Exhibit 10.1
Execution Version
INCREMENTAL FACILITY AMENDMENT dated as of July 29, 2016 (this “
Agreement
”), to the AMENDED AND RESTATED FIRST LIEN CREDIT AGREEMENT (the “
Credit Agreement
”) dated as of August 20, 2013, as amended and restated as of July 9, 2014 (as further amended, restated, amended and restated, supplemented or otherwise modified through the date hereof), among TRINET HR CORPORATION, a California corporation (the “
Borrower
”), TRINET GROUP, INC., a Delaware corporation (“
Holdings
”), the LENDERS party thereto and JPMORGAN CHASE BANK, N.A., as administrative agent.
WHEREAS, the Lenders have agreed to extend credit to the Borrower under the Credit Agreement on the terms and subject to the conditions set forth therein;
WHEREAS, the Borrower has requested, subject to the terms and conditions of the Credit Agreement, to establish Incremental Term Commitments in an aggregate principal amount of $135,000,000 (the “
Incremental Tranche A Term Loan Commitments
”; the Incremental Term Loans in respect of such Incremental Tranche A Term Loan Commitments, the “
Incremental Tranche A Term Loans
”);
WHEREAS, each of the Incremental Tranche A Term Lenders (as defined below) is willing to provide Incremental Tranche A Term Loan Commitments in the amount set forth opposite its name on
Schedule A
hereto pursuant to the terms and subject to the conditions set forth herein and in the Credit Agreement;
WHEREAS, subject to the terms and conditions set forth herein, each Incremental Tranche A Term Lender will make an Incremental Tranche A Term Loan to the Borrower in the aggregate amount set forth opposite its name on such
Schedule A
, by (a) funding such Incremental Tranche A Term Loans in cash in the amount indicated with respect to such Incremental Tranche A Term Lender in such
Schedule A
(any such Incremental Tranche A Term Lender, to the extent required to fund its Incremental Tranche A Term Loans in cash, a “
Funding Incremental Tranche A Term Lender
”) and/or (b) converting into an equivalent principal amount of Incremental Tranche A Term Loans such principal amounts of such Incremental Tranche A Term Lender’s existing Tranche B Term Loans (as defined in the Credit Agreement) as are indicated with respect to such Incremental Tranche A Term Lender in such
Schedule A
(any such Incremental Tranche A Term Lender, to the extent required to make its Incremental Tranche A Term Loans pursuant to such conversions, a “
Converting Incremental Tranche A Term Lender
”);
WHEREAS, JPMorgan Chase Bank, N.A. (in such capacity, the “
Arranger
”) has been appointed to act as sole lead arranger for the Incremental Tranche A Term Loan Commitments and the Incremental Tranche A Term Loans;
WHEREAS, the Borrower has requested that the Lenders agree to certain amendments to the Credit Agreement;
WHEREAS, the Non-Incremental Lenders (as defined below), together with the Incremental Tranche A Term Lenders, constitute the Required Lenders under the Credit Agreement immediately after giving effect to the incurrence of the Incremental Tranche A Term Loans and the use of proceeds thereof; and
WHEREAS, the Borrower, the Administrative Agent and the Required Lenders have so agreed to amend the Credit Agreement on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual agreements herein contained and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties hereto hereby agree as follows:
SECTION 1.
Defined Terms.
(a) Capitalized terms used but not otherwise defined herein (including in the preamble and the recitals hereto) shall have the meanings assigned to them in the Credit Agreement.
(b)
“
Non-Incremental Lenders
” means Lenders that are signatories to this Agreement (solely for purposes of
Section 4
) that are not Funding Incremental Tranche A Term Lenders or Converting Incremental Tranche A Term Lenders.
SECTION 2.
Incremental Tranche A Term Loan Commitments and Incremental Tranche A Term Loans.
(a) Each Person listed on
Schedule A
hereto (collectively, the “
Incremental Tranche A Term Lenders
”; any Incremental Tranche A Term Lender that was not a Lender immediately preceding the effectiveness of this Agreement being referred to as a “
New Lender
”) agrees that, on and as of the Incremental Effective Date (as defined below), the Incremental Tranche A Term Loan Commitments of such Incremental Tranche A Term Lender shall be equal to the amount set forth opposite its name on
Schedule A
.
(b)
Subject to the terms and conditions set forth herein and in the Credit Agreement, each Incremental Tranche A Term Lender agrees, severally and not jointly, to make an Incremental Tranche A Term Loan to the Borrower on the Incremental Effective Date in an aggregate principal amount equal to the Incremental Tranche A Term Commitment of such Incremental Tranche A Term Lender set forth on
Schedule A
hereto, (i) in the case of each Funding Incremental Tranche A Term Lender, by funding the amount thereof in accordance with the Credit Agreement, and (ii) in the case of each Converting Incremental Tranche A Term Lender, by converting into an equal principal amount of Incremental Tranche A Term Loans the principal amounts of such Lender’s existing Tranche B Term Loans (the “
Converted Loans
”) set forth with respect to it on
Schedule A
hereto;
provided
, that each Converting Incremental Tranche A Term Lender hereby waives any right to payment under
Section 2.16
of the Credit Agreement in respect of any Converted Loans. On the Incremental Effective Date, the conversion by Converting Incremental Tranche A Term Lenders of their Tranche B Term Loans will be deemed to take place simultaneously with the funding of Incremental Tranche A Term Loans by the Funding Incremental Tranche A Term Lenders. No Incremental Tranche A Term Lender shall be responsible for any other Incremental Tranche A Term Lender’s failure to make Incremental Tranche A Term Loans.
(c)
Pursuant to
Section 2.21
of the Credit Agreement and subject to the terms and conditions set forth herein and in the Credit Agreement, effective as of the Incremental Effective Date, for all purposes of the Loan Documents, (i) the Incremental Tranche A Term Loans shall be “Incremental Term Loans”, “Term Loans” and “Loans” under the Credit Agreement and the other Loan Documents, shall constitute a separate Series and Class of Loans under the Credit Agreement and the other Loan Documents and, except as set forth in
Sections 2(d)
,
(e)
and
(f)
below, shall have the same terms as the Tranche A Term Loans outstanding as of the date hereof for all purposes of the Credit Agreement and the other Loan Documents, (ii) the Incremental Tranche A Term Commitments shall constitute “Term Commitments” and “Incremental Term Commitments” under the Credit Agreement, and (iii) each Incremental Tranche A Term Lender shall become, or continue to be, as applicable, a “Tranche A Term Lender”, a “Term Lender” and a “Lender” under the Credit Agreement and shall have all the rights and obligations of, and benefits accruing to, a Lender under the Credit Agreement and shall be bound by all agreements, acknowledgements and other obligations of Lenders.
