Business Wire | May 3, 2021 04:15PM EDT

Insperity Announces First Quarter Results

May 03, 2021

HOUSTON--(BUSINESS WIRE)--May 03, 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 first quarter ended Mar. 31, 2021:

* Q1 revenue increased 5% to $1.3 billion * Q1 net income and diluted EPS of $61.9 million and $1.59, respectively * Q1 adjusted EPS up 7% to $1.82 * Q1 adjusted EBITDA up 3% to $104.2 million

First Quarter Results

For the first quarter of 2021, reported net income and diluted earnings per share ("EPS") were $61.9 million and $1.59, respectively. Adjusted EBITDA increased 3% to $104.2 million and adjusted EPS increased 7% to $1.82 over the first quarter of 2020, significantly above our expectations.

The average number of worksite employees ("WSEEs") paid per month in Q1 2021 was 233,170 WSEEs, which was at the mid-point of our expected range. As for the three drivers of our growth, WSEEs paid from new sales and client retention were both in line with our forecast, while net gains from hiring in our client base exceeded our expectations. Revenue in Q1 2021 increased 5% to $1.3 billion on a 7% increase in revenue per WSEE, partially offset by an expected 2% decline in the average number of paid WSEEs.

"We are pleased with our strong Q1 results and our growth momentum driven by solid sales, client retention and growth in the client base in the face of the ongoing pandemic," said Paul J. Sarvadi, Insperity chief executive officer and chairman. "The diligent and effective support provided by Insperity employees has helped our resilient client base weather the storm of the pandemic and emerge with confidence in the future. The combination of solid execution and strong demand for our services positions Insperity well for growth acceleration over the balance of the year, as we lay the foundation to return to double-digit unit growth and profitability."

Gross profit increased by 7% over Q1 2020 to $251.4 million. This increase exceeded our forecast, as pricing was above targeted levels and each of our direct costs areas experienced lower than expected cost trends. As for benefit costs, healthcare utilization continued to gradually return to normal coming off of the earlier stages of the pandemic. However, when combined with COVID-19 related vaccination, testing and treatment costs, overall costs came in slightly below our Q1 budget. Our workers' compensation program continued to produce favorable results on our ongoing claims management and, to a lesser degree, a favorable impact on the frequency of claims from the recent "work from home" status of many of our clients' employees. The payroll tax area also produced gross profit contributions above budget, due to state unemployment tax rates received during Q1 coming in lower than our estimates and the receipt of a $5.5 million federal payroll tax refund related to a prior year.

Operating expenses increased 13% over Q1 2020, however, were flat when excluding performance-based compensation. First quarter 2021 operating costs reflected continued growth investments, including a 7% increase in the number of trained Business Performance Advisors, initial costs related to our SalesForce implementation and an increase in marketing costs associated with lead generation activity. These investments were partially offset by pandemic-related cost reductions, including reduced travel expenses.

Cash outlays during Q1 2021 included the repurchase of 340,000 shares of stock at a cost of $29.7 million, cash dividends totaling $15.5 million and capital expenditures of $12.1 million. We ended the quarter with $196.7 million of adjusted cash, cash equivalents and marketable securities, and $369.4 million outstanding under our $500 million credit facility.

"With our strong Q1 results, and positive trends in our growth, pricing and direct costs, we are raising our earnings outlook for the remainder of 2021," said Douglas S. Sharp, Insperity senior vice president of finance, chief financial officer and treasurer. "With our solid balance sheet and the expectation for continued strong cash flow, we plan to continue to invest in our growth, while providing attractive returns to our shareholders through our dividend and share repurchase programs."

2021 Guidance

The company also announced its updated guidance for 2021, including the second quarter of 2021. 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.

Q2 2021 Full Year 2021



Average WSEEs paid^(a) 239,300 - 241,600 243,600 - 248,300

Year-over-year increase 5% - 6% 4% - 6%



Adjusted EPS^(b) $0.60 - $0.70 $3.83 - $4.40

Year-over-year decrease (61)% - (55)% (17)% - (5)%



Adjusted EBITDA (in millions)^(b) $44 - $49 $250 - $280

Year-over-year decrease (52)% - (47)% (13)% - (3)%

____________________________________

(a)

Q2 2021 guidance for average WSEEs paid represents 2.6% to 3.6% sequential growth compared to Q1 2021.

(b)

Q2 2021 Adjusted EPS and Adjusted EBITDA comparisons to Q2 2020 reflect the unusually low benefits costs incurred during Q2 2020 due to health care deferrals and stay at home orders during the COVID-19 pandemic onset.

Definition of Key Metrics

Average WSEEs paid - Determined by calculating the company's cumulative worksite employees 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.

