CBIZ Reports Second-Quarter and First-Half 2010 Results
EPS from continuing operations is $0.11 for the quarter vs. $0.11 a year ago
EPS of $0.38 includes restructuring charge of $0.02 for first half vs. $0.41 in prior year
Cash EPS is $0.23 for the quarter and $0.64 for six months
CLEVELAND, July 27, 2010 /PRNewswire via COMTEX/ --
CBIZ, Inc. (NYSE: CBZ) today announced results for the second quarter and first half ended June 30, 2010.
CBIZ reported revenue of $180.8 million for the second quarter ended June 30, 2010, a decline of 2.3% compared with the $185.2 million reported for the second quarter of 2009. Revenue from newly acquired operations contributed $5.1 million to revenue in the second quarter compared with the same period a year ago. Same-unit revenue declined by 5.1%, or $9.5 million for the second quarter 2010, compared to the same period a year ago. CBIZ reported income from continuing operations for the quarter of $6.9 million, or $0.11 per diluted share, compared with $6.9 million, or $0.11 per diluted share in the second quarter of 2009.
For the six-month period ended June 30, 2010, CBIZ reported revenue of $391.1 million compared with $401.6 million for the comparable six-month period a year ago. Same-unit revenue decreased by 5.4%, or $21.7 million, for the first six months of 2010 compared to the same period a year ago. Acquisitions contributed $11.1 million to revenue growth for the first half of 2010. Net income from continuing operations was $23.8 million for the first six months of 2010, or $0.38 per diluted share, compared with $25.3 million for the first six months of 2009, or $0.41 per diluted share.
Results for the six months include a pre-tax charge of approximately $1.4 million related to integration activities of Goldstein Lewin & Company which was acquired in the first quarter 2010. Also included in the six months results was an increase in legal expenses of approximately $1.3 million which was related to bringing several long standing matters to a successful conclusion. These charges were primarily incurred in the first quarter of 2010, and the impact on fully diluted earnings per share for the six months was approximately $0.03 per share.
During the second quarter, the Company repurchased approximately 1.1 million shares of its common stock at a cost of approximately $7.1 million. The outstanding balance of the Company's unsecured bank line of credit at June 30, 2010 was $115.0 million compared with a balance of $110.0 million at December 31, 2009. On June 4, 2010, the Company established a new $275 million unsecured bank credit facility to expire in 2014 that replaced its previous $214 million credit facility.
Cash earnings per share, a non-GAAP measure that includes major non-cash charges to income from continuing operations, was $0.23 for the second quarter compared with $0.23 a year ago, and $0.64 for the six months ended June 30, 2010 compared with $0.64 per share a year ago. A schedule which reconciles Cash EPS with GAAP EPS is attached. EBITDA for the second quarter ended June 30, 2010 was $18.1 million, and for the six months ended June 30, 2010 was $54.3 million.
"As expected, the economic environment in 2010 continues to present revenue growth challenges as high rates of unemployment continue to persist and the mid-sized business clients typically served by CBIZ are not yet experiencing an increase in activity. We have taken actions to carefully manage costs and results in both our Financial Services and Employee Services segments are generally in line with expectations for the first six months and we have been able to improve margins in each of these two segments despite the revenue challenges," stated Steven L. Gerard, Chairman and CEO. "Our cash flow from operations is positive for the first six months, and our balance sheet continues to be strong. We completed two acquisitions in the first half of 2010 and we are continuing to assess a number of potential acquisition opportunities," stated Mr. Gerard.
"The volume of activity within our MMP business has increased slightly in the second quarter from the decline experienced in the first quarter, but continues to be impacted from the industry-wide reduction in the volume of procedures, primarily in the radiology practices we serve. The decline we experienced in the first half of the year has impacted earnings by approximately $0.05 per share. Because of the trends we have seen in the second quarter, we expect that second half financial results within this segment will be relatively flat compared with prior year. As a result, it will be difficult to achieve our 2010 goal of increasing earnings per share by 4%, or more, however, we expect that full year earnings per share for CBIZ in 2010 will be within a close range of the $0.52 per share reported in 2009. We also expect that full year EBITDA for 2010 will be within a similar range of the $85 million that we achieved in 2009," concluded Mr. Gerard.
CBIZ will host a conference call later this morning to discuss its results. The call will be webcast in a listen-only mode over the Internet for the media and the public, and can be accessed at http://www.cbiz.com/. Investors and analysts can participate in the conference call by dialing 1-800-559-9370 several minutes before 11:00 a.m. (ET). If you are dialing from outside the United States, dial 1-847-619-6819. A replay of the call will be available starting at 1:00 p.m. (ET) July 27, through midnight (ET), July 30, 2010. The dial-in number for the replay is 1-877-213-9653. If you are listening from outside the United States, dial 1-630-652-3041. The access code for the replay is 27458829. A replay of the webcast will also be available on the Company's web site at http://www.cbiz.com/.