(d)
Subject to adjustment pursuant to paragraph (c) of
Section 2.10
of the Credit Agreement, the Borrower shall repay to the Administrative Agent for the ratable account of the Incremental Tranche A Term Lenders, (i) on the last Business Day of each March, June, September and December, commencing on December 31, 2016 (the “
Commencement Date
”) to and including September 30, 2018, an aggregate amount equal to 1.875% of the aggregate principal amount of all Incremental Tranche A Term Loans outstanding on the Incremental Effective Date and (ii) on the last Business Day of each March, June, September and December, from and including December 31, 2018, to July 9, 2019 (the “
Incremental Tranche A Term Loan Maturity Date
”), an aggregate amount equal to 2.5% of the aggregate principal amount of all Incremental Tranche A Term Loans outstanding on the Incremental Effective Date, with the balance due on the Incremental Tranche A Term Loan Maturity Date.
(e)
The Applicable Rate in respect of the Incremental Tranche A Term Loans shall be as set forth below;
provided
that the Applicable Rate in respect of the Incremental Tranche A Term Loans in effect from the Incremental Effective Date until the first Business Day immediately following the date a compliance certificate is subsequently delivered pursuant to the Credit Agreement shall be determined by reference to Pricing Level 3:
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Pricing Level
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Total Leverage Ratio
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Adjusted LIBOR Margin
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ABR Margin
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1
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< 2.75 to 1.00
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2.125%
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1.125%
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2
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> 2.75 to 1.00
≤ 3.25 to 1.00
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2.375%
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1.375%
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3
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> 3.25 to 1.00
≤ 4.25 to 1.00
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2.625%
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1.625%
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4
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> 4.25 to 1.00
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2.750%
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1.750%
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(f)
The proceeds of the Incremental Tranche A Term Loans made on the Incremental Effective Date will be used to (i) prepay the Tranche B Term Loans outstanding under the Credit Agreement on the Incremental Effective Date and (ii) pay fees and expenses incurred in connection therewith.
(g)
Notwithstanding anything to the contrary in Section 9.04(b) of the Credit Agreement, the Borrower hereby consents to any assignment by any Incremental Tranche A Term Lender within 45 days of the Amendment Effective Date of the Incremental Tranche A Term Loans made in connection with the primary syndication of the Incremental Tranche A Term Loans;
provided
that the assignee is identified in writing to the Borrower and agreed upon on or prior to the Amendment Effective Date.
SECTION 3.
Representations and Warranties.
Each of Holdings and the Borrower represents and warrants to the Administrative Agent and each of the Lenders that:
(a)
The execution, delivery and performance by each Loan Party of this Agreement are within such Loan Party’s corporate or equivalent powers and have been duly authorized by all necessary corporate or other organizational action and, if required, action by the holders of such Loan Party’s Equity Interests. This Agreement has been duly executed and delivered by each Loan Party and constitutes a legal, valid and binding obligation of such Loan Party enforceable against such Person in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.
(b)
On and as of the Incremental Effective Date, before and after giving effect to this Agreement and the making of the Incremental Tranche A Term Loans, the representations and warranties of Holdings and the Borrower set forth in
Article III
of the Credit Agreement (and treating all references therein to (i) “this Agreement” as references to each of the Credit Agreement and this Agreement, (ii) “the Restatement Effective Date” as references to the Incremental Effective Date and (iii)
(c)
“the Transactions” as references to the transactions contemplated by this Agreement) are true and correct in all material respects (or, in the case of representations and warranties qualified as to materiality, in all respects) on and as of the Incremental Effective Date, except in the case of any such representation and warranty that expressly relates to a prior date, in which case such representation and warranty shall be true and correct in all material respects (or in all respects, as applicable) as of such earlier date.
(d)
On and as of the Incremental Effective Date, before and after giving effect to this Agreement and the making of the Incremental Tranche A Term Loans, no Default shall have occurred and be continuing.
SECTION 4.
Amendments to Credit Agreement.
Subject to the occurrence of the Incremental Effective Date and
Section 5(a)
of this Agreement, and effective immediately after giving effect to the incurrence of the Incremental Tranche A Term Loans and the use of proceeds thereof, the Credit Agreement is hereby amended as follows:
(a)
The following definitions are added in the appropriate alphabetical order to Section 1.01 of the Credit Agreement:
“
Bail-In Action
” means the exercise of any Write-Down and Conversion Powers by the applicable EEA Resolution Authority in respect of any liability of an EEA Financial Institution.
“
Bail-In Legislation
” means with respect to any EEA Member Country implementing Article 55 of Directive 2014/59/EU of the European Parliament and of the Council of the European Union, the implementing law for such EEA Member Country from time to time which is described in the EU Bail-In Legislation Schedule.
“
EEA Financial Institution
” means (a) any credit institution or investment firm established in any EEA Member Country which is subject to the supervision of an EEA Resolution Authority, (b) any entity established in an EEA Member Country which is a parent of an institution described in clause (a) of this definition, or (c) any financial institution established in an EEA Member Country which is a subsidiary of an institution described in clauses (a) or (b) of this definition and is subject to consolidated supervision with its parent.
“
EEA Member Country
” means any of the member states of the European Union, Iceland, Liechtenstein, and Norway.
“
EEA Resolution Authority
” means any public administrative authority or any person entrusted with public administrative authority of any EEA Member Country (including any delegee) having responsibility for the resolution of any EEA Financial Institution.
“
EU Bail-In Legislation Schedule
” means the EU Bail-In Legislation Schedule published by the Loan Market Association (or any successor person), as in effect from time to time.
“
First Incremental Effective Date
” means July 29, 2016.
“
Write-Down and Conversion Powers
” means with respect to any EEA Resolution Authority, the write-down and conversion powers of such EEA Resolution Authority from time to time under the Bail-In Legislation for the applicable EEA Member Country, which write-down and conversion powers are described in the EU Bail-In Legislation Schedule.
