CBIZ Reports Third-Quarter And Nine-Month 2020 Results
CLEVELAND, Oct. 29, 2020 /PRNewswire/ --
THIRD-QUARTER HIGHLIGHTS:
-- TOTAL REVENUE -0.6%
-- SAME-UNIT REVENUE -2.0%
-- EPS FROM CONTINUING OPERATIONS +12.5%
-- ADJUSTED EBITDA +8.3%
NINE-MONTH HIGHLIGHTS:
-- TOTAL REVENUE +1.0%
-- SAME-UNIT REVENUE -0.8%
-- EPS FROM CONTINUING OPERATIONS +9.3%
-- ADJUSTED EBITDA +7.6%
CBIZ, Inc. (NYSE: CBZ) (the "Company") today announced third-quarter and nine-month results for the period ended September 30, 2020.
For the 2020 third quarter, CBIZ recorded revenue of $238.4 million, a decrease of $1.4 million, or 0.6%, over the $239.8 million reported in 2019. Newly acquired operations, net of divestitures, contributed $3.4 million, or 1.4%, to the third-quarter 2020 revenue. Same-unit revenue decreased by $4.8 million, or 2.0%, for the quarter, compared with the same period a year ago. Income from continuing operations was $20.1 million, or $0.36 per diluted share, in the 2020 third quarter, compared with $18.0 million, or $0.32 per diluted share, for the same period a year ago. Adjusted EBITDA for the third quarter was $34.0 million, compared with $31.4 million for the third quarter of 2019.
For the nine-month period ended September 30, 2020, CBIZ recorded revenue of $752.8 million, an increase of $7.5 million, or 1.0%, over the $745.3 million recorded for the first nine months of 2019. Acquisitions, net of divested operations, contributed $13.2 million, or 1.8%, to the revenue growth in the first nine months of 2019. Same-unit revenue decreased by $5.7 million, or 0.8%, compared with the same period a year ago. Income from continuing operations was $78.4 million, or $1.41 per diluted share, in the first nine months of 2020, compared with $72.2 million, or $1.29 per diluted share, for the same period a year ago. Adjusted EBITDA was $126.9 million, compared with $117.9 million in 2019.
For the nine months ended September 30, 2020, the Company repurchased a total of approximately 1.3 million shares of its common stock, including approximately 165,000 shares repurchased in the third quarter. Between September 30, and October 27, 2020 the Company repurchased approximately 166,000 additional shares. The balance outstanding on the Company's unsecured credit facility at September 30, 2020 was $110 million with approximately $284 million of unused borrowing capacity.
Jerry Grisko, CBIZ President and Chief Executive Officer, said, "Our strong results for the third quarter demonstrate our continued resilience and reflect the value we bring to our clients as we help them assess and respond to both opportunities and challenges in this environment. Ongoing demand for our essential and recurring services combined with our measured response to the pandemic and careful management of expenses and operations have all contributed to our ability to improve profitability. We are pleased to report quarter-over-quarter and year-to-date growth in income from continuing operations and earnings per share. We also see additional reasons for optimism, as demand for our advisory and project-based services begins to improve. Most importantly, as we look forward, we anticipate continued steady demand for our services, as our clients and prospects navigate the ongoing uncertainty and complexity of this business climate."
Grisko continued, "We began 2020 with a full pipeline of acquisition candidates and are now experiencing renewed interest as we accelerate our outreach to potential prospects. We completed two acquisitions in the third quarter, and for the year, we have closed a total of five transactions that are expected to add approximately $24.6 million in annualized revenue. Strategic acquisitions continue to be an important part of our growth strategy."
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 https://dpregister.com/sreg/10149146/db470eff7e 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 29, through 5:00 p.m. (ET), November 3, 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 10149146.
