CBIZ Reports 2015 First-Quarter Results

CBIZ, INC

FINANCIAL HIGHLIGHTS (UNAUDITED)

THREE MONTHS ENDED MARCH 31, 2015 AND 2014

(In thousands, except percentages and per share data)

 THREE MONTHS ENDED

 MARCH 31,

2015

%

2014 (1)

%

Revenue

$

213,866

100.0%

$

204,726

100.0%

Operating expenses (2)

170,864

79.9%

161,938

79.1%

Gross margin

43,002

20.1%

42,788

20.9%

Corporate general and administrative expenses (3)

9,865

4.6%

10,198

5.0%

Operating income

33,137

15.5%

32,590

15.9%

Other (expense) income:

Interest expense

(2,977)

-1.4%

(3,433)

-1.7%

Gain on sale of operations, net

56

0.0%

8

0.0%

Other income, net (4) (5)

2,859

1.4%

1,975

1.0%

     Total other expense, net

(62)

0.0%

(1,450)

-0.7%

Income from continuing operations before income tax expense

33,075

15.5%

31,140

15.2%

Income tax expense

13,572

13,114

Income from continuing operations

19,503

9.1%

18,026

8.8%

Loss from operations of discontinued businesses, net of tax

(335)

(263)

Loss on disposal of discontinued businesses, net of tax

-

(474)

Net income

$

19,168

9.0%

$

17,289

8.4%

Diluted earnings (loss) per share:

Continuing operations

$

0.38

$

0.34

Discontinued operations

(0.01)

(0.01)

Net income

$

0.37

$

0.33

Diluted weighted average common shares outstanding

51,385

52,618

Other data from continuing operations:

Adjusted EBIT (6)

$

35,996

$

34,565

Adjusted EBITDA (6)

$

40,983

$

39,265

(1)

Certain amounts in the 2014 financial data have been reclassified to conform to the current year presentation and revised to reflect the impact of discontinued operations.

(2)

Includes expense of $1,117 and $614 for the three months ended March 31, 2015 and 2014, respectively, in compensation associated with net gains from the Company's deferred compensation plan (see note 4). Excluding this item, "Operating expenses" would be $169,747 and $161,324, or 79.4% and 78.8% of revenue, for the three months ended March 31, 2015 and 2014, respectively.

(3)

Includes expense of $130 and $103 for the three months ended March 31, 2015 and 2014, respectively, in compensation associated with net gains from the Company's deferred compensation plan (see note 4). Excluding this item, "Corporate general and administrative expenses" would be $9,735 and $10,095, or 4.6% and 4.9% of revenue, for the three months ended March 31, 2015 and 2014, respectively.

(4)

Includes net gains of $1,247 and $717 for the three months ended March 31, 2015 and 2014, 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 included in "Operating expenses" and "Corporate general and administrative expenses."

(5)

For the three months ended March 31, 2015 and 2014, amount includes income of $1,500 and $959, respectively, related to net decreases in the fair value of contingent consideration related to CBIZ's prior acquisitions.

(6)

Adjusted EBIT represents income from continuing operations before income taxes, interest expense, and gain on sale of operations, net.

Adjusted EBITDA represents Adjusted EBIT before depreciation and amortization expense of $4,987 and $4,700 for the three months ended March 31, 2015 and 2014, respectively. The Company has included Adjusted EBIT and Adjusted 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. Adjusted EBIT and Adjusted EBITDA should not be regarded as an alternative or replacement to any measurement of performance or cash flow under generally accepted accounting principles.

CBIZ, INC

FINANCIAL HIGHLIGHTS (UNAUDITED)

(In thousands, except per share data)

SELECT SEGMENT DATA

 THREE MONTHS ENDED

 MARCH 31,

2015

2014 (1)

Revenue

Financial Services

$     143,832

$     141,238

Employee Services

62,651

56,109

National Practices

7,383

7,379

Total

$     213,866

$     204,726

Gross Margin

Financial Services

$       35,214

$       35,475

Employee Services

11,123

10,374

National Practices

782

746

Operating expenses - unallocated (2):

Other

(3,000)

(3,193)

Deferred compensation

(1,117)

(614)

Total

$       43,002

$       42,788

(1)

Certain amounts in the 2014 financial data have been reclassified to conform to the current year presentation and revised to reflect the impact of discontinued operations.

