DUBLIN,
Calif., Oct. 25, 2024 /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 third quarter ended
September 30, 2024. The third quarter
highlights below include non-GAAP financial measures which are
reconciled later in this release.
Third quarter highlights include:
- Total revenues increased 1% to $1.2
billion as compared to the same period last year.
- Flat professional service revenues of $184 million as compared to the same period last
year.
- Net income was $45 million, or
$0.89 per diluted share, compared to
net income of $94 million, or
$1.63 per diluted share, in the same
period last year.
- Adjusted Net Income was $59
million, or $1.17 per diluted
share, compared to Adjusted Net Income of $109 million, or $1.91 per diluted share, in the same period last
year.
- Adjusted EBITDA was $109 million,
compared to Adjusted EBITDA of $172
million, in the same period last year.
- Average WSEs increased 7% as compared to the same period last
year, to approximately 356,000 and includes approximately 20,000
PEO Platform Users.
- Average HRIS Users for the period was approximately
183,000.
- At September 30, 2024, TriNet had
unrestricted cash and cash equivalents of $251 million, unrestricted investments of
$195 million and total debt of
$1.1 billion.
"Small businesses are navigating a challenging business climate,
hiring very carefully, and dealing with healthcare cost inflation
steeper than we have seen in several years," said Mike Simonds, TriNet's President and CEO.
"TriNet is not immune from these conditions and higher healthcare
costs adversely impacted our profitability in the quarter."
Mr. Simonds continued, "Fortunately, our model allows us to
quickly take action and align our pricing with healthcare cost
trends. We repriced our largest cohort of healthcare fees on
October 1, and we experienced strong
customer retention. Following our January
1 renewal, we will have priced for the current elevated cost
trends across more than two thirds of our PEO business. Our
colleagues are extremely engaged, delivering strong service to our
customers and record retention levels in 2024 despite the
challenging environment. Nearly eight months into this role, I am
excited by the opportunity in front of us to grow our business
profitably in an increasingly focused, disciplined, and
customer-centric fashion."
Fourth Quarter and Full-Year 2024 Guidance
In addition to announcing our third quarter 2024 results, we
provide our fourth 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.
|
|
Q4
2024
|
|
Full Year
2024
|
|
|
Low
|
|
High
|
|
Low
|
|
High
|
|
Total
Revenues
|
|
(1) %
|
|
2 %
|
|
1 %
|
|
2 %
|
|
Professional Service
Revenues
|
|
(8) %
|
|
(5) %
|
|
— %
|
|
1 %
|
|
Insurance Cost
Ratio
|
|
96.5 %
|
|
93.5 %
|
|
90.3 %
|
|
89.6 %
|
|
Diluted net income per
share of common stock
|
|
$(0.19)
|
|
$0.31
|
|
$3.70
|
|
$4.20
|
|
Adjusted Net Income per
share - diluted
|
|
$0.06
|
|
$0.57
|
|
$4.95
|
|
$5.45
|
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, 2024 with the U.S. Securities and Exchange Commission
(SEC) and making it available at http://www.trinet.com today,
October 25, 2024. 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 5:30 a.m. PT (8:30 a.m.
ET) today to discuss its third quarter results for 2024 and
provide fourth 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/10193255/fda58bcb7d. 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. Participants can pre-register for the
webcast by going to: https://events.q4inc.com/attendee/366545303 A
replay of the webcast will be available on this website for
approximately one year. A telephonic replay will be available for
two weeks following the conference call at +1 (412) 317-0088
conference ID: 1675204.
