Business Wire | Aug 2, 2021 04:16PM EDT

Insperity Announces Second Quarter Results

Aug. 02, 2021

HOUSTON--(BUSINESS WIRE)--Aug. 02, 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 second quarter ended Jun. 30, 2021:

* Q2 average number of WSEEs paid and revenues up 7% and 19%, respectively * Q2 net income and diluted EPS of $25.2 million and $0.65, respectively * Q2 adjusted EBITDA and adjusted EPS of $60.2 million and $0.91, respectively * YTD net income and diluted EPS of $87.1 million and $2.24, respectively * YTD adjusted EBITDA and adjusted EPS of $164.4 million and $2.72, respectively

Second Quarter Results

The average number of worksite employees ("WSEEs") paid per month in Q2 2021 increased 7% to 243,270 WSEEs. WSEEs paid from new sales and net gains from hiring in our client base drove the accelerated growth above the high end of our expectations. Client retention remained at our historical high levels, averaging 99% for the quarter. Revenues in Q2 2021 increased 19% to $1.2 billion on the 7% increase in paid worksite employees and a 12% increase in revenue per WSEE, which includes a 6% increase in pricing and the non-recurrence of the 2020 FICA deferral credits and customer comprehensive service fee credits.

"We are pleased with our strong results and successful execution of our plan over the first half of this year," said Paul J. Sarvadi, Insperity chief executive officer and chairman. "Over the balance of 2021, we expect to invest and build upon our strong momentum in order to capitalize on our exceptional market opportunity in the years ahead."

Gross profit for Q2 2021 totaled $199.6 million and included the growth in paid worksite employees and revenue per worksite employee above targeted levels and favorable results from our workers' compensation program. The 9% decline in gross profit from Q2 of the prior year was primarily attributable to unusually low benefit costs in Q2 2020 due to the deferral of care at the onset of the pandemic. In Q2 2021, higher benefit costs were driven by increased utilization of our health plan, including care previously deferred during the height of the pandemic and COVID-19 related vaccination, testing and treatment costs. The impact of these higher benefit costs was partially offset by improved results in our payroll tax area, as state unemployment tax rates received during Q2 came in lower than our estimates and also included the receipt of $11 million of federal payroll tax refunds related to prior years.

Operating expenses increased 12% over Q2 2020, however increased just 8% when excluding performance-based compensation. Second quarter 2021 operating costs reflected continued growth investments, including an increase in marketing costs associated with lead generation activity and our SalesForce implementation. While we have reinstituted travel for certain employees and events, these costs, along with other personnel and G&A costs continue to be managed at historically low levels as the economy and our growth recovers from the pandemic.

For the second quarter of 2021, reported net income and diluted earnings per share ("EPS") were $25.2 million and $0.65, respectively. Adjusted EBITDA decreased 35% to $60.2 million and adjusted EPS decreased 41% to $0.91. The year over year earnings comparisons to the second quarter of 2020 reflect unusually low benefits costs in that period due to low utilization of our health plan during the onset of the pandemic.

"We are pleased with our performance throughout the uncertainty of the pandemic, continuing our profitability and reestablishing our growth momentum," said Douglas S. Sharp, Insperity senior vice president of finance, chief financial officer and treasurer. "This has positioned us to continue to invest in our long-term growth while providing strong return to our shareholders, including the recent increase in our dividend and our ongoing share repurchase program."

Year-to-Date Results

Revenues for the first six months of 2021 increased 11% to $2.5 billion on a 2% increase in paid worksite employees and a 9% increase in revenue per WSEE. Gross profit for the first six months of 2021 decreased 1% to $451.0 million. Operating expenses increased 12% to $332.0 million over the 2020 period.

For the six months ended June 30, 2021, reported net income and diluted EPS were $87.1 million and $2.24, respectively. Adjusted EPS decreased 16% over the first six months of 2020 to $2.72. Adjusted EBITDA decreased 15% over the first six months of 2020 to $164.4 million.

