CBIZ Reports Third-Quarter And Nine-Month 2019 Results
CLEVELAND, Oct. 30, 2019 /PRNewswire/ --
THIRD-QUARTER HIGHLIGHTS:
-- TOTAL REVENUE +6.9%
-- SAME-UNIT REVENUE +5.6%
-- EPS FROM CONTINUING OPERATIONS +33.3%
NINE-MONTH HIGHLIGHTS:
-- TOTAL REVENUE +3.1%
-- SAME-UNIT REVENUE +2.5%
-- EPS FROM CONTINUING OPERATIONS +16.2%
CBIZ, Inc. (NYSE: CBZ) (the "Company") today announced third-quarter and nine-month results for the period ended September 30, 2019.
For the 2019 third quarter, CBIZ recorded revenue of $239.8 million, an increase of $15.5 million, or 6.9%, over the $224.2 million reported in 2018. Newly acquired operations, net of divestitures, contributed $3.1 million, or 1.4%, to the third-quarter 2019 revenue growth. Same-unit revenue increased by $12.4 million, or 5.6%, for the quarter, compared with the same period a year ago. Income from continuing operations of $18.0 million, or $0.32 per diluted share, increased by 32.4% in the 2019 third quarter, compared with $13.6 million, or $0.24 per diluted share, for the same period a year ago. Adjusted EBITDA for the third quarter was $31.4 million, compared with $24.4 million for the third quarter of 2018.
For the nine-month period ended September 30, 2019, CBIZ recorded revenue of $745.3 million, an increase of $22.3 million, or 3.1%, over the $723.0 million recorded for the first nine months of 2018. Acquisitions, net of divested operations, contributed $4.3 million, or 0.6%, to the revenue growth in the first nine months of 2019. Same-unit revenue increased by $18.0 million, or 2.5%, compared with the same period a year ago. Income from continuing operations of $72.2 million, or $1.29 per diluted share, increased by 15.5% in the first nine months of 2019, compared with $62.5 million, or $1.11 per diluted share, for the same period a year ago. Adjusted EBITDA was $117.9 million, compared with $104.3 million in 2018.
For the nine months ended September 30, 2019, the Company repurchased a total of approximately 1.1 million shares of its common stock. As a result of this activity, the Company 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 September 30, 2019 was $160 million with approximately $234 million of unused borrowing capacity.
Jerry Grisko, CBIZ President and Chief Executive Officer, said, "We are very pleased to report third-quarter revenue growth of 6.9% and year-to-date growth of 3.1%, which were consistent with our expectations to experience robust second-half revenue growth this year, even compared with our historically strong results recorded in the second half of last year. Same-unit revenue growth of 5.6% in the third quarter was a result of continuous demand for the core services offered through both our Financial Services and Benefits & Insurance segments and was aided by notable contributions from a number of our more transactional, project oriented businesses. We successfully leveraged this growth into higher margins and reported a 33.3% increase in earnings per share for the third quarter and a 16.2% increase year to date."
Grisko continued, "We completed five acquisitions in the third quarter, and for the year, we have closed a total of six transactions that are expected to add approximately $17.4 million in annualized revenue. Our focus on strategic acquisitions continues and we have a full pipeline of potential acquisitions under review."
2019 Full-Year 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 near the
high end of 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/10136243 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), October 30, through 5:00 p.m. (ET), November 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 10136243.
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 SEPTEMBER 30, 2019 AND 2018
(In thousands, except percentages and per share data)
THREE MONTHS ENDED
SEPTEMBER
30,
2019 % 2018 %
Revenue $
239,790 100.0 $
224,249 100.0
% %
Operating expenses (1) 209,146 87.2 198,607 88.6
% %
Gross margin 30,644 12.8 25,642 11.4
% %
Corporate general and administrative expenses (1) 11,670 4.9 10,279 4.5
% %
Operating income 18,974 7.9 15,363 6.9
% %
Other income:
Interest expense (1,521) -0.6 (1,614) -0.8
% %
Loss on sale of operations, net (145) -0.1 0.0
% %
Other income, net (1) (2) 6,767 2.8 3,143 1.4
% %
Total other income, net 5,101 2.1 1,529 0.6
% %
Income from continuing operations before income 24,075 10.0 16,892 7.5
% %
tax expense
Income tax expense 6,069 3,297
Income from continuing operations 18,006 7.5 13,595 6.1
% %
Loss from operations of discontinued businesses, net of (200) (9)
tax
Net income $
17,806 7.4 $
13,586 6.1
% %
Diluted earnings per share:
Continuing operations $
0.32 $
0.24
Discontinued operations
Net income $
0.32 $
0.24
Diluted weighted average common shares outstanding 55,816 56,740
Other data from continuing operations:
Adjusted EBITDA (3) $
31,375 $
24,358
(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" ($6.5 million
expense in 2019 and $3.0 million
expense in 2018, or 2.7% and 1.4% of
revenue, respectively) and "Corporate
general and administrative expenses"
($0.8 million expense in 2019 and $0.4
million expense in 2018, or 0.3% and
0.1% of revenue, respectively) and are
directly offset by deferred
compensation gains or losses in "Other
income, net" ($7.3 million income in
2019 and $3.4 million income in 2018,
or 3.0% and 1.5% of revenue,
respectively). The amounts recorded for
the three months ended September 30,
2019 related to the deferred
compensation plan included a correction
of an immaterial prior period error,
which resulted in an increase of $6.0
million in "Operating expenses", $0.7
