2% Growth in Total Revenues to
$1.2 billion for the Fourth
Quarter of 2023
1% Growth in Total Revenues to
$4.9 billion for Fiscal Year
2023
68% Growth in Earnings per Share and 44%
Growth in Adjusted Earnings per Share for the Fourth Quarter of
2023
17% Growth in Earnings per Share
and 10% Growth in Adjusted Earnings per Share for Fiscal Year
2023
Initiating Inaugural Quarterly
Dividend
DUBLIN,
Calif., Feb. 15, 2024 /PRNewswire/ -- TriNet
Group, Inc. (NYSE: TNET), a leading provider of
comprehensive and flexible human capital management (HCM) solutions
for small and medium-size businesses (SMBs), today announced
financial results for the fourth quarter ended December 31, 2023. The fourth quarter highlights
below include non-GAAP financial measures which are reconciled
later in this release.
Fourth quarter highlights include:
- Total revenues increased 2% to $1.2
billion compared to the same period last year.
- Professional service revenues were flat at $189 million compared to the same period last
year.
- Net income was $67 million, or
$1.31 per diluted share, compared to
net income of $49 million, or
$0.78 per diluted share, in the same
period last year.
- Adjusted Net Income was $82
million, or $1.60 per diluted
share, compared to Adjusted Net Income of $71 million, or $1.11 per diluted share, in the same period last
year.
- Adjusted EBITDA was $140 million,
representing an Adjusted EBITDA Margin of 11.2%, compared to
Adjusted EBITDA of $111 million,
representing an Adjusted EBITDA Margin of 9.0% in the same period
last year.
- Average Worksite Employees (WSEs) decreased 3% as compared to
the same period last year and increased 1% as compared to the
previous quarter, to approximately 338,000.
- HRIS Cloud Services Revenues decreased 14% to $12 million compared to the same period last
year.
- Average HRIS Users decreased 14% as compared to the same period
last year, to approximately 204,000.
Full year highlights include:
- Total revenues increased 1% to $4.9
billion as compared to 2022.
- Professional service revenues were approximately flat at
$756 million as compared to
2022.
- Net income was $375 million or
$6.56 per diluted share, compared to
net income of $355 million or
$5.61 per diluted share, in
2022.
- Adjusted Net income was $446
million or $7.81 per diluted
share, compared to net income of $448
million or $7.07 per diluted
share, in 2022.
- Adjusted EBITDA was $697 million,
representing an Adjusted EBITDA Margin of 14.2%, compared to
Adjusted EBITDA of $688 million,
representing an Adjusted EBITDA Margin of 14.1% in 2022.
- Average Worksite Employees (WSEs) decreased by 5% compared to
2022, to approximately 331,000.
- HRIS Cloud Services Revenues increased 16% to $52 million compared to 2022.
- Average HRIS Users decreased 13% compared to 2022, to
approximately 215,000.
Dividend:
- TriNet announces quarterly dividend of $0.25 per share.
- Ex-Dividend Date March 29, 2024,
Dividend Record Date April 1, 2024,
Dividend Payment Date April 22,
2024.
Leadership Change (for more information, please visit
investor.trinet.com):
- Burton M. Goldfield announced
his intent to retire today concluding a successful 15-year career
as President & CEO of TriNet. He will continue as a special
advisor to the company through March 31,
2025.
"Throughout 2023 in what proved to be a challenging economic
environment, TriNet focused its execution on the areas within our
control," said Burton M. Goldfield,
TriNet's President and CEO. "Through our investment in sales, we
accelerated our new sales in the fourth quarter, and we just
completed our best January ever. We benefited from strong customer
retention as we kept our customers at the center of everything we
do. Finally, we launched our inaugural dividend completing an
extraordinary year of capital allocation."
He continued, "As just announced, I am retiring and
transitioning the leadership of TriNet to Mike Simonds, and I have every confidence in
Mike to keep moving the company forward. I am very proud of what we
created during my more than 15 years as President and CEO of
TriNet. My goal was to create an enduring company, and I believe
that TriNet's best days are still ahead."
"On behalf of the board, I would like to thank Burton for his
incredible leadership," said TriNet Chairman, David Hodgson. "We are thrilled to have Mike
join TriNet as President and CEO. We have confidence that he is the
right person to lead TriNet as it continues its growth."
