Insperity, Inc. Files 10-Q for Period Ending March 31, 2024

TL;DR

<b>Insperity, Inc. has filed its Q1 2024 10-Q report, detailing financial performance and position as of March 31, 2024.</b>

AI Summary

INSPERITY, INC. (NSP) filed a Quarterly Report (10-Q) with the SEC on May 1, 2024. Insperity, Inc. filed a 10-Q report for the period ending March 31, 2024. The filing covers the first quarter of 2024. The company's fiscal year ends on December 31st. Insperity, Inc. was formerly known as Adminstaff Inc. The filing includes financial data for the periods ending March 31, 2024, December 31, 2023, and March 31, 2023.

Why It Matters

For investors and stakeholders tracking INSPERITY, INC., this filing contains several important signals. This 10-Q filing provides investors with the most recent quarterly financial information for Insperity, Inc., crucial for assessing performance trends and making informed investment decisions. Understanding the company's financial health and operational segments as presented in this report is key to evaluating its current market standing and future prospects.

Risk Assessment

Risk Level: low — INSPERITY, INC. shows low risk based on this filing. The filing is a standard quarterly report (10-Q) and does not indicate any immediate or significant financial distress or unusual events, suggesting a stable operational status.

Analyst Insight

Review the detailed financial statements and segment information within the 10-Q to understand Insperity's revenue streams, profitability, and any changes from previous periods.

Key Numbers

• 2024-03-31 — Period End Date (CONFORMED PERIOD OF REPORT)
• 2024-05-01 — Filing Date (FILED AS OF DATE)
• 7363 — SIC Code (STANDARD INDUSTRIAL CLASSIFICATION)
• DE — State of Incorporation (STATE OF INCORPORATION)
• 1231 — Fiscal Year End (FISCAL YEAR END)
• 2024-01-01 — Quarter Start Date (Reporting Period)
• 2024-03-31 — Quarter End Date (Reporting Period)

Key Players & Entities

• INSPERITY, INC. (company) — FILER
• NSP (company) — tk
• 10-Q (document) — ft
• 2024-05-01T00:00:00.000Z (date) — dt
• 2024-03-31 (date) — CONFORMED PERIOD OF REPORT
• 2024-05-01 (date) — FILED AS OF DATE
• 7363 (industry_code) — STANDARD INDUSTRIAL CLASSIFICATION
• DE (state) — STATE OF INCORPORATION

FAQ

Industry Context

Insperity, Inc. operates within the Help Supply Services industry (SIC 7363), providing human resources and related services.

Regulatory Implications

The filing is a standard Form 10-Q, a quarterly report required by the Securities and Exchange Commission (SEC) for publicly traded companies in the United States.

What Investors Should Do

1. Analyze the financial statements (balance sheet, income statement, cash flow) for the quarter ended March 31, 2024.
2. Examine any disclosures regarding business segments, risks, or legal proceedings.
3. Compare the Q1 2024 results with the corresponding period in 2023 to identify year-over-year trends.

Key Dates

• 2024-03-31: Quarterly Period End — End of the reporting period for the 10-Q filing.
• 2024-05-01: Filing Date — Date the 10-Q report was officially submitted to the SEC.

Year-Over-Year Comparison

This filing represents the first quarterly report for Insperity, Inc. in the fiscal year 2024, following the year-end report for 2023.

Key Financial Figures

• $0.01 — ange on which registered Common Stock, $0.01 par value per share NSP New York Stock
• $1 million — cipant's annual claim costs that exceed $1 million ("Individual Claims Limit"). Accordingl

Filing Documents

• nsp-20240331.htm (10-Q) — 712KB
• a03312024nsp-ex101sixthame.htm (EX-10.1) — 83KB
• a03312024nsp-ex311.htm (EX-31.1) — 13KB
• a03312024nsp-ex312.htm (EX-31.2) — 14KB
• a03312024nsp-ex321.htm (EX-32.1) — 5KB
• a03312024nsp-ex322.htm (EX-32.2) — 5KB
• nsp-20240331_g1.jpg (GRAPHIC) — 71KB
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• nsp-20240331_g9.jpg (GRAPHIC) — 30KB
• 0001000753-24-000034.txt (&nbsp;) — 4582KB
• nsp-20240331.xsd (EX-101.SCH) — 27KB
• nsp-20240331_cal.xml (EX-101.CAL) — 55KB
• nsp-20240331_def.xml (EX-101.DEF) — 57KB
• nsp-20240331_lab.xml (EX-101.LAB) — 310KB
• nsp-20240331_pre.xml (EX-101.PRE) — 189KB
• nsp-20240331_htm.xml (XML) — 440KB