(b)
the definition of “
Change in Control
,” as set forth in
Section 1.01
of the Credit Agreement, is hereby amended and restated in its entirety to read as follows:
““
Change in Control
” means (a) the failure of Holdings to own, directly or indirectly through wholly-owned Subsidiaries, 100% of the outstanding Equity Interest in the Borrower; (b)(i) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or “group”, within the meaning of the Exchange Act and the rules of the SEC thereunder (other than General Atlantic or any employee benefit plan of Holdings or the Subsidiaries or a Person acting in connection with such acquisition as a trustee, agent, fiduciary or administrator of such an employee benefit plan), of Equity Interests representing more than the greater of (A) 35% of the aggregate ordinary voting power represented by the issued and outstanding Equity Interests in Holdings and (B) the percentage of then outstanding Voting Stock of Holdings then owned directly, indirectly or beneficially by the Permitted Holders; (c) the occupation of a majority of the seats (other than vacant seats) on the board of directors of Holdings by Persons who were not (i) directors of Holdings on the Restatement Effective Date, (ii) nominated or approved by the board of directors of Holdings or General Atlantic or (iii) appointed by directors who were directors of Holdings on the Restatement Effective Date or were so nominated or approved as provided in subclause (ii) of this clause (c); or (d) the occurrence of any “change in control” (or similar event, however denominated) with respect to Holdings or the Borrower under and as defined in any indenture or other agreement or instrument evidencing, governing the rights of the holders of, or otherwise relating to, any Material Indebtedness of Holdings, the Borrower or any Subsidiary.”
(c)
the definition of “
Base Incremental Amount
” as set forth in
Section 1.01
of the Credit Agreement, is hereby amended and restated in its entirety to read as follows:
“
Base Incremental Amount
” means $100,000,000. For purposes hereof, the Base Incremental Amount will be deemed to be utilized by the initial $100,000,000 of Incremental Commitments incurred after the First Incremental Effective Date under Section 2.21 and Alternative Incremental Facility Indebtedness incurred under Section 6.01(a)(xiii) (and, for the avoidance of doubt, the Base Incremental Amount shall not be reduced as a result of the Incremental Term Loans incurrence on the First Incremental Effective Date).
(d)
The definition of the term “Defaulting Lender” set forth in Section 1.01 of the Credit Agreement is hereby amended by:
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(i)
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replacing the word “or” immediately prior to clause (e) thereof with “,” and inserting the following immediately after clause (e) thereof:
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“or (f) has, or has a direct or indirect parent company that has, become the subject of a Bail-In Action”; and
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(ii)
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replacing the words “clauses (a) through (e) above” in the last sentence thereof with “clauses (a) through (f) above”.
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(e)
Article IX of the Credit Agreement is hereby amended by adding the following as a new Section 9.18:
“Section 9.18
Acknowledgement and Consent to Bail-In of EEA Financial Institutions
. Notwithstanding anything to the contrary in any Loan Document or in any other agreement, arrangement
or understanding among any such parties, each party hereto acknowledges that any liability of any Lender that is an EEA Financial Institution arising under any Loan Document, to the extent such liability is unsecured, may be subject to the Write-Down and Conversion Powers of an EEA Resolution Authority and agrees and consents to, and acknowledges and agrees to be bound by:
(
a) the application of any Write-Down and Conversion Powers by an EEA Resolution Authority to any such liabilities arising hereunder which may be payable to it by any Lender that is an EEA Financial Institution; and
(b) the effects of any Bail-in Action on any such liability, including, if applicable:
(i) a reduction in full or in part or cancellation of any such liability;
(ii) a conversion of all, or a portion of, such liability into shares or other instruments of ownership in such EEA Financial Institution, its parent undertaking, or a bridge institution that may be issued to it or otherwise conferred on it, and that such shares or other instruments of ownership will be accepted by it in lieu of any rights with respect to any such liability under this Agreement or any other Loan Document; or
(iii) the variation of the terms of such liability in connection with the exercise of the write-down and conversion powers of any EEA Resolution Authority.”
SECTION 5.
Effectiveness.
This Agreement shall become effective as of the first date (the “
Incremental Effective Date
”) on which:
(a)
The Administrative Agent shall have received from Holdings, the Borrower, each other Loan Party and each Incremental Tranche A Term Lender either (i) a counterpart of this Agreement signed on behalf of such party or (ii) written evidence satisfactory to the Administrative Agent (which may include facsimile transmission or other electronic imaging of a signed signature page of this Agreement) that such party has signed a counterpart of this Agreement;
provided
, that the effectiveness of
Section 4
of this Agreement is additionally subject to receipt of signatures from Lenders constituting the Required Lenders after giving effect to the incurrence of the Incremental Tranche A Term Loans and the use of proceeds thereof.
(b)
The Administrative Agent shall have received a favorable written opinion (addressed to the Administrative Agent and the Incremental Tranche A Term Lenders) of (i) Davis Polk & Wardwell LLP, special counsel for the Loan Parties, and (ii) Trenam, Kemker, Scharf, Barkin, Frye, O’Neill & Mullis, Professional Association, special Florida counsel for certain of the Loan Parties, in each case dated as of the Incremental Effective Date and covering such matters relating to the Loan Parties, the Loan Documents and the transactions contemplated hereby as the Administrative Agent shall reasonably request. Each of Holdings and the Borrower hereby requests such counsel to deliver such opinions.
(c)
The Administrative Agent shall have received such documents and certificates as the Administrative Agent or its counsel may reasonably request relating to the organization, existence and good standing in the jurisdiction of incorporation or formation of each Loan Party, the authorization of the transactions contemplated hereby and any other legal matters relating to the Loan Parties, the Loan Documents or such transactions, all in form and substance reasonably satisfactory to the Administrative Agent.
(d)
The Administrative Agent shall have received a certificate, dated the Incremental Effective Date and signed by a Financial Officer or the President or a Vice President of the Borrower, confirming compliance as of the Incremental Effective Date with the representations and warranties set forth in
Section
3
of this Agreement and confirming that, after giving pro forma effect to the incurrence of the Incremental Tranche A Term Loans and the use of proceeds related thereto, the Borrower shall be in compliance with a First Lien Leverage Ratio not to exceed 3.75:1.00.
