Administaff, Inc. (NYSE: ASF), a leading provider of human
resources services for small and medium-sized businesses, today
reported results for the fourth quarter and year ended December 31,
2010. For the fourth quarter, the company reported net income of
$7.8 million versus a net loss of $2.8 million in the 2009 period.
Diluted earnings per share were $0.30 compared to a loss of $0.11
per share in the 2009 period.
“We are very pleased with our performance throughout the year
and our strong finish to 2010, resulting in over 112,000 worksite
employees paid in January,” said Paul J. Sarvadi, Administaff
chairman and chief executive officer. “For 2011, we are well
positioned to resume double-digit worksite employee growth in the
PEO, continue our adjacent business development plan and launch our
new corporate brand strategy.”
Fourth Quarter Results
Revenues for the fourth quarter of 2010 increased 10.0% over the
2009 period due to a 5.8% increase in revenues per worksite
employee per month, and a 3.9% increase in the average number of
worksite employees paid per month.
Gross profit increased 31.7% to $80.8 million compared to the
fourth quarter of 2009. The average gross profit per worksite
employee per month increased $51, or 26.7%, to $242 in the fourth
quarter of 2010 from $191 in the 2009 period. This was primarily
due to the improvement in our benefits cost center. This resulted
from the effective implementation of a plan to recover from
increased COBRA costs and elevated utilization levels experienced
during the fourth quarter of 2009.
Operating expenses, which included approximately $2.3 million in
incremental costs associated with two recent acquisitions,
increased 4.3% to $68.2 million compared to $65.4 million in the
fourth quarter of 2009. Operating expenses per worksite employee
per month remained flat at $204.
Year End Results
For the year ended December 31, 2010, the company had net income
of $22.4 million, or $0.86 per diluted share, compared to $16.6
million and $0.65 in 2009.
“We successfully executed our plan to recover from the effects
of the recession in both growth and profitability during 2010,
achieving 35% earnings growth,” said Douglas S. Sharp, senior
vice-president of finance, chief financial officer and treasurer.
“With $144 million in working capital, we are in a strong position
to execute our plan to invest in growth opportunities and continue
our dividend and share repurchase programs.”
Revenues in 2010 were $1.7 billion, a 4.0% increase over the
2009 period. Gross profit for the year ended December 31, 2010,
increased 3.7% to $298.5 million. The average gross profit per
worksite employee per month was $232 compared to $221 in the 2009
period.
Operating expenses, which included approximately $5.0 million in
incremental costs associated with two recent acquisitions, remained
relatively flat at $261.5 million. On a per worksite employee per
month basis, operating expenses increased 2.0% over 2009. As a
result, operating income for the year ended December 31, 2010, was
$37.1 million compared to $27.0 million in 2009.
Working capital increased by $16.9 million during the year to
$144.5 million at December 31, 2010. During 2010, EBITDA plus
stock-based compensation totaled $61.1 million and the company
returned $21.4 million to shareholders, including dividends of
$13.5 million and share repurchases of $7.9 million.
Administaff will be hosting a conference call today at 10 a.m.
ET to discuss these results, give guidance for the first quarter
and full year 2011 and answer questions from investment analysts.
To listen in, call 877-651-0053 and use conference i.d. number
37253750. The call will also be webcast at
http://www.administaff.com. To access the webcast, click on the
Investor Relations section of the website and select “Live
Webcast.” The conference call script and company guidance will be
available at the same website later today. A replay of the
conference call will be available at 800-642-1687, conference i.d.
37253750, for one week. The webcast will be archived for one
year.
Administaff is the nation’s leading professional employer
organization (PEO), serving as a full-service human resources
department that provides small and medium-sized businesses with
administrative relief, big-company benefits, reduced liabilities
and a systematic way to improve productivity. The company also
provides an array of additional products and services designed to
improve business performance, including software solutions for time
and attendance, expense reimbursement and performance management,
as well as recruiting, background screening and retirement
services, among others. The company operates 51 sales offices in 24
major markets. For additional information, visit Administaff’s
website at http://www.administaff.com.
The statements contained herein that are not historical facts
are forward-looking statements within the meaning of the federal
securities laws (Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934). You can
identify such forward-looking statements by the words “expects,”
“intends,” “plans,” “projects,” “believes,” “estimates,” “likely,”
“possibly,” “probably,” “goal,” “objective,” “target,” “assume,”
“outlook,” “guidance,” “predicts,” “appears,” “indicator” and
similar expressions. Forward-looking statements involve a number of
risks and uncertainties. In the normal course of business,
Administaff, Inc., in an effort to help keep our stockholders and
the public informed about our operations, may from time to time
issue such forward-looking statements, either orally or in writing.
