Insperity Announces Full Year and Fourth Quarter 2019 Results

Feb 11, 2020 04:30 pm
HOUSTON -- 

Insperity, Inc. (NYSE: NSP), a leading provider of human resources and business performance solutions for America’s best businesses, today reported results for the fourth quarter and year ended Dec. 31, 2019.

  • 2019 revenue increased 13% on worksite employee growth of 13%
  • 2019 diluted EPS and adjusted EPS increased 15% and 11% to $3.70 and $4.15, respectively
  • 2019 net income and adjusted EBITDA increased 12% and 4% to $151.1 million and $250.0 million, respectively
  • 2019 repurchase of 2.1 million shares; Q4 repurchase of 643,000 shares
  • Q4 revenue increased 11% on worksite employee growth of 10%
  • Q4 diluted EPS and adjusted EPS of $0.51 and $0.57, respectively
  • Q4 net income and adjusted EBITDA of $20.4 million and $40.7 million, respectively
  • New health insurance policy feature added to help mitigate large claim risk in 2020

Full Year Results

For the year ended Dec. 31, 2019, reported net income increased 12% over 2018 to $151.1 million, and diluted net income per share increased 15% to $3.70. Adjusted EPS increased 11% over 2018 to $4.15. Adjusted EBITDA increased 4% to $250.0 million.

“In 2019, we made important progress on key strategic initiatives that will allow us to continue to capitalize on our vast and dynamic market opportunity in the years ahead,” said Paul J. Sarvadi, Insperity chairman and chief executive officer. “At the same time, we have experienced some unusual and unexpected challenges over the past year. We have responded decisively and have a plan in place to regain our momentum in growth and profitability as we move through 2020.”

Revenues in 2019 increased 13% to $4.3 billion, on a 13% increase in the average number of worksite employees (“WSEEs”) paid per month over 2018. This growth was driven by WSEEs paid from new sales on a 12% increase in the average number of trained Business Performance Advisors and client retention of 85%. We also experienced 9% fewer WSEEs added from our client base due primarily to the tight labor market.

Gross profit for the year ended Dec. 31, 2019 increased 7% to $732.9 million on a 13% increase in the average number of paid WSEEs. The average gross profit per WSEE per month declined from $272 in 2018 to $259 in 2019 on a higher than expected benefits cost trend due to elevated large healthcare claim activity. This was partially offset by improvements in pricing and favorable results in our workers’ compensation programs.

“We recently added a new feature in our health plan with our national health insurance carrier to limit our exposure on our largest claims. Beginning in 2020, we will not have financial responsibility for any amount of a participant’s annual claim costs that exceed $1 million,” said Douglas S. Sharp, senior vice president of finance, chief financial officer and treasurer. “Although this type of coverage does not address an increase in frequency of large claims below $1 million, it does provide a level of protection against significant large claims and helps to mitigate the overall risk in our health plan.”

Operating expenses increased 9% to $546.3 million over 2018 and adjusted operating expenses increased 11% to $546.3 million over 2018. Adjusted operating expense per WSEE per month decreased 2% from $197 in 2018 to $193 in 2019.

Cash outlays in 2019 included the repurchase of approximately 2,125,000 shares of stock at a cost of $203.0 million, dividends totaling $48.6 million and capital expenditures of $56.3 million partially offset by borrowings of $125.0 million under our credit facility. Adjusted cash, cash equivalents and marketable securities at Dec. 31, 2019 was $107.9 million, and $269.4 million was outstanding under our $500 million credit facility.

Fourth Quarter Results

Fourth quarter 2019 net income and diluted earnings per share of $20.4 million and $0.51 represented decreases of 17% and 14%, respectively, compared to the fourth quarter of 2018. Adjusted EPS was $0.57, a 17% decrease over the fourth quarter of 2018. Adjusted EBITDA decreased 14% over the fourth quarter of 2018 to $40.7 million.

Revenues increased 11% over the fourth quarter of 2018 to $1.1 billion on a 10% increase in the average number of WSEEs paid per month.

