DUBLIN, Calif., April 26,
2021 /PRNewswire/ -- TriNet
Group, Inc. (NYSE: TNET), a leading provider of
comprehensive human resources solutions for small and medium-size
businesses, today announced financial results for the
first quarter ended March 31, 2021. The first
quarter highlights below include non-GAAP financial measures which
are reconciled later in this release.
First quarter highlights include:
- Total revenues increased 1% to $1.1
billion and Net Service Revenues increased 9% to
$309 million, as compared to the same
period last year.
- Net income was $101 million, or
$1.51 per diluted share, compared to
net income of $91 million, or
$1.31 per diluted share, in the same
period last year.
- Adjusted Net Income was $111
million, or $1.66 per diluted
share, compared to Adjusted Net Income of $97 million, or $1.41 per diluted share, in the same period last
year.
- Adjusted EBITDA was $163 million,
representing an Adjusted EBITDA Margin of 53%.
- Total Worksite Employees (WSEs) decreased 3% compared to the
same period last year, to approximately 326,000.
- Average WSEs decreased 4% as compared to the same period last
year, to approximately 321,000.
"Our business model continued to add significant value to our
customers during these challenging times," said Burton M. Goldfield, TriNet's President and CEO.
"Our customers sought help not just with traditional HR functions
such as payroll, but also with strategic HR questions as they
addressed the difficult economic environment. Through our vertical
strategy, we have successfully aligned the right customers, with
the right service model, at the right price. We once again
leveraged our differentiated business model and financial
performance to establish the 2021 credit program for the benefit of
all of our stakeholders. We are encouraged by the economic
reopening underway, and we are excited for a return to growth in
2021."
TriNet's total revenues for the first quarter of 2021 increased
1% from the first quarter of 2020 to $1.1
billion, while Net Service Revenues (total revenues less
insurance costs) for the first quarter of 2021 increased 9% to
$309 million compared to first
quarter 2020. Net Insurance Service Revenues consisted of insurance
service revenues of $907 million,
less insurance costs of $751 million.
Professional service revenues for the first quarter of 2021
decreased 2%, and Net Insurance Service Revenues for the first
quarter of 2021 increased 23%, each as compared to the first
quarter of 2020.
At March 31, 2021, TriNet had cash and cash equivalents of
$500 million and total debt of
$494 million.
Second Quarter and Full-Year 2021 Guidance
In addition to announcing our first quarter 2021 results, we
provide our second quarter and full-year 2021 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.
|
|
Q2
2021
|
|
Full Year
2021
|
|
|
Low
|
|
High
|
|
Low
|
|
High
|
Total
revenues
|
|
12
|
%
|
|
14
|
%
|
|
9
|
%
|
|
11
|
%
|
Professional Service
Revenues
|
|
10
|
%
|
|
14
|
%
|
|
8
|
%
|
|
10
|
%
|
Net Insurance
Margin
|
|
10
|
%
|
|
11
|
%
|
|
10
|
%
|
|
11
|
%
|
Adjusted EBITDA
Margin
|
|
35
|
%
|
|
39
|
%
|
|
38
|
%
|
|
40
|
%
|
Diluted net income
per share of common stock
|
|
$
|
0.59
|
|
|
$
|
0.74
|
|
|
$
|
2.86
|
|
|
$
|
3.31
|
|
Adjusted Net Income
per share - diluted
|
|
$
|
0.70
|
|
|
$
|
0.86
|
|
|
$
|
3.42
|
|
|
$
|
3.90
|
|
Quarterly Report on Form 10-Q
We anticipate filing our Quarterly Report on Form 10-Q ("Form
10-Q") for the three months ended March 31,
2021 with the U.S. Securities and Exchange Commission (SEC)
and making it available at http://www.trinet.com today,
April 26, 2021. This press release should be read in
conjunction with the Form 10-Q 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-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 first quarter results for 2021 and
provide second quarter and full-year financial guidance for 2021.
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/10154653/e69f504b4b. 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 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: 10154656.
