CBIZ REPORTS FIRST-QUARTER 2022 RESULTS

Rhea-AI Summary

CBIZ, a leading financial services provider, reported strong first-quarter results for 2022. Total revenue surged to $391.7 million, marking a 30.3% increase year-over-year. Income from continuing operations rose to $58.1 million or $1.10 per diluted share, up 15.8%. Adjusted EBITDA climbed 26.7% to $92.9 million. The company’s acquisition of Marks Paneth contributed significantly to growth, with 20.7% of revenue growth attributed to acquired operations. CBIZ reaffirms positive revenue growth outlook of 19% to 21% for the year.

Positive

• Total revenue increased to $391.7 million, a 30.3% rise year-over-year.
• Same-unit revenue grew by 9.6%, indicating strong organic growth.
• GAAP EPS rose to $1.10, reflecting a 19.6% increase.
• Adjusted EPS improved by 28.3% to $1.18, excluding acquisition costs.
• Adjusted EBITDA increased by 26.7% to $92.9 million.
• Successful integration of the Marks Paneth acquisition contributing to growth.
• Management reaffirmed revenue growth guidance at the high end of 19% to 21%.

Negative

• None.

FIRST-QUARTER HIGHLIGHTS:

• TOTAL REVENUE UP 30.3%; SAME-UNIT REVENUE UP 9.6%
• GAAP EPS UP 19.6%; ADJUSTED EPS UP 28.3%
• INCOME FROM CONTINUING OPERATIONS UP 15.8%; ADJUSTED EBITDA UP 26.7%

CLEVELAND , April 28, 2022 /PRNewswire/ -- CBIZ, Inc., (NYSE: CBZ) ("CBIZ", or the "Company"), a leading provider of financial, insurance and advisory services, today announced results for the first quarter ended March 31, 2022.

For the 2022 first quarter, CBIZ recorded revenue of $391.7 million, an increase of $91.0 million, or 30.3%, compared with $300.7 million reported for the same period in 2021. Acquired operations, net of divestitures, contributed $62.2 million, or 20.7%, to revenue growth. Same-unit revenue increased by $28.8 million, or 9.6%, for the quarter, compared with the same period a year ago. Income from continuing operations was $58.1 million, or $1.10 per diluted share, compared with $50.2 million, or $0.92 per diluted share, for the same period a year ago. Excluding the transaction and integration costs associated with the Marks Paneth acquisition, adjusted earnings per share was $1.18 for the 2022 first quarter.

Adjusted EBITDA for the quarter was $92.9 million, compared with $73.3 million for the same period in 2021. Schedules reconciling Adjusted EBITDA and Adjusted EPS to the most directly comparable GAAP measures can be found in the tables of this release.

During the first quarter, the Company repurchased approximately 148 thousand shares of its common stock on the open market. Between March 31, 2022, and April 27, 2022, the Company repurchased an additional 170 thousand shares. The balance outstanding on the Company's unsecured credit facility on March 31, 2022, was $298.9 million with $94.8 million of unused borrowing capacity.

Jerry Grisko, CBIZ President and Chief Executive Officer, said, "We started the year with tremendous momentum and have continued it through the first quarter. We achieved growth across every major business service line fueled by strong client demand for both our essential, recurring services and our more discretionary, project-based services, coupled with our ongoing efforts to enhance pricing."

"We are pleased to report double-digit growth as we successfully navigate this business climate by focusing on our people. Our investments in recruitment, retention and the tools and systems that support our teams enable us to deliver the high-quality service our clients have come to rely on from CBIZ. The initial performance of Marks Paneth, the acquisition we completed in January, bolsters our optimism for the remainder of the year with early results coming in as expected. Given our strong start, we are pleased to reaffirm our guidance at the high end of the range we provided in February," Grisko concluded.