"I know I speak for all TriNet colleagues when I thank Burton
for his integral role in building TriNet into what it has become
today," said Kelly Tuminelli,
TriNet's Chief Financial Officer. "TriNet executed extraordinarily
well throughout 2023 managing expenses prudently while investing in
sales and service and executing against our capital plan which has
culminated in our announced inaugural dividend. We look forward to
our continued strong execution in 2024, ensuring we are there for
our customers, colleagues, and stockholders."
Dividend Announcement
On February 12, 2024, TriNet's
Board of Director's approved a dividend of $0.25 per share. TriNet's stock will have an
Ex-Dividend Date of March 29, 2024, a
Dividend Record Date of April 1,
2024, and a Dividend Payment Date of April 22, 2024.
First Quarter and Full-Year 2024 Guidance
In addition to announcing our fourth quarter 2023 results, we
provide our first quarter and full-year 2024 guidance. Non-GAAP
financial measures are reconciled later in this release.
Percentages reflect the increase or (decrease) from the prior year
quarter and prior year end.
|
|
Q1
2024
|
|
Full Year
2024
|
|
|
Low
|
|
High
|
|
Low
|
|
High
|
Total
Revenues
|
|
— %
|
|
3 %
|
|
(1) %
|
|
4 %
|
Professional Service
Revenues
|
|
2 %
|
|
8 %
|
|
1 %
|
|
5 %
|
Insurance Cost
Ratio
|
|
86.5 %
|
|
82.5 %
|
|
88.5 %
|
|
86.5 %
|
Diluted net income per
share of common stock
|
|
$
1.82
|
|
$
2.54
|
|
$
4.57
|
|
$
6.08
|
Adjusted Net Income per
share - diluted
|
|
$
2.10
|
|
$
2.85
|
|
$
5.80
|
|
$
7.35
|
Annual Report on Form 10-K
We anticipate filing our Annual Report on Form 10-K ("Form
10-K") for the year ended December 31,
2023 with the U.S. Securities and Exchange Commission (SEC)
and making it available at http://www.trinet.com today,
February 15, 2024. This press release should be read in
conjunction with the Form 10-K and the related Notes to
Consolidated Financial Statements and Management's Discussion and
Analysis of Financial Condition and Results of Operations contained
in the Form 10-K.
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 fourth quarter results for 2023 and
provide first quarter and full-year financial guidance for 2024.
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:
https://dpregister.com/sreg/10185965/fb77e71f5d. For those who
would like to join the call but have not pre-registered, they can
do so by dialing +1 (412) 317-5426 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 https://investor.trinet.com. Participants can pre-register for
the webcast by going to:
https://events.q4inc.com/attendee/789681153. A replay of the
webcast will be available on this website for approximately one
year. A telephonic replay will be available for one week following
the conference call at +1 (412) 317-0088 conference ID:
4058379.
About TriNet
TriNet provides small and medium-size businesses (SMBs) with
full-service industry-specific HR solutions, providing both
professional employer organization (PEO) and human resources
information system (HRIS) services. TriNet offers access to human
capital expertise, benefits, risk mitigation, compliance, payroll,
and R&D tax credit services, all enabled by industry-leading
technology. TriNet's suite of products also includes services and
software-based solutions to help streamline workflows by connecting
HR, benefits, employee engagement, payroll and time &
attendance. Rooted in more than 30 years of supporting
entrepreneurs and adapting to the ever-changing modern workplace,
TriNet empowers SMBs to focus on what matters most - growing their
business and enabling their people For more information, please
visit TriNet.com or follow us on Facebook, LinkedIn and
Instagram.
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 titled "Non-GAAP Financial
Measures."
Forward-Looking Statements
This press release contains, and statements made during the
above referenced conference call will contain, statements that are
not historical in nature, are predictive in nature, or that depend
upon or refer to future events or conditions or otherwise contain
forward-looking statements within the meaning of Section 21 of the
Securities Exchange Act of 1934, as amended, and the Private
Securities Litigation Reform Act of 1995, including, among other
things, TriNet's expectations and assumptions regarding: TriNet's
financial guidance for the fourth quarter and full-year 2023 and
the underlying assumptions; TriNet's future financial performance
and long-term growth; the continued value to customers and
stockholders of TriNet's product offerings; our ability to continue
to grow new client sales, client tenure and improve retention,
including through product and technological innovation; and the
ability of our solutions to meet all client needs throughout their
business cycle. Forward-looking statements are often identified by
the use of words such as, but not limited to, "ability,"
"anticipate," "believe," "can," "continue," "could," "estimate,"
"expect," "guidance," "impact," "intend," "may," "plan," "predict,"
"project," "seek," "should," "strategy," "target," "value," "will,"
"would" and similar expressions or variations intended to identify
forward-looking statements. 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 our current expectations and any past or future
results, performance or achievements expressed or implied by the
forward-looking statements. Investors are cautioned not to place
undue reliance upon any forward-looking statements.
