CBIZ Reports Second-Quarter And First-Half 2019 Results
CLEVELAND, July 31, 2019 /PRNewswire/ --
SECOND-QUARTER HIGHLIGHTS:
-- TOTAL REVENUE +1.2%
-- SAME-UNIT REVENUE +1.2%
-- EPS FROM CONTINUING OPERATIONS +30.4%
FIRST-HALF HIGHLIGHTS:
-- TOTAL REVENUE +1.4%
-- SAME-UNIT REVENUE +1.2%
-- EPS FROM CONTINUING OPERATIONS +11.5%
CBIZ, Inc. (NYSE: CBZ) (the "Company") today announced second-quarter and first-half results for the period ended June 30, 2019.
For the 2019 second quarter, CBIZ recorded revenue of $235.5 million, an increase of $2.9 million, or 1.2%, over the $232.6 million reported in 2018. Same-unit revenue increased by $2.9 million, or 1.2%, for the quarter, compared with the same period a year ago. Income from continuing operations of $16.6 million, or $0.30 per diluted share, increased by 30.4% in the 2019 second quarter, compared with $13.1 million, or $0.23 per diluted share, for the same period a year ago. Adjusted EBITDA for the second quarter was $28.8 million, compared with $24.1 million for the second quarter of 2018.
For the first half of 2019, CBIZ recorded revenue of $505.5 million, an increase of $6.8 million, or 1.4%, over the $498.7 million recorded for the first half of 2018. Same-unit revenue increased by $5.6 million, or 1.2%, compared with the same period a year ago. Revenue from acquisitions, net of divestitures, contributed $1.2 million, or 0.2%, to revenue growth in the first six months. Income from continuing operations of $54.2 million, or $0.97 per diluted share, increased by 11.5% in the first half of 2019, compared with $48.9 million, or $0.87 per diluted share, for the same period a year ago. Adjusted EBITDA was $86.5 million, compared with $79.9 million in 2018.
During the second quarter, the Company repurchased approximately 422,000 shares of its common stock at a cost of approximately $8.3 million. For the six months ended June 30, 2019, the Company has repurchased a total of approximately 1.0 million shares of its common stock at a cost of approximately $19.9 million. As a result of this activity, the Company now expects a weighted average fully diluted share count within a range of 55.5 to 56.0 million shares for 2019. The balance outstanding on the Company's unsecured credit facility at June 30, 2019 was $159 million with approximately $229.2 million of unused borrowing capacity.
Jerry Grisko, CBIZ President and Chief Executive Officer, said, "We are pleased with our ability to grow revenue in the second quarter and first half of 2019 over the historic strong results achieved last year. Further, we successfully leveraged this growth into higher margins and reported an increase in earnings per share of 30.4% for the second quarter and 11.5% for the first half of the year. We also closed three acquisitions to date this year and our acquisition pipeline remains full with potential transactions under review."
Grisko continued, "While first-half revenue growth from our recurring businesses was generally in line with our expectations, our total rate of growth was impacted by softness in one service line within our Private Equity Advisory business as well as contingent revenue within our Benefits and Insurance segment compared to the same period a year ago. As a result, we now expect full-year 2019 revenue growth to be in the range of 3% to 4% over the prior year. Notwithstanding this nominal reduction in our revenue expectations, we expect growth in earnings per share to be near the high end of our 10% to 12% full-year guidance range."
2019 Outlook
-- The Company expects growth in total revenue within a range of 3% to 4%
over the prior year.
-- Although several 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
approximately 55.5 to 56.0 million shares.
-- The Company expects to grow fully diluted earnings per share within a
range of 10% to 12% over the $1.09 reported for 2018.
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/10133167 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 website 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), July 31, through 5:00 p.m. (ET), August 4, 2019. 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 10133167.