About TriNet
TriNet is a leading provider of a comprehensive human resources
solution for small to medium-size 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 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 second quarter and full-year 2021 and
the underlying assumptions, and the extent, length and growth
impact of economic reopening efforts. 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. 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: the economic, health and business disruption
caused by the COVID-19 pandemic; the impact of the COVID-19
pandemic on our clients and prospects, insurance costs and
operations; the impact of the COVID-19 pandemic on the laws and
regulations that impact our industry and clients; our ability to
mitigate the business risks we face as a co-employer; our ability
to manage unexpected changes in workers' compensation and health
insurance claims and costs by worksite employees; the effects of
volatility in the financial and economic environment on the
businesses that make up our client base, and the concentration of
our clients in certain geographies and industries; the impact of
failures or limitations in the business systems we rely upon; the
impact of our Recovery Credit program; adverse changes in our
insurance coverage or our relationships with key insurance
carriers; our ability to improve our technology to satisfy
regulatory requirements and meet the expectations of our clients
and manage client attrition; our ability to effectively integrate
businesses we have acquired or may acquire in the future; our
ability to effectively manage and improve our operational
processes; 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 and
security breaches; our ability to secure our information technology
infrastructure and our confidential, sensitive and personal
information; 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 under
federal and state regulations; changes in the laws and regulations
that govern what it means to be an employer, employee or
independent contractor; our ability to comply with the laws and
regulations that govern PEOs and other similar industries; the
outcome of existing and future legal and tax proceedings;
fluctuation in our results of operation and stock price due to
factors 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; 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. 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
|
TriNet
|
TriNet
|
Investorrelations@TriNet.com
|
Renee.Brotherton@TriNet.com
|
(510)
875-7201
|
(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
March 31,
|
(in millions, except
per share and WSE data)
|
2021
|
|
2020
|
|
%
Change
|
|
Income Statement
Data:
|
|
|
|
|
|
|
Total
revenues
|
$
|
1,060
|
|
$
|
1,048
|
|
1
|
%
|
Operating
income
|
138
|
|
120
|
|
15
|
|
Net income
|
101
|
|
91
|
|
11
|
|
Diluted net income per
share of common stock
|
1.51
|
|
1.31
|
|
15
|
|
Non-GAAP measures
(1):
|
|
|
|
|
|
|
Net Service
Revenues
|
309
|
|
283
|
|
9
|
|
Net Insurance Service
Revenues
|
156
|
|
127
|
|
23
|
|
Adjusted
EBITDA
|
163
|
|
145
|
|
12
|
|
Adjusted Net
income
|
111
|
|
97
|
|
14
|
|
Operating
Metrics:
|
|
|
|
|
|
Average
WSEs
|
321,295
|
|
336,348
|
|
(4)
|
%
|
Total WSEs at period
end
|
326,216
|
|
336,846
|
|
(3)
|
|
|
|
|
|
|
|
|
(1) Refer to Non-GAAP
measures definitions and reconciliations from GAAP measures under
the heading "Non-GAAP Financial Measures".
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in
millions)
|
March 31,
2021
|
|
December 31,
2020
|
|
%
Change
|
|
Balance Sheet
Data:
|
|
|
|
|
|
|
Working
capital
|
$
|
520
|
|
290
|
|
79
|
%
|
Total
assets
|
3,005
|
|
3,043
|
|
(1)
|
|
Debt
|
494
|
|
370
|
|
34
|
|
Total stockholders'
equity
|
653
|
|
607
|
|
8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended
March 31,
|
(in
millions)
|
2021
|
|
2020
|
|
%
Change
|
|
Cash Flow
Data:
|
|
|
|
|
|
|
Net cash used in
operating activities
|
$
|
(175)
|
|
$
|
(282)
|
|
(38)
|
%
|
Net cash used in
investing activities
|
(3)
|
|
(94)
|
|
(97)
|
|
Net cash provided by
financing activities
|
56
|
|
185
|
|
(70)
|
|
Non-GAAP measure
(1):
|
|
|
|
|
|
|
Corporate Operating
Cash Flows
|
131
|
|
119
|
|
10
|
|
|
(1) Refer to Non-GAAP
measures definitions and reconciliations from GAAP measures under
the heading "Non-GAAP Financial Measures".
|
TRINET GROUP,
INC.