Important factors that could cause actual results to differ
materially from those expressed or implied by these forward-looking
statements include: our ability to manage unexpected changes in
workers' compensation and health insurance claims and costs by
worksite employees; our ability to mitigate the unique business
risks we face as a co-employer; the effects of volatility in the
financial and economic environment on the businesses that make up
our client base; loss of clients for reasons beyond our control and
the short-term contracts we typically use with our clients; the
impact of regional or industry-specific economic and health factors
on our operations; the impact of failures or limitations in the
business systems and service centers we rely upon; the impact of
discontinuing our discretionary credits on our business and client
loyalty and retention; changes in our insurance coverage or our
relationships with key insurance carriers; our ability to improve
our services and technology to satisfy client and regulatory
expectations; our ability to effectively integrate businesses we
have acquired or may acquire in the future; our ability to
effectively manage and improve our operational effectiveness and
resiliency; our ability to attract and retain qualified personnel;
the effects of increased competition and our ability to compete
effectively; the impact on our business of cyber-attacks, breaches,
disclosures and other data-related incidents; our ability to
protect against and remediate cyber-attacks, breaches, disclosures
and other data-related incidents, whether intentional or
inadvertent and whether attributable to us or our service
providers; our ability to comply with constantly evolving data
privacy and security laws; our ability to manage changes in,
uncertainty regarding, or adverse application of the complex laws
and regulations that govern our business; changing laws and
regulations governing health insurance and employee benefits; our
ability to be recognized as an employer of worksite employees and
for our benefits plans to satisfy all requirements under federal
and state regulations; changes in the laws and regulations that
govern what it means to be an employer, employee or independent
contractor; the impact of new and changing laws regarding remote
work; our ability to comply with the licensing requirements that
govern our HCM solutions; the outcome of existing and future legal
and tax proceedings; fluctuation in our results of operations and
stock price due to factors outside of our control; our ability to
comply with the restrictions of our credit facility and meet our
debt obligations; and the impact of concentrated ownership in our
stock by Atairos and other large stockholders. Any of these factors
could cause our actual results to differ materially from our
anticipated results.
Further information on risks that could affect TriNet's results
is included in our filings with the SEC, including under the
headings "Risk Factors" and "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and elsewhere in
our most recent Annual Report on Form 10-K and Quarterly Reports on
Form 10-Q, which are available on our investor relations website at
http://investor.trinet.com and on the SEC website at www.sec.gov.
Copies of these filings are also available by contacting TriNet
Corporation's Investor Relations Department at (510) 875-7201.
Except as required by law, neither we nor any other person assumes
responsibility for the accuracy and completeness of the
forward-looking statements in this press release, and any
forward-looking statements in this press release speak only as of
the date of this press release. In addition, we do not assume any
obligation, and do not intend, to update any of our forward-looking
statements, except as required by law.
