CBIZ REPORTS SECOND-QUARTER AND FIRST-HALF 2022 RESULTS AND RAISES FULL-YEAR 2022 GUIDANCE

News provided by

CBIZ, Inc.

Jul 28, 2022, 06:30 ET

SECOND-QUARTER HIGHLIGHTS:

  • TOTAL REVENUE UP 29.9%; SAME-UNIT REVENUE UP 11.4%
  • GAAP EPS UP 275.0%; ADJUSTED EPS UP 26.0%
  • INCOME FROM CONTINUING OPERATIONS UP 262.9%; ADJUSTED EBITDA UP 29.9%

FIRST-HALF HIGHLIGHTS:

  • TOTAL REVENUE UP 30.1%; SAME-UNIT REVENUE UP 10.5%
  • GAAP EPS UP 56.0%; ADJUSTED EPS UP 26.6%
  • INCOME FROM CONTINUING OPERATIONS UP 52.0%; ADJUSTED EBITDA UP 27.9%

CLEVELAND, July 28, 2022 /PRNewswire/ -- CBIZ, Inc., (NYSE: CBZ) ("CBIZ", or the "Company"), a leading provider of financial, insurance and advisory services, today announced results for the second quarter ended June 30, 2022.

For the 2022 second quarter, CBIZ recorded revenue of $362.0 million, an increase of $83.3 million, or 29.9%, compared with $278.6 million reported for the same period in 2021. Acquired operations, net of divestitures, contributed $51.6 million, or 18.5%, to second-quarter 2022 revenue growth. Same-unit revenue increased by $31.7 million, or 11.4%, for the quarter, compared with the same period a year ago. Income from continuing operations was $31.3 million, or $0.60 per diluted share, compared with $8.6 million, or $0.16 per diluted share, for the same period a year ago.

Adjusted income from continuing operations was $32.6 million, or $0.63 per diluted share, compared with $27.1 million, or $0.50 per diluted share, for the same period a year ago. Adjusted EBITDA for the second quarter was $55.7 million, compared with $42.9 million for the same period in 2021.

For the six months ended June 30, 2022, CBIZ recorded revenue of $753.7 million, an increase of $174.3 million, or 30.1%, over the $579.4 million recorded for the same period in 2021. Acquisitions, net of divestitures, contributed $113.8 million, or 19.6%, to revenue growth in the six months ended June 30, 2022. Same-unit revenue increased by $60.5 million, or 10.5%, compared with the same period a year ago. Income from continuing operations was $89.4 million, or $1.70 per diluted share, for the six months ended June 30, 2022, compared with $58.8 million, or $1.09 per diluted share, for the same period a year ago.

Adjusted income from continuing operations was $95.2 million, or $1.81 per diluted share, for the six months ended June 30, 2022, compared with $77.1 million, or $1.43 per diluted share, for the same period a year ago. Adjusted EBITDA for the first half was $148.6 million, compared with $116.2 million for the same period in 2021.

In the second quarter of 2021, the Company recorded a non-recurring settlement charge of $30.5 million and a $6.4 million non-recurring gain on sale of operations. These items were eliminated to arrive at Adjusted earnings per diluted share for the second-quarter and first-half periods ended June 30, 2021. In 2022, the Company incurred non-recurring transaction and first-year integration expenses related to the Marks Paneth acquisition. These expenses were eliminated to report Adjusted earnings per diluted share for 2022. Schedules reconciling Adjusted income from continuing operations, Adjusted EPS and Adjusted EBITDA to the most directly comparable GAAP measures can be found in tables included in the release.

During the first half ended June 30, 2022, the Company repurchased approximately 884 thousand shares of its common stock on the open market. Between July 1, 2022, and July 27, 2022, the Company repurchased an additional 200 thousand shares. The balance outstanding on the Company's unsecured credit facility on June 30, 2022, was $266.0 million with $323.2 million of unused borrowing capacity.

Jerry Grisko, CBIZ President and Chief Executive Officer, said, "Our exceptional performance for the second quarter and first half of 2022 is a direct result of our long-term strategy and focus on organic growth, strategic acquisitions and investments that strengthen our business and position us for the future. We continue to see growth across every major service line due to the ongoing demand for both our essential, recurring services and our project-based advisory services. In addition, the performance of our recent acquisitions is also helping to bolster our strong results. Earlier this month, we were pleased to welcome our latest acquisition, Stinnett and Associates, a professional advisory firm with offices in Oklahoma, Texas and Colorado."