Forward Looking Statements

Forward Looking Statements 4

, Item 1. Financial Statements

Part I, Item 1. Financial Statements 6 Condensed Consolidated Balance Sheets 6 Consolidated Statements of Income 7 Consolidated Statements of Cash Flows 8 Consolidated Statements of Stockholders' Equity 9

Notes to Consolidated Financial Statements

Notes to Consolidated Financial Statements 10

, Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

Part I, Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 18

, Item 3. Quantitative and Qualitative Disclosures about Market Risk

Part I, Item 3. Quantitative and Qualitative Disclosures about Market Risk 31

, Item 4. Controls and Procedures

Part I, Item 4. Controls and Procedures 31

, Item 1. Legal Proceedings

Part II, Item 1. Legal Proceedings 32

, Item 1A. Risk Factors

Part II, Item 1A. Risk Factors 32

, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 32

, Item 5. Other Information

Part II, Item 5. Other Information 32

, Item 6. Exhibits

Part II, Item 6. Exhibits 33

FORWARD LOOKING STATEMENTS

FORWARD LOOKING STATEMENTS The statements contained herein that are not historical facts are forward-looking statements within the meaning of 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; including our strategic partnership with Workday, Inc.; projected or anticipated benefits or other consequences of such plans or strategies; or projections involving anticipated revenues, earnings, average number of worksite employees ("WSEEs"), benefits and workers' compensation costs, or other operating results. We base these 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; failure to comply with or meet client expectations regarding certain COVID-19 relief programs

FORWARD LOOKING STATEMENTS

FORWARD LOOKING STATEMENTS 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, such as financial institutions, data centers or cloud service providers; our ability to fully realize the anticipated benefits of our strategic partnership and plans to develop a joint solution with Workday, Inc.; and our ability to integrate or realize expected returns on future product offerings, including through acquisitions, strategic partnerships, and investments. These factors are discussed in further detail in our Annual Report on Form 10-K for the year ended December 31, 2023 under "Item 1A. Risk Factors" in Part I and "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, and elsewhere in this report. 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 | 2024 First Quarter Form 10-Q 5

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS (Unaudited) PART I

Financial Statements

Item 1. Financial Statements CONDENSED CONSOLIDATED BALANCE SHEETS (in millions) March 31, 2024 December 31, 2023 Assets Cash and cash equivalents $ 667 $ 693 Restricted cash 61 57 Marketable securities 16 16 Accounts receivable, net 724 694 Prepaid insurance and related assets 37 7 Funds held for clients and other current assets 114 128 Total current assets 1,619 1,595 Property and equipment, net of accumulated depreciation 191 197 Right-of-use ("ROU") leased assets 56 57 Prepaid health insurance 9 9 Deposits – health insurance 8 8 Deposits – workers' compensation 204 198 Goodwill and other intangible assets, net 13 13 Deferred income taxes, net 6 20 Other assets 20 23 Total assets $ 2,126 $ 2,120 Liabilities and stockholders' equity Accounts payable $ 6 $ 11 Payroll taxes and other payroll deductions payable 489 566 Accrued worksite employee payroll costs 622 559 Accrued health insurance costs 71 46 Accrued workers' compensation costs 64 60 Accrued corporate payroll and commissions 55 64 Income taxes payable 15 3 Client funds liability and other accrued liabilities 84 127 Total current liabilities 1,406 1,436 Accrued workers' compensation costs, net of current 155 163 Long-term debt 369 369 Operating lease liabilities, net of current 56 58 Total noncurrent liabilities 580 590 Commitments and contingencies Common stock 1 1 Additional paid-in capital 172 185 Treasury stock, at cost ( 826 ) ( 831 ) Retained earnings 793 739 Total stockholders' equity 140 94 Total liabilities and stockholders' equity $ 2,126 $ 2,120 See accompanying notes. Insperity | 2024 First Quarter Form 10-Q 6

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS (Unaudited) CONSOLIDATED STATEMENTS OF INCOME Three Months Ended March 31, (in millions, except per share amounts) 2024 2023 Revenues $ 1,802 $ 1,770 Payroll taxes, benefits and workers' compensation costs 1,457 1,438 Gross profit 345 332 Salaries, wages and payroll taxes 140 125 Stock-based compensation 10 11 Commissions 12 11 Advertising 7 6 General and administrative expenses 57 48 Depreciation and amortization 11 10 Total operating expenses 237 211 Operating income 108 121 Other income (expense): Interest income 10 9 Interest expense ( 7 ) ( 6 ) Income before income tax expense 111 124 Income tax expense 32 29 Net income $ 79 $ 95 Net income per share of common stock Basic $ 2.11 $ 2.49 Diluted $ 2.08 $ 2.45 See accompanying notes. Insperity | 2024 First Quarter Form 10-Q 7