Contacts:
|
|
Investors:
|
Media:
|
Alex Bauer
|
Renee Brotherton / Josh
Gross
|
TriNet
|
TriNet
|
Investorrelations@TriNet.com
|
Renee.Brotherton@TriNet.com
|
(510)
875-7201
|
Josh.Gross@TriNet.com
|
|
(408)
646-5103
|
Key Financial and Operating Metrics
We regularly review certain key financial and operating metrics
to evaluate growth trends, measure our performance and make
strategic decisions. These key financial and operating metrics may
change over time. Our key financial and operating metrics for the
periods presented were as follows:
|
Three Months Ended
December 31,
|
|
Year Ended December
31,
|
(in millions, except
per share and Operating Metrics data)
|
2023
|
|
2022
|
|
%
Change
|
|
2023
|
|
2022
|
|
%
Change
|
Income Statement
Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
$
1,245
|
|
$
1,226
|
|
2
|
%
|
|
$
4,922
|
|
$
4,885
|
|
1
|
%
|
Operating
income
|
86
|
|
56
|
|
54
|
|
|
469
|
|
499
|
|
(6)
|
|
Net income
|
67
|
|
49
|
|
37
|
|
|
375
|
|
355
|
|
6
|
|
Diluted net income per
share of common stock
|
1.31
|
|
0.78
|
|
68
|
|
|
6.56
|
|
5.61
|
|
17
|
|
Non-GAAP measures
(1):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
140
|
|
111
|
|
26
|
|
|
697
|
|
688
|
|
1
|
|
Adjusted Net
income
|
82
|
|
71
|
|
15
|
|
|
446
|
|
448
|
|
—
|
|
Operating
Metrics:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance Cost
Ratio
|
87 %
|
|
88 %
|
|
(1)
|
%
|
|
84 %
|
|
84 %
|
|
—
|
%
|
Average WSEs
(2)
|
337,924
|
|
347,671
|
|
(3)
|
|
|
331,423
|
|
348,543
|
|
(5)
|
|
Total WSEs at period
end (2)
|
347,542
|
|
348,652
|
|
—
|
|
|
347,542
|
|
348,652
|
|
—
|
|
Average HRIS Users
(3)
|
204,006
|
|
238,865
|
|
(15)
|
|
|
215,295
|
|
248,496
|
|
(13)
|
|
|
|
(1)
|
Refer to Non-GAAP
measures definitions and reconciliations from GAAP measures under
the heading "Non-GAAP Financial Measures".
|
(2)
|
Total WSEs includes
approximately 12,000 incremental WSEs for December 31, 2023
and Average WSEs includes approximately 4,000 incremental WSEs for
the fourth quarter of 2023 (1,000 for the full year 2023) that were
charged a platform user access fee. Additionally, Total WSEs
includes approximately 4,500 incremental WSEs for December 31,
2023 and Average WSEs includes approximately 4,800 for the fourth
quarter of 2023 (1,500 for the full year 2023) additional service
recipients. These were identified as a result of our ongoing effort
to ensure that our billing practices best match the expectations of
our customers. Please refer to Item 7 under Management Discussion
& Analysis in our 2023 10-K.
|
(3)
|
For the year ended
September 30, 2022, reflects HRIS Users from February 15, 2022, the
date on which we acquired Zenefits, to the end of the
period.
|
|
|
(in
millions)
|
December 31,
2023
|
|
December 31,
2022
|
|
%
Change
|
|
Balance Sheet
Data:
|
|
|
|
|
|
|
Working
capital
|
115
|
|
338
|
|
(66)
|
%
|
Total
assets
|
3,693
|
|
3,443
|
|
7
|
|
Debt
|
1,093
|
|
496
|
|
120
|
|
Total stockholders'
equity
|
78
|
|
775
|
|
(90)
|
|
|
Year Ended December
31,
|
(in
millions)
|
2023
|
|
2022
|
|
%
Change
|
Cash Flow
Data:
|
|
|
|
|
|
|
Net cash
provided by operating activities
|
$
545
|
|
$
562
|
|
(3)
|
%
|
Net cash used
in investing activities
|
(70)
|
|
(226)
|
|
(69)
|
|
Net cash used
in financing activities
|
(546)
|
|
(536)
|
|
2
|
|
Non-GAAP
measure (1):
|
|
|
|
|
|
|
Corporate Operating Cash Flows
|
$
539
|
|
$
497
|
|
8
|
|
(1)
|
Refer to Non-GAAP
measures definitions and reconciliations from GAAP measures under
the heading "Non-GAAP Financial Measures".
|
TRINET GROUP,
INC.