Net income per WSEE per month decreased 26% from $82 in the 2020 period to $61 in the 2021 period. Adjusted EBITDA per WSEE per month decreased 17% from $138 in the 2020 period to $115 in the 2021 period.

Cash outlays in the first six months of 2021 included the repurchase of approximately 438,000 shares of stock at a cost of $38.5 million, dividends totaling $32.8 million and capital expenditures of $20.7 million. Adjusted cash totaled $213 million at June 30, 2021 and $130 million remains available under our $500 million credit facility.

2021 Guidance

The company also announced its updated guidance for 2021, including the third 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.

Q3 2021 Full Year 2021



Average WSEEs paid^(a) 253,800 - 256,100 247,100 - 249,500

Year-over-year increase 9.5% - 10.5% 5.5% - 6.5%



Adjusted EPS $0.74 - $0.93 $4.00 - $4.59

Year-over-year increase (19)% - 2% (14)% - (1)%(decrease)



Adjusted EBITDA (in millions) $52 - $62 $258 - $288

Year-over-year increase (10)% - 8% (11)% - 0%(decrease)

(a) Q3 2021 guidance for average WSEEs paid represents 4.3% to 5.3% sequentialgrowth compared to Q2 2021.

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 1411119. 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. 1411119. 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 "anticipates," "expects," "intends," "plans," "projects," "believes," "estimates," "likely," "possibly," "probably," "could," "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 as a result of data theft, cyberattacks or security vulnerabilities; * 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) June 30, 2021 December 31, 2020



Assets

Cash and cash equivalents $ 455,387 $ 554,846

Restricted cash 46,128 45,522

Marketable securities 34,597 34,529

Accounts receivable, net 595,836 392,746

Prepaid insurance 17,143 10,164

Other current assets 47,070 39,461

Income taxes receivable 5,128 -

Total current assets 1,201,289 1,077,268

Property and equipment, net 219,611 216,256

Right of use leased assets 66,463 60,663

Prepaid health insurance 9,000 9,000

Deposits 211,512 194,231

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

Deferred income taxes, net 442 9,603

Other assets 7,060 4,548

Total assets $ 1,728,084 $ 1,584,276



Liabilities and stockholders' equity

Accounts payable $ 4,063 $ 6,203

Payroll taxes and other payroll deductions 262,975 377,960 payable

Accrued worksite employee payroll cost 529,881 334,836

Accrued health insurance costs 29,064 32,685

Accrued workers' compensation costs 49,845 48,186

Accrued corporate payroll and commissions 63,901 44,277

Other accrued liabilities 62,960 60,777

Total current liabilities 1,002,689 904,924

Accrued workers' compensation cost, net of 192,703 195,239 current

Long-term debt 369,400 369,400

Operating lease liabilities, net of current 69,736 64,289

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

Total noncurrent liabilities 638,133 635,220

Stockholders' equity:

Common stock 555 555

Additional paid-in capital 94,396 95,528

Treasury stock, at cost (635,627 ) (626,984 )

Retained earnings 627,938 575,033

Total stockholders' equity 87,262 44,132

Total liabilities and stockholders' equity $ 1,728,084 $ 1,584,276

Insperity, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands, except per share amounts)

Three Months Ended June 30,

Six Months Ended June 30,

2021

2020

Change

2021

2020

Change

Operating results:

Revenues(1)

$

1,185,371

$

993,366

19.3

%

$

2,472,206

$

2,222,849

11.2

%

Payroll taxes, benefits and workers' compensation costs

985,817

773,117

27.5

%

2,021,207

1,768,578

14.3

%

Gross profit

199,554

220,249

(9.4

)%

450,999

454,271

(0.7

)%

Salaries, wages and payroll taxes

94,362

90,710

4.0

%

197,437

177,211

11.4

%

Stock-based compensation

13,781

10,694

28.9

%

25,603

17,246

48.5

%

Commissions

8,251

7,475

10.4

%

15,970

15,935

0.2

%

Advertising

8,975

5,720

56.9

%

14,297

10,553

35.5

%

General and administrative expenses

29,211

24,755

18.0

%

60,847

59,608

2.1

%

Depreciation and amortization

9,751

7,908

23.3

%

17,798

15,510

14.8

%

Total operating expenses

164,331

147,262

11.6

%

331,952

296,063

12.1

%

Operating income

35,223

72,987

(51.7

)%

119,047

158,208

(24.8

)%

Other income (expense):

