CBIZ REPORTS THIRD-QUARTER AND NINE-MONTH 2024 RESULTS
THIRD-QUARTER HIGHLIGHTS:
- TOTAL REVENUE OF
$438.9 MILLION , UP 6.9%; SAME-UNIT REVENUE UP 5.1% - NET INCOME UP 4.2%; ADJUSTED EBITDA UP 23.0%
- GAAP EPS UP 4.5%; ADJUSTED EPS UP 27.3%
NINE-MONTH HIGHLIGHTS:
- TOTAL REVENUE OF
$1.4 BILLION UP 7.1%; SAME-UNIT REVENUE UP 4.6% - NET INCOME DOWN 1.5%; ADJUSTED EBITDA UP 7.0%
- GAAP EPS DOWN 0.8%; ADJUSTED EPS UP 7.5%
For the 2024 third quarter, CBIZ recorded revenue of
For the nine months ended September 30, 2024, CBIZ recorded revenue of
On
Excluding nonrecurring acquisition-related integration expenses, transaction costs incurred related to the Marcum transaction, and gain from the sale of a national practice, Adjusted net income was $42.3 million in the third quarter of 2024, compared with Adjusted net income of
For the nine months ended
Schedules reconciling Adjusted net income, Adjusted earnings per share and Adjusted EBITDA to the most directly comparable GAAP measures can be found in the tables included at the end of this release.
The balance outstanding on the Company's unsecured credit facility on
Grisko continued, "With the Marcum transaction nearing closing, we are excited for the opportunities it presents to our collective team members, clients, and for the CBIZ shareholders. With combined annual revenues of approximately
2024 Outlook
With an expected close in the fourth quarter of 2024, current guidance excludes the impact of the Marcum acquisition. Based on expectations for the remainder of the year, the Company expects the following:
- Total revenue to grow within a range of 7% to 9% over the prior year.
- Effective tax rate of approximately 28%.
- Weighted average fully diluted share count of approximately 50.0 to 50.5 million shares.
- GAAP fully diluted earnings per share to be within a range of
$2.37 to$2.42 per share, or within a range of 1% higher or lower than the$2.39 per share reported for 2023. - Adjusted fully diluted earnings per share to grow within a range of 10% to 12%, to
$2.64 to$2.69 per share, compared with the$2.41 per share reported for 2023.
Conference Call
CBIZ will host a conference call at
About CBIZ
CBIZ is a leading provider of financial, insurance and advisory services to businesses throughout the United States. Financial services include accounting, tax, government health care consulting, transaction advisory, risk advisory, and valuation services. Insurance services include employee benefits consulting, retirement plan consulting, property and casualty insurance, payroll, and human capital consulting. With more than 120 offices in 33 states, CBIZ is one of the largest accounting and insurance brokerage providers in the
Forward-Looking Statements
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: we may be more sensitive to revenue fluctuations than other companies, which could result in fluctuations in the market price of our common stock; payments on accounts receivable may be slower than expected, or amounts due on receivables or notes may not be fully collectible; we are dependent on the services of our executive officers, other key employees, producers and service personnel, the loss of whom may have a material adverse effect on our business, financial condition and results of operations; restrictions imposed by independence requirements and conflict of interest rules may limit our ability to provide services to clients of the attest firms with which we have contractual relationships and the ability of such attest firms to provide attestation services to our clients; our goodwill and intangible assets could become impaired, which could lead to material non-cash charges against earnings; certain liabilities resulting from acquisitions are estimated and could lead to a material non-cash impact on earnings; governmental regulations and interpretations are subject to changes, which could have a material adverse effect on our clients, our business, our business services operations, our business models, or our revenue; changes in
With respect to the agreement to acquire Marcum, such risks and uncertainties include, but are not limited to: the ability of the parties to consummate the transaction in a timely manner or at all; satisfaction of the conditions precedent to consummation of the transaction, including the ability to secure regulatory approvals in a timely manner or at all; the possibility of litigation related to the transaction and the effects thereof; the possibility that anticipated benefits and/or synergies of the transaction will not be achieved in a timely manner or at all; the possibility that the costs of the transaction and/or liabilities assumed will be more significant than anticipated; the possibility that integration will prove more costly and/or time consuming than anticipated; the possibility that the transaction could disrupt ongoing plans and operations of the parties or their respective relationships with clients, other business partners and employees; the possibility that the financing will not be obtained as anticipated and the effects of the increased leverage of the Company following the transaction; and other risks described in the Company's filings with the
Such forward-looking statements can be affected by inaccurate assumptions we might make or by known or unknown risks and uncertainties. Should one or more of these risks materialize, or should the underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated or projected. Consequently, no forward-looking statements can be guaranteed.