(e)
The Administrative Agent shall have received all fees and other amounts due and payable on or prior to the Incremental Effective Date, including, to the extent invoiced at least three Business Days prior to the Incremental Effective Date, reimbursement or payment of all reasonable out-of-pocket expenses (including reasonable fees, charges and disbursements of counsel) required to be reimbursed or paid by any Loan Party hereunder, under any other Loan Document or under any other agreement entered into by the Arranger, the Administrative Agent and the Incremental Tranche A Term Lenders, on the one hand, and any of the Loan Parties, on the other hand.
(f)
The Administrative Agent shall have received a certificate from the chief financial officer of Holdings, substantially in the form of Exhibit J to the Credit Agreement, certifying as to the solvency of Holdings, the Borrower and the Subsidiaries on a consolidated basis after giving effect to the transactions consummated on the Incremental Effective Date.
(g)
The Borrower shall have delivered to the Administrative Agent the notice required by
Section 2.03
of the Credit Agreement.
(h)
Each New Lender shall have received all documentation and other information required by bank regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including the USA Patriot Act to the extent requested at least seven (7) Business Days prior to the Incremental Effective Date.
The Administrative Agent shall notify the Borrower and the Lenders of the Incremental Effective Date, and such notice shall be conclusive and binding.
SECTION 6.
Effect of this Agreement.
(a) Except as expressly set forth herein, this Agreement shall not by implication or otherwise limit, impair, constitute a waiver of, or otherwise affect the rights and remedies of the Administrative Agent, the Swingline Lender, the Issuing Banks or the Lenders under the Credit Agreement, and shall not alter, modify, amend or in any way affect any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement, all of which are ratified and affirmed in all respects and shall continue in full force and effect. Nothing herein shall be deemed to entitle the Borrower to any other consent to, or any other waiver, amendment, modification or other change of, any of the terms, conditions, obligations, covenants or agreements contained in the Credit Agreement in similar or different circumstances.
(b)
The Borrower and each other Loan Party hereby consents to this Agreement and the transactions contemplated hereby. Neither this Agreement nor the transactions contemplated hereby discharge or release the Lien or priority of any Loan Document or any other security therefor or any guarantee thereof, and the Liens and security interests existing immediately prior to the Incremental Effective Date in favor of the collateral agent for the benefit of the Secured Parties securing payment of the Obligations are in all respects continuing and in full force and effect with respect to all Obligations (including the Incremental Tranche A Term Loans). Nothing contained herein or in the Credit Agreement shall be construed as a novation or a termination of the Obligations outstanding under the Credit Agreement or instruments guaranteeing or securing the same, which shall remain in full force and effect, except as expressly set forth herein or as modified hereby.
(c)
On and after the Incremental Effective Date, each reference in the Credit Agreement to “this Agreement”, “herein”, “hereunder”, “hereto”, “hereof” and words of similar import shall, unless the context otherwise requires, refer to the Credit Agreement as amended hereby.
(d)
In the case of any Incremental Tranche A Term Lender that is a New Lender, on and after the Incremental Effective Date, such Incremental Tranche A Term Lender shall thereafter be deemed to be a Lender under the Credit Agreement and shall be entitled to all rights, benefits and privileges accorded a Lender thereunder and subject to all obligations of a Lender thereunder.
(e)
It is agreed that the Arranger and its Related Parties shall be entitled to the benefits of
Sections 9.03(a)
and
9.03(b)
of the Credit Agreement with respect to the arrangement of the Incremental Tranche A Term Loans and this Agreement, the preparation, execution and delivery of this Agreement and other matters relating to or arising out of this Agreement to the same extent as the Administrative Agent and its Related Parties are entitled to the benefits of such Sections in respect of the preparation of the Credit Agreement or other matters relating to or arising out of the Credit Agreement.
(f)
The parties hereto acknowledge that the Borrower has previously delivered to the Administrative Agent written notice of the Incremental Tranche A Term Loan Commitments, and agree that execution by any Incremental Tranche A Term Lender of this Agreement shall be deemed to be execution by it of such notice.
SECTION 7.
Applicable Law.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 8.
Counterparts.
This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original but all of which, when taken together, shall constitute a single instrument. Delivery of an executed counterpart of a signature page of this Agreement by facsimile or other electronic transmission shall be effective as delivery of a manually executed counterpart hereof.
SECTION 9.
Headings.
The Section headings used herein are for convenience of reference only, are not part of this Agreement and are not to affect the construction of, or to be taken into consideration in interpreting, this Agreement.
[Remainder of page intentionally left blank.]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the date first above written.
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TRINET HR CORPORATION,
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by
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Name:
Title:
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TRINET GROUP, INC.,
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by
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Name:
Title:
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210 PARK AVENUE HOLDING, INC.,
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by
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Name:
Title:
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ACCORD HUMAN RESOURCES, INC.,
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by
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Name:
Title:
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ACCORD HUMAN RESOURCES 12, INC.,
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by
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Name:
Title:
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AMBROSE EMPLOYER GROUP, LLC,
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by
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Name:
Title:
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[Signature Page - Incremental Facility Amendment]
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SOI HOLDINGS, INC.,
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by
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Name:
Title:
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STRATEGIC OUTSOURCING, INC.,
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by
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Name:
Title:
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TRINET HR V INC.,
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by
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Name:
Title:
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JPMORGAN CHASE BANK, N.A., as Administrative Agent,
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by
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Name:
Title:
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NON-INCREMENTAL LENDER
SIGNATURE PAGE TO THE INCREMENTAL FACILITY AMENDMENT
UNDER THE AMENDED AND RESTATED
CREDIT AGREEMENT OF TRINET HR CORPORATION
SIGNING SOLELY FOR PURPOSES OF SECTION 4
INCREMENTAL TRANCHE A TERM LENDER
SIGNATURE PAGE TO THE INCREMENTAL FACILITY AMENDMENT
UNDER THE AMENDED AND RESTATED
CREDIT AGREEMENT OF TRINET HR CORPORATION
Name of Incremental Tranche A Term Lender:
[
Lender Signature Pages on File with
Administrative Agent]
For any Incremental Tranche A Term Lender requiring a second signature block:
Name of Non-Incremental Lender:
[
Lender Signature Pages on File with
Administrative Agent]
For any Non-Incremental Lender requiring a second signature block:
Schedule A
[Scheduled A on File with Administrative Agent]
Exhibit 99.1
TriNet Announces
Second
Quarter Fiscal
2016
Results and Senior Secured Credit Facility Refinancing
17%
Growth in Total Revenues and
22%
growth in Net Service revenues for the Second Quarter
8%
Increase in Worksite Employees (WSEs), to approximately
325,000
SAN LEANDRO, Calif.
