Business Wire | Feb 11, 2021 04:30PM EST

Insperity Announces Full Year and Fourth Quarter 2020 Results

Feb. 11, 2021

HOUSTON--(BUSINESS WIRE)--Feb. 11, 2021--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, 2020.

* 2020 net income and diluted EPS of $138.2 million and $3.54, respectively * 2020 adjusted EPS up 12% to $4.64 * 2020 adjusted EBITDA up 15% to $288.6 million * Q4 net income and diluted EPS of $4.3 million and $0.11, respectively * Q4 adjusted EPS of $0.49 * Q4 adjusted EBITDA of $37.9 million

Full Year Results

For the year ended Dec. 31, 2020, reported net income and diluted earnings per share ("EPS") were $138.2 million and $3.54, respectively. Adjusted EBITDA increased 15% to $288.6 million and adjusted EPS increased 12% over 2019 to $4.64. The difference between GAAP EPS and adjusted EPS was primarily caused by performance-driven stock-based compensation.

"We are pleased with our excellent fourth quarter and full year results, and the outstanding performance of our entire Insperity team, in the face of an unprecedented and challenging year," said Paul J. Sarvadi, Insperity chairman and chief executive officer. "The proven value of our HR services offering and the resiliency of our targeted small business client base, combined with continuing momentum in sales and core client retention, bodes well for growth acceleration as we progress through 2021 and beyond."

The average number of worksite employees ("WSEEs") paid per month declined by just 1% in the face of the significant impact of the pandemic on our clients, prospects and the broader economy. Revenues in 2020 also decreased by 1% to $4.3 billion. Average pricing increased 3% for the full year 2020 over 2019, more than offsetting the decline in average paid WSEEs; however, the FICA deferral program instituted as part of the CARES Act further reduced revenues. This program had no impact on our gross profit.

Gross profit for the year ended Dec. 31, 2020 increased 10% to $806.9 million. The average gross profit per WSEE per month increased from $259 in 2019 to $287 in 2020, due to improved pricing while experiencing lower benefits and workers' compensation cost trends. Lower healthcare utilization during the pandemic, particularly associated with office visits and elective procedures, outweighed any incremental COVID-19 testing and treatment costs and drove the lower cost trend. Workers' compensation costs trended lower on the ongoing management of safety practices and claims. The reported increase in gross profit was net of comprehensive service fee credits provided to our clients as a result of negotiated savings with our vendors.

Operating expenses increased 12% over 2019 to $612.2 million, and included continued investments in our growth, products and technology. These investments were partially offset by cost savings in other areas of our business, both through effective management and as a result of pandemic related cancellations and shutdowns. An increase in stock-based compensation was driven by our outperformance in the level of earnings throughout 2020. Operating expenses, excluding stock-based compensation and depreciation and amortization, increased by 6% over the 2019 period.

"Our 2020 results reflect a strong company response to the pandemic-related challenges to our growth combined with some unexpected benefit in our direct cost programs," said Douglas S. Sharp, senior vice president of finance, chief financial officer and treasurer. "Our outlook for 2021 includes growth acceleration with modest growth within our client base as the small business climate gradually improves, combined with normalization of our direct costs and continued investment in our future growth."

Cash outlays in 2020 included the repurchase of approximately 1.4 million shares of stock at a cost of $99.4 million, dividends totaling $61.9 million and capital expenditures of $98.2 million partially offset by borrowings of $100.0 million under our credit facility. Adjusted cash, cash equivalents and marketable securities at Dec. 31, 2020 was $212.1 million, and $369.4 million was outstanding under our $500 million credit facility.

Fourth Quarter Results

For the fourth quarter 2020 net income and diluted EPS were $4.3 million and $0.11, respectively. Adjusted EPS decreased 14% compared to the 2019 period to $0.49 and adjusted EBITDA decreased 7% to $37.9 million.

The average number WSEEs paid per month in Q4 2020 increased 3% sequentially over the Q3 period to 239,232, which was above the high end of our expected range. All three drivers to our growth, including worksite employees paid from new sales, client retention and net gains in our client base exceeded our Q4 forecast and drove the continued improvement over the course of the pandemic from the low point experienced in May 2020. This improvement resulted in just a 2% year-over-year decline in the average number of paid WSEEs and revenues compared to the Q4 2019 period. Average pricing increased 4% over Q4 2019, more than offsetting the decline in average paid WSEEs; however, the FICA deferral program instituted as part of the CARES Act further reduced revenues.

