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Insperity, Inc.$113.37($.15)(.13%)

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 Insperity Announces Fourth Quarter and Full Year 2016 Results
   Monday, February 13, 2017 7:00:01 AM ET

Insperity, Inc. (NSP ), a leading provider of human resources and business performance solutions for America’s best businesses, today reported results for the fourth quarter and year ended Dec. 31, 2016.

Fourth Quarter and Record Setting Full Year 2016 Results:

-- Q4 EPS up 73% to $0.45; adjusted EPS up 76% to $0.58

-- Q4 net income increased 50% to $9.5 million

-- Q4 adjusted EBITDA up 37% to $23.1 million

-- 2016 EPS increased 96% to $3.09; adjusted EPS up 64% to $3.59

-- 2016 net income increased 68% to $66.0 million

-- 2016 adjusted EBITDA up 28% over 2015 to $141.2 million

-- Full year 2017 adjusted EPS guidance of $4.21 to $4.42, a 17% to 23% increase over 2016

Fourth Quarter Results

Fourth quarter 2016 net income and diluted earnings per share of $9.5 million and $0.45, represented increases of 50% and 73%, respectively compared to the fourth quarter of 2015. Adjusted diluted earnings per share were $0.58, a 76% increase over the fourth quarter of 2015. Adjusted EBITDA increased 37% to $23.1 million.

"Our strong fourth quarter results capped off a record setting 2016 and set the stage for continuing double-digit worksite employee growth and profitability in 2017," said Paul J. Sarvadi, Insperity chairman and chief executive officer. "A successful year-end transition, combined with a record level of trained Business Performance Advisors positions us for accelerating worksite employee growth over the course of the year."

Revenues for the fourth quarter of 2016 increased to $729.1 million on a 13% increase in the average number of worksite employees paid per month. The worksite employee growth was the result of new client sales driven by an increase in the number of trained Business Performance Advisors, combined with a continuing high level of client retention. Net hiring of worksite employees by our clients continued to show weakness, and was overall a slight negative for the fourth quarter.

Gross profit increased 14% over the fourth quarter of 2015 to $110.5 million, with both benefits and workers’ compensation costs managed to favorable trends. Adjusted operating expenses increased 10% over the fourth quarter of 2015, and included the growth in the number of Business Performance Advisors, while producing operating leverage in other areas of the business. This was demonstrated by a decrease in adjusted operating expense per worksite employee per month from $191 in the fourth quarter of 2015 to $186 in the fourth quarter of this year, inclusive of the increase in Business Performance Advisors.

Adjusted EBITDA increased 37% over the fourth quarter of 2015 to $23.1 million, and increased 22% on a per worksite employee per month basis from $37 in the fourth quarter of 2015 to $45 in the fourth quarter of 2016. The fourth quarter and full year 2016 effective income tax rates were 34% and 37%, respectively and were positively impacted by lower non-deductible items and an increase in R&D activity.

Full Year Results

For the year ended Dec. 31, 2016, reported net income increased 68% over 2015 to $66.0 million, and diluted net income per share increased 96% to $3.09. Adjusted diluted earnings per share increased 64% over 2015 to $3.59. Adjusted EBITDA increased 28% to $141.2 million.

Revenues in 2016 increased to $2.9 billion, on a 14% increase in the average number of worksite employees paid per month over 2015. This growth was driven by an increase in worksite employees paid from new sales and a further improvement in worksite employee retention from 84% in 2015 to a new historical high of 86% in 2016. Gross profit for the year ended Dec. 31, 2016 increased 12% to $491.6 million, while adjusted operating expenses increased only 7% to $385.0 million and declined 6% on a per worksite employee per month basis from $206 in 2015 to $193 in 2016.

Adjusted EBITDA per worksite employee per month increased 13% from $63 in 2015 to $71 in 2016 on double-digit worksite employee growth, effective pricing and direct cost management and operating leverage.

Cash outlays in 2016 included the repurchase of approximately 3.5 million shares of stock at a cost of $175.9 million, dividends totaling $20.6 million and capital expenditures of $34.0 million. Adjusted cash, cash equivalents and marketable securities at Dec. 31, 2016 was $44.9 million.

"We had an exceptional year with worksite employee growth of 13.7% and a record level of adjusted EBITDA, up 28% to $141 million," said Douglas S. Sharp, senior vice president of finance, chief financial officer and treasurer. "We are positioned for exceptional shareholder return in 2017 as we execute our strategic growth plan and continue our share repurchase and dividend programs."

2017 Guidance

The company also announced its guidance for 2017, including the first quarter of 2017. Please refer to the accompanying financial tables at the end of this press release for the reconciliation of non-GAAP financial measures to the comparable GAAP financial measures.

