Trinet Group, Inc. · NYSE:TNET
Trinet — Deutsche Bank Leveraged Finance Conference 2023
32 slides from Trinet's conference presentation, October 2023
Slide 1: Deutsche Bank Leveraged Finance Conference
Deutsche Bank Leveraged Finance Conference Kelly Tuminelli, CFO October 2023 © 2023 TriNet Group, Inc. All rights reserved. All trademarks, trade names, service marks and logos referenced herein belong to their respective companies. Reproduction or distribution in whole or part without express writt
Slide 2: Cautionary Note Regarding Forward-Looking Statements and Other Financial Information
Cautionary Note Regarding Forward-Looking Statements and Other Financial Information For purposes of this presentation, the terms “TriNet,” “the Company,” “we,” “us” and “our” refer to TriNet Group, Inc., and its subsidiaries. This presentation contains statements that are not historical in nature,
Slide 3: Non-GAAP Financial Measures
Non-GAAP Financial Measures In addition to financial measures presented in accordance with U.S. Generally Accepted Accounting Principles (GAAP), we present other non-GAAP financial measures in this presentation that we use to manage our business, to make planning decisions, to allocate resources, an
Slide 4: Agenda
Agenda 1 TriNet Overview 2 Financial Review 3 Q&A 4 Appendix © 2023 TriNet Group, Inc. All rights reserved. 4
Slide 5: TriNet Overview
TriNet Overview © 2023 TriNet Group, Inc. All rights reserved. 5
Slide 6: Investment Highlights
Investment Highlights Innovation leader serving large, Differentiated PEO vertical product under-penetrated market offerings and HRIS software platform Increased operational scale and Profitable growth supported by financial leverage strong corporate cash generation © 2023 TriNet Group, Inc. All rig
Slide 7: Large Market Opportunity
Large Market Opportunity ~61 million Underpenetrated SMB Market Number of Employees who work for companies with 500 or fewer employees5 7% ~ 61 Million Employees5 Approximate percentage of SMB Worksite Employees (WSEs) who work for SMBs using a PEO6 480+ PEO industry is made up of over 480 PEO servi
Slide 8: Challenges Facing SMBs
Challenges Facing SMBs Compliance ⦁ Significant regulatory oversight ⦁ Risks for federal, state, and local noncompliance are high Complexity ⦁ Federal, state, and local regulations continue to diverge ⦁ Managing HR across multiple jurisdictions Cost ⦁ SMBs pay multiple vendors and employees for a va
Slide 9: A Leading PEO Technology Platform
A Leading PEO Technology Platform • Benefits Enrollment • Workforce Analytics • Expense Management • New Hire Onboarding • Mobile App • Marketplace • Automatic Payroll • Time Tracking • Integration Center © 2023 TriNet Group, Inc. All rights reserved. 9
Slide 10: Common PEO Product and Service Capabilities
Common PEO Product and Service Capabilities HR Expertise Benefit Options Payroll Services Risk Mitigation • ACA compliance guidance • Medical (PPO, HMO, HDHP) • Payroll processing and • Workers’ compensation Technology Platform management • Employee and manager self- • Employee onboarding and • Dent
Slide 11: Scaled Service Model
Scaled Service Model Rapid access to HR expertise: when they want, how they want Personalized strategic resource Account Manager Specialized experts On-demand HR Guidance support Benefits Payroll Platform Customer Responsive support for your employees, 24/7 Solution Center © 2023 TriNet Group, Inc.
Slide 12: Vertical Strategy
Vertical Strategy Financial Services Life Science Main Street Nonprofit Professional Technology Services Full-service HR solutions tailored to our targeted Verticals for PEO clients • Different industries have different needs • SMBs want partners who know their industries and can scale with them • V
Slide 13: Insurance Services
Insurance Services Workers’ Compensation ⦁ Provide fully insured, industry Health Insurance standard $1 million per claim deductible policies ⦁ Offer 200+ fully insured health plans ⦁ Assist clients by providing risk management services ⦁ Scale enables us to offer national and regional health offeri
Slide 14: Managing Health Insurance Risk
Managing Health Insurance Risk TriNet manages a deductible layer of risk within our minimum premium health plans HEALTHCARE POOL* DISTRIBUTION OF RISK FOR EACH HEALTH PLAN MEMBER PER YEAR CARRIER $500k+ per insured PRICE TO RISK Price new and existing customers to their risk while using 72 unique TR
