EX-99.1 2 cbz-ex991_7.htm EX-99.1 cbz-ex991_7.htm

Exhibit 99.1

 

 

 

 

 

  

 

  

 

 

 

FOR IMMEDIATE RELEASE

 

CONTACT:

  

Ware Grove

 

  

 

  

Chief Financial Officer

 

  

 

  

-or-

 

  

 

  

Lori Novickis

 

  

 

  

Director, Corporate Relations

 

  

 

  

CBIZ, Inc.

 

  

 

  

Cleveland, Ohio

 

  

 

  

(216) 447-9000

CBIZ REPORTS THIRD-QUARTER AND NINE-MONTH 2018 RESULTS

THIRD-QUARTER HIGHLIGHTS:

 

•

 

TOTAL REVENUE +8.0%

 

•

 

SAME-UNIT REVENUE +6.3%

 

•

 

EPS FROM CONTINUING OPERATIONS +33.3%

NINE-MONTH HIGHLIGHTS:

 

•

 

TOTAL REVENUE +9.5%

 

•

 

SAME-UNIT REVENUE +6.0%

 

•

 

EPS FROM CONTINUING OPERATIONS +33.7%

CLEVELAND (October 31, 2018) – CBIZ, Inc. (NYSE: CBZ) (the “Company”) today announced third-quarter and nine-month results for the period ended September 30, 2018.

For the 2018 third quarter, CBIZ reported revenue of $224.2 million, an increase of $16.5 million, or 8%, over the $207.7 million reported in 2017. Same-unit revenue increased by $13 million, or 6.3%, for the quarter, compared with the same period a year ago. Newly acquired operations contributed $3.5 million, or 1.7%, to revenue in the quarter. CBIZ reported income from continuing operations of $13.6 million, or $0.24 per diluted share, in the 2018 third quarter, compared with $9.9 million, or $0.18 per diluted share, for the same period a year ago. Adjusted EBITDA for the third quarter was $24.4 million, compared with $23.7 million for the third quarter of 2017.

For the nine-month period ended September 30, 2018, CBIZ reported revenue of $723 million, an increase of $62.8 million, or 9.5%, over the $660.2 million recorded for 2017. Same-unit revenue increased by $39.4 million, or 6%, compared with the same period a year ago. Acquisitions contributed $23.4 million, or 3.5%, to revenue growth in the first nine months. Income from continuing operations was $62.5 million, or $1.11 per

Page 1 of 9

 

NYSE: CBZ ● www.cbiz.com ● Twitter @cbz

diluted share, for the first nine months of 2018, compared with $46.3 million, or $0.83 per diluted share, for the same period a year ago. Adjusted EBITDA was $104.3 million, compared with $95.1 million for 2017.

 

During the quarter and nine months ended September 30, 2018, the Company recorded expenses of approximately $600,000 and $3.5 million due to the increase in share price from $23.00 at June 30, 2018 and $15.45 at December 30, 2017, respectively. The Company is required to mark-to-market anticipated future share issuances related to contingent acquisition earnout liabilities, as well as share equivalents in the Company’s non-executive, equity-aligned cash bonus plan. These items are primarily reflected in Other income, net, with a small portion reflected in Operating expenses.

 

Jerry Grisko, CBIZ President and Chief Executive Officer, said, “We are very pleased to report strong growth in revenue and earnings for the third quarter and the first nine months of this year, led by continued strong client demand for our core tax and accounting, advisory, and government healthcare consulting services. We are also pleased with the performance of the acquisitions that we have closed in 2018, which are expected to contribute approximately $9.1 million to annual revenue. With $226 million of unused financing capacity on our unsecured credit facility, we have sufficient funds available to continue to add acquisitions that strengthen our geographic footprint and enhance our client service offerings."

 

Grisko continued, “In addition to acquisition activity, we have made a number of other strategic investments to strengthen the future growth and performance of our businesses. We launched our first national cable television advertising campaign in the third quarter to improve brand recognition and we have continued to invest in hiring and developing new business producers within our Benefits and Insurance Services group. It is expected that these investments will continue through the balance of this year and into 2019.”