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 2024 and
the underlying assumptions, the value to customers and shareholders
of TriNet's product offerings, TriNet's financial performance and
long-term growth, and the extent, length and growth impact of
current economic uncertainty. 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. Examples of forward-looking statements include, among
others, TriNet's expectations regarding our ability to continue to
have our value proposition resonate at required pricing levels;
ability to manage our expenses diligently; and our ability to meet
our forecasted retention goals. 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: our ability to manage unexpected changes in
workers' compensation and health insurance claims and costs by
WSEs; 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 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 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 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; and
our ability to manage risks associated with our international
operations. 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
|
|
Alex.Bauer@TriNet.com
|
Renee.Brotherton@TriNet.com
|
|
(510)
875-7201
|
(925)
965-8441
|
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 Operating Metrics data)
|
2024
|
|
2023
|
|
%
Change
|
|
2024
|
|
2023
|
|
%
Change
|
|
Income Statement
Data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
revenues
|
$
1,237
|
|
$ 1,222
|
|
1
|
%
|
|
$
3,727
|
|
$ 3,677
|
|
1
|
%
|
|
Operating
income
|
58
|
|
116
|
|
(50)
|
|
|
261
|
|
382
|
|
(32)
|
|
|
Net income
|
45
|
|
94
|
|
(52)
|
|
|
196
|
|
308
|
|
(36)
|
|
|
Diluted net income per
share of common stock
|
0.89
|
|
1.63
|
|
(45)
|
|
|
3.87
|
|
5.20
|
|
(26)
|
|
|
Non-GAAP measures
(1):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
109
|
|
172
|
|
(37)
|
|
|
425
|
|
557
|
|
(24)
|
|
|
Adjusted Net
income
|
59
|
|
109
|
|
(46)
|
|
|
247
|
|
365
|
|
(32)
|
|
|
Operating
Metrics:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Insurance Cost
Ratio
|
90 %
|
|
84 %
|
|
6
|
%
|
|
88 %
|
|
83 %
|
|
5
|
|
|
Average WSEs
(2)
|
355,948
|
|
333,286
|
|
7
|
|
|
351,856
|
|
329,257
|
|
7
|
%
|
|
Total WSEs at period
end (2)
|
356,137
|
|
335,741
|
|
6
|
|
|
356,137
|
|
335,741
|
|
6
|
|
|
Average HRIS Users
(3)
|
183,410
|
|
210,863
|
|
(13)
|
|
|
189,929
|
|
219,058
|
|
(13)
|
|
|
|
|
(1)
|
Refer to Non-GAAP
measures definitions and reconciliations from GAAP measures under
the heading "Non-GAAP Financial Measures".
|
|
(2)
|
Total WSEs and Average
WSEs include incremental WSEs that were charged a platform user
access fee and incremental 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 Management Discussion & Analysis in our 2024
10-Q.
|
|
(in
millions)
|
September 30,
2024
|
|
December 31,
2023
|
|
%
Change
|
|
|
Balance Sheet
Data:
|
|
|
|
|
|
|
|
Working
capital
|
165
|
|
115
|
|
43
|
%
|
|
Total
assets
|
3,729
|
|
3,693
|
|
1
|
|
|
Debt
|
1,068
|
|
1,093
|
|
(2)
|
|
|
Total stockholders'
equity
|
129
|
|
78
|
|
65
|
|
|
Nine Months Ended
September 30,
|
|
(in
millions)
|
2024
|
|
2023
|
|
%
Change
|
|
Cash Flow
Data:
|
|
|
|
|
|
|
|
Net cash used in
operating activities
|
$
(276)
|
|
$ (43)
|
|
542
|
%
|
|
Net cash used in
investing activities
|
(25)
|
|
(57)
|
|
(56)
|
|
|
Net cash used in
financing activities
|
(217)
|
|
(523)
|
|
(59)
|
|
|
Non-GAAP measure
(1):
|
|
|
|
|
|
|
|
Corporate Operating
Cash Flows
|
$ 213
|
|
$ 386
|
|
(45)
|