Gross profit increased 3% over the fourth quarter of 2019 to $167.6 million. Operating expenses increased 19% to $159.8 million over the 2019 period, including an increase in stock-based compensation that was driven by our outperformance in the level of full year earnings. Operating expenses, excluding stock-based compensation and depreciation and amortization, increased by 5% over the 2019 period.

2021 Guidance

The company also announced its guidance for 2021, including the first quarter of 2021, which reflects solid sales and improved core client retention through the year-end transition offset by the loss of a large enterprise account. 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.

Q1 2021 Full Year 2021



Average WSEEs paid 232,100 - 234,400 238,900 - 248,300

Year-over-year increase (decrease) (2.5)% - (1.5)% 2.0% - 6.0%



Adjusted EPS $1.37 - $1.72 $3.27 - $4.20

Year-over-year increase (decrease) (19.4)% - 1.2% (29.5)% - (9.5)%



Adjusted EBITDA (in millions) $84 - $103 $225 - $275

Year-over-year increase (decrease) (17.0)% - 1.7% (22.0)% - (4.7)%

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 stock-based compensation.

Adjusted EBITDA - Represents net income computed in accordance with GAAP, plus interest expense, income taxes, depreciation and amortization expense and non-cash 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 2021 and answer questions from investment analysts. To listen in, call 877-651-0053 and use conference i.d. number 4180394. 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. 4180394. The webcast will be archived for one year.

About Insperity

Insperity(r), a trusted advisor to America's best businesses for more than 34 years, provides an array of human resources and business solutions designed to help improve business performance. Offering 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(r) solution. Additional company offerings include Traditional Payroll and Human Capital Management, Time and Attendance, Performance Management, Organizational Planning, Recruiting Services, Employment Screening, Retirement Services and Insurance Services. With 2020 revenues of $4.3 billion, Insperity supports more than 100,000 businesses with over 2 million employees nationwide. 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 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, in an effort to help keep our stockholders and the public informed about our operations, from time to time, we may 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, average number of worksite employee, benefits and workers' compensation costs, or other operating results. We base the forward-looking statements on our current expectations, estimates and projections. We caution you that these statements are not guarantees of future performance and involve risks, uncertainties and assumptions 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; * impact of the COVID-19 pandemic, or other future pandemics, including the scope, severity and duration of the pandemic; government responses; regulatory developments; and the related disruptions and economic impact to our business and the small and medium-sized businesses that we serve; * vulnerability to regional economic factors because of our geographic market concentration; * failure to comply with covenants under our credit facility; * our liability for worksite employee payroll, payroll taxes and benefits costs; * increases in health insurance costs and workers' compensation rates and underlying claims trends, health care reform, financial solvency of workers' compensation carriers, other insurers or financial institutions, state unemployment tax rates, liabilities for employee and client actions or payroll-related claims; * cancellation of client contracts on short notice, or the inability to renew client contracts or attract new clients; * the ability to secure competitive replacement contracts for health insurance and workers' compensation insurance at expiration of current contracts; * regulatory and tax developments 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 growth and/or profitability; * an adverse final judgment or settlement of claims against Insperity; * disruptions of our information technology systems; * our liability or damage to our reputation relating to disclosure of sensitive or private information; * failure of third-party providers, data centers or cloud service providers; and * our ability to integrate or realize expected returns on our acquisitions.

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.

Any forward-looking statements are made only as of the date hereof and, unless otherwise required by applicable securities laws, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Insperity, Inc.