—
August 1, 2016
—
TriNet Group,
Inc.
(NYSE:
TNET),
a leading provider of a comprehensive human resources solution for small to midsize businesses,
today
announced
financial
results
for
the
second
quarter ended
June 30, 2016
. TriNet also announced the refinancing of its senior secured credit facilities on July 29, 2016.
Second
quarter highlights include:
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Total revenues increased
17%
to
$745.8 million
, while Net Service Revenues increased
22%
to
$149.2 million
, each as compared to the same period last year.
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•
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Total WSEs at
June 30, 2016
increased
8%
from
June 30, 2015
, to approximately
325,000
.
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•
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Net income was
$12.3 million
, or
$0.17
per diluted share, compared to net loss of
$1.3 million
, or
$0.02
loss per diluted share, in the same period last year.
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•
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Adjusted Net Income was
$19.5 million
, or
$0.27
per diluted share, compared to Adjusted Net Income of
$10.5 million
, or
$0.15
per diluted share, in the same period last year.
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•
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Adjusted EBITDA was
$42.6 million
, a
72%
increase from the same period last year.
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“I am pleased with our second quarter results,” said Burton M. Goldfield, TriNet’s President and CEO. “We delivered strong financial results and made further progress aligning our vertical sales channel and building bundled products tailored to select industries. Our differentiated vertical product offerings are resonating in a market in need of innovative solutions, and we believe we are well positioned for the second half of the year.”
TriNet’s total revenues for the
second
quarter of
2016
increased
17%
from the
second
quarter of
2015
to
$745.8 million
, while Net Service Revenues increased
22%
from the
second
quarter of
2015
to
$149.2 million
. Net Service Revenues consisted of professional service revenues of
$109.6 million
and Net Insurance Service Revenues of
$39.6 million
. Net Insurance Service Revenues consisted of insurance service revenues of
$636.3 million
, less insurance costs of
$596.7 million
. Professional service revenues for the
second
quarter of
2016
increased
12%
, and Net Insurance Service Revenues increased
63%
, compared to the
second
quarter of
2015
. Results for the
second
quarter of
2016
reflect a net increase of
23,091
WSEs since
June 30, 2015
representing
8%
growth. TriNet ended the
second
quarter with
471
Total Sales Representatives, down from
486
at the end of the
second
quarter of
2015
, a decrease of
3%
.
At
June 30, 2016
, TriNet had cash and equivalents of
$166.7 million
and total debt of
$476.8 million
. On July 29, 2016, TriNet refinanced its tranche B term loan in a leverage-neutral transaction: $135 million principal amount of tranche B term loans outstanding at June 30, 2016 and maturing July 2017 were replaced with the same amount of tranche A-2 term loans maturing July 2019 pursuant to an Incremental Amendment to TriNet’s Amended and Restated Credit Agreement. The $342 million of tranche A term loans outstanding at June 30, 2016 and the revolving credit facility were not modified. Additional details regarding the terms of the refinancing and a copy of the Incremental Amendment to the Amended and Restated Credit Agreement are provided in TriNet’s Current Report on Form 8-K dated August 1, 2016, filed with the Securities and Exchange Commission.
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 the outlook for the
2016
second
half. 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/10090202
. 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: 10090202.
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 one strategic partner and allowing them to focus on operating and growing their core businesses. Our HR solution includes 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 proprietary, cloud-based technology platform, which allows 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, forward-looking statements including, among other things, TriNet’s expectations regarding: the growth of its customer base, its ability to deepen its presence across a range of industry sectors, its ability to roll out additional product offerings as and when planned, its ability to make enhancements to its technology platform, its ability to execute on its vertical market strategy and penetrate the market for HR solutions for small to midsize businesses. 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 any future results, performance or achievements. Important factors that could cause actual results to differ materially from those expressed or implied by these forward-looking statements include: risks associated with the market acceptance of outsourcing the HR function, and the anticipated benefits associated with the use of a bundled HR solution; our ability to continue to expand our direct sales force and the efficacy of our sales and marketing efforts; our ability to gain new clients, and our clients’ ability to grow and gain more employees; our ability to effectively acquire and integrate new businesses; the effects of seasonal trends on our results of operations; the unpredictable nature of our costs and operating expenses, in particular our insurance costs; changes to and our ability to comply with laws and regulations, including both those applicable to the co-employment relationship as well as those applicable to our clients’ businesses and their employees; the continuing implementation of the Affordable Care Act, including its application to the co-employer relationship; our ability to effectively manage our growth; the effects of increased competition and our ability to compete effectively; and our ability to comply with the restrictions of our credit facility and meet our debt obligations.
Further information on risks that could affect TriNet’s results is included in our filings with the Securities and Exchange Commission, including our most recently filed Annual Report on Form 10-K filed with the Commission on April 1, 2016, which could cause actual results to vary from expectations. Except as required by law, neither we nor any other person assumes responsibility for the accuracy and completeness of the forward-looking statements.
|
|
|
|
|
|
Contacts:
|
|
|
Investors:
|
Media:
|
|
Alex Bauer
|
Jock Breitwieser
|
|
TriNet
|
TriNet
|
|
Investorrelations@TriNet.com
|
Jock.Breitwieser@TriNet.com
|
|
(510) 875-7201
|
(510) 875-7250
|
TriNet, Ambitions Realized and the TriNet logo are registered trademarks of TriNet.
