News Release

CBIZ, INC.

FINANCIAL HIGHLIGHTS (UNAUDITED)

THREE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022

(In thousands, except percentages and per share data)

Three Months Ended September 30,

2023

%

2022

%

Revenue

$ 410,539

100.0 %

$ 363,262

100.0 %

Operating expenses ⁽¹⁾

342,148

83.3

306,017

84.2

Gross margin

68,391

16.7

57,245

15.8

Corporate general and administrative expenses ⁽¹⁾

13,136

3.2

15,893

4.4

Operating income

55,255

13.5

41,352

11.4

Other (expense) income:

Interest expense

(5,848)

(1.4)

(2,305)

(0.6)

Gain on sale of operations, net

77

—

176

—

Other expense, net ^{(1) (2)}

(2,288)

(0.6)

(2,622)

(0.7)

Total other expense, net

(8,059)

(2.0)

(4,751)

(1.3)

Income before income tax expense

47,196

11.5

36,601

10.1

Income tax expense

13,514

9,131

Net income

$  33,682

8.2 %

$  27,470

7.6 %

Diluted earnings per share

$      0.67

$      0.53

Diluted weighted average common shares outstanding

50,371

52,238

Other data:

Adjusted EBITDA ⁽³⁾

$  61,564

$  45,861

Adjusted EPS ⁽³⁾

$      0.66

$      0.51

(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" and "Corporate general and administrative expenses," and are directly offset by deferred compensation gains or losses in "Other expense, net." The deferred compensation plan has no impact on "Income before income tax expense."

Income and expenses related to the deferred compensation plan for the three months ended September 30, 2023, and 2022, are as follows (in thousands):

Three Months Ended September 30,

2023

% of Revenue

2022

% of Revenue

Operating income

$     (3,009)

(0.7) %

$     (3,995)

(1.1) %

Corporate general and administrative income

(452)

(0.1) %

(697)

(0.2) %

Other expense, net

(3,461)

(0.8) %

(4,692)

(1.3) %

Excluding the impact of the above-mentioned income and expenses related to the deferred compensation plan, the operating results for the three months ended September 30, 2023, and 2022, are as follows (in thousands):

Three Months Ended September 30,

2023

2022

As

Reported

Deferred

Compensation

Plan

Adjusted

% of

Revenue

As

Reported

Deferred

Compensation

Plan

Adjusted

% of

Revenue

Gross margin

$  68,391

$      (3,009)

$  65,382

15.9 %

$  57,245

$      (3,995)

$  53,250

14.7 %

Operating income

55,255

(3,461)

51,794

12.6 %

41,352

(4,692)

36,660

10.1 %

Other (expense) income, net

(2,288)

3,461

1,173

0.3 %

(2,622)

4,692

2,070

0.6 %

Income before income tax expense

47,196

—

47,196

11.5 %

36,601

—

36,601

10.1 %

(2)

Included in "Other expense, net" for the three months ended September 30, 2023, and 2022, is expense of $0.6 million and $0.4 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 most directly comparable 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, 2023 AND 2022

(In thousands, except percentages and per share data)

Nine Months Ended September 30,

2023

%

2022

%

Revenue

$ 1,263,647

100.0 %

$ 1,116,936

100.0 %

Operating expenses ⁽¹⁾

1,027,146

81.3

886,052

79.3

Gross margin

236,501

18.7

230,884

20.7

Corporate general and administrative expenses ⁽¹⁾

44,527

3.5

43,128

3.9

Operating income

191,974

15.2

187,756

16.8

Other (expense) income:

Interest expense

(15,023)

(1.2)

(5,209)

(0.5)

Gain on sale of operations, net

176

—

311

—

Other income (expense), net ^{(1) (2)}

8,245

0.7

(24,932)

(2.2)

Total other expense, net

(6,602)

(0.5)

(29,830)

(2.7)

Income before income tax expense

185,372

14.7

157,926

14.1

Income tax expense

51,667

41,074

Net income

133,705

10.6 %

116,852

10.5 %

Diluted earnings per share

$        2.64

$        2.22

Diluted weighted average common shares outstanding

50,644

52,720

Other data:

Adjusted EBITDA ⁽³⁾

$  229,222

$  194,481

Adjusted EPS ⁽³⁾

$        2.67

$2.31

(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" and "Corporate general and administrative expenses," and are directly offset by deferred compensation gains or losses in "Other income (expense), net." The deferred compensation plan has no impact on "Income before income tax expense."