CONSOLIDATED
STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)
|
|
|
Three Months
Ended
December 31,
|
|
Year Ended
December 31,
|
(in millions except per
share data)
|
2023
|
2022
|
|
2023
|
2022
|
Professional service
revenues
|
$
189
|
$
189
|
|
$
756
|
$
754
|
Insurance service
revenues
|
1,056
|
1,037
|
|
4,166
|
4,131
|
Total
revenues
|
1,245
|
1,226
|
|
4,922
|
4,885
|
Insurance
costs
|
919
|
916
|
|
3,513
|
3,463
|
Cost of providing
services
|
77
|
78
|
|
307
|
303
|
Sales and
marketing
|
71
|
63
|
|
285
|
242
|
General and
administrative
|
57
|
76
|
|
211
|
241
|
Systems development and
programming
|
16
|
19
|
|
65
|
73
|
Depreciation and
amortization of intangible assets
|
19
|
18
|
|
72
|
64
|
Total costs and
operating expenses
|
1,159
|
1,170
|
|
4,453
|
4,386
|
Operating
income
|
86
|
56
|
|
469
|
499
|
Other income
(expense):
|
|
|
|
|
|
Interest expense, bank
fees and other
|
(16)
|
(5)
|
|
(40)
|
(39)
|
Interest
income
|
16
|
14
|
|
72
|
22
|
Income before
provision for income taxes
|
86
|
65
|
|
501
|
482
|
Income taxes
|
19
|
16
|
|
126
|
127
|
Net
income
|
$
67
|
$
49
|
|
$
375
|
$
355
|
Other comprehensive
income (loss), net of income taxes
|
6
|
—
|
|
3
|
(4)
|
Comprehensive
income
|
$
73
|
$
49
|
|
$
378
|
$
351
|
Net income per
share:
|
|
|
|
|
|
Basic
|
$
1.33
|
$
0.79
|
|
$
6.61
|
$
5.66
|
Diluted
|
$
1.31
|
$
0.78
|
|
$
6.56
|
$
5.61
|
Weighted average
shares:
|
|
|
|
|
|
Basic
|
51
|
62
|
|
57
|
63
|
Diluted
|
51
|
62
|
|
57
|
64
|
TRINET GROUP,
INC.
CONSOLIDATED BALANCE
SHEETS (Unaudited)
|
|
|
|
December
31,
|
|
December
31,
|
(in millions, except
share and per share data)
|
|
2023
|
|
2022
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
287
|
|
$
354
|
Investments
|
|
65
|
|
76
|
Restricted cash, cash
equivalents and investments
|
|
1,269
|
|
1,263
|
Accounts receivable,
net
|
|
18
|
|
19
|
Unbilled revenue,
net
|
|
447
|
|
375
|
Prepaid expenses,
net
|
|
67
|
|
71
|
Other payroll
assets
|
|
381
|
|
122
|
Other current
assets
|
|
44
|
|
46
|
Total
current assets
|
|
2,578
|
|
2,326
|
Restricted cash, cash
equivalents and investments, noncurrent
|
|
158
|
|
153
|
Investments,
noncurrent
|
|
143
|
|
151
|
Property and equipment,
net
|
|
17
|
|
24
|
Operating lease
right-of-use asset
|
|
24
|
|
31
|
Goodwill
|
|
462
|
|
462
|
Software and other
intangible assets, net
|
|
172
|
|
163
|
Other assets
|
|
139
|
|
133
|
Total
assets
|
|
$
3,693
|
|
$
3,443
|
Liabilities and
stockholders' equity
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts payable and
other current liabilities
|
|
$
87
|
|
$
98
|
Revolving credit
agreement borrowings
|
|
109
|
|
—
|
Client deposits and
other client liabilities
|
|
65
|
|
106
|
Accrued
wages
|
|
515
|
|
437
|
Accrued health
insurance costs, net
|
|
175
|
|
174
|
Accrued workers'
compensation costs, net
|
|
50
|
|
54
|
Payroll tax
liabilities and other payroll withholdings
|
|
1,438
|
|
1,087
|
Operating lease
liabilities
|
|
14
|
|
15
|
Insurance premiums and
other payables
|
|
10
|
|
17
|
Total
current liabilities
|
|
2,463
|
|
1,988
|
Long-term debt,
noncurrent
|
|
984
|
|
496
|
Accrued workers'
compensation costs, noncurrent, net
|
|
120
|
|
128
|
Deferred
taxes
|
|
13
|
|
8
|
Operating lease
liabilities, noncurrent
|
|
30
|
|
41
|
Other non current
liabilities
|
|
5
|
|
7
|
Total
liabilities
|
|
3,615
|
|
2,668
|
Stockholders'
equity:
|
|
|
|
|
Preferred
stock
|
|
—
|
|
—
|
Common stock and
additional paid-in capital
|
|
976
|
|
899
|
Accumulated
deficit
|
|
(896)
|
|
(119)
|
Accumulated other
comprehensive loss
|
|
(2)
|
|
(5)
|
Total
stockholders' equity
|
|
78
|
|
775
|
Total
liabilities & stockholders' equity
|
|
$
3,693
|
|
$
3,443
|
TRINET GROUP,
INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS (Unaudited)
