CBIZ Reports Second-Quarter And First-Half 2017 Results
SECOND-QUARTER HIGHLIGHTS:
- REVENUE +7.1%
- SAME-UNIT REVENUE +3.8%
- INCOME FROM CONTINUING OPERATIONS +36.1%
- EPS FROM CONTINUING OPERATIONS +25.0%
FIRST-HALF HIGHLIGHTS:
- REVENUE +7.4%
- SAME-UNIT REVENUE +2.9%
- INCOME FROM CONTINUING OPERATIONS +20.7%
- EPS FROM CONTINUING OPERATIONS +15.8%
For the 2017 second quarter,
For the first half of 2017,
Through
Grisko continued, "We closed two acquisitions in the second quarter,
2017 Outlook Update
For 2017,
Conference Call
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
About
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
CBIZ, INC. |
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FINANCIAL HIGHLIGHTS (UNAUDITED) |
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THREE MONTHS ENDED JUNE 30, 2017 and 2016 |
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(In thousands, except percentages and per share data) |
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THREE MONTHS ENDED |
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JUNE 30, |
|||||||||
2017 |
% |
2016 |
% |
||||||
Revenue |
$ 211,016 |
100.0% |
$ 197,015 |
100.0% |
|||||
Operating expenses (1) |
188,120 |
89.1% |
173,996 |
88.3% |
|||||
Gross margin |
22,896 |
10.9% |
23,019 |
11.7% |
|||||
Corporate general and administrative expenses (1) |
9,232 |
4.4% |
8,346 |
4.2% |
|||||
Operating income |
13,664 |
6.5% |
14,673 |
7.5% |
|||||
Other income (expense): |
|||||||||
Interest expense |
(1,692) |
-0.8% |
(1,733) |
-0.9% |
|||||
Gain on sale of operations, net |
23 |
0.0% |
50 |
0.0% |
|||||
Other income, net (1) (2) |
3,764 |
1.8% |
703 |
0.4% |
|||||
Total other income (expense), net |
2,095 |
1.0% |
(980) |
-0.5% |
|||||
Income from continuing operations before income tax expense |
15,759 |
7.5% |
13,693 |
7.0% |
|||||
Income tax expense |
4,343 |
5,306 |
|||||||
Income from continuing operations |
11,416 |
5.4% |
8,387 |
4.3% |
|||||
Loss from operations of discontinued businesses, net of tax |
(418) |
(258) |
|||||||
Net income |
$ 10,998 |
5.2% |
$ 8,129 |
4.1% |
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Diluted earnings (loss) per share: |
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Continuing operations |
$ 0.20 |
$ 0.16 |
|||||||
Discontinued operations |
(0.01) |
- |
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Net income |
$ 0.19 |
$ 0.16 |
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Diluted weighted average common shares outstanding |
55,831 |
53,079 |
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Other data from continuing operations: |
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Adjusted EBITDA (3) |
$ 23,066 |
$ 20,813 |
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(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" ($2 million expense in 2017 and $1 million expense in 2016, or (0.9%) and (0.5%) of revenue, respectively) and "Corporate general and administrative expenses" ($0.2 million expense in 2017 and $0.3 million expense in 2016, or (0.1%) and (0.2%) of revenue, respectively) and are directly offset by deferred compensation gains or losses in "Other income, net" ($2.2 million income in 2017 and $1.3 million income in 2016, or 1.0% and 0.7% of revenue, respectively). The deferred compensation plan has no impact on "Income from continuing operations before income tax expense". |
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(2) |
Included in "Other income, net" for the three months ended June 30, 2017 and 2016, is income of $1.4 million and expense of $0.5 million, respectively, related to net changes in the fair value of contingent consideration related to CBIZ's prior acquisitions. |
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(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. |
CBIZ, INC. |
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FINANCIAL HIGHLIGHTS (UNAUDITED) |
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SIX MONTHS ENDED JUNE 30, 2017 and 2016 |
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(In thousands, except percentages and per share data) |
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SIX MONTHS ENDED |
|||||||||
JUNE 30, |
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2017 |
% |
2016 |
% |
||||||
Revenue |
$ 452,475 |
100.0% |
$ 421,253 |
100.0% |
|||||
Operating expenses (1) |
380,886 |
84.2% |
