CBIZ Reports Fourth-Quarter And Full-Year 2019 Results
CLEVELAND, Feb. 20, 2020 /PRNewswire/ --
FOURTH-QUARTER HIGHLIGHTS:
-- TOTAL REVENUE +2.1%
-- SAME-UNIT REVENUE +0.1%
FULL-YEAR HIGHLIGHTS:
-- TOTAL REVENUE +2.9%
-- SAME-UNIT REVENUE +2.0%
-- EPS FROM CONTINUING OPERATIONS +16.5%
CBIZ, Inc. (NYSE: CBZ) (the "Company") today announced fourth-quarter and full-year results for the period ended December 31, 2019.
For the 2019 fourth quarter, CBIZ recorded revenue of $203.1 million, an increase of $4.1 million, or 2.1%, over the $199.0 million reported in the same period of 2018. Newly acquired operations, net of divestitures, contributed $3.9 million, or 2.0%, to the fourth-quarter 2019 revenue growth. Same-unit revenue increased by $0.2 million, or 0.1%, for the quarter, compared with the same period a year ago. Loss per share from continuing operations of $0.02 remained unchanged in the 2019 fourth quarter, compared with the same period a year ago. Loss from continuing operations for the 2019 fourth quarter was $1.1 million, compared with $1.0 million for the same period a year ago. Adjusted EBITDA for the fourth quarter was $2.7 million, compared with $4.8 million for the fourth quarter of 2018.
For the full-year period ended December 31, 2019, CBIZ recorded revenue of $948.4 million, an increase of $26.4 million, or 2.9%, over the $922.0 million recorded for the same period of 2018. Acquisitions, net of divested operations, contributed $8.2 million, or 0.9%, to the revenue growth in 2019. Same-unit revenue increased by $18.2 million, or 2.0%, compared with the same period a year ago. Earnings per share from continuing operations of $1.27 increased by 16.5% in 2019, compared with $1.09 for the same period a year ago. Income from continuing operations of $71.0 million increased by 15.4% in 2019, compared with $61.6 million for the same period a year ago. Adjusted EBITDA was $120.6 million, compared with $109.1 million in 2018.
During the year, the Company used approximately $27.2 million to repurchase a total of approximately 1.3 million shares of its common stock. The balance on the Company's unsecured credit facility at December 31, 2019 was $105.5 million with approximately $288 million of unused borrowing capacity. As of February 14, 2020, the Company has purchased an additional 168 thousand shares of its common stock.
Jerry Grisko, CBIZ President and Chief Executive Officer, said, "We are pleased to report 16.5% growth in earnings per share for 2019 with 2.9% total revenue growth. As expected, our second half revenue growth of 4.6% outpaced the 1.4% growth reported for the first half of 2019. Client demand for our core Financial Services business remains strong, and we are pleased to see growth within our Benefits & Insurance group in the second half of 2019."
Grisko continued, "We closed six acquisitions in 2019 and another three so far in 2020 with a number of additional potential transactions at various stages in our pipeline. With $120 million of Adjusted EBITDA and $288 million of unused financing capacity, we have the access to capital to make strategic acquisitions and to continue to conduct share repurchases. We continue to make investments in our business that will enhance our capabilities to provide exceptional services and solutions to our clients, and further strengthen our market presence."
2020 Outlook
-- The Company expects growth in total revenue within a range of 5% to 7%
over the prior year.
-- Although a number of factors may impact the tax rate, the Company
expects an effective tax rate of approximately 24%.
-- The Company expects a weighted average fully diluted share count of
approximately 56 million shares.
-- The Company expects to grow fully diluted earnings per share within a
range of 10% to 12% over the prior year.
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/10138785 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), February 20, through 5:00 p.m. (ET), February 25, 2020. 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 10138785.