Gross profit increased slightly compared to the fourth quarter of 2018 to $161.9 million. The number of large healthcare claims declined over the past two quarters after a significant increase in the second quarter of 2019; however, the frequency of large claims and related costs remained elevated when compared to levels in prior years. Higher benefit costs were partially offset by continued improvements in pricing. Operating expenses increased 4% to $134.2 million over the 2018 period, largely reflecting reduced incentive compensation costs.

Share repurchases during the fourth quarter totaled 643,000 shares at a cost of $49.4 million.

2020 Guidance

The company also announced its guidance for 2020, including the first quarter of 2020. Please refer to the accompanying financial tables at the end of this press release for the reconciliation of non-GAAP financial measures to the comparable GAAP financial measures.

Please note that 2020 adjusted EPS guidance includes a full year effective tax rate of 28% compared to 20% in 2019 due primarily to less tax benefit associated with the vesting of long-term incentive plan and time-vested restricted shares. The higher effective tax rate is expected to reduce both our Q1 and full year 2020 earnings by approximately $0.28 per share.

 

Q1 2020

 

Full Year 2020

 

 

 

 

 

 

 

 

Average WSEEs

238,000

240,200

 

249,700

254,400

Year-over-year increase (decrease)

5.5%

6.5%

 

6%

8%

 

 

 

 

 

 

 

 

Adjusted EPS(1)

$1.61

$1.70

 

$3.73

$4.16

Year-over-year increase (decrease)

(18.7)%

(14.1)%

 

(10)%

 

 

 

 

 

 

 

 

Adjusted EBITDA (in millions)

$98

$103

 

$250

$274

Year-over-year increase (decrease)

(3.4)%

1.5%

 

10%

____________________________________

(1)

Reflects a $0.28 per share impact related to a higher effective tax rate as discussed above.

Definition of Key Metrics

Average WSEEs - Determined by calculating the company’s cumulative WSEEs paid during the period divided by the number of months in the period.

Adjusted EPS - Represents diluted net income per share computed in accordance with GAAP, excluding the impact of non-cash impairment and other charges, one-time tax reform bonus and stock-based compensation.

Adjusted EBITDA - Represents net income computed in accordance with GAAP, plus interest expense, income taxes, depreciation and amortization expense, non-cash impairment and other charges, one-time tax reform bonus and stock-based compensation.

Insperity will be hosting a conference call today at 5 p.m. ET to discuss these results, provide guidance for the first quarter and full year 2020 and answer questions from investment analysts. To listen in, call 877-651-0053 and use conference i.d. number 5744718. The call will also be webcast at http://ir.insperity.com. The conference call script will be available at the same website later today. A replay of the conference call will be available at 855-859-2056, conference i.d. 5744718. The webcast will be archived for one year.

About Insperity

Insperity, a trusted advisor to America’s best businesses for more than 33 years, provides an array of human resources and business solutions designed to help improve business performance. Insperity® Business Performance Advisors offer the most comprehensive suite of products and services available in the marketplace. Insperity delivers administrative relief, better benefits, reduced liabilities and a systematic way to improve productivity through its premier Workforce Optimization® solution. Additional company offerings include Traditional Payroll and Human Capital Management, Time and Attendance, Performance Management, Organizational Planning, Recruiting Services, Employment Screening, Expense Management, Retirement Services and Insurance Services. Insperity business performance solutions support more than 100,000 businesses with over 2 million employees. With 2019 revenues of $4.3 billion, Insperity operates in 81 offices throughout the United States. For more information, visit http://www.insperity.com.

Forward-Looking Statements

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,” “opportunity,” “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, Insperity, 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:

  • adverse economic conditions;
  • our liability for WSEE payroll, payroll taxes and benefits costs;
  • increases in health insurance costs and workers’ compensation rates and underlying claims trends, and state unemployment tax rates;
  • the inability to secure competitive replacement contracts for health insurance and workers’ compensation insurance at expiration of current contracts or in the event of the insolvency of such carriers;
  • vulnerability to regional economic factors because of our geographic market concentration;
  • cancellation of client contracts on short notice, or the inability to renew client contracts or attract new clients;
  • our potential liability for client and employee actions due to the co-employment arrangement;
  • regulatory and tax developments, including health care reform, and possible adverse application of various federal, state and local regulations;
  • failure to manage growth of our operations and the effectiveness of our sales and marketing efforts;
  • the impact of the competitive environment and other developments in the human resources services industry, including the PEO industry, on our service and technology offerings, growth and/or profitability;
  • disruptions of our information technology systems;
  • the impact of data theft, cyberattacks or other security vulnerabilities on us or our vendors;
  • failure to comply with privacy, data protection and cybersecurity laws;
  • failure of certain third-party providers, such as financial institutions, data centers or cloud-service providers;
  • our ability to integrate or realize expected returns on our acquisitions;
  • an adverse final judgment or settlement of claims against us; and
  • disruptions to our business resulting from the actions of certain stockholders.

These factors are discussed in further detail in Insperity’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.

Insperity, Inc.

CONSOLIDATED BALANCE SHEETS

 

 

Dec. 31,

 

Dec. 31,

(in thousands)

2019

 

2018

 

 

 

 

Assets

 

 

 

Cash and cash equivalents

$

367,342

 

 

$

326,773

 

Restricted cash

49,295

 

 

42,227

 

Marketable securities

34,728

 

 

60,781

 

Accounts receivable, net

465,779

 

 

400,623

 

Prepaid insurance

10,418

 

 

8,411

 

Other current assets

43,493

 

 

27,721

 

Income taxes receivable

3,691

 

 

 

Total current assets

974,746

 

 

866,536

 

Property and equipment, net

147,706

 

 

117,213

 

Right-of-use leased assets

56,886

 

 

 

Prepaid health insurance

9,000

 

 

9,000

 

Deposits

184,013

 

 

172,674

 

Goodwill and other intangible assets, net

12,714

 

 

12,726

 

Deferred income taxes, net

3,956

 

 

8,816

 

Other assets

5,975

 

 

4,851

 

Total assets

$

1,394,996

 

 

$

1,191,816

 

 

 

 

 

Liabilities and stockholders' equity

 

 

 

Accounts payable

$

4,565

 

 

$

10,622

 

Payroll taxes and other payroll deductions payable

277,248

 

 

261,166

 

Accrued worksite employee payroll cost

401,859

 

 

329,979

 

Accrued health insurance costs

21,180

 

 

35,153

 

Accrued workers’ compensation costs

52,868

 

 

45,818

 

Accrued corporate payroll and commissions

52,612

 

 

60,704

 

Other accrued liabilities

58,713

 

 

28,890

 

Total current liabilities

869,045

 

 

772,332

 

 

 

 

 

Accrued workers’ compensation costs

193,609

 

 

187,412

 

Long-term debt

269,400

 

 

144,400

 

Operating lease liabilities, net of current

58,863

 

 

 

Other accrued liabilities, net of current

 

 

9,996

 

Total noncurrent liabilities

521,872

 

 

341,808

 

 

 

 

 

Stockholders’ equity:

 

 

 

Common stock

555

 

 

555

 

Additional paid-in capital

48,141

 

 

36,752

 

Treasury stock, at cost

(544,102

)

 

(357,569

)

Accumulated other comprehensive income, net of tax

12

 

 

(9

)

Retained earnings

499,473

 

 

397,947

 

Total stockholders’ equity

4,079

 

 

77,676

 

 

 

 

 

Total liabilities and stockholders’ equity

$

1,394,996

 

 

$

1,191,816

 

Insperity, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

Three Months Ended Dec. 31,

 

Year Ended Dec. 31,

(in thousands, except per share amounts)

2019

2018

Change

 

2019

2018

Change

 

 

 

 

 

 

 

 

Operating results:

 

 

 

 

 

 

 

Revenues(1)

$

1,075,090

 

$

966,756

 

11.2

%

 

$

4,314,804

 

$

3,828,549

 

12.7

%

Direct costs:

 

 

 

 

 

 

 

Payroll taxes, benefits and workers’ compensation costs

913,154

 

805,165

 

13.4

%

 

3,581,870

 

3,146,640

 

13.8

%

Gross profit

161,936

 

161,591

 

0.2

%

 