Conference Call and Webcast

Insperity will be hosting a conference call today at 5 p.m. ET to discuss these results, and the guidance discussed in this press release, and answer questions from investment analysts. To listen in, call 877-651-0053 and use conference i.d. number 4536156. 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. 4536156. The webcast will be archived for one year.

About Insperity

Since 1986, Insperity's mission has been to help businesses succeed so communities prosper. Offering the most comprehensive suite of scalable HR solutions available in the marketplace, Insperity is defined by an unrivaled breadth and depth of services and level of care. Through an optimal blend of premium HR service and technology, Insperity delivers the administrative relief, reduced liabilities and better benefit solutions that businesses need for sustained growth. With 2020 revenues of $4.3 billion and more than 80 offices throughout the U.S., Insperity is currently making a difference in thousands of businesses and communities 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 employees, 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.

____________________________________

(a) Q2 2021 guidance for average WSEEs paid represents 2.6% to 3.6% sequential growth compared to Q1 2021.

Q2 2021 Adjusted EPS and Adjusted EBITDA comparisons to Q2 2020 reflect(b) the unusually low benefits costs incurred during Q2 2020 due to health care deferrals and stay at home orders during the COVID-19 pandemic onset.

Definition of Key Metrics

Average WSEEs paid - Determined by calculating the company's cumulative worksite employees 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.

Conference Call and Webcast

Insperity will be hosting a conference call today at 5 p.m. ET to discuss these results, and the guidance discussed in this press release, and answer questions from investment analysts. To listen in, call 877-651-0053 and use conference i.d. number 4536156. 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. 4536156. The webcast will be archived for one year.

About Insperity

Since 1986, Insperity's mission has been to help businesses succeed so communities prosper. Offering the most comprehensive suite of scalable HR solutions available in the marketplace, Insperity is defined by an unrivaled breadth and depth of services and level of care. Through an optimal blend of premium HR service and technology, Insperity delivers the administrative relief, reduced liabilities and better benefit solutions that businesses need for sustained growth. With 2020 revenues of $4.3 billion and more than 80 offices throughout the U.S., Insperity is currently making a difference in thousands of businesses and communities 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 employees, 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

(Unaudited)

(in thousands) March 31, December 31, 2021 2020



Assets

Cash and cash equivalents $ 494,777 $ 554,846

Restricted cash 46,353 45,522

Marketable securities 34,292 34,529

Accounts receivable, net 561,244 392,746

Prepaid insurance 57,670 10,164

Other current assets 53,718 39,461

Income taxes receivable 3,451 -

Total current assets 1,251,505 1,077,268

Property and equipment, net 220,262 216,256

Right of use leased assets 67,688 60,663

Prepaid health insurance 9,000 9,000

Deposits 200,967 194,231

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

Deferred income taxes, net - 9,603

Other assets 6,955 4,548

Total assets $ 1,769,084 $ 1,584,276



Liabilities and stockholders' equity

Accounts payable $ 5,841 $ 6,203

Payroll taxes and other payroll deductions 310,519 377,960 payable

Accrued worksite employee payroll cost 503,334 334,836

Accrued health insurance costs 72,136 32,685

Accrued workers' compensation costs 49,696 48,186

Accrued corporate payroll and commissions 41,720 44,277

Other accrued liabilities 61,105 60,777

Total current liabilities 1,044,351 904,924

Accrued workers' compensation cost, net of 190,336 195,239 current

Long-term debt 369,400 369,400

Operating lease liabilities, net of current 71,716 64,289

Deferred income taxes, net 13,343 -

Other accrued liabilities, net of current 6,294 6,292

Total noncurrent liabilities 651,089 635,220

Stockholders' equity:

Common stock 555 555

Additional paid-in capital 81,329 95,528

Treasury stock, at cost (628,391 ) (626,984 )

Retained earnings 620,151 575,033

Total stockholders' equity 73,644 44,132

Total liabilities and stockholders' equity $ 1,769,084 $ 1,584,276

Insperity, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands, except per share amounts)

Three Months Ended March 31,

2021

2020

Change

Operating results:

Revenues(1)

$

1,286,835

$

1,229,483

4.7

%

Payroll taxes, benefits and workers' compensation costs

1,035,390

995,461

4.0

%

Gross profit

251,445

234,022

7.4

%

Salaries, wages and payroll taxes

103,075

86,501

19.2

%

Stock-based compensation

11,822

6,552

80.4

%

Commissions

7,719

8,460

(8.8

)%

Advertising

5,322

4,833

10.1

%

General and administrative expenses

31,636

34,853

(9.2

)%

Depreciation and amortization

8,047

7,602

5.9

%

Total operating expenses

167,621

148,801

12.6

%

Operating income

83,824

85,221

(1.6

)%

Other income (expense):