"As a result of our strong organic growth for the first half of the year combined with the performance of our recent acquisitions, we are raising our full-year 2022 guidance to reflect anticipated revenue growth between 23% and 25% and growth in Adjusted earnings per share between 25% and 27%," Grisko concluded.

2022 Outlook

  • The Company increased its revenue growth expectations to within a range of 23% to 25% over the prior year, up from previous guidance of 19% to 21% in revenue growth.
  • Although multiple factors may impact the tax rate, the Company expects an effective tax rate of approximately 25%.
  • The Company expects a weighted average fully diluted share count of 52.5 million to 53.0 million shares.
  • On a GAAP basis, the Company expects full-year fully diluted earnings per share from continuing operations to grow within a range of 45% to 48% per share, over the $1.32 per share reported in 2021, up from previous guidance of 43% to 46% per share.
  • The Company expects Adjusted fully diluted earnings per share from continuing operations to grow within a range of 25% to 27% over the Adjusted $1.66 reported for 2021, up from previous guidance of a 20% to 22% increase per share. A schedule reconciling GAAP Diluted EPS to Non-GAAP Adjusted Diluted EPS is attached.

Conference Call
CBIZ will host a conference call at 11:00 a.m. (ET) today to discuss its results. The call will be webcast and an archived replay will be available at https://cbiz.gcs-web.com/investor-overview. Participants may register at https://dpregister.com/sreg/10169243/f3ae1c6ba2.

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 100 offices in 32 states, CBIZ is one of the largest accounting and insurance brokerage providers in the U.S. For more information, visit www.cbiz.com. 

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 Securities and Exchange Commission at www.sec.gov. 

CBIZ, INC.

FINANCIAL HIGHLIGHTS (UNAUDITED)

THREE MONTHS ENDED JUNE 30, 2022 AND 2021

(In thousands, except percentages and per share data)




Three Months Ended June 30,



2022


%


2021


%

Revenue


$ 361,952


100.0 %


$ 278,648


100.0 %

Operating expenses (1)


289,736


80.0


236,934


85.0

Gross margin


72,216


20.0


41,714


15.0

Corporate general and administrative expenses (1)


10,926


3.0


13,816


5.0

Legal settlement, net


—


—


30,468


10.9

Operating income (loss)


61,290


17.0


(2,570)


(0.9)

Other (expense) income:









Interest expense


(1,645)


(0.5)


(959)


(0.3)

Gain on sale of operations, net


135


—


6,385


2.3

Other (expense) income, net (1) (2)


(15,898)


(4.4)


8,373


3.0

Total other (expense) income, net


(17,408)


(4.9)


13,799


5.0

Income from continuing operations before income tax expense


43,882


12.1


11,229


4.1

Income tax expense


12,622




2,616



Income from continuing operations


31,260


8.6


8,613


3.1

Loss from operations of discontinued businesses, net of tax


(5)




(6)



Net Income


$  31,255


8.6 %


$    8,607


3.1 %










Diluted income per share:









Continuing operations


$      0.60




$      0.16



Discontinued operations


—




—



Net income


$      0.60




$      0.16












Diluted weighted average common shares outstanding


52,531




53,769



Other data from continuing operations:









Adjusted EBITDA (3)


$  55,732




$  42,895



Adjusted EPS (3)


$      0.63




$      0.50





(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) income, net." The deferred compensation plan has no impact on "Income from continuing operations before income tax expense."