CONDENSED
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)
|
|
|
Three Months Ended
March 31,
|
(in millions except
per share data)
|
2021
|
2020
|
Professional service
revenues
|
$
|
153
|
|
$
|
156
|
|
Insurance service
revenues
|
907
|
|
892
|
|
Total
revenues
|
1,060
|
|
1,048
|
|
Insurance
costs
|
751
|
|
765
|
|
Cost of providing
services
|
64
|
|
64
|
|
Sales and
marketing
|
46
|
|
46
|
|
General and
administrative
|
36
|
|
33
|
|
Systems development
and programming
|
13
|
|
9
|
|
Depreciation and
amortization of intangible assets
|
12
|
|
11
|
|
Total costs and
operating expenses
|
922
|
|
928
|
|
Operating
income
|
138
|
|
120
|
|
Other income
(expense):
|
|
|
Interest expense, bank
fees and other
|
(5)
|
|
(4)
|
|
Interest
income
|
2
|
|
5
|
|
Income before
provision for income taxes
|
135
|
|
121
|
|
Income
taxes
|
34
|
|
30
|
|
Net
income
|
$
|
101
|
|
$
|
91
|
|
Other comprehensive
(loss) income, net of income taxes
|
(1)
|
|
2
|
|
Comprehensive
income
|
$
|
100
|
|
$
|
93
|
|
Net income per
share:
|
|
|
Basic
|
$
|
1.53
|
|
$
|
1.32
|
|
Diluted
|
$
|
1.51
|
|
$
|
1.31
|
|
Weighted average
shares:
|
|
|
Basic
|
66
|
|
68
|
|
Diluted
|
67
|
|
69
|
|
TRINET GROUP,
INC.
CONDENSED
CONSOLIDATED BALANCE SHEETS (Unaudited)
|
|
(In
millions)
|
March 31,
2021
|
|
December 31,
2020
|
Assets
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
500
|
|
|
$
|
301
|
|
Investments
|
71
|
|
|
57
|
|
Restricted cash, cash
equivalents and investments
|
1,081
|
|
|
1,388
|
|
Accounts receivable,
net
|
5
|
|
|
18
|
|
Unbilled revenue,
net
|
340
|
|
|
246
|
|
Prepaid expenses,
net
|
58
|
|
|
63
|
|
Other current
assets
|
105
|
|
|
87
|
|
Total current
assets
|
2,160
|
|
|
2,160
|
|
Restricted cash, cash
equivalents and investments, noncurrent
|
184
|
|
|
210
|
|
Investments,
noncurrent
|
130
|
|
|
138
|
|
Property, equipment
and software, net
|
75
|
|
|
79
|
|
Operating lease
right-of-use asset
|
51
|
|
|
51
|
|
Goodwill
|
294
|
|
|
294
|
|
Other intangible
assets, net
|
17
|
|
|
18
|
|
Other
assets
|
94
|
|
|
93
|
|
Total
assets
|
$
|
3,005
|
|
|
$
|
3,043
|
|
Liabilities and
stockholders' equity
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts payable and
other current liabilities
|
$
|
84
|
|
|
$
|
50
|
|
Long-term
debt
|
—
|
|
|
22
|
|
Client deposits and
other client liabilities
|
151
|
|
|
134
|
|
Accrued
wages
|
488
|
|
|
309
|
|
Accrued health
insurance costs, net
|
165
|
|
|
172
|
|
Accrued workers'
compensation costs, net
|
59
|
|
|
59
|
|
Payroll tax
liabilities and other payroll withholdings
|
668
|
|
|
1,095
|
|
Operating lease
liabilities
|
12
|
|
|
11
|
|
Insurance premiums and
other payables
|
13
|
|
|
18
|
|
Total current
liabilities
|
1,640
|
|
|
1,870
|
|
Long-term debt,
noncurrent
|
494
|
|
|
348
|
|
Accrued workers'
compensation costs, noncurrent, net
|
138
|
|
|
138
|
|
Deferred
taxes
|
21
|
|
|
22
|
|
Operating lease
liabilities, noncurrent
|
49
|
|
|
49
|
|
Other non-current
liabilities
|
10
|
|
|
9
|
|
Total
liabilities
|
2,352
|
|
|
2,436
|
|
Stockholders'
equity:
|
|
|
|
Preferred
stock
|
—
|
|
|
—
|
|
Common stock and
additional paid-in capital
|
758
|
|
|
747
|
|
Accumulated
deficit
|
(108)
|
|
|
(144)
|
|
Accumulated other
comprehensive income
|
3
|
|
|
4
|
|
Total stockholders'
equity
|
653
|
|
|
607
|
|
Total liabilities
and stockholders' equity
|
$
|
3,005
|
|
|
$
|
3,043
|
|
TRINET GROUP,
INC.