                                                             Q1 2017                                                              Full Year 2017
                                                                        ------------------------------------------------------------                                                               --------------------------------------------------------------------------
                                                                                                                                                                           
Average WSEEs                                                            174,200                      -                      175,800                                                                185,000                      -                             188,000
  Year-over-year increase                                                  10%                        -                        11%                                                                   11.5%                       -                              13.4%
                                                                                                                                                                                                                                                         
Adjusted EPS                                                              $1.78                       -                       $1.87                                                                  $4.21                       -                              $4.42
  Year-over-year increase                                                  9%                         -                        15%                                                                    17%                        -                               23%
                                                                                                                                                                                                                                                         
Adjusted EBITDA (in millions)                                              $63                        -                        $66                                                                   $161                        -                              $168
  Year-over-year increase                                                  3%                         -                        8%                                                                     14%                        -                               19%
                                                                                                                                                                                                                                                         

Definition of Key Metrics

Average WSEEs - Determined by calculating the company’s cumulative worksite employees paid during the period divided by the number of months in the period.

Adjusted EPS - Represents diluted net income per share computed in accordance with GAAP, excluding the impact of non-cash impairment and other charges, stockholder advisory expenses and stock-based compensation.

Adjusted EBITDA - Represents net income computed in accordance with GAAP, plus interest expense, income taxes, depreciation and amortization expense, non-cash impairment and other charges, costs associated with stockholder advisory expenses and stock-based compensation.

Insperity will be hosting a conference call today at 10 a.m. ET to discuss these results, provide guidance for the first quarter and full year 2017 and answer questions from investment analysts. To listen in, call 877-651-0053 and use conference i.d. number 56690992. The call will also be webcast at http://ir.insperity.com . The conference call script will be available at the same website later today. A replay of the conference call will be available at 855-859-2056, conference i.d. 56690992. The webcast will be archived for one year.

Insperity, a trusted advisor to America’s best businesses for more than 30 years, provides an array of human resources and business solutions designed to help improve business performance. Insperity(R) Business Performance Advisors offer the most comprehensive suite of products and services available in the marketplace. Insperity delivers administrative relief, better benefits, reduced liabilities and a systematic way to improve productivity through its premier Workforce Optimization(R) solution. Additional company offerings include Human Capital Management, Payroll Software, Time and Attendance, Performance Management, Organizational Planning, Recruiting Services, Employment Screening, Financial Services, Expense Management, Retirement Services and Insurance Services. Insperity business performance solutions support more than 100,000 businesses with over 2 million employees. With 2016 revenues of $2.9 billion, Insperity operates in 61 offices throughout the United States. For more information, visit http://www.insperity.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," "opportunity," "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, Insperity, 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 expectations, estimates and projections at the time such statements are made. 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) adverse economic conditions; (ii) regulatory and tax developments and possible adverse application of various federal, state and local regulations; (iii) the ability to secure competitive replacement contracts for health insurance and workers’ compensation insurance at expiration of current contracts; (iv) cancellation of client contracts on short notice, or the inability to renew client contracts or attract new clients; (v) vulnerability to regional economic factors because of our geographic market concentration; (vi) increases in health insurance costs and workers’ compensation rates and underlying claims trends, health care reform, financial solvency of workers’ compensation carriers, other insurers or financial institutions, state unemployment tax rates, liabilities for employee and client actions or payroll-related claims; (vii) failure to manage growth of our operations and the effectiveness of our sales and marketing efforts; (viii) the impact of the competitive environment in the PEO industry on our growth and/or profitability; (ix) our liability for worksite employee payroll, payroll taxes and benefits costs; (x) our liability for disclosure of sensitive or private information; (xi) our ability to integrate or realize expected returns on our acquisitions; (xii) failure of our information technology systems; (xiii) an adverse final judgment or settlement of claims against Insperity; and (xiv) disruptions to our business resulting from the actions of certain stockholders. These factors are discussed in further detail in Insperity’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.

Except to the extent otherwise required by federal securities law, we do not undertake any obligation to update our forward-looking statements to reflect events or circumstances after the date they are made or to reflect the occurrence of unanticipated events.

 
                                                                                                                                      Insperity, Inc.
                                                                                                                               Summary Financial Information
                                                                                                               (in thousands, except per share amounts and statistical data)
                                                                                                                                       
                                                                                                                                          Dec. 31,                                                                                                          Dec. 31,
                                                                                                                                            2016                                                                                                              2015
                                                                                                                     ---------------------------------------------------                                                               ---------------------------------------------------
Assets:
  Cash and cash equivalents                                                                                                             $  286,034                                                                                                        $  269,538
  Restricted cash                                                                                                                           42,637                                                                                                            37,418
  Marketable securities                                                                                                                      1,851                                                                                                             9,875
  Accounts receivable, net                                                                                                                 270,284                                                                                                           200,665
  Prepaid insurance                                                                                                                         15,041                                                                                                             7,417
  Other current assets                                                                                                                      19,526                                                                                                            17,135
  Income taxes receivable                                                                                                 4,949                                                                           -  
                                                                                                                     -------------------- -------- --------------------                                                                -------------------- -------- --------------------
     Total current assets                                                                                                                  640,322                                                                                                           542,048
                                                                                                                                                                                                                                        
