Insparity, Inc. Files Q3 2024 10-Q

Ticker: NSP · Form: 10-Q · Filed: Oct 31, 2024 · CIK: 1000753

Insperity, Inc. 10-Q Filing Summary
FieldDetail
CompanyInsperity, Inc. (NSP)
Form Type10-Q
Filed DateOct 31, 2024
Risk Levellow
Pages16
Reading Time19 min
Key Dollar Amounts$0.01, $1 million
Sentimentneutral

Sentiment: neutral

Topics: 10-Q, financials, quarterly-report

TL;DR

Insparity's Q3 2024 10-Q is in, check the balance sheet for 9/30/24 vs 12/31/23.

AI Summary

Insparity, Inc. filed its 10-Q for the period ending September 30, 2024. The filing covers the third quarter of 2024 and provides financial details for the nine months ended September 30, 2024, compared to the same period in 2023. Key financial statement information, including common stock, additional paid-in capital, treasury stock, and retained earnings, is presented for the periods ending December 31, 2023, and September 30, 2024.

Why It Matters

This filing provides investors with the latest financial performance and position of Insparity, Inc. for the third quarter of 2024, crucial for investment decisions.

Risk Assessment

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

Key Numbers

  • 2024-09-30 — Reporting Period End Date (This is the end date for the financial data presented in the 10-Q.)
  • 2024-10-31 — Filing Date (This is the date the 10-Q was officially filed with the SEC.)
  • 2023-12-31 — Prior Year End Date (Provides a comparison point for the current year's financial statements.)

Key Players & Entities

  • INSPERITY, INC. (company) — Filer of the 10-Q
  • 20240930 (date) — End of the reporting period
  • 20241031 (date) — Filing date
  • 760479645 (company) — IRS Number
  • DE (company) — State of Incorporation
  • 7363 (company) — Standard Industrial Classification Code

FAQ

What is the reporting period for this 10-Q filing?

The reporting period for this 10-Q filing is September 30, 2024.

When was this 10-Q filed with the SEC?

This 10-Q was filed on October 31, 2024.

What is Insparity, Inc.'s Standard Industrial Classification code?

Insparity, Inc.'s Standard Industrial Classification code is 7363, which corresponds to SERVICES-HELP SUPPLY SERVICES.

What were the key financial statement components reported as of December 31, 2023?

Key financial statement components reported as of December 31, 2023, include Common Stock, Additional Paid-In Capital, Treasury Stock (Common), and Retained Earnings.

What is the former name of Insparity, Inc. and when was the name change?

The former name of Insparity, Inc. was ADMINISTAFF INC \DE\, and the date of the name change was September 15, 1995.

Filing Stats: 4,760 words · 19 min read · ~16 pages · Grade level 18.8 · Accepted 2024-10-31 16:09:31

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

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 37

, Item 4. Controls and Procedures

Part I, Item 4. Controls and Procedures 37

, Item 1. Legal Proceedings

Part II, Item 1. Legal Proceedings 38

, Item 1A. Risk Factors

Part II, Item 1A. Risk Factors 38

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

Part II, Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 38

, Item 5. Other Information

Part II, Item 5. Other Information 38

, Item 6. Exhibits

Part II, Item 6. Exhibits 39

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," "forecasts," "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 re

