Exhibit 99.1
ADMINISTAFF ANNOUNCES SECOND QUARTER RESULTS
AND RAISES 2005 GUIDANCE
Earnings per share up 180% as
unit growth and profitability continue to
accelerate
HOUSTON -
Aug.1, 2005 - Administaff, Inc. (NYSE: ASF), the nation’s
leading Professional Employer Organization (PEO), today announced
results for the second quarter and six months ended June 30, 2005.
The company reported second quarter net income and diluted earnings
per share of $7.3 million and $0.28, versus $2.8 million and $0.10
in the second quarter of 2004.
Revenues for
the second quarter of 2005 increased 20.2% over the 2004 period to
$279.9 million, due to a 12.5% increase in the average number of
worksite employees paid per month and a 6.9% increase in revenues
per worksite employee per month.
“Our
second quarter results reflect outstanding execution in all areas
of the business, including record levels of sales and client
retention,” said Paul J. Sarvadi, Administaff chairman and
chief executive officer. “New clients sold increased 44% over
the same period in 2004 and were 17% higher than any second quarter
in the company’s history. In addition, client retention
averaged 98.6% per month, our highest quarterly rate since
1998.”
Gross profit
increased 16.0% over the second quarter of 2004 to $56.3 million,
primarily due to a combination of accelerated unit growth,
increased pricing and effective management of benefits and
workers’ compensation programs. The average gross profit per
worksite employee per month of $216 reflects a slight increase in
the pricing of service fees and continued favorable trends in these
direct costs.
Operating
expenses for the quarter increased 3.3% to $45.5 million, as
increases in salaries, wages and incentive compensation were mostly
offset by reductions in other areas, including expenses associated
with the annual sales conference, incentive sales trip and spring
campaign marketing efforts, which were shifted from the second
quarter in 2004 to the first quarter in 2005. On a per worksite
employee basis, operating expenses decreased 7.9% to $175 per month
in the 2005 period versus $190 per month in the 2004 period,
primarily due to the 12.5% increase in the average number of
worksite employees paid per month.
Operating
income for the second quarter of 2005 increased 141.3% to $10.9
million, with an average operating income per worksite employee of
$42 per month compared to $19 in the 2004 period.
For the six
months ended June 30, 2005, the company reported net income and
diluted earnings per share of $11.9 million and $0.45, versus $12.0
million and $0.44 for the same period in 2004. Diluted earnings per
share increased 73.1% over the 2004 period, excluding the $0.18 per
share impact of the Aetna lawsuit settlement in the 2004
period.
Year-to-date
revenues were $578.9 million, a 19.4% increase over the 2004
period, which resulted from a 12.2% increase in the average number
of worksite employees paid per month and a 6.4% increase in
revenues per worksite employee per month. Gross profit for the six
months ended June 30, 2005 increased 12.0% to $110.4 million. The
average gross profit per worksite employee per month of $216 was
consistent with the 2004 period, although the 2004 results included
a $5 reduction in payroll tax expense associated with the
California state unemployment tax matter, and $2 of insurance
proceeds related to the reimbursement of workers’
compensation claims.
Year-to-date
operating expenses increased 6.6% to $92.6 million, but declined
5.2% on a per worksite employee per month basis from $191 in the
2004 period to $181 in the 2005 period. The resulting operating
income for the six months ended June 30, 2005 was $17.7 million
compared to $11.7 million in the 2004 period. Operating income per
worksite employee per month increased 34.6% to $35 from $26 in the
prior year.
“Our
financial performance in the first half of this year demonstrates
the strength and leverage of our business model,” said
Douglas S. Sharp, vice-president of finance, chief financial
officer and treasurer. “With a solid foundation of
double-digit unit growth, strong pricing, effective management of
direct costs and continued operating leverage, we are raising our
guidance for the remainder of the year.”
Administaff
also provided its outlook for the third quarter and full year
2005.
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Average
worksite employees paid per month
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Gross profit
per worksite employee per month
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Operating
expenses (in millions) (1) (2)
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Net interest
income (in millions)
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Effective
income tax rate
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Average
outstanding shares (in millions)
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Includes
$375,000 and $2.2 million in stock-based compensation expense, in
the third quarter and full year, respectively.
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The high end of
the third quarter and full year operating expense range assumes a
higher accrual for incentive compensation based upon achieving
higher unit growth and gross profit goals.
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Administaff will be hosting a conference call today at 10 a.m. ET
to discuss these results, give guidance for the third quarter and
full year 2005, and answer questions from investment analysts. To
listen in, call 800-435-1398 and use passcode 65801359. The call
will also be webcast at http://www.administaff.com . To
access the webcast, click on the Investor Relations section of the
website and select “Live Webcast.” The conference call
script will be available at the same website later today. A replay
of the conference call will be available at 888-286-8010, passcode
33806037, for two weeks after the call. The webcast will be
archived for one year.
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. The compa
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