  Property and equipment, net                                                                                                               80,261                                                                                                            61,759
  Prepaid health insurance                                                                                                                   9,000                                                                                                             9,000
  Deposits                                                                                                                                 148,638                                                                                                           140,162
  Goodwill and other intangible assets, net                                                                                                 13,088                                                                                                            13,588
  Deferred income taxes, net                                                                                                                14,025                                                                                                            16,976
  Other assets                                                                                                            1,840                                                                       1,379  
                                                                                                                     -------------------- -------- --------------------                                                                -------------------- -------- --------------------
     Total assets                                                                                                                       $  907,174                                                                                     $  784,912  
                                                                                                                     ==================== ======== ====================                                                                ==================== ======== ====================
                                                                                                                                                                                                                                        
Liabilities and stockholders’ equity:
  Accounts payable                                                                                                                      $    4,189                                                                                                        $    5,381
  Payroll taxes and other payroll deductions payable                                                                                       247,766                                                                                                           205,393
  Accrued worksite employee payroll cost                                                                                                   215,214                                                                                                           161,917
  Accrued health insurance costs                                                                                                            26,360                                                                                                            13,643
  Accrued workers’ compensation costs                                                                            44,231                                                                                                            39,053
  Accrued corporate payroll and commissions                                                                                                 40,761                                                                                                            39,103
  Other accrued liabilities                                                                                                                 22,437                                                                                                            20,250
  Income taxes payable                                                                                                        -                                                                       2,971  
                                                                                                                     -------------------- -------- --------------------                                                                -------------------- -------- --------------------
     Total current liabilities                                                                                                             600,958                                                                                                           487,711
                                                                                                                                                                                                                                        
  Accrued workers’ compensation costs                                                                           141,291                                                                                                           124,746
  Long-term debt                                                                                                        104,400                                                                           -  
                                                                                                                     -------------------- -------- --------------------                                                                -------------------- -------- --------------------
     Total noncurrent liabilities                                                                                                          245,691                                                                                                           124,746
                                                                                                                                                                                                                                        
Stockholders’ equity:
  Common stock                                                                                                                                 277                                                                                                               308
  Additional paid-in capital                                                                                                                 9,240                                                                                                           144,701
  Treasury stock, at cost                                                                                                                 (227,152 )                                                                                                        (205,325 )
  Accumulated other comprehensive income, net of tax                                                                                            (3 )                                                                                                               -
  Retained earnings                                                                                                     278,163                                                                     232,771  
                                                                                                                     -------------------- -------- --------------------                                                                -------------------- -------- --------------------
     Total stockholders’ equity                                                               60,525                                                                     172,455  
                                                                                                                     -------------------- -------- --------------------                                                                -------------------- -------- --------------------
     Total liabilities and stockholders’ equity                                                              $  907,174                                                                                     $  784,912  
                                                                                                                     ==================== ======== ====================                                                                ==================== ======== ====================
                                                                                                                                                                                                                                                   
                                                                                                                                                                                                                                     Insperity, Inc.
                                                                                                                                                                                                                               Summary Financial Information (continued)
                                                                                                                                                                                                                     (in thousands, except per share amounts and statistical data)
                                                                                                                                                                                                                                                                                                                                 
