Insperity, Inc. (NYSE:NSP) Q4 2018 Earnings Conference Call - Final Transcript
Feb 11, 2019 • 10:00 am ET
Good morning. My name is Kyle and I'll be your conference operator for today. I would like to welcome everyone to the Insperity Fourth Quarter 2018 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator Instructions) At this time, I would like to introduce today's speakers. Joining us are Paul Sarvadi, Chairman of the Board and Chief Executive Officer; Douglas Sharp, Senior Vice President of Finance, Chief Financial Officer and Treasurer.
At this time, I'd like to turn the call over to Douglas Sharp. Mr. Sharp, please go ahead.
Douglas S. Sharp
Thank you. We appreciate you joining us this morning. Let me begin by outlining our plan for this morning's call. First, I'm going to discuss the details of our fourth quarter and full year 2018 financial results. Paul will then recap the 2018 year and discuss the major initiatives of our 2019 plan. I will return to provide our financial guidance for the first quarter and full year 2019. We will then end the call with a question-and-answer session.
Now, before we begin, I would like to remind you that Mr. Sarvadi or I may make forward-looking statements during today's call, which are subject to risks, uncertainties and assumptions. In addition, some of our discussion may include non-GAAP financial measures. For a more detailed discussion of the risks and uncertainties that could cause actual results to differ materially from any forward-looking statements, and reconciliations of non-GAAP financial measures, please see the Company's public filings, including the Form 8-K filed today, which are available on our website.
Now let's discuss the details behind our fourth quarter results. We once again achieved record high operating results, reporting a 25% increase in adjusted EPS over Q4 2017 to $0.69, and a 24% increase in adjusted EBITDA to $47.6 million. These results were driven by continued acceleration of worksite employee growth and effective management of pricing, direct cost programs and operating costs.
As for the fourth quarter details, average paid worksite employees increased by 17% over Q4 2017, at the high end of our forecasted range. Client retention remains strong, again averaging over 99% for the quarter. As for our sales efforts, worksite employees paid from new sales increased by 36% on a 13% increase in the average number of trained Business Performance Advisors on continued sales momentum in both our core and mid-market client segments.
As Paul will discuss in detail in a few minutes, this momentum continued through year-end with the successful fall sales campaign and client renewal period, leading to a strong starting point for 2019. Gross profit increased by 13% over Q4 of 2017, on continued pricing strength and favorable results in our workers' compensation and payroll tax direct cost areas. Positive results in these areas was partially offset by slightly higher than expected Q4 medical claims.
Our fourth quarter adjusted operating expenses increased 9% over Q4 of 2017 to $129 million and included a