News Release

CBIZ, INC.

FINANCIAL HIGHLIGHTS (UNAUDITED)

THREE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018

(In thousands, except percentages and per share data)

THREE MONTHS ENDED

SEPTEMBER 30,

2019

%

2018

%

Revenue

$

239,790

100.0

%

$

224,249

100.0

%

Operating expenses (1)

209,146

87.2

%

198,607

88.6

%

Gross margin

30,644

12.8

%

25,642

11.4

%

Corporate general and administrative expenses (1)

11,670

4.9

%

10,279

4.5

%

Operating income

18,974

7.9

%

15,363

6.9

%

Other income:

Interest expense

(1,521)

-0.6

%

(1,614)

-0.8

%

Loss on sale of operations, net

(145)

-0.1

%

-

0.0

%

Other income, net (1) (2)

6,767

2.8

%

3,143

1.4

%

Total other income, net

5,101

2.1

%

1,529

0.6

%

Income from continuing operations before income
tax expense

24,075

10.0

%

16,892

7.5

%

Income tax expense

6,069

3,297

Income from continuing operations

18,006

7.5

%

13,595

6.1

%

Loss from operations of discontinued businesses, net of
tax

(200)

(9)

Net income

$

17,806

7.4

%

$

13,586

6.1

%

Diluted earnings per share:

Continuing operations

$

0.32

$

0.24

Discontinued operations

-

-

Net income

$

0.32

$

0.24

Diluted weighted average common shares outstanding

55,816

56,740

Other data from continuing operations:

Adjusted EBITDA (3)

$

31,375

$

24,358

(1)

CBIZ sponsors a deferred compensation plan, under which a CBIZ employee's compensation deferral is held in a rabbi trust and invested accordingly as directed by the employee. Income and expenses related to the deferred compensation plan are included in "Operating expenses" ($6.5 million expense in 2019 and $3.0 million expense in 2018, or 2.7% and 1.4% of revenue, respectively) and "Corporate general and administrative expenses" ($0.8 million expense in 2019 and $0.4 million expense in 2018, or 0.3% and 0.1% of revenue, respectively) and are directly offset by deferred compensation gains or losses in "Other income, net" ($7.3 million income in 2019 and $3.4 million income in 2018, or 3.0% and 1.5% of revenue, respectively). The amounts recorded for the three months ended September 30, 2019 related to the deferred compensation plan included a correction of an immaterial prior period error, which resulted in an increase of $6.0 million in "Operating expenses", $0.7 million in "Corporate general and administrative expense", and a corresponding increase of $6.7 million in "Other income, net". The deferred compensation plan has no impact on "Income from continuing operations before income tax expense".      

(2)

Included in "Other income, net" for the three months ended September 30, 2019 and 2018, is expense of $0.5 million and income of $0.2 million, respectively, related to net changes in the fair value of contingent consideration related to CBIZ's prior acquisitions.

(3)

Refer to the financial highlights tables for a reconciliation of Non-GAAP financial measures to the nearest generally accepted accounting principles ("GAAP") financial measure, and for additional information as to the usefulness of the Non-GAAP financial measures to shareholders and investors. 

CBIZ, INC.

FINANCIAL HIGHLIGHTS (UNAUDITED)

NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018

(In thousands, except percentages and per share data)

NINE MONTHS ENDED

SEPTEMBER 30,

2019

%

2018

%

Revenue

$

745,286

100.0

%

$

722,980

100.0

%

Operating expenses (1)

622,790

83.6

%

608,459

84.2

%

Gross margin

122,496

16.4

%

114,521

15.8

%

Corporate general and administrative expenses (1)

33,916

4.6

%

30,300

4.2

%

Operating income

88,580

11.8

%

84,221

11.6

%

Other income (expense):

Interest expense

(4,509)

-0.6

%

(5,211)

-0.7

%

Gain on sale of operations, net

402

0.1

%

663

0.1

%

Other income, net (1) (2)

