CBIZ REPORTS SECOND-QUARTER AND FIRST-HALF 2023 RESULTS

News provided by

CBIZ, Inc.

Jul 27, 2023, 06:30 ET

AND RAISES FULL-YEAR 2023 REVENUE GUIDANCE

SECOND-QUARTER HIGHLIGHTS:

  • TOTAL REVENUE UP 10.1%; SAME-UNIT REVENUE UP 4.1%
  • GAAP EPS DOWN 11.7%; ADJUSTED EPS DOWN 12.7%
  • NET INCOME DOWN 14.1%; ADJUSTED EBITDA DOWN 2.3%

FIRST-HALF HIGHLIGHTS:

  • TOTAL REVENUE UP 13.2%; SAME-UNIT REVENUE UP 7.2%
  • GAAP EPS UP 16.5%; ADJUSTED EPS UP 11.0%
  • NET INCOME UP 11.9%; ADJUSTED EBITDA UP 12.9%

CLEVELAND, July 27, 2023 /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, 2023.

For the 2023 second quarter, CBIZ recorded revenue of $398.5 million, an increase of $36.6 million, or 10.1%, compared with $362.0 million reported for the same period in 2022. Acquired operations, net of divestitures, contributed $21.6 million, or 6.0%, to revenue growth. Same-unit revenue increased by $15.0 million, or 4.1%, for the quarter, compared with the same period a year ago. Net income was $26.9 million, or $0.53 per diluted share, compared with $31.3 million, or $0.60 per diluted share, for the same period a year ago.

For the six months ended June 30, 2023, CBIZ recorded revenue of $853.1 million, an increase of $99.4 million, or 13.2%, over the $753.7 million recorded for the same period in 2022. Acquisitions, net of divestitures, contributed $45.5 million, or 6.0%, to revenue growth in the six months ended June 30, 2023. Same-unit revenue increased by $53.9 million, or 7.2%, compared with the same period a year ago. Net income was $100.0 million, or $1.98 per diluted share, for the six months ended June 30, 2023, compared with $89.4 million, or $1.70 per diluted share, for the same period a year ago.

Excluding non-recurring transaction and first-year integration expenses related to the acquisition of Marks Paneth in January 2022, and expenses related to the acquisition of Somerset in February 2023, Adjusted net income was $27.6 million in the second quarter of 2023 compared with Adjusted net income of $32.7 million for the same period a year ago. Adjusted earnings per share was $0.55, a decrease of 12.7% compared with Adjusted earnings per share of $0.63 for the same period a year ago. Adjusted EBITDA for the second quarter was $54.4 million, down 2.3% compared with $55.7 million for the same period in 2022.

Adjusted net income was $102.0 million, or $2.01 per diluted share, for the six months ended June 30, 2023, compared with $95.3 million, or $1.81 per diluted share, for the same period a year ago. Adjusted EBITDA for the six months was $167.8 million, compared with $148.6 million for the same period in 2022.

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 in this release.

During the six months ended June 30, 2023, the Company repurchased approximately 1.0 million shares of its common stock on the open market. The balance outstanding on the Company's unsecured credit facility on June 30, 2023, was $410.6 million with $177.5 million of unused borrowing capacity.

Jerry Grisko, CBIZ President and Chief Executive Officer, said, "Following an exceptionally strong first quarter, our core businesses continued to perform well during the second quarter, and demand for our financial services, including accounting, tax and our advisory services, as well as our benefits and insurance offerings, remains strong. Our second-quarter results came in much as we expected with the exception of two areas that are largely beyond our control – contract delays in our Government Health Care consulting business and changes to tax filing deadlines in California. Based on our year-to-date performance and current outlook for the remainder of the year, we are pleased to raise revenue guidance and reaffirm our EPS guidance for the full year."

"So far this year, we've completed three strategic acquisitions and two tuck-in transactions that together are expected to add approximately $68 million in annualized revenue. Our most recent transactions include one in the highly in-demand cyber and information security space to expand our advisory services, and another that bolsters our retirement and investment solutions service offerings, and our overall M&A pipeline continues to remain active."