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
|
|
|
Three Months Ended
March 31,
|
(in
millions)
|
2021
|
2020
|
Operating
activities
|
|
|
Net income
|
$
|
101
|
|
$
|
91
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
Depreciation and
amortization
|
19
|
|
15
|
|
Amortization of ROU
asset
|
3
|
|
4
|
|
Accretion of discount
rate on lease liabilities
|
1
|
|
—
|
|
Amortization of
premium of investments
|
1
|
|
—
|
|
Stock based
compensation
|
11
|
|
9
|
|
Changes in operating
assets and liabilities:
|
|
|
Accounts receivable,
net
|
13
|
|
—
|
|
Unbilled revenue,
net
|
(94)
|
|
(95)
|
|
Prepaid expenses,
net
|
5
|
|
(3)
|
|
Accounts payable and
other current liabilities
|
33
|
|
29
|
|
Client deposits and
other client liabilities
|
17
|
|
(6)
|
|
Accrued
wages
|
179
|
|
38
|
|
Accrued health
insurance costs, net
|
(7)
|
|
(2)
|
|
Accrued workers'
compensation costs, net
|
—
|
|
3
|
|
Payroll taxes payable
and other payroll withholdings
|
(426)
|
|
(334)
|
|
Operating lease
liabilities
|
(3)
|
|
(5)
|
|
Other
assets
|
(24)
|
|
(28)
|
|
Other
liabilities
|
(4)
|
|
2
|
|
Net cash used in
operating activities
|
(175)
|
|
(282)
|
|
Investing
activities
|
|
|
Purchases of
marketable securities
|
(82)
|
|
(155)
|
|
Proceeds from sale and
maturity of marketable securities
|
84
|
|
67
|
|
Acquisitions of
property and equipment
|
(5)
|
|
(6)
|
|
Net cash used in
investing activities
|
(3)
|
|
(94)
|
|
Financing
activities
|
|
|
Repurchase of common
stock
|
(60)
|
|
(40)
|
|
Awards effectively
repurchased for required employee withholding taxes
|
(5)
|
|
(3)
|
|
Proceeds from
revolving credit agreement borrowings
|
—
|
|
234
|
|
Payment of long-term
financing fees
|
(2)
|
|
—
|
|
Payment of debt
issuance costs
|
(7)
|
|
—
|
|
Proceeds from issuance
of 2029 Notes
|
500
|
|
—
|
|
Repayment of
debt
|
(370)
|
|
(6)
|
|
Net cash provided
by financing activities
|
56
|
|
185
|
|
Net decrease in
cash and cash equivalents, unrestricted and
restricted
|
(122)
|
|
(191)
|
|
Cash and cash
equivalents, unrestricted and restricted:
|
|
|
Beginning of
period
|
1,643
|
|
1,456
|
|
End of
period
|
$
|
1,521
|
|
$
|
1,265
|
|
|
|
|
Supplemental
disclosures of cash flow information
|
|
|
Interest
paid
|
$
|
2
|
|
$
|
3
|
|
Income taxes paid,
net
|
2
|
|
1
|
|
Supplemental
schedule of noncash investing and financing
activities
|
|
|
Payable for purchase
of property and equipment
|
$
|
3
|
|
$
|
1
|
|
|
|
|
|
|
|
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
|
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
presented 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 service
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
presented 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.
|
Net Insurance
Margin
|
• Net Insurance
Margin (NIM) is the ratio of Net Insurance Services Revenues to
insurance service revenues.
