CBIZ Reports First-Quarter 2020 Results
FIRST-QUARTER HIGHLIGHTS:
- Total revenue increases 2.8%
- Same-unit revenue increases 0.9%
- EPS
$0.66 vs.$0.67 in prior-year first quarter - Adjusted EBITDA
$57.0 million vs.$57.7 million in prior-year first quarter - Mobilizes resources to help clients access emerging economic relief opportunities
- Financial flexibility positions Company well for economic recovery
For the first quarter of 2020, CBIZ reported revenue of
During the first quarter of 2020, the Company announced three acquisitions with expected annualized revenue of
Given the uncertainty in the business environment created by the evolving COVID-19 situation and uncertain impact on full year 2020 results, the Company is withdrawing its 2020 guidance, which was provided on
Grisko continued, "The safety and well-being of our team members and clients remains our top priority as we all navigate this uncertain business climate. Our workforce is well equipped to operate in a remote work environment, and our early actions to shift our team to working remotely allowed us to stabilize operations and minimize disruption for our clients. We have also mobilized resources to focus on supporting our clients and prospects through emerging relief opportunities such as the CARES Act and related stimulus programs. We are experiencing exceptionally high demand for content and guidance on the numerous government initiatives focused on small and midmarket businesses."
Grisko concluded "At this point, we, like other businesses around the country, are uncertain as to the duration and magnitude of the pandemic's impact and the pace for recovery. I remain confident that despite the complexity and uncertainty we now face, our size, geographic reach and wide range of services will enable us to bring valuable and differentiated solutions to both our clients and prospects, and that we will emerge a stronger company ready to take advantage of further growth opportunities."
Conference Call
CBIZ will host a conference call at
A replay of the webcast will be made available approximately two hours following the call on the Company's website at www.cbiz.com. For those without internet access, a replay of the call will also be available starting at approximately
About CBIZ
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, the impact of COVID-19 on the Company's business and operations and those of our clients; the Company's ability to adequately manage and sustain 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 the Company's 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
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FINANCIAL HIGHLIGHTS (UNAUDITED) |
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THREE MONTHS ENDED |
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(In thousands, except percentages and per share data) |
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THREE MONTHS ENDED |
||||||||||||||||
MARCH 31, |
||||||||||||||||
2020 |
% |
2019 |
% |
|||||||||||||
Revenue |
$ |
277,455 |
100.0 |
% |
$ |
269,998 |
100.0 |
% |
||||||||
Operating expenses (1) |
199,827 |
72.0 |
% |
215,496 |
79.8 |
% |
||||||||||
Gross margin |
77,628 |
28.0 |
% |
54,502 |
20.2 |
% |
||||||||||
Corporate general and administrative expenses (1) |
10,489 |
3.8 |
% |
11,680 |
4.3 |
% |
||||||||||
Operating income |
67,139 |
24.2 |
% |
42,822 |
15.9 |
% |
||||||||||
Other (expense) income: |
||||||||||||||||
Interest expense |
(1,119) |
(0.4) |
% |
(1,401) |
(0.5) |
% |
||||||||||
Gain on sale of operations, net |
95 |
0.0 |
% |
497 |
0.2 |
% |
||||||||||
Other (expense) income, net (1) (2) |
(15,800) |
(5.7) |
% |
9,260 |
3.4 |
% |
||||||||||
Total other (expense) income, net |
(16,824) |
(6.1) |
% |
8,356 |
3.1 |
% |
||||||||||
Income from continuing operations before income tax expense |
50,315 |
18.1 |
% |
51,178 |
19.0 |
% |
||||||||||
Income tax expense |
13,453 |
13,613 |
||||||||||||||
Income from continuing operations |
36,862 |
13.3 |
% |
37,565 |
13.9 |
% |
||||||||||
Loss from operations of discontinued businesses, net of tax |
(14) |
(96) |
||||||||||||||
Net Income |
$ |
36,848 |
13.3 |
% |
$ |
37,469 |
13.9 |
% |
||||||||
Diluted income per share: |
||||||||||||||||
Continuing operations |
$ |
0.66 |
$ |
0.67 |
||||||||||||
Discontinued operations |
- |
- |
||||||||||||||
Net income |
$ |
0.66 |
$ |
0.67 |
||||||||||||
Diluted weighted average common shares outstanding |
55,945 |
55,915 |
||||||||||||||
Other data from continuing operations: |
||||||||||||||||
Adjusted EBITDA (3) |
$ |
57,043 |
$ |
57,741 |
(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" ( |
(2) Included in "Other (expense) income, net" for the three months ended |
(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. |
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FINANCIAL HIGHLIGHTS (UNAUDITED) |
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(In thousands) |
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SELECT SEGMENT DATA |
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THREE MONTHS ENDED |
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MARCH 31, |
||||||||
2020 |
2019 |
|||||||
Revenue |
||||||||