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 SEPTEMBER 30, 2020 AND 2019
(In thousands, except percentages and per share data)
THREE MONTHS ENDED
SEPTEMBER
30,
2020 % 2019 %
Revenue $
238,389 100.0 $
239,790 100.0
% %
Operating expenses (1) 204,760 85.9 209,146 87.2
% %
Gross margin 33,629 14.1 30,644 12.8
% %
Corporate general and administrative expenses (1) 11,339 4.8 11,670 4.9
% %
Operating income 22,290 9.3 18,974 7.9
% %
Other income:
Interest expense (974) -0.4 (1,521) -0.6
% %
Loss on sale of operations, net (74) 0.0 (145) -0.1
% %
Other income, net (1) (2) 5,914 2.5 6,767 2.8
% %
Total other income, net 4,866 2.1 5,101 2.1
% %
Income from continuing operations before income 27,156 11.4 24,075 10.0
% %
tax expense
Income tax expense 7,060 6,069
Income from continuing operations 20,096 8.4 18,006 7.5
% %
Loss from operations of discontinued businesses, net of (19) (200)
tax
Net income $
20,077 8.4 $
17,806 7.4
% %
Diluted earnings per share:
Continuing operations $
0.36 $
0.32
Discontinued operations
Net income $
0.36 $
0.32
Diluted weighted average common shares outstanding 55,360 55,816
Other data from continuing operations:
Adjusted EBITDA (3) $
33,990 $
31,375
(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" ($5.4 million
expense in 2020 and $6.5 million
expense in 2019, or 2.3% and 2.7% of
revenue, respectively) and "Corporate
general and administrative expenses"
($0.6 million expense in 2020 and $0.8
million expense in 2019, or 0.3% and
0.3% of revenue, respectively) and are
directly offset by deferred
compensation gains or losses in "Other
income, net" ($6.0 million income in
2020 and $7.3 million income in 2019,
or 2.5% and 3.0% of revenue,
respectively).
(2) Included in "Other income, net" for the
three months ended September 30, 2020
and 2019, is expense of $0.1 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, 2020 AND 2019
(In thousands, except percentages and per share data)
NINE MONTHS ENDED
SEPTEMBER
30,
2020 % 2019 %
Revenue $
752,787 100.0 $
745,286 100.0
% %
Operating expenses (1) 613,603 81.5 622,790 83.6
% %
Gross margin 139,184 18.5 122,496 16.4
% %
Corporate general and administrative expenses (1) 32,988 4.4 33,916 4.6
% %
Operating income 106,196 14.1 88,580 11.8
% %
Other (expense) income:
Interest expense (4,167) -0.6 (4,509) -0.6
% %
Gain on sale of operations, net 78 0.0 402 0.1
% %
Other income, net (1) (2) 3,450 0.5 12,716 1.7
% %
Total other (expense) income, net (639) -0.1 8,609 1.2
% %
Income from continuing operations before income 105,557 14.0 97,189 13.0
% %
tax expense
Income tax expense 27,120 25,004
Income from continuing operations 78,437 10.4 72,185 9.7
% %
Loss from operations of discontinued businesses, net of (44) (318)
tax
Net income $
78,393 10.4 $
71,867 9.6
% %
Diluted earnings (loss) per share:
Continuing operations $
1.41 $
1.29
Discontinued operations (0.01)
Net income $
1.41 $
1.28
Diluted weighted average common shares 55,473 55,778
outstanding
Other data from continuing operations:
Adjusted EBITDA (3) $
126,923 $
117,906
(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" ($2.8 million
expense in 2020 and $11.7 million
expense in 2019, or 0.4% and 1.6% of
revenue, respectively) and "Corporate
general and administrative expenses"
($0.3 million expense in 2020 and $1.3
million expense in 2019, or 0.0% and
0.2% of revenue for 2020 and 2019,
respectively) and are directly offset
by deferred compensation gains or
losses in "Other income, net" ($3.1
million income in 2020 and $13.0
million income in 2019, or 0.4% and
1.7% 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 nine months ended
September 30, 2020 and 2019, is income
of $0.1 million and expense of $0.3
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,
2020 2019 2020 2019
Revenue
Financial Services $
155,499 $
153,794 $
498,359 $
493,311
Benefits and Insurance Services 73,881 76,960 227,433 225,342
National Practices 9,009 9,036 26,995 26,633
Total $
238,389 $
239,790 $
752,787 $
745,286
Gross Margin
Financial Services $
25,577 $
25,563 $
102,422 $
102,464
Benefits and Insurance Services 11,868 13,570 38,914 39,506
National Practices 939 932 2,652 2,325
Operating expenses - unallocated (1):
Other income (expense) 609 (2,927) (2,008) (10,095)
Deferred compensation (5,364) (6,494) (2,796) (11,704)
Total $
33,629 $
30,644 $
139,184 $
122,496
(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, 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, net".