2022 Outlook

• The Company expects revenue to grow within a range of 19% to 21% over the prior year.
• Although a number of 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 53.0 million shares.
• On a GAAP basis, the Company expects full-year fully diluted earnings per share from continuing operations to grow within a range of 43% to 46%, to $1.89 to $1.93 per share, over the $1.32 per share reported in 2021.
• The Company expects adjusted fully diluted earnings per share from continuing operations to grow within a range of 20% to 22%, to $1.99 to $2.03 per share, over the adjusted $1.66 reported for 2021. A schedule reconciling GAAP Diluted EPS to Non-GAAP Adjusted Diluted EPS is attached.

Conference Call

CBIZ will host a conference call at 11:00 a.m. (ET) today to discuss its results. The call will be webcast and an archived replay will be available at https://cbiz.gcs-web.com/investor-overview. Participants may register at  https://dpregister.com/sreg/10165078/f21a7d0e64.

About CBIZ

CBIZ 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 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 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, 2022 AND 2021 (In thousands, except percentages and per share data)
		Three Months Ended March 31,
		2022		%		2021		%
Revenue		$ 391,722		100.0%		$ 300,730		100.0%
Operating expenses (1)		290,299		74.1		223,971		74.5
Gross margin		101,423		25.9		76,759		25.5
Corporate general and administrative expenses (1)		16,309		4.2		14,483		4.8
Operating income		85,114		21.7		62,276		20.7
Other (expense) income:
Interest expense		(1,259)		(0.3)		(877)		(0.3)
Other (expense) income, net (1) (2)		(6,403)		(1.6)		4,789		1.6
Total other (expense) income, net		(7,662)		(1.9)		3,912		1.3
Income  from continuing operations before income tax expense		77,452		19.8		66,188		22.0
Income tax expense		19,321				15,972
Income  from continuing operations		58,131		14.8		50,216		16.7
Loss from operations of discontinued businesses, net of tax		(4)				(7)
Net Income		$  58,127		14.8%		$  50,209		16.7%
Diluted income per share:
Continuing operations		$      1.10				$      0.92
Discontinued operations		—				—
Net income		$      1.10				$      0.92
Diluted weighted average common shares outstanding		52,955				54,436
Other data from continuing operations:
Adjusted EBITDA (3)		$  92,896				$  73,317

(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" and "Corporate general and administrative expenses," and are directly offset by deferred compensation gains or losses in "Other (expense) income, net." The deferred compensation plan has no impact on "Income from continuing operations before income tax expense."
	Income and expenses related to the deferred compensation plan for the three months ended March 31, 2022, and 2021 are as follows (in thousands):

			Three Months Ended March 31,
			2022		% of Revenue		2021		% of Revenue
	Operating (income) expenses		$      (5,667)		(1.4)%		$       4,616		1.5%
	Corporate general and administrative (income) expenses		(811)		(0.2)%		496		0.2%
	Other (expense) income, net		(6,478)		(1.6)%		5,112		1.7%

	Excluding the impact of the above-mentioned income and expenses related to the deferred compensation plan, the operating results for the three months ended March 31, 2022, and 2021 are as follows (in thousands):
		Three Months Ended March 31,
		2022								2021
		As Reported		Deferred Compensation Plan		Adjusted		% of Revenue		As Reported		Deferred Compensation Plan		Adjusted		% of Revenue
	Gross margin	$ 101,423		$      (5,667)		$  95,756		24.4%		$  76,759		$       4,616		$  81,375		27.1%
	Operating income	85,114		(6,478)		78,636		20.1%		62,276		5,112		67,388		22.4%
	Other (expense) income, net	(6,403)		6,478		75		— %		4,789		(5,112)		(323)		(0.1)%
	Income from continuing operations before income tax expense	77,452		—		77,452		19.8%		66,188		—		66,188		22.0%

(2)	Included in "Other (expense) income, net" for the three months ended March 31, 2022 and 2021, is expense of $0.6 million and expense 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 most directly comparable 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,
		2022		2021
Revenue
Financial Services		$            288,746		$            204,149
Benefits and Insurance Services		92,486		87,239
National Practices		10,490		9,342
Total		$            391,722		$            300,730
Gross Margin
Financial Services		$              78,946		$              62,403
Benefits and Insurance Services		19,829		20,306
National Practices		914		801
Operating expenses - unallocated (1):
Other expense		(3,933)		(2,135)
Deferred compensation		5,667		(4,616)
Total		$            101,423		$              76,759

(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 includes 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 (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 rabbi trust are recorded as compensation expense (income) in "Operating expenses" and "Corporate, general and administrative expenses," and offset in "Other (expense) income, net."