TriNet Group, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except share and per share data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Professional service revenues
|
$
|
109,593
|
|
|
$
|
97,799
|
|
|
$
|
221,996
|
|
|
$
|
194,815
|
|
|
Insurance service revenues
|
636,253
|
|
|
542,208
|
|
|
1,256,789
|
|
|
1,070,770
|
|
|
Total revenues
|
745,846
|
|
|
640,007
|
|
|
1,478,785
|
|
|
1,265,585
|
|
|
Costs and operating expenses:
|
|
|
|
|
|
|
|
|
|
Insurance costs
|
596,673
|
|
|
517,994
|
|
|
1,166,362
|
|
|
1,001,197
|
|
|
Cost of providing services (exclusive of depreciation and
amortization of intangible assets)
|
44,034
|
|
|
37,672
|
|
|
89,739
|
|
|
74,042
|
|
|
Sales and marketing
|
43,800
|
|
|
41,119
|
|
|
92,508
|
|
|
78,743
|
|
|
General and administrative
|
18,951
|
|
|
15,801
|
|
|
46,601
|
|
|
31,265
|
|
|
Systems development and programming costs
|
6,457
|
|
|
7,633
|
|
|
12,846
|
|
|
14,858
|
|
|
Amortization of intangible assets
|
5,005
|
|
|
10,608
|
|
|
9,985
|
|
|
21,825
|
|
|
Depreciation
|
4,559
|
|
|
3,195
|
|
|
8,475
|
|
|
6,629
|
|
|
Total costs and operating expenses
|
719,479
|
|
|
634,022
|
|
|
1,426,516
|
|
|
1,228,559
|
|
|
Operating income
|
26,367
|
|
|
5,985
|
|
|
52,269
|
|
|
37,026
|
|
|
Other income (expense):
|
|
|
|
|
|
|
|
|
|
Interest expense and bank fees
|
(5,038
|
)
|
|
(4,764
|
)
|
|
(10,080
|
)
|
|
(9,968
|
)
|
|
Other, net
|
163
|
|
|
68
|
|
|
121
|
|
|
518
|
|
|
Income before provision for income taxes
|
21,492
|
|
|
1,289
|
|
|
42,310
|
|
|
27,576
|
|
|
Provision for income taxes
|
9,210
|
|
|
2,597
|
|
|
18,451
|
|
|
13,073
|
|
|
Net income (loss)
|
$
|
12,282
|
|
|
$
|
(1,308
|
)
|
|
$
|
23,859
|
|
|
$
|
14,503
|
|
|
Net income (loss) per share:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
$
|
0.17
|
|
|
$
|
(0.02
|
)
|
|
$
|
0.34
|
|
|
$
|
0.21
|
|
|
Diluted
|
$
|
0.17
|
|
|
$
|
(0.02
|
)
|
|
$
|
0.33
|
|
|
$
|
0.20
|
|
|
Weighted average shares:
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
70,728,934
|
|
|
70,305,185
|
|
|
70,625,000
|
|
|
70,251,980
|
|
|
Diluted
|
72,319,992
|
|
|
70,305,185
|
|
|
72,022,065
|
|
|
73,090,962
|
|
TriNet Group, Inc. and Subsidiaries
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2016
|
|
December 31,
2015
|
|
Assets
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash and cash equivalents
|
$
|
166,664
|
|
|
$
|
166,178
|
|
|
Restricted cash
|
14,558
|
|
|
14,557
|
|
|
Prepaid income taxes
|
7,671
|
|
|
4,105
|
|
|
Prepaid expenses
|
12,922
|
|
|
8,579
|
|
|
Other current assets
|
2,049
|
|
|
1,359
|
|
|
Worksite employee related assets
|
947,571
|
|
|
1,373,386
|
|
|
Total current assets
|
1,151,435
|
|
|
1,568,164
|
|
|
Workers compensation receivable
|
39,803
|
|
|
29,204
|
|
|
Restricted cash and investments
|
112,807
|
|
|
101,806
|
|
|
Property and equipment, net
|
47,320
|
|
|
37,844
|
|
|
Goodwill
|
289,207
|
|
|
289,207
|
|
|
Other intangible assets, net
|
37,087
|
|
|
46,772
|
|
|
Other assets
|
18,817
|
|
|
19,452
|
|
|
Total assets
|
$
|
1,696,476
|
|
|
$
|
2,092,449
|
|
|
Liabilities and stockholders’ equity
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable
|
$
|
16,629
|
|
|
$
|
12,904
|
|
|
Accrued corporate wages
|
25,676
|
|
|
28,963
|
|
|
Current portion of notes payable and borrowings under capital leases, net
|
25,006
|
|
|
32,970
|
|
|
Other current liabilities
|
11,197
|
|
|
11,402
|
|
|
Worksite employee related liabilities
|
943,403
|
|
|
1,369,497
|
|
|
Total current liabilities
|
1,021,911
|
|
|
1,455,736
|
|
|
Notes payable and borrowings under capital leases, net, less current portion
|
447,399
|
|
|
460,965
|
|
|
Workers compensation liabilities
|
130,523
|
|
|
105,481
|
|
|
Deferred income taxes
|
54,815
|
|
|
54,641
|
|
|
Other liabilities
|
8,365
|
|
|
7,545
|
|
|
Total liabilities
|
1,663,013
|
|
|
2,084,368
|
|
|
Commitments and contingencies
|
|
|
|
|
Stockholders’ equity:
|
|
|
|
|
|
|
Preferred stock, $.000025 per share stated value; 20,000,000 shares authorized;
no shares issued and outstanding at June 30, 2016 and December 31, 2015
|
—
|
|
|
—
|
|
|
Common stock, $.000025 per share stated value; 750,000,000 shares authorized;
70,500,720 and 70,371,425 shares issued and outstanding at June 30, 2016
and December 31, 2015, respectively
|
513,439
|
|
|
494,397
|
|
|
Accumulated deficit
|
(479,680
|
)
|
|
(485,595
|
)
|
|
Accumulated other comprehensive loss
|
(296
|
)
|
|
(721
|
)
|
|
Total stockholders’ equity
|
33,463
|
|
|
8,081
|
|
|
Total liabilities and stockholders’ equity
|
$
|
1,696,476
|
|
|
$
|
2,092,449
|
|
TriNet Group, Inc. and Subsidiaries
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended June 30,
|
|
|
2016
|
|
2015
|
|
Operating activities
|
|
|
Net income
|
$
|
23,859
|
|
|
$
|
14,503
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
Depreciation and amortization
|
17,919
|
|
|
27,944
|
|
|
Deferred income taxes
|
—
|
|
|
1,977
|
|
|
Stock-based compensation
|
13,905
|
|
|
8,803
|
|
|
Excess tax benefit from equity incentive plan activity
|
(703
|
)
|
|
(17,673
|
)
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
Restricted cash and investments
|
(21,041
|
)
|
|
(13,413
|
)
|
|
Prepaid expenses and other current assets
|
(5,033
|
)
|
|
(5,082
|
)
|
|
Workers compensation receivables
|
(10,599
|
)
|
|
(5,083
|
)
|
|
Other assets
|
238
|
|
|
(14,509
|
)
|
|
Accounts payable
|
2,488
|
|
|
(35
|
)
|
|
Prepaid income taxes
|
(2,863
|
)
|
|
23,953
|
|
|
Accrued corporate wages and other current liabilities
|
(719
|
)
|
|
(612
|
)
|
|
Workers compensation and other liabilities
|
25,792
|
|
|
25,532
|
|
|
Worksite employee related assets
|