732,934

 

681,909

 

7.5

%

Salaries, wages and payroll taxes

79,784

 

74,541

 

7.0

%

 

317,124

 

301,027

5.3

%

Stock-based compensation

3,180

 

5,769

 

(44.9

)%

 

23,993

 

20,425

17.5

%

Commissions

8,693

 

9,094

 

(4.4

)%

 

31,420

 

28,957

8.5

%

Advertising

4,129

 

4,558

 

(9.4

)%

 

21,603

 

18,554

16.4

%

General and administrative expenses

30,637

 

28,503

 

7.5

%

 

123,438

 

111,068

 

11.1

%

Depreciation and amortization

7,794

 

6,507

 

19.8

%

 

28,723

 

22,842

 

25.7

%

Total operating expenses

134,217

 

128,972

 

4.1

%

 

546,301

 

502,873

8.6

%

Operating income

27,719

 

32,619

 

(15.0

)%

 

186,633

 

179,036

 

4.2

%

Other income (expense):

 

 

 

 

 

 

 

Interest income

2,036

 

2,701

 

(24.6

)%

 

10,657

 

7,992

 

33.3

%

Interest expense

(2,205

)

(1,316

)

67.6

%

 

(7,647

)

(4,668

)

63.8

%

Income before income tax expense

27,550

 

34,004

 

(19.0

)%

 

189,643

 

182,360

 

4.0

%

Income tax expense

7,155

 

9,349

 

(23.5

)%

 

38,544

 

46,947

 

(17.9

)%

Net income

$

20,395

 

$

24,655

 

(17.3

)%

 

$

151,099

 

$

135,413

 

11.6

%

Less distributed and undistributed earnings allocated to participating securities

(224

)

(341

)

(34.3

)%

 

(1,759

)

(1,875

)

(6.2

)%

Net income allocated to common shares

$

20,171

 

$

24,314

 

(17.0

)%

 

$

149,340

 

$

133,538

 

11.8

%

 

 

 

 

 

 

 

 

Net income per share of common stock

 

 

 

 

 

 

 

Basic

$

0.51

 

$

0.59

 

(13.6

)%

 

$

3.72

 

$

3.24

 

14.8

%

Diluted

$

0.51

 

$

0.59

 

(13.6

)%

 

$

3.70

 

$

3.22

 

14.9

%

____________________________________

(1)

Revenues are comprised of gross billings less WSEE payroll costs as follows:

 

Three Months Ended Dec. 31,

 

Year Ended Dec. 31,

(in thousands)

2019

2018

 

2019

2018

 

 

 

 

 

 

Gross billings

$

7,407,460

 

$

6,546,253

 

 

$

27,212,010

 

$

23,830,731

 

Less: WSEE payroll cost

6,332,370

 

5,579,497

 

 

22,897,206

 

20,002,182

 

Revenues

$

1,075,090

 

$

966,756

 

 

$

4,314,804

 

$

3,828,549

 

Insperity, Inc.

KEY FINANCIAL AND STATISTICAL DATA

 

 

Three Months Ended Dec. 31,

 

Year Ended Dec. 31,

 

2019

2018

Change

 

2019

2018

Change

 

 

 

 

 

 

 

 

Average WSEEs paid

243,715

 

221,809

 

9.9

%

 

235,547

 

209,123

 

12.6

%

 

 

 

 

 

 

 

 

Statistical data (per WSEE per month):

 

 

 

 

 

 

 

Revenues(1)

$

1,470

 

$

1,453

 

1.2

%

 

$

1,527

 

$

1,526

 

0.1

%

Gross profit

221

 

243

 

(9.1

)%

 

259

 

272

 

(4.8

)%

Operating expenses

183

 

194

 

(5.7

)%

 

193

 

201

 

(4.0

)%

Operating income

38

 

49

 

(22.4

)%

 

66

 

71

 

(7.0

)%

Net income

28

 

37

 

(24.3

)%

 

53

 

54

 

(1.9

)%

____________________________________

(1)

Revenues per WSEE per month are comprised of gross billings per WSEE per month less WSEE payroll costs per WSEE per month follows:

 

Three Months Ended Dec. 31,

 

Year Ended Dec. 31,

(per WSEE per month)

2019

2018

 

2019

2018

 

 

 

 

 

 

Gross billings

$

10,131

 

$

9,838

 

 

$

9,627

 

$

9,496

 

Less: WSEE payroll cost

8,661

 

8,385

 

 

8,100

 

7,970

 

Revenues

$

1,470

 

$

1,453

 

 

$

1,527

 

$

1,526

 

 

Insperity, Inc.