Income and expenses related to the deferred compensation plan for the three months ended June 30, 2022, and 2021 are as follows (in thousands):






Three Months Ended June 30,



2022


% of Revenue


2021


% of Revenue

Operating (income) expenses


$   (13,338)


(3.7) %


$       6,761


2.4 %

Corporate general and administrative (income) expenses


(1,811)


(0.5) %


850


0.3 %

Other (expense) income, net


(15,149)


(4.1) %


7,611


2.7 %

Excluding the impact of the above-mentioned income and expenses related to the deferred compensation plan, the operating results for the three months ended June 30, 2022, and 2021 are as
follows (in thousands):




Three Months Ended June 30,


2022


2021


As
Reported


Deferred
Compensation
Plan


Adjusted


% of
Revenue


As
Reported


Deferred
Compensation
Plan


Adjusted


% of
Revenue

Gross margin

$  72,216


$    (13,338)


$  58,878


16.3 %


$  41,714


$       6,761


$  48,475


17.4 %

Operating income (expense)

61,290


(15,149)


46,141


12.7 %


(2,570)


7,611


5,041


1.8 %

Other (expense) income, net

(15,898)


15,149


(749)


(0.2) %


8,373


(7,611)


762


0.3 %

Income from continuing operations before income tax expense

43,882


—


43,882


12.1 %


11,229


—


11,229


4.0 %



(2)

Included in "Other (expense) income, net" for the three months ended June 30, 2022 and 2021, is expense of $0.8 million and $0.1 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)

SIX MONTHS ENDED JUNE 30, 2022 AND 2021

(In thousands, except percentages and per share data)

 




Six Months Ended June 30,



2022


%


2021


%

Revenue


$ 753,674


100.0 %


$ 579,378


100.0 %

Operating expenses (1)


580,035


77.0


460,905


79.6

Gross margin


173,639


23.0


118,473


20.4

Corporate general and administrative expenses (1)


27,235


3.6


28,299


4.9

Legal settlement, net


—


—


30,468


5.3

Operating income


146,404


19.4


59,706


10.2

Other income (expense):









Interest expense


(2,904)


(0.4)


(1,836)


(0.3)

Gain on sale of operations, net


135


—


6,385


1.1

Other (expense) income, net (1) (2)


(22,301)


(3.0)


13,162


2.3

Total other (expense) income, net


(25,070)


(3.4)


17,711


3.1

Income from continuing operations before income tax expense


121,334


16.0


77,417


13.3

Income tax expense


31,943




18,588



Income from continuing operations


89,391


11.9


58,829


10.2

Loss from operations of discontinued businesses, net of tax


(9)




(13)



Net income


$  89,382


11.9 %


$  58,816


10.2 %










Diluted income per share:









Continuing operations


$      1.70




$      1.09



Discontinued operations


—




—



Net income


$      1.70




$      1.09












Diluted weighted average common shares outstanding


52,736




54,109



Other data from continuing operations:









Adjusted EBITDA (3)


$ 148,629




$ 116,212



Adjusted EPS (3)


$      1.81




$      1.43





(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) income, net." The deferred
compensation plan has no impact on "Income from continuing operations before income tax expense."

Income and expenses related to the deferred compensation plan for the six months ended June 30, 2022, and 2021 are as follows (in thousands):






Six Months Ended June 30,



2022


% of Revenue


2021


% of Revenue

Operating (income) expenses


$   (19,005)


(2.5) %


$     11,377


2.0 %

Corporate general and administrative (income) expenses


(2,622)


(0.3) %


1,346


0.2 %

Other (expense) income, net


(21,627)


(2.9) %


12,723


2.2 %

Excluding the impact of the above-mentioned income and expenses related to the deferred compensation plan, the operating results for the six months ended June 30, 2022, and 2021 are as follows (in thousands):




Six Months Ended June 30,


2022


2021


As
Reported


Deferred
Compensation
Plan


Adjusted


% of
Revenue


As
Reported


Deferred
Compensation
Plan


Adjusted


% of
Revenue

Gross margin

$ 173,639


$    (19,005)


$ 154,634


20.5 %


$ 118,473


$     11,377


$ 129,850


22.4 %

Operating income (expense)

146,404


(21,627)


124,777


16.6 %


59,706


12,723


72,429


12.5 %

Other (expense) income, net

(22,301)


21,627


(674)


(0.1) %


13,162


(12,723)


439


0.1 %

Income from continuing operations before income tax expense

121,334


—


121,334


16.1 %


77,417


—


77,417


13.4 %



(2)

Included in "Other (expense) income, net" for the six months ended June 30, 2022 and 2021, is expense of $1.5 million and $0.8 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)

