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CBIZ Reports First-Quarter 2018 Results

Apr 26, 2018
  |  

CLEVELAND, April 26, 2018 /PRNewswire/ --

FIRST-QUARTER HIGHLIGHTS:

  • REVENUE +10.2%
  • SAME-UNIT REVENUE +5.8%
  • EPS FROM CONTINUING OPERATIONS +42.2%

CBIZ, Inc. (NYSE: CBZ) today announced financial results for the first quarter ended March 31, 2018.

For the 2018 first quarter, CBIZ reported revenue of $266.1 million, an increase of $24.6 million, or 10.2%, over the $241.5 million reported in 2017. Same-unit revenue increased by $14.0 million, or 5.8%, for the quarter, compared with the same period a year ago. Newly acquired operations contributed $10.6 million, or 4.4%, to revenue growth in the quarter. CBIZ reported income from continuing operations of $35.8 million, or $0.64 per diluted share, in the 2018 first quarter, compared with income of $25.0 million, or $0.45 per diluted share, for the same period a year ago. Adjusted EBITDA for the first quarter was $55.9 million, compared with $48.3 million for the first quarter of 2017.

Jerry Grisko, President and Chief Executive Officer of CBIZ, said, "We are pleased to record strong first quarter revenue growth as well as improved margins.  Our results were bolstered by strong demand for our core services, a high level of optimism among our clients regarding the general business climate, new consulting and planning engagements related to the Tax Cuts and Jobs Act of 2017, and improved results from a number of our project-oriented businesses.  We also continue to benefit from the acquisitions that we made in recent years, and we are pleased to have completed two additional acquisitions so far this year."

2018 Outlook

  • The Company expects growth in total revenue within a range of 5% to 8%.
  • The Company expects to report an effective tax rate of approximately 25% as a result of the Tax Reform 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 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 2017. Adjusted for the one-time 2017 impact of the Tax Reform 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/10119212 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.

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), April 26, through 5:00 p.m. (ET), May 1, 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 10119212.

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.

 

CBIZ, INC.
FINANCIAL HIGHLIGHTS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 2018 AND 2017
(In thousands, except percentages and per share data)



THREE MONTHS ENDED


MARCH 31,


2018

%

2017

%

Revenue

$

266,090


100.0

%

$

241,459


100.0

%

Operating expenses (1)

204,750


76.9

%

192,766


79.8

%

Gross margin

61,340


23.1

%

48,693


20.2

%

Corporate general and administrative expenses (1)

10,028


3.8

%

8,768


3.7

%

Operating income

51,312


19.3

%

39,925


16.5

%

Other (expense) income:















Interest expense

(1,780)


-0.7

%

(1,517)


-0.6

%

Gain on sale of operations, net

663


0.3

%

22


0.0

%

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

(1,229)


-0.5

%

2,737


1.1

%

Total other (expense) income, net

(2,346)


-0.9

%

1,242


0.5

%

Income from continuing operations before income tax

   expense

48,966


18.4

%

41,167


17.0

%

Income tax expense

13,156






16,141




Income from continuing operations

35,810


13.5

%

25,026


10.4

%

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

41






(152)




Net income

$

35,851


13.5

%

$

24,874


10.3

%

















Diluted earnings per share:















Continuing operations

$

0.64





$

0.45




Discontinued operations

-






-




Net income

$

0.64





$

0.45





















Diluted weighted average common shares outstanding

55,924






55,214




Other data from continuing operations:















Adjusted EBITDA (3)

$

55,858





$

48,303




 

(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" ($0.1 million income in 2018 and $3.0 million expense in 2017, or 0.0% and (1.2%) of revenue, respectively) and "Corporate general and administrative expenses" ($16 thousand income in 2018 and $0.3 million expense in 2017, or 0.0% and (0.1%) of revenue for 2018 and 2017, respectively) and are directly offset by deferred compensation gains or losses in "Other (expense) income, net" ($0.1 million expense in 2018 and $3.3 million income in 2017, or 0.0% 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 (expense) income, net" for the three months ended March 31, 2018 and 2017, is expense of $1.6 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 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.
FINANCIAL HIGHLIGHTS (UNAUDITED)
(In thousands)

