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| 8-K - 8-K - INSPERITY, INC. | a09302018-8xkearningsrelea.htm |
Exhibit 99.1
Insperity Announces Record Third Quarter Results
HOUSTON – Nov. 1, 2018 – Insperity, Inc. (NYSE: NSP), a leading provider of human resources and business performance solutions for America’s best businesses, today reported results for the third quarter ended Sep. 30, 2018:
• | Q3 WSEE growth accelerates to 15%, driving 19% gross profit increase |
• | Q3 net income and EPS up 89% and 87%, to $36 million and $0.86, respectively |
• | Q3 adjusted EPS up 68% to $0.96 |
• | Q3 adjusted EBITDA up 43% to $62 million |
• | YTD EPS and adjusted EPS up 60% and 61%, respectively |
Third Quarter Results
Third quarter 2018 net income and diluted earnings per share of $36.2 million and $0.86 represented increases of 89% and 87%, respectively, compared to the third quarter of 2017. Adjusted EPS was $0.96, a 68% increase over the third quarter of 2017. Adjusted EBITDA increased 43% over the third quarter of 2017 to $61.6 million.
“Our refined business model is continuing to generate outstanding growth and profitability as demonstrated by the recent quarter and year-to-date results,” said Paul J. Sarvadi, Insperity chairman and chief executive officer. “We are in an excellent position to continue double-digit growth and profitability as we look forward to 2019.”
Revenues increased 16% over the third quarter of 2017 to $925.1 million on a 15% increase in the average number of worksite employees (“WSEEs”) paid per month. An acceleration of WSEE growth throughout 2018 has been the result of increased new client sales in both our core and midmarket client segments, a continued high level of client retention and an improvement in net hiring of WSEEs by our client base.
Gross profit increased 19% over the third quarter of 2017 to $166.1 million. This increase was driven by the 15% WSEE growth and the effective pricing and management of our direct cost programs. Operating expenses increased 7% over the third quarter of 2017 to $117.9 million, as we leveraged various areas of the business while continuing to invest in our growth, technology and product and service offerings. Our growth investment has included the opening of six new sales offices in 2018, along with a 16% increase in the average number of Business Performance Advisors over the third quarter of 2017.
“Our year-to-date results, combined with our outlook for the fourth quarter, results in 33% adjusted EBITDA growth for 2018,” said Douglas S. Sharp, senior vice president of finance, chief financial officer and treasurer. “This would be our fourth year in a row with adjusted EBITDA growth in excess of 25% demonstrating strong execution of our long-term business plan.”
Year-to-Date Results
For the nine months ended Sep. 30, 2018, reported net income increased 61% over the first nine months of 2017 to $110.8 million, and diluted net income per share increased 60% to $2.63. Adjusted EPS increased 61% over the first nine months of 2017 to $3.06. Adjusted EBITDA increased 38% to $192.0 million.
Revenues for the first nine months of 2018 increased 16% to $2.9 billion, on a 14% increase in the average number of WSEEs paid per month over the 2017 period. Gross profit for the first nine months of 2018 increased 21% to $520.3 million. Operating expenses increased 16% to $373.9 million over the 2017 period and adjusted operating expenses increased 13% to $364.6 million.
Net income per WSEE per month increased 43% from $42 in the 2017 period to $60 in the 2018 period. Adjusted EBITDA per WSEE per month increased 21% from $86 in the 2017 period to $104 in the 2018 period.
Cash outlays in the first nine months of 2018 included the repurchase of approximately 212,000 shares of stock at a cost of $16.2 million, dividends totaling $25.2 million and capital expenditures of $21.5 million. Adjusted cash, cash equivalents and marketable securities at Sep. 30, 2018 were $166.5 million.
2018 Guidance
The company also announced its updated guidance for 2018, including the fourth quarter of 2018. 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.
Q4 2018 | Full Year 2018 | ||||||
Average WSEEs | 219,800 | — | 221,700 | 208,300 | — | 209,200 | |
Year-over-year increase | 16.0% | — | 17.0% | 14.0% | — | 14.5% | |
Adjusted EPS | $0.63 | — | $0.67 | $3.69 | — | $3.73 | |
Year-over-year increase | 15% | — | 22% | 51% | — | 52% | |
Adjusted EBITDA (in millions) | $44 | — | $46 | $236 | — | $238 | |
Year-over-year increase | 14% | — | 19% | 33% | — | 34% | |
Definition of Key Metrics
Average WSEEs - 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 and costs associated with a one-time tax reform bonus paid to corporate employees.