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS (Unaudited) CONSOLIDATED STATEMENTS OF CASH FLOWS Three Months Ended March 31, (in millions) 2024 2023 Cash flows from operating activities Net income $ 79 $ 95 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 11 10 Stock-based compensation 10 11 Deferred income taxes 14 17 Changes in operating assets and liabilities: Accounts receivable ( 30 ) 16 Prepaid insurance and related assets ( 30 ) ( 39 ) Other current assets ( 27 ) ( 12 ) Other assets and ROU assets 5 2 Accounts payable ( 5 ) 1 Payroll taxes and other payroll deductions payable ( 77 ) ( 60 ) Accrued worksite employee payroll costs 63 12 Accrued health insurance costs 25 26 Accrued workers' compensation costs ( 4 ) — Accrued corporate payroll, commissions and other accrued liabilities ( 15 ) ( 46 ) Income taxes payable/receivable 12 7 Total adjustments ( 48 ) ( 55 ) Net cash provided by operating activities 31 40 Cash flows from investing activities Marketable securities: Purchases ( 6 ) ( 14 ) Proceeds from maturities 6 12 Property and equipment purchases ( 5 ) ( 7 ) Net cash used in investing activities ( 5 ) ( 9 ) Cash flows from financing activities Purchase of treasury stock ( 23 ) ( 35 ) Dividends paid ( 21 ) ( 20 ) Client funds liability and other ( 39 ) 8 Net cash used in financing activities ( 83 ) ( 47 ) Net decrease in cash, cash equivalents, restricted cash and funds held for clients ( 57 ) ( 16 ) Cash, cash equivalents, restricted cash and funds held for clients beginning of period 1,035 1,014 Cash, cash equivalents, restricted cash and funds held for clients end of period $ 978 $ 998 Supplemental cash flow information: ROU assets obtained in exchange for lease obligations $ 4 $ 1 See accompanying notes. Insperity | 2024 First Quarter Form 10-Q 8

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS (Unaudited) CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY For the Three Months Ended March 31, 2024 and 2023 Common Stock Issued Additional Paid-In Capital Treasury Stock Retained Earnings and AOCI Total (in millions) Shares Amount Balance at December 31, 2023 55 $ 1 $ 185 $ ( 831 ) $ 739 $ 94 Purchase of treasury stock, at cost — — — ( 23 ) — ( 23 ) Issuance of equity-based incentive awards and dividend equivalents — — ( 24 ) 28 ( 4 ) — Stock-based compensation expense — — 10 — — 10 Other — — 1 — — 1 Dividends paid — — — — ( 21 ) ( 21 ) Net income — — — — 79 79 Balance at March 31, 2024 55 $ 1 $ 172 $ ( 826 ) $ 793 $ 140 Balance at December 31, 2022 55 $ 1 $ 151 $ ( 726 ) $ 655 $ 81 Purchase of treasury stock, at cost — — — ( 35 ) — ( 35 ) Issuance of equity-based incentive awards and dividend equivalents — — ( 21 ) 26 ( 5 ) — Stock-based compensation expense — — 11 — — 11 Other — — 1 — — 1 Dividends paid — — — — ( 20 ) ( 20 ) Net income — — — — 95 95 Balance at March 31, 2023 55 $ 1 $ 142 $ ( 735 ) $ 725 $ 133 See accompanying notes. Insperity | 2024 First Quarter Form 10-Q 9

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Basis of Presentation Insperity, Inc., a Delaware corporation ("Insperity," "we," "our," and "us"), provides an array of human resources ("HR") and business solutions designed to help improve business performance. Our most comprehensive HR services offerings are provided through our professional employer organization ("PEO") services, known as our Workforce Optimization and Workforce Synchronization TM solutions (together, our "PEO HR Outsourcing Solutions"), which we provide by entering into a co-employment relationship with our clients. Our PEO HR Outsourcing Solutions encompass a broad range of HR functions, including payroll and employment administration, employee benefits, workers' compensation, government compliance, performance management, and training and development services, along with our cloud-based human capital management solution, the Insperity Premier TM platform. In addition to our PEO HR Outsourcing Solutions, we offer a comprehensive traditional payroll and human capital management solution, known as our Workforce Acceleration TM solution (our "Traditional Payroll Solution"). We also offer a number of other business performance solutions, including Recruiting Services, Employment Screening, Retirement Services, and Insurance Services. These other products or services are offered separately or with our other solutions. The Consolidated Financial Statements include the accounts of Insperity, Inc. and its wholly owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. The preparation of financial statements in conformity with accounting principles generally accepted in the United States ("GAAP") requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates. The accompanying Consolidated Financial Statements should be read in conjuncti

