CBIZ Reports First-Quarter 2020 Results

CLEVELAND, May 6, 2020 /PRNewswire/ --

FIRST-QUARTER HIGHLIGHTS:

    --  Total revenue increases 2.8%
    --  Same-unit revenue increases 0.9%
    --  EPS $0.66 vs. $0.67 in prior-year first quarter
    --  Adjusted EBITDA $57.0 million vs. $57.7 million in prior-year first
        quarter
    --  Mobilizes resources to help clients access emerging economic relief
        opportunities
    --  Financial flexibility positions Company well for economic recovery

CBIZ, Inc. (NYSE: CBZ) today announced financial results for the first quarter ended March 31, 2020.

For the first quarter of 2020, CBIZ reported revenue of $277.5 million, an increase of $7.5 million, or 2.8%, over the $270.0 million reported in 2019. Same-unit revenue increased by $2.3 million, or 0.9%, compared with the same period a year ago. Newly acquired operations, net of divestitures, contributed $5.2 million, or 1.9%, to revenue growth in the quarter. CBIZ reported income from continuing operations of $36.9 million, or $0.66 per diluted share, compared with income of $37.6 million, or $0.67 per diluted share, for the same period a year ago. Adjusted EBITDA for the first quarter was $57.0 million, compared with $57.7 million for the first quarter of 2019.

During the first quarter of 2020, the Company announced three acquisitions with expected annualized revenue of $6.1 million. The Company also repurchased approximately 1.2 million shares at a cost of $29.5 million in the first quarter, but suspended further share repurchases in mid-March due to the uncertainty caused by the COVID-19 pandemic. As a precautionary measure, on March 25, 2020, the Company drew down an additional $210.0 million on its $400.0 million credit facility to preserve financial flexibility. The Company has ample liquidity, and at March 31, 2020, the Company had unrestricted cash and cash equivalents of $216.9 million and an outstanding credit facility balance of $383.0 million, resulting in a net debt balance of $166.1 million.

Given the uncertainty in the business environment created by the evolving COVID-19 situation and uncertain impact on full year 2020 results, the Company is withdrawing its 2020 guidance, which was provided on February 20, 2020.

Jerry Grisko, President and Chief Executive Officer of CBIZ, said, "After recording strong second-half 2019 results, we started 2020 with strong momentum across all major lines of business including positive contributions from our project-based businesses and evidence that strategic investments are realizing intended benefits. The COVID-19 pandemic began to impact our results in late March. We are fortunate to have entered this situation in a strong financial position with a solid balance sheet and are carefully managing our liquidity. Looking forward, the recurring and essential nature of our client services will help to mitigate some of the economic impact of the pandemic."

Grisko continued, "The safety and well-being of our team members and clients remains our top priority as we all navigate this uncertain business climate. Our workforce is well equipped to operate in a remote work environment, and our early actions to shift our team to working remotely allowed us to stabilize operations and minimize disruption for our clients. We have also mobilized resources to focus on supporting our clients and prospects through emerging relief opportunities such as the CARES Act and related stimulus programs. We are experiencing exceptionally high demand for content and guidance on the numerous government initiatives focused on small and midmarket businesses."

Grisko concluded "At this point, we, like other businesses around the country, are uncertain as to the duration and magnitude of the pandemic's impact and the pace for recovery. I remain confident that despite the complexity and uncertainty we now face, our size, geographic reach and wide range of services will enable us to bring valuable and differentiated solutions to both our clients and prospects, and that we will emerge a stronger company ready to take advantage of further growth opportunities."

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/10142060 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), May 6, through 5:00 p.m. (ET), May 11, 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 10142060.