|
• Provides a
comparable basis of Net Insurance Service Revenues relative to
insurance service revenues. Promotes an understanding of our
pricing to risk performance.
|
Adjusted
EBITDA
|
• Net income,
excluding the effects of:
- income tax
provision,
- interest expense,
bank fees and other,
-
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), 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
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 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 25.5% for the first quarters of 2021 and 2020, 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 derivative.
|
Reconciliation of
GAAP to Non-GAAP Measures
The table below
presents a reconciliation of total revenues to Net Service
Revenues:
|
|
|
Three Months
Ended
March 31,
|
(in
millions)
|
2021
|
2020
|
Total
revenues
|
$
|
1,060
|
|
$
|
1,048
|
|
Less: Insurance
costs
|
751
|
|
765
|
|
Net Service
Revenues
|
$
|
309
|
|
$
|
283
|
|
|
The table below
presents a reconciliation of insurance service revenues to Net
Insurance Service Revenues:
|
|
|
Three Months
Ended
March 31,
|
(in
millions)
|
2021
|
2020
|
Insurance service
revenues
|
$
|
907
|
|
$
|
892
|
|
Less: Insurance
costs
|
751
|
|
765
|
|
Net Insurance
Service Revenues
|
$
|
156
|
|
$
|
127
|
|
NIM
|
17
|
%
|
14
|
%
|
|
The table below
presents a reconciliation of net income to Adjusted
EBITDA:
|
|
|
Three Months
Ended
March 31,
|
(in
millions)
|
2021
|
2020
|
Net income
|
$
|
101
|
|
$
|
91
|
|
Provision for income
taxes
|
34
|
|
30
|
|
Stock based
compensation
|
11
|
|
9
|
|
Interest expense,
bank fees and other
|
5
|
|
4
|
|
Depreciation and
amortization of intangible assets
|
12
|
|
11
|
|
Adjusted
EBITDA
|
$
|
163
|
|
$
|
145
|
|
Adjusted EBITDA
Margin
|
53
|
%
|
51
|
%
|
|
The table below
presents a reconciliation of net income to Adjusted Net Income and
Adjusted Net Income per share - diluted:
|
|
|
Three Months
Ended
March 31,
|
(in millions, except
per share data)
|
2021
|
2020
|
Net income
|
$
|
101
|
|
$
|
91
|
|
Effective income tax
rate adjustment
|
—
|
|
(1)
|
|
Stock based
compensation
|
11
|
|
9
|
|
Amortization of
intangible assets
|
1
|
|
1
|
|
Non-cash interest
expense
|
2
|
|
—
|
|
Income tax impact of
pre-tax adjustments
|
(4)
|
|
(3)
|
|
Adjusted Net
Income
|
$
|
111
|
|
$
|
97
|
|
GAAP weighted
average shares of common stock - diluted
|
67
|
|
69
|
|
Adjusted Net
Income per share - diluted
|
$
|
1.66
|
|
$
|
1.41
|
|
|
The table below
presents a reconciliation of net cash (used in) provided by
operating activities to Corporate Operating Cash flows:
|
|
|
Three Months
Ended
March
31,
|
(in
millions)
|
2021
|
2020
|
Net cash used in
operating activities
|
$
|
(175)
|
|
$
|
(282)
|
|
Less: Change
in WSE related other current assets
|
(85)
|
|
(110)
|
|
Less: Change
in WSE related liabilities
|
(221)
|
|
(291)
|
|
Net cash used in
operating activities - WSE
|
$
|
(306)
|
|
$
|
(401)
|
|
Net cash provided
by operating activities - Corporate
|
$
|
131
|
|
$
|
119
|
|
Reconciliation of
GAAP to Non-GAAP Measures for the second quarter and full-year 2021
guidance.
Low and high
percentages represent increases (decreases) from the same period in
the previous year.
