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ADMINISTAFF COMMENTS ON ALLIANCE RESULTS, FUNDAMENTALS
AND Q3 EARNINGS
HOUSTON, TX September 25, 1998
Administaff, Inc. (NYSE: ASF), a leading Professional
Employer Organization (PEO), today announced the initial results
of its marketing alliance with American Express Travel Related Services
Company, Inc., announced earlier this year. Under this agreement,
American Express is utilizing its resources to generate appointments
with prospects for the company's services.
"The initial activities of the American Express relationship,
which commenced in the second quarter, have increased our first
call activity per salesperson by approximately 40% over the first
quarter of 1998," said Paul J. Sarvadi, president and chief
executive officer of Administaff. "A primary goal of this relationship
is to develop a significant and more efficient source of prospects
for our sales force, and we are pleased with the early results in
this regard. The alliance is proving to be an excellent addition
to our already solid growth plan."
The first 1,600 qualified appointments completed by Administaff
have confirmed that the characteristics of these prospects fit the
profile of the company's target market. Historically, the company
has received a census, which constitutes an opportunity to bid on
the client's business, on over 40% of qualified appointments, and
the company has generated, on average, 3 to 3.5 new worksite employees
per census received. Richard G. Rawson, Administaff executive vice
president of administration and chief financial officer, added,
"Based on this initial activity and our historical sales conversion
rates, we expect this relationship to provide incremental unit growth
beyond our current organic growth model, which would allow the company
to experience revenue growth rates consistent with those experienced
in 1998 on a significantly higher revenue base." Rawson also
commented, "The pricing on the accounts sold so far through
this relationship has been consistent with our ongoing sales efforts."
The company also stated that it is comfortable with consensus earnings
estimates for the third quarter of 1998, and expects to report earnings
in the range of $0.25 to $0.27 per share (diluted). Earnings for
the third quarter are expected to be released on November 2, 1998.
The company has scheduled a conference call for Friday, September
25, 1998 at 11:00 EDT to discuss the American Express alliance,
the company's expansion plans, overall growth rate and near-term
profitability. To participate, call 1-800-360-0565 and ask for the
Administaff conference call.
Administaff is one of the nation's leading Professional Employer
Organizations, providing a comprehensive Personnel Management System
that encompasses a broad range of services, including benefits and
payroll administration, medical and workers' compensation insurance
programs, personnel records management, employer liability management,
employee recruiting and selection, performance management, and performance
improvement services to small- and medium-sized businesses. Administaff
has 22 offices in 14 major markets and serves clients and worksite
employees throughout the United States.
(NOTE. The statements contained in this
press release that are not historical facts are forward-looking
statements that involve a number of risks and uncertainties. Therefore,
the actual results of 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: (i) regulatory and tax developments; (ii)
changes in the company's direct costs and operating expenses; (iii)
the effectiveness of the company's sales and marketing efforts,
including its marketing agreement with American Express, American
Express' ability to set qualified appointments and the company's
ability to convert those appointments into sales; (iv) the estimated
costs and effectiveness of capital projects and investments in technology
and infrastructure; (v) changes in the competitive environment in
the PEO industry; and (vi) the effectiveness and estimated costs
of the company's Year 2000 conversion and contingency plans. These
factors are described in further detail in the company's filings
with the Securities and Exchange Commission.)
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