DUBLIN, Calif., Oct. 24,
2019 /PRNewswire/ -- TriNet
Group, Inc. (NYSE: TNET), a leading provider of
comprehensive human resources solutions for small to midsize
businesses, today announced financial results for the
third quarter ended September 30, 2019. The third
quarter highlights below include non-GAAP financial measures which
are reconciled later in this release.
Third quarter highlights include:
- Total revenues increased 11% to $969
million and Net Service Revenues decreased 4% to
$221 million, each as compared to the
same period last year.
- Net income was $55 million, or
$0.78 per diluted share, compared to
net income of $51 million, or
$0.71 per diluted share, in the same
period last year.
- Adjusted Net Income was $58
million, or $0.81 per diluted
share, compared to Adjusted Net Income of $55 million, or $0.75 per diluted share, in the same period last
year.
- Adjusted EBITDA was $93 million,
an 8% increase from the same period last year.
- Total WSEs increased 4% compared to the same period last year,
at approximately 332,000.
- Average WSEs increased 4% as compared to the same period last
year, at approximately 331,000.
"During the third quarter, we continued to accelerate the
momentum in our business as we successfully delivered our value
proposition into our installed base and to new customers," said
Burton M. Goldfield, TriNet's
President and CEO. "We did experience higher insurance costs during
the quarter, and we have already taken steps to mitigate their
impact to 2020. With the current momentum in our business coupled
with the steps we've taken, we believe we are well positioned to
continue to deliver profitable growth for our shareholders."
TriNet's total revenues for the third quarter of 2019 increased
11% from the third quarter of 2018 to $969
million, while Net Service Revenues (Total revenues less
insurance costs) for the third quarter of 2019 decreased 4% from
the third quarter of 2018 to $221
million. Net Insurance Service Revenues consisted of
insurance service revenues of $839
million, less insurance costs of $748
million. Professional service revenues for the third quarter
of 2019 increased 8%, and Net Insurance Service Revenues for the
third quarter of 2019 decreased 17%, each as compared to the third
quarter of 2018.
At September 30, 2019, TriNet had cash and cash equivalents
of $216 million and total debt of
$397 million.
Quarterly Report on Form 10-Q
We anticipate filing our Quarterly Report on Form 10-Q ("Form
10-Q") for the nine months ended September
30, 2019 with the SEC and making it available at
http://www.trinet.com today, October 24, 2019. This press
release should be read in conjunction with the Form 10-Q and the
related Notes to Condensed Consolidated Financial Statements and
Management's Discussion and Analysis of Financial Condition and
Results of Operations contained in the Form 10-Q.
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 its outlook
for the third quarter and 2019. 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/10135972. 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
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: 10135972.
About TriNet
TriNet is a leading provider of a comprehensive human resources
solution for small to midsize businesses, or SMBs. We enhance
business productivity by enabling our clients to outsource their
human resources, or HR, function to us, allowing them to focus on
operating and growing their core businesses. Our HR solutions
include 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 technology platform,
with online and mobile tools, which allow our clients and their
employees to efficiently conduct their HR transactions anytime and
anywhere. For more information, please visit
http://www.trinet.com.
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 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: its
ability to execute its strategic operational plan, including its
vertical strategy and process and common platform improvement
initiative, its ability to successfully leverage its scale, and its
ability to deliver profitable growth. 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," "impact," "intend," "may," "plan," "project,"
"seek," "should," "strategy," "target," "value," "will," "would"
and similar expressions or variations. 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. 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: risks associated with changes in, uncertainty
regarding, or adverse application of the complex laws and
regulations that govern our business; our ability to be recognized
as an employer of worksite employees under federal and state
regulations; our ability to mitigate business risks associated with
our co-employment relationship with our worksite employees; our
ability to secure private and confidential client and worksite
employee data and our information technology infrastructure against
cyber-attacks and security breaches; our ability to manage
unexpected changes in workers' compensation and health insurance
claims by worksite employees; fluctuation in our results of
operation and stock price as a result of numerous factors, many of
which are outside of our control, such as the volume and
severity of our workers' compensation and health insurance claims
and the amount and timing of our insurance costs, operating
expenses and capital expenditure requirements; failures or
limitations in the business systems we rely upon; our ability to
improve our technology to meet the expectations of our clients; our
ability to properly manage our internal controls over financial
reporting; our ability to effectively integrate businesses we have
acquired and new businesses we may acquire in the future; the
effects of volatility in the financial and economic environment on
the businesses that make up our client base; our ability to
effectively manage and improve our operational processes; market
acceptance of our vertical strategy; our ability to manage our
sales force effectively; the ability of our products and services
to compete effectively in our industry; the concentration of our
clients in certain geographies and industries; the outcome of
existing and future legal proceedings; changes in our income tax
positions or adverse outcomes from on-going and future audits;
adverse changes in our insurance coverage or our relationships with
key insurance carriers; our ability to manage our client attrition;
our ability to comply with the restrictions of our credit facility
and meet our debt obligations; the impact of concentrated ownership
in our stock; and the effects of increased competition and our
ability to compete effectively.