Interest income

543

1,879

(71.1

)%

Interest expense

(1,599

)

(2,362

)

(32.3

)%

Income before income tax expense

82,768

84,738

(2.3

)%

Income tax expense

20,846

22,646

(7.9

)%

Net income

$

61,922

$

62,092

(0.3

)%

Less distributed and undistributed earnings allocated to participating securities

(197

)

(462

)

(57.4

)%

Net income allocated to common shares

$

61,725

$

61,630

0.2

%

Net income per share of common stock

Basic

$

1.62

$

1.59

1.9

%

Diluted

$

1.59

$

1.58

0.6

%

Insperity, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

Three Months Ended March 31,(in thousands, except per share amounts) 2021 2020 Change

Operating results:

Revenues^(1) $ 1,286,835 $ 1,229,483 4.7 %

Payroll taxes, benefits and workers' 1,035,390 995,461 4.0 %compensation costs

Gross profit 251,445 234,022 7.4 %

Salaries, wages and payroll taxes 103,075 86,501 19.2 %

Stock-based compensation 11,822 6,552 80.4 %

Commissions 7,719 8,460 (8.8 )%

Advertising 5,322 4,833 10.1 %

General and administrative expenses 31,636 34,853 (9.2 )%

Depreciation and amortization 8,047 7,602 5.9 %

Total operating expenses 167,621 148,801 12.6 %

Operating income 83,824 85,221 (1.6 )%

Other income (expense):

Interest income 543 1,879 (71.1 )%

Interest expense (1,599 ) (2,362 ) (32.3 )%

Income before income tax expense 82,768 84,738 (2.3 )%

Income tax expense 20,846 22,646 (7.9 )%

Net income $ 61,922 $ 62,092 (0.3 )%

Less distributed and undistributedearnings allocated to participating (197 ) (462 ) (57.4 )%securities

Net income allocated to common shares $ 61,725 $ 61,630 0.2 %



Net income per share of common stock

Basic $ 1.62 $ 1.59 1.9 %

Diluted $ 1.59 $ 1.58 0.6 %

____________________________________

(1)

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

____________________________________

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

Three Months Ended March 31,

(in thousands)

2021

2020

Gross billings

$

8,050,422

$

7,436,754

Less: WSEE payroll cost

6,763,587

6,207,271

Revenues

$

1,286,835

$

1,229,483

Three Months Ended March 31,

(in thousands) 2021 2020



Gross billings $ 8,050,422 $ 7,436,754

Less: WSEE payroll cost 6,763,587 6,207,271

Revenues $ 1,286,835 $ 1,229,483

Insperity, Inc.

KEY FINANCIAL AND STATISTICAL DATA

(Unaudited)

Three Months Ended March 31,

2021

2020

Change

Average WSEEs paid

233,170

238,014

(2.0)

%

Statistical data (per WSEE per month):

Revenues(1)

$

1,840

$

1,722

6.9

%

Gross profit

359

328

9.5

%

Operating expenses

240

208

15.4

%

Operating income

120

119

0.8

%

Net income

89

87

2.3

%

Insperity, Inc.

KEY FINANCIAL AND STATISTICAL DATA

(Unaudited)

Three Months Ended March 31,

2021 2020 Change



Average WSEEs paid 233,170 238,014 (2.0) %

Statistical data (per WSEE per month):

Revenues^(1) $ 1,840 $ 1,722 6.9 %

Gross profit 359 328 9.5 %

Operating expenses 240 208 15.4 %

Operating income 120 119 0.8 %

Net income 89 87 2.3 %

____________________________________

(1)

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

____________________________________

(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 March 31,

(per WSEE per month)

2021

2020

Gross billings

$

11,509

$

10,415

Less: WSEE payroll cost

9,669

8,693

Revenues

$

1,840

$

1,722

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.

Three Months Ended March 31,

(per WSEE per month) 2021 2020

Gross billings $ 11,509 $ 10,415

Less: WSEE payroll cost 9,669 8,693

Revenues $ 1,840 $ 1,722

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

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

Excludes funds associated with:

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

? client prepayments.



Represents operating expenses excluding the impact of theAdjusted following:operatingexpenses ? non-cash stock-based compensation, and

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

Represents EBITDA plus:AdjustedEBITDA ? non-cash stock-based compensation.



Represents net income computed in accordanceAdjusted with GAAP, excluding:net income ? non-cash stock-based compensation.



Represents diluted net income per shareAdjusted computed in accordanceEPS with GAAP, excluding:

? non-cash stock-based compensation.