CONDENSED CONSOLIDATED BALANCE SHEETS



Dec. 31, Dec. 31,

(in thousands) 2020 2019



Assets

Cash and cash equivalents $ 554,846 $ 367,342

Restricted cash 45,522 49,295

Marketable securities 34,529 34,728

Accounts receivable, net 392,746 465,779

Prepaid insurance 10,164 10,418

Other current assets 39,461 43,493

Income taxes receivable - 3,691

Total current assets 1,077,268 974,746

Property and equipment, net 216,256 147,706

Right-of-use leased assets 60,663 56,886

Prepaid health insurance 9,000 9,000

Deposits 194,231 184,013

Goodwill and other intangible assets, net 12,707 12,714

Deferred income taxes, net 9,603 3,956

Other assets 4,548 5,975

Total assets $ 1,584,276 $ 1,394,996



Liabilities and stockholders' equity

Accounts payable $ 6,203 $ 4,565

Payroll taxes and other payroll deductions 377,960 277,248 payable

Accrued worksite employee payroll cost 334,836 401,859

Accrued health insurance costs 32,685 21,180

Accrued workers' compensation costs 48,186 52,868

Accrued corporate payroll and commissions 44,277 52,612

Other accrued liabilities 60,777 58,713

Total current liabilities 904,924 869,045



Accrued workers' compensation costs 195,239 193,609

Long-term debt 369,400 269,400

Operating lease liabilities, net of current 64,289 58,863

Other accrued liabilities, net of current 6,292 -

Total noncurrent liabilities 635,220 521,872



Stockholders' equity:

Common stock 555 555

Additional paid-in capital 95,528 48,141

Treasury stock, at cost (626,984 ) (544,102 )

Accumulated other comprehensive income, net 5 12 of tax

Retained earnings 575,028 499,473

Total stockholders' equity 44,132 4,079



Total liabilities and stockholders' equity $ 1,584,276 $ 1,394,996

Insperity, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

Three Months Ended Dec. 31,

Year Ended Dec. 31,

(in thousands, except per share amounts)

2020

2019

Change

2020

2019

Change

Operating results:

Revenues(1)

$

1,056,335

$

1,075,090

(1.7

)

%

$

4,287,004

$

4,314,804

(0.6

)

%

Direct costs:

Payroll taxes, benefits and workers' compensation costs

888,785

913,154

(2.7

)

%

3,480,150

3,581,870

(2.8

)

%

Gross profit

167,550

161,936

3.5

%

806,854

732,934

10.1

%

Salaries, wages and payroll taxes

86,633

79,784

8.6

%

353,273

317,124

11.4

%

Stock-based compensation

22,035

3,180

592.9

%

60,145

23,993

150.7

%

Commissions

9,178

8,693

5.6

%

32,835

31,420

4.5

%

Advertising

6,222

4,129

50.7

%

21,556

21,603

(0.2

)

%

General and administrative expenses

27,913

30,637

(8.9

)

%

113,167

123,438

(8.3

)

%

Depreciation and amortization

7,860

7,794

0.8

%

31,189

28,723

8.6

%

Total operating expenses

159,841

134,217

19.1

%

612,165

546,301

12.1

%

Operating income

7,709

27,719

(72.2

)

%

194,689

186,633

4.3

%

Other income (expense):

Interest income

246

2,036

(87.9

)

%

2,597

10,657

(75.6

)

%

Interest expense

(1,704

)

(2,205

)

(22.7

)

%

(8,016

)

(7,647

)

4.8

%

Income before income tax expense

6,251

27,550

(77.3

)

%

189,270

189,643

(0.2

)

%

Income tax expense

1,966

7,155

(72.5

)

%

51,033

38,544

32.4

%

Net income

$

4,285

$

20,395

(79.0

)

%

$

138,237

$

151,099

(8.5

)

%

Less distributed and undistributed earnings allocated to participating securities

(78

)

(224

)

(65.2

)

%

(782

)

(1,759

)

(55.5

)

%

Net income allocated to common shares

$

4,207

$

20,171

(79.1

)

%

$

137,455

$

149,340

(8.0

)

%

Net income per share of common stock

Basic

$

0.11

$

0.51

(78.4

)

%

$

3.57

$

3.72

(4.0

)

%

Diluted

$

0.11

$

0.51

(78.4

)

%

$

3.54

$

3.70

(4.3

)

%

____________________________________

Insperity, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS



Three Months Ended Dec. 31, Year Ended Dec. 31,

(in thousands,except per 2020 2019 Change 2020 2019 Changeshare amounts)



Operating results:

Revenues^(1) $ 1,056,335 $ 1,075,090 (1.7 ) % $ 4,287,004 $ 4,314,804 (0.6 ) %

Direct costs:

Payroll taxes,benefits andworkers' 888,785 913,154 (2.7 ) % 3,480,150 3,581,870 (2.8 ) %compensationcosts