                                                                                                                                                                                             Three months ended Dec. 31,                                                                                                                                                                                  Year ended Dec. 31,
                                                                                                                               -------------------------------------------------------------------------------------------------------------------------------------------------------                                          -----------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                           2016                             2015                  Change                                                         2016                               2015                         Change
                                                                                                                               -----------------------------                                          -----------------------------                                          --------                                           -------------------------------                                          -------------------------------                                          --------------------
Operating results:
                                                                                                                                                  $ 729,069                                                              $ 650,011                                              12.2%                                                              $ 2,941,347                                                              $ 2,603,614                                                          13.0%
  Revenues (gross billings of $4.892 billion, $4.337 billion,
  $17.933 billion and $15.806 billion, less worksite employee
  payroll cost of $4.163 billion, $3.687 billion, $14.992 billion
  and $13.202 billion, respectively)
  Direct costs:
  Payroll taxes, benefits and workers’ compensation costs                                             618,530                                             552,966                                              11.9%                                             2,449,737                                             2,165,747                                                          13.1%
                                                                                                                               -------------------- -------                                           -------------------- -------                                                                                              -------------------- ---------                                           -------------------- ---------
  Gross profit                                                                                                                                      110,539                                                                 97,045                                              13.9%                                                                  491,610                                                                  437,867                                                          12.3%
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
  Operating expenses:
    Salaries, wages and payroll taxes                                                                                                                58,679                                                                 52,749                                              11.2%                                                                  229,589                                                                  211,060                                                           8.8%
    Stock-based compensation                                                                                                                          4,116                                                                  3,171                                              29.8%                                                                   16,643                                                                   13,345                                                          24.7%
    Commissions                                                                                                                                       5,642                                                                  5,556                                               1.5%                                                                   19,288                                                                   18,479                                                           4.4%
    Advertising                                                                                                                                       3,148                                                                  2,724                                              15.6%                                                                   16,447                                                                   15,980                                                           2.9%
    General and administrative expenses                                                                                                              20,337                                                                 19,256                                               5.6%                                                                   86,693                                                                   84,259                                                           2.9%
    Impairment charges and other                                                                                                                          -                                                                  (640)                                           (100.0)%                                                                        -                                                                   10,480                                                       (100.0)%
    Depreciation and amortization                                                                                                  4,150                                               4,203                                             (1.3)%                                                16,644                                                18,565                                                        (10.3)%
                                                                                                                               -------------------- -------                                           -------------------- -------                                                                                              -------------------- ---------                                           -------------------- ---------
      Total operating expenses                                                                                                    96,072                                              87,019                                              10.4%                                               385,304                                               372,168                                                           3.5%
                                                                                                                               -------------------- -------                                           -------------------- -------                                                                                              -------------------- ---------                                           -------------------- ---------
  Operating income                                                                                                                                   14,467                                                                 10,026                                              44.3%                                                                  106,306                                                                   65,699                                                          61.8%
  Other income (expense):
    Interest income                                                                                                                                     340                                                                     43                                             690.7%                                                                    1,267                                                                      379                                                         234.3%
    Interest expense                                                                                                               (481)                                               (109)                                             341.3%                                               (2,396)                                                 (459)                                                         422.0%
                                                                                                                               -------------------- -------                                           -------------------- -------                                                                                              -------------------- ---------                                           -------------------- ---------
  Income before income tax expense                                                                                                                   14,326                                                                  9,960                                              43.8%                                                                  105,177                                                                   65,619                                                          60.3%
  Income tax expense                                                                                                               4,806                                               3,621                                              32.7%                                                39,186                                                26,229                                                          49.4%
                                                                                                                               -------------------- -------                                           -------------------- -------                                                                                              -------------------- ---------                                           -------------------- ---------
  Net income                                                                                                                                      $   9,520                                                              $   6,339                                              50.2%                                                              $    65,991                                                              $    39,390                                                          67.5%
                                                                                                                               ==================== =======                                           ==================== =======                                                                                              ==================== =========                                           ==================== =========
  Less distributed and undistributed earnings allocated to                                                                         (222)                                               (160)                                              38.8%                                               (1,496)                                                 (981)                                                          52.5%
  participating securities
                                                                                                                               -------------------- -------                                           -------------------- -------                                                                                              -------------------- ---------                                           -------------------- ---------
  Net income allocated to common shares                                                                                                           $   9,298                                                              $   6,179                                              50.5%                                                              $    64,495                                                              $    38,409                                                          67.9%
                                                                                                                               ==================== =======                                           ==================== =======                                                                                              ==================== =========                                           ==================== =========
  Basic net income per share of common stock                                                                                                      $    0.45                                                              $    0.26                                              73.1%                                                              $      3.10                                                              $      1.58                                                          96.2%
                                                                                                                               ==================== =======                                           ==================== =======                                                                                              ==================== =========                                           ==================== =========
  Diluted net income per share of common stock                                                                                                    $    0.45                                                              $    0.26                                              73.1%                                                              $      3.09                                                              $      1.58                                                          95.6%
                                                                                                                               ==================== =======                                           ==================== =======                                                                                              ==================== =========                                           ==================== =========
                                                                                                                                                                                 
                                                                                                                                                                                       Insperity, Inc.
                                                                                                                                                                          Summary Financial Information (continued)
                                                                                                                                                                (in thousands, except per share amounts and statistical data)
                                                                                                                                                                                                                                                               
                                                                                                                                             Three months ended Dec. 31,                                                                                                                                            Year ended Dec. 31,
                                                                                                 -------------------------------------------------------------------------------------------------------------------                                          -------------------------------------------------------------------------------------------------------------------------------
                                                                                                    2016           2015         Change                                               2016           2015               Change
                                                                                                 -----------                                          -----------                                          ---------                                          -----------                                          -----------                                          ---------------------
                                                                                                                                                                                                                                                                                                                                                                         
Statistical Data:
   Average number of worksite employees paid per month                                              172,578                                              153,144                                           12.7 %                                                165,850                                              145,830                                                 13.7 %
   Revenues per worksite employee per month (1)                                                   $   1,408                                            $   1,415                                           (0.5 )%                                             $   1,478                                            $   1,488                                                 (0.7 )%
   Gross profit per worksite employee per month                                                         214                                                  211                                            1.4 %                                                    247                                                  250                                                 (1.2 )%
   Operating expenses per worksite employee per month                                                   186                                                  189                                           (1.6 )%                                                   194                                                  212                                                 (8.5 )%
   Operating income per worksite employee per month                                                      28                                                   22                                           27.3 %                                                     53                                                   38                                                 39.5 %
   Net income per worksite employee per month                                                            18                                                   14                                           28.6 %                                                     33                                                   23                                                 43.5 %
     
(1)                      Gross billings of $9,449, $9,440, $9,011 and $9,032 per worksite
                         employee per month, less payroll cost of $8,041, $8,025, $7,533 and
                         $7,544 per worksite employee per month, respectively.
 
