CBIZ REPORTS FIRST-QUARTER 2024 RESULTS

CBIZ, INC.

FINANCIAL HIGHLIGHTS (UNAUDITED)

THREE MONTHS ENDED MARCH 31, 2024 AND 2023

(In thousands, except percentages and per share data)

Three Months Ended March 31,

%

2023

%

Revenue

$ 494,297

100.0 %

$ 454,606

100.0 %

Operating expenses ⁽¹⁾

376,485

76.2

341,011

75.0

Gross margin

117,812

23.8

113,595

25.0

Corporate general and administrative expenses ⁽¹⁾

18,711

3.8

15,598

3.4

Operating income

99,101

20.0

97,997

21.6

Other (expense) income:

Interest expense

(4,511)

(0.9)

(3,641)

(0.8)

Gain on sale of operations, net

—

—

99

—

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

9,424

1.9

5,112

1.1

Total other income, net

4,913

1.0

1,570

0.3

Income before income tax expense

104,014

21.0

99,567

21.9

Income tax expense

27,130

26,407

Net income

$  76,884

15.6 %

$  73,160

16.1 %

Diluted earnings per share

$      1.53

$      1.44

Diluted weighted average common shares outstanding

50,221

50,762

Other data:

Adjusted EBITDA ⁽³⁾

$ 118,830

$ 113,348

Adjusted EPS ⁽³⁾

$      1.54

$      1.46

(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, 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 March 31, 2024, and 2023, are as follows (in thousands):

Three Months Ended March 31,

2024

% of Revenue

2023

% of Revenue

Operating expense

$      8,576

1.7 %

$      4,760

1.0 %

Corporate general and administrative expense

1,057

0.2 %

642

0.1 %

Other income, net

9,633

1.9 %

5,402

1.2 %

Excluding the impact of the above-mentioned income and expenses related to the deferred compensation plan, the operating results for the three months ended March 31, 2024, and 2023, are as follows (in thousands):

Three Months Ended March 31,

2024

2023

As
Reported

Deferred
Compensation
Plan

Adjusted

% of Revenue

As
Reported

Deferred
Compensation
Plan

Adjusted

% of
Revenue

Gross margin

$ 117,812

$         8,576

$ 126,388

25.6 %

$ 113,595

$         4,760

$ 118,355

26.0 %

Operating income

99,101

9,633

108,734

22.0 %

97,997

5,402

103,399

22.7 %

Other income (expense), net

9,424

(9,633)

(209)

— %

5,112

(5,402)

(290)

(0.1) %

Income before income tax expense

104,014

—

104,014

21.0 %

99,567

—

99,567

21.9 %

(2)

Included in "Other income, net" for the three months ended March 31, 2024, and 2023, is expense of $0.4 million and $0.6 million, respectively, related to net changes in the fair value of contingent consideration related to CBIZ's prior acquisitions.

(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 shareholders and investors.

CBIZ, INC.

FINANCIAL HIGHLIGHTS (UNAUDITED)

(In thousands)

SELECT SEGMENT DATA

Three Months Ended March 31,

2024

2023

Revenue

Financial Services

$            372,630

$            343,086

Benefits and Insurance Services

108,408

100,054

National Practices

13,259

11,466

Total

$            494,297

$            454,606

Gross Margin

Financial Services

$            107,069

$              98,643

Benefits and Insurance Services

24,771

23,131

National Practices

1,326

883

Operating expenses - unallocated ⁽¹⁾:

Other expense

(6,778)

(4,302)

Deferred compensation

(8,576)

(4,760)

Total

$            117,812

$            113,595

(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."

CBIZ, INC.

SELECT CASH FLOW DATA (UNAUDITED)

(In thousands)

Three Months Ended March 31,

2023

Net income

$         76,884

$         73,160

Adjustments to reconcile net income to net cash used in operating activities:

Depreciation and amortization expense

9,468

8,625

Gain on sale of operations, net

—

(99)

Bad debt expense, net of recoveries

550

461

Adjustments to contingent earnout liability, net

434

630

Stock-based compensation expense

2,638

3,831

Other noncash adjustments

2,207

2,749

Net income, after adjustments to reconcile net income to net cash used in
operating activities

92,181

89,357

Changes in assets and liabilities, net of acquisitions and divestitures

(155,901)

(133,868)

Net cash used in operating activities

(63,720)

(44,511)

Net cash used in investing activities

(28,702)

(45,896)

Net cash provided by financing activities

71,188

61,778

Net decrease in cash, cash equivalents and restricted cash

(21,234)

(28,629)

Cash, cash equivalents and restricted cash at beginning of year

$       157,148

$       160,145

Cash, cash equivalents and restricted cash at end of period

$       135,914

$       131,516

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

Cash and cash equivalents

$           1,402

$           2,265

Restricted cash

27,740

25,109

Cash equivalents included in funds held for clients

106,772

104,142

Total cash, cash equivalents and restricted cash

$       135,914

$       131,516

CBIZ, INC.

SELECT FINANCIAL DATA AND RATIOS (UNAUDITED)

(In thousands)

March 31, 2024

December 31, 2023

Cash and cash equivalents

1,402

8,090

Restricted cash

27,740

30,362

Accounts receivable, net

504,107

380,152

Current assets before funds held for clients

574,819

453,499

Funds held for clients

147,345

159,186

Goodwill and other intangible assets, net

1,038,410

1,008,604

Total assets

2,196,998

2,043,592

Current liabilities before client fund obligations

322,021

352,028

Client fund obligations

148,034

159,893

Total long-term debt, net

436,344

310,826

Total liabilities

1,329,909

1,251,974

Treasury stock

(910,322)

(899,093)

Total stockholders' equity

867,089

791,618

Debt to equity

50.3 %

39.3 %

Days sales outstanding (DSO) ⁽¹⁾

101

78

Shares outstanding

50,112

49,814

Basic weighted average common shares outstanding

50,045

49,989

Diluted weighted average common shares outstanding

50,221

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 March 31, 2023, was 94.

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 March 31,

2024

2023

Amounts

EPS

Amounts

EPS

Net income

$      76,884

$          1.53

$      73,160

$          1.44

Adjustments:

Transaction costs related to acquisitions ⁽²⁾

—

—

611

0.01

Integration & retention costs related to acquisitions ⁽²⁾

582

0.01

1,003

0.02

Facility optimization costs ⁽³⁾

255

0.01

—

—

Income tax effect related to adjustments

(218)

(0.01)

(428)

(0.01)

Adjusted net income

$      77,503

$          1.54

$      74,346

$          1.46

Interest expense

$        4,511

$        3,641

Income tax expense

27,130

26,407

Gain on sale of operations, net

—

(99)

Tax effect related to the adjustments above

218

428

Depreciation

3,523

2,975

Amortization

5,945

5,650

Adjusted EBITDA

$    118,830

$    113,348

(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 (loss) 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 a performance measure 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 EBK and CompuData, and those reported in 2023 related to the Somerset 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 2024 Diluted Earnings Per Share ("EPS") Guidance to Full Year 2024 Adjusted Diluted EPS

Full Year 2024 Guidance

Low

High

Diluted EPS - GAAP Guidance

$                2.70

$                  2.75

Adjusted Diluted EPS Guidance

$                2.70

$                  2.75

GAAP Diluted EPS for 2023

$                2.39

$                  2.39

Adjusted Diluted EPS for 2023

$                2.41

$                  2.41

GAAP Diluted EPS Range

13 %

15 %

Adjusted Diluted EPS Range

12 %

14 %