Interest income

1,436

369

289.2

%

1,979

2,248

(12.0

)%

Interest expense

(1,975

)

(2,219

)

(11.0

)%

(3,574

)

(4,581

)

(22.0

)%

Income before income tax expense

34,684

71,137

(51.2

)%

117,452

155,875

(24.6

)%

Income tax expense

9,530

19,286

(50.6

)%

30,376

41,932

(27.6

)%

Net income

$

25,154

$

51,851

(51.5

)%

$

87,076

$

113,943

(23.6

)%

Less distributed and undistributed earnings allocated to participating securities

(37

)

(276

)

(86.6

)%

(193

)

(724

)

(73.3

)%

Net income allocated to common shares

$

25,117

$

51,575

(51.3

)%

$

86,883

$

113,219

(23.3

)%

Net income per share of common stock

Basic

$

0.65

$

1.34

(51.5

)%

$

2.26

$

2.93

(22.9

)%

Diluted

$

0.65

$

1.33

(51.1

)%

$

2.24

$

2.91

(23.0

)%

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

Insperity, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in thousands, Three Months Ended June 30, Six Months Ended June 30,except pershare amounts) 2021 2020 Change 2021 2020 Change

Operating results:

Revenues^(1) $ 1,185,371 $ 993,366 19.3 % $ 2,472,206 $ 2,222,849 11.2 %

Payroll taxes,benefits andworkers' 985,817 773,117 27.5 % 2,021,207 1,768,578 14.3 %compensationcosts

Gross profit 199,554 220,249 (9.4 ) 450,999 454,271 (0.7 ) % %

Salaries,wages and 94,362 90,710 4.0 % 197,437 177,211 11.4 %payroll taxes

Stock-based 13,781 10,694 28.9 % 25,603 17,246 48.5 %compensation

Commissions 8,251 7,475 10.4 % 15,970 15,935 0.2 %

Advertising 8,975 5,720 56.9 % 14,297 10,553 35.5 %

General andadministrative 29,211 24,755 18.0 % 60,847 59,608 2.1 %expenses

Depreciationand 9,751 7,908 23.3 % 17,798 15,510 14.8 %amortization

Totaloperating 164,331 147,262 11.6 % 331,952 296,063 12.1 %expenses

Operating 35,223 72,987 (51.7 ) 119,047 158,208 (24.8 )income % %

Other income (expense):

Interest 1,436 369 289.2 % 1,979 2,248 (12.0 )income %

Interest (1,975 ) (2,219 ) (11.0 ) (3,574 ) (4,581 ) (22.0 )expense % %

Income before ) )income tax 34,684 71,137 (51.2 % 117,452 155,875 (24.6 %expense

Income tax 9,530 19,286 (50.6 ) 30,376 41,932 (27.6 )expense % %

Net income $ 25,154 $ 51,851 (51.5 ) $ 87,076 $ 113,943 (23.6 ) % %

Lessdistributedandundistributed (37 ) (276 ) (86.6 ) (193 ) (724 ) (73.3 )earnings % %allocated toparticipatingsecurities

Net income ) )allocated to $ 25,117 $ 51,575 (51.3 % $ 86,883 $ 113,219 (23.3 %common shares