                                                                                                                                                                                                                                     Insperity, 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
                                                                                                                                                                                                                                                                    Dec. 31,                                                                                                                                                                                                             Dec. 31,
                                                                                                                                                                                       -------------------------------------------------------------------------------------------------------------------------------------------------------------------                                          -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                      2016                                   2015                     Change                                                            2016                                     2015                            Change
                                                                                                                                                                                       -----------------------------------                                          -----------------------------------                                          ---------                                          -------------------------------------                                          -------------------------------------                                          ---------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
Payroll cost (GAAP)                                                                                                                                                                      $ 4,163,210                                                                  $ 3,686,902                                                                12.9 %                                                $ 14,991,510                                                                   $ 13,202,564                                                                      13.5 %
Less: Bonus payroll cost                                                                                                                                                                     598,288                                                   573,542                                              4.3 %                                                   1,648,936                                                   1,611,857                                                    2.3 %
                                                                                                                                                                                       ----------------------------------                                           ----------------------------------                                                                                              ------------------------------------                                           ------------------------------------
    Non-bonus payroll cost                                                                                                                                                               $ 3,564,922                                               $ 3,113,360                                             14.5 %                                                $ 13,342,574                                                $ 11,590,707                                                   15.1 %
                                                                                                                                                                                       === ========= ====================                                           === ========= ====================                                                                                              ==== ========== ====================                                           ==== ========== ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
Payroll cost per worksite employee per month (GAAP)                                                                                                                   $     8,041                                                                  $     8,025                                                                 0.2 %                                                $      7,533                                                                   $      7,544                                                                      (0.1 )%
Less: Bonus payroll cost per worksite employee per month                                                                                                                    1,156                                                     1,248                                             (7.4 )%                                                        829                                                         921                                                  (10.0 )%
                                                                                                                                                                                       ------------  --------------------                                           ------------  --------------------                                                                                              --------------  --------------------                                           --------------  --------------------
                                                                                                                                                                                         $     6,885                                               $     6,777                                              1.6 %                                                $      6,704                                                $      6,623                                                    1.2 %
    Non-bonus payroll cost per worksite employee per month
                                                                                                                                                                                       === ========= ====================                                           === ========= ====================                                                                                              ==== ========== ====================                                           ==== ========== ====================
 

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, Insperity management refers to non-bonus payroll cost in analyzing, reporting and forecasting the company’s workers’ compensation costs.

 
                                                                                  December 31,              December 31,
                                                                                                                            2016                                         2015
                                                                                                             -------------------------------                        -------------
                                                                                                              
Cash, cash equivalents and marketable securities (GAAP)                                                         $ 287,885                                                $ 279,413
Less: Amounts payable for withheld federal and state income taxes,                                                221,710                                                  185,719
employment taxes and other payroll deductions
       Customer prepayments                                                                                        21,256                                17,037
                                                                                                             ---------------------------------                      ---------------
  Adjusted cash, cash equivalents and marketable securities                                                     $  44,919                             $  76,657
                                                                                                             ==== ======= ====================                      ====== =======
 

Adjusted cash, cash equivalents and marketable securities excludes funds associated with federal and state income tax withholdings, employment taxes and other payroll deductions, as well as client prepayments. Insperity management believes adjusted cash, cash equivalents and marketable securities is a useful measure of the company’s available funds.