CBIZ, Inc. provides professional business services that help clients better manage their finances and employees. CBIZ provides its clients with financial services including accounting and tax, internal audit, merger and acquisition advisory, and valuation services. Employee services include group benefits, property and casualty insurance, payroll, HR consulting and wealth management. CBIZ also provides outsourced technology staffing support services, healthcare consulting and medical practice management. As one of the largest benefits specialists and one of the largest accounting, valuation and medical practice management companies in the United States, the Company's services are provided through more than 150 Company offices in 36 states.
Forward-looking statements in this release are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those projected. Such risks and uncertainties include, but are not limited to, the Company's ability to adequately manage its growth; the Company's dependence on the current trend of outsourcing business services; the Company's dependence on the services of its CEO and other key employees; competitive pricing pressures; general business and economic conditions; and changes in governmental regulation and tax laws affecting its insurance business or its business services operations. A more detailed description of such risks and uncertainties may be found in the Company's filings with the Securities and Exchange Commission.
For further information regarding CBIZ, call our Investor Relations Office at (216) 447-9000 or visit our web site at www.cbiz.com.
CBIZ, INC.
FINANCIAL HIGHLIGHTS (UNAUDITED)
THREE MONTHS ENDED JUNE 30, 2010 AND 2009
(In thousands, except percentages and per share data)
THREE MONTHS ENDED
JUNE 30,
--------
2010 % 2009 (1) %
---- --- ------- ---
Revenue $180,840 100.0% $185,170 100.0%
Operating expenses 159,177 88.0% 165,428 89.3%
Gross margin 21,663 12.0% 19,742 10.7%
Corporate general
and administrative
expenses (2) 6,638 3.7% 7,674 4.2%
Operating income 15,025 8.3% 12,068 6.5%
Other income
(expense):
Interest expense (3,411) -1.9% (3,522) -1.9%
Gain on sale of
operations, net 2 0.0% 14 0.0%
Other (expense)
income, net (3) (2,047) -1.1% 2,896 1.6%
------ ---- ----- ---
Total other
expense, net (5,456) -3.0% (612) -0.3%
Income from
continuing
operations before
income tax expense 9,569 5.3% 11,456 6.2%
Income tax expense 2,655 4,597
Income from
continuing
operations 6,914 3.8% 6,859 3.7%
Loss from
operations of
discontinued
businesses, net of
tax (896) (207)
(Loss) gain on
disposal of
discontinued
businesses, net of
tax (596) 144
Net income $5,422 3.0% $6,796 3.7%
====== ======
Diluted earnings
(loss) per share:
Continuing
operations $0.11 $0.11
Discontinued
operations (0.02) -
Net income $0.09 $0.11
===== =====
Diluted weighted
average common
shares outstanding 61,837 61,870
Other data from
continuing
operations:
EBIT (4) $12,978 $14,964
EBITDA (4) $18,066 $19,987
(1) Certain amounts in the 2009 financial data have been
reclassified to conform to the current year presentation.
(2) Includes a benefit of $198 and an expense of $329 for the three
months ended June 30, 2010 and 2009, respectively, in
compensation expense associated with gains and losses from the
Company's deferred compensation plan (see note 3).
Excluding this item, corporate general and administrative expenses
would be $6,836 and $7,345, or 3.8% and 4.0% of revenue,
for the three months ended June 30, 2010 and 2009, respectively.
(3) Includes a net loss of $2,188 and a net gain of $2,485 for the
three months ended June 30, 2010 and 2009, respectively,
attributable to assets held in the Company's deferred compensation
plan. These net gains and losses do not impact "income
from continuing operations before income tax expense" as they are
directly offset by compensation adjustments to the Plan
participants. Compensation is included in "operating expenses" and
"corporate general and administrative expenses."
(4) EBIT represents earnings from continuing operations before
income taxes, interest expense, and gain on sale of operations,
net. EBITDA represents EBIT before depreciation and amortization
expense of $5,088 and $5,023 for the three months ended
June 30, 2010 and 2009, respectively. The Company has included EBIT
and EBITDA data because such data is commonly used
as a performance measure by analysts and investors and as a measure
of the Company's ability to service debt. EBIT and EBITDA
should not be regarded as an alternative or replacement to any
measurement of performance under generally accepted accounting
principles.
CBIZ, INC.
