Insperity, Inc. (NYSE:NSP) Q2 2019 Earnings Conference Call - Final Transcript

Jul 29, 2019 • 10:00 am ET

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Insperity, Inc. (NYSE:NSP) Q2 2019 Earnings Conference Call - Final Transcript

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Presentation
Executive
Douglas S. Sharp

year 2019 expected benefit cost trend of only 2% to 2.5%. Second quarter adjusted operating expenses increased 12% and include continued investments in our growth, including costs associated with the increase in the number of Business Performance Advisors, and the opening of eight new sales offices over the past four quarters. We have also continued to invest in service personnel with client growth and our client facing, back-office and cybersecurity technology.

Our effective tax rate in Q2 came in at 28%, similar to our estimate for the latter half of this year, equating to an estimated full year rate of 22%. As for our balance sheet and cash flow, we ended the second quarter with $131 million of adjusted cash, this is up from $129 million at December 31, 2018 after the repurchase of 315,000 shares of stock at a total cost of $39 million, of which 85,000 shares were repurchased in Q2 at a cost of $10 million. Additionally, we have paid $25 million in cash dividends during the first half of 2019, and this reflects our continued focus on providing shareholder return as we invest in the long-term growth of our business.

Now, at this time, I'd like to turn the call over to Paul.

Executive
Paul J. Sarvadi

Thank you, Doug. Today, I plan to cover three topics of interest to shareholders. I'll start by highlighting significant developments in Q2. Second, I'll cover our plan for the balance of the year to continue our momentum. Third, I'll discuss our strong competitive position supporting our long-term strategy. The second quarter included continued solid execution of our 2019 operating plan, contrasted with two significant challenges from factors outside our direct control.

New sales, client retention, expansion and product development all progressed on plan, while lower net hiring in our client base and frequency in severity of large healthcare claims presented impediments. Despite these challenges, our business model demonstrated substantial resiliency and our earnings outlook is on track for the year. New sales were 101% of forecast over the first half of the year, as sales efficiency stayed the same despite an 11% increase in the average number of Business Performance Advisors. This demonstrates our success in hiring and training new Business Performance Advisors, which is the key driver for future growth. Our marketing success is continuing to support our growth and expansion. In the second quarter total worksite employees sold [Phonetic] for marketing lease increased 25%, over the same period last year.

Total visitors to our website increased 13%, while organic search traffic was up 22%. In addition, consistent with our 2019 goal of extending our authority in the HR space, unique visitors to our blog was up 25%. Client retention was above 99% in the quarter, continuing to demonstrate the value of our unique offering to small and medium sized businesses, and our ability to sustain excellent service levels in a high growth mode. This is particularly impressive, considering we are in our fifth consecutive year with double digit growth in worksite