|
|
|
Year Ended December
31,
|
(in
millions)
|
2023
|
2022
|
2021
|
Operating
activities
|
|
|
|
Net income
|
$
375
|
$
355
|
338
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization of intangible assets
|
72
|
64
|
54
|
Amortization of
deferred costs
|
40
|
38
|
31
|
Amortization of ROU
asset, lease modification, impairment, and abandonment
|
9
|
25
|
12
|
Stock based
compensation
|
59
|
62
|
50
|
Accretion of discount
rate on lease liabilities
|
2
|
2
|
2
|
Provision for doubtful
accounts
|
3
|
2
|
—
|
Deferred income
taxes
|
5
|
(22)
|
(9)
|
Losses from
disposition of assets
|
1
|
6
|
—
|
Losses and impairment
on investments
|
1
|
18
|
—
|
Changes in operating
assets and liabilities:
|
|
|
|
Accounts receivable,
net
|
(2)
|
—
|
3
|
Unbilled revenue,
net
|
(72)
|
(51)
|
(78)
|
Prepaid expenses,
net
|
4
|
(2)
|
(5)
|
Other payroll
assets
|
(259)
|
(72)
|
10
|
Accounts payable and
other current liabilities
|
(8)
|
(13)
|
33
|
Client deposits and
other client liabilities
|
(40)
|
9
|
(37)
|
Accrued
wages
|
77
|
65
|
60
|
Accrued health
insurance costs, net
|
1
|
—
|
2
|
Accrued workers'
compensation costs, net
|
(12)
|
(8)
|
(7)
|
Payroll taxes payable
and other payroll withholdings
|
351
|
158
|
(166)
|
Operating lease
liabilities
|
(17)
|
(17)
|
(13)
|
Other
assets
|
(38)
|
(55)
|
(60)
|
Other
liabilities
|
(7)
|
(2)
|
(2)
|
Net cash
provided by operating activities
|
545
|
562
|
218
|
Investing
activities
|
|
|
|
Purchases of
marketable securities
|
(276)
|
(410)
|
(444)
|
Proceeds from sale and
maturity of marketable securities
|
286
|
469
|
349
|
Acquisitions of
property and equipment and projects in process
|
(75)
|
(56)
|
(40)
|
Acquisitions of
subsidiaries, net of cash acquired
|
—
|
(229)
|
—
|
Other
Investments
|
(5)
|
—
|
—
|
Net cash
used in investing activities
|
(70)
|
(226)
|
(135)
|
Financing
activities
|
|
|
|
Repurchase of common
stock
|
(1,122)
|
(523)
|
(94)
|
Proceeds from issuance
of common stock
|
15
|
11
|
11
|
Payment of long-term
financing costs and debt issuance costs
|
(9)
|
—
|
(9)
|
Proceeds from issuance
of 2031 Notes
|
400
|
—
|
—
|
Proceeds from issuance
of 2029 Notes
|
—
|
—
|
500
|
Repayment of
borrowings
|
—
|
—
|
(370)
|
Proceeds from
revolving credit agreement borrowings
|
695
|
—
|
—
|
Repayment of
borrowings under revolving credit agreement
|
(495)
|
—
|
—
|
Awards effectively
repurchased for required employee withholding taxes
|
(30)
|
(24)
|
(26)
|
Net
cash provided by (used in) financing activities
|
(546)
|
(536)
|
12
|
Effect of exchange rate changes on cash and cash
equivalents
|
—
|
(1)
|
—
|
Net
increase (decrease) in cash and cash equivalents, unrestricted and
restricted
|
(71)
|
(201)
|
95
|
Cash and cash
equivalents, unrestricted and restricted:
|
|
|
|
Beginning of
period
|
1,537
|
1,738
|
1,643
|
End of
period
|
$ 1,466
|
$ 1,537
|
$ 1,738
|
|
|
|
|
Supplemental
disclosures of cash flow information
|
|
|
|
Interest
paid
|
$
25
|
$
18
|
12
|
Income taxes paid,
net
|
114
|
128
|
129
|
Supplemental
schedule of noncash investing and financing
activities
|
|
|
|
Payable for purchase
of property and equipment
|
$
4
|
$
6
|
3
|
Acquisitions of
subsidiaries paid in stock
|
$
—
|
$
17
|
—
|
Non-GAAP Financial Measures
In addition to the selected financial measures presented in
accordance with U.S. Generally Accepted Accounting Principles
(GAAP), we monitor other non-GAAP financial measures that we use to
manage our business, to make planning decisions, to allocate
resources and to use as performance measures in our executive
compensation plan. These key financial measures provide an
additional view of our operational performance over the long term
and provide information that we use to maintain and grow our
business.