Gross profit 167,550 161,936 3.5 % 806,854 732,934 10.1 %

Salaries,wages and 86,633 79,784 8.6 % 353,273 317,124 11.4 %payroll taxes

Stock-based 22,035 3,180 592.9 % 60,145 23,993 150.7 %compensation

Commissions 9,178 8,693 5.6 % 32,835 31,420 4.5 %

Advertising 6,222 4,129 50.7 % 21,556 21,603 (0.2 ) %

General andadministrative 27,913 30,637 (8.9 ) % 113,167 123,438 (8.3 ) %expenses

Depreciationand 7,860 7,794 0.8 % 31,189 28,723 8.6 %amortization

Totaloperating 159,841 134,217 19.1 % 612,165 546,301 12.1 %expenses

Operating 7,709 27,719 (72.2 ) % 194,689 186,633 4.3 %income

Other income (expense):

Interest 246 2,036 (87.9 ) % 2,597 10,657 (75.6 ) %income

Interest (1,704 ) (2,205 ) (22.7 ) % (8,016 ) (7,647 ) 4.8 %expense

Income beforeincome tax 6,251 27,550 (77.3 ) % 189,270 189,643 (0.2 ) %expense

Income tax 1,966 7,155 (72.5 ) % 51,033 38,544 32.4 %expense

Net income $ 4,285 $ 20,395 (79.0 ) % $ 138,237 $ 151,099 (8.5 ) %

Lessdistributedandundistributed (78 ) (224 ) (65.2 ) % (782 ) (1,759 ) (55.5 ) %earningsallocated toparticipatingsecurities

Net incomeallocated to $ 4,207 $ 20,171 (79.1 ) % $ 137,455 $ 149,340 (8.0 ) %common shares



Net income pershare of common stock

Basic $ 0.11 $ 0.51 (78.4 ) % $ 3.57 $ 3.72 (4.0 ) %

Diluted $ 0.11 $ 0.51 (78.4 ) % $ 3.54 $ 3.70 (4.3 ) %

____________________________________

^ Revenues are comprised of gross billings less WSEE payroll costs as follows:(1)

Three Months Ended Dec. 31, Year Ended Dec. 31,

(in thousands) 2020 2019 2020 2019



Gross billings $ 7,812,448 $ 7,407,460 $ 28,168,611 $ 27,212,010

Less: WSEE payroll 6,756,113 6,332,370 23,881,607 22,897,206 cost

Revenues $ 1,056,335 $ 1,075,090 $ 4,287,004 $ 4,314,804

Insperity, Inc.

KEY FINANCIAL AND STATISTICAL DATA

Three Months Ended Dec. 31,

Year Ended Dec. 31,

2020

2019

Change

2020

2019

Change

Average WSEEs paid

239,232

243,715

(1.8

)

%

234,223

235,547

(0.6

)

%

Statistical data(per WSEE per month)

Revenues(1)

$

1,472

$

1,470

0.1

%

$

1,525

$

1,527

(0.1

)

%

Gross profit

233

221

5.4

%

287

259

10.8

%

Operating expenses

223

183

21.9

%

218

193

13.0

%

Operating income

11

38

(71.1

)

%

69

66

4.5

%

Net income

6

28

(78.6

)

%

49

53

(7.5

)

%

____________________________________

Insperity, Inc.

KEY FINANCIAL AND STATISTICAL DATA



Three Months Ended Dec. 31, Year Ended Dec. 31,

2020 2019 Change 2020 2019 Change



Average WSEEs paid 239,232 243,715 (1.8 ) % 234,223 235,547 (0.6 ) %



Statistical data(per WSEE per month):

Revenues^(1) $ 1,472 $ 1,470 0.1 % $ 1,525 $ 1,527 (0.1 ) %

Gross profit 233 221 5.4 % 287 259 10.8 %

Operating expenses 223 183 21.9 % 218 193 13.0 %

Operating income 11 38 (71.1 ) % 69 66 4.5 %

Net income 6 28 (78.6 ) % 49 53 (7.5 ) %

____________________________________

^ Revenues per WSEE per month are comprised of gross billings per WSEE per(1) month less WSEE payroll costs per WSEE per month follows:

Three Months Ended Dec. 31, Year Ended Dec. 31,

(per WSEE per month) 2020 2019 2020 2019



Gross billings $ 10,885 $ 10,131 $ 10,022 $ 9,627

Less: WSEE payroll cost 9,413 8,661 8,497 8,100

Revenues $ 1,472 $ 1,470 $ 1,525 $ 1,527

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 Definition Benefit of Non-GAAP MeasureMeasure

Non-bonus payroll cost is a non-GAAP financial measure that excludes Our management refers to non-bonus payroll the impact of bonus cost in analyzing, reporting and payrolls paid to our forecasting our workers' compensation WSEEs. costs.