|
|
|
|
(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
September 30,
|
|
Nine Months
Ended
September 30,
|
|
(in millions except per
share data)
|
2024
|
2023
|
|
2024
|
2023
|
|
Professional service
revenues
|
$ 184
|
$ 185
|
|
$ 584
|
$ 567
|
|
Insurance service
revenues
|
1,053
|
1,037
|
|
3,143
|
3,110
|
|
Total
revenues
|
1,237
|
1,222
|
|
3,727
|
3,677
|
|
Insurance
costs
|
949
|
874
|
|
2,772
|
2,594
|
|
Cost of providing
services
|
74
|
74
|
|
228
|
231
|
|
Sales and
marketing
|
74
|
75
|
|
218
|
214
|
|
General and
administrative
|
46
|
51
|
|
140
|
154
|
|
Systems development and
programming
|
17
|
15
|
|
52
|
49
|
|
Depreciation and
amortization of intangible assets
|
19
|
17
|
|
56
|
53
|
|
Total costs and
operating expenses
|
1,179
|
1,106
|
|
3,466
|
3,295
|
|
Operating
income
|
58
|
116
|
|
261
|
382
|
|
Other income
(expense):
|
|
|
|
|
|
|
Interest expense, bank
fees and other
|
(15)
|
(10)
|
|
(47)
|
(23)
|
|
Interest
income
|
15
|
18
|
|
49
|
57
|
|
Income before
provision for income taxes
|
58
|
124
|
|
263
|
416
|
|
Income taxes
|
13
|
30
|
|
67
|
108
|
|
Net
income
|
$ 45
|
$ 94
|
|
$ 196
|
$ 308
|
|
Other comprehensive
income (loss), net of income taxes
|
7
|
(2)
|
|
4
|
(3)
|
|
Comprehensive
income
|
$ 52
|
$ 92
|
|
$ 200
|
$ 305
|
|
Net income per
share:
|
|
|
|
|
|
|
Basic
|
$
0.90
|
$ 1.65
|
|
$
3.91
|
$ 5.23
|
|
Diluted
|
$
0.89
|
$ 1.63
|
|
$
3.87
|
$ 5.20
|
|
Weighted average
shares:
|
|
|
|
|
|
|
Basic
|
50
|
57
|
|
50
|
59
|
|
Diluted
|
50
|
58
|
|
51
|
59
|
|
TRINET GROUP,
INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
|
|
|
|
September
30,
|
|
December
31,
|
|
(in millions, except
share and per share data)
|
|
2024
|
|
2023
|
|
ASSETS
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$ 251
|
|
$ 287
|
|
Investments
|
|
50
|
|
65
|
|
Restricted cash, cash
equivalents and investments
|
|
780
|
|
1,269
|
|
Accounts receivable,
net
|
|
15
|
|
18
|
|
Unbilled revenue,
net
|
|
511
|
|
447
|
|
Prepaid expenses,
net
|
|
64
|
|
67
|
|
Other payroll
assets
|
|
883
|
|
381
|
|
Other current
assets
|
|
51
|
|
44
|
|
Total current
assets
|
|
2,605
|
|
2,578
|
|
Restricted cash, cash
equivalents and investments, noncurrent
|
|
153
|
|
158
|
|
Investments,
noncurrent
|
|
145
|
|
143
|
|
Property and equipment,
net
|
|
14
|
|
17
|
|
Operating lease
right-of-use asset
|
|
30
|
|
24
|
|
Goodwill
|
|
462
|
|
462
|
|
Software and other
intangible assets, net
|
|
179
|
|
172
|
|
Other assets
|
|
141
|
|
139
|
|
Total
assets
|
|
$
3,729
|
|
$ 3,693
|
|
Liabilities and
stockholders' equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts payable and
other current liabilities
|
|
$ 82
|
|
$ 87
|
|
Revolving credit
agreement borrowings
|
|
75
|
|
109
|
|
Client deposits and
other client liabilities
|
|
39
|
|
65
|
|
Accrued
wages
|
|
566
|
|
515
|
|
Accrued health
insurance costs, net
|
|
193
|
|
175
|
|
Accrued workers'
compensation costs, net
|
|
44
|
|
50
|
|
Payroll tax
liabilities and other payroll withholdings
|
|
1,420
|
|
1,438
|
|
Operating lease
liabilities
|
|
15
|
|
14
|
|
Insurance premiums and
other payables
|
|
6
|
|
10
|
|
Total current
liabilities
|
|
2,440
|
|
2,463
|
|
Long-term debt,
noncurrent
|
|
993
|
|
984
|
|
Accrued workers'
compensation costs, noncurrent, net
|
|
107
|
|
120
|
|
Deferred
taxes
|
|
18
|
|
13
|
|
Operating lease
liabilities, noncurrent
|
|
30
|
|
30
|
|
Other non current
liabilities
|
|
12
|
|
5
|
|
Total
liabilities
|
|
3,600
|
|
3,615
|
|
Stockholders'