The presentation of these non-GAAP financial measures is used to
enhance the understanding of certain aspects of our financial
performance. It is not meant to be considered in isolation from,
superior to, or as a substitute for the directly comparable
financial measures prepared in accordance with GAAP.
Non-GAAP
Measure
|
Definition
|
How We Use The
Measure
|
Adjusted
EBITDA
|
• Net income, excluding
the effects of:
- income tax
provision,
- interest expense,
bank fees and other,
-
depreciation,
- amortization of
intangible assets,
- stock based
compensation expense,
- amortization of cloud
computing
arrangements,
and
- transaction and
integration costs.
|
• Provides
period-to-period comparisons on a
consistent basis and an
understanding as to
how our management
evaluates the
effectiveness of our
business strategies by
excluding certain
non-recurring costs, which
include transaction and
integration costs, as
well as certain
non-cash charges such as
depreciation and
amortization, and stock-
based compensation and
certain impairment
charges recognized
based on the estimated
fair values. We believe
these charges are
either not directly
resulting from our core
operations or not
indicative of our ongoing
operations.
• Enhances comparisons
to prior periods
and, accordingly,
facilitates the development
of future projections
and earnings growth
prospects.
• Provides a measure,
among others, used
in the determination of
incentive compensation
for
management.
• We also sometimes
refer to Adjusted EBITDA
margin, which is the
ratio of Adjusted EBITDA
to total
revenues.
|
Adjusted Net
Income
|
• Net income, excluding
the effects of:
- effective income tax
rate (1),
- stock based
compensation,
- amortization of
intangible assets, net,
- non-cash interest
expense (2),
- transaction and
integration costs, and
- the income tax effect
(at our effective tax
rate (1) of these
pre-tax adjustments.
|
• Provides information
to our stockholders and
board of directors to
understand how our
management evaluates
our business, to monitor
and evaluate our
operating results, and analyze
profitability of our
ongoing operations and trends
on a consistent basis
by excluding certain non-
cash
charges.
|
Corporate Operating
Cash Flows
|
• Net cash provided by
(used in) operating
activities, excluding
the effects of:
- Assets associated
with WSEs (accounts
receivable, unbilled
revenue, prepaid
expenses, other payroll
assets and other
current assets)
and
- Liabilities
associated with WSEs (client
deposits and other
client liabilities, accrued
wages, payroll tax
liabilities and other payroll
withholdings, accrued
health insurance
costs, accrued workers'
compensation costs,
insurance premiums and
other payables, and
other current
liabilities).
|
• Provides information
that our stockholders and
management can use to
evaluate our cash flows
from operations
independent of the current assets
and liabilities
associated with our WSEs.
• Enhances comparisons
to prior periods and,
accordingly, used as a
liquidity measure to manage
liquidity between
corporate and WSE related
activities, and to help
determine and plan our cash
flow and capital
strategies.
|
|
|
(1)
|
Non-GAAP effective tax
rate is 25.6% for the fourth quarter and full year of 2023 and
25.5% for the fourth quarter and full year of 2022, which excludes
the income tax impact from stock-based compensation, changes in
uncertain tax positions, and nonrecurring benefits or expenses from
federal legislative changes.
|
(2)
|
Non-cash interest
expense represents amortization and write-off of our debt issuance
costs and loss on a terminated derivative.
