Administaff Announces Record Earnings Per Share

Business Wire,  May 1, 2008  

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* Earnings per share increase 70% on 12% revenue growth

* Operating income increases 79%

* EBITDA increases 44% to $24 million

HOUSTON -- Administaff, Inc. (NYSE:ASF), a leading provider of human resources services for small and medium-sized businesses, today announced a 70.0% increase in diluted earnings per share to $0.51 compared to $0.30 in the first quarter of 2007. Net income increased to $13.2 million from $8.4 million in the 2007 period.

"Our record results, in the face of a slowing economy, confirm the strength and resiliency of our business model," said Paul J. Sarvadi, Administaff chairman and chief executive officer. "Although we are experiencing slightly slower unit growth, we are meeting our profitability targets due to effective pricing and direct cost management. As these trends continue for the balance of the year, we will make the investments necessary to accelerate growth and profitability in 2009."

Revenues for the first quarter of 2008 increased 11.8% over the 2007 period to $456.1 million, due to an 8.3% increase in the average number of worksite employees paid per month and a 3.3% increase in revenues per worksite employee per month.

Gross profit increased 27.2% over the first quarter of 2007 to $86.6 million on the growth in the average number of worksite employees paid and an increase in the average gross profit per worksite employee per month to $254 from $216 in the 2007 period. These results were at the high end of the company's forecasted range primarily due to a higher-than-expected surplus from payroll taxes.

Operating expenses for the quarter increased 18.2% to $68.6 million, slightly below the low end of the company's expected range, and included expected costs associated with the company's sales expansion, middle-market and HRTools.com initiatives.

Operating income for the first quarter of 2008 increased 79.4% to $18.0 million, with an average operating income per worksite employee per month of $53 compared to $32 in the 2007 period.

EBITDA for the first quarter was $24.1 million. Cash outlays included share repurchases of $15.0 million, capital expenditures of $4.8 million and dividends of $2.9 million.

"Our solid earnings and the strength of our balance sheet have allowed us to distribute over $100 million to shareholders since January 2007 through share repurchases and dividends, which is nearly 20% of our current enterprise value," said Douglas S. Sharp, vice-president of finance, chief financial officer and treasurer. "This not only demonstrates our commitment to maximizing shareholder return, but also our intent to take advantage of the company's attractive valuation."

Administaff will be hosting a conference call today at 10 a.m. EDT to discuss these results, give guidance for the second quarter and full year 2008, and answer questions from investment analysts. To listen in, call 866-831-6224 and use passcode 25151513. The call will also be webcast at http://www.administaff.com/investor_relations. The conference call script and company guidance will be available at the same Web site later today. A replay of the conference call will be available at 888-286-8010, passcode 21908131, for two weeks after the call. The webcast will be archived for one year.

Administaff is the nation's leading professional employer organization (PEO), serving as a full-service human resources department that provides small and medium-sized businesses with administrative relief, big-company benefits, reduced liabilities and a systematic way to improve productivity. The company operates 49 sales offices in 24 major markets. For additional information, visit Administaff's Web site at http://www.administaff.com.

The statements contained herein that are not historical facts are forward-looking statements within the meaning of the federal securities laws (Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934). You can identify such forward-looking statements by the words "expects," "intends," "plans," "projects," "believes," "estimates," "likely," "possibly," "probably," "goal," "objective," "target," "assume," "outlook," "guidance," "predicts," "appears," "indicator" and similar expressions. Forward-looking statements involve a number of risks and uncertainties. In the normal course of business, Administaff, Inc., in an effort to help keep our stockholders and the public informed about our operations, may from time to time issue such forward-looking statements, either orally or in writing. Generally, these statements relate to business plans or strategies, projected or anticipated benefits or other consequences of such plans or strategies, or projections involving anticipated revenues, earnings, unit growth, profit per worksite employee, pricing, operating expenses or other aspects of operating results. We base the forward-looking statements on our current expectations, estimates and projections. These statements are not guarantees of future performance and involve risks and uncertainties that we cannot predict. In addition, we have based many of these forward-looking statements on assumptions about future events that may prove to be inaccurate. Therefore, the actual results of the future events described in such forward-looking statements could differ materially from those stated in such forward-looking statements. Among the factors that could cause actual results to differ materially are: (i) changes in general economic conditions; (ii) regulatory and tax developments and possible adverse application of various federal, state and local regulations; (iii) increases in health insurance costs and workers' compensation rates and underlying claims trends, financial solvency of workers' compensation carriers and other insurers, state unemployment tax rates, liabilities for employee and client actions or payroll-related claims, changes in the costs of expanding into new markets, and failure to manage growth of our operations; (iv) the effectiveness of our sales and marketing efforts; (v) changes in the competitive environment in the PEO industry, including the entrance of new competitors and our ability to renew or replace client companies; and (vi) our liability for worksite employee payroll and benefits costs; and (vii) an adverse final judgment or settlement of claims against Administaff. These factors are discussed in further detail in Administaff's filings with the U.S. Securities and Exchange Commission. Any of these factors, or a combination of such factors, could materially affect the results of our operations and whether forward-looking statements we make ultimately prove to be accurate.