Further information on risks that could affect TriNet's results
is included in our filings with the U.S. Securities and Exchange
Commission (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
|
Fatima
Afzal
|
TriNet
|
TriNet
|
Investorrelations@TriNet.com
|
Fatima.Afzal@TriNet.com
|
(510)
875-7201
|
(510)
875-7265
|
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
September 30,
|
|
Nine Months Ended
September 30,
|
(in millions, except
per share and WSE data)
|
2019
|
|
2018
|
|
%
Change
|
|
2019
|
|
2018
|
|
%
Change
|
Income Statement
Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
$
|
969
|
|
|
$
|
875
|
|
|
11
|
|
%
|
|
$
|
2,838
|
|
|
$
|
2,586
|
|
|
10
|
|
%
|
|
Operating
income
|
68
|
|
|
62
|
|
|
9
|
|
|
|
205
|
|
|
209
|
|
|
(2)
|
|
|
|
Net income
|
55
|
|
|
51
|
|
|
8
|
|
|
|
164
|
|
|
163
|
|
|
1
|
|
|
|
Diluted net income
per share of
common stock
|
0.78
|
|
|
0.71
|
|
|
11
|
|
|
|
2.31
|
|
|
2.25
|
|
|
3
|
|
|
|
Non-GAAP measures
(1):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Service
Revenues
|
221
|
|
|
228
|
|
|
(4)
|
|
|
|
703
|
|
|
668
|
|
|
5
|
|
|
|
Net Insurance Service
Revenues
|
91
|
|
|
109
|
|
|
(17)
|
|
|
|
310
|
|
|
305
|
|
|
1
|
|
|
|
Adjusted
EBITDA
|
93
|
|
|
88
|
|
|
8
|
|
|
|
286
|
|
|
277
|
|
|
3
|
|
|
|
Adjusted Net
income
|
58
|
|
|
55
|
|
6
|
|
|
|
177
|
|
|
176
|
|
|
1
|
|
|
|
Operating
Metrics:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total WSEs payroll
and payroll taxes
processed
|
$
|
9,381
|
|
|
$
|
8,669
|
|
|
8
|
|
%
|
|
$
|
30,113
|
|
|
$
|
27,360
|
|
|
10
|
|
%
|
|
Average
WSEs
|
330,970
|
|
|
318,129
|
|
|
4
|
|
|
|
320,868
|
|
|
315,512
|
|
|
2
|
|
|
|
Total WSEs at period
end
|
331,584
|
|
|
317,496
|
|
|
4
|
|
|
|
331,584
|
|
|
317,496
|
|
|
4
|
|
|
|
|
(1)
Refer to Non-GAAP Financial Measures section below for definitions
and reconciliations from GAAP measures.