Non-GAAP Financial Measures

(Unaudited)

 

Non-GAAP financial measures are not prepared in accordance with GAAP and may be different from non-GAAP financial measures used by other companies. Non-GAAP financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of the non-GAAP financial measures used to their most directly comparable GAAP financial measures as provided in the tables below.

 

Non-GAAP Measure

Definition

Benefit of Non-GAAP Measure

Non-bonus payroll cost

Non-bonus payroll cost is a non-GAAP financial measure that excludes the impact of bonus payrolls paid to our WSEEs.

 

Bonus payroll cost varies from period to period, but has no direct impact to our ultimate workers’ compensation costs under the current program.

Our management refers to non-bonus payroll cost in analyzing, reporting and forecasting our workers’ compensation costs.

 

 

 

 

 

We include these non-GAAP financial measures because we believe they are useful to investors in allowing for greater transparency related to the costs incurred under our current workers’ compensation program.

Adjusted cash, cash equivalents and marketable securities

Excludes funds associated with:

• federal and state income tax withholdings,

• employment taxes,

• other payroll deductions, and

• client prepayments.

We believe that the exclusion of the identified items helps us reflect the fundamentals of our underlying business model and analyze results against our expectations, against prior periods, and to plan for future periods by focusing on our underlying operations. We believe that the adjusted results provide relevant and useful information for investors because they allow investors to view performance in a manner similar to the method used by management and improves their ability to understand and assess our operating performance. Adjusted EBITDA is used by our lenders to assess our leverage and ability to make interest payments.

 

 

Adjusted operating expense

Represents operating expenses excluding the impact of the following:

• costs associated with a one-time tax reform bonus paid to corporate employees and

• charitable donations to Hurricane Harvey relief efforts.

 

 

EBITDA

Represents net income computed in accordance with GAAP, plus:

• interest expense,

• income tax expense, and

• depreciation and amortization expense.

 

 

Adjusted EBITDA

Represents net income computed in accordance with GAAP, plus:

• interest expense,

• income tax expense, and

• depreciation and amortization expense.

 

 

Adjusted net income

Represents net income computed in accordance with GAAP, excluding:

• non-cash stock based compensation,

• costs associated with a one-time tax reform bonus paid to corporate employees, and

• charitable donations to Hurricane Harvey relief efforts.

 

 

Adjusted EPS

Represents diluted net income per share computed in accordance with GAAP, excluding:

• non-cash stock based compensation,

• costs associated with a one-time tax reform bonus paid to corporate employees, and

• charitable donations to Hurricane Harvey relief efforts.

Following is a reconciliation of payroll cost (GAAP) to non-bonus payroll costs (non-GAAP):

 

Three Months Ended Dec. 31,

 

Year Ended Dec. 31,

(in thousands, except per WSEE per month)

2019

 

2018

 

2019

 

2018

$

WSEE

 

$

WSEE

 

$

WSEE

 

$

WSEE

 

 

 

 

 

 

 

 

 

 

 

 

Payroll cost

$

6,332,370

 

$

8,661

 

 

$

5,579,497

 

$

8,385

 

 

$

22,897,206

 

$

8,100

 

 

$

20,002,182

 

$

7,970

 

Less: Bonus payroll cost

1,029,342

 

1,408

 

 

860,847

 

1,294

 

 

2,880,680

 

1,019

 

 

2,498,875

 

996

 

Non-bonus payroll cost

$

5,303,028

 

$

7,253

 

 

$

4,718,650

 

$

7,091

 

 

$

20,016,526

 

$

7,081

 

 

$

17,503,307

 

$

6,974

 