equity:
|
|
|
|
|
|
Preferred
stock
|
|
—
|
|
—
|
|
Common stock and
additional paid-in capital
|
|
1,037
|
|
976
|
|
Accumulated
deficit
|
|
(910)
|
|
(896)
|
|
Accumulated other
comprehensive loss
|
|
2
|
|
(2)
|
|
Total stockholders'
equity
|
|
129
|
|
78
|
|
Total liabilities
& stockholders' equity
|
|
$
3,729
|
|
$ 3,693
|
|
TRINET GROUP,
INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
Nine Months
Ended
September 30,
|
|
(in
millions)
|
2024
|
2023
|
|
Operating
activities
|
|
|
|
Net income
|
$ 196
|
$ 308
|
|
Adjustments to
reconcile net income to net cash used in operating
activities:
|
|
|
|
Depreciation and
amortization of intangible assets
|
56
|
53
|
|
Amortization of
deferred costs
|
32
|
31
|
|
Amortization of ROU
asset, lease modification, impairment, and abandonment
|
4
|
5
|
|
Deferred income
taxes
|
3
|
—
|
|
Stock based
compensation
|
53
|
43
|
|
Other
|
3
|
1
|
|
Changes in operating
assets and liabilities:
|
|
|
|
Accounts receivable,
net
|
2
|
(4)
|
|
Unbilled revenue,
net
|
(64)
|
(29)
|
|
Prepaid expenses,
net
|
3
|
(4)
|
|
Other
assets
|
(44)
|
(44)
|
|
Other payroll
assets
|
(502)
|
(104)
|
|
Accounts payable and
other liabilities
|
(13)
|
9
|
|
Client deposits and
other client liabilities
|
(27)
|
(33)
|
|
Accrued
wages
|
52
|
21
|
|
Accrued health
insurance costs, net
|
18
|
9
|
|
Accrued workers'
compensation costs, net
|
(19)
|
(9)
|
|
Payroll taxes payable
and other payroll withholdings
|
(18)
|
(283)
|
|
Operating lease
liabilities
|
(11)
|
(13)
|
|
Net cash used in
operating activities
|
(276)
|
(43)
|
|
Investing
activities
|
|
|
|
Purchases of
marketable securities
|
(161)
|
(226)
|
|
Proceeds from sale and
maturity of marketable securities
|
196
|
223
|
|
Acquisitions of
property and equipment and software
|
(60)
|
(54)
|
|
Net cash used in
investing activities
|
(25)
|
(57)
|
|
Financing
activities
|
|
|
|
Repurchase of common
stock
|
(155)
|
(1,109)
|
|
Proceeds from issuance
of common stock
|
6
|
9
|
|
Proceeds from
revolving credit agreement borrowings
|
—
|
695
|
|
Revolver
repayment
|
—
|
(495)
|
|
Proceeds from issuance
of 2031 Notes
|
—
|
400
|
|
Awards effectively
repurchased for required employee withholding taxes
|
(18)
|
(14)
|
|
Payment of long-term
financing fees and debt issuance costs
|
—
|
(9)
|
|
Repayment of revolving
credit agreement borrowings
|
(25)
|
—
|
|
Dividends
paid
|
(25)
|
—
|
|
Net cash used in
financing activities
|
(217)
|
(523)
|
|
Net change in cash
and cash equivalents, unrestricted and restricted
|
(518)
|
(623)
|
|
Cash and cash
equivalents, unrestricted and restricted:
|
|
|
|
Beginning of
period
|
1,466
|
1,537
|
|
End of
period
|
$ 948
|
$ 914
|
|
|
|
|
Supplemental
disclosures of cash flow information
|
|
|
|
Interest
paid
|
$ 55
|
$ 21
|
|
Income taxes paid,
net
|
$ 67
|
$ 89
|
|
Supplemental
schedule of noncash investing and financing
activities
|
|
|
|
Cash dividend
declared, but not yet paid
|
$ 12
|
$ —
|
|
Payable for purchase
of property and equipment
|
$ 2
|
$ 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 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 the prior period 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,
- 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 and TriNet Trust (accounts receivable, unbilled revenue,
prepaid expenses, other payroll assets and other current assets)
and
- Liabilities
associated with WSEs and TriNet Trust (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 and TriNet Trust.