|
(in
millions)
|
September 30,
2019
|
|
December 31,
2018
|
|
%
Change
|
|
Balance Sheet
Data:
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
216
|
|
|
$
|
228
|
|
|
(5)
|
|
%
|
Working
capital
|
253
|
|
|
221
|
|
|
15
|
|
|
Total
assets
|
2,245
|
|
|
2,435
|
|
|
(8)
|
|
|
Long-term
debt
|
397
|
|
|
413
|
|
|
(4)
|
|
|
Total
liabilities
|
1,768
|
|
|
2,060
|
|
|
(14)
|
|
|
Total stockholders'
equity
|
477
|
|
|
375
|
|
|
27
|
|
|
|
Nine Months Ended
September 30,
|
(in
millions)
|
2019
|
|
2018
|
|
%
Change
|
Cash Flow
Data:
|
|
|
|
|
|
|
Net cash used in
operating activities
|
$
|
(211)
|
|
|
$
|
(476)
|
|
|
(56)
|
|
%
|
Net cash used in
investing activities
|
(30)
|
|
|
(169)
|
|
|
(82)
|
|
|
Net cash used in
financing activities
|
(109)
|
|
|
(62)
|
|
|
76
|
|
|
Non-GAAP measures
(1):
|
|
|
|
|
|
|
Corporate operating
cash flows
|
146
|
|
|
184
|
|
|
(21)
|
|
|
(1) Refer to
Non-GAAP Financial Measures section in the following pages for
definitions and reconciliations from GAAP measures.
|
TRINET GROUP,
INC.
|
CONSOLIDATED
STATEMENTS OF INCOME (Unaudited)
|
|
|
Three Months
Ended
September 30,
|
Nine Months
Ended
September 30,
|
(in millions, except
share and per share data)
|
2019
|
2018
|
2019
|
2018
|
Professional service
revenues
|
$
|
130
|
|
$
|
119
|
|
$
|
393
|
|
$
|
363
|
|
Insurance service
revenues
|
839
|
|
756
|
|
2,445
|
|
2,223
|
|
Total
revenues
|
969
|
|
875
|
|
2,838
|
|
2,586
|
|
Insurance
costs
|
748
|
|
647
|
|
2,135
|
|
1,918
|
|
Cost of providing
services
|
59
|
|
58
|
|
186
|
|
166
|
|
Sales and
marketing
|
47
|
|
52
|
|
145
|
|
132
|
|
General and
administrative
|
27
|
|
33
|
|
99
|
|
95
|
|
Systems development
and programming
|
9
|
|
12
|
|
34
|
|
36
|
|
Depreciation and
amortization of intangible assets
|
11
|
|
11
|
|
34
|
|
30
|
|
Total costs and
operating expenses
|
901
|
|
813
|
|
2,633
|
|
2,377
|
|
Operating
income
|
68
|
|
62
|
|
205
|
|
209
|
|
Other income
(expense):
|
|
|
|
|
Interest expense,
bank fees and other
|
(6)
|
|
(5)
|
|
(17)
|
|
(17)
|
|
Interest
income
|
5
|
|
3
|
|
18
|
|
7
|
|
Income before
provision for income taxes
|
67
|
|
60
|
|
206
|
|
199
|
|
Income tax
expense
|
12
|
|
9
|
|
42
|
|
36
|
|
Net
income
|
$
|
55
|
|
$
|
51
|
|
$
|
164
|
|
$
|
163
|
|
Other comprehensive
income, net of tax
|
—
|
|
—
|
|
1
|
|
—
|
|
Comprehensive
income
|
$
|
55
|
|
$
|
51
|
|
$
|
165
|
|
$
|
163
|
|
|
|
|
|
|
Net income per
share:
|
|
|
|
|
Basic
|
$
|
0.80
|
|
$
|
0.73
|
|
$
|
2.35
|
|
$
|
2.32
|
|
Diluted
|
$
|
0.78
|
|
$
|
0.71
|
|
$
|
2.31
|
|
$
|
2.25
|
|
Weighted average
shares:
|
|
|
|
|
Basic
|
69,612,362
|
|
70,556,877
|
|
69,740,956
|
|
70,353,597
|
|
Diluted
|
70,972,874
|
|
72,599,944
|
|
71,069,852
|
|
72,388,598
|
|
TRINET GROUP,
INC.