% Change period over period

12.4

%

2.3

%

 

19.0

%

1.6

%

 

14.4

%

1.5

%

 

17.4

%

2.5

%

Following is a reconciliation of cash, cash equivalents and marketable securities (GAAP) to adjusted cash, cash equivalents and marketable securities (non-GAAP):

(in thousands)

December 31,
2019

 

December 31,
2018

 

 

Cash, cash equivalents and marketable securities

$

402,070

 

 

$

387,554

 

Less:

 

 

 

Amounts payable for withheld federal and state income taxes, employment taxes and other payroll deductions

234,553

 

 

224,487

 

Customer prepayments

59,612

 

 

34,177

 

Adjusted cash, cash equivalents and marketable securities

$

107,905

 

 

$

128,890

 

Following is a reconciliation of operating expenses (GAAP) to adjusted operating expenses (non-GAAP):

 

Three Months Ended Dec 31,

 

Year Ended Dec. 31,

(in thousands, except per WSEE per month)

2019

 

2018

 

2019

 

2018

$

WSEE

 

$

WSEE

 

$

WSEE

 

$

WSEE

 

 

 

 

 

 

 

 

 

 

 

 

Operating expenses

$

134,217

 

$

183

 

 

$

128,972

 

$

194

 

 

$

546,301

 

$

193

 

 

$

502,873

 

$

201

 

Less:

 

 

 

 

 

 

 

 

 

 

 

One-time tax reform bonus

 

 

 

 

 

 

 

 

 

9,306

 

4

 

Adjusted operating expenses

$

134,217

 

$

183

 

 

$

128,972

 

$

194

 

 

$

546,301

 

$

193

 

 

$

493,567

 

$

197

 

% Change period over period

4.1

%

(5.7

)%

 

9.0

%

(6.7

)%

 

10.7

%

(2.0

)%

 

12.0

%

(2.0

)%

Following is a reconciliation of net income (GAAP) to EBITDA (non-GAAP) and adjusted EBITDA (non-GAAP):

 

Three Months Ended Dec. 31,

(in thousands, except per WSEE per month)

2019

 

2018

$

WSEE

 

$

WSEE

 

 

 

 

 

 

Net income

$

20,395

 

$

28

 

 

$

24,655

 

$

37

 

Income tax expense

7,155

 

9

 

 

9,349

 

14

 

Interest expense

2,205

 

3

 

 

1,316

 

2

 

Depreciation and amortization

7,794

 

11

 

 

6,507

 

10

 

EBITDA

37,549

 

51

 

 

41,827

 

63

 

Stock-based compensation

3,180

 

5

 

 

5,769

 

9

 

Adjusted EBITDA

$

40,729

 

$

56

 

 

$

47,596

 

$

72

 

% Change period over period

(14.4

)%

(22.2

)%

 

23.5

%

5.9

%

(in thousands, except per WSEE per month)

Year Ended December 31,

2019

 

2018

 

2017

 

2016

 

2015

$

WSEE

 

$

WSEE

 

$

WSEE

 

$

WSEE

 

$

WSEE

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income

$

151,099

 

$

53

 

 

$

135,413

 

$

54

 

 

$

84,402

 

$

38

 

 

$

65,991

 

$

33

 

 

$

39,390

 

$

23

 

Income tax expense

38,544

 

14

 

 

46,947

 

19

 

 

45,739

 

21

 

 

39,186

 

19

 

 

26,229

 

14

 

Interest expense

7,647

 

3

 

 

4,668

 

2

 

 

3,213

 

1

 

 

2,396

 

1

 

 

459

 

 

Depreciation and amortization

28,723

 

10

 

 

22,842

 

9

 

 

18,182

 

9

 

 

16,644

 

9

 

 

18,565

 

11

 

EBITDA

226,013

 

80

 

 

209,870

 

84

 

 

151,536

 

69

 

 

124,217

 

62

 

 

84,643

 

48

 

Impairment charges and other

 

 

 

 

 

 

 

 

 

 

 

 

10,480

 

6

 

Stock-based compensation

23,993

 

8

 

 

20,425

 

8

 

 

24,345

 

11

 