million in "Corporate general and
administrative expense", and a
corresponding increase of $6.7 million
in "Other income, net". 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, 2019
and 2018, is expense of $0.5 million
and income of $0.2 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, 2019 AND 2018
(In thousands, except percentages and per share data)
NINE MONTHS ENDED
SEPTEMBER
30,
2019 % 2018 %
Revenue $
745,286 100.0 $
722,980 100.0
% %
Operating expenses (1) 622,790 83.6 608,459 84.2
% %
Gross margin 122,496 16.4 114,521 15.8
% %
Corporate general and administrative expenses (1) 33,916 4.6 30,300 4.2
% %
Operating income 88,580 11.8 84,221 11.6
% %
Other income (expense):
Interest expense (4,509) -0.6 (5,211) -0.7
% %
Gain on sale of operations, net 402 0.1 663 0.1
% %
Other income, net (1) (2) 12,716 1.7 2,544 0.4
% %
Total other income (expense), net 8,609 1.2 (2,004) -0.2
% %
Income from continuing operations before income 97,189 13.0 82,217 11.4
% %
tax expense
Income tax expense 25,004 19,691
Income from continuing operations 72,185 9.7 62,526 8.6
% %
(Loss) gain from operations of discontinued businesses, (318) 17
net of tax
Net income $
71,867 9.6 $
62,543 8.7
% %
Diluted earnings (loss) per share:
Continuing operations $
1.29 $
1.11
Discontinued operations (0.01)
Net income $
1.28 $
1.11
Diluted weighted average common shares 55,778 56,393
outstanding
Other data from continuing operations:
Adjusted EBITDA (3) $
117,906 $
104,293
(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" ($11.7 million
expense in 2019 and $4.7 million expense
in 2018, or 1.6% and 0.7% of revenue,
respectively) and "Corporate general and
administrative expenses" ($1.3 million
expense in 2019 and $0.5 million expense
in 2018, or 0.2% and 0.1% of revenue for
2019 and 2018, respectively) and are
directly offset by deferred compensation
gains or losses in "Other income
(expense), net" ($13.0 million income in
2019 and $5.2 million income in 2018, or
1.7% and 0.7% 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, 2019 and
2018, is expense of $0.3 million and $3.3
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 NINE MONTHS ENDED
SEPTEMBER SEPTEMBER
30, 30,
2019 2018 2019 2018
Revenue
Financial Services $
153,794 $
146,145 $
493,311 $
478,485
Benefits and Insurance Services 76,960 70,069 225,342 220,152
National Practices 9,036 8,035 26,633 24,343
Total $
239,790 $
224,249 $
745,286 $
722,980
Gross Margin
Financial Services $
25,563 $
21,599 $
102,464 $
91,836
Benefits and Insurance Services 13,570 10,670 39,506 38,455
National Practices 932 521 2,325 1,987
Operating expenses - unallocated (1):
Other (2,927) (4,126) (10,095) (13,010)
Deferred compensation (6,494) (3,022) (11,704) (4,747)
Total $
30,644 $
25,642 $
122,496 $
114,521
(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)
NINE MONTHS ENDED
SEPTEMBER
30,
2019 2018
Net income $
71,867 $
62,543
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization expense 16,610 17,528
Bad debt expense, net of recoveries 1,974 3,697
Adjustments to contingent earnout liability 322 3,290
Stock-based compensation expense 5,258 5,358
Other noncash adjustments 1,395 (1,989)
Net income, after adjustments to reconcile net income to net 97,426 90,427
cash provided by operating activities
Changes in assets and liabilities, net of acquisitions and (47,708) (26,993)
divestitures
Operating cash flows provided by continuing operations 49,718 63,434
Operating cash used in discontinued operations (304) (162)
Net cash provided by operating activities 49,414 63,272
Net cash used in investing activities (24,691) (39,267)
Net cash used in financing activities (56,473) (102,838)
Net decrease in cash, cash equivalents and restricted cash $
(31,750) $
(78,833)
Cash, cash equivalents and restricted cash at beginning of year 130,554 182,262
Cash, cash equivalents and restricted cash at end of year $
98,804 $
103,429
Reconciliation of cash, cash equivalents and restricted cash to
the consolidated balance sheet:
Cash and cash equivalents $
2,723 $
3,493
Restricted cash 35,739 32,551
Cash equivalents included in funds held for clients 60,342 67,385
Total cash, cash equivalents and restricted cash $
98,804 $
103,429
CBIZ, INC.
SELECT FINANCIAL DATA AND RATIOS
---
(In thousands)
SEPTEMBER
30, DECEMBER 31,
2019 2018
Cash and cash equivalents $
2,723 $
640
Restricted cash 35,739 27,481
Accounts receivable, net 260,969 207,287
Current assets before funds held for clients 324,451 262,249
Funds held for clients 123,448 161,289
Goodwill and other intangible assets, net 658,442 637,009
Total assets $
1,397,063 $
1,183,031
Current liabilities before client fund obligations $
186,948 $
159,241
Client fund obligations 123,133 162,073
Bank debt 158,744 133,974
Total liabilities $
740,767 $
589,368
Treasury stock $
(531,356) $
(508,530)
Total stockholders' equity $
656,296 $
593,663
Debt to equity 24.5 23.0
% %
Days sales outstanding (DSO) - continuing operations (1) 93 70
Shares outstanding 54,909 55,072
Basic weighted average common shares outstanding 54,215 54,561
Diluted weighted average common shares outstanding 55,778 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 September 30, 2018
was 87.
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,
2019 2018 2019 2018
Income from continuing operations $
18,006 $
13,595 $
72,185 $
62,526
Interest expense 1,521 1,614 4,509 5,211
Income tax expense 6,069 3,297 25,004 19,691
Loss (gain) on sale of operations, net 145 (402) (663)
Depreciation 2,085 1,465 6,102 4,383
Amortization 3,549 4,387 10,508 13,145
Adjusted EBITDA $
31,375 $
24,358 $
117,906 $
104,293
(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.