SELECT SEGMENT DATA



THREE MONTHS ENDED


MARCH 31,


2018

2017

Revenue







Financial Services

$

180,603

$

158,633

Benefits and Insurance Services

77,330


75,164

National Practices

8,157


7,662

Total

$

266,090

$

241,459









Gross Margin







Financial Services

$

47,570

$

39,244

Benefits and Insurance Services

16,197


15,022

National Practices

882


655

Operating expenses - unallocated (1):







Other

(3,423)


(3,274)

Deferred compensation

114


(2,954)

Total

$

61,340

$

48,693

 

(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, which 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 deferred compensation plan are recorded as compensation income/expense in "Operating expenses" and as income/expense in "Other (expense) income, net".

 

 

CBIZ, INC.
SELECT CASH FLOW DATA
(In thousands)



THREE MONTHS ENDED


MARCH 31,


2018

2017

Net income

$

35,851

$

24,874

Adjustments to reconcile net income to net cash provided by operating

   activities:







Depreciation and amortization expense

5,775


5,641

Bad debt expense, net of recoveries

1,766


734

Adjustments to contingent earnout liability

1,609


616

Other

(1,244)


195

Net income, after adjustments to reconcile net income to net

   cash used in operating activities

43,757


32,060

Changes in assets and liabilities, net of acquisitions and divestitures

(64,396)


(46,434)

Operating cash flows used in continuing operations

(20,639)


(14,374)

Operating cash flows provided by (used in) discontinued operations

139


(118)

Net cash used in operating activities

(20,500)


(14,492)

Net cash provided by investing activities

37,455


48,847

Net cash used in financing activities

(20,296)


(36,654)

Net decrease in cash, cash equivalents and restricted cash

$

(3,341)

$

(2,299)

 

 

CBIZ, INC.
SELECT FINANCIAL DATA AND RATIOS
(In thousands, except for percentages and days sales outstanding)



MARCH 31,

DECEMBER 31,


2018

2017

Cash and cash equivalents

$

295

$

424

Restricted cash

29,773


32,985

Accounts receivable, net

261,336


188,300

Current assets before funds held for clients

315,907


245,061

Funds held for clients

147,655


203,112

Goodwill and other intangible assets, net

631,956


613,206









Total assets

$

1,214,353

$

1,176,231









Notes payable, current

$

1,743

$

1,861

Current liabilities before client fund obligations

139,687


130,664

Client fund obligations

148,654


203,582

Notes payable, non-current

1,824


2,164

Bank debt, net of debt issuance costs

214,002


177,672









Total liabilities

$

642,737

$

645,352









Treasury stock

$

(491,604)

$

(491,046)









Total stockholders' equity

$

571,616

$

530,879









Debt to equity

38.1

%

34.2

%

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

92


72









Shares outstanding

54,956


54,592

Basic weighted average common shares outstanding

54,071


53,862

Diluted weighted average common shares outstanding

55,924


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 March 31, 2017 was 91.

 

 

CBIZ, INC.
GAAP RECONCILIATIONS

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



THREE MONTHS ENDED


MARCH 31,


2018

2017

Income from continuing operations

$

35,810

$

25,026

Interest expense

1,780


1,517

Income tax expense

13,156


16,141

Gain on sale of operations, net

(663)


(22)

Depreciation

1,404


1,247

Amortization

4,371


4,394

Adjusted EBITDA

$

55,858

$

48,303

 

(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 share

13

%

17

%

2018 outlook earnings per share

$

1.04

$

1.08








2018 outlook growth in earnings per diluted share, excluding impact of Tax Reform Act

20

%

24

%

 

Cision View original content:http://www.prnewswire.com/news-releases/cbiz-reports-first-quarter-2018-results-300636833.html

SOURCE CBIZ, Inc.

Ware Grove, Chief Financial Officer or Lori Novickis, Director, Corporate Relations, CBIZ, Inc., Cleveland, Ohio, (216) 447-9000

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