TriNet Announces Second Quarter Fiscal 2014 Results - FOX 54 WZDX – Huntsville News, Weather and Sports

TriNet Announces Second Quarter Fiscal 2014 Results

Information contained on this page is provided by an independent third-party content provider. WorldNow and this Station make no warranties or representations in connection therewith. If you have any questions or comments about this page please contact pressreleases@worldnow.com.

SOURCE TriNet Group, Inc.

44% Growth in Total Revenues and 32% Growth in Net Service Revenues

31% Increase in Worksite Employees (WSEs), to 259,000

SAN LEANDRO, Calif., Aug. 4, 2014 /PRNewswire/ -- TriNet Group, Inc. (NYSE: TNET), a leading provider of a comprehensive human resources solution for small to medium-sized businesses, today announced financial results for the second quarter of 2014. Highlights include:

  • Total revenues for the second quarter increased 44% to $525.0 million and Net Service Revenues increased 32% to $124.8 million from the same period last year. 
  • Total Worksite Employees (WSEs) at June 30, 2014 increased 31% from June 30, 2013, to approximately 259,000, including approximately 13,000 acquired from Ambrose.  Organic growth was 23%.
  • Net income for the second quarter was $6.2 million, or $0.09 per diluted share, compared to net income of $4.3 million, or $0.08 per diluted share, in the same period last year.
  • Adjusted Net Income for the second quarter was $17.4 million, or $0.24 per diluted share on a pro forma basis, compared to Adjusted Net Income of $12.1 million, or $0.18 per diluted share, in the same period last year.
  • Adjusted EBITDA for the second quarter was $39.4 million, a 38% increase the same period last year.

"We generated robust growth during the second quarter, highlighting the strength of our bundled product offering and vertical go-to-market strategy," said Burton M. Goldfield, TriNet's President and CEO.  "Our total worksite employees served crossed the quarter-million threshold during the quarter and grew 31 percent year-over-year, which was a tremendous milestone for the company.  We have also executed well in building our salesforce, now up to 388 professionals, which we believe puts us in a solid position for the year ahead.  Overall, our business outlook remains strong, and we have a significant opportunity in front of us as we seek to address the increasingly complex human resources needs of small and medium-sized businesses with our comprehensive bundled HR solution."

Results for the second quarter of 2014 reflect the 31% growth in WSEs as TriNet continued to leverage its growing salesforce to increase penetration of targeted customer verticals.  TriNet's total revenues increased 44% to $525.0 million, while Net Service Revenues increased 32% to $124.8 million in the second quarter of 2014.  Net Service Revenues consisted of professional services revenues of $82.3 million and Net Insurance Service Revenues of $42.5 million.  Net Insurance Service Revenues consisted of insurance service revenues of $442.7 million, less insurance costs of $400.2 million.  Professional service revenues increased 35% and Net Insurance Service Revenues increased 28% over the second quarter of 2013. TriNet ended the second quarter of 2014 with 388 Total Sales Representatives, up from 298 at the end of the second quarter of 2013.

At June 30, 2014, TriNet had cash and equivalents of $100.3 million and total debt of $575.7 million.

Earnings Conference Call and Audio Webcast                                    
TriNet will host a conference call at 2:00 p.m. PT (5:00 p.m. ET) today to discuss its quarterly results and the outlook for the full 2014 fiscal year. TriNet encourages participants to pre-register for the conference call. Callers who pre-register will be given a unique PIN to gain immediate access to the call and bypass the live operator. To pre-register, go to: http://dpregister.com/10049442. For those who would like to join the call but have not pre-registered, they can do so by dialing +1 (412) 902-6510 and requesting the "TriNet Conference Call."  The live webcast of the conference call can be accessed on the Investor Relations section of TriNet's website at http://investor.trinet.com. A replay of the webcast will be available on this site for approximately one year. A telephonic replay will be available for one week following the conference call at +1 (412) 317-0088 conference ID: 10049442.

About TriNet                     
TriNet is a leading provider of a comprehensive human resources solution for small to medium-sized businesses, or SMBs. We enhance business productivity by enabling our clients to outsource their human resources, or HR, function to one strategic partner and allowing them to focus on operating and growing their core businesses. Our HR solution includes services such as payroll processing, human capital consulting, employment law compliance and employee benefits, including health insurance, retirement plans and workers compensation insurance. Our services are delivered by our expert team of HR professionals and enabled by our proprietary, cloud-based technology platform, which allows our clients and their employees to efficiently conduct their HR transactions anytime and anywhere.