Generally, these statements relate to business plans or strategies,
projected or anticipated benefits or other consequences of such
plans or strategies, or projections involving anticipated revenues,
earnings, unit growth, profit per worksite employee, pricing,
operating expenses or other aspects of operating results. We base
the forward-looking statements on our 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) changes in
general 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 contracts at expiration of current contracts; (iv)
increases in health insurance costs and workers’ compensation rates
and underlying claims trends, health care reform, financial
solvency of workers’ compensation carriers and other insurers,
state unemployment tax rates, liabilities for employee and client
actions or payroll-related claims; (v) failure to manage growth of
our operations and the effectiveness of our sales and marketing
efforts; (vi) changes in the competitive environment in the PEO
industry, including the entrance of new competitors and our ability
to renew or replace client companies; (vii) our liability for
worksite employee payroll and benefits costs; (viii) our liability
for disclosure of sensitive or private information; (ix) our
ability to integrate or realize expected returns on our Adjacent
Business strategy, including acquisitions; and (x) an adverse final
judgment or settlement of claims against Administaff. These factors
are discussed in further detail in Administaff’s filings with the
U.S. Securities and Exchange Commission. Any of these factors, or a
combination of such factors, could materially affect the results of
our operations and whether forward-looking statements we make
ultimately prove to be accurate.
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.
Administaff, Inc.
Summary Financial Information
(in thousands, except per share amounts
and statistical data)
December 31, December 31,
2010 2009 Assets
Cash and cash equivalents $ 234,829 $ 227,085 Restricted cash
41,204 36,436 Marketable securities 43,367 6,037 Accounts
receivable 142,107 122,592 Prepaid insurance and other current
assets 33,506 20,801 Income taxes receivable 1,808 2,692 Deferred
income taxes
1,267
2,578 Total current assets 498,088 418,221
Property and equipment, net 76,027 81,174 Deposits 63,371
67,529 Other assets
22,359
9,546 Total assets
$
659,845 $ 576,470
Liabilities and Stockholders’ Equity Accounts payable
$ 3,309 $ 1,857 Payroll taxes and other payroll deductions payable
145,096 127,597 Accrued worksite employee payroll expense 109,697
93,138 Accrued health insurance costs 15,419 6,374 Accrued workers’
compensation costs 42,081 37,049 Other accrued liabilities
38,007 24,579 Total
current liabilities 353,609 290,594 Accrued workers’
compensation costs 55,730 52,014 Other accrued liabilities 1,261
-
Deferred income taxes
8,850
10,702 Total noncurrent liabilities 65,841
62,716 Stockholders’ equity: Common stock 309 309 Additional
paid-in capital 135,607 138,551 Treasury stock, cost (124,464 )
(135,712 ) Accumulated other comprehensive income, net of tax 21 3
Retained earnings
228,922
220,009 Total stockholders’ equity
240,395 223,160
Total liabilities and stockholders’ equity
$
659,845 $ 576,470
Administaff, Inc.
Summary Financial Information
(continued)
(in thousands, except per share amounts
and statistical data)
(Unaudited)
Three months ended December
31,
Year ended
December 31,
2010
2009
Change
2010
2009
Change
Operating results:
Revenues (gross billings of $2.896
billion, $2.633 billion, $10.169 billion and $9.856 billion, less
worksite employee payroll cost of $2.460 billion, $2.237 billion,
$8.449 billion and $8.203 billion, respectively)
$
435,526
$
395,897
10.0
%
$
1,719,752
$
1,653,096
4.0
%
Direct costs: Payroll taxes, benefits and workers’ compensation
costs
354,718
334,559
6.0
%
1,421,216
1,365,129
4.1
%
Gross profit 80,808 61,338 31.7 % 298,536 287,967 3.7 % Operating
expenses: Salaries, wages and payroll taxes 38,343 35,146 9.1 %
146,901 144,086 2.0 % Stock-based compensation 1,978 2,183 (9.4 )%
8,126 10,064 (19.3 )% General and administrative expenses 15,540
15,270 1.8 % 63,214 62,381 1.3 % Commissions 3,387 2,824 19.9 %
11,881 11,800 0.7 % Advertising 5,267 5,954 (11.5 )% 16,447 16,011
2.7 % Depreciation and amortization
3,641
3,993 (8.8 )%
14,907
16,592 (10.2 )% Total operating expenses
68,156 65,370 4.3 %
261,476 260,934 0.2 % Operating
income (loss) 12,652 (4,032 ) 413.8 % 37,060 27,033 37.1 % Other
income (expense): Interest income, net
217
201 8.0 %
961
1,616 (40.5 )% Income (loss) before income tax expense
12,869 (3,831 ) 435.9 % 38,021 28,649 32.7 % Income tax (benefit)
expense
5,080 (1,022 )
597.1 %
15,581 12,075 29.0
% Net income (loss)
$ 7,789
$ (2,809 ) 377.3 %
$
22,440 $ 16,574 35.4 %
Diluted net income (loss) per share of common stock $ 0.30 $ (0.11
) 372.7 % $ 0.86 $ 0.65 32.3 %
Administaff, Inc.