CBIZ, INC.
SELECT CASH FLOW DATA
(In thousands)
---
NINE MONTHS ENDED
SEPTEMBER
30,
2020 2019
Net income $
78,393 $
71,867
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization expense 17,277 16,610
Bad debt expense, net of recoveries 3,166 1,974
Adjustments to contingent earnout liability (80) 322
Stock-based compensation expense 6,765 5,258
Other noncash adjustments (3,173) 1,395
Net income, after adjustments to reconcile net income to 102,348 97,426
net cash provided by operating activities
Changes in assets and liabilities, net of acquisitions and divestitures (20,486) (47,708)
Operating cash flows provided by continuing operations 81,862 49,718
Operating cash used in discontinued operations (66) (304)
Net cash provided by operating activities 81,796 49,414
Net cash used in investing activities (9,491) (24,691)
Net cash used in financing activities (94,058) (56,473)
Net decrease in cash, cash equivalents and restricted cash $
(21,753) $
(31,750)
Cash, cash equivalents and restricted cash at beginning of year 146,505 130,554
Cash, cash equivalents and restricted cash at end of year $
124,752 $
98,804
Reconciliation of cash, cash equivalents and restricted cash to
the consolidated balance sheet:
Cash and cash equivalents $
6,113 $
2,723
Restricted cash 25,275 35,739
Cash equivalents included in funds held for clients 93,364 60,342
Total cash, cash equivalents and restricted cash $
124,752 $
98,804
CBIZ, INC.
SELECT FINANCIAL DATA AND RATIOS
(In thousands)
---
SEPTEMBER
30, DECEMBER 31,
2020 2019
Cash and cash equivalents $
6,113 $
567
Restricted cash 25,275 29,595
Accounts receivable, net 248,886 222,031
Current assets before funds held for clients 302,136 276,518
Funds held for clients 123,755 179,502
Goodwill and other intangible assets, net 695,562 654,671
Total assets $
1,425,116 $
1,400,774
Current liabilities before client fund obligations $
174,837 $
186,906
Client fund obligations 123,219 179,020
Total long-term debt 109,103 104,333
Total liabilities $
707,112 $
741,536
Treasury stock $
(570,504) $
(535,693)
Total stockholders' equity $
718,004 $
659,238
Debt to equity 15.3 16.0
% %
Days sales outstanding (DSO) - continuing operations (1) 87 75
Shares outstanding 54,713 55,419
Basic weighted average common shares outstanding 54,372 54,299
Diluted weighted average common shares outstanding 55,473 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
September 30, 2019 was 94.
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,
2020 2019 2020 2019
Income from continuing operations $
20,096 $
18,006 $
78,437 $
72,185
Interest expense 974 1,521 4,167 4,509
Income tax expense 7,060 6,069 27,120 25,004
Loss (gain) on sale of operations, net 74 145 (78) (402)
Depreciation 2,412 2,085 7,052 6,102
Amortization 3,374 3,549 10,225 10,508
Adjusted EBITDA $
33,990 $
31,375 $
126,923 $
117,906
(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.