About CBIZ
CBIZ, Inc. is a leading provider of 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 offices in 31 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 these risks and uncertainties, as well as others, 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 DECEMBER 31, 2019 AND 2018
(In thousands, except percentages and per share data)
THREE MONTHS ENDED
DECEMBER 31,
2019 % 2018 %
Revenue $
203,138 100.0 $
199,023 100.0
% %
Operating expenses (1) 200,706 98.8 181,824 91.4
% %
Gross margin 2,432 1.2 17,199 8.6
% %
Corporate general and administrative expenses (1) 10,490 5.2 8,873 4.5
% %
Operating (loss) income (8,058) (4.0)
%
% 8,326 4.1
Other income (expense):
Interest expense (1,256) (0.6) (1,434) (0.7)
% %
Gain on sale of operations, net 15 0.0 362 0.2
% %
Other income (expense), net (1) (2) 4,999 2.5 (9,631) (4.8)
% %
Total other income (expense), net 3,758 1.9 (10,703) (5.3)
% %
Loss from continuing operations before income tax (4,300) (2.1) (2,377) (1.2)
% %
expense
Income tax benefit (3,164) (1,424)
Loss from continuing operations (1,136) (0.6) (953) (0.5)
% %
Loss from operations of discontinued businesses, net of (16) (20)
tax
Net loss $
(1,152) (0.6) $
(973) (0.5)
% %
Diluted loss per share:
Continuing operations $
(0.02) $
(0.02)
Discontinued operations
Net loss $
(0.02) $
(0.02)
Basic weighted average common shares outstanding 54,547 54,775
Other data from continuing operations:
Adjusted EBITDA (3) $
2,676 $
4,842
(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" ($5.5 million
expense in 2019 and $9.2 million income
in 2018, or 2.7% and (4.6%) of revenue,
respectively) and "Corporate general
and administrative expenses" ($0.7
million expense in 2019 and $0.9
million income in 2018, or 0.3% and
(0.5%) of revenue, respectively) and
are directly offset by deferred
compensation gains or losses in "Other
income, net" ($6.2 million gain in 2019
and $10.1 million loss in 2018, or 3.0%
and (5.1%) of revenue, respectively).
The deferred compensation plan has no
impact on "Loss from continuing
operations before income tax expense".
(2) Included in "Other income (expense),
net" for the three months ended
December 31, 2019 and 2018, is expense
of $1.3 million and income of $0.7
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)
YEAR ENDED DECEMBER 31, 2019 AND 2018
(In thousands, except percentages and per share data)
YEAR ENDED
DECEMBER 31,
2019 % 2018 %
Revenue $
948,424 100.0 $
922,003 100.0
% %
Operating expenses (1) 823,496 86.8 790,283 85.7
% %
Gross margin 124,928 13.2 131,720 14.3
% %
Corporate general and administrative expenses (1) 44,406 4.7 39,173 4.2
% %
Operating income 80,522 8.5 92,547 10.1
% %
Other income (expense):
Interest expense (5,765) (0.6) (6,645) (0.7)
% %
Gain on sale of operations, net 417 0.0 1,025 0.1
% %
Other income (expense), net (1) (2) 17,715 1.9 (7,087) (0.8)
%
%
Total other income (expense), net 12,367 1.3 (12,707) (1.4)
%
%
Income from continuing operations before income 92,889 9.8 79,840 8.7
% %
tax expense
Income tax expense 21,840 18,267
Income from continuing operations 71,049 7.5 61,573 6.7
% %
Loss from operations of discontinued businesses, net of (335) (3)
tax
Net income $
70,714 7.5 $
61,570 6.7
% %
Diluted earnings (loss) per share:
Continuing operations $
1.27 $
1.09
Discontinued operations (0.01)
Net income $
1.26 $
1.09
Diluted weighted average common shares 55,895 56,487
outstanding
Other data from continuing operations:
Adjusted EBITDA (3) $
120,582 $
109,135
(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" ($17.2 million
expense in 2019 and $4.5 million income
in 2018, or 1.8% and (0.5%) of revenue,
respectively) and "Corporate general and
administrative expenses" ($2.0 million
expense in 2019 and $0.4 million income
in 2018, or 0.2% 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" ($19.2 million gain in
2019 and $4.9 million loss in 2018, or
2.0% and (0.5%) 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
twelve months ended December 31, 2019 and