 

CBIZ, INC. SELECT CASH FLOW DATA (UNAUDITED) (In thousands)
		Three Months Ended March 31,
		2022		2021
Net income		$         58,127		$         50,209
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization expense		8,173		6,252
Bad debt expense, net of recoveries		549		58
Adjustments to contingent earnout liability, net		642		660
Stock-based compensation expense		3,689		2,855
Other noncash adjustments		2,996		3,444
Net income, after adjustments to reconcile net income to net cash used in   operating activities		74,176		63,478
Changes in assets and liabilities, net of acquisitions and divestitures		(125,062)		(78,299)
Operating cash flows used in continuing operations		(50,886)		(14,821)
Operating cash used in discontinued operations		(4)		(6)
Net cash used in operating activities		(50,890)		(14,827)
Net cash (used in) provided by investing activities		(81,531)		229
Net cash provided by (used in) financing activities		170,446		(2,960)
Net increase (decrease) in cash, cash equivalents and restricted cash		38,025		(17,558)
Cash, cash equivalents and restricted cash at beginning of year		$       150,474		$       170,335
Cash, cash equivalents and restricted cash at end of period		$       188,499		$       152,777
Reconciliation of cash, cash equivalents and restricted cash to the consolidated balance sheet:
Cash and cash equivalents		$              558		$           6,778
Restricted cash		33,394		27,618
Cash equivalents included in funds held for clients		154,547		118,381
Total cash, cash equivalents and restricted cash		$       188,499		$       152,777

 

CBIZ, INC. SELECT FINANCIAL DATA AND RATIOS (UNAUDITED) (In thousands)
		March 31, 2022		December 31, 2021
Cash and cash equivalents		558		1,997
Restricted cash		33,394		30,383
Accounts receivable, net		365,758		242,168
Current assets before funds held for clients		412,494		293,765
Funds held for clients		199,065		157,909
Goodwill and other intangible assets, net		951,902		840,783
Total assets		1,942,444		1,627,934
Current liabilities before client fund obligations		257,761		265,174
Client fund obligations		200,614		158,115
Total long-term debt, net		298,541		154,851
Total liabilities		1,182,596		923,386
Treasury stock		(707,088)		(694,716)
Total stockholders' equity		759,848		704,548
Debt to equity		39.3%		22.0%
Days sales outstanding (DSO) - continuing operations (1)		94		71
Shares outstanding		52,294		52,038
Basic weighted average common shares outstanding		52,119		52,637
Diluted weighted average common shares outstanding		52,955		53,723

(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 on March 31, 2021 was 91.

 

CBIZ, INC. GAAP RECONCILIATION Income from Continuing Operations to Adjusted EBITDA(1) (In thousands)
	Three Months Ended March 31,
	2022		2021
Income from continuing operations	$               58,131		$               50,216
Interest expense	1,259		877
Income tax expense	19,321		15,972
Transaction costs related to Marks Paneth (2)	1,329		—
Integration & retention costs related to Marks Paneth (2)	4,684		—
Depreciation	2,779		2,553
Amortization	5,394		3,699
Adjusted EBITDA	$               92,896		$               73,317

(1)	CBIZ reports its financial results in accordance with GAAP. This table reconciles Adjusted EBITDA to the most directly comparable 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 under GAAP. Adjusted EBITDA is commonly used by the Company, its shareholders and debt holders as a performance measurement to evaluate, assess and benchmark the Company's operational results.
(2)	These costs include, but are not limited to, certain consulting, technology, personnel, as well as other first year operating and general administrative costs that are non-recurring in nature.