Income and expenses related to the deferred compensation plan for the nine months ended September 30, 2023, and 2022, are as follows (in thousands):

Nine Months Ended September 30,

2023

% of Revenue

2022

% of Revenue

Operating  expenses (income)

$       6,853

0.5 %

$   (23,000)

(2.1) %

Corporate general and administrative expenses (income)

821

0.1 %

(3,319)

(0.3) %

Other income (expense), net

7,674

0.6 %

(26,319)

(2.4) %

Excluding the impact of the above-mentioned income and expenses related to the deferred compensation plan, the operating results for the nine months ended September 30, 2023, and 2022, are as follows (in thousands):

Nine Months Ended September 30,

2023

2022

As

Reported

Deferred

Compensation

Plan

Adjusted

% of

Revenue

As

Reported

Deferred

Compensation

Plan

Adjusted

% of

Revenue

Gross margin

$ 236,501

$       6,853

$ 243,354

19.3 %

$ 230,884

$    (23,000)

$ 207,884

18.6 %

Operating income

191,974

7,674

199,648

15.8 %

187,756

(26,319)

161,437

14.5 %

Other income (expense), net

8,245

(7,674)

571

— %

(24,932)

26,319

1,387

0.1 %

Income before income tax expense

185,372

—

185,372

14.7 %

157,926

—

157,926

14.1 %

(2)

Included in "Other income (expense), net" for the nine months ended September 30, 2023, and 2022, is expense of $2.1 million and $1.9 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 most directly comparable 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)

Three Months Ended September 30,

Nine Months Ended September 30,

2023

2022

2023

2022

Revenue

Financial Services

$      298,372

$      259,998

$      932,388

$      808,052

Benefits and Insurance Services

100,287

92,067

296,179

276,261

National Practices

11,880

11,197

35,080

32,623

Total

$      410,539

$      363,262

$   1,263,647

$   1,116,936

Gross Margin

Financial Services

$        48,692

$        39,661

$      194,820

$      168,272

Benefits and Insurance Services

20,651

18,746

61,246

55,263

National Practices

1,213

1,454

3,285

3,405

Operating expenses - unallocated ⁽¹⁾:

Other expense

(5,174)

(6,611)

(15,997)

(19,056)

Deferred compensation

3,009

3,995

(6,853)

23,000

Total

$        68,391

$        57,245

$      236,501

$      230,884

SELECT SEGMENT DATA

(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 includes 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 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 (income) in "Operating expenses" and "Corporate, general and administrative expenses," and offset in "Other income (expense), net."

CBIZ, INC.

SELECT CASH FLOW DATA (UNAUDITED)

(In thousands)

Nine Months Ended September 30,

2023

2022

Net income

$       133,705

$       116,852

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

Depreciation and amortization expense

26,965

24,707

Gain on sale of operations, net

(176)

(311)

Bad debt expense, net of recoveries

1,011

1,295

Adjustments to contingent earnout liability, net

2,071

1,917

Stock-based compensation expense

9,721

11,987

Other noncash adjustments

5,533

3,594

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

178,830

160,041

Changes in assets and liabilities, net of acquisitions and divestitures

(121,576)

(99,982)

Net cash provided by operating activities

57,254

60,059

Net cash used in investing activities

(76,630)

(95,550)

Net cash (used in) provided by financing activities

(18,442)

6,025

Net decrease in cash, cash equivalents and restricted cash

(37,818)

(29,466)

Cash, cash equivalents and restricted cash at beginning of year

$       160,145

$       150,474

Cash, cash equivalents and restricted cash at end of period

$       122,327

$       121,008

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

Cash and cash equivalents

$           1,415

$           2,040

Restricted cash

38,229

39,555

Cash equivalents included in funds held for clients

82,683

79,413

Total cash, cash equivalents and restricted cash

$       122,327

$       121,008

CBIZ, INC.

SELECT FINANCIAL DATA AND RATIOS (UNAUDITED)

(In thousands)

September 30, 2023

December 31, 2022

Cash and cash equivalents

1,415

4,697

Restricted cash

38,229

28,487

Accounts receivable, net

465,848

334,498

Current assets before funds held for clients

543,371

397,113

Funds held for clients

122,531

171,313

Goodwill and other intangible assets, net

1,014,607

951,702

Total assets

2,074,494

1,879,124

Current liabilities before client fund obligations

350,536

338,940

Client fund obligations

123,910

173,467

Total long-term debt, net

393,008

263,654

Total liabilities

1,263,900

1,165,672

Treasury stock

(891,880)

(824,778)

Total stockholders' equity

810,594

713,452

Debt to equity

48.5 %

37.0 %

Days sales outstanding (DSO) ⁽¹⁾

96

74

Shares outstanding

49,917

50,180

Basic weighted average common shares outstanding

50,054

51,502

Diluted weighted average common shares outstanding

50,644

52,388

(1)

DSO is provided for continuing operations and represents accounts receivable, net, at the end of the period, divided by trailing twelve months 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 on September 30, 2022, was 93.

CBIZ, INC.