 
                                                                                                                                                                     Three months ended                                                                                                                                                                   Year ended
                                                                                                                                                                                                                                                                         Dec. 31,                                                                                                                                                                                                               Dec. 31,
                                                                                                                                                                                               ------------------------------------------------------------------------------------------------------------------------------------------------------------                                          ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                            2016                              2015                    Change                                                          2016                                  2015                          Change
                                                                                                                                                                                               ------------------------------                                          -------------------------------                                          -----------                                          -------------------------------                                                               ---------------------------------                                          ---------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
Operating expenses (GAAP)                                                                                                                                                                      $ 96,072                                                                 $ 87,019                                                                  10.4 %                                             $ 385,304                                                                                       $ 372,168                                                                       3.5 %
Less: Impairment charges and other                                                                                                                                                                    -                                                                     (640 )                                                              (100.0 )%                                                    -                                                                                          10,480                                                                    (100.0 )%
       Stockholder advisory expenses                                                                                                                                                                  -                                                     -                                                  -                                                     323                                                                        1,546                                                  (79.1 )%
                                                                                                                                                                                               -------  --------------------                                           --------  --------------------                                                                                                --------  --------------------                                                                ----------  --------------------
      Adjusted operating expenses (non-GAAP)                                                                                                                                                   $ 96,072                                              $ 87,659                                                9.6 %                                             $ 384,981                                                                    $ 360,142                                                    6.9 %
                                                                                                                                                                                               = ====== ====================                                           == ====== ====================                                                                                                = ======= ====================                                                                === ======= ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
Operating expenses per worksite employee per month (GAAP)                                                                                                                   $    186                                                                 $    189                                                                  (1.6 )%                                            $     194                                                                                       $     212                                                                      (8.5 )%
Less: Impairment charges and other per worksite employee per month                                                                                                                 -                                                                       (2 )                                                              (100.0 )%                                                    -                                                                                               5                                                                    (100.0 )%
                                                                                                                                                                                                      -                                                     -                                                  -                                                       1                                                                            1                                                      -
       Stockholder advisory expenses per worksite employee per month
                                                                                                                                                                                               -------  --------------------                                           --------  --------------------                                                                                                --------  --------------------                                                                ----------  --------------------
Adjusted operating expenses per worksite employee per month                                                                                                                 $    186                                              $    191                                               (2.6 )%                                            $     193                                                                    $     206                                                   (6.3 )%
(non-GAAP)
                                                                                                                                                                                               = ====== ====================                                           == ====== ====================                                                                                                = ======= ====================                                                                === ======= ====================
 

Adjusted operating expenses represent operating expenses excluding the impact of impairment and other charges related to the sale of two aircraft and stockholder advisory expenses. Insperity management believes adjusted operating expenses is a useful measure of the company’s operating costs, as it allows for additional analysis of the company’s operating expenses separate from the impact of these items.

 
                                                                                                                                                                   Three months ended                                                                                                                                                           Year ended
                                                                                                                                                                                                                                                                       Dec. 31,                                                                                                                                                                                                       Dec. 31,
                                                                                                                                                                                            ---------------------------------------------------------------------------------------------------------------------------------------------------------------                                          ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                                          2016                                2015                    Change                                                           2016                                 2015                          Change
                                                                                                                                                                                            --------------------------------                                          --------------------------------                                          -----------                                          ---------------------------------                                          ---------------------------------                                          ---------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
Net income (GAAP)                                                                                                                                                                             $  9,520                                                                  $  6,339                                                                  50.2 %                                               $  65,991                                                                  $  39,390                                                                      67.5 %
Income tax expense                                                                                                                                                                               4,806                                                                     3,621                                                                  32.7 %                                                  39,186                                                                     26,229                                                                      49.4 %
Interest expense                                                                                                                                                                                   481                                                                       109                                                                 341.3 %                                                   2,396                                                                        459                                                                     422.0 %
Depreciation and amortization                                                                                                                                                                    4,150                                                  4,203                                               (1.3 )%                                                 16,644                                                  18,565                                                  (10.3 )%
                                                                                                                                                                                            -------------------------------                                           -------------------------------                                                                                                --------------------------------                                           --------------------------------
EBITDA                                                                                                                                                                                          18,957                                                                    14,272                                                                  32.8 %                                                 124,217                                                                     84,643                                                                      46.8 %
Impairment charges and other                                                                                                                                                                         -                                                                      (640 )                                                              (100.0 )%                                                      -                                                                     10,480                                                                    (100.0 )%
Stock-based compensation                                                                                                                                                                         4,116                                                                     3,171                                                                  29.8 %                                                  16,643                                                                     13,345                                                                      24.7 %
Stockholder advisory expenses                                                                                                                                                                        -                                                      -                                                  -                                                       323                                                   1,546                                                  (79.1 )%
                                                                                                                                                                                            ---------  --------------------                                           ---------  --------------------                                                                                                ----------  --------------------                                           ----------  --------------------
  Adjusted EBITDA (non-GAAP)                                                                                                                                                                  $ 23,073                                               $ 16,803                                               37.3 %                                               $ 141,183                                               $ 110,014                                                   28.3 %
                                                                                                                                                                                            === ====== ====================                                           === ====== ====================                                                                                                === ======= ====================                                           === ======= ====================
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
                                                                                                                                                                                              $     18                                                                  $     14                                                                  28.6 %                                               $      33                                                                  $      23                                                                      43.5 %
  Net income per worksite employee per month (GAAP)
                                                                                                                                                                                                     9                                                                         8                                                                  12.5 %                                                      20                                                                         15                                                                      33.3 %
  Income tax expense per worksite employee per month
                                                                                                                                                                                                     1                                                                         -                                                                     -                                                         -                                                                         (1 )                                                                  (100.0 )%
  Interest expense per worksite employee per month
                                                                                                                                                                                                     9                                                      9                                                  -                                                         9                                                      11                                                  (18.2 )%
  Depreciation and amortization per worksite employee per month
                                                                                                                                                                                            ---------  --------------------                                           ---------  --------------------                                                                                                ----------  --------------------                                           ----------  --------------------
                                                                                                                                                                                                    37                                                                        31                                                                  19.4 %                                                      62                                                                         48                                                                      29.2 %
  EBITDA per worksite employee per month
                                                                                                                                                                                                     -                                                                        (1 )                                                              (100.0 )%                                                      -                                                                          6                                                                    (100.0 )%
  Impairment charges and other per worksite employee per month
                                                                                                                                                                                                     8                                                                         7                                                                  14.3 %                                                       8                                                                          8                                                                         -
  Stock-based compensation per worksite employee per month
                                                                                                                                                                                                     -                                                      -                                                  -                                                         1                                                       1                                                      -
  Stockholder advisory expenses per worksite employee per month
                                                                                                                                                                                            ---------  --------------------                                           ---------  --------------------                                                                                                ----------  --------------------                                           ----------  --------------------
                                                                                                                                                                                              $     45                                               $     37                                               21.6 %                                               $      71                                               $      63                                                   12.7 %
  Adjusted EBITDA per worksite employee per month (non-GAAP)
                                                                                                                                                                                            === ====== ====================                                           === ====== ====================                                                                                                === ======= ====================                                           === ======= ====================
 