The table below
presents a reconciliation of insurance service revenues to Net
Insurance Service Revenues and NIM:
|
|
|
Q2
2020
|
|
Q2 2021
Guidance
|
|
FY
2020
|
|
Year 2021
Guidance
|
(in
millions)
|
Actual
|
|
Low
|
High
|
|
Actual
|
|
Low
|
High
|
Insurance service
revenues
|
$
|
827
|
|
|
13
|
%
|
14
|
%
|
|
$
|
3,490
|
|
|
9
|
%
|
11
|
%
|
Less: Insurance
costs
|
613
|
|
|
38
|
|
38
|
|
|
2,979
|
|
|
15
|
|
15
|
|
Net Insurance
Service Revenues
|
$
|
214
|
|
|
(59)
|
%
|
(53)
|
%
|
|
$
|
511
|
|
|
(25)
|
%
|
(17)
|
%
|
NIM
|
26
|
%
|
|
9.5
|
%
|
10.7
|
%
|
|
15
|
%
|
|
10
|
%
|
11
|
%
|
|
The table below
presents a reconciliation of net income to Adjusted
EBITDA:
|
|
|
|
|
|
|
|
|
|
Q2
2020
|
|
Q2 2021
Guidance
|
|
FY
2020
|
|
Year 2021
Guidance
|
(in
millions)
|
Actual
|
|
Low
|
High
|
|
Actual
|
|
Low
|
High
|
Net income
|
$
|
126
|
|
|
(69)
|
%
|
(61)
|
%
|
|
$
|
272
|
|
|
(30)
|
%
|
(18)
|
%
|
Provision for income
taxes
|
45
|
|
|
(81)
|
|
(73)
|
|
|
85
|
|
|
(32)
|
|
(18)
|
|
Stock based
compensation
|
11
|
|
|
15
|
|
20
|
|
|
43
|
|
|
18
|
|
22
|
|
Interest expense,
bank fees and other
|
4
|
|
|
29
|
|
29
|
|
|
21
|
|
|
(8)
|
|
(8)
|
|
Depreciation and
amortization of
intangible
assets
|
13
|
|
|
1
|
|
1
|
|
|
47
|
|
|
(4)
|
|
(4)
|
|
Adjusted
EBITDA
|
$
|
199
|
|
|
(61)
|
%
|
(54)
|
%
|
|
$
|
468
|
|
|
(22)
|
%
|
(13)
|
%
|
Adjusted EBITDA
Margin
|
59
|
%
|
|
35
|
%
|
39
|
%
|
|
44
|
%
|
|
38
|
%
|
40
|
%
|
The table below
presents a reconciliation of net income to Adjusted Net Income and
Adjusted Net Income per share - diluted:
|
|
|
Q2
2020
|
|
Q2 2021
Guidance
|
|
FY
2020
|
|
Year 2021
Guidance
|
(in millions, except
per share data)
|
Actual
|
|
Low
|
High
|
|
Actual
|
|
Low
|
High
|
Net income
|
$
|
126
|
|
|
(69)
|
%
|
(61)
|
%
|
|
$
|
272
|
|
|
(30)
|
%
|
(18)
|
%
|
Effective income tax
rate adjustment
|
1
|
|
|
(403)
|
|
(371)
|
|
|
(6)
|
|
|
(2)
|
|
(19)
|
|
Stock based
compensation
|
11
|
|
|
15
|
|
20
|
|
|
43
|
|
|
18
|
|
22
|
|
Amortization of
intangible assets
|
1
|
|
|
(1)
|
|
(1)
|
|
|
5
|
|
|
(1)
|
|
(1)
|
|
Non-cash interest
expense
|
—
|
|
|
31
|
|
31
|
|
|
1
|
|
|
286
|
|
286
|
|
Income tax impact of
pre-tax adjustments
|
(3)
|
|
|
14
|
|
18
|
|
|
(12)
|
|
|
21
|
|
24
|
|
Adjusted Net
Income
|
$
|
136
|
|
|
(66)
|
%
|
(58)
|
%
|
|
$
|
303
|
|
|
(24)
|
%
|
(13)
|
%
|
GAAP weighted
average shares of common stock - diluted
|
68
|
|
|
|
|
|
68
|
|
|
|
|
Adjusted Net
Income per share - diluted
|
$
|
2.03
|
|
|
$
|
0.70
|
|
$
|
0.86
|
|
|
$
|
4.44
|
|
|
$
|
3.42
|
|
$
|
3.90
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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SOURCE TriNet Group, Inc.