Net income per share of common stock

Basic $ 0.65 $ 1.34 (51.5 ) $ 2.26 $ 2.93 (22.9 ) % %

Diluted $ 0.65 $ 1.33 (51.1 ) $ 2.24 $ 2.91 (23.0 ) % %

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

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

2021

2020

2021

2020

Gross billings

$

7,637,851

$

6,355,683

$

15,688,273

$

13,792,437

Less: WSEE payroll cost

6,452,480

5,362,317

13,216,067

11,569,588

Revenues

$

1,185,371

$

993,366

$

2,472,206

$

2,222,849

Three Months Ended June Six Months Ended June 30, 30,

(in thousands) 2021 2020 2021 2020



Gross billings $ 7,637,851 $ 6,355,683 $ 15,688,273 $ 13,792,437

Less: WSEE payroll 6,452,480 5,362,317 13,216,067 11,569,588cost

Revenues $ 1,185,371 $ 993,366 $ 2,472,206 $ 2,222,849

Insperity, Inc.

KEY FINANCIAL AND STATISTICAL DATA

(Unaudited)

Three Months Ended June 30,

Six Months Ended June 30,

2021

2020

Change

2021

2020

Change

Average WSEEs paid

243,270

227,894

6.7

%

238,220

232,954

2.3

%

Statistical data (per WSEE per month):

Revenues(1)

$

1,624

$

1,453

11.8

%

$

1,730

$

1,590

8.8

%

Gross profit

273

322

(15.2

)%

316

325

(2.8

)%

Operating expenses

225

215

4.7

%

232

212

9.4

%

Operating income

48

107

(55.1

)%

83

113

(26.5

)%

Net income

34

76

(55.3

)%

61

82

(25.6

)%

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

Insperity, Inc.

KEY FINANCIAL AND STATISTICAL DATA

(Unaudited)

Three Months Ended June 30, Six Months Ended June 30,

2021 2020 Change 2021 2020 Change



Average 243,270 227,894 6.7 % 238,220 232,954 2.3 %WSEEs paid

Statisticaldata (per WSEE per month):

Revenues^ $ 1,624 $ 1,453 11.8 % $ 1,730 $ 1,590 8.8 %(1)

Gross 273 322 (15.2 ) 316 325 (2.8 )profit % %

Operating 225 215 4.7 % 232 212 9.4 %expenses

Operating 48 107 (55.1 ) 83 113 (26.5 )income % %

Net income 34 76 (55.3 ) 61 82 (25.6 ) % %

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

Three Months Ended June 30,

Six Months Ended June 30,

(per WSEE per month)

2021

2020

2021

2020

Gross billings

$

10,466

$

9,296

$

10,976

$

9,868

Less: WSEE payroll cost

8,842

7,843

9,246

8,278

Revenues

$

1,624

$

1,453

$

1,730

$

1,590

Three Months Ended June Six Months Ended June 30, 30,

(per WSEE per month) 2021 2020 2021 2020

Gross billings $ 10,466 $ 9,296 $ 10,976 $ 9,868

Less: WSEE payroll cost 8,842 7,843 9,246 8,278

Revenues $ 1,624 $ 1,453 $ 1,730 $ 1,590

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 expenses

Represents operating expenses excluding the impact of the following:

? non-cash stock-based compensation, and

? depreciation and amortization expense.

EBITDA

Represents net income computed in accordance with GAAP, plus:

? interest expense,

? income tax expense, and

? depreciation and amortization expense.

Adjusted EBITDA

Represents EBITDA plus:

? non-cash stock-based compensation.

Adjusted net income

Represents net income computed in accordance with GAAP, excluding:

? non-cash stock-based compensation.

Adjusted EPS

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

? non-cash stock-based compensation.

Insperity, Inc.

Non-GAAP Financial Measures

(Unaudited)

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

Non-GAAP Definition Benefit of Non-GAAP MeasureMeasure

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

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

Excludes funds associated with:

Adjusted ? federal and statecash, cash income taxequivalents withholdings,and marketable ? 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 computed in accordance to plan for future periods by focusing on with GAAP, plus: our underlying operations. We believe that the adjusted results provide relevant and ? interest expense, useful information for investors becauseEBITDA they allow investors to view performance ? income tax expense, in 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 amortization expense. our lenders to assess our leverage and ability to make interest payments.

