37 per diluted
share.
"We made substantial progress on several long-term initiatives
during the quarter, in spite of results being below our expectations,"
said Paul J. Sarvadi, Administaff chairman and chief executive
officer. "We completed our analysis of the mid-market opportunity,
enhanced our recruiting services, and secured a very favorable
three-year extension to our UnitedHealthcare agreement."
Revenues for the first quarter of 2007 increased 13.1% over the
2006 period to $407.8 million. This increase was due to a 9.2%
increase in the average number of worksite employees paid per month,
while revenues per worksite employee per month increased 3.5% to
$1,296 compared to $1,252 in the 2006 period.
Gross profit was consistent with the first quarter of 2006 at
$68.1 million. The average gross profit per worksite employee per
month decreased to $216 in the first quarter of 2007 from $236 in the
2006 period. These results reflect higher than expected healthcare
costs, partially offset by better than expected workers' compensation
surplus.
Operating expenses for the quarter increased 8.3% to $58.0
million. Operating expenses on a per worksite employee per month basis
decreased 1.1% from $186 in the 2006 period to $184 in the 2007
period.
Operating income for the first quarter of 2007 was $10.0 million,
with an average operating income per worksite employee per month of
$32 compared to $50 in the 2006 period.
"We generated EBITDA of $16.8 million and ended the quarter with
approximately $120.0 million in working capital," said Douglas S.
Sharp, vice-president of finance, chief financial officer and
treasurer. "The strength of our current balance sheet and expected
future cash flow put us in a position to support our long-term
operating plan, while returning value to shareholders through share
repurchases and quarterly dividends."
Administaff will be hosting a conference call today at 10 a.m. EDT
to discuss these results, give guidance for the second quarter and
full year 2007 and answer questions from investment analysts. To
listen in, call 800-573-4840 and use passcode 71124700. 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 second quarter and full year 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 22377284, 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 43 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, 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)
March 31, December 31,
2007 2006
------------ ------------
(Unaudited)
Assets
Cash and cash equivalents $141,001 $148,416
Restricted cash 36,643 37,405
Marketable securities 90,525 85,617
Accounts receivable 126,013 122,723
Prepaid expenses and other current assets 10,796 15,233
Income taxes receivable -- 3,193
Deferred income taxes 3,894 2,492
------------ ------------
Total current assets 408,872 415,079
Property and equipment, net 79,273 81,120
Deposits 67,431 59,890
Other assets 5,364 5,426
------------ ------------
Total assets $560,940 $561,515
============ ============
Liabilities and Stockholders' Equity
Accounts payable $3,345 $3,802
Payroll taxes and other payroll deductions
payable 121,298 116,926
Accrued worksite employee payroll expense 105,857 94,818
Accrued health insurance costs 4,615 2,824
Accrued workers' compensation costs 37,973 39,035
Other accrued liabilities 14,722 28,690
Income taxes payable 913 --
Current portion of long-term debt 595 583
------------ ------------
Total current liabilities 289,318 286,678
Long-term debt 1,013 1,166
Accrued workers' compensation costs 40,583 40,019
Deferred income taxes 5,367 5,207
------------ ------------
Total noncurrent liabilities 46,963 46,392
Stockholders' equity:
Common stock 309 309
Additional paid-in capital 137,687 135,942
Treasury stock, cost (66,259) (55,405)
Accumulated other comprehensive income, net
of tax (126) (131)
Retained earnings 153,048 147,730
------------ ------------
Total stockholders' equity 224,659 228,445
------------ ------------
Total liabilities and stockholders'
equity $560,940 $561,515
============ ============
Administaff, Inc.
Summary Financial Information (continued)
(in thousands, except per share amounts and statistical data)
(Unaudited)
Three months ended
March 31,
2007 2006 Change
---------- ---------- ----------
Operating results:
Revenues (gross billings of $2.275
billion and $1.912 billion less
worksite employee payroll cost of
$1.867 billion and $1.551 billion,
respectively) $ 407,758 $ 360,636 13.1%
Direct costs:
Payroll taxes, benefits and
workers' compensation costs 339,691 292,643 16.1%
---------- ----------
Gross profit 68,067 67,993 0.1%
Operating expenses:
Salaries, wages and payroll taxes 32,045 28,224 13.5%
Stock-based compensation 1,308 289 352.6%
General and administrative
expenses 15,946 15,975 (0.2)%
Commissions 2,919 2,833 3.0%
Advertising 2,102 2,383 (11.8)%
Depreciation and amortization 3,720 3,895 (4.5)%
---------- ----------
Total operating expenses 58,040 53,599 8.3%
---------- ----------
Operating income 10,027 14,394 (30.3)%
Other income (expense):
Interest income 2,997 2,809 6.7%
Interest expense (32) (670) (95.2)%
Other, net 9 119 (92.4)%
---------- ----------
Income before income tax expense 13,001 16,652 (21.9)%
Income tax expense 4,608 6,111 (24.6)%
---------- ----------
Net income $8,393 $10,541 (20.4)%
========== ==========
Diluted net income per share of
common stock $0.30 $0.37 (18.9)%
========== ==========
Diluted weighted average common
shares outstanding 28,176 28,383
Administaff, Inc.
Summary Financial Information (continued)
(in thousands, except per share amounts and statistical data)
(Unaudited)
Three months ended
March 31,
2007 2006 Change
--------- --------- ---------
Statistical data:
Average number of worksite employees
paid per month 104,881 96,006 9.2%
Revenues per worksite employee per
month(1) $1,296 $1,252 3.5%
Gross profit per worksite employee per
month 216 236 (8.5)%
Operating expenses per worksite
employee per month 184 186 (1.1)%
Operating income per worksite employee
per month 32 50 (36.0)%
Net income per worksite employee per
month 27 37 (27.0)%
(1) Gross billings of $7,229 and $6,639 per worksite employee per
month, less payroll cost of $5,933 and $5,387 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
March 31,
2007 2006 Change
----------- ----------- -----------
Payroll cost (GAAP) $1,866,759 $1,551,502 20.3%
Less: Bonus payroll cost (235,995) (153,727) 53.5%
----------- -----------
Non-bonus payroll cost $1,630,764 $1,397,775 16.7%
=========== ===========
Payroll cost per worksite employee
(GAAP) $5,933 $5,387 10.1%
Less: Bonus payroll cost per
worksite employee (750) (534) 40.4%
----------- -----------
Non-bonus payroll cost per
worksite employee $5,183 $4,853 6.8%
=========== ===========
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.
Three months ended
March 31,
2007 2006
--------- ---------
Net income (GAAP) $8,393 $10,541
Interest expense 32 670
Income tax expense 4,608 6,111
Depreciation and amortization 3,720 3,895
--------- ---------
EBITDA $16,753 $21,217
========= =========
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: Administaff, Inc., Houston
Investor Relations Contact:
Douglas S. Sharp, 281-348-3232
Vice President, Finance
Chief Financial Officer and Treasurer
Douglas_Sharp@Administaff.com
or
News Media Contact:
Susan Emfinger, 281-348-3105
Director, Corporate Communications
Susan_Emfinger@Administaff.com
SOURCE: Administaff, Inc.
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