Adjusted EBITDA - Represents net income computed in accordance with GAAP, plus interest expense, income taxes, depreciation and amortization expense, non-cash stock-based compensation and costs associated with a one-time tax reform bonus paid to corporate employees.
Insperity will be hosting a conference call today at 10 a.m. ET to discuss these results, provide guidance for the fourth quarter and an update to the full year guidance, and answer questions from investment analysts. To listen in, call 877-651-0053 and use conference i.d. number 2768708. 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. 2768708. The webcast will be archived for one year.
About Insperity
Insperity, a trusted advisor to America’s best businesses for more than 32 years, provides an array of human resources and business solutions designed to help improve business performance. Insperity® Business Performance Advisors offer the most comprehensive suite of products and services available in the marketplace. Insperity delivers administrative relief, better benefits, reduced liabilities and a systematic way to improve productivity through its premier Workforce Optimization® solution. Additional company offerings include Human Capital Management, Payroll Services, Time and Attendance, Performance Management, Organizational Planning, Recruiting Services, Employment Screening, Expense Management, Retirement Services and Insurance Services. Insperity business performance solutions support more than 100,000 businesses with over 2 million employees. With 2017 revenues of $3.3 billion, Insperity operates in 71 offices throughout the United States. For more information, visit http://www.insperity.com.
Forward-Looking Statements
The statements contained herein that are not historical facts are forward-looking statements within the meaning of the federal securities laws (Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934). You can identify such forward-looking statements by the words “expects,” “intends,” “plans,” “projects,” “believes,” “estimates,” “likely,” “possibly,” “probably,” “goal,” “opportunity,” “objective,” “target,” “assume,” “outlook,” “guidance,” “predicts,” “appears,” “indicator” and similar expressions. Forward-looking statements involve a number of risks and uncertainties. In the normal course of business, Insperity, Inc., in an effort to help keep our stockholders and the public informed about our operations, may from time to time issue such forward-looking statements, either orally or in writing. Generally, these statements relate to business plans or strategies, projected or anticipated benefits or other consequences of such plans or strategies, or projections involving anticipated revenues, earnings, unit growth, profit per worksite employee, pricing, operating expenses or other aspects of operating results. We base the forward-looking statements on our expectations, estimates and projections at the time such statements are made. These statements are not guarantees of future performance and involve risks and uncertainties that we cannot predict. In addition, we have based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate. Therefore, the actual results of the future events described in such forward-looking statements could differ materially from those stated in such forward-looking statements. Among the factors that could cause actual results to differ materially are:
• | adverse economic conditions; |
• | regulatory and tax developments and possible adverse application of various federal, state and local regulations; |
• | the ability to secure competitive replacement contracts for health insurance and workers’ compensation insurance at expiration of current contracts; |
• | cancellation of client contracts on short notice, or the inability to renew client contracts or attract new clients; |
• | vulnerability to regional economic factors because of our geographic market concentration; |
• | 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; |
• | 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; |
• | our liability for worksite employee payroll, payroll taxes and benefits costs; |
• | our liability for disclosure of sensitive or private information; |
• | our ability to integrate or realize expected returns on our acquisitions; |
• | failure of our information technology systems; |
• | an adverse final judgment or settlement of claims against Insperity; and |
• | disruptions to our business resulting from the actions of certain stockholders. |
These factors are discussed in further detail in Insperity’s filings with the U.S. Securities and Exchange Commission. Any of these factors, or a combination of such factors, could materially affect the results of our operations and whether forward-looking statements we make ultimately prove to be accurate.
Except to the extent otherwise required by federal securities law, we do not undertake any obligation to update our forward-looking statements to reflect events or circumstances after the date they are made or to reflect the occurrence of unanticipated events.