2018, is expense of $1.6 million and $2.6
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 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
YEAR ENDED
DECEMBER 31, DECEMBER 31,
2019 2018 2019 2018
Revenue
Financial Services $
123,256 $
122,441 $
616,567 $
600,926
Benefits and Insurance Services 70,886 68,285 296,228 288,437
National Practices 8,996 8,297 35,629 32,640
Total $
203,138 $
199,023 $
948,424 $
922,003
Gross Margin
Financial Services $
(1,137) $
437 $
101,327 $
92,273
Benefits and Insurance Services 10,477 10,336 49,983 48,791
National Practices 830 650 3,155 2,637
Operating expenses - unallocated (1):
Other (2,266) (3,421) (12,361) (16,431)
Deferred compensation (5,472) 9,197 (17,176) 4,450
Total $
2,432 $
17,199 $
124,928 $
131,720
(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
(loss) 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)
---
YEAR ENDED
DECEMBER 31,
2019 2018
Net income $
70,714 $
61,570
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization expense 22,345 23,675
Bad debt expense, net of recoveries 2,415 3,665
Adjustments to contingent earnout liability 1,599 2,617
Stock-based compensation expense 7,254 6,866
Other noncash adjustments 5,582 1,890
Net income, after adjustments to reconcile net income to net 109,909 100,283
cash provided by operating activities
Changes in assets and liabilities, net of acquisitions and (11,386) 5,149
divestitures
Operating cash flows provided by continuing operations 98,523 105,432
Operating cash used in discontinued operations (338) (184)
Net cash provided by operating activities 98,185 105,248
Net cash used in investing activities (27,685) (47,576)
Net cash used in financing activities (54,549) (109,380)
Net change in cash, cash equivalents and restricted cash $
15,951 $
(51,708)
Cash, cash equivalents and restricted cash at beginning of year 130,554 182,262
Cash, cash equivalents and restricted cash at end of year $
146,505 $
130,554
Reconciliation of cash, cash equivalents and restricted cash to
the consolidated balance sheet:
Cash and cash equivalents $
567 $
640
Restricted cash 29,595 27,481
Cash equivalents included in funds held for clients 116,343 102,433
Total cash, cash equivalents and restricted cash $
146,505 $
130,554
CBIZ, INC.
SELECT FINANCIAL DATA AND RATIOS
(In thousands)
---
DECEMBER 31, DECEMBER 31,
2019 2018
Cash and cash equivalents $
567 $
640
Restricted cash 29,595 27,481
Accounts receivable, net 222,031 207,287
Current assets before funds held for clients 276,518 262,249
Funds held for clients 179,502 161,289
Goodwill and other intangible assets, net 654,671 637,009
Total assets $
1,400,774 $
1,183,031
Current liabilities before client fund obligations $
186,906 $
159,241
Client fund obligations 179,020 162,073
Bank debt 104,333 133,974
Total liabilities $
741,536 $
589,368
Treasury stock $
(535,693) $
(508,530)
Total stockholders' equity $
659,238 $
593,663
Debt to equity 16.0 23.0
% %
Days sales outstanding (DSO) - continuing operations (1) 75 75
Shares outstanding 55,419 55,072
Basic weighted average common shares outstanding 54,299 54,561
Diluted weighted average common shares outstanding 55,895 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.
CBIZ, INC.
GAAP RECONCILIATION
Income from Continuing Operations to Non-GAAP Financial Measures (1)
(In thousands)
---
THREE MONTHS ENDED
YEAR ENDED
DECEMBER 31, DECEMBER 31,
2019 2018 2019 2018
(Loss) income from continuing $
(1,136) $
(953) $
71,049 $
61,573
operations
Interest expense 1,256 1,434 5,765 6,645
Income tax (benefit) expense (3,164) (1,424) 21,840 18,267
Gain on sale of operations, net (15) (362) (417) (1,025)
Depreciation 2,181 1,757 8,283 6,140
Amortization 3,554 4,390 14,062 17,535
Adjusted EBITDA $
2,676 $
4,842 $
120,582 $
109,135
(1) CBIZ reports its financial results
in accordance with GAAP. This
table reconciles Non-GAAP
financial measures to the nearest
GAAP financial measure, "Income
(loss) 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.