Use of Non-GAAP Financial Measures                         
Reconciliations of non-GAAP financial measures to TriNet's financial results as determined in accordance with GAAP are included at the end of this press release following the accompanying financial data. For a description of these non-GAAP financial measures, including the reasons management uses each measure, please see the section of the tables titled "Non-GAAP Financial Results."

Forward-Looking Statements                                     
This press release contains, and statements made during the above referenced conference call will contain, forward-looking statements including, among other things, TriNet's expectations regarding its ability to grow its salesforce and its customer base; and future total revenues, Net Service Revenues, professional service revenues, insurance service revenues, Net Insurance Service Revenues, expenses, net income, Adjusted Net Income and Adjusted EBITDA. These statements are not guarantees of future performance, but are based on management's expectations as of the date hereof and assumptions that are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements. Important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements include: risks associated with the market acceptance of outsourcing the HR function, and the anticipated benefits associated with the use of a bundled HR solution; our ability to continue to expand our direct sales force and the efficacy of our sales and marketing efforts; our ability to gain new clients, and our clients' ability to grow and gain more employees; our ability to effectively acquire and integrate new businesses; the effects of seasonal trends on our results of operations; changes to and our ability to comply with laws and regulations, including both those applicable to the co-employment relationship as well as those applicable to our clients' businesses and their employees; the implementation of the Patient Protection and Affordable Care Act, as modified by the Health Care and Education Reconciliation Act, and its application to the co-employer relationship; our ability to effectively manage our growth; the effects of increased competition and our ability to compete effectively; and our ability to comply with the restrictions of our credit facility and meet our debt obligations.

Further information on risks that could affect TriNet's results is included in our filings with the Securities and Exchange Commission, including our Quarterly Report on Form 10-Q filed with the Commission on May 8, 2014, which could cause actual results to vary from expectations. Except as required by law, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements.

Contacts:


Investors:

Media:

Jimmy Franzone

Jock Breitwieser

TriNet

TriNet

Investorrelations@TriNet.com

Jock.Breitwieser@TriNet.com

(510) 875-7201

(510) 875-7250

 

TriNet, Ambitions Realized and the TriNet logo are registered trademarks of TriNet. All other trademarks, service marks, registered trademarks, or registered service marks are the property of their respective owners.

 

TriNet Group, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

(Unaudited)











Three Months Ended June 30,



Six Months Ended June 30,





2014




2013




2014




2013


Professional service revenues


$

82,260



$

61,080



$

165,135



$

120,311


Insurance service revenues



442,746




302,352




868,783




594,191


Total revenues



525,006




363,432




1,033,918




714,502


Costs and operating expenses:

















Insurance costs



400,195




269,217




781,352




523,129


Cost of providing services (exclusive of depreciation and

   amortization of intangible assets)



34,034




23,671




67,677




46,486


Sales and marketing



34,992




25,389




66,829




48,020


General and administrative



12,682




12,741




27,019




25,228


Systems development and programming costs



6,565




5,578




12,459




10,088


Amortization of intangible assets



13,267




10,178




26,816




20,484


Depreciation



3,242




2,726




6,460




5,552


Total costs and operating expenses



504,977




349,500




988,612




678,987


Operating income



20,029




13,932




45,306




35,515


Other income (expense):

















Interest expense and bank fees



(8,860)




(7,037)




(30,712)




(12,189)


Other, net



(25)




161




78




234


Income before provision for income taxes



11,144




7,056




14,672




23,560


Provision for income taxes



4,923




2,713




6,911




8,680


Net income


$

6,221



$

4,343



$

7,761



$

14,880


Net income per share:

















Basic


$

0.09



$

0.09



$

0.13



$

0.30


Diluted


$

0.09



$

0.08



$

0.12



$

0.28


Weighted average shares:

















Basic



69,053,403




10,898,957




42,914,458




10,834,724


Diluted



72,658,822




15,303,439




46,028,300




14,874,720


 

 

TriNet Group, Inc. and Subsidiaries

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)



June 30,



December 31,



2014



2013


Assets







Current assets:








Cash and cash equivalents

$

100,288



$

94,356


Restricted cash


15,050




15,267


Prepaid income taxes


12,821




3,331


Deferred income taxes


68




68


Prepaid expenses


9,094




7,849


Deferred loan costs and other current assets


4,418




5,238


Worksite employee related assets


664,279




772,437


Total current assets


806,018




898,546


Workers compensation receivable


40,826




25,381


Restricted cash and investments


43,454




36,968


Property and equipment, net


30,389




25,690


Goodwill


288,857




288,857


Other intangible assets, net


107,204




134,020


Deferred income taxes


1,000




1,000


Deferred loan costs and other assets


15,300




24,276


Total assets

$

1,333,048



$

1,434,738


Liabilities and stockholders' deficit








Current liabilities:








Accounts payable

$

13,145



$

7,315


Accrued corporate wages


23,095




26,264


Deferred income taxes


25,406




16,535


Current portion of notes payable and borrowings under capital leases


6,061




6,669


Other current liabilities


9,943




9,078


Worksite employee related liabilities


658,040




767,624


Total current liabilities


735,690




833,485


Notes payable and borrowings under capital leases, less current portion


569,650




812,208


Workers compensation liabilities


56,253




45,309


Deferred income taxes


2,292




8,888


Other liabilities


5,822




5,210


Total liabilities


1,369,707




1,705,100


Commitments and contingencies








Series G convertible preferred stock, $.0001 per share stated value
     
(aggregate liquidation preference of $59,306); no shares authorized, issued and outstanding
     
at June 30, 2014; 5,391,441 shares authorized, issued and outstanding at December 31, 2013


-




59,059


Series H convertible preferred stock, $.0001 per share stated value
     
(aggregate liquidation preference of $60,000); no shares authorized, issued and outstanding
     
at June 30, 2014; 4,124,986 shares authorized, issued and outstanding at December 31, 2013


-




63,819


Stockholders' deficit:








Preferred stock, $.000025 per share stated value; 20,000,000 shares authorized;
     
no shares issued and outstanding at June 30, 2014 and December 31, 2013


-




-


Common stock, $.000025 per share stated value; 750,000,000 shares authorized;
     
69,103,537 and 15,259,540 shares issued and outstanding at June 30, 2014
     
and December 31, 2013


424,222




74,160


Accumulated deficit


(460,711)




(467,209)


Accumulated other comprehensive loss


(170)




(191)


Total stockholders' deficit


(36,659)




(393,240)


Total liabilities and stockholders' deficit

$

1,333,048



$

1,434,738


 

 


TriNet Group, Inc. and Subsidiaries

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)








Six Months Ended June 30,




2014



2013


Operating activities









Net income


$

7,761



$

14,880


Adjustments to reconcile net income to net cash provided by  operating activities:









Depreciation and amortization



39,070




26,143


Deferred income taxes



2,276




5,933


Stock-based compensation



5,070




2,865


Excess tax benefit from equity incentive plan activity



(3,029)




(1,876)


Accretion of workers compensation and leases fair value adjustment



(695)




(768)


Changes in operating assets and liabilities:









Restricted cash



10,520




(979)


Prepaid expenses and other current assets



(3,960)




(1,571)


Workers compensation receivables



(14,737)




(414)


Other assets



4,871




1,874


Accounts payable



3,405




(157)


Income tax payable/receivable



(6,461)




3,062


Other current liabilities



(753)




2,792


Other liabilities



11,745




1,659


Worksite employee related assets



108,158




(37,161)


Worksite employee related liabilities



(109,584)




44,272


Net cash provided by operating activities



53,657




60,554


Investing activities









Proceeds from sale and maturity of debt securities






500


Purchase of debt securities



(16,789)




(6,752)


Purchase of property and equipment



(8,709)




(4,653)


Net cash used in investing activities



(25,498)




(10,905)


Financing activities









Proceeds from issuance of common stock



218,613





Proceeds from issuance of common stock on exercised options



631




1,296


Excess tax benefit from equity incentive plan activity



3,029




1,876


Borrowings under notes payable






150,000


Repayment of notes payable



(243,025)




(4,854)


Payment of debt issuance costs






(2,639)


Payments of special dividend






(52)


Repayments under capital leases



(188)




(458)


Repurchase of common stock



(1,288)




(6,063)


Net cash provided by (used in) financing activities



(22,228)




139,106


Effect of exchange rate changes on cash and cash equivalents



1




(39)


Net increase in cash and cash equivalents



5,932




188,716


Cash and cash equivalents at beginning of period



94,356




63,749


Cash and cash equivalents at end of period


$

100,288



$

252,465


Key Operating Metrics

We regularly review certain key operating metrics to evaluate growth trends, measure our performance and make strategic decisions. Our key operating metrics were as follows:



Three Months Ended

June 30,



Six Months Ended

June 30,




2014



2013



2014



2013


Net Insurance Service Revenues (in thousands)


$

42,551



$

33,135



$

87,431



$

71,062


Net Service Revenues (in thousands)