352,113 |
83.6% |
|||||
Gross margin |
71,589 |
15.8% |
69,140 |
16.4% |
|||||
Corporate general and administrative expenses (1) |
18,000 |
4.0% |
18,591 |
4.4% |
|||||
Operating income |
53,589 |
11.8% |
50,549 |
12.0% |
|||||
Other income (expense): |
|||||||||
Interest expense |
(3,209) |
-0.7% |
(3,259) |
-0.8% |
|||||
Gain on sale of operations, net |
45 |
0.0% |
151 |
0.0% |
|||||
Other income, net (1) (2) |
6,501 |
1.5% |
2,850 |
0.7% |
|||||
Total other income (expense), net |
3,337 |
0.8% |
(258) |
-0.1% |
|||||
Income from continuing operations before income tax expense |
56,926 |
12.6% |
50,291 |
11.9% |
|||||
Income tax expense |
20,484 |
20,106 |
|||||||
Income from continuing operations |
36,442 |
8.1% |
30,185 |
7.2% |
|||||
Loss from operations of discontinued businesses, net of tax |
(570) |
(288) |
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Net income |
$ 35,872 |
7.9% |
$ 29,897 |
7.1% |
|||||
Diluted earnings (loss) per share: |
|||||||||
Continuing operations |
$ 0.66 |
$ 0.57 |
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Discontinued operations |
(0.01) |
(0.01) |
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Net income |
$ 0.65 |
$ 0.56 |
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Diluted weighted average common shares outstanding |
55,530 |
52,901 |
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Other data from continuing operations: |
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Adjusted EBITDA (3) |
$ 71,369 |
$ 64,081 |
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(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" ($4.9 million expense in 2017 and $1.5 million expense in 2016, or (1.1%) and (0.4%) of revenue, respectively) and "Corporate general and administrative expenses" ($0.5 million expense in 2017 and $0.4 million expense in 2016, or (0.1%) of revenue for both 2017 and 2016) and are directly offset by deferred compensation gains or losses in "Other income, net" ($5.4 million income in 2017 and $1.9 million income in 2016, or 1.2% and 0.5% of revenue, respectively). The deferred compensation plan has no impact on "Income from continuing operations before income tax expense". |
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(2) |
Included in "Other income, net" for the six months ended June 30, 2017 and 2016, is income of $0.8 million and $0.7 million, respectively, related to net changes in the fair value of contingent consideration related to CBIZ's prior acquisitions. |
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(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. |
CBIZ, INC. |
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FINANCIAL HIGHLIGHTS (UNAUDITED) |
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(In thousands) |
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SELECT SEGMENT DATA |
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THREE MONTHS ENDED |
SIX MONTHS ENDED |
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JUNE 30, |
JUNE 30, |
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2017 |
2016 |
2017 |
2016 |
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Revenue |
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Financial Services |
$ 132,591 |
$ 122,856 |
$ 291,224 |
$ 275,063 |
|||||
Benefits and Insurance Services |
70,559 |
66,484 |
145,723 |
130,811 |
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National Practices |
7,866 |
7,675 |
15,528 |
15,379 |
|||||
Total |
$ 211,016 |
$ 197,015 |
$ 452,475 |
$ 421,253 |
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Gross Margin |
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Financial Services |
$ 16,740 |
$ 15,869 |
$ 55,984 |
$ 54,579 |
|||||
Benefits and Insurance Services |
10,682 |
10,140 |
25,704 |
20,787 |
|||||
National Practices |
631 |
670 |
1,286 |
1,497 |
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Operating expenses - unallocated (1): |
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Other |
(3,167) |
(2,614) |
(6,441) |
(6,195) |
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Deferred compensation |
(1,990) |
(1,046) |
(4,944) |
(1,528) |
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Total |
$ 22,896 |
$ 23,019 |
$ 71,589 |
$ 69,140 |
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(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 (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 deferred compensation plan are recorded as compensation expense in "Operating expenses" and as income in "Other income (expense), net". |