FINANCIAL HIGHLIGHTS (UNAUDITED)
SIX MONTHS ENDED JUNE 30, 2010 AND 2009
(In thousands, except percentages and per share data)
SIX MONTHS ENDED
JUNE 30,
--------
2010 % 2009 (1) %
---- --- ------- ---
Revenue $391,075 100.0% $401,648 100.0%
Operating expenses 331,468 84.8% 339,415 84.5%
Gross margin 59,607 15.2% 62,233 15.5%
Corporate general and
administrative
expenses (2) 15,622 4.0% 15,383 3.8%
Operating income 43,985 11.2% 46,850 11.7%
Other income
(expense):
Interest expense (6,579) -1.7% (7,025) -1.7%
Gain on sale of
operations, net 376 0.1% 94 0.0%
Other income, net (3) 126 0.1% 2,305 0.5%
--- --- ----- ---
Total other expense,
net (6,077) -1.5% (4,626) -1.2%
Income from
continuing
operations before
income tax expense 37,908 9.7% 42,224 10.5%
Income tax expense 14,130 16,962
Income from
continuing
operations 23,778 6.1% 25,262 6.3%
Loss from operations
of discontinued
businesses, net of
tax (1,340) (436)
(Loss) gain on
disposal of
discontinued
businesses, net of
tax (1,032) 151
Net income $21,406 5.5% $24,977 6.2%
======= =======
Diluted earnings
(loss) per share:
Continuing operations $0.38 $0.41
Discontinued
operations (0.03) (0.01)
Net income $0.35 $0.40
===== =====
Diluted weighted
average common
shares outstanding 61,972 61,891
Other data from
continuing
operations:
EBIT (4) $44,111 $49,155
EBITDA (4) $54,324 $59,222
(1) Certain amounts in the 2009 financial data have been
reclassified to conform to the current
year presentation.
(2) Includes a benefit of $32 and an expense of $202 for the six
months ended June 30, 2010 and
2009, respectively, in compensation expense associated with gains and
losses from the Company's
deferred compensation plan (see note 3). Excluding this item,
corporate general and administrative
expenses would be $15,654 and $15,181, or 4.0% and 3.8% of revenue,
for the six months ended
June 30, 2010 and 2009, respectively.
(3) Includes a net loss of $936 and a net gain of $1,649 for the six
months ended June 30, 2010 and
2009, respectively, attributable to assets held in the Company's
deferred compensation plan. These
net gains do not impact "income from continuing operations before
income tax expense" as they
are directly offset by compensation adjustments to the Plan
participants. Compensation is included
in "operating expenses" and "corporate general and administrative
expenses."
(4) EBIT represents income from continuing operations before income
taxes, interest expense, and
gain on sale of operations, net. EBITDA represents EBIT before
depreciation and amortization expense
of $10,213 and $10,067 for the six months ended June 30, 2010 and
2009, respectively. The Company
has included EBIT and EBITDA data because such data is commonly used
as a performance measure
by analysts and investors and as a measure of the Company's ability
to service debt. EBIT and
EBITDA should not be regarded as an alternative or replacement to any
measurement of performance
under generally accepted accounting principles.
CBIZ, INC.
FINANCIAL HIGHLIGHTS (UNAUDITED)
(In thousands, except per share data)
SELECT SEGMENT DATA
-------------------
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------- --------
2010 2009 (1) 2010 2009 (1)
---- ------- ---- -------
Revenue
Financial
Services $92,144 $94,138 $213,567 $218,831
Employee
Services 43,828 42,351 90,616 87,741
Medical
Management
Professionals 38,018 41,853 73,336 81,701
National
Practices 6,850 6,828 13,556 13,375
----- ----- ------ ------
Total $180,840 $185,170 $391,075 $401,648
======== ======== ======== ========
Gross Margin
Financial
Services $9,807 $10,702 $42,130 $42,257
Employee
Services 7,178 7,157 16,817 15,194
Medical
Management
Professionals 4,672 6,604 5,900 11,316
National
Practices 268 694 484 1,067
Operating
expenses -
unallocated
(2):
Other (2,252) (3,259) (6,628) (6,153)
Deferred
compensation 1,990 (2,156) 904 (1,448)
Total $21,663 $19,742 $59,607 $62,233
======= ======= ======= =======
(1) Certain amounts in the 2009 financial data have been
reclassified to conform to the current year presentation.
(2) Represents operating expenses not directly allocated to
individual businesses, including stock based compensation,
consolidation and
integration charges and certain advertising expenses. Unallocated
operating expenses also include gains or losses attributable to the
assets
held in the Company's deferred compensation plan. These gains or
losses do not impact "income from continuing operations" as they are
directly offset by the same adjustment to "other income (expense),
net" in the consolidated statements of operations. Gains recognized
from
adjustments to the fair value of the assets held in the deferred
compensation plan are recorded as additional compensation expense in
"operating expenses" and as income in "other income (expense), net."
