Insperity(US:NSP)2022-02-11 02:56Financial Data and Key Metrics Changes - The company reported a 12.4% increase in the average number of paid worksite employees in Q4 2021, driven by strong net hiring and improved sales efficiency [6][12] - Adjusted EPS for Q4 was $0.34, while full year 2021 adjusted EBITDA was $255 million and adjusted EPS was $3.95 [12][13] - Operating expenses in Q4 increased by 8% due to higher headcount and sales commission costs, while full year operating expenses increased by just 6% on a 7% growth in worksite employees [11][14] Business Line Data and Key Metrics Changes - Gross profit per worksite employee per month averaged $273 in 2021, slightly exceeding budget expectations despite a decline from 2020 [14] - The company experienced a 39% increase in new sales booked during the fall campaign compared to the previous year, indicating strong demand for services [23] - Workforce optimization and workforce acceleration book sales increased by 24% and 111%, respectively, over 2020, reflecting significant sales momentum [28] Market Data and Key Metrics Changes - Client retention remained high at 82%, despite the loss of a large enterprise account at the beginning of the year [13] - The company noted that service interactions continued at nearly three times pre-COVID levels, indicating increased client engagement [19] Company Strategy and Development Direction - The company launched a new five-year plan aimed at capitalizing on the increased demand for sophisticated HR services post-pandemic [31][32] - Key initiatives for 2022 include increasing sales efficiency, delivering premium service levels, and developing competitive HR technology [37][39] - The renewal of the United Health Care Group policy through 2026 is expected to provide service level improvements and cost reductions [30] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the impact of new COVID variants on healthcare costs, which rose from 4% of total claims in prior quarters to 7% in Q4 [8][22] - The company expects an 18% to 19% increase in paid worksite employees in Q1 2022, with a full year expectation of mid-teens growth [36][42] - Despite short-term challenges, management remains optimistic about long-term growth potential and profitability [40][41] Other Important Information - The company invested $33 million in capital expenditures during the year and returned $214 million to shareholders through dividends and share repurchase programs [15] - Adjusted cash at year-end was $163 million, with $130 million available under a $500 million credit facility [15] Q&A Session Summary Question: What drove the higher COVID costs in Q4 compared to previous quarters? - Management indicated that the spike in Q4 was primarily due to new variants, including Delta and Omicron, which led to increased treatment, vaccination, and testing costs [62][63] Question: How does the company view the healthcare cost trend for 2022? - Management stated that they are not considering the Q4 spike as a bubble and have budgeted for a continued trend based on elevated costs from 2021 [63][68] Question: Will the company provide financial metrics for the five-year plan? - Management has not provided specific long-term financial metrics but aims for double-digit unit growth and improved gross profitability [78][80]