SUMMARY FINANCIAL INFORMATION |
Insperity, Inc.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands) | September 30, 2018 | December 31, 2017 | |||||
Assets | |||||||
Cash and cash equivalents | $ | 328,299 | $ | 354,260 | |||
Restricted cash | 42,257 | 41,137 | |||||
Marketable securities | 37,576 | 1,960 | |||||
Accounts receivable, net | 400,001 | 333,981 | |||||
Prepaid insurance | 13,755 | 10,782 | |||||
Other current assets | 24,274 | 26,991 | |||||
Income taxes receivable | — | 9,824 | |||||
Total current assets | 846,162 | 778,935 | |||||
Property and equipment, net | 100,681 | 95,659 | |||||
Prepaid health insurance | 9,000 | 9,000 | |||||
Deposits | 157,568 | 159,515 | |||||
Goodwill and other intangible assets, net | 12,729 | 12,762 | |||||
Deferred income taxes, net | 4,874 | 4,283 | |||||
Other assets | 5,663 | 3,541 | |||||
Total assets | $ | 1,136,677 | $ | 1,063,695 | |||
Liabilities and stockholders’ equity | |||||||
Accounts payable | $ | 5,316 | $ | 6,447 | |||
Payroll taxes and other payroll deductions payable | 204,086 | 303,247 | |||||
Accrued worksite employee payroll cost | 340,115 | 267,402 | |||||
Accrued health insurance costs | 33,458 | 26,075 | |||||
Accrued workers’ compensation costs | 45,773 | 42,974 | |||||
Accrued corporate payroll and commissions | 43,849 | 52,595 | |||||
Other accrued liabilities | 24,600 | 27,741 | |||||
Income taxes payable | 61 | — | |||||
Total current liabilities | 697,258 | 726,481 | |||||
Accrued workers’ compensation cost | 183,099 | 166,493 | |||||
Long-term debt | 104,400 | 104,400 | |||||
Total noncurrent liabilities | 287,499 | 270,893 | |||||
Stockholders’ equity: | |||||||
Common stock | 555 | 555 | |||||
Additional paid-in capital | 32,047 | 25,337 | |||||
Treasury stock, at cost | (262,187 | ) | (256,363 | ) | |||
Retained earnings | 381,505 | 296,792 | |||||
Total stockholders’ equity | 151,920 | 66,321 | |||||
Total liabilities and stockholders’ equity | $ | 1,136,677 | $ | 1,063,695 | |||
SUMMARY FINANCIAL INFORMATION |
Insperity, Inc.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
____________________________________
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
(in thousands, except per share amounts) | 2018 | 2017 | Change | 2018 | 2017 | Change | |||||||||||
Operating results: | |||||||||||||||||
Revenues(1) | $ | 925,126 | $ | 795,513 | 16.3 | % | $ | 2,861,793 | $ | 2,473,729 | 15.7 | % | |||||
Payroll taxes, benefits and workers’ compensation costs | 759,072 | 655,547 | 15.8 | % | 2,341,475 | 2,043,864 | 14.6 | % | |||||||||
Gross profit | 166,054 | 139,966 | 18.6 | % | 520,318 | 429,865 | 21.0 | % | |||||||||
Salaries, wages and payroll taxes | 70,552 | 65,223 | 8.2 | % | 226,486 | 189,138 | 19.7 | % | |||||||||
Stock-based compensation | 5,769 | 6,584 | (12.4 | )% | 14,656 | 16,390 | (10.6 | )% | |||||||||
Commissions | 6,818 | 5,675 | 20.1 | % | 19,863 | 15,815 | 25.6 | % | |||||||||
Advertising | 3,846 | 3,476 | 10.6 | % | 13,996 | 13,623 | 2.7 | % | |||||||||
General and administrative expenses | 25,294 | 24,513 | 3.2 | % | 82,565 | 75,315 | 9.6 | % | |||||||||
Depreciation and amortization | 5,642 | 4,696 | 20.1 | % | 16,335 | 13,355 | 22.3 | % | |||||||||
Total operating expenses | 117,921 | 110,167 | 7.0 | % | 373,901 | 323,636 | 15.5 | % | |||||||||
Operating income | 48,133 | 29,799 | 61.5 | % | 146,417 | 106,229 | 37.8 | % | |||||||||
Other income (expense): | |||||||||||||||||
Interest income | 2,028 | 1,015 | 99.8 | % | 5,291 | 2,158 | 145.2 | % | |||||||||