SELECT SEGMENT DATA




Three Months Ended June 30,


Six Months Ended June 30,



2022


2021


2022


2021

Revenue









Financial Services


$      259,308


$      186,589


$      548,054


$      390,738

Benefits and Insurance Services


91,708


82,620


184,194


169,859

National Practices


10,936


9,439


21,426


18,781

Total


$      361,952


$      278,648


$      753,674


$      579,378










Gross Margin









Financial Services


$        49,665


$        35,669


$      128,611


$        98,072

Benefits and Insurance Services


16,688


14,844


36,517


35,150

National Practices


1,037


952


1,951


1,753

Operating expenses - unallocated (1):









Other expense


(8,512)


(2,990)


(12,445)


(5,125)

Deferred compensation


13,338


(6,761)


19,005


(11,377)

Total


$        72,216


$        41,714


$      173,639


$      118,473



(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 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 rabbi trust are recorded as compensation expense (income) in "Operating expenses" and "Corporate,
general and administrative expenses," and offset in "Other (expense) income, net."

CBIZ, INC.

SELECT CASH FLOW DATA (UNAUDITED)

(In thousands)




Six Months Ended June 30,



2022


2021

Net income


$         89,382


$         58,816

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





Depreciation and amortization expense


16,465


12,876

Gain on sale of operations, net


(135)


(6,385)

Bad debt expense, net of recoveries


1,263


265

Adjustments to contingent earnout liability, net


1,478


753

Stock-based compensation expense


6,428


5,454

Other noncash adjustments


4,899


4,882

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


119,780


76,661

Changes in assets and liabilities, net of acquisitions and divestitures


(91,263)


(10,354)

Operating cash flows provided by continuing operations


28,517


66,307

Operating cash used in discontinued operations


(9)


(13)

Net cash provided by operating activities


28,508


66,294

Net cash used in investing activities


(89,756)


(40,137)

Net cash provided by (used in) financing activities


91,655


(42,582)

Net increase (decrease) in cash, cash equivalents and restricted cash


30,407


(16,425)

Cash, cash equivalents and restricted cash at beginning of year


$       150,474


$       170,335

Cash, cash equivalents and restricted cash at end of period


$       180,881


$       153,910






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





Cash and cash equivalents


$           3,881


$           4,677

Restricted cash


42,188


39,268

Cash equivalents included in funds held for clients


134,812


109,965

Total cash, cash equivalents and restricted cash


$       180,881


$       153,910

CBIZ, INC.

SELECT FINANCIAL DATA AND RATIOS (UNAUDITED)

(In thousands)




June 30, 2022


December 31, 2021

Cash and cash equivalents


3,881


1,997

Restricted cash


42,188


30,383

Accounts receivable, net


410,481


242,168

Current assets before funds held for clients


468,771


293,765

Funds held for clients


185,271


157,909

Goodwill and other intangible assets, net


946,468


840,783






Total assets


1,972,597


1,627,934






Current liabilities before client fund obligations


344,219


265,174

Client fund obligations


187,129


158,115

Total long-term debt, net


263,718


154,851






Total liabilities


1,208,074


923,386






Treasury stock


(737,559)


(694,716)






Total stockholders' equity


764,523


704,548






Debt to equity


34.5 %


22.0 %

Days sales outstanding (DSO) - continuing operations (1)


88


71






Shares outstanding


51,602


52,038

Basic weighted average common shares outstanding


52,015


52,637

Diluted weighted average common shares outstanding


52,736


53,723



(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 on June 30, 2021 was 84.

CBIZ, INC.

GAAP RECONCILIATION

Income from Continuing Operations to Adjusted EBITDA (1)

(In thousands)




Three Months Ended June 30,


Six Months Ended June 30,



2022


2021


2022


2021

Income from continuing operations


$        31,260


$          8,613


$        89,391


$        58,829

Interest expense


1,645


959


2,904


1,836

Income tax expense


12,622


2,616


31,943


18,588

Gain on sale of operations, net


(135)


(6,385)


(135)


(6,385)

Legal settlement, net


—


30,468


—


30,468

Transaction costs related to Marks Paneth (2)


—


—


1,329


—

Integration & retention costs related to Marks Paneth (2)


2,048


—


6,732


—

Depreciation


2,828


2,649


5,607


5,202

Amortization


5,464


3,975


10,858


7,674

Adjusted EBITDA


$        55,732


$        42,895


$      148,629


$      116,212



(1)

CBIZ reports its financial results in accordance with GAAP. This table reconciles Adjusted EBITDA to the most directly comparable
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 under GAAP. Adjusted EBITDA is commonly used
by the Company, its shareholders and debt holders as a performance measurement 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.

