Insperity(US:NSP)2021-05-04 01:45Financial Data and Key Metrics Changes - Adjusted earnings per share for Q1 2021 was $1.82, a 7% increase compared to Q1 2020 [5] - Adjusted EBITDA increased by 3% to $104 million [5] - Gross profit rose by 7% over Q1 2020 despite a 2% decline in worksite employees [10] - Operating expenses increased by 13% over Q1 2020, but were flat when excluding performance-based compensation [15] - The company ended Q1 with $197 million of adjusted cash and $370 million of debt [16] Business Line Data and Key Metrics Changes - The average number of paid worksite employees declined by 2% compared to Q1 2020, primarily due to the loss of one large enterprise account [6] - Client attrition was 9%, an improvement from 11% in Q1 2020, excluding the large account loss [9] - The number of new clients increased by 16% over the same period last year [22] - The average number of worksite employees per client decreased, reflecting pandemic-related downsizing [23] Market Data and Key Metrics Changes - The company reported an 8% increase in the number of clients during the pandemic, although the average size of clients decreased due to layoffs [7] - A client survey indicated that 86% of small and medium-sized business owners were optimistic about their business outlook for the year [32] - 53% of surveyed clients expect to add employees, while only 3% expect to reduce their workforce [32] Company Strategy and Development Direction - The company aims to return to double-digit growth and profitability, with expectations for 5% to 6% growth in Q2 2021 [38] - The WX initiative, a traditional employment HR bundle, has seen a 90% increase in proposals and more than doubled book sales [25] - The company is focusing on increasing awareness of PEO services to enhance market penetration [88] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in growth acceleration due to improved client hiring and retention trends [30] - The company anticipates a strong recovery in the average number of worksite employees per client as optimism among small business owners increases [31] - There is a cautious outlook regarding potential increases in healthcare costs due to pent-up demand for services [80] Other Important Information - The company repurchased 340,000 shares at a cost of $30 million and paid $15 million in cash dividends during Q1 [16] - The retirement of Jay Mincks, Executive Vice President of Sales and Marketing, was announced, marking the end of a 31-year career with the company [39] Q&A Session Summary Question: What are the expectations for net job growth in the existing customer base? - Management believes there is a growth mindset among business owners, indicating potential recovery in employee numbers [47] Question: What changes were made to the traditional employment package? - The package was adjusted to remove less utilized components, making it more appealing to clients [48] Question: How does the company view pricing and healthcare utilization normalization? - Pricing has been adjusted to reflect a normal trend, with healthcare utilization expected to continue normalizing [51][53] Question: What are the hiring plans for BPAs in Q2 and beyond? - The company plans to increase BPA hiring significantly starting in Q3 [61] Question: How is the WX initiative performing across different regions? - The WX initiative has shown momentum, but detailed performance metrics are still being developed [84] Question: What is the competitive environment like in the PEO space? - There is a strong demand for PEO services, and the company aims to increase market penetration through awareness [88]