A more detailed description of such risks and uncertainties may be found in "Item 1A. Risk Factors" of the Company's Annual Report on Form 10-K for the year ended
All forward-looking statements made in this release are made only as of the date hereof. The Company does not undertake any obligation to publicly update or correct any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
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|
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|
Three Months Ended |
|||||||||
|
2024 |
% |
2023 |
% |
||||||
|
Revenue |
$ 438,884 |
100.0 % |
$ 410,539 |
100.0 % |
|||||
|
Operating expenses (1) |
365,971 |
83.4 |
342,148 |
83.3 |
|||||
|
Gross margin |
72,913 |
16.6 |
68,391 |
16.7 |
|||||
|
Corporate general and administrative expenses (1) |
23,227 |
5.3 |
13,136 |
3.2 |
|||||
|
Operating income |
49,686 |
11.3 |
55,255 |
13.5 |
|||||
|
Other (expense) income: |
|||||||||
|
Interest expense |
(4,968) |
(1.1) |
(5,848) |
(1.4) |
|||||
|
Gain on sale of operations, net |
4,953 |
1.1 |
77 |
— |
|||||
|
Other income (expense), net (1) (2) |
1,300 |
0.3 |
(2,288) |
(0.6) |
|||||
|
Total other income (expense), net |
1,285 |
0.3 |
(8,059) |
(2.0) |
|||||
|
Income before income tax expense |
50,971 |
11.6 |
47,196 |
11.5 |
|||||
|
Income tax expense |
15,887 |
13,514 |
|||||||
|
Net income |
$ 35,084 |
8.0 % |
$ 33,682 |
8.2 % |
|||||
|
Diluted earnings per share |
$ 0.70 |
$ 0.67 |
|||||||
|
Diluted weighted average common shares outstanding |
50,401 |
50,371 |
|||||||
|
Other data: |
|||||||||
|
Adjusted EBITDA (3) |
$ 75,713 |
$ 61,564 |
|||||||
|
Adjusted EPS (3) |
$ 0.84 |
$ 0.66 |
|||||||
|
(1) CBIZ sponsors a deferred compensation plan, under which a CBIZ employee's compensation deferral is held in a rabbi trust and invested 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 three months ended |
|||||||||
|
Three Months Ended |
||||
|
2024 |
% of Revenue |
2023 |
% of Revenue |
|
|
Operating (income) expenses |
$ 7,305 |
1.7 % |
$ (3,009) |
(0.7) % |
|
Corporate general & administrative (income) expenses |
1,064 |
0.2 % |
(452) |
(0.1) % |
|
Other income (expenses), net |
8,369 |
1.9 % |
(3,461) |
(0.8) % |
|
Excluding the impact of the previously mentioned income and expenses related to the deferred compensation plan, the operating results for the three months ended |
|
Three Months Ended |
|||||||||
|
2024 |
2023 |
||||||||
|
As |
Deferred |
Adjusted |
% of |
As |
Deferred |
Adjusted |
% of |
||
|
Gross margin |
$ 72,913 |
$ 7,305 |
$ 80,218 |
18.3 % |
$ 68,391 |
$ (3,009) |
$ 65,382 |
15.9 % |
|
|
Operating income |
49,686 |
8,369 |
58,055 |
13.2 % |
55,255 |
(3,461) |
51,794 |
12.6 % |
|
|
Other income (expense), net |
1,300 |
(8,369) |
(7,069) |
(1.6) % |
(2,288) |
3,461 |
1,173 |
0.3 % |
|
|
Income before income tax expense |
50,971 |
— |
50,971 |
11.6 % |
47,196 |
— |
47,196 |
11.5 % |
|
|
(2) Included in "Other income (expense), net" for the three months ended September 30, 2024, and 2023, is expense of (3) Refer to the schedules reconciling Adjusted earnings per share and Adjusted EBITDA to the most directly comparable GAAP measures at the end of this release and for additional information as to the usefulness of the non-GAAP financial measures to stockholders and investors. |
|
|
||||
|
Nine Months Ended |
||||
|
2024 |
% |
2023 |
% |
|
|
Revenue |
|
100.0 % |
|
100.0 % |
|
Operating expenses (1) |
1,108,824 |
81.9 |
1,027,146 |
81.3 |
|
Gross margin |
244,369 |
18.1 |
236,501 |
18.7 |
|