 

16,643

 

8

 

 

13,345

 

8

 

One-time tax reform bonus

 

 

 

9,306

 

3

 

 

 

 

 

 

 

 

 

 

Charitable donations to Hurricane Harvey relief efforts

 

 

 

 

 

 

2,000

 

1

 

 

 

 

 

 

 

Other

 

 

 

 

 

 

(200

)

 

 

 

 

 

 

 

Stockholder advisory expenses

 

 

 

 

 

 

 

 

 

323

 

1

 

 

1,546

 

1

 

Adjusted EBITDA

$

250,006

 

$

88

 

 

$

239,601

 

$

95

 

 

$

177,681

 

$

81

 

 

$

141,183

 

$

71

 

 

$

110,014

 

$

63

 

% Change year over year

4.3

%

(7.4

)%

 

34.8

%

17.3

%

 

25.9

%

14.1

%

 

28.3

%

12.7

%

 

30.8

%

16.7

%

Following reconciliation of net income (GAAP) to adjusted net income (non-GAAP):

 

Three Months Ended

Dec. 31,

 

Year Ended Dec. 31,

(in thousands)

2019

2018

 

2019

2018

 

 

 

 

 

 

Net income

$

20,395

 

$

24,655

 

 

$

151,099

 

$

135,413

 

Non-GAAP adjustments:

 

 

 

 

 

Stock-based compensation

3,180

 

5,769

 

 

23,993

 

20,425

 

One-time tax reform bonus

 

 

 

 

9,306

 

Total non-GAAP adjustments

3,180

 

5,769

 

 

23,993

 

29,731

 

Tax effect of non-GAAP adjustments

(826

)

(1,586

)

 

(5,643

)

(7,608

)

Adjusted net income

$

22,749

 

$

28,838

 

 

$

169,449

 

$

157,536

 

% Change period over period

(21.1

)%

25.3

%

 

7.6

%

52.9

%

Following is a reconciliation of diluted EPS (GAAP) to adjusted EPS (non-GAAP):

 

Three Months Ended

Dec. 31,

 

Year Ended

Dec. 31,

 

2019

2018

 

2019

2018

 

 

 

 

 

 

Diluted EPS

$

0.51

 

$

0.59

 

 

$

3.70

 

$

3.22

 

Non-GAAP adjustments:

 

 

 

 

 

Stock-based compensation

0.08

 

0.14

 

 

0.59

 

0.49

 

One-time tax reform bonus

 

 

 

 

0.22

 

Total non-GAAP adjustments

0.08

 

0.14

 

 

0.59

 

0.71

 

Tax effect on non-GAAP adjustments

(0.02

)

(0.04

)

 

(0.14

)

(0.18

)

Adjusted EPS

$

0.57

 

$

0.69

 

 

$

4.15

 

$

3.75

 

% Change period over period

(17.4

)%

25.5

%

 

10.7

%

53.1

%

The following is a reconciliation of GAAP to non-GAAP financial measures for first quarter and full year 2020 guidance:

 

Q1 2020

 

Full Year 2020

(in millions, except per share amounts)

Guidance

 

Guidance

 

 

 

 

Net income

$60 - $63

 

$128 - $145

Income tax expense

22 - 24

 

49 - 56

Interest expense

3

 

11

Depreciation and amortization

8

 

34

EBITDA

93 - 98

 

222 - 246

Stock-based compensation

5

 

28

Adjusted EBITDA

$98 - $103

 

$250 - $274

 

 

 

 

Diluted EPS

$1.51 - $1.60

 

$3.22 - $3.65

Non-GAAP adjustments:

 

 

 

Stock-based compensation

0.13

 

0.71

Total non-GAAP adjustments

0.13

 

0.71

Tax effect

(0.03)

 

(0.20)

Adjusted EPS

$1.61 - $1.70

 

$3.73 - $4.16

 

Investor Relations Contact:
Douglas S. Sharp
Senior Vice President of Finance,
Chief Financial Officer and Treasurer
(281) 348-3232
[email protected]

News Media Contact:
Suzanne Haugen
Public Relations Manager
(281) 312-3543
[email protected]