Interest expense | (1,174 | ) | (894 | ) | 31.3 | % | (3,352 | ) | (2,320 | ) | 44.5 | % | |||||
Income before income tax expense | 48,987 | 29,920 | 63.7 | % | 148,356 | 106,067 | 39.9 | % | |||||||||
Income tax expense | 12,780 | 10,718 | 19.2 | % | 37,598 | 37,219 | 1.0 | % | |||||||||
Net income | $ | 36,207 | $ | 19,202 | 88.6 | % | $ | 110,758 | $ | 68,848 | 60.9 | % | |||||
Less distributed and undistributed earnings allocated to participating securities | (503 | ) | (337 | ) | 49.3 | % | (1,546 | ) | (1,233 | ) | 25.4 | % | |||||
Net income allocated to common shares | $ | 35,704 | $ | 18,865 | 89.3 | % | $ | 109,212 | $ | 67,615 | 61.5 | % | |||||
Net income per share of common stock | |||||||||||||||||
Basic | $ | 0.86 | $ | 0.46 | 87.0 | % | $ | 2.64 | $ | 1.65 | 60.0 | % | |||||
Diluted | $ | 0.86 | $ | 0.46 | 87.0 | % | $ | 2.63 | $ | 1.64 | 60.4 | % | |||||
(1) | Revenues are comprised of gross billings less WSEE payroll costs as follows: |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||
Gross billings | $ | 5,810,779 | $ | 4,898,333 | $ | 17,284,477 | $ | 14,655,545 | |||||
Less: WSEE payroll cost | 4,885,653 | 4,102,820 | 14,422,684 | 12,181,816 | |||||||||
Revenues | $ | 925,126 | $ | 795,513 | $ | 2,861,793 | $ | 2,473,729 | |||||
SUMMARY FINANCIAL INFORMATION |
Insperity, Inc.
KEY FINANCIAL AND STATISTICAL DATA
(Unaudited)
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
2018 | 2017 | Change | 2018 | 2017 | Change | ||||||||||||
Average WSEE | 215,051 | 186,641 | 15.2 | % | 204,895 | 180,424 | 13.6 | % | |||||||||
Statistical data (per WSEE per month): | |||||||||||||||||
Revenues(1) | $ | 1,434 | $ | 1,421 | 0.9 | % | $ | 1,552 | $ | 1,523 | 1.9 | % | |||||
Gross profit | 257 | 250 | 2.8 | % | 282 | 265 | 6.4 | % | |||||||||
Operating expenses | 183 | 197 | (7.1 | )% | 203 | 199 | 2.0 | % | |||||||||
Operating income | 75 | 53 | 41.5 | % | 79 | 65 | 21.5 | % | |||||||||
Net income | 56 | 34 | 64.7 | % | 60 | 42 | 42.9 | % | |||||||||
(1) | Revenues per WSEE per month are comprised of gross billings per WSEE per month less WSEE payroll costs per WSEE per month follows: |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||
(per WSEE per month) | 2018 | 2017 | 2018 | 2017 | |||||||||
Gross billings | $ | 9,007 | $ | 8,748 | $ | 9,373 | $ | 9,025 | |||||
Less: WSEE payroll cost | 7,573 | 7,327 | 7,821 | 7,502 | |||||||||
Revenues | $ | 1,434 | $ | 1,421 | $ | 1,552 | $ | 1,523 | |||||
NON-GAAP FINANCIAL MEASURES |
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 period, 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 operating expense | Represents operating expenses excluding the impact of the following: • costs associated with a one-time tax reform bonus paid to corporate employees and • charitable donations to Hurricane Harvey relief efforts. | |
EBITDA | Represents net income computed in accordance with GAAP, plus: • interest expense, • income tax expense, and • depreciation and amortization expense. | |
Adjusted EBITDA | Represents EBITDA plus: • non-cash stock based compensation, • costs associated with a one-time tax reform bonus paid to corporate employees, and • charitable donations to Hurricane Harvey relief efforts. | |
Adjusted Net Income | Represents net income computed in accordance with GAAP, excluding: • non-cash stock based compensation, • costs associated with a one-time tax reform bonus paid to corporate employees, and • charitable donations to Hurricane Harvey relief efforts. | |