425,815
|
|
|
796,897
|
|
|
Worksite employee related liabilities
|
(426,094
|
)
|
|
(798,024
|
)
|
|
Net cash provided by operating activities
|
42,964
|
|
|
45,178
|
|
|
Investing activities
|
|
|
|
|
Acquisitions of businesses
|
(300
|
)
|
|
—
|
|
|
Purchases of restricted investments
|
(14,959
|
)
|
|
—
|
|
|
Proceeds from maturities of restricted investments
|
24,998
|
|
|
—
|
|
|
Purchase of property and equipment
|
(16,714
|
)
|
|
(10,349
|
)
|
|
Net cash used in investing activities
|
(6,975
|
)
|
|
(10,349
|
)
|
|
Financing activities
|
|
|
|
|
Proceeds from issuance of common stock on exercised options
|
2,220
|
|
|
4,639
|
|
|
Proceeds from issuance of common stock on employee stock purchase plan
|
2,304
|
|
|
2,723
|
|
|
Excess tax benefit from equity incentive plan activity
|
703
|
|
|
17,673
|
|
|
Repayment of notes payable and borrowings under capital leases
|
(22,810
|
)
|
|
(35,325
|
)
|
|
Repurchase of common stock
|
(16,459
|
)
|
|
(30,000
|
)
|
|
Awards effectively repurchased for required employee withholding taxes
|
(1,485
|
)
|
|
(358
|
)
|
|
Net cash used in financing activities
|
(35,527
|
)
|
|
(40,648
|
)
|
|
Effect of exchange rate changes on cash and cash equivalents
|
24
|
|
|
(109
|
)
|
|
Net increase (decrease) in cash and cash equivalents
|
486
|
|
|
(5,928
|
)
|
|
Cash and cash equivalents at beginning of period
|
166,178
|
|
|
134,341
|
|
|
Cash and cash equivalents at end of period
|
$
|
166,664
|
|
|
$
|
128,413
|
|
Key Operating Metrics
We regularly review certain key operating metrics to evaluate growth trends, measure our performance and make strategic decisions. Our key operating metrics for the periods presented were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
|
Six Months Ended
June 30,
|
|
Key Financial and Operating Metrics
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
Net Insurance Service Revenues (in thousands)
|
$
|
39,580
|
|
|
$
|
24,214
|
|
|
$
|
90,427
|
|
|
$
|
69,573
|
|
|
Net Service Revenues (in thousands)
|
$
|
149,173
|
|
|
$
|
122,013
|
|
|
$
|
312,423
|
|
|
$
|
264,388
|
|
|
Total WSEs
|
325,466
|
|
|
302,375
|
|
|
|
|
|
|
Total Sales Representatives
|
471
|
|
|
486
|
|
|
|
|
|
Non-GAAP Financial Measures
We use Net Insurance Service Revenues, Net Service Revenues, Adjusted EBITDA, Adjusted Net Income, and Adjusted Net Income per share – diluted to provide an additional view of our operational performance. Net Insurance Service Revenues, Net Service Revenues, Adjusted EBITDA, Adjusted Net Income and Adjusted Net Income per share – diluted are financial measures that are not prepared in accordance with GAAP. We define Net Insurance Service Revenues as insurance service revenues less insurance costs, which include the premiums we pay to insurance carriers for the health and workers compensation insurance coverage provided to our clients and WSEs and the reimbursements we pay to the insurance carriers for claim payments within our insurance deductible layer. We define Net Service Revenues as the sum of professional service revenues and Net Insurance Service Revenues. We define Adjusted EBITDA as net income (loss), excluding the effects of our income tax provision, interest expense, depreciation, amortization of intangible assets and stock-based compensation. We define Adjusted Net Income as net income (loss), excluding the effects of our effective income tax rate, stock-based compensation, amortization of intangible assets, non-cash interest expense, debt prepayment premium, and the income tax effect of these pre-tax adjustments at our effective tax rate. For purposes of our non-GAAP financial presentation, as a result of a
2015
increase in New York City tax rates and an increase in blended state rates, we have adjusted the effective tax rate to
42.5%
for the periods ended
June 30, 2016
, from
40.5%
for the periods ended
June 30, 2015
. Each of these effective tax rates exclude income tax on non-deductible stock-based compensation and discrete items including the cumulative effect of state law changes. Non-cash interest expense represents amortization and write-off of our debt issuance costs.
We believe that the use of Net Insurance Service Revenues provides useful information as it presents a measure of revenues from our provision of insurance services to our clients that eliminates the cost to us of that insurance. We believe that Net Service Revenues provides a useful measure of total revenues for the two main components of our revenues calculated on a consistent basis. We believe that the use of Adjusted EBITDA, Adjusted Net Income and Adjusted Net Income per share – diluted provides additional period-to-period comparisons and analysis of trends in our business, as they exclude certain non-cash expenses. We believe that Net Insurance Service Revenues, Net Service Revenues, Adjusted EBITDA, Adjusted Net Income, and Adjusted Net Income per share – diluted are useful for our stockholders and board of directors by helping them to identify trends in our business and understand how our management evaluates our business. We use Net Insurance Service Revenues, Net Service Revenues, Adjusted EBITDA, Adjusted Net Income and Adjusted Net Income per share – diluted to monitor and evaluate our operating results and trends on an ongoing basis and internally for operating, budgeting and financial planning purposes, in addition to allocating our resources to enhance the financial performance of our business and evaluating the effectiveness of our business strategies. We also use Net Service Revenues and Adjusted EBITDA in determining the incentive compensation for management.