Financial Services |
$ |
188,777 |
$ |
185,144 |
||||
Benefits and Insurance Services |
79,612 |
76,255 |
||||||
National Practices |
9,066 |
8,599 |
||||||
Total |
$ |
277,455 |
$ |
269,998 |
||||
Gross Margin |
||||||||
Financial Services |
$ |
50,179 |
$ |
50,686 |
||||
Benefits and Insurance Services |
14,389 |
14,884 |
||||||
National Practices |
783 |
599 |
||||||
Operating expenses - unallocated (1): |
||||||||
Other |
(2,523) |
(3,449) |
||||||
Deferred compensation |
14,800 |
(8,218) |
||||||
Total |
$ |
77,628 |
$ |
54,502 |
(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 the Company's deferred compensation plan, which do not impact "Income from continuing operations before income tax expense" as they are directly offset by the same adjustment to "Other (expense) income, net" in the Consolidated Statements of Comprehensive Income. Net gains/losses recognized from adjustments to the fair value of the assets held in the deferred compensation plan are recorded as compensation income/expense in "Operating expenses" and as income/expense in "Other (expense) income, net". |
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SELECT CASH FLOW DATA |
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(In thousands) |
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MARCH 31, |
||||||||
2020 |
2019 |
|||||||
Net income |
$ |
36,848 |
$ |
37,469 |
||||
Adjustments to reconcile net income to net cash used in operating activities: |
||||||||
Depreciation and amortization expense |
5,704 |
5,659 |
||||||
Bad debt expense, net of recoveries |
2,289 |
1,054 |
||||||
Adjustments to contingent earnout liability |
(684) |
(281) |
||||||
Other noncash adjustments |
1,712 |
511 |
||||||
Net income, after adjustments to reconcile net income to net cash provided by operating activities |
45,869 |
44,412 |
||||||
Changes in assets and liabilities, net of acquisitions and divestitures |
(64,500) |
(69,074) |
||||||
Operating cash flows used in continuing operations |
(18,631) |
(24,662) |
||||||
Operating cash used in discontinued operations |
(16) |
(91) |
||||||
Net cash used in operating activities |
(18,647) |
(24,753) |
||||||
Net cash provided by (used in) investing activities |
4,355 |
(9,736) |
||||||
Net cash provided by financing activities |
207,772 |
10,025 |
||||||
Net change in cash, cash equivalents and restricted cash |
$ |
193,480 |
$ |
(24,464) |
||||
Cash, cash equivalents and restricted cash at beginning of year |
146,505 |
130,554 |
||||||
Cash, cash equivalents and restricted cash at end of year |
$ |
339,985 |
$ |
106,090 |
||||
Reconciliation of cash, cash equivalents and restricted cash to the consolidated balance sheet: |
||||||||
Cash and cash equivalents |
$ |
216,942 |
$ |
2,143 |
||||
Restricted cash |
28,927 |
27,721 |
||||||
Cash equivalents included in funds held for clients |
94,116 |
76,226 |
||||||
Total cash, cash equivalents and restricted cash |
$ |
339,985 |
$ |
106,090 |
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SELECT FINANCIAL DATA AND RATIOS |
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(In thousands, except for percentages and days sales outstanding) |
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MARCH 31, |
|
|||||||
2020 |
2019 |
|||||||
Cash and cash equivalents |
$ |
216,942 |
$ |
567 |
||||
Restricted cash |
28,927 |
29,595 |
||||||
Accounts receivable, net |
263,180 |
222,031 |
||||||
Current assets before funds held for clients |
533,589 |
276,518 |
||||||
Funds held for clients |
141,984 |
179,502 |
||||||
|
666,112 |
654,671 |
||||||
Total assets |
$ |
1,616,558 |
$ |
1,400,774 |
||||
Current liabilities before client fund obligations |
$ |
167,210 |
$ |
186,906 |
||||
Client fund obligations |
142,219 |
179,020 |
||||||
Bank debt |
381,923 |
104,333 |
||||||
Total liabilities |
$ |
946,298 |
$ |
741,536 |
||||
|
$ |
(565,180) |
$ |
(535,693) |
||||
Total stockholders' equity |
$ |
670,260 |
$ |
659,238 |
||||
Debt to equity |
57.2 |
% |
16.0 |
% |
||||
Days sales outstanding (DSO) - continuing operations (1) |
94 |
75 |
||||||
Shares outstanding |
54,430 |
55,419 |
||||||
Basic weighted average common shares outstanding |
54,571 |
54,299 |
||||||
Diluted weighted average common shares outstanding |
55,945 |
55,895 |
(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 |
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GAAP RECONCILIATIONS |
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Income from Continuing Operations to Non-GAAP Financial Measures (1) |
||||||||
(In thousands) |
||||||||
THREE MONTHS ENDED |
||||||||
MARCH 31, |
||||||||
2020 |
2019 |
|||||||
Income from continuing operations |
$ |
36,862 |
$ |
37,565 |
||||
Interest expense |
1,119 |
1,401 |
||||||
Income tax expense |
13,453 |
13,613 |
||||||
Gain on sale of operations, net |
(95) |
(497) |
||||||
Depreciation |
2,283 |
2,157 |
||||||
Amortization |
3,421 |
3,502 |
||||||
Adjusted EBITDA |
$ |
57,043 |
$ |
57,741 |
(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. |
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SOURCE
Ware Grove, Chief Financial Officer, or Lori Novickis, Director, Corporate Relations, CBIZ, Inc., Cleveland, Ohio, (216) 447-9000