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

Three Months Ended March 31,

(in thousands, except per WSEE 2021 2020per month) $ WSEE $ WSEE



Payroll cost $ 6,763,587 $ 9,669 $ 6,207,271 $ 8,693

Less: Bonus payroll cost 1,420,475 2,031 1,050,968 1,472

Non-bonus payroll cost $ 5,343,112 $ 7,638 $ 5,156,303 $ 7,221

% Change period over period 3.6 % 5.8 % 9.1 % 3.3 %

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

(in thousands)

March 31, 2021

December 31, 2020

Cash, cash equivalents and marketable securities

$

529,069

$

589,375

Less:

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

273,499

341,998

Client prepayments

58,918

35,328

Adjusted cash, cash equivalents and marketable securities

$

196,652

$

212,049

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

(in thousands) March 31, December 2021 31, 2020



Cash, cash equivalents and marketable securities $ 529,069 $ 589,375

Less:

Amounts payable for withheld federal and state income 273,499 341,998taxes, employment taxes and other payroll deductions

Client prepayments 58,918 35,328

Adjusted cash, cash equivalents and marketable securities $ 196,652 $ 212,049

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

(in thousands, except per WSEE per month)

Three Months Ended March 31,

2021

2020

$

WSEE

$

WSEE

Net income

$

61,922

$

89

$

62,092

$

87

Income tax expense

20,846

30

22,646

32

Interest expense

1,599

2

2,362

3

Depreciation and amortization

8,047

11

7,602

11

EBITDA

92,414

132

94,702

133

Stock-based compensation

11,822

17

6,552

9

Adjusted EBITDA

$

104,236

$

149

$

101,254

$

142

% Change period over period

2.9

4.9

%

(0.2

)%

(5.3

)%

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

Three Months Ended March 31,(in thousands, except per WSEE permonth) 2021 2020

$ WSEE $ WSEE



Net income $ 61,922 $ 89 $ 62,092 $ 87

Income tax expense 20,846 30 22,646 32

Interest expense 1,599 2 2,362 3

Depreciation and amortization 8,047 11 7,602 11

EBITDA 92,414 132 94,702 133

Stock-based compensation 11,822 17 6,552 9

Adjusted EBITDA $ 104,236 $ 149 $ 101,254 $ 142

% Change period over period 2.9 4.9 % (0.2 ) (5.3 )% %

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

Three Months Ended March 31,

(in thousands)

2021

2020

Net income

$

61,922

$

62,092

Non-GAAP adjustments:

Stock-based compensation

11,822

6,552

Total non-GAAP adjustments

11,822

6,552

Tax effect

(2,978

)

(1,751

)

Adjusted net income

$

70,766

$

66,893

% Change period over period

5.8

%

(18.0

) %

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

Three Months Ended March 31,

(in thousands) 2021 2020



Net income $ 61,922 $ 62,092

Non-GAAP adjustments:

Stock-based compensation 11,822 6,552

Total non-GAAP adjustments 11,822 6,552

Tax effect (2,978 ) (1,751 )

Adjusted net income $ 70,766 $ 66,893

% Change period over period 5.8 % (18.0 ) %

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

Three Months Ended March 31,

2021

2020

Diluted EPS

$

1.59

$

1.58

Non-GAAP adjustments:

Stock-based compensation

0.30

0.17

Total non-GAAP adjustments

0.30

0.17

Tax effect

(0.07

)

(0.05

)

Adjusted EPS

$

1.82

$

1.70

% Change period over period

7.1

%

(14.1

) %

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

Three Months Ended March 31,

2021 2020



Diluted EPS $ 1.59 $ 1.58

Non-GAAP adjustments:

Stock-based compensation 0.30 0.17

Total non-GAAP adjustments 0.30 0.17

Tax effect (0.07 ) (0.05 )

Adjusted EPS $ 1.82 $ 1.70

% Change period over period 7.1 % (14.1 ) %

Following is a reconciliation of GAAP to non-GAAP financial measures for second quarter and full year 2021 guidance:

(in millions, except per share amounts)

Q2 2021 Guidance

Full Year 2021 Guidance

Net income

$14 - $18

$118 - $139

Income tax expense

5 - 6

42 - 51

Interest expense

2

7

Depreciation and amortization

10

40

EBITDA

31 - 36

207 - 237

Stock-based compensation

13

43

Adjusted EBITDA

$44 - $49

$250 - $280

Diluted net income per share of common stock

$0.36 - $0.46

$3.03 - $3.60

Non-GAAP adjustments:

Stock-based compensation

0.33

1.10

Total non-GAAP adjustments

0.33

1.10

Tax effect

(0.09)

(0.30)

Adjusted EPS

$0.60 - $0.70

$3.83 - $4.40

View source version on businesswire.com: https://www.businesswire.com/news/home/20210503005660/en/

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