Non-bonus payrollcost Bonus payroll cost We include these non-GAAP financial varies from period to measures because we believe they are useful period, but has no to investors in allowing for greater direct impact to our transparency related to the costs incurred ultimate workers' under our current workers' compensation compensation costs program. under the current program.

Excludes funds associated with:

Adjusted ? federal and statecash, cash income taxequivalents withholdings,andmarketable ? employment taxes,securities ? other payroll deductions, and

? client prepayments.



Represents net income computed in accordance with GAAP, plus:

? interest expense,EBITDA ? income tax expense, and

? depreciation and amortization expense.



Represents EBITDA plus:

? non-cash stock based We believe that the exclusion of the compensation, identified items helps us reflect the fundamentals of our underlying businessAdjusted ? costs associated with model and analyze results against ourEBITDA a one-time tax reform expectations, against prior periods, and to bonus paid to corporate plan for future periods by focusing on our employees, and underlying operations. We believe that the adjusted results provide relevant and ? charitable donations useful information for investors because to Hurricane Harvey they allow investors to view performance in relief efforts. 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 Represents net income lenders to assess our leverage and ability computed in accordance to make interest payments. with GAAP, excluding:

? non-cash stock based compensation,Adjustednet income ? costs associated with a one-time tax reform bonus paid to corporate employees, and

? charitable donations to Hurricane Harvey relief efforts.



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

? non-cash stock based compensation,AdjustedEPS ? 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 2020 2019 2020 2019thousands,except perWSEE per $ WSEE $ WSEE $ WSEE $ WSEEmonth)



Payroll $ 6,756,113 $ 9,414 $ 6,332,370 $ 8,661 $ 23,881,607 $ 8,497 $ 22,897,206 $ 8,100 cost

Less:Bonus 1,302,335 1,815 1,029,342 1,408 3,238,284 1,152 2,880,680 1,019 payrollcost

Non-bonuspayroll $ 5,453,778 $ 7,599 $ 5,303,028 $ 7,253 $ 20,643,323 $ 7,345 $ 20,016,526 $ 7,081 cost

% Changeperiod 2.8 % 4.8 % 12.4 % 2.3 % 3.1 % 3.7 % 14.4 % 1.5 %overperiod

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

December December(in thousands) 31, 31, 2020 2019



Cash, cash equivalents and marketable securities $ 589,375 $ 402,070

Less:

Amounts payable for withheld federal and state income 341,988 234,553 taxes, employment taxes and other payroll deductions

Client prepayments 35,328 59,612

Adjusted cash, cash equivalents and marketable $ 212,059 $ 107,905 securities

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 2020 2019month) $ WSEE $ WSEE



Net income $ 4,285 $ 6 $ 20,395 $ 28

Income tax expense 1,966 3 7,155 9

Interest expense 1,704 2 2,205 3

Depreciation and amortization 7,860 11 7,794 11

EBITDA 15,815 22 37,549 51

Stock-based compensation 22,035 31 3,180 5

Adjusted EBITDA $ 37,850 $ 53 $ 40,729 $ 56

% Change period over period (7.1 ) % (5.4 ) % (14.4 ) % (22.2 ) %

(in thousands, except per WSEE per month)