2018 Outlook

 

•

The Company expects growth in total revenue to be near the high end of a range of 5% to 8%.

 

 

•

The Company expects to report an effective tax rate of approximately 24% as a result of the Tax Cuts and Jobs Act, although a number of factors may impact the tax rate. The Company expects a weighted average fully diluted share count of approximately 56.0 to 56.5 million shares for full-year 2018.

 

 

•

The Company expects to achieve growth in fully diluted earnings per share within a range of 13% to 17% over the $0.92 reported for full-year 2017. Adjusted for the one-time 2017 impact of the Tax Cuts and Jobs Act, the Company expects to achieve growth within a range of 20% to 24% over the adjusted $0.87 reported for 2017.

Conference Call

CBIZ will host a conference call at 11:00 a.m. (ET) today to discuss its results. The call will be webcast live for the media and the public, and can be accessed at www.cbiz.com. Shareholders and analysts who would like to participate in the call can register at http://dpregister.com/10125170 to receive the dial-in number and unique personal identification number. Participants may register at any time, including up to and after the call start time.

Page 2 of 9

 

NYSE: CBZ ● www.cbiz.com ● Twitter @cbz

A replay of the webcast will be made available approximately two hours following the call on the Company’s web site at www.cbiz.com. For those without internet access, a replay of the call will also be available starting at approximately 1:00 p.m. (ET), October 31, through 5:00 p.m. (ET), November 5, 2018. The toll-free dial-in number for the replay is 1-877-344-7529. If you are listening from outside the United States, dial 1-412-317-0088. The access code for the replay is 10125170.

About CBIZ

CBIZ, Inc. provides professional business services that help clients better manage their finances, employees and insurance needs. CBIZ provides its clients with financial services including accounting, tax, financial advisory, government healthcare consulting, risk advisory and valuation services. Benefits and insurance services include group health benefits consulting, property and casualty insurance, retirement plan consulting, payroll and HR consulting. As a leading provider of accounting, insurance and other professional consulting services to businesses throughout the United States, the Company’s services are provided through more than 100 Company offices in 33 states. For more information, please 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 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.

 

 

Page 3 of 9

 

NYSE: CBZ ● www.cbiz.com ● Twitter @cbz

CBIZ, INC.

FINANCIAL HIGHLIGHTS (UNAUDITED)

THREE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017

(In thousands, except percentages and per share data)

 

 

 

THREE MONTHS ENDED

 

 

 

SEPTEMBER 30,

 

 

 

2018

 

 

%

 

 

2017

 

 

%

 

Revenue

 

$

224,249

 

 

 

100.0

%

 

$

207,723

 

 

 

100.0

%

Operating expenses (1)

 

 

198,607

 

 

 

88.6

%

 

 

184,723

 

 

 

88.9

%

Gross margin

 

 

25,642

 

 

 

11.4

%

 

 

23,000

 

 

 

11.1

%

Corporate general and administrative expenses (1)

 

 

10,279

 

 

 

4.5

%

 

 

7,979

 

 

 

3.8

%

Operating income

 

 

15,363

 

 

 

6.9

%

 

 

15,021

 

 

 

7.3

%

Other (expense) income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(1,614

)

 

 

-0.8

%

 

 

(1,777

)

 

 

-0.9

%

Other income, net (1) (2)

 

 

3,143

 

 

 

1.4

%

 

 

2,792

 

 

 

1.3

%

Total other income, net

 

 

1,529

 

 

 

0.6

%

 

 

1,015

 

 

 

0.4

%

Income from continuing operations before income tax expense

 

 

16,892

 

 

 

7.5

%

 

 

16,036

 

 

 

7.7

%

Income tax expense

 

 

3,297

 

 

 

 

 

 

 

6,172

 

 

 

 

 

Income from continuing operations

 

 

13,595

 

 

 

6.1

%

 

 

9,864

 

 

 

4.7

%

Loss from operations of discontinued businesses, net of tax

 

 

(9

)

 

 

 

 

 

 

(206

)

 

 

 

 

Net income

 

$

13,586

 

 

 

6.1

%

 