2023 Outlook

  • The Company increased its revenue growth expectations to within a range of 10% to 12% over the prior year, up from previous guidance of within a range of 8% to 10%.
  • The Company expects an effective tax rate of approximately 28%. The increased rate, up from 25.5% in 2022, will impact diluted earnings per share by approximately $0.08.
  • The Company expects a weighted average fully diluted share count of approximately 50.5 to 51.0 million shares.
  • The Company expects GAAP fully diluted earnings per share to grow within a range of 15% to 17%, to $2.31 to $2.36 per share, over the $2.01 per share reported for 2022.
  • The Company expects Adjusted fully diluted earnings per share to grow within a range of 11% to 13%, to $2.36 to $2.41 per share over the Adjusted earnings per share, of $2.13 per share reported for 2022.

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/10180368/f9d02de210.

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 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 risk that the anticipated benefits and perceived advantages of an acquisition may not be achieved; the impact of COVID-19 or governmental rules related to public health issues on the Company's business, operations and clients; the Company's ability to adequately manage and sustain its growth; the Company's dependence on the trend of outsourcing business services; the Company's dependence on the services of its CEO, other key employees, producers and service personnel; the effects of any potential cyber-attacks; competitive pricing pressures; general business and economic conditions; and changes in governmental laws or regulation affecting the Company's clients, business, business services operations, or business models. 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, 2023 AND 2022

(In thousands, except percentages and per share data)




Three Months Ended June 30,



2023


%


2022


%

Revenue


$ 398,502


100.0 %


$ 361,952


100.0 %

Operating expenses (1)


343,987


86.3


289,736


80.0

Gross margin


54,515


13.7


72,216


20.0

Corporate general and administrative expenses (1)


15,793


4.0


10,926


3.0

Operating income


38,722


9.7


61,290


17.0

Other income (expense):









Interest expense


(5,534)


(1.4)


(1,645)


(0.5)

Gain on sale of operations, net


—


—


135


—

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


5,421


1.4


(15,903)


(4.4)

Total other expense, net


(113)


—


(17,413)


(4.9)

Income before income tax expense


38,609


9.7


43,877


12.1

Income tax expense


11,746




12,622



Net income


$  26,863


6.7 %


$  31,255


8.6 %










Diluted earnings per share


$      0.53




$      0.60












Diluted weighted average common shares outstanding


50,385




52,531



Other data:









Adjusted EBITDA (3)


$  54,435




$  55,727



Adjusted EPS (3)


$      0.55




$      0.63





(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 (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 June 30, 2023, and 2022 are as
follows (in thousands):







Three Months Ended June 30,




2023

% of Revenue

2022

% of Revenue



Operating expenses (income)

$       5,102

1.3 %

$ (13,338)

(3.7) %



Corporate general and administrative expenses (income)

631

0.1 %

(1,811)

(0.5) %



Other income (expense), net

5,733

1.4 %

(15,149)

(4.1) %









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, 2023, and 2022 are as follows (in thousands):






                                                  Three Months Ended June 30,




2023

2022

As 

Reported

Deferred 

Compensation 

Plan

Adjusted

% 

of

Revenue

As 

Reported

Deferred 

Compensation 

Plan

Adjusted

% 

of

Revenue



Gross margin

$ 54,515

$        5,102

$ 59,617

15.0 %

$ 72,216

$  (13,338)

$ 58,878

16.3 %



Operating income

38,722

5,733

44,455

11.2 %

61,290

(15,149)

46,141

12.7 %



Other income (expense), net

5,421

(5,733)

(312)

(0.1) %

(15,903)

15,149

(754)

(0.2) %



Income before income tax expense

38,609

—

38,609

9.7 %

43,877

—

43,877

12.1 %





(2)

Included in "Other income (expense), net" for the three months ended June 30, 2023 and 2022, is expense of $0.8 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) 

SIX MONTHS ENDED JUNE 30, 2023 AND 2022

(In thousands, except percentages and per share data)



Six Months Ended June 30,


2023

%

2022

%

Revenue

$    853,108

100.0 %

$ 753,674

100.0 %

Operating expenses (1)

684,998

80.3

580,035

77.0

Gross margin

168,110

19.7

173,639

23.0

Corporate general and administrative expenses (1)

31,391

3.7

27,235

3.6

Operating income

136,719

16.0

146,404

19.4

Other income (expense):





Interest expense

(9,175)

(1.1)

(2,904)

(0.4)

Gain on sale of operations, net

99

—

135

—

Other income (expense), net (1) (2)

10,533

1.2

(22,310)

