CBIZ Reports Third-Quarter And Nine-Month 2018 Results
CLEVELAND, Oct. 31, 2018 /PRNewswire/ --
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%
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 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.
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.
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 16,892 7.5 16,036 7.7
% %
tax expense
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 (9) (206)
tax
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.
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 82,217 11.4 72,962 11.1
% %
tax expense
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 17 (776)
tax
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.
CBIZ, INC.
FINANCIAL HIGHLIGHTS (UNAUDITED)
(In thousands)
SELECT SEGMENT DATA
---
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER SEPTEMBER
30, 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."
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
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.
CBIZ, INC.
GAAP RECONCILIATION
---
Income from Continuing Operations to Non-GAAP Financial Measures (1)
---
(In thousands)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER SEPTEMBER
30, 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 and Jobs % %
growth in Act
adjusted
earnings
per
diluted
share,
excluding
impact of
Tax Cuts 20 24
View original content:http://www.prnewswire.com/news-releases/cbiz-reports-third-quarter-and-nine-month-2018-results-300740871.html
SOURCE CBIZ, Inc.