$

9,658

 

 

 

4.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

0.24

 

 

 

 

 

 

$

0.18

 

 

 

 

 

Discontinued operations

 

 

-

 

 

 

 

 

 

 

-

 

 

 

 

 

Net income

 

$

0.24

 

 

 

 

 

 

$

0.18

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average common shares outstanding

 

 

56,740

 

 

 

 

 

 

 

55,827

 

 

 

 

 

Other data from continuing operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA (3)

 

$

24,358

 

 

 

 

 

 

$

23,701

 

 

 

 

 

 

(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" ($3 million expense in 2018 and $2.7 million expense in 2017, or (1.4%) and (1.3%) of revenue, respectively) and "Corporate general and administrative expenses" ($0.4 million expense in both 2018 and 2017, respectively, or (0.1%) and (0.1%) of revenue, respectively) and are directly offset by deferred compensation gains or losses in "Other income, net" ($3.4 million income in 2018 and $3 million income in 2017, or 1.5% and 1.4% of revenue, respectively). The deferred compensation plan has no impact on "Income from continuing operations before income tax expense."    

(2)

Included in "Other income, net" for the three months ended September 30, 2018 and 2017, is income of $0.2 million and $0.5 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 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. 

Page 4 of 9

 

NYSE: CBZ ● www.cbiz.com ● Twitter @cbz

CBIZ, INC.

FINANCIAL HIGHLIGHTS (UNAUDITED)

NINE MONTHS ENDED SEPTEMBER 30, 2018 AND 2017

(In thousands, except percentages and per share data)

 

 

 

NINE MONTHS ENDED

 

 

 

SEPTEMBER 30,

 

 

 

2018

 

 

%

 

 

2017

 

 

%

 

Revenue

 

$

722,980

 

 

 

100.0

%

 

$

660,198

 

 

 

100.0

%

Operating expenses (1)

 

 

608,459

 

 

 

84.2

%

 

 

565,609

 

 

 

85.7

%

Gross margin

 

 

114,521

 

 

 

15.8

%

 

 

94,589

 

 

 

14.3

%

Corporate general and administrative expenses (1)

 

 

30,300

 

 

 

4.2

%

 

 

25,979

 

 

 

3.9

%

Operating income

 

 

84,221

 

 

 

11.6

%

 

 

68,610

 

 

 

10.4

%

Other (expense) income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(5,211

)

 

 

-0.7

%

 

 

(4,986

)

 

 

-0.8

%

Gain on sale of operations, net

 

 

663

 

 

 

0.1

%

 

 

45

 

 

 

0.0

%

Other income, net (1) (2)

 

 

2,544

 

 

 

0.4

%

 

 

9,293

 

 

 

1.5

%

Total other (expense) income, net

 

 

(2,004

)

 

 

-0.2

%

 

 

4,352

 

 

 

0.7

%

Income from continuing operations before income tax expense

 

 

82,217

 

 

 

11.4

%

 

 

72,962

 

 

 

11.1

%

Income tax expense

 

 

19,691

 

 

 

 

 

 

 

26,656

 

 

 

 

 

Income from continuing operations

 

 

62,526

 

 

 

8.6

%

 

 

46,306

 

 

 

7.0

%

Gain (loss) from operations of discontinued businesses, net of tax

 

 

17

 

 

 

 

 

 

 

(776

)

 

 

 

 

Net income

 

$

62,543

 

 

 

8.7

%

 

$

45,530

 

 

 

6.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted earnings (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

$

1.11

 

 

 

 

 

 

$

0.83

 

 

 

 

 

Discontinued operations

 

 

-

 

 

 

 

 

 

 

(0.01

)

 

 

 

 

Net income

 

$

1.11

 

 

 

 

 

 

$

0.82

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted weighted average common shares outstanding

 

 

56,393

 

 

 

 

 

 

 

55,641

 

 

 

 

 

Other data from continuing operations:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA (3)

 

$

104,293

 

 

 

 

 

 

$

95,070

 

 

 

 

 

 

(1)