Summary Financial Information
(continued)
(in thousands, except per share amounts
and statistical data)
(Unaudited)
Three months ended Year ended December
31, December 31,
2010
2009
Change
2010
2009
Change
Statistical data:
Average number of worksite employees paid
per month
111,249 107,025 3.9 % 107,014 108,736 (1.6 )%
Revenues per worksite employee per month
(1)
$ 1,305 $ 1,233 5.8 % $ 1,339 $ 1,267 5.7 %
Gross profit per worksite employee per
month
242 191 26.7 % 232 221 5.0 %
Operating expenses per worksite employee
per month
204 204 - 204 200 2.0 %
Operating income (loss) per worksite
employee per month
38 (13 ) 392.3 % 29 21 38.1 %
Net income (loss) per worksite employee
per month
23 (9 ) 355.6 % 17 13 30.8 %
(1) Gross billings of $8,675, $8,200, $7,919 and $7,553 per
worksite employee per month, less payroll cost of $7,370, $6,967,
$6,580 and $6,286 per worksite employee per month,
respectively.
Administaff, Inc.
Summary Financial Information
(continued)
(in thousands, except per share amounts
and statistical data)
(Unaudited)
GAAP to Non-GAAP Reconciliation
Tables
Three months ended Year ended December
31, December 31,
2010
2009
Change
2010
2009
Change
Payroll cost (GAAP) $ 2,459,803 $ 2,236,888 10.0 % $
8,449,484 $ 8,202,743 3.0 % Less: Bonus payroll cost
411,903 341,351 20.7 %
839,066 750,351 11.8 % Non-bonus
payroll cost
$ 2,047,900 $
1,895,537 8.0 %
$ 7,610,418
$ 7,452,392 2.1 %
Payroll cost per worksite employee
(GAAP)
$
7,370
$
6,967
5.8
%
$
6,580
$
6,286
4.7
%
Less: Bonus payroll cost per worksite
employee
1,234
1,063
16.1
%
654
575
13.7
%
Non-bonus payroll cost per worksite
employee
$
6,136
$
5,904
3.9
%
$
5,926
$
5,711
3.8
%
Non-bonus payroll cost represents payroll cost excluding the
impact of bonus payrolls paid to the company’s worksite employees.
Bonus payroll cost varies from period to period, but has no direct
impact to the company’s ultimate workers’ compensation costs under
the current program. As a result, Administaff management refers to
non-bonus payroll cost in analyzing, reporting and forecasting the
company’s workers’ compensation costs.
Three months ended Year ended
December 31, December 31,
2010
2009
Change
2010
2009
Change
Net income (loss) (GAAP) $ 7,789 $ (2,809 ) 377.3 % $ 22,440
$ 16,574 35.4 % Interest expense
-
-
-
-
18 (100.0 )% Income tax expense (benefit) 5,080 (1,022 ) 597.1 %
15,581 12,075 29.0 % Depreciation and amortization
3,641 3,993 (8.8 )%
14,907 16,592 (10.2 )% EBITDA
$ 16,510 $ 162
-
$ 52,928 $
45,259 16.9 % Stock-based compensation
$
1,978 $ 2,183 (9.4 )%
$ 8,126 $
10,064 (19.3 )%
$ 18,488
$ 2,345 688.4 %
$
61,054 $ 55,323 10.4 %
EBITDA represents net income computed in accordance with
generally accepted accounting principles (“GAAP”), plus interest
expense, income tax expense, depreciation and amortization expense.
Administaff management believes EBITDA is often a useful measure of
the company’s operating performance, as it allows for additional
analysis of the company’s operating results separate from the
impact of taxes and capital and financing transactions on
earnings.
Non-bonus payroll and EBITDA are not financial measures prepared
in accordance with GAAP and may be different from similar measures
used by other companies. Non-bonus payroll and EBITDA should not be
considered as a substitute for, or superior to, measures of
financial performance prepared in accordance with GAAP. Administaff
includes non-bonus payroll and EBITDA in this press release because
the company believes they are useful to investors in allowing for
greater transparency related to the costs incurred under the
company’s workers’ compensation program and the company’s operating
performance during the periods presented. Investors are encouraged
to review the reconciliation of the non-GAAP financial measures
used in this press release to their most directly comparable GAAP
financial measures as provided in the tables above.
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