CBIZ, INC.

GAAP RECONCILIATION

Income and Diluted Earnings Per Share ("EPS") from Continuing Operations to Adjusted Income and EPS(1)

(In thousands, except per share data)



Three Months Ended June 30, 2022


Three Months Ended June 30, 2021


Amounts


EPS


Amounts


EPS

Income from continuing operations

$      31,260


$          0.60


$        8,613


$          0.16

Adjustments:








Gain on sale of operations, net

(135)


—


(6,385)


(0.12)

Legal settlement, net

—


—


30,468


0.56

Integration & retention costs related to Marks Paneth (2)

2,048


0.04


—


—

Income tax effect related to adjustments

(550)


(0.01)


(5,608)


(0.10)

Adjusted income from continuing operations

$      32,623


$          0.63


$      27,088


$          0.50



(1)

CBIZ reports its financial results in accordance with GAAP. This table reconciles Adjusted Income and Adjusted EPS to the most directly
comparable GAAP financial measures, "Income from continuing operations" and "Diluted earnings per share from continuing operations."
Adjusted Income and Adjusted EPS are not defined by GAAP and should not be regarded as an alternative or replacement to any
measurement of performance under GAAP. Adjusted Income and Adjusted EPS, 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.


Six Months Ended June 30, 2022


Six Months Ended June 30, 2021


Amounts


EPS


Amounts


EPS

Income from continuing operations

$      89,391


$          1.70


$      58,829


$          1.09

Adjustments:








Gain on sale of operations, net

(135)


—


(6,385)


(0.12)

Legal settlement, net

—


—


30,468


0.56

Transaction costs related to Marks Paneth (2)

1,329


0.03


—


—

Integration & retention costs related to Marks Paneth (2)

6,732


0.13


—


—

Income tax effect related to adjustments

(2,087)


(0.05)


(5,782)


(0.10)

Adjusted income from continuing operations

$      95,230


$          1.81


$      77,130


$          1.43



(1)

CBIZ reports its financial results in accordance with GAAP. This table reconciles Adjusted Income and Adjusted EPS to the most directly
comparable GAAP financial measures, "Income from continuing operations" and "Diluted earnings per share from continuing operations."
Adjusted Income and Adjusted EPS are not defined by GAAP and should not be regarded as an alternative or replacement to any
measurement of performance under GAAP. Adjusted Income and Adjusted EPS, 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.

CBIZ, INC.

GAAP RECONCILIATION

Full Year 2022 EPS from Continuing Operations Guidance to Full Year 2022 Adjusted Diluted EPS



Full Year 2022 Guidance


Low


High

Diluted EPS  - GAAP Guidance

$                1.92


$                  1.95

Transaction and integration costs related to Marks Paneth (1)

0.16


0.16

Adjusted Diluted EPS Guidance

$                2.08


$                  2.11

GAAP Diluted EPS for 2021

$                1.32


$                  1.32

Adjusted Diluted EPS for 2021 (2)

$                1.66


$                  1.66

GAAP Diluted EPS Range

45 %


48 %

 Adjusted Diluted EPS Range

25 %


27 %



(1)

Includes estimated transaction and integration costs related to the Marks Paneth 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 income from continuing operations and adjusted income from continuing operations and a
reconciliation between GAAP Diluted EPS and Adjusted Diluted EPS for fiscal year ended December 31, 2021 are
presented as follows:




Year Ended December 31, 2021


In thousands


EPS

Income from continuing operations

$                  70,911


$                      1.32

Adjustments:




Gain on sale of operations, net

(6,311)


(0.12)

Legal settlement, net

30,468


0.57

Income tax effect related to adjustments

(5,746)


(0.11)

Adjusted income from continuing operations

$                  89,322


$                      1.66

SOURCE CBIZ, Inc.