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 Third Quarter Form 10-Q 5

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS (Unaudited) PART I

Financial Statements

Item 1. Financial Statements CONDENSED CONSOLIDATED BALANCE SHEETS (in millions) September 30, 2024 December 31, 2023 Assets Cash and cash equivalents $ 470 $ 693 Restricted cash 67 57 Marketable securities 16 16 Accounts receivable, net 765 694 Prepaid insurance and related assets 31 7 Funds held for clients and other current assets 84 128 Total current assets 1,433 1,595 Property and equipment, net of accumulated depreciation 190 197 Right-of-use ("ROU") leased assets 66 57 Prepaid health insurance 9 9 Deposits – health insurance 8 8 Deposits – workers' compensation 175 198 Goodwill and other intangible assets, net 13 13 Deferred income taxes, net 19 20 Other assets 20 23 Total assets $ 1,933 $ 2,120 Liabilities and stockholders' equity Accounts payable $ 6 $ 11 Payroll taxes and other payroll deductions payable 297 566 Accrued worksite employee payroll costs 650 559 Accrued health insurance costs 46 46 Accrued workers' compensation costs 70 60 Accrued corporate payroll and commissions 79 64 Income taxes payable 8 3 Client funds liability and other accrued liabilities 77 127 Total current liabilities 1,233 1,436 Accrued workers' compensation costs, net of current 140 163 Long-term debt 369 369 Operating lease liabilities, net of current 66 58 Total noncurrent liabilities 575 590 Commitments and contingencies Common stock 1 1 Additional paid-in capital 208 185 Treasury stock, at cost ( 853 ) ( 831 ) Retained earnings 769 739 Total stockholders' equity 125 94 Total liabilities and stockholders' equity $ 1,933 $ 2,120 See accompanying notes. Insperity | 2024 Third Quarter Form 10-Q 6

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS (Unaudited) CONSOLIDATED STATEMENTS OF INCOME Three Months Ended September 30, Nine Months Ended September 30, (in millions, except per share amounts) 2024 2023 2024 2023 Revenues $ 1,561 $ 1,551 $ 4,968 $ 4,906 Payroll taxes, benefits and workers' compensation costs 1,332 1,293 4,134 4,091 Gross profit 229 258 834 815 Salaries, wages and payroll taxes 127 114 393 349 Stock-based compensation 17 16 47 42 Commissions 11 11 34 34 Advertising 9 7 28 30 General and administrative expenses 53 40 167 132 Depreciation and amortization 11 11 33 32 Total operating expenses 228 199 702 619 Operating income 1 59 132 196 Other income (expense): Interest income 9 9 28 25 Interest expense ( 7 ) ( 7 ) ( 21 ) ( 20 ) Income before income tax expense 3 61 139 201 Income tax expense — 16 39 49 Net income $ 3 $ 45 $ 100 $ 152 Net income per share of common stock Basic $ 0.07 $ 1.17 $ 2.65 $ 4.00 Diluted $ 0.07 $ 1.16 $ 2.63 $ 3.94 See accompanying notes. Insperity | 2024 Third Quarter Form 10-Q 7

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS (Unaudited) CONSOLIDATED STATEMENTS OF CASH FLOWS Nine Months Ended September 30, (in millions) 2024 2023 Cash flows from operating activities Net income $ 100 $ 152 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 33 32 Stock-based compensation 47 42 Deferred income taxes 1 6 Changes in operating assets and liabilities: Accounts receivable ( 71 ) ( 34 ) Prepaid insurance and related assets ( 24 ) ( 9 ) Other current assets ( 7 ) — Other assets and ROU assets 13 3 Accounts payable ( 5 ) ( 1 ) Payroll taxes and other payroll deductions payable ( 269 ) ( 38 ) Accrued worksite employee payroll costs 91 47 Accrued health insurance costs — ( 2 ) Accrued workers' compensation costs ( 13 ) ( 7 ) Accrued corporate payroll, commissions and other accrued liabilities — ( 44 ) Income taxes payable/receivable 5 ( 7 ) Total adjustments ( 199 ) ( 12 ) Net cash provided by (used in) operating activities ( 99 ) 140 Cash flows from investing activities Marketable securities: Purchases ( 17 ) ( 40 ) Proceeds from maturities 17 32 Proceeds from dispositions — 28 Property and equipment purchases ( 25 ) ( 22 ) Net cash used in investing activities ( 25 ) ( 2 ) Cash flows from financing activities Purchase of treasury stock ( 52 ) ( 131 ) Dividends paid ( 67 ) ( 63 ) Client funds liability and other ( 44 ) ( 1 ) Net cash used in financing activities ( 163 ) ( 195 ) Net decrease in cash, cash equivalents, restricted cash and funds held for clients ( 287 ) ( 57 ) 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 $ 748 $ 957 Supplemental cash flow information: ROU assets obtained in exchange for lease obligations $ 24 $ 12 Excise tax liability accrued for common stock repurchases — 1 See accompanying notes. Insperity | 2024 Third