$

124,811



$

94,215



$

252,566



$

191,373


Total WSEs



258,985




197,458










Total Sales Representatives



388




298










Non-GAAP Financial Results

We use Net Insurance Service Revenues, Net Service Revenues, Adjusted EBITDA, Adjusted Net Income and, in 2014, Pro forma Adjusted Net Income per share – diluted to provide an additional view of our operational performance. Net Insurance Service Revenues, Net Service Revenues, Adjusted EBITDA, Adjusted Net Income and Pro forma Adjusted Net Income per share – diluted are financial measures that are not prepared in accordance with GAAP. We define Net Insurance Service Revenues as insurance service revenues less insurance costs, which include the premiums we pay to insurance carriers for the health and workers compensation insurance coverage provided to our clients and WSEs and the reimbursements we pay to the insurance carriers for claim payments within our insurance deductible layer. We define Net Service Revenues as the sum of professional service revenues and Net Insurance Service Revenues. We define Adjusted EBITDA as net income (loss), excluding the effects of our income tax provision (benefit), interest expense, depreciation, amortization of intangible assets and stock-based compensation expense. We define Adjusted Net Income as net income (loss), excluding the effects of stock-based compensation, amortization of intangible assets, non-cash interest expense, in 2014, a debt prepayment premium paid in connection with the repayment of our second lien debt facility using proceeds from our initial public offering and the income tax effect of these pre-tax adjustments at our effective tax rate. In 2014, the effective tax rate is adjusted to 39.5% to exclude income tax on non-deductible stock-based compensation and discrete items including the cumulative effect of state law changes. Non-cash interest expense represents amortization and write-off of our debt issuance costs and, in 2014, a debt prepayment premium. We define Pro Forma Adjusted Net Income per share – diluted as Adjusted Net Income per basic share adjusted to reflect the equity structure as if our initial public offering and associated conversion of preferred stock had occurred at the beginning of the period and all option exercises that occurred during the period occurred at the beginning of the period, and then giving effect to all remaining potential shares of common stock issuable upon exercise of options or settlement of restricted stock units, to the extent dilutive.

We believe that the use of Net Insurance Service Revenues provides useful information as it presents a measure of revenues from our provision of insurance services to our clients that eliminates the cost of insurance. We believe that Net Service Revenues provides a useful measure of total revenues for the two main components of our revenues calculated on a consistent basis. We believe that the use of Adjusted EBITDA, Adjusted Net Income and Pro Forma Adjusted Net Income per share – diluted provides additional period-to-period comparisons and analysis of trends in our business, as they exclude certain one-time and non-cash expenses. We believe that Net Insurance Service Revenues, Net Service Revenues, Adjusted EBITDA, Adjusted Net Income, and Pro Forma Adjusted Net Income per share – diluted are useful for our stockholders and board of directors by helping them to identify trends in our business and understand how our management evaluates our business. We use Net Insurance Service Revenues, Net Service Revenues, Adjusted EBITDA, Adjusted Net Income and Pro Forma Adjusted Net Income per share – diluted to monitor and evaluate our operating results and trends on an ongoing basis and internally for operating, budgeting and financial planning purposes, in addition to allocating our resources to enhance the financial performance of our business and evaluating the effectiveness of our business strategies. We also use Net Service Revenues and Adjusted EBITDA in determining the incentive compensation for management.

Net Insurance Service Revenues, Net Service Revenues, Adjusted EBITDA, Adjusted Net Income and Pro Forma Adjusted Net Income per share – diluted are not prepared in accordance with, and should not be considered in isolation of, or as an alternative to, measurements required by GAAP. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. As non-GAAP measures, Net Insurance Service Revenues, Net Service Revenues, Adjusted EBITDA, Adjusted Net Income and Pro Forma Adjusted Net Income per share – diluted have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP. In particular:

  • Net Insurance Service Revenues and Net Service Revenues are reduced by the insurance costs that we pay to the insurance carriers;
  • Adjusted EBITDA does not reflect interest expense, or the cash requirements necessary to service interest or principal payments on our debt;
  • Adjusted EBITDA does not reflect the amounts we paid in taxes or other components of our tax provision;
  • Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;
  • Adjusted EBITDA and Adjusted Net Income do not reflect changes in, or cash requirements for, our working capital needs;
  • Adjusted EBITDA, Adjusted Net Income and Pro Forma Adjusted Net Income per share – diluted do not reflect the non-cash component of employee compensation;
  • Although depreciation and amortization of intangible assets are non-cash charges, the assets being depreciated and amortized often will have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements; and
  • Other companies in our industry may calculate these measures or similar measures differently than we do, limiting their usefulness as a comparative measure.

