Insperity(US:NSP)2023-02-09 22:45Financial Data and Key Metrics Changes - The company achieved $1.21 in adjusted EPS and $79 million of adjusted EBITDA in Q4 2022, significantly above expectations and prior year results [7][10] - Full year 2022 adjusted EBITDA increased by 38% to $352 million, and adjusted EPS rose by 42% to $5.59, driven by growth in paid worksite employees and effective cost management [10][11] - Paid worksite employee growth was 14.3% in Q4, slightly below forecasts due to a slowdown in client hiring [7][11] - Gross profit per worksite employee improved from $273 in 2021 to $286 in 2022, reflecting effective pricing and lower benefit costs [12][10] Business Line Data and Key Metrics Changes - The company reported a 41% increase in gross profit in Q4, driven by a 14% growth in paid worksite employees and a 24% improvement in gross profit per worksite employee [8] - Operating expenses increased by 22% in Q4 compared to the prior year, reflecting investments in service personnel and sales commissions [9][13] - Client retention improved from 82% in 2021 to 85% in 2022, contributing to overall growth [11] Market Data and Key Metrics Changes - The company experienced a slowdown in net hiring among clients in Q4, with only a slight increase compared to the previous quarter [24][25] - Client sentiment improved, with over 70% expecting 2023 to be better than 2022, indicating potential for future growth [26][84] Company Strategy and Development Direction - The company is focused on a five-year plan with ten key success factors aimed at improving sales efficiency and client retention [28][40] - Continued investment in technology and marketing is planned to support growth objectives and enhance service offerings [48][94] - The company aims to achieve a compound annual growth rate in paid worksite employees of 12.5% and adjusted EBITDA growth of over 24% during the five-year plan [37][39] Management's Comments on Operating Environment and Future Outlook - Management acknowledged economic uncertainty and a recent slowdown in client hiring, leading to a wider range for worksite employee growth projections for 2023 [42][36] - Despite challenges, management remains optimistic about client retention and sales efficiency improvements, projecting adjusted EBITDA growth for 2023 [50][44] - The company expects to maintain strong pricing performance and manage direct costs effectively in the current economic environment [46][34] Other Important Information - The company returned $150 million to shareholders through dividends and share repurchase programs in 2022 [15][16] - The company ended 2022 with $224 million in adjusted cash, up from $163 million at the end of 2021 [16] Q&A Session Summary Question: What is assumed in guidance regarding gross profit per worksite employee per month? - The company does not provide specific guidance on this metric but expects to realize administrative cost savings in their UnitedHealthcare plan [55][56] Question: Are there any unique trends in healthcare activity or claims for 2023? - The company anticipates a more normalized year for benefit utilization, with no significant pent-up demand expected [58][60] Question: Is there any noticeable change in competitor pricing aggressiveness? - Management has not observed significant changes in competitor pricing strategies, maintaining a strong pricing approach [61][62] Question: Can you provide insights on Workforce Acceleration growth trends? - The company reported a 40% increase in Workforce Acceleration sales in 2022 and plans to enhance customer awareness of service options [65][66] Question: What is the expected benefit cost increase for this year? - The company expects benefit cost growth of around 4% to 5% for the year, influenced by demographic changes [80][81] Question: What was the client retention rate for the full year? - Client retention improved to 85% in 2022, benefiting from a strong year-end transition [82][83]