Net Insurance Service Revenues, Net Service Revenues, Adjusted EBITDA, Adjusted Net Income and Adjusted Net Income per share – diluted are not prepared in accordance with, and should not be considered in isolation of, or as an alternative to, measurements required by GAAP. In addition, these non-GAAP measures are not based on any comprehensive set of accounting rules or principles. As non-GAAP measures, Net Insurance Service Revenues, Net Service Revenues, Adjusted EBITDA, Adjusted Net Income and Adjusted Net Income per share – diluted have limitations in that they do not reflect all of the amounts associated with our results of operations as determined in accordance with GAAP. In particular:
• Net Insurance Service Revenues and Net Service Revenues are reduced by the insurance costs that we pay to insurance carriers;
• Adjusted EBITDA does not reflect interest expense, or the cash requirements necessary to service interest or principal payments on our debt;
• Adjusted EBITDA does not reflect the amounts we paid in taxes or other components of our tax provision;
• Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;
• Adjusted EBITDA and Adjusted Net Income do not reflect changes in, or cash requirements for, our working capital needs;
• Adjusted EBITDA, Adjusted Net Income and Adjusted Net Income per share – diluted do not reflect the non-cash component of employee compensation;
• Although depreciation and amortization of intangible assets are non-cash charges, the assets being depreciated and amortized often will have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements; and
• Other companies in our industry may calculate these measures or similar measures differently than we do, limiting their usefulness as a comparative measure.
Because of these limitations, you should consider Net Insurance Service Revenues, Net Service Revenues, Adjusted EBITDA, Adjusted Net Income and Adjusted Net Income per share – diluted alongside other financial performance measures, including total revenues, net income (loss) and our other financial results presented in accordance with GAAP.
The table below sets forth a reconciliation of GAAP insurance service revenues to Net Insurance Service Revenues:
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|
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
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Change
2016 vs. 2015
|
|
Six Months Ended
June 30,
|
|
Change
2016 vs. 2015
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|
|
2016
|
|
2015
|
|
$
|
|
%
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|
2016
|
|
2015
|
|
$
|
|
%
|
|
|
(in thousands, except percentages)
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|
Insurance service revenues
|
$
|
636,253
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|
|
$
|
542,208
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|
|
$
|
94,045
|
|
|
17%
|
|
$
|
1,256,789
|
|
|
$
|
1,070,770
|
|
|
$
|
186,019
|
|
|
17
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%
|
|
Less: Insurance costs
|
596,673
|
|
|
517,994
|
|
|
78,679
|
|
|
15%
|
|
1,166,362
|
|
|
1,001,197
|
|
|
165,165
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|
|
16
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%
|
|
Net Insurance Service Revenues
|
$
|
39,580
|
|
|
$
|
24,214
|
|
|
$
|
15,366
|
|
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63%
|
|
$
|
90,427
|
|
|
$
|
69,573
|
|
|
$
|
20,854
|
|
|
30
|
%
|
The table below sets forth a reconciliation of GAAP total revenues to Net Service Revenues:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
|
Change
2016 vs. 2015
|
|
Six Months Ended
June 30,
|
|
Change
2016 vs. 2015
|
|
|
2016
|
|
2015
|
|
$
|
|
%
|
|
2016
|
|
2015
|
|
$
|
|
%
|
|
|
(in thousands, except percentages)
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|
Total revenues
|
$
|
745,846
|
|
|
$
|
640,007
|
|
|
$
|
105,839
|
|
|
17%
|
|
$
|
1,478,785
|
|
|
$
|
1,265,585
|
|
|
$
|
213,200
|
|
|
17
|
%
|
|
Less: Insurance costs
|
596,673
|
|
|
517,994
|
|
|
78,679
|
|
|
15%
|
|
1,166,362
|
|
|
1,001,197
|
|
|
165,165
|
|
|
16
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%
|
|
Net Service Revenues
|
$
|
149,173
|
|
|
$
|
122,013
|
|
|
$
|
27,160
|
|
|
22%
|
|
$
|
312,423
|
|
|
$
|
264,388
|
|
|
$
|
48,035
|
|
|
18
|
%
|
The table below sets forth a reconciliation of GAAP net income (loss) to Adjusted EBITDA:
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
(in thousands)
|
|
Net income (loss)
|
$
|
12,282
|
|
|
$
|
(1,308
|
)
|
|
$
|
23,859
|
|
|
$
|
14,503
|
|
|
Provision for income taxes
|
9,210
|
|
|
2,597
|
|
|
18,451
|
|
|
13,073
|
|
|
Stock-based compensation
|
6,508
|
|
|
4,883
|
|
|
13,905
|
|
|
8,803
|
|
|
Interest expense and bank fees
|
5,038
|
|
|
4,764
|
|
|
10,080
|
|
|
9,968
|
|
|
Depreciation
|
4,559
|
|
|
3,195
|
|
|
8,475
|
|
|
6,629
|
|
|
Amortization of intangible assets
|
5,005
|
|
|
10,608
|
|
|
9,985
|
|
|
21,825
|
|
|
Adjusted EBITDA
|
$
|
42,602
|
|
|
$
|
24,739
|
|
|
$
|
84,755
|
|
|
$
|
74,801
|
|
The table below sets forth a reconciliation of GAAP net income (loss) to Adjusted Net Income and Adjusted Net Income per share - diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
|
Six Months Ended
June 30,
|
|
|
2016
|
|
2015
|
|
2016
|
|
2015
|
|
|
(in thousands)
|
|
Net income (loss)
|
$
|
12,282
|
|
|
$
|
(1,308
|
)
|
|
$
|
23,859
|
|
|
$
|
14,503
|
|
|
Effective income tax rate adjustment
|
76
|
|
|
2,075
|
|
|
469
|
|
|
1,905
|
|
|
Stock-based compensation
|
6,508
|
|
|
4,883
|
|
|
13,905
|
|
|
8,803
|
|
|
Amortization of intangible assets
|
5,005
|
|
|
10,608
|
|
|
9,985
|
|
|
21,825
|
|
|
Non-cash interest expense
|
849
|
|
|
804
|
|
|
1,624
|
|
|
2,021
|
|
|
Income tax impact of pre-tax adjustments
|
(5,254
|
)
|
|
(6,599
|
)
|
|
(10,843
|
)
|
|
(13,223
|
)
|
|
Adjusted Net Income
|
$
|
19,466
|
|
|
$
|
10,463
|
|
|
$
|
38,999
|
|
|
$
|
35,834
|
|
|
GAAP Weighted average shares of common stock - diluted
|
72,320
|
|
|
70,305
|
|
|
72,022
|
|
|
73,091
|
|
|
Adjusted Net Income per share - diluted
|
$
|
0.27
|
|
|
$
|
0.15
|
|
|
$
|
0.54
|
|
|
$
|
0.49
|
|