About CBIZ
CBIZ, Inc. provides 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 Company 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 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, 2019 AND 2018
(In thousands, except percentages and per share data)
THREE MONTHS ENDED
JUNE
30,
2019 % 2018 %
Revenue $
235,498 100.0 $
232,641 100.0
% %
Operating expenses (1) 198,148 84.1 205,102 88.2
% %
Gross margin 37,350 15.9 27,539 11.8
% %
Corporate general and administrative expenses (1) 10,566 4.5 9,993 4.3
% %
Operating income 26,784 11.4 17,546 7.5
% %
Other income (expense):
Interest expense (1,587) -0.7 (1,817) -0.8
% %
Gain on sale of operations, net 50 0.0 0.0
% %
Other (expense) income, net (1) (2) (3,311) -1.4 630 0.3
% %
Total other expense, net (4,848) -2.1 (1,187) -0.5
% %
Income from continuing operations before income tax expense 21,936 9.3 16,359 7.0
% %
Income tax expense 5,322 3,238
Income from continuing operations 16,614 7.1 13,121 5.6
% %
Loss from operations of discontinued businesses, net of tax (22) (15)
Net income $
16,592 7.0 $
13,106 5.6
% %
Diluted earnings per share:
Continuing operations $
0.30 $
0.23
Discontinued operations
Net income $
0.30 $
0.23
Diluted weighted average common shares outstanding 55,494 56,437
Other data from continuing operations:
Adjusted EBITDA (3) $
28,790 $
24,077
(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" ($3.0 million
income in 2019 and $1.8 million expense
in 2018, or 1.3% and 0.8% of revenue,
respectively) and "Corporate general
and administrative expenses" ($0.3
million income in 2019 and $0.2 million
expense in 2018, or 0.1% and 0.1% of
revenue, respectively) and are directly
offset by deferred compensation gains
or losses in "Other income (expense),
net" ($3.43 million expense in 2019 and
$2.0 million income in 2018, or 1.4%
and 0.9% 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 June
30, 2019 and 2018, is expense of $0.1
million and $1.4 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)
SIX MONTHS ENDED JUNE 30, 2019 AND 2018
(In thousands, except percentages and per share data)
SIX MONTHS ENDED
JUNE
30,
2019 % 2018 %
Revenue $
505,496 100.0 $
498,731 100.0
% %
Operating expenses (1) 413,644 81.8 409,852 82.2
% %
Gross margin 91,852 18.2 88,879 17.8
% %
Corporate general and administrative expenses (1) 22,246 4.4 20,021 4.0
% %
Operating income 69,606 13.8 68,858 13.8
% %
Other (expense) income:
Interest expense (2,988) -0.6 (3,597) -0.7
% %
Gain on sale of operations, net 547 0.1 663 0.1
% %
Other income (expense), net (1) (2) 5,949 1.2 (599) -0.1
% %
Total other income (expense), net 3,508 0.7 (3,533) -0.7
% %
Income from continuing operations before income tax expense 73,114 14.5 65,325 13.1
% %
Income tax expense 18,935 16,394
Income from continuing operations 54,179 10.7 48,931 9.8
% %
Gain (loss) from operations of discontinued businesses, net of tax (118) 26
Net income $
54,061 10.7 $
48,957 9.8
% %
Diluted earnings per share:
Continuing operations $
0.97 $
0.87
Discontinued operations
Net income $
0.97 $
0.87
Diluted weighted average common shares outstanding 55,701 56,166
Other data from continuing operations:
Adjusted EBITDA (3) $
86,531 $
79,935
(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" ($5.2 million
expense in 2019 and $1.7 million
expense in 2018, or 1.0% and 0.3% of
revenue, respectively) and "Corporate
general and administrative expenses"
($0.5 million expense in 2019 and $0.2
million expense in 2018, or 0.1% and
0.0% of revenue for 2019 and 2018,
respectively) and are directly offset
by deferred compensation gains or
losses in "Other income (expense), net"
($5.7 million income in 2019 and $1.9
million income in 2018, or 1.1% and
0.4% of revenue, respectively). The
deferred compensation plan has no
impact on "Income from continuing
operations before income tax expense".
