Insperity (NYSE: NSP) reported Q1 EPS of $1.82, $0.26 better than the analyst estimate of $1.56. Revenue for the quarter came in at $1.3 billion versus the consensus estimate of $1.2 billion.

• Q1 revenue increased 5% to $1.3 billion
• Q1 net income and diluted EPS of $61.9 million and $1.59, respectively
• Q1 adjusted EPS up 7% to $1.82
• Q1 adjusted EBITDA up 3% to $104.2 million

“We are pleased with our strong Q1 results and our growth momentum driven by solid sales, client retention and growth in the client base in the face of the ongoing pandemic,” said Paul J. Sarvadi, Insperity chief executive officer and chairman. “The diligent and effective support provided by Insperity employees has helped our resilient client base weather the storm of the pandemic and emerge with confidence in the future. The combination of solid execution and strong demand for our services positions Insperity well for growth acceleration over the balance of the year, as we lay the foundation to return to double-digit unit growth and profitability.”

Gross profit increased by 7% over Q1 2020 to $251.4 million. This increase exceeded our forecast, as pricing was above targeted levels and each of our direct costs areas experienced lower than expected cost trends. As for benefit costs, healthcare utilization continued to gradually return to normal coming off of the earlier stages of the pandemic. However, when combined with COVID-19 related vaccination, testing and treatment costs, overall costs came in slightly below our Q1 budget. Our workers’ compensation program continued to produce favorable results on our ongoing claims management and, to a lesser degree, a favorable impact on the frequency of claims from the recent “work from home” status of many of our clients’ employees. The payroll tax area also produced gross profit contributions above budget, due to state unemployment tax rates received during Q1 coming in lower than our estimates and the receipt of a $5.5 million federal payroll tax refund related to a prior year.

Operating expenses increased 13% over Q1 2020, however, were flat when excluding performance-based compensation. First quarter 2021 operating costs reflected continued growth investments, including a 7% increase in the number of trained Business Performance Advisors, initial costs related to our SalesForce implementation and an increase in marketing costs associated with lead generation activity. These investments were partially offset by pandemic-related cost reductions, including reduced travel expenses.

Cash outlays during Q1 2021 included the repurchase of 340,000 shares of stock at a cost of $29.7 million, cash dividends totaling $15.5 million and capital expenditures of $12.1 million. We ended the quarter with $196.7 million of adjusted cash, cash equivalents and marketable securities, and $369.4 million outstanding under our $500 million credit facility.

“With our strong Q1 results, and positive trends in our growth, pricing and direct costs, we are raising our earnings outlook for the remainder of 2021,” said Douglas S. Sharp, Insperity senior vice president of finance, chief financial officer and treasurer. “With our solid balance sheet and the expectation for continued strong cash flow, we plan to continue to invest in our growth, while providing attractive returns to our shareholders through our dividend and share repurchase programs.”

For earnings history and earnings-related data on Insperity (NSP) click here.