CBIZ, INC. |
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SELECT CASH FLOW DATA |
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(In thousands) |
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SIX MONTHS ENDED |
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JUNE 30, |
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2017 |
2016 |
||||
Net income |
$ 35,872 |
$ 29,897 |
|||
Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation and amortization expense |
11,279 |
10,682 |
|||
Amortization of discount on notes and deferred financing costs |
262 |
262 |
|||
Bad debt expense, net of recoveries |
2,439 |
2,205 |
|||
Adjustments to contingent earnout liability |
(1,032) |
(714) |
|||
Employee stock awards |
2,790 |
2,842 |
|||
Other adjustments |
(1,101) |
464 |
|||
Net income, after adjustments to reconcile net income to net cash provided |
50,509 |
45,638 |
|||
Changes in assets and liabilities, net of acquisitions and divestitures |
(32,775) |
(23,806) |
|||
Operating cash flows provided by continuing operations |
17,734 |
21,832 |
|||
Operating cash flows (used in) provided by discontinued operations |
(540) |
428 |
|||
Net cash provided by operating activities |
17,194 |
22,260 |
|||
Net cash provided by (used in) investing activities |
31,757 |
(32,196) |
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Net cash (used in) provided by financing activities |
(51,284) |
17,578 |
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Net (decrease) increase in cash and cash equivalents |
$ (2,333) |
$ 7,642 |
CBIZ, INC. |
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SELECT FINANCIAL DATA AND RATIOS |
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(In thousands) |
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JUNE 30, |
DECEMBER 31, |
||||
2017 |
2016 |
||||
Cash and cash equivalents |
$ 1,161 |
$ 3,494 |
|||
Restricted cash |
34,924 |
27,880 |
|||
Accounts receivable, net |
218,317 |
175,354 |
|||
Current assets before funds held for clients |
279,891 |
228,135 |
|||
Funds held for clients - current and non-current |
148,704 |
213,457 |
|||
Goodwill and other intangible assets, net |
618,846 |
584,401 |
|||
Total assets |
$ 1,150,666 |
$ 1,118,588 |
|||
Current liabilities before client fund obligations |
$ 141,434 |
$ 125,592 |
|||
Client fund obligations |
148,814 |
213,855 |
|||
Notes payable - long-term |
1,696 |
1,721 |
|||
Bank debt |
209,510 |
190,049 |
|||
Total liabilities |
$ 627,304 |
$ 638,567 |
|||
Treasury stock |
$ (476,986) |
$ (471,311) |
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Total stockholders' equity |
$ 523,362 |
$ 480,021 |
|||
Debt to equity |
40.6% |
40.2% |
|||
Days sales outstanding (DSO) - continuing operations (1) |
88 |
76 |
|||
Shares outstanding |
55,055 |
54,044 |
|||
Basic weighted average common shares outstanding |
53,632 |
52,321 |
|||
Diluted weighted average common shares outstanding |
55,530 |
53,513 |
|||
(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 June 30, 2016 was 83. |
CBIZ, INC. |
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GAAP RECONCILIATION |
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Income from Continuing Operations to Non-GAAP Financial Measures (1) |
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(In thousands) |
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THREE MONTHS ENDED |
SIX MONTHS ENDED |
|||||||||
JUNE 30, |
JUNE 30, |
|||||||||
2017 |
2016 |
2017 |
2016 |
|||||||
Income from continuing operations |
$ 11,416 |
$ 8,387 |
$ 36,442 |
$ 30,185 |
||||||
Interest expense |
1,692 |
1,733 |
3,209 |
3,259 |
||||||
Income tax expense |
4,343 |
5,306 |
20,484 |
20,106 |
||||||
Gain on sale of operations, net |
(23) |
(50) |
(45) |
(151) |
||||||
Depreciation |
1,215 |
1,342 |
2,462 |
2,655 |
||||||
Amortization |
4,423 |
4,095 |
8,817 |
8,027 |
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Adjusted EBITDA |
$ 23,066 |
$ 20,813 |
$ 71,369 |
$ 64,081 |
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(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. |
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SOURCE
Ware Grove, Chief Financial Officer -or- Lori Novickis, Director, Corporate Relations, CBIZ, Inc., Cleveland, Ohio, (216) 447-9000