Slide 15: Experienced Leadership Team
Experienced Leadership Team Burton M. Goldfield Kelly Tuminelli Samantha Wellington President & Executive Vice President & Executive Vice President, Chief Executive Officer Chief Financial Officer Business Affairs, Chief Legal Officer and Secretary Alex Warren Michael Mendenhall Catherine Wragg Chie
Slide 16: Financial Review
Financial Review © 2023 TriNet Group, Inc. All rights reserved. 16
Slide 17: Financial Model
Financial Model Revenue EBITDA Growth Strong Corporate Growth from Operating Operating Cash Leverage Flow* • Vertical strategy drives • Disciplined Operating Expense • Efficient Working Capital volume growth management • CAPEX light • Customer experience drives • Use scale in operations and • Profit
Slide 18: Financial Policy
Financial Policy Prioritize Maintain Target Deploy/Return Capital Appropriate Cash Leverage Ratio of 75%, on Average, Deployment for Buffer & Prudent 1.5x-2.0x Adjusted of Corporate Organic Growth Access to Liquidity EBITDA* Operating Cash Flow* via Capital Returns/ M&A, Annually *Non-GAAP measure;
Slide 19: Q2 2023 Financial Highlights
Q2 2023 Financial Highlights © 2023 TriNet Group, Inc. All rights reserved. 19
Slide 20: Q2 2023 Total Revenues
Q2 2023 Total Revenues4 • In Q2 ‘23, Total Revenues increased 1% year-over- year, and Professional Service Revenues decreased 3% year-over-year, driven by lower WSE volume offset by rate growth $1,200 $1,209 $182 $177 $1,018 $1,032 Q2 '22 Q2 '23 Insurance Service Revenues Professional Service Revenu
Slide 21: Q2 2023 Insurance Cost Ratio
Q2 2023 Insurance Cost Ratio1,4 • Insurance Cost Ratio1 was largely unchanged year-over-year in Q2 ‘23 • The Q2 ‘23 Insurance Cost Ratio was impacted by increased Insurance Cost growth driven by health utilization and health cost inflation offset by favorable prior period development in workers comp
Slide 22: Q2 2023 EPS & Adjusted EBITDA Margin
Q2 2023 EPS4 & Adjusted EBITDA Margin2,3,4 • GAAP Net Income per share-diluted grew 2% and Adjusted Net Income (ANI) per share-diluted2,3 grew 1% in Q2 ‘23 • For Q2 ’23, Adjusted EBITDA Margin2,3 contracted slightly 13.5% 13.3% $1.72 $1.74 $1.35 $1.38 Q2 '22 Q2 '23 2,3 2,3 © 2023 TriNet Group, I
Slide 23: Historical Financial Performance
Historical Financial Performance © 2023 TriNet Group, Inc. All rights reserved. 23
Slide 24: Consistent Total Revenues Growth
Consistent Total Revenues4 Growth $4,885 $4,540 $754 $4,034 $3,856 $639 $3,503 $544 $530 $487 $4,131 $3,901 $3,326 $3,490 $3,016 FY2018 FY2019 FY2020 FY2021 FY2022 Insurance Service Revenues Professional Service Revenues 9% Total Revenues & 12% Professional Service Revenues CAGR5 From 2018 Through 2
Slide 25: Historical Insurance Cost Ratio
Historical Insurance Cost Ratio1,4 Insurance Cost Ratio FY 2018A – LTM 6/30/23 95% 88.0% 86.5% 85.4% 85.6% 83.8% 84.3% 85% 75% FY 2018A FY 2019A FY 2020A FY 2021A FY 2022A LTM 6/30/23 Insurance Cost Ratio 1 1,4 See Appendix B Priced for Stable Insurance Cost Experience © 2023 TriNet Group, Inc. All
Slide 26: Attractive EPS Growth & Adj EBITDA Margin Expansion
Attractive EPS4 Growth & Adj EBITDA Margin2,3,4 Expansion 14.1% 12.5% 11.6% 9.9% 9.8% $7.07 $5.64 $5.61 $5.07 $4.44 $3.99 $3.02 $2.99 $3.33 $2.65 FY2018 FY2019 FY2020 FY2021 FY2022 GAAP EPS ANI per Share-Diluted Adj EBITDA Margin 21% GAAP EPS CAGR5 and 24% Adjusted EPS2,3 CAGR5 From 2018 Through 202
Slide 27: Q&A
Q&A © 2023 TriNet Group, Inc. All rights reserved. 27
Slide 28: Appendix
Appendix © 2023 TriNet Group, Inc. All rights reserved. 28
Slide 29: Appendix A
Appendix A Reconciliation of non-GAAP financial measures to GAAP financial measures © 2023 TriNet Group, Inc. All rights reserved. 29
Slide 30: Appendix A
Appendix A Reconciliation of non-GAAP financial measures to GAAP financial measures © 2023 TriNet Group, Inc. All rights reserved. 30
Slide 31: Appendix B
Appendix B Please refer to our most recent Annual Report and Quarterly Reports for a more detailed discussion of our Statement of Cash Flows © 2023 TriNet Group, Inc. All rights reserved. 31
Slide 32: Appendix C – End Notes
Appendix C – End Notes 1 Insurance costs to insurance service revenues ratio, or Insurance Cost Ratio, is a ratio obtained by dividing GAAP Insurance Costs by GAAP Insurance Service Revenues. 2 Non-GAAP financial measure. See Slide 3 and Appendix A for more information about these non-GAAP financial
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