Corporate general and administrative expenses (1) |
63,988 |
4.7 |
44,527 |
3.5 |
|
Operating income |
180,381 |
13.4 |
191,974 |
15.2 |
|
Other (expense) income: |
||||
|
Interest expense |
(15,363) |
(1.1) |
(15,023) |
(1.2) |
|
Gain on sale of operations, net |
4,953 |
0.4 |
176 |
— |
|
Other income, net (1) (2) |
13,207 |
1.0 |
8,245 |
0.7 |
|
Total other income (expense), net |
2,797 |
0.3 |
(6,602) |
(0.5) |
|
Income before income tax expense |
183,178 |
13.7 |
185,372 |
14.7 |
|
Income tax expense |
51,417 |
51,667 |
||
|
Net income |
131,761 |
9.7 % |
133,705 |
10.6 % |
|
Diluted earnings per share |
$ 2.62 |
$ 2.64 |
||
|
Diluted weighted average common shares outstanding |
50,359 |
50,644 |
||
|
Other data: |
||||
|
Adjusted EBITDA (3) |
$ 245,226 |
$ 229,222 |
||
|
Adjusted EPS (3) |
$ 2.87 |
$ 2.67 |
||
|
(1) CBIZ sponsors a deferred compensation plan, under which a CBIZ employee's compensation deferral is held in a rabbi trust and invested 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, 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
|
|
Nine Months Ended |
||||
|
2024 |
% of Revenue |
2023 |
% of Revenue |
|
|
Operating expenses |
$ 18,164 |
1.3 % |
$ 6,853 |
0.5 % |
|
Corporate general and administrative |
2,444 |
0.2 % |
821 |
0.1 % |
|
Other income, net |
20,608 |
1.5 % |
7,674 |
0.6 % |
|
Excluding the impact of the above-mentioned income and expenses related to the deferred compensation plan, the operating results for the nine months ended |
|
Nine Months Ended |
||||||||
|
2024 |
2023 |
|||||||
|
As |
Deferred Compensation |
% of |
As |
Deferred Compensation |
% of |
|||
|
Reported |
Plan |
Adjusted |
Revenue |
Reported |
Plan |
Adjusted |
Revenue |
|
|
Gross margin |
|
$ 18,164 |
|
19.4 % |
|
$ 6,853 |
|
19.3 % |
|
Operating income |
180,381 |
20,608 |
200,989 |
14.9 % |
191,974 |
7,674 |
199,648 |
15.8 % |
|
Other income (expense), net |
13,207 |
(20,608) |
(7,401) |
(0.5) % |
8,245 |
(7,674) |
571 |
— % |
|
Income before income tax expense |
183,178 |
— |
183,178 |
13.5 % |
185,372 |
— |
185,372 |
14.7 % |
|
(1) Included in "Other income, net" for the nine months ended
(2) Refer to the schedules reconciling Adjusted earnings per share and Adjusted EBITDA to the most directly comparable GAAP financial measures at the end of this release and for additional information as to the usefulness of the non-GAAP financial measures to stockholders and investors. |
|
SELECT SEGMENT DATA
|
||||
|
Three Months Ended |
Nine Months Ended |
|||
|
2024 |
2023 |
2024 |
2023 |
|
|
Revenue |
||||
|
Financial Services |
$ 322,295 |
$ 298,372 |
$ 1,004,158 |
$ 932,388 |
|
Benefits and Insurance Services |
104,040 |
100,287 |
309,867 |
296,179 |
|
National Practices |
12,549 |
11,880 |
39,168 |
35,080 |
|
Total |
$ 438,884 |
$ 410,539 |
$ 1,353,193 |
$ 1,263,647 |
|
Gross Margin |
||||
|
Financial Services |
$ 61,656 |
$ 48,692 |
$ 215,149 |
$ 194,820 |
|
Benefits and Insurance Services |
21,075 |
20,651 |
60,022 |
61,246 |
|
National Practices |
1,448 |
1,213 |
4,106 |
3,285 |
|
Operating expenses - unallocated (1): |
||||
|
Other expense |
(3,961) |
(5,174) |
(16,744) |
(15,997) |
|
Deferred compensation |
(7,305) |
3,009 |
(18,164) |
(6,853) |
|
Total |
$ 72,913 |
$ 68,391 |
$ 244,369 |
$ 236,501 |
|
(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 or 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." |
|
|
||
|
Nine Months Ended September 30, |
||
|
2024 |
2023 |
|
|
Net income |
$ 131,761 |
$ 133,705 |
|
Adjustments to reconcile net income to net cash provided by operating activities: |