|
CONSOLIDATED
BALANCE SHEETS (Unaudited)
|
|
(In
millions)
|
September 30,
2019
|
|
December 31,
2018
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
216
|
|
|
$
|
228
|
|
Investments
|
67
|
|
|
54
|
|
Restricted cash, cash
equivalents and investments
|
585
|
|
|
942
|
|
Accounts receivable,
net
|
9
|
|
|
11
|
|
Unbilled revenue,
net
|
366
|
|
|
304
|
|
Prepaid expenses,
net
|
63
|
|
|
48
|
|
Other current
assets
|
69
|
|
|
59
|
|
Total current
assets
|
1,375
|
|
|
1,646
|
|
Restricted cash, cash
equivalents and investments, noncurrent
|
198
|
|
|
187
|
|
Investments,
noncurrent
|
128
|
|
|
135
|
|
Property &
equipment, net
|
86
|
|
|
79
|
|
Operating lease
right-of-use asset
|
57
|
|
|
—
|
|
Goodwill
|
289
|
|
|
289
|
|
Other intangible
assets, net
|
17
|
|
|
21
|
|
Other
assets
|
95
|
|
|
78
|
|
Total
assets
|
$
|
2,245
|
|
|
$
|
2,435
|
|
Liabilities and
stockholders' equity
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts payable and
other current liabilities
|
$
|
33
|
|
|
$
|
45
|
|
Long-term
debt
|
22
|
|
|
22
|
|
Client
deposits
|
28
|
|
|
56
|
|
Accrued
wages
|
405
|
|
|
352
|
|
Accrued health
insurance costs, net
|
156
|
|
|
135
|
|
Accrued workers'
compensation costs, net
|
63
|
|
|
67
|
|
Payroll tax
liabilities and other payroll withholdings
|
389
|
|
|
729
|
|
Operating lease
liabilities
|
17
|
|
|
—
|
|
Insurance premiums
and other payables
|
9
|
|
|
19
|
|
Total current
liabilities
|
1,122
|
|
|
1,425
|
|
Long-term debt,
noncurrent
|
375
|
|
|
391
|
|
Accrued workers'
compensation costs, noncurrent, net
|
146
|
|
|
158
|
|
Deferred
taxes
|
64
|
|
|
68
|
|
Operating lease
liabilities, noncurrent
|
52
|
|
|
—
|
|
Other non-current
liabilities
|
9
|
|
|
18
|
|
Total
liabilities
|
1,768
|
|
|
2,060
|
|
Stockholders'
equity:
|
|
|
|
Preferred
stock
|
—
|
|
|
—
|
|
Common stock and
additional paid-in capital
|
676
|
|
|
641
|
|
Accumulated
deficit
|
(200)
|
|
|
(266)
|
|
Accumulated other
comprehensive income
|
1
|
|
|
—
|
|
Total
stockholders' equity
|
477
|
|
|
375
|
|
Total liabilities
and stockholders' equity
|
$
|
2,245
|
|
|
$
|
2,435
|
|
TRINET GROUP,
INC.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS (Unaudited)
|
|
Nine Months
Ended
September 30,
|
(In
millions)
|
2019
|
|
2018
|
Operating
activities
|
|
|
|
Net income
|
$
|
164
|
|
|
$
|
163
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
41
|
|
|
36
|
|
Noncash lease
expense
|
14
|
|
|
—
|
|
Stock-based
compensation
|
29
|
|
|
31
|
|
Changes in operating
assets and liabilities:
|
|
|
|
Accounts receivable,
net
|
5
|
|
|
12
|
|
Unbilled revenue,
net
|
(61)
|
|
|
(3)
|
|
Prepaid expenses,
net
|
(17)
|
|
|
(26)
|
|
Other
assets
|
(34)
|
|
|
(54)
|
|
Accounts payable and
other current liabilities
|
(16)
|
|
|
(18)
|
|
Client
deposits
|
(28)
|
|
|
(17)
|
|
Accrued
wages
|
53
|
|
|
34
|
|
Accrued health
insurance costs, net
|
21
|
|
|
(7)
|
|
Accrued workers'
compensation costs, net
|
(16)
|
|
|
(5)
|
|
Payroll taxes payable
and other payroll withholdings
|
(340)
|
|
|
(616)
|
|
Operating lease
liabilities
|
(13)
|
|
|
—
|
|
Other
liabilities
|
(13)
|
|
|
(6)
|
|
Net cash used in
operating activities
|
(211)
|
|
|
(476)
|
|
Investing
activities
|
|
|
|
Purchases of
marketable securities
|
(109)
|
|
|
(223)
|
|
Proceeds from sale
and maturity of marketable securities
|
113
|
|
|
87
|
|
Acquisitions of
property and equipment
|
(34)
|
|
|
(33)
|
|
Net cash (used in)
provided by investing activities
|
(30)
|
|
|
(169)
|
|
Financing
activities
|
|
|
|
Repurchase of common
stock
|
(84)
|
|
|
(47)
|
|
Proceeds from
issuance of common stock from employee stock purchase
plan
|
4
|
|
|
3