12,716

1.7

%

2,544

0.4

%

Total other income (expense), net

8,609

1.2

%

(2,004)

-0.2

%

Income from continuing operations before income
tax expense

97,189

13.0

%

82,217

11.4

%

Income tax expense

25,004

19,691

Income from continuing operations

72,185

9.7

%

62,526

8.6

%

(Loss) gain from operations of discontinued businesses,
net of tax

(318)

17

Net income

$

71,867

9.6

%

$

62,543

8.7

%

Diluted earnings (loss) per share:

Continuing operations

$

1.29

$

1.11

Discontinued operations

(0.01)

-

Net income

$

1.28

$

1.11

Diluted weighted average common shares
outstanding

55,778

56,393

Other data from continuing operations:

Adjusted EBITDA (3)

$

117,906

$

104,293

(1)

CBIZ sponsors a deferred compensation plan, under which a CBIZ employee's compensation deferral is held in a rabbi trust and invested accordingly as directed by the employee. Income and expenses related to the deferred compensation plan are included in "Operating expenses" ($11.7 million expense in 2019 and $4.7 million expense in 2018, or 1.6% and 0.7% of revenue, respectively) and "Corporate general and administrative expenses" ($1.3 million expense in 2019 and $0.5 million expense in 2018, or 0.2% and 0.1% of revenue for 2019 and 2018, respectively) and are directly offset by deferred compensation gains or losses in "Other income (expense), net" ($13.0 million income in 2019 and $5.2 million income in 2018, or 1.7% and 0.7% of revenue, respectively). The deferred compensation plan has no impact on "Income from continuing operations before income tax expense". 

(2)

Included in "Other income, net" for the nine months ended September 30, 2019 and 2018, is expense of $0.3 million and $3.3 million, respectively, related to net changes in the fair value of contingent consideration related to CBIZ's prior acquisitions.

(3)

Refer to the financial highlights tables for a reconciliation of Non-GAAP financial measures to the nearest GAAP financial measure, and for additional information as to the usefulness of the Non-GAAP financial measures to shareholders and investors.

CBIZ, INC.

FINANCIAL HIGHLIGHTS (UNAUDITED)

(In thousands)

SELECT SEGMENT DATA

THREE MONTHS ENDED

NINE MONTHS ENDED

SEPTEMBER 30,

SEPTEMBER 30,

2019

2018

2019

2018

Revenue

Financial Services

$

153,794

$

146,145

$

493,311

$

478,485

Benefits and Insurance Services

76,960

70,069

225,342

220,152

National Practices

9,036

8,035

26,633

24,343

Total

$

239,790

$

224,249

$

745,286

$

722,980

Gross Margin

Financial Services

$

25,563

$

21,599

$

102,464

$

91,836

Benefits and Insurance Services

13,570

10,670

39,506

38,455

National Practices

932

521

2,325

1,987

Operating expenses - unallocated (1):

Other

(2,927)

(4,126)

(10,095)

(13,010)

Deferred compensation

(6,494)

(3,022)

(11,704)

(4,747)

Total

$

30,644

$

25,642

$

122,496

$

114,521

(1)

Represents operating expenses not directly allocated to individual businesses, including stock-based compensation, consolidation and integration charges, and certain advertising expenses. "Operating expenses - unallocated" also include gains or losses attributable to the assets held in a rabbi trust associated with the Company's deferred compensation plan. These gains or losses do not impact "Income from continuing operations before income tax expense" as they are directly offset by the same adjustment to "Other income (expense), net" in the Consolidated Statements of Comprehensive Income. Net gains/losses recognized from adjustments to the fair value of the assets held in the rabbi trust are recorded as compensation expense in "Operating expenses" and "Corporate, general and administrative expense," and offset in "Other income (expense), net".

CBIZ, INC.