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 impact of COVID-19 on the Company's business and operations and those of our clients; 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, 2020 AND 2019


                                                                      
         
             
               (In thousands, except percentages and per share data)




                                                                              
           
             THREE MONTHS ENDED


                                                                          
         
            MARCH
               
              31,



                                                          2020                                                        %                                 2019                 %




     
              Revenue                                       $
        
           277,455                                                          100.0          $
       
           269,998    100.0


                                                                                                                                                 %                                    %



     Operating expenses (1)                                                 199,827                                                           72.0                       215,496     79.8
                                                                                                                                                 %                                    %




     
              Gross margin                                                 77,628                                                           28.0                        54,502     20.2

                                                                                                                                                 %                                    %


      Corporate general and administrative                                    10,489                                                            3.8                        11,680      4.3
       expenses (1)                                                                                                                              %                                    %




     
              Operating income                                             67,139                                                           24.2                        42,822     15.9

                                                                                                                                                 %                                    %



     Other (expense) income:



     Interest expense                                                       (1,119)                                                         (0.4)                      (1,401)   (0.5)
                                                                                                                                                 %                                    %



     Gain on sale of operations, net                                             95                                                            0.0                           497      0.2
                                                                                                                                                 %                                    %


      Other (expense) income, net (1) (2)                                   (15,800)                                                         (5.7)                        9,260      3.4
                                                                                                                                                 %                                    %




     Total other (expense) income, net                                     (16,824)                                                         (6.1)                        8,356      3.1
                                                                                                                                                 %                                    %


                 Income from continuing operations before                     50,315                                                           18.1                        51,178     19.0
                  income tax expense
                                                                                                                                                 %                                    %



     Income tax expense                                                      13,453                                                                                      13,613



                 Income from continuing operations                            36,862                                                           13.3                        37,565     13.9

                                                                                                                                                 %                                    %


      Loss from operations of discontinued
       businesses, net of tax                                                   (14)                                                                                       (96)




     
              Net Income                                     $
        
           36,848                                                           13.3           $
       
           37,469     13.9

                                                                                                                                                 %                                    %





                 Diluted income per share:



     Continuing operations                                              $
         0.66                                                                                 $
         0.67



     Discontinued operations




     
              Net income                                       $
        
           0.66                                                                           $
       
           0.67





      Diluted weighted average common shares
       outstanding                                                            55,945                                                                                      55,915


                 Other data from continuing operations:



     Adjusted EBITDA (3)                                              $
         57,043                                                                               $
         57,741


               (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" ($14.8 million
                income in 2020 and $8.2 million expense
                in 2019, or (5.3%) and 3.0% of revenue,
                respectively) and "Corporate general and
                administrative expenses" ($1.8 million
                income in 2020 and $0.9 million expense
                in 2019, respectively, or (0.7%) and 0.3%
                of revenue, respectively) and are
                directly offset by deferred compensation
                gains or losses in "Other (expense)
                income, net" ($16.6 million loss in 2020
                and $9.1 million gain in 2019, or (6.0%)
                and 3.4% of revenue, respectively). The
                deferred compensation plan has no impact
                on "Loss from continuing operations
                before income tax expense".


               (2)      Included in "Other (expense)
                income, net" for the three months ended
                March 31, 2020 and 2019 is income of $0.7
                million and $0.3 million 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,



                                               2020                                          2019




     
                Revenue



     Financial Services                                   $
              188,777                         $
       185,144


      Benefits and Insurance Services                                   79,612                               76,255



     National Practices                                                 9,066                                8,599




     
                Total                             $
       
                277,455                    $
      
         269,998






     
                Gross Margin



     Financial Services                                    $
              50,179                          $
       50,686


      Benefits and Insurance Services                                   14,389                               14,884



     National Practices                                                   783                                  599


      Operating expenses -unallocated (1):



     Other                                                            (2,523)                             (3,449)



     Deferred compensation                                             14,800                              (8,218)




     
                Total                              $
       
                77,628                     $
      
         54,502


               (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)




                                                                       MARCH
                 
              31,



                                                        2020                                             2019




     
                Net income                                 $
             
                36,848                    $
       
           37,469


                   Adjustments to reconcile net
                    income to net cash used in
                    operating activities:


      Depreciation and amortization
       expense                                                                         5,704                                  5,659


      Bad debt expense, net of
       recoveries                                                                      2,289                                  1,054