(3.0)

Total other income (expense), net

1,457

0.1

(25,079)

(3.4)

Income before income tax expense

138,176

16.1

121,325

16.0

Income tax expense

38,153


31,943


Net Income

100,023

11.7

89,382

11.9






Diluted earnings per share

$          1.98


$       1.70







Diluted weighted average common shares outstanding

50,639


52,736


Other data:





Adjusted EBITDA (3)

$    167,783


$ 148,620


Adjusted EPS (3)

$          2.01


$       1.81




(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 (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 six months ended June 30, 2023, and 2022 are as
follows (in thousands):

 







Six Months Ended June 30,




2023

% of Revenue

2022

% of Revenue



Operating expenses (income)

$       9,862

1.2 %

$ (19,005)

(2.5) %



Corporate general and administrative expenses (income)

1,273

0.1 %

(2,622)

(0.3) %



Other income (expense), net

11,135

1.3 %

(21,627)

(2.9) %









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, 2023, and 2022 are as follows (in thousands):

 



Six Months Ended June 30,





2023




2022


As

Deferred 

Compensation


% of

As

Deferred 

Compensation


% of

Reported

Plan

Adjusted

Revenue

Reported

Plan

Adjusted

Revenue



Gross margin

$168,110

$        9,862

$177,972

20.9 %

$173,639

$  (19,005)

$154,634

20.5 %



Operating income

136,719

11,135

147,854

17.3 %

146,404

(21,627)

124,777

16.6 %



Other income (expense), net

10,533

(11,135)

(602)

(0.1) %

(22,310)

21,627

(683)

(0.1) %



Income before income tax expense

138,176

—

138,176

16.1 %

121,325

—

121,325

16.0 %



(2)

Included in "Other income (expense), net" for the six months ended June 30, 2023 and 2022, is expense of $1.4 million and

$1.5 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,


2023

2022

2023

2022

Revenue





Financial Services

$      290,930

$      259,308

$      634,016

$      548,054

Benefits and Insurance Services

95,838

91,708

195,892

184,194

National Practices

11,734

10,936

23,200

21,426

Total

$      398,502

$      361,952

$      853,108

$

753,674

Gross Margin

Financial Services

$        47,485

$        49,665

$      146,128

$      128,611

Benefits and Insurance Services

17,464

16,688

40,595

36,517

National Practices

1,189

1,037

2,072

1,951

Operating expenses - unallocated (1):





Other expense

(6,521)

(8,512)

(10,823)

(12,445)

Deferred compensation

(5,102)

13,338

(9,862)

19,005

Total

$        54,515

$        72,216

$      168,110

$      173,639



(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/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)



Six Months Ended June 30,


2023

2022

Net income

$        100,023

$         89,382

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



Depreciation and amortization expense

17,831

16,465

Gain on sale of operations, net

(99)

(135)

Bad debt expense, net of recoveries

805

1,263

Adjustments to contingent earnout liability, net

1,445

1,478

Stock-based compensation expense

6,619

6,428

Other noncash adjustments

4,671

4,890

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

 operating activities

131,295

119,771

Changes in assets and liabilities, net of acquisitions and divestitures

(101,566)

(91,263)

Net cash provided by operating activities

29,729

28,508

Net cash used in investing activities

(65,617)

(89,756)

Net cash provided by financing activities

21,793

91,655

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

(14,095)

30,407

Cash, cash equivalents and restricted cash at beginning of year

$        160,145

$        150,474

Cash, cash equivalents and restricted cash at end of period

$        146,050

$        180,881




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

Cash and cash equivalents

$           3,692

$           3,881

Restricted cash

52,314

42,188

Cash equivalents included in funds held for clients

90,044

134,812

Total cash, cash equivalents and restricted cash

$        146,050

$        180,881

CBIZ, INC.

SELECT FINANCIAL DATA AND RATIOS (UNAUDITED)

(In thousands)





June 30, 2023


December 31, 2022


Cash and cash equivalents

3,692

4,697


Restricted cash

52,314

28,487


Accounts receivable, net

456,397

334,498


Current assets before funds held for clients

554,814

397,113


Funds held for clients

131,374

171,313


Goodwill and other intangible assets, net

1,014,673

951,702






Total assets

2,088,755

1,879,124






Current liabilities before client fund obligations

367,908

338,940


Client fund obligations

133,069

173,467


Total long-term debt, net

408,790

263,654






Total liabilities

1,312,712

1,165,672






Treasury stock

(882,088)

(824,778)






Total stockholders' equity

776,043

713,452






Debt to equity

52.7 %

37.0 %


Days sales outstanding (DSO) (1)

89

74






Shares outstanding

49,822

50,180


Basic weighted average common shares outstanding

50,164

51,502


Diluted weighted average common shares outstanding

50,639

52,388


(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, 2022 was 88.

