Insparity, Inc. Files Q2 2024 10-Q Financial Report

TL;DR

Insparity's Q2 10-Q is in. Check financials for 6/30/24.

AI Summary

Insparity, Inc. filed its 10-Q for the period ending June 30, 2024. The filing covers the second quarter of 2024 and provides financial details for the company. Key financial periods reported include the three months ended June 30, 2024, and 2023, as well as the six months ended June 30, 2024 and 2023.

Why It Matters

This filing provides investors and analysts with the latest financial performance data for Insparity, Inc., crucial for understanding the company's current health and future prospects.

Risk Assessment

Risk Level: low — This is a routine quarterly financial filing with no immediate red flags or significant new risks disclosed.

Key Numbers

• Q2 2024 — Reporting Period (Financial results for the second quarter of 2024 are detailed.)
• June 30, 2024 — As of Date (The financial position reported is as of this date.)
• 2023-12-31 — Prior Year End (Comparative financial data from the end of the previous fiscal year is included.)

Key Players & Entities

• INSPERITY, INC. (company) — Filer
• 20240630 (date) — Period of Report
• 7133588986 (phone_number) — Business Phone
• ADMINISTAFF INC (company) — Former Company Name

FAQ

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-20240630.htm (10-Q) — 935KB
• a06302024nsp-ex311.htm (EX-31.1) — 13KB
• a06302024nsp-ex312.htm (EX-31.2) — 14KB
• a06302024nsp-ex321.htm (EX-32.1) — 5KB
• a06302024nsp-ex322.htm (EX-32.2) — 5KB
• nsp-20240630_g1.jpg (GRAPHIC) — 71KB
• nsp-20240630_g10.jpg (GRAPHIC) — 51KB
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• nsp-20240630_g8.jpg (GRAPHIC) — 31KB
• nsp-20240630_g9.jpg (GRAPHIC) — 30KB
• 0001000753-24-000046.txt ( ) — 5123KB
• nsp-20240630.xsd (EX-101.SCH) — 27KB
• nsp-20240630_cal.xml (EX-101.CAL) — 56KB
• nsp-20240630_def.xml (EX-101.DEF) — 57KB
• nsp-20240630_lab.xml (EX-101.LAB) — 313KB
• nsp-20240630_pre.xml (EX-101.PRE) — 190KB
• nsp-20240630_htm.xml (XML) — 531KB

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 11

, 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 19

, Item 3. Quantitative and Qualitative Disclosures about Market Risk

Part I, Item 3. Quantitative and Qualitative Disclosures about Market Risk 36

, Item 4. Controls and Procedures

Part I, Item 4. Controls and Procedures 36

, Item 1. Legal Proceedings

Part II, Item 1. Legal Proceedings 37

, Item 1A. Risk Factors

Part II, Item 1A. Risk Factors 37

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

Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 37

, Item 5. Other Information

Part II, Item 5. Other Information 37

, Item 6. Exhibits

Part II, Item 6. Exhibits 38

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 Second Quarter Form 10-Q 5

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS (Unaudited) PART I

Financial Statements

Item 1. Financial Statements CONDENSED CONSOLIDATED BALANCE SHEETS (in millions) June 30, 2024 December 31, 2023 Assets Cash and cash equivalents $ 676 $ 693 Restricted cash 64 57 Marketable securities 16 16 Accounts receivable, net 740 694 Prepaid insurance and related assets 34 7 Funds held for clients and other current assets 91 128 Total current assets 1,621 1,595 Property and equipment, net of accumulated depreciation 186 197 Right-of-use ("ROU") leased assets 55 57 Prepaid health insurance 9 9 Deposits – health insurance 8 8 Deposits – workers' compensation 170 198 Goodwill and other intangible assets, net 13 13 Deferred income taxes, net 15 20 Other assets 18 23 Total assets $ 2,095 $ 2,120 Liabilities and stockholders' equity Accounts payable $ 7 $ 11 Payroll taxes and other payroll deductions payable 504 566 Accrued worksite employee payroll costs 627 559 Accrued health insurance costs 42 46 Accrued workers' compensation costs 67 60 Accrued corporate payroll and commissions 59 64 Income taxes payable 5 3 Client funds liability and other accrued liabilities 72 127 Total current liabilities 1,383 1,436 Accrued workers' compensation costs, net of current 146 163 Long-term debt 369 369 Operating lease liabilities, net of current 55 58 Total noncurrent liabilities 570 590 Commitments and contingencies Common stock 1 1 Additional paid-in capital 191 185 Treasury stock, at cost ( 838 ) ( 831 ) Retained earnings 788 739 Total stockholders' equity 142 94 Total liabilities and stockholders' equity $ 2,095 $ 2,120 See accompanying notes. Insperity | 2024 Second Quarter Form 10-Q 6