GAAP RECONCILIATION

Net Income and Diluted Earnings Per Share ("EPS") to Adjusted Net Income, EPS and EBITDA⁽¹⁾

(In thousands, except per share data)

Three Months Ended

September 30, 2023

Three Months Ended

September 30, 2022

Amounts

EPS

Amounts

EPS

Net income

$      33,682

$          0.67

$      27,470

$          0.53

Adjustments:

Gain on sale of assets, net

(1,375)

(0.03)

(2,391)

(0.05)

Integration & retention costs related to acquisitions ⁽²⁾

583

0.01

1,280

0.02

Facility optimization costs ⁽³⁾

255

0.01

—

—

Income tax effect related to adjustments

154

—

277

0.01

Adjusted net income

$      33,299

$          0.66

$      26,636

$          0.51

Interest expense

$        5,848

$        2,305

Income tax expense

13,514

9,131

Gain on sale of operations, net

(77)

(176)

Tax effect related to the adjustments above

(154)

(277)

Depreciation

3,083

2,771

Amortization

6,051

5,471

Adjusted EBITDA

$      61,564

$      45,861

Nine Months Ended

September 30, 2023

Nine Months Ended

September 30, 2022

Amounts

EPS

Amounts

EPS

Net income

$    133,705

$          2.64

$    116,852

$          2.22

Adjustments:

Gain on sale of assets, net

(1,500)

(0.03)

(2,391)

(0.05)

Transaction costs related to acquisitions ⁽²⁾

611

0.01

1,329

0.02

Integration & retention costs related to acquisitions ⁽²⁾

2,451

0.05

8,012

0.15

Facility optimization costs ⁽³⁾

476

0.01

—

—

Income tax effect related to adjustments

(568)

(0.01)

(1,808)

(0.03)

Adjusted net income

$    135,175

$          2.67

$    121,994

$          2.31

Interest expense

$      15,023

$        5,209

Income tax expense

51,667

41,074

Gain on sale of operations, net

(176)

(311)

Tax effect related to the adjustments above

568

1,808

Depreciation

9,174

8,378

Amortization

17,791

16,329

Adjusted EBITDA

$    229,222

$    194,481

(1)

CBIZ reports its financial results in accordance with GAAP. This table reconciles Adjusted net income, Adjusted EPS and Adjusted EBITDA to the most directly comparable GAAP financial measures, "Net income" and "Diluted earnings per share." Adjusted net income, Adjusted EPS and Adjusted EBITDA are not defined by GAAP and should not be regarded as an alternative or replacement to any measurement of performance under GAAP. Adjusted net income, Adjusted EPS and Adjusted EBITDA, which excludes significant non-operating related gains and losses, are used by the Company for its shareholders and debt holders as a performance measure to evaluate, assess and benchmark the Company's operational results.

(2)

These costs include, but are not limited to, certain consulting, technology, personnel, as well as other first year operating and general administrative costs that are non-recurring in nature. Amounts reported in 2023 related to the costs incurred related to the Somerset acquisition and those reported in 2022 related to the Marks Paneth acquisition.

(3)

These costs related to incremental non-recurring lease expense incurred as a result of CBIZ's real estate optimization efforts.

CBIZ, INC.

GAAP RECONCILIATION

Full Year 2023 Diluted Earnings Per Share ("EPS") to Full Year 2023 Adjusted Diluted EPS

Full Year 2023 Guidance

Low

High

Per Share

Per Share

Diluted EPS - GAAP Guidance

$                   2.31

$                   2.36

Transaction and integration costs related to Somerset ⁽¹⁾

0.07

0.07

Income tax effect related to adjustments

(0.02)

(0.02)

Adjusted Diluted EPS Guidance

$                   2.36

$                   2.41

GAAP diluted EPS for 2022

$                   2.01

$                   2.01

Adjusted diluted EPS for 2022 ⁽²⁾

$                   2.13

$                   2.13

GAAP diluted EPS range

15 %

17 %

 Adjusted diluted EPS range

11 %

13 %

(1)

Includes estimated integration costs related to the Somerset acquisition. Such costs include, but are not limited to, certain consulting, technology, personnel, as well as other first year operating and general administrative costs that are non-recurring in nature.

(2)

A reconciliation between net income and adjusted net income and a reconciliation between GAAP diluted EPS and Adjusted diluted EPS for fiscal year ended December 31, 2022, are presented as follows:

Year Ended December 31, 2022

In millions

EPS

Net income

$                 105.4

$                           2.01

Adjustments:

Gain on sale of assets, net

(2.4)

(0.05)

Transaction costs related to Marks Paneth

1.3

0.03

Integration and retention costs related to Marks Paneth

9.2

0.18

Income tax effect related to adjustments

(2.1)

(0.04)

Adjusted net income

$                 111.4

$                           2.13