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS (Unaudited) CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY For the Nine Months Ended September 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 — — — ( 52 ) — ( 52 ) Issuance of equity-based incentive awards and dividend equivalents — — ( 24 ) 27 ( 3 ) — Stock-based compensation expense — — 46 1 — 47 Other — — 1 2 — 3 Dividends paid — — — — ( 67 ) ( 67 ) Net income — — — — 100 100 Balance at September 30, 2024 55 $ 1 $ 208 $ ( 853 ) $ 769 $ 125 Balance at December 31, 2022 55 $ 1 $ 151 $ ( 726 ) $ 655 $ 81 Purchase of treasury stock, at cost — — — ( 132 ) — ( 132 ) Issuance of equity-based incentive awards and dividend equivalents — — ( 21 ) 25 ( 4 ) — Stock-based compensation expense — — 41 1 — 42 Other — — 2 1 — 3 Dividends paid — — — — ( 63 ) ( 63 ) Net income — — — — 152 152 Balance at September 30, 2023 55 $ 1 $ 173 $ ( 831 ) $ 740 $ 83 Insperity | 2024 Third Quarter Form 10-Q 9

FINANCIAL STATEMENTS

FINANCIAL STATEMENTS (Unaudited) CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Continued) For the Three Months Ended September 30, 2024 and 2023 Common Stock Issued Additional Paid-In Capital Treasury Stock Retained Earnings and AOCI Total (in millions) Shares Amount Balance at June 30, 2024 55 $ 1 $ 191 $ ( 838 ) $ 788 $ 142 Purchase of treasury stock, at cost — — — ( 15 ) — ( 15 ) Issuance of equity-based incentive awards and dividend equivalents — — — ( 1 ) 1 — Stock-based compensation expense — — 17 — — 17 Other — — — 1 — 1 Dividends paid — — — — ( 23 ) ( 23 ) Net income — — — — 3 3 Balance at September 30, 2024 55 $ 1 $ 208 $ ( 853 ) $ 769 $ 125 Balance at June 30, 2023 55 $ 1 $ 158 $ ( 745 ) $ 717 $ 131 Purchase of treasury stock, at cost — — — ( 87 ) — ( 87 ) Issuance of equity-based incentive awards and dividend equivalents — — — — — — Stock-based compensation expense — — 15 1 — 16 Other — — — — ( 1 ) ( 1 ) Dividends paid — — — — ( 21 ) ( 21 ) Net income — — — — 45 45 Balance at September 30, 2023 55 $ 1 $ 173 $ ( 831 ) $ 740 $ 83 See accompanying notes. Insperity | 2024 Third 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 September 30, 2024, and is included in deposits - health insurance as a long-term asset on our Condensed Consolidated Balance Sheets. As of September 30, 2024, Plan Costs were less than the net premiums paid and owed to United by $ 28 million. As this amount is in excess of the agreed-upon $ 9 million surplus maintenance level, the $ 19 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 September 30, 2024 were $ 39 million, which is included in accrued health insurance costs, a current l

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: Nine Months Ended September 30, (in millions) 2024 2023 Beginning balance, January 1, $ 220 $ 229 Accrued claims 48 44 Present value discount, net of accretion ( 10 ) ( 10 ) Paid claims ( 51 ) ( 41 ) Ending balance $ 207 $ 222 Current portion of accrued claims $ 67 $ 51 Long-term portion of accrued claims 140 171 Total accrued claims $ 207 $ 222 The current portion of accrued workers' compensation costs on our Condensed Consolidated Balance Sheets at September 30, 2024 and 2023 includes $ 3 million and $ 4 million, respectively, of workers' compensation administrative fees. The undiscounted accrued workers' compensation costs were $ 242 million as of September 30, 2024 and $ 250 million as of September 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 September 30, 2024, we had restricted cash of $ 67 million and deposits – workers' compensation of $ 175 million, of which $ 233 million was held in a trust account. 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 Co

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 September 30, Nine Months Ended September 30, (in millions) 2024 2023 % Change 2024 2023 % C

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