Adjusted EPS | Represents diluted net income per share computed in accordance with GAAP, excluding: • non-cash stock based compensation, • costs associated with a one-time tax reform bonus paid to corporate employees, and • charitable donations to Hurricane Harvey relief efforts. | |
NON-GAAP FINANCIAL MEASURES |
Following is a reconciliation of payroll cost (GAAP) to non-bonus payroll costs (non-GAAP):
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||
(in thousands, except per WSEE per month) | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||||
$ | WSEE | $ | WSEE | $ | WSEE | $ | WSEE | ||||||||||||||||||||
Payroll cost | $ | 4,885,653 | $ | 7,573 | $ | 4,102,820 | $ | 7,327 | $ | 14,422,684 | $ | 7,821 | $ | 12,181,816 | $ | 7,502 | |||||||||||
Less: Bonus payroll cost | 434,942 | 674 | 312,230 | 557 | 1,638,028 | 888 | 1,233,827 | 760 | |||||||||||||||||||
Non-bonus payroll cost | $ | 4,450,711 | $ | 6,899 | $ | 3,790,590 | $ | 6,770 | $ | 12,784,656 | $ | 6,933 | $ | 10,947,989 | $ | 6,742 | |||||||||||
% Change period over period | 17.4 | % | 1.9 | % | 12.9 | % | 2.2 | % | 16.8 | % | 2.8 | % | 12.0 | % | 1.5 | % | |||||||||||
Following is a reconciliation of cash, cash equivalents and marketable securities (GAAP) to adjusted cash, cash equivalents and marketable securities (non-GAAP):
(in thousands) | September 30, 2018 | December 31, 2017 | |||||
Cash, cash equivalents and marketable securities | $ | 365,875 | $ | 356,220 | |||
Less: | |||||||
Amounts payable for withheld federal and state income taxes, employment taxes and other payroll deductions | 181,329 | 271,547 | |||||
Client prepayments | 18,043 | 23,603 | |||||
Adjusted cash, cash equivalents and marketable securities | $ | 166,503 | $ | 61,070 | |||
Following is a reconciliation of operating expenses (GAAP) to adjusted operating expenses (non-GAAP):
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||
(in thousands, except per WSEE per month) | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||||
$ | WSEE | $ | WSEE | $ | WSEE | $ | WSEE | ||||||||||||||||||||
Operating expenses | $ | 117,921 | $ | 183 | $ | 110,167 | $ | 197 | $ | 373,901 | $ | 203 | $ | 323,636 | $ | 199 | |||||||||||
Less: | |||||||||||||||||||||||||||
One-time tax reform bonus | — | — | — | — | 9,306 | 5 | — | — | |||||||||||||||||||
Charitable donations to Hurricane Harvey relief efforts | — | — | 1,218 | 2 | — | — | 1,218 | 1 | |||||||||||||||||||
Adjusted operating expenses | $ | 117,921 | $ | 183 | $ | 108,949 | $ | 195 | $ | 364,595 | $ | 198 | $ | 322,418 | $ | 198 | |||||||||||
% Change period over period | 8.2 | % | (6.2 | )% | 14.7 | % | 4.3 | % | 13.1 | % | — | 11.6 | % | 0.5 | % | ||||||||||||
NON-GAAP FINANCIAL MEASURES |
Following is a reconciliation of net income (GAAP) to EBITDA (non-GAAP) and adjusted EBITDA (non-GAAP):
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||||||||||||
(in thousands, except per WSEE per month) | 2018 | 2017 | 2018 | 2017 | |||||||||||||||||||||||
$ | WSEE | $ | WSEE | $ | WSEE | $ | WSEE | ||||||||||||||||||||
Net income | $ | 36,207 | $ | 56 | $ | 19,202 | $ | 34 | $ | 110,758 | $ | 60 | $ | 68,848 | $ | 42 | |||||||||||
Income tax expense | 12,780 | 20 | 10,718 | 19 | 37,598 | 20 | 37,219 | 23 | |||||||||||||||||||
Interest expense | 1,174 | 2 | 894 | 2 | 3,352 | 2 | 2,320 | 1 | |||||||||||||||||||
Depreciation and amortization | 5,642 | 8 | 4,696 | 8 | 16,335 | 9 | 13,355 | 9 | |||||||||||||||||||
