Human resources solutions company Insperity (NSP 128.39, +17.49, +15.77%) cracked a fresh all-time high this morning in reaction to better than
expected fourth quarter earnings, which, coupled with upbeat earnings guidance
for the first quarter and full year 2019, has the stock trading almost 16% higher
Adjusted earnings per share increased by 25% year/year to $0.69 on adjusted EBITDA of $47.6 mln. Overall, sales rose by 17% in the quarter to $966.8 mln on a 17% increase in the average number of worksite employees (WSEEs) paid per month.
Insperity was able to grow gross profit by 13% compared to last year to $161.6 mln, while operating expenses increased only 8%. The company’s growth investment included the opening of seven new sales offices in 2018, along with a 13% increase in the average number of trained Business Performance Advisors compared to last year.
An acceleration of WSEE growth throughout 2018 resulted, said the company in its comments on the quarter, from increased new client sales in the company’s core and midmarket client segments, high levels of client retention, and an improvement in the net hiring of WSEEs by Insperity’s client base.
Net income per WSEE per month increased by 42% from $38 in 2017 to $54 in 2018, and adjusted EBITDA per WSEE per month increased 17% from $81 in 2017 to $95 in 2018.
Also helping the stock higher today is the company’s forward-looking guidance. Insperity management outlined expectations for Q1 adjusted EPS of $1.85-1.91 on adjusted EBITDA between $96-99 mln. FY19 adjusted EPS is expected in a range of $4.37-4.69, and FY19 adjusted EBITDA is slated to come in between $268-285 mln.
Simply put, Insperity is growing the business. The company is seeing profit increase while simultaneously keeping costs low. More of the same is expected to come, evidenced by the company’s strong outlook for Q1 and for the full year. NSP management highlighted the success of the company’s fall selling and retention campaign, which blossomed into starting 2019 with 15% worksite employee growth and a solid position for continued strength.
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