Year Ended December 31,

2020

2019

2018

2017

2016

$

WSEE

$

WSEE

$

WSEE

$

WSEE

$

WSEE

Net income

$

138,237

$

49

$

151,099

$

53

$

135,413

$

54

$

84,402

$

38

$

65,991

$

33

Income tax expense

51,033

19

38,544

14

46,947

19

45,739

21

39,186

19

Interest expense

8,016

3

7,647

3

4,668

2

3,213

1

2,396

1

Depreciation and amortization

31,189

11

28,723

10

22,842

9

18,182

9

16,644

9

EBITDA

228,475

82

226,013

80

209,870

84

151,536

69

124,217

62

Stock-based compensation

60,145

21

23,993

8

20,425

8

24,345

11

16,643

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

Adjusted EBITDA

$

288,620

$

103

$

250,006

$

88

$

239,601

$

95

$

177,681

$

81

$

141,183

$

71

% Change year over year

15.4

%

17.0

%

4.3

%

(7.4

)

%

34.8

%

17.3

%

25.9

%

14.1

%

28.3

%

12.7

%

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

Year Ended December 31,(in thousands,except per WSEE 2020 2019 2018 2017 2016per month) $ WSEE $ WSEE $ WSEE $ WSEE $ WSEE



Net income $ 138,237 $ 49 $ 151,099 $ 53 $ 135,413 $ 54 $ 84,402 $ 38 $ 65,991 $ 33

Income tax expense 51,033 19 38,544 14 46,947 19 45,739 21 39,186 19

Interest expense 8,016 3 7,647 3 4,668 2 3,213 1 2,396 1

Depreciation and 31,189 11 28,723 10 22,842 9 18,182 9 16,644 9 amortization

EBITDA 228,475 82 226,013 80 209,870 84 151,536 69 124,217 62

Stock-based 60,145 21 23,993 8 20,425 8 24,345 11 16,643 8 compensation

One-time tax - - - - 9,306 3 - - - - reform bonus

Charitabledonations to - - - - - - 2,000 1 - - Hurricane Harveyrelief efforts

Other - - - - - - (200 ) - - -

Stockholder - - - - - - - - 323 1 advisory expenses

Adjusted EBITDA $ 288,620 $ 103 $ 250,006 $ 88 $ 239,601 $ 95 $ 177,681 $ 81 $ 141,183 $ 71

% Change year over 15.4 % 17.0 % 4.3 % (7.4 ) % 34.8 % 17.3 % 25.9 % 14.1 % 28.3 % 12.7 %year

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

Three Months Ended Year Ended Dec. 31, Dec. 31,

(in thousands) 2020 2019 2020 2019



Net income $ 4,285 $ 20,395 $ 138,237 $ 151,099

Non-GAAP adjustments:

Stock-based compensation 22,035 3,180 60,145 23,993

Total non-GAAP adjustments 22,035 3,180 60,145 23,993

Tax effect of non-GAAP (6,934 ) (826 ) (17,068 ) (5,643 ) adjustments

Adjusted net income $ 19,386 $ 22,749 $ 181,314 $ 169,449

% Change period over period (14.8 ) % (21.1 ) % 7.0 % 7.6 %

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

Three Months Ended Year Ended Dec. 31, Dec. 31,

2020 2019 2020 2019



Diluted EPS $ 0.11 $ 0.51 $ 3.54 $ 3.70

Non-GAAP adjustments:

Stock-based compensation 0.56 0.08 1.54 0.59

Total non-GAAP adjustments 0.56 0.08 1.54 0.59

Tax effect on non-GAAP (0.18 ) (0.02 ) (0.44 ) (0.14 ) adjustments

Adjusted EPS $ 0.49 $ 0.57 $ 4.64 $ 4.15

% Change period over period (14.0 ) % (17.4 ) % 11.8 % 10.7 %

The following is a reconciliation of GAAP to non-GAAP financial measures for first quarter and full year 2021 guidance:

Q1 2021 Full Year 2021

(in millions, except per share amounts) Guidance Guidance



Net income $47 - $61 $102 - $139

Income tax expense 17 - 22 37- 50

Interest expense 2 8

Depreciation and amortization 9 41

EBITDA 75 - 94 188 - 238

Stock-based compensation 9 37

Adjusted EBITDA $84 - $103 $225 - $275



Diluted EPS $1.20 - $1.55 $2.58 - $3.51

Non-GAAP adjustments:

Stock-based compensation 0.23 0.94

Total non-GAAP adjustments 0.23 0.94

Tax effect (0.06) (0.25)

Adjusted EPS $1.37 - $1.72 $3.27 - $4.20

View source version on businesswire.com: https://www.businesswire.com/news/home/20210211005910/en/

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