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS patterns under the plan; and (3) the number of participants in the plan, including both active and COBRA enrollees. Each reporting period, changes in the estimated ultimate costs resulting from claim trends, plan design and migration, participant demographics, and other factors are incorporated into the benefits costs, which requires a significant level of judgment. Additionally, since the plan's inception, under the terms of the contract, United establishes cash funding rates 90 days in advance of the beginning of a reporting quarter. If the Plan Costs for a reporting quarter are greater than the premiums paid and owed to United, a deficit in the plan would be incurred and a liability for the excess costs would be accrued in our Condensed Consolidated Balance Sheets. On the other hand, if the Plan Costs for the reporting quarter are less than the premiums paid and owed to United, a surplus in the plan would be incurred and we would record an asset for the excess premiums in our Condensed Consolidated Balance Sheets. The terms of the arrangement require us to maintain an accumulated cash surplus in the plan of $ 9 million, which is reported as long-term prepaid health insurance. In addition, United requires a deposit equal to approximately one day of claims funding activity, which was $ 7 million at March 31, 2024, and is included in deposits - health insurance as a long-term asset on our Condensed Consolidated Balance Sheets. As of March 31, 2024, Plan Costs were less than the net premiums paid and owed to United by $ 33 million. As this amount is in excess of the agreed-upon $ 9 million surplus maintenance level, the $ 24 million difference is included in prepaid insurance, a current asset, in our Condensed Consolidated Balance Sheets. The premiums, including the additional quarterly premiums, owed to United at March 31, 2024 were $ 63 million, which is included in accrued health insurance costs, a current liability in

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS The following table provides the activity and balances related to incurred but not paid workers' compensation claims: Three Months Ended March 31, (in millions) 2024 2023 Beginning balance, January 1, $ 220 $ 229 Accrued claims 14 16 Present value discount, net of accretion ( 3 ) ( 3 ) Paid claims ( 16 ) ( 13 ) Ending balance $ 215 $ 229 Current portion of accrued claims $ 60 $ 48 Long-term portion of accrued claims 155 181 Total accrued claims $ 215 $ 229 The current portion of accrued workers' compensation costs on our Condensed Consolidated Balance Sheets at March 31, 2024 and 2023 includes $ 4 million in both periods of workers' compensation administrative fees. The undiscounted accrued workers' compensation costs were $ 247 million as of March 31, 2024 and $ 253 million as of March 31, 2023. At the beginning of each policy period, the workers' compensation insurance carrier establishes monthly funding requirements comprised of premium costs and funds to be set aside for payment of future claims ("claim funds"). The level of claim funds is primarily based upon anticipated WSEE payroll levels and expected workers' compensation loss rates, as determined by the insurance carrier. Monies funded into the program for incurred claims expected to be paid within one year are recorded as restricted cash, a short-term asset, while the remainder of claim funds are included in deposits – workers' compensation, a long-term asset in our Condensed Consolidated Balance Sheets. At March 31, 2024, we had restricted cash of $ 61 million and deposits – workers' compensation of $ 204 million. Our estimate of incurred claim costs expected to be paid within one year is included in short-term liabilities, while our estimate of incurred claim costs expected to be paid beyond one year is included in long-term liabilities on our Condensed Consolidated Balance Sheets. Revenues We enter into contracts with our customers for hu

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS Our revenue for our PEO HR Outsourcing Solutions by geographic region and for our other products and services offerings are as follows: Three Months Ended March 31, (in millions) 2024 2023 % Change Northeast $ 509 $ 492 3 % Southeast 246 239 3 % Central 324 319 2 % Southwest 340 340 — % West 366 363 1 % 1,785 1,753 2 % Other revenue 17 17 — % Total revenue $ 1,802 $ 1,770 2 % Our PEO HR Outsourcing Solutions revenues are primarily derived from our gross billings, which are based on (1) the payroll cost of our WSEEs; and (2) a markup computed as a percentage of the payroll cost. The gross billings are invoiced concurrently with each periodic payroll of our WSEEs. Revenues, which exclude the payroll cost component of gross billings and therefore consist solely of the markup, are recognized ratably over the payroll period as WSEEs perform their service at the client worksite. In determining the pricing of the markup component of our gross billings, we take into consideration our estimates of the costs directly associated with our WSEEs, including payroll taxes, benefits and workers' compensation costs, plus an acceptable gross profit margin. As a result, our operating results are significantly impacted by our ability to accurately estimate our direct costs relative to the revenues derived from the markup component of our gross billings. Revenues are comprised of gross billings less WSEE payroll costs as follows: Three Months Ended March 31, (in millions) 2024 2023 Gross billings $ 11,483 $ 11,451 Less: WSEE payroll cost 9,681 9,681 Revenues $ 1,802 $ 1,770 3. Other Balance Sheet Information Cash, Cash Equivalents and Marketable Securities The following table summarizes our cash and investments in cash equivalents and marketable securities held by investment managers and overnight investments: March 31, 2024 December 31, 2023 (in millions) Cash & Cash Equivalents Marketabl

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