|
Reconciliation of GAAP to Non-GAAP Measures
The table below presents a reconciliation of net income to
Adjusted EBITDA:
|
Three Months
Ended
December 31,
|
|
Year
Ended
December
31,
|
(in
millions)
|
2023
|
2022
|
|
2023
|
2022
|
Net income
|
$
67
|
$
49
|
|
$
375
|
$
355
|
Provision for income
taxes
|
19
|
16
|
|
126
|
127
|
Stock based
compensation
|
16
|
16
|
|
59
|
62
|
Interest expense, bank
fees and other (1)
|
16
|
5
|
|
40
|
39
|
Depreciation and
amortization of intangible assets
|
19
|
18
|
|
72
|
64
|
Amortization of cloud
computing arrangements
|
1
|
1
|
|
8
|
4
|
Transaction and
integration costs
|
2
|
6
|
|
17
|
37
|
Adjusted
EBITDA
|
$
140
|
$
111
|
|
$
697
|
$
688
|
Adjusted EBITDA
Margin
|
11.2 %
|
9.0 %
|
|
14.2 %
|
14.1 %
|
|
|
(1)
|
2022 Interest expense,
bank fees and other includes $17M of realized investments losses on
sales and impairments related to AFS securities.
|
The table below presents a reconciliation of net income to
Adjusted Net Income and Adjusted Net Income per share -
diluted:
|
Three Months
Ended
December 31,
|
|
Year
Ended
December
31,
|
(in millions, except
per share data)
|
2023
|
2022
|
|
2023
|
2022
|
Net income
|
$
67
|
$
49
|
|
$
375
|
$
355
|
Effective income tax
rate adjustment
|
(3)
|
—
|
|
(2)
|
5
|
Stock based
compensation
|
16
|
16
|
|
59
|
62
|
Amortization of
intangible assets
|
5
|
5
|
|
20
|
18
|
Non-cash interest
expense
|
1
|
—
|
|
2
|
1
|
Transaction and
integration costs
|
2
|
6
|
|
17
|
37
|
Income tax impact of
pre-tax adjustments
|
(6)
|
(6)
|
|
(25)
|
(30)
|
Adjusted Net
Income
|
$
82
|
$
71
|
|
$
446
|
$
448
|
GAAP weighted
average shares of common stock - diluted
|
51
|
62
|
|
57
|
64
|
Adjusted Net Income
per share - diluted
|
$
1.60
|
$
1.11
|
|
$
7.81
|
$
7.07
|
The table below presents a reconciliation of net cash provided
by operating activities to Corporate Operating Cash flows:
|
Year
Ended
December
31,
|
(in
millions)
|
2023
|
2022
|
Net cash provided by
operating activities
|
$
545
|
$
562
|
Less: Change in
WSE related other current assets
|
(329)
|
(149)
|
Less: Change in
WSE related liabilities
|
335
|
214
|
Net cash used in
operating activities - WSE
|
$
6
|
$
65
|
Net cash provided by
operating activities - Corporate
|
$
539
|
$
497
|
Reconciliation of GAAP to Non-GAAP Measures for the first
quarter and full-year 2024 guidance.
Low and high percentages represent increases (decreases) from
the same periods in the previous year.
The table below presents a reconciliation of net income to
Adjusted Net Income and Adjusted Net Income per share -
diluted:
|
Q1
2023
|
|
Q1 2024
Guidance
|
|
FY
2023
|
|
Year 2024
Guidance
|
(in millions, except
per share data)
|
Actual
|
|
Low
|
High
|
|
Actual
|
|
Low
|
High
|
Net income
|
$
131
|
|
(29) %
|
(1) %
|
|
$
375
|
|
(38) %
|
(17) %
|
Effective income tax
rate adjustment
|
3
|
|
(108)
|
(77)
|
|
(2)
|
|
98
|
1
|
Stock based
compensation
|
11
|
|
39
|
39
|
|
59
|
|
17
|
17
|
Amortization of
intangible assets
|
6
|
|
(13)
|
(13)
|
|
20
|
|
(5)
|
(5)
|
Non-cash interest
expense
|
—
|
|
(25)
|
(25)
|
|
2
|
|
(39)
|
(39)
|
Transaction and
integration costs
|
5
|
|
(100)
|
(100)
|
|
17
|
|
(100)
|
(100)
|
Income tax impact of
pre-tax adjustments
|
(6)
|
|
(6)
|
(6)
|
|
(25)
|
|
(9)
|
(9)
|
Adjusted Net
Income
|
$
150
|
|
(28) %
|
(3) %
|
|
$
446
|
|
(34) %
|
(16) %
|
GAAP weighted
average shares of common stock - diluted
|
60
|
|
|
|
|
57
|
|
|
|
Adjusted Net Income
per share - diluted
|
$
2.49
|
|
$
2.10
|
$
2.85
|
|
$
7.81
|
|
$ 5.80
|
$ 7.35
|
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SOURCE TriNet Group, Inc.