• Enhances comparisons
to prior periods and, accordingly, used as a liquidity measure to
manage liquidity between corporate and WSE and TriNet Trust 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 third quarters and full years of 2024 and
2023, 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
September 30,
|
|
Nine Months
Ended
September
30,
|
|
(in
millions)
|
2024
|
2023
|
|
2024
|
2023
|
|
Net income
|
$ 45
|
$ 94
|
|
$ 196
|
$ 308
|
|
Provision for income
taxes
|
13
|
30
|
|
67
|
108
|
|
Stock based
compensation
|
15
|
15
|
|
53
|
43
|
|
Interest expense, bank
fees and other
|
15
|
10
|
|
47
|
23
|
|
Depreciation and
amortization of intangible assets
|
19
|
17
|
|
56
|
53
|
|
Amortization of cloud
computing arrangements
|
2
|
3
|
|
6
|
7
|
|
Transaction and
integration costs
|
—
|
3
|
|
—
|
15
|
|
Adjusted
EBITDA
|
$ 109
|
$ 172
|
|
$ 425
|
$ 557
|
|
Adjusted EBITDA
Margin
|
8.8 %
|
14.1 %
|
|
11.4 %
|
15.1 %
|
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)
|
2024
|
2023
|
|
2024
|
2023
|
|
Net income
|
$ 45
|
$ 94
|
|
$ 196
|
$ 308
|
|
Effective income tax
rate adjustment
|
(2)
|
(2)
|
|
—
|
1
|
|
Stock based
compensation
|
15
|
15
|
|
53
|
43
|
|
Amortization of
intangible assets
|
5
|
5
|
|
14
|
16
|
|
Non-cash interest
expense
|
1
|
—
|
|
2
|
1
|
|
Transaction and
integration costs
|
—
|
3
|
|
—
|
15
|
|
Income tax impact of
pre-tax adjustments
|
(5)
|
(6)
|
|
(18)
|
(19)
|
|
Adjusted Net
Income
|
$ 59
|
$ 109
|
|
$ 247
|
$ 365
|
|
GAAP weighted
average shares of common stock - diluted
|
50
|
58
|
|
51
|
59
|
|
Adjusted Net Income
per share - diluted
|
$
1.17
|
$ 1.91
|
|
$
4.88
|
$ 6.16
|
The table below presents a reconciliation of net cash provided
by operating activities to Corporate Operating Cash flows:
|
Nine Months
Ended
September
30,
|
|
(in
millions)
|
2024
|
2023
|
|
Net cash used in
operating activities
|
$
(276)
|
$ (43)
|
|
Less: Change in WSE
& TriNet Trust related other current assets
|
(548)
|
(134)
|
|
Less: Change in WSE
& TriNet Trust related current liabilities
|
59
|
(295)
|
|
Net cash used in
operating activities - WSE & TriNet Trust
|
$
(489)
|
$ (429)
|
|
Net cash provided by
operating activities - Corporate
|
$ 213
|
$ 386
|
Reconciliation of GAAP to Non-GAAP Measures for the fourth
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:
|
Q4
2023
|
|
Q4 2024
Guidance
|
|
FY
2023
|
|
Year 2024
Guidance
|
|
(in millions, except
per share data)
|
Actual
|
|
Low
|
High
|
|
Actual
|
|
Low
|
High
|
|
Net income
|
$67
|
|
(114) %
|
(77) %
|
|
$375
|
|
(50) %
|
(44) %
|
|
Effective income tax
rate adjustment
|
(3)
|
|
(73)
|
(59)
|
|
(2)
|
|
(28)
|
(3)
|
|
Stock based
compensation
|
16
|
|
(17)
|
(12)
|
|
59
|
|
11
|
13
|
|
Amortization of
intangible assets
|
5
|
|
1
|
1
|
|
20
|
|
(5)
|
(5)
|
|
Non-cash interest
expense
|
1
|
|
(100)
|
(100)
|
|
2
|
|
(20)
|
(20)
|
|
Transaction and
integration costs
|
2
|
|
(100)
|
(100)
|
|
17
|
|
(100)
|
(100)
|
|
Income tax impact of
pre-tax adjustments
|
(6)
|
|
(24)
|
(20)
|
|
(25)
|
|
(12)
|
(11)
|
|
Adjusted Net
Income
|
$82
|
|
(96) %
|
(65) %
|
|
$446
|
|
(44) %
|
(38) %
|
|
GAAP weighted
average shares of common stock - diluted
|
51
|
|
|
|
|
57
|
|
|
|
|
Adjusted Net Income
per share - diluted
|
$1.60
|
|
$0.06
|
$0.57
|
|
$7.81
|
|
$4.95
|
$5.45
|
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SOURCE TriNet Group, Inc.