||
|
Depreciation and amortization expense |
28,593 |
26,965 |
|
Gain on sale of operations, net |
(4,953) |
(176) |
|
Bad debt expense, net of recoveries |
2,099 |
1,011 |
|
Adjustments to contingent earnout liability, net |
6,340 |
2,071 |
|
Stock-based compensation expense |
7,431 |
9,721 |
|
Other noncash adjustments |
5,276 |
5,533 |
|
Net income, after adjustments to reconcile net income to net cash provided by operating activities |
176,547 |
178,830 |
|
Changes in assets and liabilities, net of acquisitions and divestitures |
(108,379) |
(121,576) |
|
Net cash provided by operating activities |
68,168 |
57,254 |
|
Net cash used in investing activities |
(24,911) |
(76,630) |
|
Net cash used in financing activities |
(85,222) |
(18,442) |
|
Net decrease in cash, cash equivalents and restricted cash |
(41,965) |
(37,818) |
|
Cash, cash equivalents and restricted cash at beginning of year |
$ 157,148 |
$ 160,145 |
|
Cash, cash equivalents and restricted cash at end of period |
$ 115,183 |
$ 122,327 |
|
Reconciliation of cash, cash equivalents and restricted cash to the consolidated balance sheet: |
||
|
Cash and cash equivalents |
$ 1,076 |
$ 1,415 |
|
Restricted cash |
43,104 |
38,229 |
|
Cash equivalents included in funds held for clients |
71,003 |
82,683 |
|
Total cash, cash equivalents and restricted cash |
$ 115,183 |
$ 122,327 |
|
|
|||||
|
|
|
||||
|
Cash and cash equivalents |
1,076 |
8,090 |
|||
|
Restricted cash |
43,104 |
30,362 |
|||
|
Accounts receivable, net |
476,565 |
380,152 |
|||
|
Other current assets |
42,902 |
34,895 |
|||
|
Current assets before funds held for clients |
563,647 |
453,499 |
|||
|
Funds held for clients |
112,148 |
159,186 |
|||
|
Goodwill and other intangible assets, net |
1,030,104 |
1,008,604 |
|||
|
Total assets |
2,133,370 |
2,043,592 |
|||
|
Current liabilities before client fund obligations |
340,598 |
352,028 |
|||
|
Client fund obligations |
112,319 |
159,893 |
|||
|
Total long-term debt, net |
335,835 |
310,826 |
|||
|
Total liabilities |
1,205,450 |
1,251,974 |
|||
|
Treasury stock |
(910,537) |
(899,093) |
|||
|
Total stockholders' equity |
927,920 |
791,618 |
|||
|
Debt to equity |
36.2 % |
39.3 % |
|||
|
Days sales outstanding (DSO) (1) |
97 |
78 |
|||
|
Shares outstanding |
50,188 |
49,814 |
|||
|
Basic weighted average common shares outstanding |
50,101 |
49,989 |
|||
|
Diluted weighted average common shares outstanding |
50,359 |
50,557 |
|||
|
(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 |
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|
CBIZ, INC. GAAP RECONCILIATION
|
|||||
|
Three Months Ended |
|||||
|
2024 |
2023 |
||||
|
Amounts |
EPS |
Amounts |
EPS |
||
|
Net income |
$ 35,084 |
$ 0.70 |
$ 33,682 |
$ 0.67 |
|
|
Adjustments: |
|||||
|
Gain on sale of assets, net |
— |
— |
(1,375) |
(0.03) |
|
|
Integration & retention costs related to acquisitions (2) |
347 |
0.01 |
583 |
0.01 |
|
|
Facility optimization costs (3) |
— |
— |
255 |
0.01 |
|
|
Gain on sale of operations, net |
(4,953) |
(0.10) |
(77) |
— |
|
|
Transaction costs (4) |
14,794 |
0.29 |
— |
— |
|
|
Income tax effect related to adjustments |
(2,954) |
(0.06) |
154 |
0.00 |
|
|
Adjusted net income |
$ 42,318 |
$ 0.84 |
$ 33,222 |
$ 0.66 |
|
|
Interest expense |
$ 4,968 |
$ 5,848 |
|||
|
Income tax expense |
15,887 |
13,514 |
|||
|
Tax effect related to the adjustments above |
2,954 |
(154) |
|||
|
Depreciation |
3,532 |
3,083 |
|||
|
Amortization |
6,054 |
6,051 |
|||
|
Adjusted EBITDA |
$ 75,713 |