SELECT CASH FLOW DATA

(In thousands)

NINE MONTHS ENDED

SEPTEMBER 30,

2019

2018

Net income

$

71,867

$

62,543

Adjustments to reconcile net income to net cash provided by
operating activities:

Depreciation and amortization expense

16,610

17,528

Bad debt expense, net of recoveries

1,974

3,697

Adjustments to contingent earnout liability

322

3,290

Stock-based compensation expense

5,258

5,358

Other noncash adjustments

1,395

(1,989)

Net income, after adjustments to reconcile net income to net
cash provided by operating activities

97,426

90,427

Changes in assets and liabilities, net of acquisitions and
divestitures

(47,708)

(26,993)

Operating cash flows provided by continuing operations

49,718

63,434

Operating cash used in discontinued operations

(304)

(162)

Net cash provided by operating activities

49,414

63,272

Net cash used in investing activities

(24,691)

(39,267)

Net cash used in financing activities

(56,473)

(102,838)

Net decrease in cash, cash equivalents and restricted cash

$

(31,750)

$

(78,833)

Cash, cash equivalents and restricted cash at beginning of year

130,554

182,262

Cash, cash equivalents and restricted cash at end of year

$

98,804

$

103,429

Reconciliation of cash, cash equivalents and restricted cash to
the consolidated balance sheet:

Cash and cash equivalents

$

2,723

$

3,493

Restricted cash

35,739

32,551

Cash equivalents included in funds held for clients

60,342

67,385

Total cash, cash equivalents and restricted cash

$

98,804

$

103,429

CBIZ, INC.

SELECT FINANCIAL DATA AND RATIOS

(In thousands)

SEPTEMBER 30,

DECEMBER 31,

2019

2018

Cash and cash equivalents

$

2,723

$

640

Restricted cash

35,739

27,481

Accounts receivable, net

260,969

207,287

Current assets before funds held for clients

324,451

262,249

Funds held for clients

123,448

161,289

Goodwill and other intangible assets, net

658,442

637,009

Total assets

$

1,397,063

$

1,183,031

Current liabilities before client fund obligations

$

186,948

$

159,241

Client fund obligations

123,133

162,073

Bank debt

158,744

133,974

Total liabilities

$

740,767

$

589,368

Treasury stock

$

(531,356)

$

(508,530)

Total stockholders' equity

$

656,296

$

593,663

Debt to equity

24.5

%

23.0

%

Days sales outstanding (DSO) - continuing operations (1)

93

70

Shares outstanding

54,909

55,072

Basic weighted average common shares outstanding

54,215

54,561

Diluted weighted average common shares outstanding

55,778

56,487

(1)

DSO is provided for continuing operations and represents accounts receivable, net, 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 GAAP. DSO at September 30, 2018 was 87.

CBIZ, INC.

GAAP RECONCILIATION

Income from Continuing Operations to Non-GAAP Financial Measures (1)

(In thousands)

THREE MONTHS ENDED

NINE MONTHS ENDED

SEPTEMBER 30,

SEPTEMBER 30,

2019

2018

2019

2018

Income from continuing operations

$

18,006

$

13,595

$

72,185

$

62,526

Interest expense

1,521

1,614

4,509

5,211

Income tax expense

6,069

3,297

25,004

19,691

Loss (gain) on sale of operations, net

145

-

(402)

(663)

Depreciation

2,085

1,465

6,102

4,383

Amortization

3,549

4,387

10,508

13,145

Adjusted EBITDA

$

31,375

$

24,358

$

117,906

$

104,293

(1)

CBIZ reports its financial results in accordance with GAAP. This table reconciles Non-GAAP financial measures to the nearest GAAP financial measure, "Income from continuing operations". Adjusted EBITDA is not defined by GAAP and should not be regarded as an alternative or replacement to any measurement of performance or cash flow under GAAP. Adjusted EBITDA is commonly used by the Company, its shareholders and debt holders to evaluate, assess and benchmark the Company's operational results and to provide an additional measure with respect to the Company's ability to meet future debt obligations.