CASH EARNINGS AND PER SHARE DATA
--------------------------------
Reconciliation of Income from Continuing Operations to Cash Earnings
from Continuing Operations (3)
--------------------------------------------------------------------
THREE MONTHS ENDED JUNE 30,
---------------------------
2010 Per Share 2009 Per Share
---- --------- --- ---------
Income from
Continuing
Operations $6,914 $0.11 $6,859 $0.11
Selected
non-cash
items:
Depreciation
and
amortization 5,088 0.08 5,023 0.08
Non-cash
interest on
convertible
note 1,056 0.02 978 0.02
Stock based
compensation 1,275 0.02 1,235 0.02
----- ---- ----- ----
Non-cash
items 7,419 0.12 7,236 0.12
----- ---- ----- ----
Cash
earnings -
Continuing
Operations $14,333 $0.23 $14,095 $0.23
======= ===== ======= =====
SIX MONTHS ENDED JUNE 30,
-------------------------
2010 Per Share 2009 Per Share
---- --------- --- ---------
Income from
Continuing
Operations $23,778 $0.38 $25,262 $0.41
Selected
non-cash
items:
Depreciation
and
amortization 10,213 0.17 10,067 0.16
Non-cash
interest on
convertible
note 2,098 0.03 1,943 0.03
Stock based
compensation 2,570 0.04 2,180 0.04
Restructuring
charge 1,131 0.02 - -
----- ---- --- ---
Non-cash
items 16,012 0.26 14,190 0.23
------ ---- ------ ----
Cash
earnings -
Continuing
Operations $39,790 $0.64 $39,452 $0.64
======= ===== ======= =====
(3) The Company believes cash earnings and cash earnings per diluted
share (non-GAAP measures) more clearly illustrate the impact of
certain
non-cash charges to income from continuing operations and are a
useful measure for the Company and its analysts. Cash earnings is
defined as
income from continuing operations excluding depreciation and
amortization, non-cash interest expense, non-cash stock based
compensation
expense and the portion of the $1.4 million restructuring charge to
be paid in future periods related to the 2010 acquisition of
Goldstein Lewin.
Cash earnings per diluted share is calculated by dividing cash
earnings by the number of weighted average diluted common shares
outstanding
for the period indicated. Cash earnings and cash earnings per diluted
share should not be regarded as a replacement or alternative of
performance
under generally accepted accounting principles.
CBIZ, INC.
FINANCIAL HIGHLIGHTS (UNAUDITED)
(In thousands, except percentages and ratios)
SELECT BALANCE SHEET DATA AND RATIOS
------------------------------------
JUNE 30, DECEMBER 31,
2010 2009 (1)
---- -------
Cash and cash
equivalents $408 $9,257
Restricted cash $12,512 $15,432
Accounts
receivable, net $156,160 $128,766
Current assets
before funds
held for clients $190,384 $181,001
Funds held for
clients -
current and non-
current $72,376 $98,470
Goodwill and
other intangible
assets, net $393,045 $375,211
Total assets $714,324 $713,097
Notes payable -
current $280 $13,410
Convertible notes
-current $95,946 $-
Current
liabilities
before client
fund obligations $181,445 $89,530
Client fund
obligations $74,478 $101,279
Convertible notes
- non-current $- $93,848
Bank debt $115,000 $110,000
Total liabilities $423,835 $442,479
Treasury stock $(277,243) $(269,642)
Total
stockholders'
equity $290,489 $270,618
Debt to equity
(2) 72.6% 75.3%
Days sales
outstanding
(DSO) -
continuing
operations (3) 79 66
Shares
outstanding 61,698 61,937
====== ======
Basic weighted
average common
shares
outstanding 61,479 61,200
====== ======
Diluted weighted
average common
shares
outstanding 61,972 61,859
====== ======
(1) Certain amounts in the 2009 financial data have been
reclassified to conform to the current year presentation.
(2) Ratio is convertible notes and bank debt divided by total
stockholders' equity.
(3) DSO is provided for continuing operations and represents
accounts receivable (before the allowance for doubtful
accounts) and unbilled revenue (net of realization adjustments) at
the end of the period, divided by trailing twelve month
daily revenue. The Company has included DSO data because such data is
commonly used as a performance measure
by analysts and investors and as a measure of the Company's ability
to collect on receivables in a timely manner. DSO
should not be regarded as an alternative or replacement to any
measurement of performance under generally accepted
accounting principles. DSO at June 30, 2009 was 71.
SOURCE CBIZ, Inc.