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS (Unaudited) CONSOLIDATED STATEMENTS OF INCOME Three Months Ended June 30, Six Months Ended June 30, (in millions, except per share amounts) 2024 2023 2024 2023 Revenues $ 1,605 $ 1,585 $ 3,407 $ 3,355 Payroll taxes, benefits and workers' compensation costs 1,345 1,360 2,802 2,798 Gross profit 260 225 605 557 Salaries, wages and payroll taxes 126 110 266 235 Stock-based compensation 20 15 30 26 Commissions 11 12 23 23 Advertising 12 17 19 23 General and administrative expenses 57 44 114 92 Depreciation and amortization 11 11 22 21 Total operating expenses 237 209 474 420 Operating income 23 16 131 137 Other income (expense): Interest income 9 7 19 16 Interest expense ( 7 ) ( 7 ) ( 14 ) ( 13 ) Income before income tax expense 25 16 136 140 Income tax expense 7 4 39 33 Net income $ 18 $ 12 $ 97 $ 107 Net income per share of common stock Basic $ 0.48 $ 0.34 $ 2.58 $ 2.82 Diluted $ 0.48 $ 0.33 $ 2.56 $ 2.78 See accompanying notes. Insperity | 2024 Second Quarter Form 10-Q 7

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS (Unaudited) CONSOLIDATED STATEMENTS OF CASH FLOWS Six Months Ended June 30, (in millions) 2024 2023 Cash flows from operating activities Net income $ 97 $ 107 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 22 21 Stock-based compensation 30 26 Deferred income taxes 5 5 Changes in operating assets and liabilities: Accounts receivable ( 46 ) 18 Prepaid insurance and related assets ( 27 ) ( 11 ) Other current assets ( 11 ) — Other assets and ROU assets 11 1 Accounts payable ( 4 ) ( 1 ) Payroll taxes and other payroll deductions payable ( 62 ) ( 154 ) Accrued worksite employee payroll costs 68 11 Accrued health insurance costs ( 4 ) ( 19 ) Accrued workers' compensation costs ( 10 ) ( 2 ) Accrued corporate payroll, commissions and other accrued liabilities ( 20 ) ( 53 ) Income taxes payable/receivable 2 ( 19 ) Total adjustments ( 46 ) ( 177 ) Net cash provided by (used in) operating activities 51 ( 70 ) Cash flows from investing activities Marketable securities: Purchases ( 12 ) ( 32 ) Proceeds from maturities 12 22 Proceeds from dispositions — 8 Property and equipment purchases ( 11 ) ( 14 ) Net cash used in investing activities ( 11 ) ( 16 ) Cash flows from financing activities Purchase of treasury stock ( 37 ) ( 45 ) Dividends paid ( 44 ) ( 42 ) Client funds liability and other ( 46 ) 2 Net cash used in financing activities ( 127 ) ( 85 ) Net decrease in cash, cash equivalents, restricted cash and funds held for clients ( 87 ) ( 171 ) 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 $ 948 $ 843 Supplemental cash flow information: ROU assets obtained in exchange for lease obligations $ 7 $ 5 See accompanying notes. Insperity | 2024 Second Quarter Form 10-Q 8