 

CBIZ, INC. GAAP RECONCILIATION Income and Diluted Earnings Per Share ("EPS") from Continuing Operations to Adjusted Income and EPS(1) (In thousands, except per share data)
	Three Months Ended March 31, 2022				Three Months Ended March 31, 2021
	Amounts		EPS		Amounts		EPS
Income from continuing operations	$      58,131		$          1.10		$      50,216		$          0.92
Adjustments:
Transaction costs related to Marks Paneth (2)	1,329		0.03		—		—
Integration & retention costs related to Marks Paneth (2)	4,684		0.09		—		—
Income tax effect related to adjustments	(1,500)		(0.04)		—		—
Adjusted income from continuing operations	$      62,644		$          1.18		$      50,216		$          0.92

(1)	CBIZ reports its financial results in accordance with GAAP. This table reconciles Adjusted Income and Adjusted EPS to the most directly comparable GAAP financial measures, "Income from continuing operations" and "Diluted earnings per share from continuing operations." Adjusted Income and Adjusted EPS are not defined by GAAP and should not be regarded as an alternative or replacement to any measurement of performance under GAAP. Adjusted Income and Adjusted EPS, which excludes significant non-operating related gains and losses, are used by the Company for its shareholders and debt holders as a performance measure to evaluate, assess and benchmark the Company's operational results.
(2)	These costs include, but are not limited to, certain consulting, technology, personnel, as well as other first year operating and general administrative costs that are non-recurring in nature.

 

CBIZ, INC. GAAP RECONCILIATION Full Year 2022 EPS from Continuing Operations Guidance to Full Year 2022 Adjusted Diluted EPS
	Full Year 2022 Guidance
	Low		High
Diluted EPS  - GAAP Guidance	$                1.89		$                  1.93
Transaction and integration costs related to Marks Paneth (1)	0.10		0.10
Adjusted Diluted EPS Guidance	$                1.99		$                  2.03
GAAP Diluted EPS for 2021	$                1.32		$                  1.32
Adjusted Diluted EPS for 2021 (2)	$                1.66		$                  1.66
GAAP Diluted EPS Range	43%		46%
Adjusted Diluted EPS Range	20%		22%

(1)	Includes estimated transaction and integration costs related to the Marks Paneth acquisition. Such costs include, but are not limited to, certain consulting, technology, personnel, as well as other first year operating and general administrative costs that are non-recurring in nature.
(2)	A reconciliation between income from continuing operations and adjusted income from continuing operations and a reconciliation between GAAP Diluted EPS and Adjusted Diluted EPS for fiscal year ended December 31, 2021 are presented as follows:

 

	Twelve Months Ended December 31, 2021
	In thousands		EPS
Income from continuing operations	$                  70,911		$                      1.32
Adjustments:
Gain on sale of operations, net	(6,311)		(0.12)
Legal settlement, net	30,468		0.57
Income tax effect related to adjustments	(5,746)		(0.11)
Adjusted income from continuing operations	$                  89,322		$                      1.66

 

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SOURCE CBIZ, Inc.

FAQ

What were CBIZ's first-quarter 2022 financial results?

CBIZ reported first-quarter 2022 revenue of $391.7 million, a 30.3% increase, with GAAP EPS at $1.10, up 19.6%.

How much did CBIZ's revenue increase year-over-year?

CBIZ's revenue increased by $91.0 million or 30.3% compared to the same quarter in 2021.

What is CBIZ's guidance for revenue growth in 2022?

CBIZ expects revenue growth between 19% and 21% for the year 2022.

What were the key drivers of revenue growth for CBIZ in Q1 2022?

The key drivers included strong demand for services and the contribution from the acquisition of Marks Paneth.

What impact did the Marks Paneth acquisition have on CBIZ's first-quarter results?

The Marks Paneth acquisition contributed $62.2 million to revenue growth, accounting for 20.7% of the increase.