CBIZ sponsors a deferred compensation plan, as discussed in the quarterly footnote section. Income and expenses related to the deferred compensation plan are included in "Operating expenses" ($4.7 million expense in 2018 and $7.6 million expense in 2017, or (0.7%) and (1.2%) of revenue, respectively) and "Corporate general and administrative expenses" ($0.5 million expense in 2018 and $0.8 million expense in 2017, or (0.2%) and (0.1%) of revenue, respectively) and are directly offset by deferred compensation gains or losses in "Other income, net" ($5.2 million income in 2018 and $8.4 million income in 2017, or 0.9% and 1.3% of revenue, respectively). The deferred compensation plan has no impact on "Income from continuing operations before income tax expense."  

(2)

Included in "Other income, net" for the nine months ended September 30, 2018 is expense of $3.3 million related to net changes in the fair value of contingent consideration which is mostly attributable to the required mark-to-market accounting of future share issuances for contingent acquisitions. For the same period in 2017, "Other income, net" included $0.2 million of income 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 nearest GAAP financial measure, and for additional information as to the usefulness of the Non-GAAP financial measures to shareholders and investors.

Page 5 of 9

 

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CBIZ, INC.

FINANCIAL HIGHLIGHTS (UNAUDITED)

(In thousands)

SELECT SEGMENT DATA

 

 

 

THREE MONTHS ENDED

 

 

NINE MONTHS ENDED

 

 

 

SEPTEMBER 30,

 

 

SEPTEMBER 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Services

 

$

146,145

 

 

$

130,305

 

 

$

478,485

 

 

$

421,529

 

Benefits and Insurance Services

 

 

70,069

 

 

 

69,663

 

 

 

220,152

 

 

 

215,386

 

National Practices

 

 

8,035

 

 

 

7,755

 

 

 

24,343

 

 

 

23,283

 

Total

 

$

224,249

 

 

$

207,723

 

 

$

722,980

 

 

$

660,198

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Margin

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Services

 

$

21,599

 

 

$

17,309

 

 

$

91,836

 

 

$

73,293

 

Benefits and Insurance Services

 

 

10,670

 

 

 

10,508

 

 

 

38,455

 

 

 

36,212

 

National Practices

 

 

521

 

 

 

646

 

 

 

1,987

 

 

 

1,932

 

Operating expenses - unallocated (1):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other

 

 

(4,126

)

 

 

(2,779

)

 

 

(13,010

)

 

 

(9,220

)

Deferred compensation

 

 

(3,022

)

 

 

(2,684

)

 

 

(4,747

)

 

 

(7,628

)

Total

 

$

25,642

 

 

$

23,000

 

 

$

114,521

 

 

$

94,589

 

 

(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. 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. Net gains/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 in "Other income, net."

Page 6 of 9

 

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CBIZ, INC.

SELECT CASH FLOW DATA

(In thousands)

 

 

 

NINE MONTHS ENDED

 

 

 

SEPTEMBER 30,

 

 

 

2018

 

 

2017

 

Net income

 

$

62,543

 

 

$

45,530

 

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

 

 

 

 

 

 

 

 

Depreciation and amortization expense

 

 

17,528

 

 

 

17,167

 

Bad debt expense, net of recoveries

 

 

3,697

 

 

 

4,265

 

Adjustments to contingent earnout liability

 

 

3,290

 

 

 

(221

)

Stock-based compensation expense

 

 

5,358

 

 

 

4,247

 

Other noncash adjustments

 

 

(1,989

)

 

 

(3,273

)

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

 

 

90,427

 

 

 

67,715

 

Changes in assets and liabilities, net of acquisitions and divestitures

 

 

(26,993

)

 

 

(29,116

)

Operating cash flows provided by continuing operations

 

 

63,434

 

 

 

38,599

 

Operating cash used in discontinued operations

 

 

(162

)

 

 

(748

)

Net cash provided by operating activities

 

 

63,272

 

 

 

37,851

 

Net cash provided by investing activities

 

 

42,201

 

 

 

43,463

 

Net cash used in financing activities

 

 

(102,838

)

 

 

(79,306

)

Net increase in cash, cash equivalents and restricted cash

 

$

2,635

 

 

$

2,008

 

 

Page 7 of 9

 

NYSE: CBZ ● www.cbiz.com ● Twitter @cbz

CBIZ, INC.