      Adjustments to contingent earnout
       liability                                                                       (684)                                 (281)


      Other noncash adjustments                                                        1,712                                    511



                   Net income, after adjustments to
                    reconcile net income to net cash
                    provided by operating activities                                  45,869                                 44,412


      Changes in assets and liabilities,
       net of acquisitions and
       divestitures                                                                 (64,500)                              (69,074)



      Operating cash flows used in
       continuing operations                                                        (18,631)                              (24,662)


      Operating cash used in
       discontinued operations                                                          (16)                                  (91)



                   Net cash used in operating
                    activities                                                      (18,647)                              (24,753)


                   Net cash provided by (used in)
                    investing activities                                               4,355                                (9,736)


                   Net cash provided by financing
                    activities                                                       207,772                                 10,025



                   Net change in cash, cash
                    equivalents and restricted cash          $
             
                193,480                  $
       
           (24,464)



      Cash, cash equivalents and
       restricted cash at beginning of
       year                                                                          146,505                                130,554



                   Cash, cash equivalents and
                    restricted cash at end of year           $
             
                339,985                   $
       
           106,090





                   Reconciliation of cash, cash
                    equivalents and restricted cash
                    to the consolidated balance
                    sheet:


      Cash and cash equivalents                                          $
              216,942                           $
         2,143



     Restricted cash                                                                 28,927                                 27,721


      Cash equivalents included in funds
       held for clients                                                               94,116                                 76,226



                   Total cash, cash equivalents and
                    restricted cash                          $
             
                339,985                   $
       
           106,090


                                                             
             
                CBIZ, INC.


                                                  
         
             
                  SELECT FINANCIAL DATA AND RATIOS

                                                                            ---

                                              
     
       
               (In thousands, except for percentages and days sales outstanding)




                                                     MARCH

                                                            31,                                                                   DECEMBER 31,


                                                           2020                                                                           2019



      Cash and cash equivalents                                                 $
              216,942                                                       $
            567



     Restricted cash                                                                        28,927                                                              29,595


      Accounts receivable, net                                                              263,180                                                             222,031


      Current assets before funds
       held for clients                                                                     533,589                                                             276,518


      Funds held for clients                                                                141,984                                                             179,502


      Goodwill and other intangible
       assets, net                                                                          666,112                                                             654,671




                   Total assets                                  $
              
                1,616,558                                            $
       
             1,400,774




      Current liabilities before
       client fund obligations                                                  $
              167,210                                                    $
           186,906


      Client fund obligations                                                               142,219                                                             179,020



     Bank debt                                                                             381,923                                                             104,333




                   Total liabilities                               $
              
                946,298                                              $
       
             741,536





     Treasury stock                                                          $
              (565,180)                                                 $
           (535,693)




                   Total stockholders' equity                      $
              
                670,260                                              $
       
             659,238





     Debt to equity                                                                           57.2                                                                16.0
                                                                                                  %                                                                  %


      Days sales outstanding (DSO) -
       continuing operations (1)                                                                 94                                                                  75





     Shares outstanding                                                                     54,430                                                              55,419


      Basic weighted average common
       shares outstanding                                                                    54,571                                                              54,299


      Diluted weighted average
       common shares outstanding                                                             55,945                                                              55,895


               (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, 2019 was 97.


                                                       
              
                CBIZ, INC.


                                               
         
                
                  GAAP RECONCILIATIONS

                                                                      ---

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

                                                                      ---

                                                  
         
                
                  (In thousands)




                                                                                THREE MONTHS ENDED


                                                                                       MARCH
                                                                                         31,



                                                         2020                                                       2019



                   Income from continuing operations            $
              
                36,862                               $
     
     37,565



     Interest expense                                                                    1,119                                     1,401



     Income tax expense                                                                 13,453                                    13,613


      Gain on sale of operations, net                                                      (95)                                    (497)



     Depreciation                                                                        2,283                                     2,157



     Amortization                                                                        3,421                                     3,502



                   Adjusted EBITDA                              $
              
                57,043                               $
     
     57,741


               (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.