EBITDA represents net income computed in accordance with generally accepted accounting principles ("GAAP"), plus interest expense, income tax expense, depreciation and amortization expense. Adjusted EBITDA represents EBITDA plus non-cash impairment and other charges, costs associated with stockholder advisory expenses and stock-based compensation. Insperity management believes EBITDA and Adjusted EBITDA are often useful measures of the company’s operating performance, as they allow for additional analysis of the company’s operating results separate from the impact of these items.

 
                                                                                                                                                 Three Months Ended                                                                                                                                                         Year Ended
                                                                                                                                                                                                                                                     Dec. 31,                                                                                                                                                                                                     Dec. 31,
                                                                                                                                                                           -------------------------------------------------------------------------------------------------------------------------------------------------                                                      -------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                         2016                               2015                   Change                                                           2016                                2015                         Change
                                                                                                                                                                           --------------------------------                                          ------------------------------                                          -----------                                          --------------------------------                                          --------------------------------                                          ---------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
Net income (GAAP)                                                                                                                                                            $  9,520                                                                 $ 6,339                                                                  50.2 %                                               $ 65,991                                                                  $ 39,390                                                                      67.5 %
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
Impairment charges and other                                                                                                                                                        -                                                                    (640 )                                                              (100.0 )%                                                     -                                                                    10,480                                                                    (100.0 )%
Stock-based compensation                                                                                                                                                        4,116                                                                   3,171                                                                  29.8 %                                                 16,643                                                                    13,345                                                                      24.7 %
Stockholder advisory expenses                                                                                                                                                       -                                                    -                                                  -                                                      323                                                  1,546                                                  (79.1 )%
                                                                                                                                                                           ---------  --------------------                                           -------  --------------------                                                                                                ---------  --------------------                                           ---------  --------------------
  Total non-GAAP adjustments                                                                                                                                                    4,116                                                                   2,531                                                                  62.6 %                                                 16,966                                                                    25,371                                                                     (33.1 )%
Tax effect on non-GAAP adjustments                                                                                                                                             (1,381 )                                                                  (920 )                                                                50.1 %                                                 (6,239 )                                                                 (10,242 )                                                                   (39.1 )%
                                                                                                                                                                           -------------------------------                                           -----------------------------                                                                                                -------------------------------                                           -------------------------------
  Adjusted net income (non-GAAP)                                                                                                                                             $ 12,255                                              $ 7,950                                               54.2 %                                               $ 76,718                                               $ 54,519                                                   40.7 %
                                                                                                                                                                           === ====== ====================                                           == ===== ====================                                                                                                === ====== ====================                                           === ====== ====================
 