|
|
Proceeds from
issuance of common stock from exercised options
|
2
|
|
|
6
|
|
Awards effectively
repurchased for required employee withholding taxes
|
(14)
|
|
|
(15)
|
|
Proceeds from
issuance of notes payable, net
|
—
|
|
|
210
|
|
Payments for
extinguishment of debt
|
—
|
|
|
(204)
|
|
Repayment of
debt
|
(17)
|
|
|
(15)
|
|
Net cash used in
financing activities
|
(109)
|
|
|
(62)
|
|
Net decrease in
unrestricted and restricted cash and cash
equivalents
|
(350)
|
|
|
(707)
|
|
Cash and cash
equivalents, unrestricted and restricted:
|
|
|
|
Beginning of
period
|
$
|
1,349
|
|
|
1,738
|
|
End of
period
|
$
|
999
|
|
|
$
|
1,031
|
|
|
|
|
|
Supplemental
disclosures of cash flow information
|
|
|
|
Interest
paid
|
15
|
|
|
13
|
|
Income taxes paid,
net
|
48
|
|
|
33
|
|
Supplemental
schedule of noncash investing and financing
activities
|
|
|
|
Payable for purchase
of property and equipment
|
4
|
|
|
2
|
|
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,
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
|
Net Service
Revenues
|
• Sum of professional
service revenues and Net Insurance Service Revenues, or total
revenues less insurance costs.
|
• Provides a
comparable basis of revenues on a net basis. Professional service
revenues are represented net of client payroll costs whereas
insurance service revenues are presented gross of insurance costs
for financial reporting purposes.
• Acts as the basis
to allocate resources to different functions and evaluates the
effectiveness of our business strategies by each business
function.
• Provides a measure,
among others, used in the determination of incentive compensation
for management.
|
Net Insurance
Service Revenues
|
• Insurance revenues
less insurance costs.
|
• Is a component of
Net Service Revenues.
• Provides a
comparable basis of revenues on a net basis. Professional service
revenues are represented net of client payroll costs whereas
insurance service revenues are presented gross of insurance costs
for financial reporting purposes. Promotes an understanding of our
insurance services business by evaluating insurance service
revenues net of our WSE related costs which are substantially
pass-through for the benefit of our WSEs. Under GAAP, insurance
service revenues and costs are recorded gross as we have latitude
in establishing the price, service and supplier
specifications.
• We also sometimes
refer to Net Insurance Service Margin, which is the ratio of Net
Insurance Revenue to Insurance Service Revenue.
|
Adjusted
EBITDA
|
• Net income,
excluding the effects of:
- income tax
provision,
- interest
expense,
-
depreciation,
- amortization of
intangible assets, and
- stock-based
compensation expense.
|
• 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-cash charges
such as depreciation and amortization, and stock-based compensation
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 Net Service Revenue.
|
Adjusted Net
Income
|
• Net income,
excluding the effects of:
- effective income tax
rate(1),
- stock-based
compensation,
- amortization of
intangible assets,
- non-cash interest
expense(2),
- 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 (used in)
provided by operating activities, excluding the effects
of:
- Assets associated
with WSEs (accounts receivable,
unbilled revenue, prepaid expenses and other current assets)
and
- Liabilities associated with WSEs (client deposits, accrued wages,
payroll tax liabilities and other payroll withholdings, accrued
health benefit 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 26%
for 2019 and 2018 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.