EBITDA | 55,803 | 86 | 35,510 | 63 | 168,043 | 91 | 121,742 | 75 | |||||||||||||||||||
Stock-based compensation | 5,769 | 9 | 6,584 | 12 | 14,656 | 8 | 16,390 | 10 | |||||||||||||||||||
Charitable donations to Hurricane Harvey relief efforts | — | — | 1,218 | 2 | — | — | 1,218 | 1 | |||||||||||||||||||
Other | — | — | (200 | ) | — | — | — | (200 | ) | — | |||||||||||||||||
One-time tax reform bonus | — | — | — | — | 9,306 | 5 | — | — | |||||||||||||||||||
Adjusted EBITDA | $ | 61,572 | $ | 95 | $ | 43,112 | $ | 77 | $ | 192,005 | $ | 104 | $ | 139,150 | $ | 86 | |||||||||||
% Change period over period | 42.8 | % | 23.4 | % | 37.5 | % | 24.2 | % | 38.0 | % | 20.9 | % | 17.8 | % | 7.5 | % | |||||||||||
Following reconciliation of net income (GAAP) to adjusted net income (non-GAAP):
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||
(in thousands) | 2018 | 2017 | 2018 | 2017 | |||||||||
Net income | $ | 36,207 | $ | 19,202 | $ | 110,758 | $ | 68,848 | |||||
Non-GAAP adjustments: | |||||||||||||
Stock-based compensation | 5,769 | 6,584 | 14,656 | 16,390 | |||||||||
Charitable donations to Hurricane Harvey relief efforts | — | 1,218 | — | 1,218 | |||||||||
Other | — | (200 | ) | — | (200 | ) | |||||||
One-time tax reform bonus | — | — | 9,306 | — | |||||||||
Total non-GAAP adjustments | 5,769 | 7,602 | 23,962 | 17,408 | |||||||||
Tax effect | (1,505 | ) | (2,723 | ) | (6,022 | ) | (6,262 | ) | |||||
Adjusted net income | $ | 40,471 | $ | 24,081 | $ | 128,698 | $ | 79,994 | |||||
% Change period over period | 68.1 | % | 44.3 | % | 60.9 | % | 24.1 | % | |||||
NON-GAAP FINANCIAL MEASURES |
Following is a reconciliation of diluted EPS (GAAP) to adjusted EPS (non-GAAP)(1):
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||
Diluted EPS | $ | 0.86 | $ | 0.46 | $ | 2.63 | $ | 1.64 | |||||
Non-GAAP adjustments: | |||||||||||||
Stock-based compensation | 0.14 | 0.16 | 0.35 | 0.39 | |||||||||
Charitable donations to Hurricane Harvey relief efforts | — | 0.03 | — | 0.03 | |||||||||
Other | — | (0.01 | ) | — | (0.01 | ) | |||||||
One-time tax reform bonus | — | — | 0.22 | — | |||||||||
Total non-GAAP adjustments | 0.14 | 0.18 | 0.57 | 0.41 | |||||||||
Tax effect | (0.04 | ) | (0.07 | ) | (0.14 | ) | (0.15 | ) | |||||
Adjusted EPS | $ | 0.96 | $ | 0.57 | $ | 3.06 | $ | 1.90 | |||||
% Change period over period | 68.4 | % | 46.2 | % | 61.1 | % | 26.2 | % | |||||
(1) | Amounts in 2017 adjusted to reflect the two-for-one split of our common stock effected on December 18, 2017 in the form of a stock dividend. |
The following is a reconciliation of GAAP to non-GAAP financial measures for fourth quarter and full year 2018 guidance:
(in millions, except per share amounts) | Q4 2018 Guidance | Full Year 2018 Guidance | ||||
Net income | $22 - $24 | $134 - $135 | ||||
Income tax expense | 9 | 46 - 47 | ||||
Interest expense | 1 | 5 | ||||
Depreciation and amortization | 6 | 22 | ||||
EBITDA | 38 - 40 | 207 - 209 | ||||
One-time tax reform bonus | — | 9 | ||||
Stock-based compensation | 6 | 20 | ||||
Adjusted EBITDA | $44 - $46 | $236 - $238 | ||||
Diluted net income per share of common stock | $0.53 - $0.57 | $3.17 - $3.21 | ||||
Non-GAAP adjustments: | ||||||
One-time tax reform bonus | — | 0.22 | ||||
Stock-based compensation | 0.14 | 0.48 | ||||
Total non-GAAP adjustments | 0.14 | 0.70 | ||||
Tax effect | (0.04 | ) | (0.18 | ) | ||
Adjusted EPS | $0.63 - $0.67 | $3.69 - $3.73 | ||||
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