Represents EBITDAAdjusted plus:EBITDA ? 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 June 30,

Six Months Ended June 30,

(in thousands, except per WSEE per month)

2021

2020

2021

2020

Per WSEE

Per WSEE

Per WSEE

Per WSEE

Payroll cost

$

6,452,480

$

8,842

$

5,362,317

$

7,843

$

13,216,067

$

9,246

$

11,569,588

$

8,278

Less: Bonus payroll cost

796,154

1,092

453,121

662

2,216,629

1,551

1,504,089

1,076

Non-bonus payroll cost

$

5,656,326

$

7,750

$

4,909,196

$

7,181

$

10,999,438

$

7,695

$

10,065,499

$

7,202

% Change period over period

15.2

%

7.9

%

0.6

%

2.4

%

9.3

%

6.8

%

4.7

%

2.9

%

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

Three Months Ended June 30, Six Months Ended June 30,

(in 2021 2020 2021 2020thousands, except perWSEE per Per WSEE Per WSEE Per WSEE Per WSEEmonth)



Payroll $ 6,452,480 $ 8,842 $ 5,362,317 $ 7,843 $ 13,216,067 $ 9,246 $ 11,569,588 $ 8,278 cost

Less:Bonus 796,154 1,092 453,121 662 2,216,629 1,551 1,504,089 1,076 payroll cost

Non-bonuspayroll $ 5,656,326 $ 7,750 $ 4,909,196 $ 7,181 $ 10,999,438 $ 7,695 $ 10,065,499 $ 7,202 cost

% Changeperiod 15.2 % 7.9 % 0.6 % 2.4 % 9.3 % 6.8 % 4.7 % 2.9 %over period

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

(in thousands)

June 30, 2021

December 31, 2020

Cash, cash equivalents and marketable securities

$

489,984

$

589,375

Less:

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

226,727

341,988

Client prepayments

50,420

35,328

Adjusted cash, cash equivalents and marketable securities

$

212,837

$

212,059

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

(in thousands) June 30, December 2021 31, 2020



Cash, cash equivalents and marketable securities $ 489,984 $ 589,375

Less:

Amounts payable for withheld federal and stateincome taxes, employment taxes and other payroll 226,727 341,988 deductions

Client prepayments 50,420 35,328

Adjusted cash, cash equivalents and marketable $ 212,837 $ 212,059 securities

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 June 30,

Six Months Ended June 30,

2021

2020

2021

2020

Per WSEE

Per WSEE

Per WSEE

Per WSEE

Net income

$

25,154

$

34

$

51,851

$

76

$

87,076

$

61

$

113,943

$

82

Income tax expense

9,530

13

19,286

28

30,376

21

41,932

30

Interest expense

1,975

3

2,219

3

3,574

3

4,581

3

Depreciation and amortization

9,751

14

7,908

12

17,798

12

15,510

11

EBITDA

46,410

64

81,264

119

138,824

97

175,966

126

Stock-based compensation

13,781

18

10,694

16

25,603

18

17,246

12

Adjusted EBITDA

$

60,191

$

82

$

91,958

$

135

$

164,427

$

115

$

193,212

$

138

% Change period over period

(34.5

)%

(39.3

)%

62.2

%

66.7

%

(14.9

)%

(16.7

)%

22.2

%

20.0

%

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

(in Three Months Ended June 30, Six Months Ended June 30,thousands,except per 2021 2020 2021 2020WSEE permonth) Per WSEE Per WSEE Per WSEE Per WSEE