|
Reconciliation of GAAP to Non-GAAP Measures
The table below presents a reconciliation of total revenues to
Net Service Revenues:
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
(in
millions)
|
2019
|
2018
|
|
2019
|
2018
|
Total
revenues
|
$
|
969
|
|
$
|
875
|
|
|
$
|
2,838
|
|
$
|
2,586
|
|
Less: Insurance
costs
|
748
|
|
647
|
|
|
2,135
|
|
1,918
|
|
Net Service
Revenues
|
$
|
221
|
|
$
|
228
|
|
|
$
|
703
|
|
$
|
668
|
|
The table below presents a reconciliation of insurance service
revenues to Net Insurance Service Revenues:
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
(in
millions)
|
2019
|
2018
|
|
2019
|
2018
|
Insurance service
revenues
|
$
|
839
|
|
$
|
756
|
|
|
$
|
2,445
|
|
$
|
2,223
|
|
Less: Insurance
costs
|
748
|
|
647
|
|
|
2,135
|
|
1,918
|
|
Net Insurance
Service Revenues
|
$
|
91
|
|
$
|
109
|
|
|
$
|
310
|
|
$
|
305
|
|
Net Insurance
Service Revenue Margin
|
11
|
%
|
14
|
%
|
|
13
|
%
|
14
|
%
|
The table below presents a reconciliation of net income to
Adjusted EBITDA:
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
(in
millions)
|
2019
|
2018
|
|
2019
|
2018
|
Net income
|
$
|
55
|
|
$
|
51
|
|
|
$
|
164
|
|
$
|
163
|
|
Provision for income
taxes
|
12
|
|
9
|
|
|
42
|
|
36
|
|
Stock based
compensation
|
9
|
|
12
|
|
|
29
|
|
31
|
|
Interest expense and
bank fees
|
6
|
|
5
|
|
|
17
|
|
17
|
|
Depreciation and
amortization of intangible assets
|
11
|
|
11
|
|
|
34
|
|
30
|
|
Adjusted
EBITDA
|
$
|
93
|
|
$
|
88
|
|
|
$
|
286
|
|
$
|
277
|
|
Adjusted EBITDA
Margin
|
43
|
%
|
38
|
%
|
|
41
|
%
|
41
|
%
|
The table below presents a reconciliation of net income to
Adjusted Net Income and Adjusted Net Income per share -
diluted:
|
Three Months
Ended
September 30,
|
|
Nine Months
Ended
September 30,
|
(in millions, except
per share data)
|
2019
|
2018
|
|
2019
|
2018
|
Net income
|
$
|
55
|
|
$
|
51
|
|
|
$
|
164
|
|
$
|
163
|
|
Effective income tax
rate adjustment
|
(5)
|
|
(6)
|
|
|
(12)
|
|
(16)
|
|
Stock based
compensation
|
9
|
|
12
|
|
|
29
|
|
31
|
|
Amortization of
intangible assets
|
1
|
|
1
|
|
|
4
|
|
4
|
|
Non-cash interest
expense
|
1
|
|
—
|
|
|
1
|
|
4
|
|
Income tax impact of
pre-tax adjustments
|
(3)
|
|
(3)
|
|
|
(9)
|
|
(10)
|
|
Adjusted Net
Income
|
$
|
58
|
|
$
|
55
|
|
|
$
|
177
|
|
$
|
176
|
|
GAAP Weighted
average shares of common stock - diluted
|
71
|
|
73
|
|
|
71
|
|
72
|
|
Adjusted Net
Income per share - diluted
|
$
|
0.81
|
|
$
|
0.75
|
|
|
$
|
2.49
|
|
$
|
2.43
|
|
The table below presents a reconciliation of net cash used in
operating activities to corporate operating cash flows:
|
Nine Months
Ended
September 30,
|
(in
millions)
|
2019
|
2018
|
Net cash used in
operating activities
|
$
|
(211)
|
|
$
|
(476)
|
|
Change in WSE related
other current assets
|
65
|
|
51
|
|
Change in WSE related
liabilities
|
292
|
|
609
|
|
Corporate
Operating Cash Flows
|
$
|
146
|
|
$
|
184
|
|
View original
content:http://www.prnewswire.com/news-releases/trinet-announces-third-quarter-2019-results-300945179.html
SOURCE TriNet Group, Inc.