$ 61,564 |
|||
|
Nine Months Ended |
|||||
|
2024 |
2023 |
||||
|
Amounts |
EPS |
Amounts |
EPS |
||
|
Net income |
$ 131,761 |
$ 2.62 |
$ 133,705 |
$ 2.64 |
|
|
Adjustments: |
|||||
|
Gain on sale of assets, net |
— |
— |
(1,500) |
(0.03) |
|
|
Transaction costs related to acquisitions (2) |
— |
— |
611 |
0.01 |
|
|
Integration & retention costs related to acquisitions (2) |
1,259 |
0.03 |
2,451 |
0.05 |
|
|
Facility optimization costs (3) |
340 |
0.01 |
476 |
0.01 |
|
|
Gain on sale of operations, net |
(4,953) |
(0.10) |
(176) |
— |
|
|
Transaction costs (4) |
21,445 |
0.43 |
— |
— |
|
|
Income tax effect related to adjustments |
(5,078) |
(0.12) |
(568) |
(0.01) |
|
|
Adjusted net income |
$ 144,774 |
$ 2.87 |
$ 134,999 |
$ 2.67 |
|
|
Interest expense |
$ 15,363 |
$ 15,023 |
|||
|
Income tax expense |
51,417 |
51,667 |
|||
|
Tax effect related to the adjustments above |
5,078 |
568 |
|||
|
Depreciation |
10,575 |
9,174 |
|||
|
Amortization |
18,019 |
17,791 |
|||
|
Adjusted EBITDA |
$ 245,226 |
$ 229,222 |
|||
|
(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 financial information determined under GAAP. Adjusted net income, Adjusted EPS and Adjusted EBITDA exclude significant non-operating related gains and losses that management does not consider on-going in nature. These non-GAAP financial measures are used by the Company as performance measures to evaluate, assess and benchmark the Company's operational results and to evaluate results relative to employee compensation targets. Accordingly, the Company believes the presentation of these non-GAAP financial measures allows its stockholders, debt holders, and other interested parties to meaningfully compare the Company's period-to-period operating 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 2024 related to the costs incurred related to the acquisitions of (3) These costs relate to incremental non-recurring lease expense incurred as a result of CBIZ's real estate optimization efforts. (4) These costs include, but are not limited to, certain non-recurring legal and other professional service costs incurred in connection with the announced purchase of Marcum. |
|
CBIZ, INC. |
||||
|
Full Year 2024 Guidance |
||||
|
Low |
High |
|||
|
Diluted EPS - GAAP Guidance |
$ |
2.37 |
$ |
2.42 |
|
Adjustments: |
||||
|
Transaction costs(2) |
0.31 |
0.31 |
||
|
Other adjustments (3) |
(0.04) |
(0.04) |
||
|
Adjusted Diluted EPS Guidance |
$ |
2.64 |
$ |
2.69 |
|
GAAP Diluted EPS for 2023 |
$ |
2.39 |
$ |
2.39 |
|
Adjusted Diluted EPS for 2023 |
$ |
2.41 |
2.41 |
|
|
GAAP Diluted EPS Range |
(1) % |
1 % |
||
|
Adjusted Diluted EPS Range |
10 % |
12 % |
||
|
(1) The full year 2024 guidance is based on management's current expectations for the remainder of 2024, excluding the impact of the announced acquisition of Marcum. |
|
(2) These costs include, but are not limited to, certain non-recurring legal and other professional service costs incurred in connection with the announced purchase of Marcum. |
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(3) These adjustments include, but are not limited to, certain non-recurring consulting, technology, personnel, and other first year operating and general administrative costs incurred related to the acquisitions of |
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SOURCE
Ware Grove, Chief Financial Officer; Lori Novickis, Director, Corporate Relations; Amy McGahan, Director of Corporate & Strategic Communications CBIZ, Inc., Cleveland, Ohio, (216) 447-9000