SELECT FINANCIAL DATA AND RATIOS

(In thousands)

 

 

 

SEPTEMBER 30,

 

 

DECEMBER 31,

 

 

 

2018

 

 

2017

 

Cash and cash equivalents

 

$

3,493

 

 

$

424

 

Restricted cash

 

 

32,551

 

 

 

32,985

 

Accounts receivable, net

 

 

234,906

 

 

 

188,300

 

Current assets before funds held for clients

 

 

297,526

 

 

 

245,061

 

Funds held for clients - current and non-current

 

 

126,311

 

 

 

203,112

 

Goodwill and other intangible assets, net

 

 

636,202

 

 

 

613,206

 

 

 

 

 

 

 

 

 

 

Total assets

 

$

1,189,856

 

 

$

1,176,231

 

 

 

 

 

 

 

 

 

 

Notes payable - current

 

$

1,523

 

 

$

1,861

 

Current liabilities before client fund obligations

 

 

154,500

 

 

 

130,664

 

Client fund obligations

 

 

127,297

 

 

 

203,582

 

Notes payable - long-term

 

 

1,480

 

 

 

2,164

 

Bank debt

 

 

165,482

 

 

 

177,672

 

 

 

 

 

 

 

 

 

 

Total liabilities

 

$

587,941

 

 

$

645,352

 

 

 

 

 

 

 

 

 

 

Treasury stock

 

$

(499,167

)

 

$

(491,046

)

 

 

 

 

 

 

 

 

 

Total stockholders' equity

 

$

601,915

 

 

$

530,879

 

 

 

 

 

 

 

 

 

 

Debt to equity

 

 

28.0

%

 

 

34.2

%

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

 

 

81

 

 

 

75

 

 

 

 

 

 

 

 

 

 

Shares outstanding

 

 

55,492

 

 

 

54,592

 

Basic weighted average common shares outstanding

 

 

54,489

 

 

 

53,862

 

Diluted weighted average common shares outstanding

 

 

56,393

 

 

 

55,689

 

 

(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 September 30, 2017 was 84.

 

Page 8 of 9

 

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CBIZ, INC.

GAAP RECONCILIATION

Income from Continuing Operations to Non-GAAP Financial Measures (1)

(In thousands)

 

 

 

THREE MONTHS ENDED

 

 

NINE MONTHS ENDED

 

 

 

SEPTEMBER 30,

 

 

SEPTEMBER 30,

 

 

 

2018

 

 

2017

 

 

2018

 

 

2017

 

Income from continuing operations

 

$

13,595

 

 

$

9,864

 

 

$

62,526

 

 

$

46,306

 

Interest expense

 

 

1,614

 

 

 

1,777

 

 

 

5,211

 

 

 

4,986

 

Income tax expense

 

 

3,297

 

 

 

6,172

 

 

 

19,691

 

 

 

26,656

 

Gain on sale of operations, net

 

 

-

 

 

 

-

 

 

 

(663

)

 

 

(45

)

Depreciation

 

 

1,465

 

 

 

1,402

 

 

 

4,383

 

 

 

3,864

 

Amortization

 

 

4,387

 

 

 

4,486

 

 

 

13,145

 

 

 

13,303

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

$

24,358

 

 

$

23,701

 

 

$

104,293

 

 

$

95,070

 

 

(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.

 

Guidance on 2018 Earnings Per Diluted Share from Continuing Operations

 

 

 

 

 

 

 

 

 

 

Low

 

 

High

 

2018 outlook growth in earnings per diluted share

 

13

%

 

 

17

%

2018 outlook earnings per diluted share

$

1.04

 

 

$

1.08

 

 

 

 

 

 

 

 

 

2018 outlook growth in adjusted earnings per diluted share, excluding impact of Tax Cuts and Jobs Act

 

20

%

 

 

24

%

 

Page 9 of 9

 

NYSE: CBZ ● www.cbiz.com ● Twitter @cbz