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ADMINISTAFF REPORTS FIRST QUARTER RESULTS
- Revenues increase 38%
- Gross profit increases 34%
- Sales metrics improving
HOUSTON, TX — May 2, 2001 —
Administaff, Inc. (NYSE: ASF), the nation's leading Professional
Employer Organization (PEO), today announced results for the first
quarter ended March 31, 2001. For the first quarter, the company
reported a net loss and diluted net loss per share of $4.3 million
and $0.16, versus a loss of $2.5 million and $0.09 for the first
quarter of 2000. Historically, the company's earnings pattern has
included losses in the first quarter, followed by improved profitability
in subsequent quarters throughout the year. This pattern is due
to the effects of employment-related taxes which are based on each
employee's cumulative earnings up to specified wage levels, causing
employment-related taxes to be highest in the first quarter and
then decline over the course of the year.
Revenues for the first quarter of 2001 increased
38.1% to $1.0 billion, primarily due to a 25.2% increase in the
average number of worksite employees paid per month and a 9.4% increase
in fee payroll cost per worksite employee per month. Gross profit
increased 34.4% to $27.8 million. The average gross profit per worksite
employee per month increased 7.8% to $138 in the first quarter of
2001, versus $128 in the 2000 period.
"Our first quarter results were driven primarily
by strong gross profit performance attributable to pricing strength
and lower-than-expected unemployment taxes," said Richard G. Rawson,
executive vice president of administration and chief financial officer.
"We have also implemented operating expense controls as planned,
and we anticipate that these costs will remain relatively constant
for the balance of the year."
Operating expenses increased 43.0% over the
2000 period to $36.3 million. On a per worksite employee basis,
operating expenses increased 14.6% to $180 per month in the 2001
period from $157 per month in the 2000 period. This increase was
primarily the result of increased compensation costs related to
the expansion of sales, service and support staff during the fall
of 2000, and an increase in rent expense and infrastructure costs
related to the national sales and service expansion program. As
a result, the operating loss for the first quarter of 2001 increased
81.0% to $8.5 million. On a per worksite employee basis, the operating
loss increased 44.8% to $42 per month.
"The weakness we reported at the beginning of
the year in all three growth drivers — sales, client attrition,
and layoffs exceeding new hires — impacted our growth slightly
more than originally expected," commented Paul J. Sarvadi, Administaff
president and chief executive officer. "However, we have experienced
a quick turnaround in our sales results, and we are seeing signs
that client attrition is returning to historical levels. While we
do not expect these factors to substantially impact our financial
results in the second quarter, we believe the same dynamics that
led to previous periods of growth acceleration are coming together
for the last half of this year and beyond."
Administaff will be hosting a conference call
today at 10:00 a.m. EDT to discuss these results. To listen in,
call 1-888-481-9034. The call may also be accessed via the Internet
at www.administaff.com
or www.streetfusion.com.
Administaff is a leading personnel management company that serves
as a full-service human resources department for small and medium-sized
businesses throughout the United States. With 2000 revenues of $3.7
billion, the company ranks number 448 on the Fortune 500
list. In addition, the company is included on Fortune's list
of "America's Most Admired Companies," the Forbes Platinum
400 list of the best big companies in America and the InformationWeek
500 list of leading information technology innovators.
Administaff's Personnel Management System includes
employment administration, benefits management, government compliance,
recruiting and selection, employer liability management, training
and development, performance management and owner support. These
core services are complemented by an eBusiness strategy that includes
Administaff Assistant®, an eService platform that provides clients
and worksite employees with information and resources to help maximize
the benefit of their Administaff services; and bizzportSM,
an eCommerce portal that features value-added products and services
from best-of-class providers such as American Express, AT&T, Bank
One, Continental Airlines, Dell, IBM and Spiegel.
Administaff has 34 sales offices in 18 major
markets. For additional information, visit the company's Web site
at www.administaff.com.
(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) changes in general economic conditions;
(ii) regulatory and tax developments; (iii) changes in Administaff's
direct costs and operating expenses; (iv) the estimated costs and
effectiveness of capital projects and investments in technology
and infrastructure; (v) Administaff's ability to effectively implement
its eBusiness strategy; (vi) the effectiveness of Administaff's
sales and marketing efforts, including the company's marketing arrangements
with other companies; and (vii) changes in the competitive environments
in the PEO industry. These factors are described in further detail
in Administaff's filings with the Securities and Exchange Commission.)
Administaff, Inc.
Summary Financial Information
(in thousands, except per share amounts and statistical data)
(Unaudited)
Three months ended
March 31,
2001
2000
Change
Operating results:
Revenues
$ 1,043,419 $ 755,545
38.1%
Direct costs:
Salaries and wages of worksite
employees
872,280 629,937
38.5%
Benefits and payroll taxes
143,310 104,903
36.6%
Gross profit
27,829 20,705
34.4%
Operating
expenses:
Salaries, wages and payroll taxes
16,164
12,068 33.9%
General and administrative expenses
11,845
7,562 56.6%
Commissions
3,133
2,212 41.6%
Advertising
1,458
930 56.8%
Depreciation and amortization
3,732
2,632 41.8%
36,332
25,404 43.0%
Operating loss
(8,503)
(4,699) (81.0)%
Interest and other income
1,397
808 72.9%
Loss before income tax
benefit
(7,106)
(3,891) (82.6)%
Income tax benefit
2,769
1,420 95.0%
Net loss
$ (4,337)
$ (2,471) (75.5)%
Basic and diluted net
loss per share
$ (0.16)
$ (0.09) (77.8)%
Basic and diluted weighted
average
common shares outstanding
27,508
26,948
Administaff, Inc.
Summary Financial Information (continued)
(in thousands, except per share amounts and statistical data)
(Unaudited)
Three months ended
March 31,
2001
2000
Change
Statistical data:
Average number
of worksite employees
paid per month
67,460 53,897
25.2%
Fee revenue
per worksite employee
per month
$ 4,798 $ 4,387
9.4%
Fee payroll
cost per worksite employee
per month
3,960 3,621
9.4%
Gross mark-up
per worksite employee
per month
838
766
9.4%
Gross profit
per worksite employee
per month
138
128
7.8%
Operating
expenses per worksite employee
per month
180
157
14.6%
Operating
loss per worksite employee
per month
(42)
(29) (44.8)%
Net loss
per worksite employee per month
(21)
(15) (40.0)%
March 31,
2001
December 31,
(Unaudited)
2000
Balance Sheet data:
Working capital
$ 39,174
$ 51,179
Total assets
216,486
242,817
Total debt
—
—
Total stockholders’ equity
95,862
105,510
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