(2) Included in "Other income (expense),
net" for the six months ended June 30,
2019 and 2018, is income of $0.2
million and expense of $3.1 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 nearest 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 SIX MONTHS ENDED
JUNE
30, JUNE
30,
2019 2018 2019 2018
Revenue
Financial Services $
154,373 $
151,737 $
339,517 $
332,340
Benefits and Insurance Services 72,127 72,753 148,382 150,083
National Practices 8,998 8,151 17,597 16,308
Total $
235,498 $
232,641 $
505,496 $
498,731
Gross Margin
Financial Services $
26,215 $
22,667 $
76,901 $
70,237
Benefits and Insurance Services 11,052 11,588 25,936 27,785
National Practices 794 584 1,393 1,466
Operating expenses - unallocated (1):
Other (3,719) (5,461) (7,168) (8,884)
Deferred compensation 3,008 (1,839) (5,210) (1,725)
Total $
37,350 $
27,539 $
91,852 $
88,879
(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 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 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 in
"Operating expenses" and "Corporate,
general and administrative expense,"
and offset in "Other income
(expense), net".
CBIZ, INC.
SELECT CASH FLOW DATA
---
(In thousands)
SIX MONTHS ENDED
JUNE
30,
2019 2018
Net income $
54,061 $
48,957
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization expense 10,976 11,676
Bad debt expense, net of recoveries 1,506 3,172
Adjustments to contingent earnout
liability (193) 3,050
Stock-based compensation expense 3,399 3,850
Other noncash adjustments 72 (2,840)
Net income, after adjustments to
reconcile net income to net cash
provided by operating activities 69,821 67,865
Changes in assets and liabilities,
net of acquisitions and divestitures (50,122) (26,607)
Operating cash flows provided by
continuing operations 19,699 41,258
Operating cash used in discontinued
operations (119) (152)
Net cash provided by operating
activities 19,580 41,106
Net cash used in investing activities (10,879) (31,084)
Net cash used in financing activities (42,076) (75,530)
Net decrease in cash, cash
equivalents and restricted cash $
(33,375) $
(65,508)
Cash, cash equivalents and restricted
cash at beginning of year 130,554 182,262
Cash, cash equivalents and restricted
cash at end of year $
97,179 $
116,754
Reconciliation of cash, cash
equivalents and restricted cash to
the consolidated balance sheet:
Cash and cash equivalents $
2,628 $
1,921
Restricted Cash 30,126 39,535
Cash equivalents included in funds
held for clients 64,425 75,298
Total cash, cash equivalents and
restricted cash $
97,179 $
116,754
CBIZ, INC.
SELECT FINANCIAL DATA AND RATIOS
---
(In thousands)
JUNE
30, DECEMBER 31,
2019 2018
Cash and cash equivalents $
2,628 $
640
Restricted cash 30,126 27,481
Accounts receivable, net 271,781 207,287
Current assets before funds held for clients 330,595 262,249
Funds held for clients 127,420 161,289
Goodwill and other intangible assets, net 632,425 637,009
Total assets $
1,376,923 $
1,183,031
Current liabilities before client fund obligations $
197,610 $
159,241
Client fund obligations 127,126 162,073
Bank debt 157,654 133,974
Total liabilities $
742,863 $
589,368
Treasury stock $
(530,262) $
(508,530)
Total stockholders' equity $
634,060 $
593,663
Debt to equity 25.2 23.0
% %
Days sales outstanding (DSO) - continuing operations (1) 90 70
Shares outstanding 54,680 55,072
Basic weighted average common shares outstanding 54,188 54,561
Diluted weighted average common shares outstanding 55,701 56,487
(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, 2018 was 87.
CBIZ, INC.
GAAP RECONCILIATION
---
Income from Continuing Operations to Non-GAAP Financial Measures (1)
---
(In thousands)
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE JUNE
30, 30,
2019 2018 2019 2018
Income from continuing operations $
16,614 $
13,121 $
54,179 $
48,931
Interest expense 1,587 1,817 2,988 3,597
Income tax expense 5,322 3,238 18,935 16,394
Gain on sale of operations, net (50) (547) (663)
Depreciation 1,859 1,514 4,017 2,918
Amortization 3,458 4,387 6,959 8,758
Adjusted EBITDA $
28,790 $
24,077 $
86,531 $
79,935
(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 CBIZ, Inc.