(2)

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. 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, net" in the Consolidated Statements of Comprehensive Income. Gains or losses recognized from adjustments to the fair value of the assets held in the deferred compensation plan are recorded as compensation expense in "Operating expenses" and as income or expense in "Other income, net."

NON-GAAP EARNINGS AND PER SHARE DATA

Reconciliation of Income from Continuing Operations to Non-GAAP Earnings from Continuing Operations (3)

THREE MONTHS ENDED MARCH 31,

2015

 Per Share

2014 (1)

 Per Share

Income from Continuing Operations

$       19,503

$           0.38

$       18,026

$            0.34

Selected non-cash items:

Amortization

3,529

0.07

3,461

0.07

Depreciation (4)

1,458

0.03

1,239

0.02

Non-cash interest on convertible notes

595

0.01

736

0.01

Stock-based compensation

1,622

0.03

1,390

0.03

Adjustment to contingent earnouts

(1,500)

(0.03)

(959)

(0.02)

Non-cash items

5,704

0.11

5,867

Non-GAAP earnings - Continuing Operations

$       25,207

$           0.49

$       23,893

$            0.45

(3)

The Company believes Non-GAAP earnings and Non-GAAP earnings per diluted share more clearly illustrate the impact of certain

non-cash charges and credits to "income from continuing operations" and are a useful measure for the Company and its analysts. Non-GAAP earnings is defined as income from continuing operations excluding: depreciation and amortization, non-cash interest expense, non-cash stock-based compensation expense, and adjustments to the fair value of contingent consideration related to prior acquisitions. Non-GAAP earnings per diluted share is calculated by dividing Non-GAAP earnings by the number of weighted average diluted common shares outstanding for the period indicated. Non-GAAP earnings and Non-GAAP earnings per diluted share should not be regarded as a replacement or alternative to any measurement of performance under generally accepted accounting principles.

(4)

Capital spending was $3.0 million and $1.6 million for the three months ended March 31, 2015 and 2014.

CBIZ, INC

FINANCIAL HIGHLIGHTS (UNAUDITED)

(In thousands, except percentages and ratios)

SELECT BALANCE SHEET DATA AND RATIOS

 MARCH 31,

 DECEMBER 31,

2015

2014

Cash and cash equivalents

$             128

$             979

Restricted cash

$        25,608

$        28,293

Accounts receivable, net

$      188,484

$      143,048

Current assets before funds held for clients

$      240,827

$      196,479

Funds held for clients - current and non-current

$      125,594

$      182,847

Goodwill and other intangible assets, net

$      533,118

$      526,462

Total assets

$      991,033

$      991,244

Notes payable - current

$             297

$             760

Current liabilities before client fund obligations

$      107,991

$      111,232

Client fund obligations

$      125,583

$      183,936

Bank debt

$      146,800

$      107,400

Convertible notes - non-current (1)

$        97,165

$        96,569

Total liabilities

$      572,700

$       591,399

Treasury stock

$     (430,693)

$     (425,685)

Total stockholders' equity

$      418,333

$      399,845

Debt to equity (2)

58.4%

51.2%

Days sales outstanding (DSO) - continuing operations (3)

90

70

Shares outstanding

49,336

49,487

Basic weighted average common shares outstanding

48,146

48,343

Diluted weighted average common shares outstanding

51,385

51,487

(1)

The 2010 Notes and 2006 Convertible Senior Subordinated Notes ("2006 Notes") are classified as a non-current liability due to Management's
intention to retire the 2010 Notes and 2006 Notes during the year ended December 31, 2015 with the amounts available under the credit facility.
In addition, the Company may repurchase additional 2010 Notes in privately negotiated transactions before maturity date, but there can be no
assurance that additional transactions will be completed or on what terms.

(2)

(3)

DSO is provided for continuing operations and represents accounts receivable, net 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 March 31, 2014 was 92.