                                                                                                                                                                                                                                                Three Months Ended                                                                                                                                                                                               Year Ended
                                                                                                                                                                                                                                                     Dec. 31,                                                                                                                                                                                                     Dec. 31,
                                                                                                                                                                           -------------------------------------------------------------------------------------------------------------------------------------------------                                                      -------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                                                                         2016                                                                     2015                                                         Change                                                           2016                                                                      2015                                                               Change
                                                                                                                                                                           --------------------------------                                          ------------------------------                                          -----------                                          --------------------------------                                          --------------------------------                                          ---------------------
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
Diluted net income per share of common stock                                                                                                                                 $   0.45                                                                 $  0.26                                                                  73.1 %                                               $   3.09                                                                  $   1.58                                                                      95.6 %
  (GAAP)
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
Impairment charges and other                                                                                                                                                        -                                                                   (0.03 )                                                              (100.0 )%                                                     -                                                                      0.42                                                                    (100.0 )%
Stock-based compensation                                                                                                                                                         0.19                                                                    0.13                                                                  46.2 %                                                   0.78                                                                      0.54                                                                      44.4 %
Stockholder advisory expenses                                                                                                                                                       -                                                    -                                                  -                                                     0.02                                                   0.06                                                  (66.7 )%
                                                                                                                                                                           ---------  --------------------                                           -------  --------------------                                                                                                ---------  --------------------                                           ---------  --------------------
  Total non-GAAP adjustments                                                                                                                                                     0.19                                                                    0.10                                                                  90.0 %                                                   0.80                                                                      1.02                                                                     (21.6 )%
Tax effect on non-GAAP adjustments                                                                                                                                              (0.06 )                                                                 (0.03 )                                                               100.0 %                                                  (0.30 )                                                                   (0.41 )                                                                   (26.8 )%
                                                                                                                                                                           -------------------------------                                           -----------------------------                                                                                                -------------------------------                                           -------------------------------
                                                                                                                                                                             $   0.58                                              $  0.33                                               75.8 %                                               $   3.59                                               $   2.19                                                   63.9 %
  Adjusted diluted net income per share of
    common stock (non-GAAP)
                                                                                                                                                                           === ====== ====================                                           == ===== ====================                                                                                                === ====== ====================                                           === ====== ====================
 

Adjusted net income and adjusted diluted net income per share of common stock represent net income and diluted net income per share computed in accordance with GAAP, excluding the impact of non-cash impairment and other charges related to the sale of two aircraft in 2015, stock-based compensation and costs associated with stockholder advisory expenses. Insperity management believes adjusted net income and adjusted diluted net income per share of common stock are useful measures of the company’s operating performance in this period, as they allow for additional analysis of the company’s operating results separate from the impact of these items.

Non-bonus payroll, adjusted cash, cash equivalents and marketable securities, adjusted operating expenses, EBITDA, adjusted EBITDA, adjusted net income and adjusted diluted net income per share of common stock are not financial measures prepared in accordance with GAAP and may be different from similar measures used by other companies. Non-bonus payroll, adjusted cash, cash equivalents and marketable securities, adjusted operating expenses, EBITDA, adjusted EBITDA, adjusted net income and adjusted diluted net income per share of common stock should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. 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.

The following is a reconciliation of GAAP to non-GAAP financial measures for first quarter and full year 2017 guidance (in millions, except per share amounts):

 
                                                                  Q1 2017            Full Year 2017
                                                                                                                                                                Guidance                                                                        Guidance
                                                                                                                                                             -------------                                                                --------------------
Net income (GAAP)                                                                                                                                                $35 - $37                                                                           $76 - $81
Income tax expense                                                                                                                                                 19 - 20                                                                             45 - 47
Interest expense                                                                                                                                                         1                                                                                   3
Depreciation and amortization                                                                                                                                            4                                                                                  18
                                                                                                                                                             -------------                                                                --------------------
EBITDA                                                                                                                                                             59 - 62                                                                           142 - 149
Stock-based compensation                                                                                                                                                 4                                                                                  19
                                                                                                                                                             -------------                                                                --------------------
  Adjusted EBITDA (non-GAAP)                                                                                                                                     $63 - $66                                                                         $161 - $168
                                                                                                                                                             =============                                                                ====================
                                                                                                                                                                                                                                           
Diluted net income per share of common stock (GAAP)                                                                                                          $1.66 - $1.75                                                                       $3.64 - $3.85
Stock-based compensation                                                                                                                                              0.19                                                                                0.90
                                                                                                                                                             -------------                                                                --------------------
  Total non-GAAP adjustments                                                                                                                                          0.19                                                                                0.90
Tax effect on non-GAAP adjustments                                                                                                                                  (0.07)                                                                              (0.33)
                                                                                                                                                             -------------                                                                --------------------
  Adjusted EPS (non-GAAP)                                                                                                                                    $1.78 - $1.87                                                                       $4.21 - $4.42
                                                                                                                                                             =============                                                                ====================
 

http://cts.businesswire.com/ct/CT?id=bwnews&sty=20170213005196r1&sid=cmtx6&distro=nx&lang=en

View source version on businesswire.com: http://www.businesswire.com/news/home/20170213005196/en/

SOURCE: Insperity, Inc.

Insperity, Inc. 
Investor Relations Contact: 
Douglas S. Sharp, (281) 348-3232 
Senior Vice President of Finance, 
Chief Financial Officer and Treasurer 
Investor.Relations@Insperity.com 
or 
News Media Contact: 
Suzanne Haugen, (281) 312-3543 
Public Relations Manager 
Media@Insperity.com


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