Net income $ 25,154 $ 34 $ 51,851 $ 76 $ 87,076 $ 61 $ 113,943 $ 82

Income tax 9,530 13 19,286 28 30,376 21 41,932 30 expense

Interest 1,975 3 2,219 3 3,574 3 4,581 3 expense

Depreciationand 9,751 14 7,908 12 17,798 12 15,510 11 amortization

EBITDA 46,410 64 81,264 119 138,824 97 175,966 126

Stock-based 13,781 18 10,694 16 25,603 18 17,246 12 compensation

Adjusted $ 60,191 $ 82 $ 91,958 $ 135 $ 164,427 $ 115 $ 193,212 $ 138 EBITDA

% Change ) ) ) )period over (34.5 % (39.3 % 62.2 % 66.7 % (14.9 % (16.7 % 22.2 % 20.0 %period

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

Three Months Ended June 30,

Six Months Ended June 30,

(in thousands)

2021

2020

2021

2020

Net income

$

25,154

$

51,851

$

87,076

$

113,943

Non-GAAP adjustments:

Stock-based compensation

13,781

10,694

25,603

17,246

Tax effect

(3,643

)

(2,899

)

(6,621

)

(4,650

)

Total non-GAAP adjustments, net

10,138

7,795

18,982

12,596

Adjusted net income

$

35,292

$

59,646

$

106,058

$

126,539

% Change period over period

(40.8

)%

73.1

%

(16.2

)%

9.0

%

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

Three Months Ended June Six Months Ended June 30, 30,

(in thousands) 2021 2020 2021 2020



Net income $ 25,154 $ 51,851 $ 87,076 $ 113,943

Non-GAAP adjustments:

Stock-based compensation 13,781 10,694 25,603 17,246

Tax effect (3,643 ) (2,899 ) (6,621 ) (4,650 )

Total non-GAAP 10,138 7,795 18,982 12,596 adjustments, net

Adjusted net income $ 35,292 $ 59,646 $ 106,058 $ 126,539

% Change period over (40.8 ) 73.1 % (16.2 ) 9.0 %period % %

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

Three Months Ended June 30,

Six Months Ended June 30,

2021

2020

2021

2020

Diluted EPS

$

0.65

$

1.33

$

2.24

$

2.91

Non-GAAP adjustments:

Stock-based compensation

0.35

0.27

0.66

0.44

Tax effect

(0.09)

(0.06)

(0.18)

(0.11)

Total non-GAAP adjustments, net

$

0.26

$

0.21

$

0.48

$

0.33

Adjusted EPS

$

0.91

$

1.54

$

2.72

$

3.24

% Change period over period

(40.9)

%

85.5

%

(16.0)

%

15.3

%

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

Three Months Ended Six Months Ended June June 30, 30,

2021 2020 2021 2020



Diluted EPS $ 0.65 $ 1.33 $ 2.24 $ 2.91

Non-GAAP adjustments:

Stock-based compensation 0.35 0.27 0.66 0.44

Tax effect (0.09) (0.06) (0.18) (0.11)

Total non-GAAP adjustments, $ 0.26 $ 0.21 $ 0.48 $ 0.33 net

Adjusted EPS $ 0.91 $ 1.54 $ 2.72 $ 3.24

% Change period over period (40.9) % 85.5 % (16.0) % 15.3 %

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

(in millions, except per share amounts)

Q3 2021 Guidance

Full Year 2021 Guidance

Net income

$21 - $28

$123 - $146

Income tax expense

8 - 11

44 - 51

Interest expense

2

8

Depreciation and amortization

10

39

EBITDA

41 - 51

214 - 244

Stock-based compensation

11

44

Adjusted EBITDA

$52 - $62

$258 - $288

Diluted net income per share of common stock

$0.55 - $0.74

$3.17 - $3.76

Non-GAAP adjustments:

Stock-based compensation

0.27

1.13

Tax effect

(0.08)

(0.30)

Total non-GAAP adjustments, net

0.19

0.83

Adjusted EPS

$0.74 - $0.93

$4.00 - $4.59

View source version on businesswire.com: https://www.businesswire.com/news/home/20210802005706/en/

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