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 June 30,

2023


Three Months Ended June 30,

2022


Amounts

EPS


Amounts

EPS

Net income

$      26,863

$          0.53


$      31,255

$          0.60

Adjustments:






Integration & retention costs related to acquisitions (2)

865

0.03


2,048

0.04

Facility optimization costs (3)

221

—


—

—

Income tax effect related to adjustments

(330)

(0.01)


(589)

(0.01)

Adjusted net income

$      27,619

$          0.55


$      32,714

$          0.63

Interest expense

$        5,534



$        1,645


Income tax expense

11,746



12,622


Gain on sale of operations, net

—



(135)


Tax effect related to the adjustments above

330



589


Depreciation

3,116



2,828


Amortization

6,090



5,464


Adjusted EBITDA

$      54,435



$      55,727



Six Months Ended June 30,
2023


Six Months Ended June 30,
2022


Amounts


EPS


Amounts


EPS

Net income

$    100,023


$          1.98


$      89,382


$          1.70

Adjustments:








Transaction costs related to acquisitions (2)

611


0.01


1,329


0.03

Integration & retention costs related to acquisitions (2)

1,868


0.04


6,732


0.13

Facility optimization costs (3)

221


—


—


—

Income tax effect related to adjustments

(746)


(0.02)


(2,122)


(0.05)

Adjusted net income

$    101,977


$          2.01


$      95,321


$          1.81

Interest expense

$        9,175




$        2,904



Income tax expense

38,153




31,943



Gain on sale of operations, net

(99)




(135)



Tax effect related to the adjustments above

746




2,122



Depreciation

6,091




5,607



Amortization

11,740




10,858



Adjusted EBITDA

$    167,783




$    148,620



(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 measurement of performance under GAAP. Adjusted net income, Adjusted EPS and Adjusted

EBITDA, 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. Amounts reported in 2023 related to the costs incurred related to

the Somerset acquisition and those reported in 2022 related to the Marks Paneth 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 2023 Net Income and Diluted Earnings Per Share ("EPS") to Adjusted Net Income, EPS and EBITDA Guidance

(Amount in millions, except per share data)




Full Year 2023 Guidance


Low 

High


       Amount       

Per Share 

     Amount

Per Share

Net income

$     121.1

$       2.31

$     123.2

$       2.36

Transaction and integration costs related to Somerset (1)

3.6

0.07

3.6

0.07

Income tax effect related to adjustments

(1.0)

$      (0.02)

(1.0)

$      (0.02)

Adjusted net income

$     123.7

$       2.36

$     125.8

$       2.41






Interest expense

$       20.8


$       20.8


Income tax expense

47.2


47.2


Tax effect related to the adjustments above

1.0


1.0


Depreciation and amortization

35.9


35.9


Adjusted EBITDA

$     228.6


$     230.7







GAAP diluted EPS for 2022


$       2.01


$       2.01

Adjusted diluted EPS for 2022 (2)


$       2.13


$       2.13

GAAP diluted EPS range


15 %


17 %

Adjusted diluted EPS range


11 %


13 %

GAAP Net income for 2022

$     105.4


$     105.4


GAAP Net income range

15 %


17 %


(1)

Includes estimated integration costs related to the Somerset 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 net income and adjusted net income and a reconciliation between GAAP diluted EPS and Adjusted

diluted EPS for fiscal year ended December 31, 2022 are presented as follows:


Year Ended December 31, 2022


In millions


EPS


Net income

$                    105.4

$


2.01

Adjustments:





Gain on sale of assets, net

(2.4)



(0.05)

Transaction costs related to Marks Paneth

1.3



0.03

Integration and retention costs related to Marks Paneth

9.2



0.18

Income tax effect related to adjustments

(2.1)



(0.04)

Adjusted net income

$                    111.4

$


2.13

SOURCE CBIZ, Inc.