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS (Unaudited) CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY For the Six Months Ended June 30, 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 — — — ( 37 ) — ( 37 ) Issuance of equity-based incentive awards and dividend equivalents — — ( 24 ) 28 ( 4 ) — Stock-based compensation expense — — 29 1 — 30 Other — — 1 1 — 2 Dividends paid — — — — ( 44 ) ( 44 ) Net income — — — — 97 97 Balance at June 30, 2024 55 $ 1 $ 191 $ ( 838 ) $ 788 $ 142 Balance at December 31, 2022 55 $ 1 $ 151 $ ( 726 ) $ 655 $ 81 Purchase of treasury stock, at cost — — — ( 45 ) — ( 45 ) Issuance of equity-based incentive awards and dividend equivalents — — ( 21 ) 25 ( 4 ) — Stock-based compensation expense — — 26 — — 26 Other — — 2 1 1 4 Dividends paid — — — — ( 42 ) ( 42 ) Net income — — — — 107 107 Balance at June 30, 2023 55 $ 1 $ 158 $ ( 745 ) $ 717 $ 131 Insperity | 2024 Second Quarter Form 10-Q 9

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS (Unaudited) CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Continued) For the Three Months Ended June 30, 2024 and 2023 Common Stock Issued Additional Paid-In Capital Treasury Stock Retained Earnings and AOCI Total (in millions) Shares Amount Balance at March 31, 2024 55 $ 1 $ 172 $ ( 826 ) $ 793 $ 140 Purchase of treasury stock, at cost — — — ( 14 ) — ( 14 ) Issuance of equity-based incentive awards and dividend equivalents — — — — — — Stock-based compensation expense — — 19 1 — 20 Other — — — 1 — 1 Dividends paid — — — — ( 23 ) ( 23 ) Net income — — — — 18 18 Balance at June 30, 2024 55 $ 1 $ 191 $ ( 838 ) $ 788 $ 142 Balance at March 31, 2023 55 $ 1 $ 142 $ ( 735 ) $ 725 $ 133 Purchase of treasury stock, at cost — — — ( 10 ) — ( 10 ) Issuance of equity-based incentive awards and dividend equivalents — — — ( 1 ) 1 — Stock-based compensation expense — — 15 — — 15 Other — — 1 1 1 3 Dividends paid — — — — ( 22 ) ( 22 ) Net income — — — — 12 12 Balance at June 30, 2023 55 $ 1 $ 158 $ ( 745 ) $ 717 $ 131 See accompanying notes. Insperity | 2024 Second Quarter Form 10-Q 10

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 June 30, 2024, and is included in deposits - health insurance as a long-term asset on our Condensed Consolidated Balance Sheets. As of June 30, 2024, Plan Costs were less than the net premiums paid and owed to United by $ 27 million. As this amount is in excess of the agreed-upon $ 9 million surplus maintenance level, the $ 18 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 June 30, 2024 were $ 35 million, which is included in accrued health insurance costs, a current liability in our

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: Six Months Ended June 30, (in millions) 2024 2023 Beginning balance, January 1, $ 220 $ 229 Accrued claims 31 31 Present value discount, net of accretion ( 7 ) ( 6 ) Paid claims ( 33 ) ( 26 ) Ending balance $ 211 $ 228 Current portion of accrued claims $ 65 $ 48 Long-term portion of accrued claims 146 180 Total accrued claims $ 211 $ 228 The current portion of accrued workers' compensation costs on our Condensed Consolidated Balance Sheets at June 30, 2024 and 2023 includes $ 2 million and $ 3 million, respectively, of workers' compensation administrative fees. The undiscounted accrued workers' compensation costs were $ 244 million as of June 30, 2024 and $ 253 million as of June 30, 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 June 30, 2024, we had restricted cash of $ 64 million and deposits – workers' compensation of $ 170 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 customer

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 June 30, Six Months Ended June 30, (in millions) 2024 2023 % Change 2024 2023 % Change Northeast $ 437 $ 426 3 % $ 946 $ 918 3 % Southeast 225 221 2 % 471 460 2 % Central 292 285 2 % 616 604 2 % Southwest 304 308 (1) % 644 648 (1) % West 329 330 — % 695 693 — % 1,587 1,570 1 % 3,372 3,323 1 % Other revenue 18 15 20 % 35 32 9 % Total revenue $

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