Because of these limitations, you should consider Net Insurance Service Revenues, Net Service Revenues, Adjusted EBITDA, Adjusted Net Income and Pro Forma Adjusted Net Income per share – diluted alongside other financial performance measures, including total revenues, net income (loss) and our financial results presented in accordance with GAAP.

The table below sets forth a reconciliation of GAAP insurance service revenues to Net Insurance Service Revenues:


Three months ended



Change



Six months ended



Change



June 30,



2014 vs. 2013



June 30,



2014 vs. 2013



2014



2013



$



%



2014



2013



$



%



(in thousands, except percentages)


Insurance service revenues

$

442,746



$

302,352



$

140,394




46%



$

868,783



$

594,191



$

274,592




46%


Less:  Insurance costs


400,195




269,217




130,978




49%




781,352




523,129




258,223




49%


Net Insurance Service Revenues

$

42,551



$

33,135



$

9,416




28%



$

87,431



$

71,062



$

16,369




23%


The table below sets forth a reconciliation of GAAP total revenues to Net Service Revenues:


Three months ended



Change



Six months ended



Change



June 30,



2014 vs. 2013



June 30,



2014 vs. 2013



2014



2013



$



%



2014



2013



$



%



(in thousands, except percentages)


Total revenues

$

525,006



$

363,432



$

161,574




44%



$

1,033,918



$

714,502



$

319,416




45%


Less:  Insurance costs


400,195




269,217




130,978




49%




781,352




523,129




258,223




49%


Net Service Revenues

$

124,811



$

94,215



$

30,596




32%



$

252,566



$

191,373



$

61,193




32%


The table below sets forth a reconciliation of GAAP net income to Adjusted EBITDA:



Three Months Ended



Six Months Ended




June 30,



June 30,




2014



2013



2014



2013




(in thousands)


Net income


$

6,221



$

4,343



$

7,761



$

14,880


Provision for income taxes



4,923




2,713




6,911




8,680


Stock-based compensation



2,923




1,505




5,070




2,865


Interest expense and bank fees



8,860




7,037




30,712




12,189


Depreciation



3,242




2,726




6,460




5,552


Amortization of intangible assets



13,267




10,178




26,816




20,484


Adjusted EBITDA


$

39,436



$

28,502



$

83,730



$

64,650


The table below sets forth a reconciliation of GAAP net income to Adjusted Net Income:



Three Months Ended



Six Months Ended




June 30,



June 30,




2014



2013



2014



2013




(in thousands)


Net income


$

6,221



$

4,343



$

7,761



$

14,880


Effective income tax rate adjustment



521




-




1,116




-


Stock-based compensation



2,923




1,505




5,070




2,865


Amortization of intangible assets



13,267




10,178




26,816




20,484


Non-cash interest expense



1,380




684




7,486




1,297


Debt prepayment premium



-




-




3,800




-


Income tax impact of pre-tax adjustments at 39.5%



(6,940)




(4,658)




(17,053)




(9,282)


Adjusted Net Income


$

17,372



$

12,052



$

34,996



$

30,244


The table below sets forth a reconciliation of GAAP weighted average shares of common stock – basic to pro forma weighted average shares of common stock - diluted and Adjusted Net Income per share – diluted (in thousands, except per share amount) as if the equity structure had been in place at the beginning of the periods presented:


Three Months Ended


Six Months Ended


June 30,


June 30,


2014



2013


2014


2013

 GAAP Weighted average shares of common stock - basic


69,053




10,899



42,914



10,835

 Effect of IPO, conversion of preferred stock and

  exercise of stock options during the period included above


(87)




(46)



(27,799)



(126)

 Adjustments as if the equity structure had occurred at the beginning of the
periods:













 Conversion of preferred stock





38,066



38,066



38,066

 Common stock issued in connection with IPO





15,000



15,000



15,000

 Common stock issued in connection with stock option exercises


137




189



778



426

 Dilutive effect of outstanding stock options and restricted stock units


3,470




3,902



2,567



3,571

 Pro forma weighted average shares of common stock - diluted


72,574




68,010



71,527



67,772














 Adjusted Net Income

$

17,372



$

12,052


$

34,996


$

30,244

 Pro forma adjusted net income per share - diluted

$

0.24



$

0.18


$

0.49


$

0.45

 

©2012 PR Newswire. All Rights Reserved.

Powered by WorldNow