Insperity, Inc. (NYSE:NSP) Q1 2019 Earnings Conference Call - Final Transcript
Apr 29, 2019 • 10:00 am ET
Good morning. My name is Colandra and I will be your conference operator today. At this time, I would like to welcome everyone to the Insperity First Quarter 2019 Earnings Conference Call. All lines have placed on mute to prevent any background noise. After the speakers remarks, there will be a question-and-answer session.
At this time, I would like to introduce today's speakers. Joining us are Paul Sarvadi, Chairman of the Board and Chief Executive Officer; and Douglas Sharp, Senior Vice President of Finance, Chief Financial Officer and Treasurer.
And 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 behind our first quarter 2019 financial results. Paul will then comment on the key drivers behind our Q1 results and our plans for the remainder of the year. I will return to provide our financial guidance for the second quarter and an update to the full year 2019 guidance. 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 myself 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 discussions 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 another strong quarter in which we achieved record highs of $1.98 in adjusted EPS, a 40% increase over Q1 of 2018, and adjusted EBITDA of $101 million, an increase of 21%. These results were driven by worksite employee growth in the mid-teens and effective management of pricing, direct cost programs and operating costs.
Average paid worksite employees increased 15.3% over Q1 of 2018, slightly above the midpoint of our forecasted range. This quarter's growth was driven by both the enrollment of new clients coming off of our successful 2018 fall sales campaign and a low level of client attrition during our heavy Q1 client renewal period.
Client attrition totaled only 7.9% during the quarter, which is consistent with the prior year. Additionally, we experienced net hiring by our client base during the quarter, although at lower levels than that experienced in Q1 of 2018. Gross profit increased by 14% over Q1 of 2018 and included favorable results achieved in our workers' compensation and benefit cost areas, and stronger pricing. A slight decrease in gross profit per worksite employee per month from the $340 reported in Q1 of 2018 to $335 in Q1 of 2019 was expected due to the low benefit costs reported in the prior period.
First quarter adjusted operating expenses